Telecom & Cable Regulation

House votes to nullify net neutrality: what’s next?

by on April 12, 2011 · 0 comments

On Forbes this morning, I analyze the legislative and judicial challenges to last year’s FCC Open Internet rules, the so-called net neutrality order.

Despite the urgency of Friday’s budget machinations, the House took time out to pass House Joint Resolution 37, which “disapproves” the FCC’s December rulemaking.  If passed by the Senate and not vetoed by President Obama, HJR 37 would effectively nullify the net neutrality rules, and ensure the FCC cannot pass alternate versions of them absent new authority to do so from Congress.

Most commentators believe that the House action was merely symbolic.  Passage in the Senate requires only a simple majority, but the neutrality fight has turned violently partisan since the mid-term elections and getting a few Democratic Senators on-board may be hard.  More to the point, the White House last week pre-emptively threatened to veto the resolution.

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AT&T/T-Mobile highlights artificial spectrum scarcity

by on March 21, 2011 · 10 comments

Many folks will no doubt be writing a lot about the competitive issues surrounding the announced AT&T/T-Mobile merger, so instead I thought I’d weigh in on what I know best: spectrum.

To the extent you’re worried about the concentration of the wireless market, you should really be concerned about the government policies that make entry and expansion so difficult.

First, if a carrier wants to acquire more spectrum to meet consumer demand for new services, it can’t thanks to the artificial scarcity created by federal policies that dedicate vast swaths of the most valuable spectrum to broadcast television and likely inefficient government uses. It’s gratifying to see the FCC now confronting the “spectrum crunch,” but waiting for a deal to be brokered on incentive auctions is a luxury carriers don’t have. So, buying a competitor might be the only way left for them to acquire more spectrum.

Second, if a carrier wants to put up a new tower, or add antennas to existing towers, it has to get permission from the local zoning board. This can be an extremely onerous process as different localities will have [different reasons to hold up the process](http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/07/06/BAT01E8QTQ.DTL). Buying a competitor is therefore also an obvious way to get access to more towers.

Again, I’m not sure this merger will have a negative effect on competition. Many high sunk costs industries are [perfectly competitive with just two or three players](http://techliberation.com/2010/05/23/wireless-networks-lemonade-stand-economics/). (I’m look forward to a good analysis on that question, perhaps from our own Geoff Manne of Josh Wright.) What I do know is that if you are worried about competition, antitrust policy is not going to solve the long-term issue of artificial scarcity, which is the real problem here.

Entry is possible. In fact, a new entrant in the wireless market is waiting in the wings in the form of the cable industry with the spectrum they acquired in the AWS auction. Before they can start offering services, however, they must move incumbent users of the bands they acquired. There is also Clearwire, part owned by Comcast, Time Warner, and Google–serious competitors to the Bells.

If we really got serious about reallocating broadcast and inefficiently used federal spectrum, we might not have to worry competition. We’d likely see new entry, and access to spectrum would be less of a reason to acquire a competitor.

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AT&T and T-Mobile: The Anti-Antitrust Terrorists

by on March 21, 2011 · 1 comment

In the rush of ink that flowed yesterday over AT&T’s announced merger with T-Mobile USA, I posted a long piece on CNET calling for calm, reasoned analysis of the deal by regulators, chiefly the Department of Justice and the FCC.

Since the details of the deal have yet to be fleshed out, it’s hard to say much about the specifics of how customers will be affected in the short or long term. My CNET colleague Maggie Reardon, however, does an excellent job laying out both the technical and likely regulatory issues in a piece posted today from the CTIA conference. Continue reading →

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Is Digital Utopianism Dead? And Other Questions

by on March 10, 2011 · 0 comments

What I hoped would be a short blog post to accompany the video from Geoff Manne and my appearances this week on PBS’s “Ideas in Action with Jim Glassman” turned out to be a very long article which I’ve published over at Forbes.com.

I apologize to Geoff for taking an innocent comment he made on the broadcast completely out of context, and to everyone else who chooses to read 2,000 words I’ve written in response.

So all I’ll say here is that Geoff Manne and I taped the program in January, as part of the launch of TechFreedom and of “The Next Digital Decade.”   Enjoy!

 

 

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Progress on Spectrum Inventory…if Only Illusory

by on March 3, 2011 · 8 comments

I’ve written posts today for both CNET and Forbes on legislation introduced yesterday by Senators Olympia Snowe and John Kerry that would require the FCC and NTIA to complete inventories of existing spectrum allocations.  These inventories were mandated by President Obama last June (after Congress failed to pass legislation), but got lost at the FCC in the net neutrality armageddon.

Everyone believes that without relatively quick action to make more spectrum available, the mobile Internet could seize up.  Given the White House’s showcasing of wireless as a leading source of new jobs, investment, and improved living conditions for all Americans, both Congress and President Obama, along with the FCC and just about everyone else, knows this is a crisis that must be avoided.

Indeed, the National Broadband Plan estimates conservatively that mobile users will need 300-500 mhz of new spectrum over the next 5-10 years. Continue reading →

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Free the Toll-Free Numbers

by on March 2, 2011 · 0 comments

Toll-free number allocation remains one of the last vestiges of telecom’s monopoly era. Unlike Internet domain names, there is no organized way of requesting, registering, reserving, purchasing 800, 888, 877, 866, or the newly available 855  numbers, the five prefixes that currently designate toll-free service. If you’re lucky or creative enough, you can visit any number of sites (just Google “855 toll free code”) and the number you request might be available. If not, you’re SOL.

That’s because the toll-free number regulation regime is cumbersome, opaque and bureaucratic. And while the FCC technically prohibits the warehousing, hoarding, transfer and sale of toll-free numbers, enforcement is difficult and inconsistent.

The North American Numbering Council, a federal advisory committee that was created to advise the FCC on numbering issues will be meeting in Washington March 9. On the agenda will be discussion on whether to go forward with exploring market mechanisms that can be applied to toll-free number assignment.

It’s an idea worth pursuing. It is clear that some toll-free numbers have equity value, especially when they can bolster a brand identity or be easily remembered. 1-800-SOUTHWEST, 1-800-FLOWERS are two examples.

Yet right now, the toll-free numbering pool is a vast and unruly commons that recognizes no difference in value between a desirable mnemonic and a generic sequence of digits. Numbers are assigned on a first-come, first-served basis. End users can request a specific number, but they can get it only if it is available from the pool. Under the current rules, they cannot offer to buy the number from its current user. Nor can the user of 1-800-555-2665, which alphanumerically translates to both 1-800-555-BOOK and 1-800-555-COOK, put the number up for auction to see who will pay more, the bookstore or cooking school.

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Net Neutrality Drama Continues – And What About (President) Obama?

by on February 23, 2011 · 4 comments

Following up on my Congressional testimony last week, I’ve written two articles on how the House and Senate are moving forward with plans to undo the FCC’s December 23,2010 “Open Internet” order, aka net neutrality. For my inaugural post for Forbes, I write about the experience of being a witness before the House Judiciary Committee’s Subcommittee on Intellectual Property, Competition and the Internet, and provide some background on how the FCC found itself backed into a corner that led to the unpopular (on both sides) new rules. See “Deep in the Net Neutrality Trenches.”

On CNET this morning, I review in detail the steps taken last week by Congress. These include two hearings, one featuring all five FCC Commissioners. After the hearings, the House approved an amendment to the on-going budget negotiations that would deny the agency any funding to implement or enforce its rules. Later, both the House and Senate issued a Joint Resolution of Disapproval, which, if passed, would nullify the rule-making and deny the FCC future authority to try again. Continue reading →

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Why are some states disproportionately taxing a service we want more people using?

by on February 15, 2011 · 3 comments

A new report out this week in State Tax Notes shows the discriminatory way in which Federal, state and local governments treat their citizens who subscribe to wireless services — and according to CTIA that’s about 93% of Americans.

Federal, state and local taxes and fees for wireless services topped an average of 16.3% in 2010. The highest combined rate was 16.85% in 2005. This far surpasses the average retail sales tax rate, which obviously varies by state.

Some blame can rest squarely on the shoulders of state or local officials who have targeted wireless services for a specific tax. The report points out a few examples:

  • Baltimore: increased its per-line tax from $3.50 per month to $4
  • Montgomery County, MD: increased its per-line tax from $2 to $3.50 per month
  • Olympia, WA: imposed a 9 percent telecommunications tax on top of the state-local combined sales tax of 8.5 percent
  • Chicago: imposed a 7 percent excise tax on wireless services on top of the state’s 7 percent excise tax
  • Nebraska: imposes a local “utility” tax of up to 6.5 percent in addition to the 6.5 percent combined state-local sales tax
  • Tucson, AZ: increased its telecommunications license tax from 2 percent to 4 percent Continue reading →

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Two Years on the Internet is an Eternity

by on February 8, 2011 · 1 comment

Video is now available for all of the excellent programming at this year’s State of The Net 2011 conference. (Programming will also be available over time on C-SPAN’s video library.) The Conference, organized by the Advisory Committee to the Congressional Internet Caucus, featured Members of Congress, leading academics, Administration, agency, and Congressional staff and other provocateurs. Topics this year ranged from social networking, Wikileaks, COICA, copyright, privacy, security, broadband policy and, of course, the end-of-the-year vote by the FCC to approve new rules for network management by broadband providers, aka net neutrality. Continue reading →

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Doing Nothing to Save the Internet

by on January 30, 2011 · 6 comments

My essay last week for Slate.com (the title I proposed is above, but it must have been too “punny” for the editors) generated a lot of feedback, for which I’m always grateful, even when it’s hostile and ad hominem.  Which much of it was.

The piece argues generally that when it comes to the Internet, a disruptive technology if ever there was one, the best course of action for traditional, terrestrial governments intent on “saving” or otherwise regulating digital life is to try as much as possible to restrain themselves.  Or as they say to new interns in the operating room, “Don’t just do something.  Stand there.”

This is not an argument in favor of anarchy, or even more generally for social Darwinism.  I have something much more practical in mind.  Disruptive technologies, by definition, do not operate within the “normal science” of those areas of life they impact. Its problems can’t be solved by reference to existing systems and institutions. In the case of the Internet, that’s pretty much all aspects of life, including regulation. Continue reading →

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