Miscellaneous

Good Spectrum News from the Obama Administration

by on June 29, 2010 · 2 comments

National Economic Council Director Lawrence Summers made a major policy speech yesterday at the New America Foundation, announcing the adminstration’s plan to find an additional 500 megaherz of spectrum for wireless broadband service by the end of the decade. The spectrum will come from two places: federal agencies who currently under-utilize their spectrum, and commercial users who volunteer to participate in “incentive auctions.”

In an incentive auction, the current spectrum user receives part of the proceeds in exchange for making the spectrum available for reallocation. Within the current US system of spectrum allocation, it’s about as close as we can come to allowing spectrum holders to sell their spectrum licenses to someone else who can put the spectrum to a more valuable use. 

Summers even mentioned broadcasters specifically, noting that a local television station with a few hundred millions of dollars of revenue may currently control spectrum worth hundreds of millions of dollars. Federal agencies would get to use some of the proceeds to adopt “state-of-the-art communications.” Presumably this would include new equipment that doesn’t use so much spectrum.

In his speech, Summers gave appropriate credit to the Federal Communications Commission, which surfaced many of these ideas in its National Broadband Plan. Even more appropriately, the former Harvard University president and academic economist assigned proper credit for the original source of the idea: 

Most of the freed-up spectrum will be auctioned off for use by mobile broadband providers. As the great law and economics scholar Ronald Coase originally pointed out, auctions ensure that spectrum is devoted to its most productive uses because it is determined by investors’ willingness to pay for it.

There are, of course, a few unanswered questions. How much of the spectrum will actually get auctioned for mobile broadband, rather than reserved for unlicensed use? Will the buyers have to use the spectrum for mobile broadband, or will the license be sufficiently broad that they could use it for other forms of personal communication that perhaps haven’t even been invented yet? Do we really have to wait ten years for this? Will the Ronald Coase Institute get any royalties for the government’s use of its namesake’s intellectual property? (Academics will recognize the joke in the last question.)

For now I’ll just say, “Bravo, Dr. Summers!”

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Free Press Pressing Communities of Color on Net Neutrality

by on June 17, 2010 · 7 comments

A fun little tidbit from Huffington Post today. Cook County Commissioner Robert Steele penned an op-ed revealing that Free Press, strong advocates for Net Neutrality regulation, is pushing its agenda on minority communities in order to gin up support for further regulation of the Internet. I’m sure there is no connection with today’s FCC decision to move forward with its Notice of Inquiry on reclassifying the Internet to fits Chairman Genachowski’s controversial “third way.”

Take a minute to read the entire piece by Commissioner Steele, but one of the more salient points is this,

“My first thought when reading this [Free Press] email was, ‘what do these folks know about the needs and wants of communities of color, especially on an issue as impactful as Net Neutrality?'”

In assessing a couple of recent surveys on broadband adoption among minority communities (especially African-American and Hispanic), a couple of things become evident. First, the nation is facing an adoption problem, not an access problem. Those who are not connected to broadband are in this position largely due to their own choice. The FCC’s own report shows that, while African-Americans and Hispanics trail the average in broadband access, the gaps have narrowed just in the last year.

Not only that, but when it comes to the African-American community, it is the older folks who are not connecting (both minority and non-minorities). Those in the minority community under the age of 30 have basically the same broadband adoption rates as whites, which mean younger adults are recognizing the benefits of broadband. The same can be said about educated households, but then, educated households have a higher income level than non-educated and higher income is another factor towards higher adoption rates.

Another interesting factoid is that the minority groups are more likely to access the Internet via a handheld device. This means that mobile broadband growth may very well help pick up the slack in the “digital divide.” It seems more and more are relying on their smartphones to handle their Internet needs.

Really though, the bottom line is that people in low-income households, and those who tend to be older, are the ones that by-and-large do not want to connect to the Internet. There is nothing in Genachowski’s “third way” regulatory scheme, nor in anything that Free Press is pushing, that will help bridge this gap.

It’s a shame that Free Press is using racial division as a motivation to push unnecessary government regulation.

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Do you know your broadband speed? Do you care?

by on June 17, 2010 · 0 comments

This is a post for all those broadband fans out there who want to talk about something today besides the Federal Communication’s Commission’s decision to take comments on which legal classification it should use to regulate broadband.

A recent FCC survey revealed that 80 percent of home broadband users do not know the speed of their broadband service. I can easily imagine how this statistic could be spun to “prove” that consumers are woefully uninformed and the broadband market must be plagued with “market failures” because consumers do not have even the basic information they need to make intelligent decisions.

Before we go down that road, let me explain, based on my own experience, why this is a non-issue.

I’m part of that 80 percent. I do not know the speed of my broadband service at home.  I know that when I signed up several years ago, I selected the slowest and cheapest broadband speed the provider offered.  I also know that this speed is still plenty fast for anything we need to do at home (and usually faster than the speed at my university office). I remain blissfully ignorant of the actual speed, even though it would be very easy for me to find out by looking at the materials I received when I signed up or checking the provider’s web site online.

In economic jargon, I am “rationally ignorant” of my home broadband speed. I don’t know (or remember) the speed, but to me this information is not worth the 45 seconds it would take me to find out. And that also means any FCC initiatives to “improve consumer information” or “educate” me about it will not, for me, be worth the time and money the FCC might spend on them.

If some of our Internet applications were not working in a satisfactory manner, we would probably do an online speed test, check to see what other speeds our provider offers, and check offers from competing providers. All of these steps would be easy and would require no FCC policy initiatives to facilitate (beyond making sure that the providers aren’t lying about what speeds they will provide).

I’m probably not alone.  The same survey reveals that 50 percent of Americans are satisfied with their broadband speeds, and another 41 percent are “somewhat satisfied.” So, 91 percent of consumers are more or less satisfied, even though 80 percent don’t know their speeds.

It would have been quite useful and instructive if the FCC survey had included an additional question: “Is your broadband speed adequate for the Internet applications you want to use?” And then cross-tabulate the responses with the responses on knowledge of broadband speed. Wanna bet that a substantial majority of people who do not know their speed would also have said that it is adequate?

Surely there are some broadband customers who use applications that require specific (fast) speeds, and these customers have a greater need to know what speed they’re receiving. That’s why providers tell prospective customers what speed tiers they offer. And that’s why one can find multiple web-based speed tests. This information is not hard to find if you want it.

But for some of us, it just ain’t worth it. And shame on anyone who tries to use my willful ignorance as an excuse for some new policy initiative. Rational ignorance is bliss, and I’m a bliss-ter.

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Then What’s the Point?

by on June 16, 2010 · 2 comments

A “funny until you realize it’s real” story out of San Francisco today (courtesy of the NY Times) where the city will soon require cell phone retailers to display the amount of radiation in each phone that is for sale on their shelves.

Even though this concern has been debunked time and again — the article mentions the latest major study that found no supporting evidence linking cancer to cell phone usage — the city believes that, though there are plenty of resources for those wishing to research radiation for particular cell phones, the city “thinks that for the consumer…it ought to be easier to find.”

Continue reading →

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A T-Shirt to Save Miranda

by on June 2, 2010 · 12 comments

Professor Crim Pro I ain’t, but it seems to me that anybody who has used a computer can pretty easily grasp the holding of Berghuis v. Thompkins, 560 U.S. __, No. 08-1470 (June 1, 2010) [PDF]. In that opinion, handed down just yesterday, the U.S. Supreme Court toggled the default on the Miranda warning. A five-justice majority held that silence will not suffice for citizens who want to invoke Miranda’s protections against self-incrimination; we now must ask for our Constitutional rights. Think of it like a computer program that annoyingly assumes you want unsolicited advice from a chirpy paper clip–except this paper clip throws you in cuffs and tazes you if you talk back.

The Berghuis decision inspires me to offer a new piece of legal armor—this time in the form of a t-shirt:

Miranda Rights Notice shirt

Click on the picture to buy a shirt, or borrow the text (I’ve uncopyrighted it) to make your own version from scratch. Combine that notice of your Miranda rights with the bumper sticker and magnetic sign I offered earlier, in defense of your rights to record and report what public officials do to you, and you might just dodge some serious legal hurt. Or—who knows?—you might inspire some interesting and important litigation.
Continue reading →

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Hands in the Broadband Till

by on May 27, 2010 · 1 comment

We all pay “universal service” assessments on our phone bills.  It’s even broken out separately; go look. It’s probably just a matter of time before the Federal Communications Commission proposes to slap universal service assessments on broadband service to help pay for universal service subsidies for broadband service. The national broadband plan, after all, calls for “broadening” the universal service funding base.

If the commission reclassifies broadband as a “Title II” telecommunications service, this will be virtually automatic because the Telecommunications Act of 1996 says telecommunications providers must contribute toward the FCC’s universal service fund. If the commission doesn’t reclassify broadband, it could still require contributions — just like it imposed universal service assessments on VOIP without classifying VOIP as telecommunications.

After the FCC starts using universal service funds to subsidize broadband for poor people and rural households, the logic will be seductively compelling: “Broadband receives subsidies, so it’s only fair that broadband pays into the fund.”

Forget the ensuing howls about “taxing the Internet.”  I want to talk about another aspect of this.  Would imposing universal service assessments on broadband actually further the FCC’s goals in its national broadband plan?

Irish Setter Chasing Tail

Photo by nawtydawg.

The FCC wants to make broadband available to all Americans, regardless of where they live. Ideally, the FCC would like us all to subscribe, regardless of our income or where we live. The problem with imposing universal service assessments on broadband is that this would increase the price, leading subscribership to be lower than it would otherwise be.

This effect might be big or it might be little. But before making a decision about imposing universal service assessments on broadband, the FCC ought to know the size of the effect and how it compares to the increase in subscribership that would result from the subsidies.

To figure out how universal service assessments might affect broadband subscribership, we need to know how responsive broadband subscription is to changes in price. Economists call this the “price elasticity of demand.” The most recent study I’ve seen — and the only one cited in the FCC’s technical paper underlying the national broadband plan — estimates the elasticity of broadband demand was about -0.69 in 2008. That means a 1 percent increase in price would lead to a 0.69 percent decrease in subscribership. Other, earlier studies find much higher demand elasticities. But to be conservative, let’s use -0.69.

Current universal service assessments on interstate telecommunications are about 15 percent.  About 66.6 million households had broadband in 2008. A 15 percent increase in the price of broadband would reduce subscribership by about 6.9 million households (15% times -0.69 times 66.6 million.)

If the FCC imposed universal service assessments on broadband, it might be able to lower the rate since it would be collecting assessments from a broader base than just telephone service. Suppose the FCC could lower the assessment to 10 percent, more in line with the historical norm.  A 10 percent increase in the price of broadband would reduce subscribership by 4.6 million households (10% times -0.69 times 66.6 million).

So we’re going to reduce broadband subscribership by 4.6-6.9 million households in order to provide subsidies to increase broadband subscribership.  If the funds currently spent to subsidize phone service in rural areas were spent on broadband, that would be enough money to close the “funding gap” and make broadband available to the 7 million homes the FCC  says currently are unserved or under-served. 

Not all of them will susbcribe, so we can’t assume these subsidies will increase subscribership by 7 million.  About 65 percent of Americans currently have broadband at home.  If 65 percent of unserved or underserved households choose to subscribe once broadband becomes available, that would be  4.55 million new subscribers.

In short, it looks like subjecting all broadband to universal service assessments to pay for rural broadband subsidies would either be a wash or reduce subscribership on net. Paying for universal broadband service with assessments on broadband service will give the FCC a lot to do, but it won’t advance the subscribership goals of the national broadband plan. 

There are other ways to raise the money without this perverse effect. Historically, local telephone subscription has been very insensitive to price, so one option would be for the FCC to simply impose a universal service charge per phone number instead of the current percentage fee.  (Low-income households who have “Lifeline” service or use low-cost prepaid wireless plans could be charged a lower fee without sacrificing much revenue.)

Another option would be for Congress to earmark some revenues from upcoming spectrum auctions to fund universal broadband service, and reduce the universal service assessments on our phone bills accordingly.

Reasonable people can differ on whether, or by how much, the federal government should subsidize broadband where it is not currently available. But if we’re gonna do it, there’s no sense in funding it with a mechanism that reduces broadband subscription elsewhere.

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These Are a Few of My Favorite (Tech) Things

by on May 22, 2010 · 4 comments

Every once an awhile I like to post something about my favorite tech toys, apps, and services to highlight what I think are spectacular innovations in the field.  I usually do so at the end of the year, like this. But I there’s no reason to wait for end of the year lists. So here are a few things that are currently making my life better.   [Note to pesky FTC before they send the Blog Police to my door… I didn’t get paid for any of these “endorsements”!]

NewsRoom RSS Reader: After months of searching fruitlessly for a decent RSS reader for Android, I finally stumbled upon NewsRoom last month. Wow, what a life-changer. It has become my primary RSS reader largely taking over for Bloglines on my PC (which is an app desperately in need of a makeover). NewsRoom’s slick interface is the most friendly finger-swiping app I’ve ever touched. I can quickly flip (left and right) through headlines for each feed and then easily pull up full text of any particular post with a quick flip of the thumb up. The only downside is the limited number of feeds you can have on the main pages. But that actually helped me go back and sort through my feeds to determine which ones I needed to be reading on a daily basis vs those that I can just monitor every couple days or weekly via my PC. I love this app.

TweetDeck (v.34): I have no idea how the folks at TweetDeck make any money, but they produce one the most spectacular pieces of freeware on the planet. It makes Twittering a real joy by making it a cinch to follow multiple hashtag topics in addition to your primary friends and mentions. And reTweeting is super simple. And version 32 just raises the bar even higher with new features like scheduled Tweets, maps, Buzz and Foresquare integration, and much more. I would gladly pay a few bucks a month for TweetDeck, but this amazing app remains free to the public.  Apparently they are booking revenue, but I can’t figure out how. (Seriously, how do they do it?!) Regardless, keep up the great work guys… and hurry up and get the Android version out!  I played with TweetDeck for the iPhone and it is outstanding. I’m pretty happy with TwiDroid, but I think I’d prefer TweetDeck for my Droid. Continue reading →

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More on the FCC's "Broadband Funding Gap" and Universal Service

by on May 19, 2010 · 1 comment

Back on St. Paddy’s Day, I offered a few comments on the “funding gap” identified in the FCC’s just-released national broadband plan. Since then, the FCC has put out a notice of proposed rulemaking and notice of inquiry seeking public comment on reforms that would allow its universal service fund to subsidize broadband. The FCC has also released a 137-page technical paper that details how the staff calculated the broadband “availability gap” and funding gap.

So, now there’s more to chew on, and another round of online mastication would be timely given the open FCC proceeding.  Here are three big issues:

1. Definition of broadband

The plan announced a goal of making broadband with actual download speeds of 4 mbps available to all Americans.  In the plan, this goal appeared to be based on the actual average speed of broadband service (4 mbps), even though the median speed is just 3.1 mbps (p. 21). The technical paper, however, also projects that, based on past growth rates in broadband speed, “the median will likely be higher than 4 mbps by the end of 2010.” (p. 43)  Contrary to what I thought back in March, it appears the FCC is justifying the 4 mbps goal based on the median speed, not the average. 

The technical report also argues that 4 mbps is necessary to run high-speed video, which a “growing portion of subscribers” (not including me) apparently use. (p. 43) So, if the broadband plan achieves its goals, every Amercian will have the opportunity to subscribe to Internet access capable of delivering high-quality porn! Fortunately, the technical report uses a different and more productive example — streamed classroom lectures. 

Reasonable people could still question whether the median is the appropriate benchmark to guide government actions intended to equalize broadband access opportunities.  The technical report includes a helpful graphic that shows the most common broadband speed users actually buy is 2 mbps, and 38 percent of all subscribers have speeds of 2 mbps or less. (p. 43) The FCC staff’s model calculates that if the goal were set at 1.5 mbps, the number of “unserved” households would fall from 7 million to 6.3 million, and the required subsidy would fall from $18.6 billion to $15.3 billion. (p. 45) 

If almost half of broadband subscribers have decided that something less than 4 mbps is perfectly adequate, that suggests 4 mbps may go far beyond what is necessary to ensure that all Americans have access to basic broadband service. So, that 4 mbps goal is still questionable.

2. Omission of 3G wireless

The 4 mbps goal allowed the FCC to ignore third generation wireless when it estimated the “availability gap.” The technical paper shows that 95 percent of households have 4 mbps broadband available. About 3 percent of households have no broadband available, while 2 percent have broadband available at speeds ranging from 384 kbps – 3 mbps. (p. 17)  That 2 percent probably includes households with slow DSL and 3G wireless.

The technical paper also revealed that it did not include service from fixed Wireless Internet Service Providers due to data availability. (p. 25) These serve 2 million subscribers in rural areas (p. 66), so the omission potentially accounts for a large chunk of the households considered “unserved.” No telling how many, since apparently the data aren’t available.

Back in March, I guesstimated that the 7 million household “availability gap” might overstate the size of the problem by more than half, simply because 3G wireless is available to 98 percent of American households. Looks like my guesstimate is pretty much in line with the more detailed figures in the FCC technical paper.

 3. Role of satellite

The broadband plan did not count satellite broadband when assessing availability. The technical paper (pp. 89-94)provides a much more detailed explanation of the capacity constraints the FCC staff believes will prevent satellite broadband from serving more than a couple million subscribers.   (The current satellite subscriber base is approximately 900,000.)

The technical paper pointed out that satellites are expensive and take three years to build. (p. 92) To put the time frame in perspective, that’s about as long as the FCC and the Federal-State Joint Board on Universal Service have been discussing universal service subsidies for broadband. Lord knows we shouldn’t make consumers wait that long!

There is, however, something a little asymmetrical about the way the FCC staff treated satellite and other forms of broadband. The point of estimating the broadband availability gap was to determine how much of a subsidy would be required to induce the private sector to build the infrastructure to close the gap. But while the study assumed that the subsidies would call forth the requisite cable, DSL, and wireless infrastructure within some unnamed but acceptable time frame, it decided that three years is just too long to wait for satellite infrastructure to expand. So, satellite plays a minimal role in the FCC’s plan.

Yet even this minimal role has a big impact. To its credit, the technical paper calculated how satellite broadband could dramatically slash the cost of serving the most expensive 250,000 homes. It estimated (pp. 91-92) that the net present value of subsidies required to serve these homes with satellite would range between $800 million and $2 billion — compared to a $13.4 billion subsidy required to serve these homes with terrestrial broadband. (This implies an annual subsidy of $105-255 million, which is pretty close to my March 17 guesstimate of $100-200 million.)

So, satellite broadband could help prevent costs from skyrocketing, even assuming it plays only the limited role envisioned in the FCC staff’s analysis.

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Shameless Self-Promotion: Vote for Me for DC Bar Computer & Telecom Section!

by on May 18, 2010 · 2 comments

If you happen to belong to the DC Bar’s Computer and Telecommunications Law Section, I hope you will consider casting one of your three votes for me when you complete your ballot for the Section’s Steering Committee—which you probably received in the mail today (as I did). Ballots must be received by June 4. I used my 75 words for the following mini-bio on the ballot:

I direct the Internet policy program at The Progress & Freedom Foundation.  I practiced communications and cyber law at Latham & Watkins and Lawler Metzger Milkman & Keeney after a district clerkship and graduating Virginia Law in 2004. I have particular expertise with the FCC, FTC and ICANN, and in online privacy, advertising, e-commerce, free speech, Internet governance and satellite law. I am eager use my panel-planning experience to help the Section do more events.

Find more on my work here. This is a volunteer position that allows lawyers interested in tech policy to give back to the legal/policy community here in DC, primarily by offering the high quality CLE programming for which the DC Bar is so well-respected (which are open to all).

I hope to have the opportunity to serve. While there are a number of fine candidates, I plan on casting my other two votes for NetChoice’s Braden Cox, my fellow TLF co-blogger, and Grace Koh, whom I have gotten to know through her work on privacy and other policy issues at Cox Enterprises. I’m Berin Szoka, and I endorse this ad.

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event video: “What Should the Next Communications Act Look Like?”

by on May 10, 2010 · 2 comments

PFF hosted an event last Friday asking “What Should the Next Communications Act Look Like?” and the folks at NextGenWeb were kind enough to make a video of the event and post it online along with a writeup. The event featured (in order of appearance) Link Hoewing of Verizon, Walter McCormick of US Telecom, Peter Pitsch of Intel, Barbara Esbin of PFF, Ray Gifford of Wilkinson, Barker, Knauer, and Michael Calabrese of the New America Foundation. It was a terrific discussion and it couldn’t have been more timely in light of recent regulatory developments at the FCC.   Here’s the 90-min event video if you are interested:

Video thumbnail. Click to play
Click To Play

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