Articles by Hance Haney

Hance Haney is Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute. Haney spent ten years as an aide to former Senator Bob Packwood (R-OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a BA in history from Willamette University and a JD from Lewis and Clark Law School in Portland, Oregon.


Title II for broadband is desperate and ill-conceived

by on July 16, 2010 · 2 comments

Julius Genachowski is in a hurry.

He is arguing that the commission must act quickly to “restore the longstanding deregulatory—as opposed to ‘no-regulatory’ or ‘over-regulatory’—compact” that governed broadband Internet access services prior to a recent court decision.  Such an approach is urgently needed to “restore the status quo,” he claims.

If the Federal Communications Commission cannot regulate the Internet, it may die.   The telephone and television industries are declining, whereas communications industries which the FCC monitors to some extent but does not regulate, e.g., the Internet backbone, broadband Internet access and wireless, are thriving.  The Internet, which the FCC cannot regulate, is subsuming legacy communications services which the commission can regulate.  That spells doom for legacy regulation.  Career regulators are worried.

Genachowski’s plan would reclassify broadband as a “telecommunications” service subject to blunt, onerous, industrial-era regulation under Title II of the Communications Act of 1934 – which governs common carriers – and then forbear from enforcing most of Title II’s heavy-handed provisions.

Broadband services haven’t been subject to Title II regulation for several years, so reclassification would not restore the status quo.   It would harken back to a bygone era.

Broadband services provided by cable operators have thrived in the absence of common carrier regulation since before 1999, when William E. Kennard (designated FCC chairman by President Bill Clinton) declared:

If we’ve learned anything about the Internet in government over the last 15 years, it’s that it thrived quite nicely without the intervention of government.

If fact, the best decision government ever made with respect to the Internet was the decision that the FCC made 15 years ago NOT to impose regulation on it. This was not a dodge; it was a decision NOT to act. It was intentional restraint born of humility. Humility that we can’t predict where this market is going.

Though under significant pressure to do so, Kennard refused to regulate broadband services provided by cable operators like the broadband services provided by telecommunications carriers.  In 2005 and 2007, respectively, the commission finally admitted that neither telecommunications carriers nor wireless providers provided broadband services that met the statutory definition of a “telecommunications” service under Title II, either.

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Broadband For All, or Bigger Government?

by on January 29, 2010 · 4 comments

While the FCC considers whether to impose nondiscrimination and transparency regulation to all forms of broadband Internet access, Public Knowledge is proposing to subject broadband services to the same pervasive, overlapping, heavy-handed regulatory framework as century-old telephone service (see this and this) — a framework which a former FCC chairman during the Clinton Administration described as a hopeless “morass.”

PK is worried the U.S. Court of Appeals for the D.C. Circuit might rule in a pending case that the FCC doesn’t have jurisdiction to regulate broadband. The group also is fretting over a recent observation by AT&T that, “with each passing day, more and more communications service migrate to broadband and IP-based services,” leaving the public switched telephone network (“PSTN”) and plain old telephone service (“POTS”) we all grew up with “as relics of a by-gone era.” Continue reading →

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Surprises in the Open Internet NPRM

by on October 23, 2009 · 14 comments

Pre-release rumors and press reports were making it sound like the Obama administration let Rep. Ed Markey draft the FCC’s Notice of Proposed Rulemaking to “Preserve the Free and Open Internet.”

Maybe there was a last-minute change of plan.

There were rumors and/or reports that the NPRM would contain a “viewpoint diversity” mandate and only allow forms of network management which someone has managed to prove to the FCC satisfy a “strict scrutiny” test.

In the Markey-Eshoo bill, the strict scrutiny test is defined as follows:

[A] network management practice is a reasonable practice only if it furthers a critically important interest, is narrowly tailored to further that interest, and is the means of furthering that interest that is the least restrictive, least discriminatory, and least constricting of consumer choice available.

But in paragraph 137 of the NPRM, the commission declines to adopt a strict scrutiny standard.

We recognize that in a past adjudication, the Commission proposed that for a network management practice to be considered “reasonable,” it “should further a critically important interest and be narrowly or carefully tailored to serve that interest.” We believe that this standard is unnecessarily restrictive in the context of a rule that generally prohibits discrimination subject to a flexible category of reasonable network management. We seek comment on our proposal not to adopt the standard articulated in the Comcast Network Management Practices Order in this rulemaking.

There were also reports the NPRM would include a carve-out for application and service giants like Google. But the definitions in the draft regulations included in the NPRM are so broad that many applications and services arguably could be included:

Broadband Internet access. Internet Protocol data transmission between an end user and the Internet. For purposes of this definition, dial-up access requiring an end user to initiate a call across the public switched telephone network to establish a connection shall not constitute broadband Internet access.

Broadband Internet access service. Any communication service by wire or radio that provides broadband Internet access directly to the public, or to such classes of users as to be effectively available directly to the public.

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Government thinks it can “preserve” Internet

by on September 21, 2009 · 8 comments

Julius Genachowski, the new FCC chairman, announced that the commission will begin a rulemaking process to formalize and supplement existing network neutrality policy. According to Genachowski,

This is not about government regulation of the Internet. It’s about fair rules of the road for companies that control access to the Internet. We will do as much as we need to, and no more, to ensure that the Internet remains an unfettered platform for competition, creativity, and entrepreneurial activity.

Of course it is about regulation. The formal rulemaking process Genachowski is planning is for the avowed purpose of enshrining network neutrality principles in the Code of Federal Regulations.

Regulation always starts out small, before it grows really big. It has to: Loopholes and other unintended consequences (and opportunities) are always discovered after the “product” launches.

Genachowski unfairly and innaccurately implies that network neutrality opponents want to “abandon the underlying values fostered by an open network, [and] the important goal of setting rules of the road to protect the free and open Internet.” In fact, the existing Internet Policy Statement that would serve as the foundation of a new network neutrality regulatory regime received 2 Republican votes and 2 Democrat votes.

Genachowski is attempting to present a false choice between letting minimally trained politicians and myopic bureaucrats get their hands all over the Internet to remake it as they see fit versus “doing nothing.”

Saying nothing — and doing nothing — would impose its own form of unacceptable cost. It would deprive innovators and investors of confidence that the free and open Internet we depend upon today will still be here tomorrow. It would deny the benefits of predictable rules of the road to all players in the Internet ecosystem. And it would be a dangerous retreat from the core principle of openness — the freedom to innovate without permission — that has been a hallmark of the Internet since its inception, and has made it so stunningly successful as a platform for innovation, opportunity, and prosperity.

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Legacy Regulation Killed Google Voice

by on August 19, 2009 · 21 comments

Reacting to Apple’s decision to not allow Google Voice for the iPhone, Wall Street Journal guest columnist Andy Kessler complains,

It wouldn’t be so bad if we were just overpaying for our mobile plans. Americans are used to that—see mail, milk and medicine. But it’s inexcusable that new, feature-rich and productive applications like Google Voice are being held back, just to prop up AT&T while we wait for it to transition away from its legacy of voice communications. How many productive apps beyond Google Voice are waiting in the wings?

So Kessler proposes a “national data plan.”

Before we get to that, Kessler complains that margins in AT&T’s cellphone unit are an “embarrassingly” high 25%.  He doesn’t point out that AT&T’s combined profit margin — taking into account all products and services — is only 9.66%.

AT&T is actually earning less now than it was legally entitled to earn when fully regulated — 9.66% versus 11.75%.

Don’t fall for the myth that AT&T killed Google Voice.

The truth is regulators are quietly expropriating wireless profits to hold prices for regulated services like plain old telephone service artificially low. Continue reading →

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Don’t Believe ‘Special Access’ Hype

by on June 24, 2009 · 27 comments

A new coalition, NoChokePoints, has been formed to lobby Congress and the Federal Communications Commission to further regulate the prices that incumbent telephone companies (Regional Bell Operating Companies or Incumbent Local Exchange Carriers) can charge for special access services purchased by businesses and institutions.  Special access circuits are dedicated, private lines.  For example, Sprint purchases special access circuits to connect its cell towers to its backbone.

According to a coalition spokeswoman,

Huge companies like Verizon and AT&T control the broadband lines of almost every business in the United States. The virtually unchallenged, exclusive control of these lines costs businesses and consumers more than $10 billion annually and generates a profit margin of more than 100 percent for the controlling phone companies, according to their own data provided to the FCC. This hidden broadband tax results in enormous losses for consumers and the economy, and this country cannot afford it; especially now.

An analysis prepared by Peter Bluhm with Dr. Robert Loube under contract with the National Association of Regulatory Commissioners (NARUC) disputes this conclusion.
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Exclusivity Inspired Smart Phones

by on June 24, 2009 · 9 comments

Small cellphone operators want Congress or the Federal Communications Commission to prohibit larger carriers from becoming exclusive providers of popular handsets, like the Apple iPhone (AT&T), Blackberry Storm (Verizon Wireless), Palm Pre (Sprint) and Samsung Behold (T-Mobile).

John E. Rooney, President and CEO of United States Cellular Corp., testified at a recent Senate Commerce Committee hearing:

These arrangements harm consumers in rural areas and decrease competition nationwide and do not enhance innovation.

Let’s examine these arguments.

Rural Consumers

Rooney bemoans the fact that

many rural residents of Alaska, Arizona, Colorado, Idaho, Kansas, Maine, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, South Dakota, Utah, West Virginia and Wyoming are not served by AT&T network facilities

while Victor H. “Hu” Meena, President and CEO if Cellular South, Inc.,  claims that

Vast portions of America – including all or part of Alaska, Arizona, California, Idaho, Kansas, Maine, Minnesota, Montana, Nebraska, Nevada, New Hampshire New Mexico, Oregon, Vermont, Washington, West Virginia and Wisconsin – are not served by any of the largest carriers, so Americans in these areas are prohibited from acquiring the newest and most innovative devices.

There are advantages and disadvantages no matter where one chooses to live.  The fact that someplace is without a particular amenity traditionally hasn’t justified limiting the ability of private entities to exercise their own judgment as to parties with whom they will deal.  While I am fortunate to have the opportunity to own an iPhone, I don’t get to live in a pristine rural setting with a wide open outdoors, low housing costs, etc.

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Golden Age for Antitrust?

by on May 13, 2009 · 11 comments

Today the European Union issued the opinion explaining its decision to fine Intel $1.45 billion for offering discounts to large purchasers (see this,  this and this).

Although antitrust originated in the U.S., antitrust enforcement has become more active in other parts of the world where awareness of the limitations and dangers of overly-aggressive antitrust enforcement is still in the embryonic stages.  This has created regrettable forum-shopping opportunities for less-successful U.S. and foreign competitors.

Many smaller companies complaining of abusive practices by their larger rivals were so frustrated that they went overseas to the European Commission and to Asian authorities to find receptive enforcement officials.

Does this just sound awful, or not?

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Pai and Dunn for FCC

by on May 2, 2009 · 13 comments

President Obama intends to nominate Mignon L. Clyburn to the Federal Communications Commission. Clyburn is a good pick. She has been a member of the Public Service Commission of South Carolina since 1998. She chaired the South Carolina commission from 2002 to 2004, is a past chair of the Southeastern Association of Regulatory Utility Commissioners and is a respected leader in the National Association of Regulatory Utility Commissioners (NARUC). She is trained in economics and has a reputation for thoughtfulness.

The remaining question is who ought to be the Republican nominee to fill the seat vacated by former chairman Kevin J. Martin (a soon-to-be-vacant seat held by Republican Robert M. McDowell will also need to be filled). By law, two of the commssion’s five members may not be from the President’s political party.

Let’s pretend you’re president. You have to appoint two opponents to the FCC. You don’t need their votes to pass your agenda, because you get to appoint three members from your political party who agree with your views. Do you fill the other two slots with people who hold few clear convictions, who are inclined to compromise and who crave positive feedback? Or do you look for people who are intellectually-engaged and are inclined to debate? If you believe your agenda is radical and you worry it will lead to negative consequences for which you will be blamed, you would want to appoint opponents who can be induced to vote with you. That way, you can claim your agenda had bipartisan support. This is the “cover you ass” approach. Continue reading →

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Which Republican for the FCC?

by on February 6, 2009 · 11 comments

Over at TVNewsday, Harry A. Jessell writes:

I don’t like the way the new FCC is shaping up. There’s something missing.

My concern has nothing to do with Julius Genachowski, whom the president has reportedly tapped for chairman….

What I’m having trouble with are the names popping up for the Republican seat….

All [the rumored candidates] work or used to work on Capitol Hill. They are basically experts on policymaking, crafting legislation and Washington politics, but not much else.

The seat is turning into a reward for loyalty and a test of whose boss has the most clout.

Bad idea.

As the professed champion of business, the Republicans should award the seat to a businessman or a businesswoman.

I’m talking about somebody who has actually done some hiring and firing, made a payroll in tough times, sweated a big sale, produced goods or services, acquired another company, got a loan to expand operations or survive a downturn and struggled to untangle and comply with federal regulations.

There’s a double standard here.

Ajit Pai, for example, who is one of the Republican candidates, is Deputy General Counsel of the FCC.  He served as Chief Counsel of the U.S. Senate Judiciary Committee’s Subcommittee on the Constitution, Senior Counsel at the Office of Legal Policy at the U.S. Department of Justice, Deputy Chief Counsel of the U.S. Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts, an Honors Program trial attorney in the Telecommunications Task Force at the U.S. Department of Justice’s Antitrust Division and a law clerk to Judge Martin L.C. Feldman of the U.S. District Court for the Eastern District of Louisiana. He graduated with honors from Harvard College and from the University of Chicago Law School, where he was an editor of the University of Chicago Law Review.

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