Articles by Brent Skorup

Brent SkorupBrent is a senior research fellow with the Technology Policy Program at the Mercatus Center at GMU. He has an economics degree from Wheaton College and a law degree from George Mason University. Opinions are his own.


The urban air mobility stories keep stacking up in 2019. A few highlights and a few thoughts.

Commercial developments

There have been tons of urban air mobility announcements, partnerships, and demos in 2019. EHang, the Chinese drone maker, seems to be farthest along in eVTOL development, though many companies are working with regulators to bring about eVTOL services in the next five years. 

In April, representatives said EHang will start selling its two-passenger, autonomous eVTOL next year for about $350,000 to commercial operators. Ehang’s co-founder says its 2-passenger autonomous eVTOL is already completing routine flights in China for tourists between a hotel and local attractions.

Uber recently announced they’ll offer shared-ride helicopter service between Manhattan and JFK airport, starting in July. This week, Voom (Airbus) announced they will expand their helicopter ridesharing service to San Francisco. They’ve been operating in Sao Paulo and Mexico City already.

These helicopter rides are targeting popular urban routes (airport-to-airport, CBD-to-airport, etc.) for customers who are willing to pay to shorten a one-hour car ride to a ten-minute helicopter ride. Fees are typically $150 to $250 one-way. Both companies want to get a sense of demand, price, and frequency for eVTOL services.

[BS – July 9 update: Last week Xin Gou, a pilot, reported on Twitter that EHang had sold 18 of its 2-passenger eVTOL aircraft, 10 in China, 8 overseas. To my knowledge, these are the first sales of passenger eVTOL aircraft in the world.]

What’s the Plan?

This makes the development of airspace markets and unmanned traffic management (UTM) systems all the more urgent. What regulators must guard against is first-movers squatting on high-revenue aerial routes.

Airspace is nominally a common-pool resource, rationed via regulation and custom. That worked tolerably well for the Wright brother era and the jet age. Still, there are massive distortions and competitive problems because an oligopoly of first movers attained popular routes and airport terminals. The common-pool resource model for airspace also leaves regulators with few tools to ration access sensibly.

From my airspace policy paper:

For example, in 1968, nearly one-third of peak-time New York City air traffic—the busiest region in the United States—was general aviation (that is, small, personal) aircraft. To combat severe congestion, local authorities raised minimum landing fees by a mere $20 (1968 dollars) on sub 25-seat aircraft. General aviation traffic at peak times immediately fell by more than 30 percent, suggesting that a massive amount of pre-July 1968 air traffic in the region was low value. The share of aircraft delayed by 30 or more minutes fell from 17 percent to about 8 percent. Similarly, Logan Airport raised fees on small aircraft in the 1980s in order to lessen congestion. The scheme worked, and general aviation traffic fell by about one-third, though the fee hike was later overturned.

There’s a revolution in aviation policy occurring. The arrival of drones, eVTOL, and urban air mobility requires a totally different framework. It seems inevitable that a layer-cake or corridor approach to airspace management will develop, even though the FAA currently resists that. As with American frontier or radio spectrum: a demand shock to Ostromian common pool resource leads to enclosure and property rights.

Already, first movers and the government are collaborating on UTM and airspace policy. But regulators must resist letting collaboration today degrade into oligopoly tomorrow. This early collaboration on technology and norms is necessary but the regulators will be under immense pressure, inside and outside the agency, to have a single UTM provider, or a few hand-picked vendors. 

A single UTM system or a tightly-integrated system with a few private system operators would reproduce many of the problems with today’s air traffic management. It is very hard to update information-rich systems, especially air traffic control systems, the delayed, over-budget NextGen modernization shows. Today there are 16,000 FAA workers working on the NextGen project, which has been ongoing since 1983. UTM will be an even more information-rich system. An system-wide upgrade to UTM would make NextGen modernization look simple by comparison.

Further, once the urban air mobility market develops, the first movers (UTM and eVTOL operators) will resist newcomers and new UTM technologies in the future. Exclusive aerial corridors, as opposed to shared corridors planned for today by regulators, would allow competitive UTM systems with only basic interoperability requirements.

Quick Hits

NETT Council: In March, USDOT Secretary Chao announced the formation of the Non-Traditional and Emerging Transportation Technology Council. It sounds great, and one of the likely topics the Council will take up is urban air mobility.

ASI Aviation Report, “Taking Off”: The Adam Smith Institute (UK) this week published an excellent report from Matthew Lesh about improving competition and service in aviation. The UK often leads the world in deregulation and market-based management of government property (like AIP in spectrum policy), and ASI has been influential in aviation policy in particular. Report highlights:

  1. Analysis of terminal competition policies for Heathrow (which is in the midst of a major expansion project)
  2. Proposes additional slot auctions for takeoff and landing slots at UK airports
  3. Endorses aerial corridor auctions for air taxis and eVTOL

Government study of airspace auctions: My proposal that the FAA auction aerial corridors for eVTOL caught the attention of the FAA’s Drone Advisory Committee and was included in a working group’s 2018 report about ways to finance drone and eVTOL regulation. Section 360 of the FAA Reauthorization Act, passed a few months after the working group report came out, then instructed the GAO to study ways of financing drone and eVTOL regulation. The law specifies that the GAO must study the six proposals in that working group report, including the auction of aerial corridors.

Lincoln Network Conference: I recently had the privilege of speaking at the Lincoln Network’s Reboot American Innovation conference. Jamie Boone (CTA) and I gave a fireside chat about the fast-moving urban air mobility sector. Matt Parlmer, founder of Ohlogen, was a great moderator. Video here.

eVTOL in North Carolina: The North Carolina state appropriations bill, which is nearing passage, allocates some funds to the Lt. Governor’s office to study eVTOLs, consult with experts, and convene an eVTOL summit in the next year. The Lt. Governor might also form a state advisory committee on eVTOL, a good, forward-looking policy for states given the rapid pace of progress in urban air mobility. To my knowledge, North Carolina is the first state to dedicate funding for study of this industry.

Two weeks ago, Gov. Polis signed a bill that generally cuts off Colorado state funds from ISPs that commit “net neutrality violations” in the state. Oddly, I’ve seen no coverage from national outlets and barely a mention from local outlets. Perhaps journalists and readers have tired from what Larry Downes has dubbed the net neutrality farce, a debate about Internet regulation that has distracted the FCC and lawmakers for over a decade.

There’s not much new in the net neutrality debate, but Colorado did tread new ground: a House amendment to allow ISPs to filter adult content barely failed, on a tied vote 32-32. Net neutrality in the US runs into First Amendment and Section 230 problems, and that amendment is the first time I’ve seen the issue raised by a state legislature.

A few thoughts on the law because in March I was invited to testify before a Colorado House committee about net neutrality, broadband, and the policy implications of the then-pending bill. I commended the bill drafters for scrupulously attempting to narrow their bill to intra-state consumer protection issues. Nevertheless, it was my view that the Colorado law, as written, wouldn’t survive judicial review if litigated.

States can have agreements with vendors and contractors and can require them to abide by certain contractual terms. However, courts have held that states cannot, as Seth Cooper has pointed out, use their contractual relationships with firms to extract concessions that are “tantamount to regulation.” State agencies cannot attempt an end-around federal laws that prevent state regulation of Internet services generally, and net neutrality regulation in particular.

My testimony:

Good afternoon. My name is Brent Skorup and I am a senior research fellow at the Mercatus Center at George Mason University. I also serve on the Broadband Deployment Advisory Committee of the Federal Communications Commission (FCC).

It is commendable that state legislatures, governors, and cities around the country, including in Colorado, are prioritizing broadband deployment. The focus should remain on the pressing broadband issues of competition and deployment. The political battles in Washington, DC, about net neutrality, which I have observed over the past decade, have alarmingly spread to statehouses in recent months, and they will distract from far more important issues.

Lawmakers should enter the debate with their eyes wide open about the stakes and the unintended effects of internet regulation. By imposing network management rules on certain providers, SB 19-078 conflicts with federal policy, codified in the Telecommunications Act, that internet access should be “unfettered by Federal or State regulation.”

First, net neutrality laws and regulations do not accomplish what they purportedly accomplish. As the FCC revealed when it defended its net neutrality regulations in federal court in 2016, any no-blocking rule is mostly unenforceable. As a tech journalist put it, internet service providers (ISPs) can “exempt [themselves] from the net neutrality rules”—the rules are “essentially voluntary.” The same problem arises with state net neutrality laws.

Second, state internet regulations are unlikely to survive judicial review. Internet access is inherently interstate: simply streaming a YouTube video or sending an email often transmits data across state lines. State attempts to regulate treatment of internet access therefore likely violate federal law, which vests authority to regulate interstate communications with the FCC.

Third, the bill penalizes small, rural carriers. There’s a saying in politics: “If you’re not at the table, you’re on the menu.” It appears that Colorado’s rural broadband providers are “on the menu.” The bill applies internet regulations only to companies receiving state support (13 companies, each one serving rural areas). With the exception of CenturyLink, these are very small telecommunications companies, and the smallest had 64 customers. It is a puzzle why the state would add regulations and compliance costs to rural ISPs at a time when the FCC and most states are doing everything possible to help deploy broadband in rural areas.

This is not a plea to “do nothing” in Colorado regarding broadband. The FCC’s Broadband Deployment Advisory Committee has several recommendations for states and localities to improve broadband deployment.

Further, the FCC and some states are considering making it easier for private property owners to install wireless antennas without local regulation and fees, much like how satellite dishes are installed.

Finally, the legislature could also urge flexibility from the FCC regarding the federal high-cost fund, which disburses about $60 million annually to carriers in Colorado. My preliminary estimates using FCC data suggest that, under a new voucher program, every rural household in Colorado could receive $15 to $20 per month to reduce their monthly broadband bill.

Testimony on the Mercatus website here.

An interesting divide has opened up in recent months among right-of-center groups about what the FCC should do with the “C Band.” A few weeks ago, the FCC requested public comment on how to proceed with the band.

The C Band is 500 MHz of spectrum that the FCC, like regulators around the globe, dedicated for satellite use years ago and gave to satellite companies to share among each other. Satellite operators typically use it to transmit cable programming to a regional cable network operations center, where it is bundled and relayed to cable subscribers. However, the C Band would work terrifically if repurposed for 5G and cellular services. As Joe Kane explained in a white paper, the FCC and telecom companies are exploring various ways of accomplishing that.

Free-market groups disagree. Should the FCC prioritize:

The quick deployment of new wireless services? Or:

Deficit reduction and limiting FCC-granted windfalls?

This is a complex question since we’re dealing with the allocation of public property. Both sides, in my view, have a defensible free-market position. There are other non-trivial C Band issues like interference protection and the FCC’s authority to act here, but I’ll address the ideological split on the right.

The case for secondary markets

The full 500 MHz of “clean” C Band in the US would be worth tens of billions to cellular companies. However, the current satellite users don’t want to part with all of it and a group of satellite companies using the spectrum estimate they could sell 200 MHz to cellular carriers if the FCC would liberalize its rules to allow flexible uses (like 5G), not merely satellite services. The satellite providers would then be able to sell much of their spectrum on the secondary market (probably to cellular providers) at a nice premium.

Prof. Dan Lyons and Roslyn Layton wrote in support of the secondary market plan on the AEI blog and at Forbes, respectively. Joe Kane also favors the approach. As they say, the benefit of secondary market sales is that it will likely lead a significant and fast repurposing of the C Band for mobile use. The consumer benefits of dezoned spectrum are large and with every year of inaction, billions of dollars of consumer welfare evaporate. Hazlett and Munoz estimate that spectrum reallocated from a restricted use to flexible use generates annual consumer benefits in the same order of magnitude as auction value of the spectrum.

I’d add that there’s a history of the FCC de-zoning spectrum (SMR spectrum in 2004, EBS spectrum in 2004, AWS-4 in 2011, WCS spectrum in 2012). The FCC is considering doing this with some government spectrum that Ligado or others could repurpose for mobile broadband. In these cases, the FCC upzoned spectrum so that it can be used for higher-valued uses, not legacy uses required by previous FCCs. The circumstances and technologies vary, but some of these bands were repurposed quickly for better uses by cellular providers and are used for 4G LTE today by tens of millions of Americans.

The case for FCC auction

Liberalizing spectrum quickly gets spectrum to higher-valued uses but does raise the complaint that the existing users are gaining an unfair windfall. I’m not sure when the C Band was allocated for satellite but many legacy assignments of spectrum were given to industries for free.

When the FCC “upzones” spectrum, it typically increases the value of the band. The “secondary market” plan is akin to the government giving away a parcel of public land to a developer to be used for a gas station, then deciding years later to upzone the land so that condo or office buildings can be built on it. It’s a better use for the land, but the gas station operator gains a big windfall when the property value increases. Not only is there a windfall, the government captures no revenue from the increase in the value of public property.

Free-market groups like Americans for Tax Reform, Taxpayers Protection Alliance, and Citizens Against Government Waste favor the FCC reclaiming the spectrum from satellite providers, perhaps via incentive auction, and collecting government revenue by re-selling it. If the FCC went the incentive auction route, the FCC would purchase the “satellite spectrum” (ie a low price) from the current C Band users, upzone it, and re-sell that spectrum as “mobile spectrum” (ie a high price) in an open auction. The FCC and the Treasury pocket the difference, probably several billion dollars here.

The FCC has only done one incentive auction, the 600 MHz auction. There, the FCC purchased “TV spectrum” from broadcasters and re-sold it to wireless carriers.

The benefit of this is deficit reduction and there’s more perceived fairness since there’s no big, FCC-granted windfall to legacy users. The downside is that it’s a slower, more complicated process since the FCC is deeply involved in the spectrum transfer. Arguably, however, the FCC should be deeply involved and interested in government revenue since spectrum is public property.

My view

A few years ago I would have definitely favored speed and the secondary market plan. I still lean towards that approach but I’m a little more on the fence after reading Richard Epstein’s work and others’ about the “public trust doctrine.” This is a traditional governance principle that requires public actors to receive fair value when disposing of public property. It prevents public institutions from giving discounted public property to friends and cronies. Clearly, cronyism isn’t the case here and FCC can’t undo what FCCs did generations ago in giving away spectrum. I think the need for speedy deployment trumps the windfall issue here, but it’s a closer call for me than in the past.

One proposal that hasn’t been contemplated with the C Band but might have merit is an overlay auction with a deadline. With such an auction, the FCC gives incumbent users a deadline to vacate a band (say, 5 years). The FCC then auctions flexible-use licenses in the band. The FCC receives the auction revenues and the winning bidders are allowed to deploy services in the “white spaces” unoccupied by the incumbents. The winning bidders are allowed to pay the incumbents to move out before the deadline.

With an overlay auction, you get fairly rapid deployment–at least in the white spaces–and the government gains revenue from the auction. This type of auction was used to deploy cellular (PCS) in the 1990s and cellular (AWS-1) in the 2000s. However, incumbents dislike it because the deadline devalues their existing spectrum holdings.

I think overlay auctions should be considered in more spectrum proceedings because they avoid the serious windfall problems while also allowing rapid deployment of new services. That doesn’t seem in the cards, however, and secondary markets seems like the next best option.

Every week, it seems, there is a news story about another air taxi startup or test flight. Another signal of the industry’s development is that at a House Transportation and Infrastructure hearing last week, Eric Fanning, the President and CEO of the Aerospace Industries Association, devoted most of his testimony to urging lawmaker action on air taxi (also called vertical takeoff and landing aircraft and, colloquially, flying cars) policy and infrastructure.

The technology is exciting but federal officials are interested in whether the air taxi industry will be a drain on taxpayers. Using government estimates of the air taxi industry and current tax rates for infrastructure-based industries like wireless and oil extraction, I estimate that the air taxi industry could deposit tens of billions of dollars into the US Treasury annually. Hopefully the hundreds of air taxi “vertiports” required are privately funded as well.

Air Taxi Market Size

In November, I published a Wall Street Journal piece about the rapid development and promise of the air taxi industry. Some people inquired as to the potential size of the air taxi market and government revenue. I wasn’t aware of any estimates at the time. Nevertheless, I estimated that the US market could one day reach $200 billion in revenue annually–about the size of the current US aviation market and the US wireless broadband market.

Other analyst and government estimates are now coming out, turns out, my estimates were on the conservative side. For instance, a NASA-funded study (.pdf) estimated that, at the upper limit, the US market could approach $500 billion annually, which is nearly the size of the US auto market. That would require tens of thousands of air taxis serving over 10 million passengers per day.

Experts at McKinsey, NASA, and JP Morgan Chase estimate that the global air taxi market could be anywhere from $615 billion to $3 trillion annually by 2040. Given the potential for this industry, other countries are moving quickly to commercialize air taxis. A German consultancy, Roland Berger, predicts there will be 3,000 commercial air taxis by 2025. The drone expert at the World Economic Forum believes Chinese companies are far ahead when it comes to autonomous air taxi service. That said, the operator of the Frankfurt airport announced a partnership with an eVTOL company recently, and the powerful Japanese trade and industry ministry has convened a 25-member private-public council to develop air taxis. Japanese regulators intend to make Japan the birthplace of urban air taxi service.

Private or Public Funding of Vertiports?

A key decision for US lawmakers is whether the hundreds of vertiports in the US will be privately funded and operated or will, like today’s airports, receive subsidies and public operation. A NASA study estimates that each major US city could support on average about 200 “vertiports.” That would be a major drain on taxpayers if publicly funded.

My working paper on the subject of air taxi traffic management contemplates entirely private funding of urban vertiports and infrastructure. It also proposes that the government auction aerial corridors to air taxi operators. Private infrastructure and the auction of exclusive aerial corridors, in my view, is the safest and most fiscally responsible way to develop the American air taxi market.

However, the FAA and NASA’s plans are unclear on whether air taxi infrastructure will be funded by taxpayers or funded privately. There’s a good chance the FAA and NASA will import the norms and regulations for traditional aviation–open access airspace and public funding of shared airports–into the urban air mobility market. I think that would create an anticompetitive market and be an unnecessary drain on taxpayers.

Government Revenue From the Air Taxi Industry

How much government revenue could be generated by the air taxi industry? We can look to other assets that are auctioned by government for analogues: spectrum and offshore oil sites. There is no “spectrum tax,” but wireless taxes and fees resemble a de facto tax on cellular spectrum. The Tax Foundation puts government (federal, state, and local) wireless taxes and fees at around 9% of annual wireless revenues. For oil leases on federal property, there is a government royalty amounting to about 12.5% of oil revenue.

With these figures in mind, let’s assume that government taxes and fees will one day amount to about 10% of air taxi revenues. Supposing that the US air taxi market will one day fall between my conservative estimate, $200 billion annually, and NASA’s best-case estimate, $500 billion annually, the air taxi industry could one day generate about $20 billion to $50 billion in tax revenue annually. That doesn’t include the auction revenues of aerial corridors, if implemented. If spectrum auctions and offshore oil leases are the best comparison, the auction of aerial corridors could return another $100 billion to the US Treasury.

These are tentative estimates. Market size estimates vary widely, and much depends on whether a workable regulatory framework develops. In any case, like aviation 100 years ago, it’s an exciting area to watch.

Air taxis and electric vertical takeoff and landing aircraft (eVTOLs) will receive significant regulator attention in 2019 as companies test these aircraft and move towards commercialization. I’m fairly bullish on the technology and its potential and I’m pleased to see state lawmakers and mayors, however, seem to be waking up to the massive possibilities of this industry.

A recent NASA-commissioned study estimates that in the best-case scenario, the U.S. air taxi market would be worth about $500 billion annually, which is nearly the size of the U.S. auto sector. This translates into about 1 million air taxis in the air and 11 million flights per day. Morgan Stanley researchers recently estimated that the global flying car market could be about $1.5 trillion annually by 2040.

You can quibble with the numbers, but it’s clear that aircraft companies and governments believe flying cars are no longer science fiction. Uber plans to offer commercial eVTOL flights in 2023, with testing beginning in 2020. Boeing plans testing later this year.

Federal and state lawmakers need to start preparing for the industry. In November, I published a paper and a Wall Street Journal op-ed proposing that the FAA demarcate and auction highways in the sky–exclusive aerial corridors–for air taxi flights, as a way to manage airspace congestion and preserve competition.

As I wrote in the Detroit News a few weeks ago, state lawmakers also need to start planning for air taxis. States don’t manage aircraft flights but they do manage zoning, property rights, and other areas where state policy can inhibit or encourage the air taxi industry. I mentioned in the op-ed that there are two things states can do in the near future.

Aerial Navigational Easement

First, a good policy is to grant small aircraft a navigational easement to low-altitude airspace. Trespass lawsuits from landowners could scare away companies and innovators who want to test passenger drone and air taxi flights.

About half of states created these aerial navigation easements in the 1920s and 1930s so that trespass lawsuits would not interfere with the new aviation industry. Per these state statutes, flights over property are allowed so long as they do not substantially interfere with the homeowner’s use and enjoyment of the land.

Aerial navigation easement laws have a few benefits: They:

  1. Reaffirm the primacy of landowner property interests.
  2. Reinforce state prerogatives to determine property rights.
  3. Encourage the drone and air taxi industry by precluding most trespass lawsuits.
  4. Avoid a fight with federal regulators by leaving air traffic management policy untouched.

This 80-year old policy will see new relevance in the states this year. Last month, in Washington, a landowner sued a drone operator for aerial trespass. Washington, notably, does not provide for an aerial navigational easement in law.

Air Taxi Advisory Committee

Second, governors or legislatures should consider creating advisory committees for the air taxi industry. Air taxis will raise all sorts of novel state and local issues. A few come to mind:

  • Should municipal zoning laws for helipads and air taxi “vertiports” be liberalized?
  • EVTOLs require substantial electrical grid improvements and distributed, powerful charging stations on rooftops and landing sites. Are state regulations standing in the way?
  • Air taxis, like trains and autos, create significant noise and local nuisance laws could essentially preclude all air taxi testing and operation. What decibel levels are appropriate to balance industry and public acceptance? Should that be decided at the state or local level?

State advisory committees were created for another emerging technology sector–autonomous vehicles. Committees are composed of stakeholders, including public safety representatives, consumer groups, industry representatives, and academics. They can create policy recommendations for legislators and participate in hearings as air taxis come closer to commercialization.

For the air taxi industry to reach its potential, there needs to be collaboration between and foresight from state and federal lawmakers. Air taxi technology has moved far ahead of law, regulation, and public perception. Fortunately, I expect state and local officials to start examining their current laws and whether modernization is in order to stimulate this transportation sector.

Below are the top 10 posts on the Technology Liberation Front in 2018. Everything from privacy, to 5G, to tech monopolies, and net neutrality. Enjoy, and Happy New Year!

10. How Well-Intentioned Privacy Regulation Could Boost Market Power of Facebook & Google, April 25.

9. Nationalizing 5G networks? Why that’s a bad idea., January 29. (Republished at The Federalist.)

8. The Pacing Problem, the Collingridge Dilemma & Technological Determinism, August 16.

7. GDPR Compliance: The Price of Privacy Protections, July 9.

6. Evasive Entrepreneurialism and Technological Civil Disobedience: Basic Definitions, July 10.

5. No, “83% of Americans” do not support the 2015 net neutrality regulations, May 18.

4. The FCC can increase 5G deployment by empowering homeowners, July 26.

3. Doomed to fail: “net neutrality” state laws, February 20.

2. Should We Teach Children to Be Entrepreneurs, or How to Pay Licensing Fees?, Aug. 21.

1. The Week Facebook Became a Regulated Monopoly (and Achieved Its Greatest Victory in the Process), April 10.

One year ago, the FCC majority passed the 2017 Restoring Internet Freedom Order, largely overturning the 2015 Open Internet Order. I consider the 2017 Order the most significant FCC action in a generation. The FCC did a rare thing for an agency—it voluntarily narrowed its authority to regulate a powerful and massive industry.

In addition to returning authority to the Federal Trade Commission and state attorneys general, the 2017 Order restored common-sense regulatory humility, despite the courts blessing the Obama FCC’s unconvincing, expansive interpretation of FCC authority. National policy, codified in law, is that the Internet and Internet services should be “unfettered by Federal or State regulation,” which, if it means anything, means Internet services cannot be regulated as common carriers.

Net neutrality is dead

Net neutrality advocates who want the FCC to have common carriage powers over Internet applications and networking practices were outraged by the approval of the 2017 Order. Joe Kane at R Street has a good roundup of some of the death-of-the-Internet hyperbole from the political class and advocates. Some disturbed net neutrality supporters took it too far, including threats to the lives and families of the Republican commissioners, especially Chairman Pai.

But the 2017 Order hadn’t killed net neutrality. It was already dead. A few hours after the passage of the Restoring Internet Freedom Order, I was on a net neutrality panel in DC for an event about the First Amendment and the Internet. (One of my co-panelists dropped out out of caution because of the credible bomb threat at the FCC that day.) I pointed out at that event that while you wouldn’t know it from the news coverage, the Obama FCC had already killed net neutrality’s core principle—the prohibition against content blocking. The 2015 “net neutrality” Order allowed ISPs to block content. Attributing things to the 2015 Order that it simply doesn’t do is what Commissioner Carr has called the “Title II head fake.” The 2017 Order simply freed ISPs and app companies to invest and innovate without fear of plodding scrutiny and inconclusive findings from a far-off FCC bureau.

Long live net neutrality

The net neutrality movement will live on, however. The main net neutrality proponents aren’t that concerned with ISP content blocking; they want FCC regulation of the Internet companies and new media. It’s no coincidence that most of the prominent net neutrality advocates come out of the media access movement, which urged the FCC’s Fairness Doctrine, equal time laws, and programming mandates for TV and radio broadcasts.

The newer net neutrality coalition, as then-FCC Chairman Wheeler conceded frankly, doesn’t know precisely what Internet regulation would look like. What they do know is that ISPs and Internet companies are operating with inadequate public supervision and government design. 

As Public Knowledge CEO Gene Kimmelman has said, the 2015 Order was about threatening the industry with vague but severe rules: “Legal risk and some ambiguity around what practices will be deemed ‘unreasonably discriminatory’ have been effective tools to instill fear for the last 20 years” for the telecom industry. Title II functions, per Kimmelman, as a “way[] to keep the shadow and the fear of ‘going too far’ hanging over the dominant ISPs.” Internet regulation advocates, he said at the time, “have to have fight after fight over every claim of discrimination, of new service or not.”

So it’s Internet regulation, not strict net neutrality, that is driving the movement. As former Obama administration and FCC adviser Kevin Werbach said last year, “It’s not just broadband providers that are fundamental public utilities, at some level Google is, at some level Facebook is, at some level Amazon is.” 

Fortunately, because of the Restoring Internet Freedom Order, IP networks and apps companies have a few years of regulatory reprieve at a critical time. Net neutrality was invented in 2003 and draws on common carriage principles that cannot be applied sensibly to the various services carried on IP networks. Unlike the “single app” phone network regulated with common carriage, these networks transmit thousands of services and apps–like VoIP, gaming, conferencing, OTT video, IPTV, VoLTE, messaging, and Web–that require various technologies, changing topologies, and different quality-of-service requirements. 5G wireless will only accelerate the service differentiation that is at severe tension with net neutrality norms.

Rather than distract agency staff and the Internet industry with metaphysical debates about “reasonable network” practices, the Trump FCC has prioritized network investment, spectrum access, and rural broadband. Hopefully the next year is like the last.

Addendum: The net neutrality reprieve has not only freed up FCC staff to work on more pressing matters, it’s freed  up my time to write about tech policy areas that the public will benefit from. In November I published a Mercatus working paper and a Wall Street Journal op-ed about flying car policy.

Until recently, I wasn’t familiar with Freedom House’s Freedom on the Net reports. Freedom House has useful recommendations for Internet non-regulation and for protecting freedom of speech. Their Freedom on the Net Reports make an attempt at grading a complex subject: national online freedoms.

However, their latest US report came to my attention. Tech publications like TechCrunch and Internet regulation advocates were trumpeting the report because it touched on net neutrality. Freedom House penalized the US score in the US report because the FCC a few months ago repealed the so-called net neutrality rules from 2015.

The authors of the US report reached a curious conclusion: Internet deregulation means a loss of online freedom. In 2015, the FCC classified Internet services as a “Title II” common carrier service. In 2018, the FCC, reversed course, and shifted Internet services from one of the most-regulated industries in the US to one of least-regulated industries. This 2018 deregulation, according to the Freedom House US report, creates an “obstacle to access” and, while the US is still “free,” regulation repeal moves the US slightly in the direction of “digital authoritarianism.”   Continue reading →

By Brent Skorup and Trace Mitchell

An important benefit of 5G cellular technology is more bandwidth and more reliable wireless services. This means carriers can offer more niche services, like smart glasses for the blind and remote assistance for autonomous vehicles. A Vox article last week explored an issue familiar to technology experts: will millions of new 5G transmitters and devices increase cancer risk? It’s an important question but, in short, we’re not losing sleep over it.

5G differs from previous generations of cellular technology in that “densification” is important–putting smaller transmitters throughout neighborhoods. This densification process means that cities must regularly approve operators’ plans to upgrade infrastructure and install devices on public rights-of-way. However, some homeowners and activists are resisting 5G deployment because they fear more transmitters will lead to more radiation and cancer. (Under federal law, the FCC has safety requirements for emitters like cell towers and 5G. Therefore, state and local regulators are not allowed to make permitting decisions based on what they or their constituents believe are the effects of wireless emissions.)

We aren’t public health experts; however, we are technology researchers and decided to explore the telecom data to see if there is a relationship. If radio transmissions increase cancer, we should expect to see a correlation between the number of cellular transmitters and cancer rates. Presumably there is a cumulative effect: the more cellular radiation people are exposed to, the higher the cancer rates.

From what we can tell, there is no link between cellular systems and cancer. Despite a huge increase in the number of transmitters in the US since 2000, the nervous system cancer rate hasn’t budged. In the US the number of wireless transmitters have increased massively–300%–in 15 years. (This is on the conservative side–there are tens of millions of WiFi devices that are also transmitting but are not counted here.) Continue reading →

By Brent Skorup and Michael Kotrous

In 1999, the FCC completed one of its last spectrum “beauty contests.” A sizable segment of spectrum was set aside for free for the US Department of Transportation (DOT) and DOT-selected device companies to develop DSRC, a communications standard for wireless automotive communications, like vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I). The government’s grand plans for DSRC never materialized and in the intervening 20 years, new tech—like lidar, radar, and cellular systems—advanced and now does most of what regulators planned for DSRC.

Too often, however, government technology plans linger, kept alive by interest groups that rely on the new regulatory privilege, even when the market moves on. At the eleventh hour of the Obama administration, NHTSA proposed mandating DSRC devices in all new vehicles, an unprecedented move that Brent and other free-market groups opposed in public interest comment filings. As Brent wrote last year,

In the fast-moving connected car marketplace, there is no reason to force products with reliability problems [like DSRC] on consumers. Any government-designed technology that is “so good it must be mandated” warrants extreme skepticism….

Further,

Rather than compel automakers to add costly DSRC systems to cars, NHTSA should consider a certification or emblem system for vehicle-to-vehicle safety technologies, similar to its five-star crash safety ratings. Light-touch regulatory treatment would empower consumer choice and allow time for connected car innovations to develop.

Fortunately, the Trump administration put the brakes on the mandate, which would have added cost and complexity to cars for uncertain and unlikely benefits.

However, some regulators and companies are trying to revive the DSRC device industry while NHTSA’s proposed DSRC mandate is on life support. Marc Scribner at CEI uncovered a sneaky attempt to create DSRC technology sales via an EPA proceeding. The stalking horse DSRC boosters have chosen is the Corporate Average Fuel Economy (CAFE) regulations—specifically the EPA’s off-cycle program. EPA and NHTSA jointly manage these regulations. That program rewards manufacturers who adopt new technologies that reduce a vehicle’s emissions in ways not captured by conventional measures like highway fuel economy.

Under the proposed rules, auto makers that install V2V or V2I capabilities can receive credit for having reduced emissions. The EPA proposal doesn’t say “DSRC” but it singles out only one technology standard that would be favored in this scheme: a standard underlying DSRC

This proposal comes as a bit of surprise for those who have followed auto technology; we’re aware of no studies showing DSRC improves emissions. (DSRC’s primary use-case today is collision warnings to the driver.) But the EPA proposes a helpful end-around that problem: simply waiving the requirement that manufacturers provide data showing a reduction in harmful emissions. Instead of requiring emissions data, the EPA proposes a much lower bar, that auto makers show that these devices merely “have some connection to overall environmental benefits.” Unless the agency applies credits in a tech-neutral way and requires more rigor in the final rules, which is highly unlikely, this looks like a backdoor subsidy to DSRC via gaming of emission reduction regulations.

Hopefully EPA regulators will discover the ruse and drop the proposal. It was a pleasant surprise last week when a DOT spokesman committed that the agency favored a tech-neutral approach for this “talking car” band. But after 20 years, this 75 MHz of spectrum gifted to DSRC device makers should be repurposed by the FCC for flexible-use. Fortunately, the FCC has started thinking about alternative uses for the DSRC spectrum. In 2015 Commissioners O’Rielly and Rosenworcel said the agency should consider flexible-use alternatives to this DSRC-only band.

The FCC would be wise to follow through and push even farther. Until the gifted spectrum that powers DSRC is reallocated to flexible use, interest groups will continue to pull any regulatory lever it has to subsidize or mandate adoption of talking-car technology. If DSRC is the best V2V technology available, device makers should win market share by convincing auto companies, not by convincing regulators.