The DOJ’s recommendation would likely reduce the amount of revenue produced by the incentive auction and risk leaving the public safety network unfunded (as the economist who led the design of the most successful auction in FCC history will explain in this webinar on Thursday). The unsubstantiated, speculative increase in commercial competition the DOJ says could occur if the FCC picks winners and losers in the incentive auction is a poor justification for continuing to deny our nation’s first responders the network they need to protect the safety of every American.
Beyond enforcing the antitrust laws, the Antitrust Division of the Department of Justice (DOJ) advocates for competition policy in regulatory proceedings initiated by Executive Branch and independent agencies, including the Federal Communications Commission (FCC). In this role, the DOJ works with the FCC on mergers involving communications companies and occasionally provides input in other FCC proceedings. The historical reputation of the DOJ in this area has been one of impartial engagement and deliberate analysis based on empirical data. The DOJ’s recent filing (DOJ filing) on mobile spectrum aggregation jeopardizes that reputation, however, by recommending that the FCC “ensure” Sprint Nextel and T-Mobile obtain a nationwide block of mobile spectrum in the upcoming broadcast incentive auction.
The new “findings” in the DOJ filing fail to cite any factual record and are inconsistent with the DOJ’s factual findings in recent merger proceedings that contain extensive factual records. The DOJ filing blithely relies on a discriminatory evidentiary presumption to insinuate that Verizon and AT&T are “warehousing” spectrum, and then uses that presumption to support a proposed remedy that bears no rational relationship to factual findings that the DOJ has actually made. The absence of any empirical evidence supporting the relevant conclusions in the DOJ filing gives it the appearance of a political document rather than a deliberative work product crafted with the traditionally substantive and impartial standards of the Justice Department. The FCC, the independent agency that prides itself on being fact-based and data-driven, should give this screed no weight. Continue reading →
Why did the government impose a completely different funding mechanism on the Internet than on the Interstate Highway System? There is no substantive distinction between the shared use of local infrastructure by commercial “edge” providers on the Internet and shared use of the local infrastructure by commercial “edge” providers (e.g., FedEx) on the highways.
In Part 1 of this post, I described the history of government intervention in the funding of the Internet, which has been used to exempt commercial users from paying for the use of local Internet infrastructure. The most recent intervention, known as “net neutrality”, was ostensibly intended to protect consumers, but in practice, requires that consumers bear all the costs of maintaining and upgrading local Internet infrastructure while content and application providers pay nothing. This consumer-funded commercial subsidy model is the opposite of the approach the government took when funding the Interstate Highway System: The federal government makes commercial users pay more for their use of the highways than consumers. This fundamental difference in approach is why net neutrality advocates abandoned the “information superhighway” analogy promoted by the Clinton Administration during the 1990s. Continue reading →
Many net neutrality advocates would prefer that the FCC return to the regulatory regime that existed during the dial-up era of the Internet. They have fond memories of the artificially low prices charged by the dial-up ISPs of that era, but have forgotten that those artificially low prices were funded by consumers through implied subsidies embedded in their monthly telephone bills.
Remember when the Internet was the “information superhighway”? As recently as 2009, the Federal Communications Commission (FCC) still referred to the broadband Internet as, “the interstate highway of the 21st century.” Highways remain a close analogy to the Internet, yet by 2010, net neutrality advocates had replaced Internet highway analogies with analogies to waterworks and the electrical grid. They stopped analogizing the Internet to highways when they realized their approach to Internet regulation is inconsistent with government management of the National Highway System, which has always required commercial users of the highways to pay more for their use than ordinary consumers. In contrast, net neutrality is only the latest in a series of government interventions that have exempted commercial users from paying for the use of local Internet infrastructure. Continue reading →
At Mobile World Congress in Barcelona last month, I was surprised that nobody had access to 4G mobile Internet services. How could Barcelona, the second largest city in Spain and host to the “world’s premier mobile industry event,” lack access to 4G? In the opening day keynote session, Vittorio Colao, Vodafone’s CEO, said Europe has only 6% of the world’s LTE connections, and Telefónica’s CEO, César Alierta, said only 17% of European mobile subscribers have smartphones. European mobile operators agreed they are lagging the world in 4G deployment and penetration due to existing price regulations that discourage new infrastructure investments.
Europe now stands at a crossroads: Does it adopt the modern, investment-based approach toward wireless markets that made the US the world’s 4G leader, or does it further increase regulation and impose new obligations on “over the top” (e.g., Skype) services? Our history with the regulation of rural telephone companies demonstrates the perils of the second option. Yet European mobile operators appear ready to embrace new regulations as a means to enhance their business and create a “balanced relationship” with “US companies” that provide over the top (OTT) services. Continue reading →
In an opinion published in the Wall Street Journal last week, Federal Communications Commission Chairman Julius Genachowski admonished us to keep “discussions focused on solving problems, and on facts and data” when evaluating his spectrum policy proposals. That sounds reasonable, and it could be persuasive, if the FCC based its spectrum policy on consistently applied facts and data.
The FCC has instead chosen to selectively manipulate the facts and data to support its desired policy outcomes. Within a single quarter, the FCC has simultaneously concluded that:
- 194 MHz of spectrum in the 2.5 GHz band is available for mobile broadband services (note: when the FCC wants to show licensed spectrum in the US compares favorably with licensed spectrum on a global basis and that the ratio of licensed to unlicensed spectrum in the US is relatively balanced), and
- Only 55 MHz of the same 194 MHz in the 2.5 GHz band is available for mobile broadband services (note: when the FCC wants to deny a merger or limit the amount of spectrum available to disfavored competitors).
Neither the laws of physics and economics nor the regulations governing the 2.5 GHz band changed the actual facts and data in the intervening period between these inconsistent conclusions. The only things that changed were the results the FCC wanted to reach and the “facts and data” the FCC decided to present to the public. Continue reading →
In remarks delivered at the Hudson Institute today, Federal Communications Commissioner Ajit Pai outlined two paths for the Internet Protocol (or IP) transition: One that clings to a legacy of heavily-regulated, monopoly communications networks and another that embraces the future being wrought by the competitive nature of IP communications. He noted that, while the FCC has thus far refused to choose one path or the other, consumers have overwhelming chosen the lightly regulated, competitive IP technologies of the future over the preference for monopoly the government chose in the past. Commissioner Pai has chosen to side with consumers by choosing the future – the path that protects consumers while making it clear that 20th Century economic regulation will not be imported into the IP-world. Continue reading →
Congress recently mandated that the Federal Communications Commission (FCC) make additional spectrum available through a novel incentive auction designed to transition television broadcast spectrum to mobile use. The FCC’s task is to adequately compensate television broadcasters for relinquishing their spectrum while ensuring such spectrum is rapidly transitioned to mobile uses that benefit consumers nationwide.
This will be the most challenging and complex auction design the FCC has ever attempted. The FCC cannot avoid the complexity inherent in this unique auction design, but it can emphasize simplicity and exercise restraint when considering the other service rules that will govern this new spectrum. To maximize its opportunity for success in this daunting circumstance, the FCC should leverage proven policies wherever possible.
Successful spectrum policies are critical to sustaining innovation, economic growth, and global competitiveness in the mobile era. Today, consumer demand for tablets and smartphones is straining the limits of mobile Internet capacity, which is threatening our nation’s lead in mobile innovation. The quickest and least costly way to increase mobile network capacity is to add spectrum, and the incentive auction is how the FCC intends to bolster our spectrum resources. The continued success of the mobile Internet thus depends on the success of the incentive auction, and the auction’s success depends on policy decisions that must be made by the FCC. Continue reading →
Today marks the seventeenth birthday of the Telecommunications Act of 1996. Since it became law nearly two decades ago, the 1996 Act has largely succeeded in meeting its principal goals. Ironically, its success is becoming its potential failure.
By the time most teenagers turn seventeen, they have already begun planning their future after high school. Their primary school achievements are only a beginning in a lifetime of future possibilities. For most legislation, however, there is no future after the initial goals of Congress are achieved. Fortunately, the seventeen year-old 1996 Act isn’t like most legislation.
Congress recognized that when the goals of the 1996 Act were achieved, many of its regulations would no longer be necessary. In its wisdom, Congress provided the FCC with statutory authority to adapt our communications laws to future changes in the communications market. This authority includes the ability for the FCC to forbear from applying an unnecessary or outdated law.
Unfortunately, the FCC has been very reluctant to exercise this authority. It has instead preferred to remain within the familiar walls of stagnant regulations while the opportunity of Internet transformation knocks on the door. If the FCC refuses to use its forbearance authority, the only future for the 1996 Act is to live in the proverbial parents’ basement and eat 20th Century leftovers. If the FCC instead chooses to act, it could accelerate investment in new broadband infrastructure and the transition to an all-Internet future. Continue reading →
I posted an analysis of Netflix’s new Internet blocking strategy last week. I concluded that Netflix is attempting to leverage net neutrality regulations to gain an anticompetitive price advantage in the marketplace. In my view, this harm is an unintended consequence of the FCC’s decision to abandon its free market approach to the Internet and adopt net neutrality rules that enhance the market power of so-called “edge” companies. As Neil Stevens said in his Tech at Night column: “Told you so.”
Harold Feld apparently agrees that Netflix is threatening competition, and he has is own case of Cassandrafreude (“told you so,” but with a smile). In his view, however, the problem is that the FCC didn’t go far enough. He believes this situation could have been avoided if the FCC had applied common carrier regulation to the Internet (also known as Title II), which would regulate the Internet using statutes written for the old monopoly telephone network.
Though Harold Feld and I disagree on the appropriate level of Internet regulation (I would prefer less rather than more), it appears we do agree on several issues raised by Netflix’s decision to block access to its Super HD service. The unintended consequence of Netflix’s decision is that the ensuing debate has clarified some important Internet policy issues. Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.