Telecom & Cable Regulation

The FCC has signaled that it may vote to overhaul the Lifeline program this month. Today, Lifeline typically provides a $9.25 subsidy for low-income households to purchase landline or mobile telephone service from eligible providers. While Lifeline has problems–hence the bipartisan push for reform–years ago the FCC structured Lifeline in a way that generally improves access and mitigates abuse (the same cannot be said about the three other major universal service programs).

A direct subsidy plus a menu of options is a good way to expand access to low-income people (assuming there are effective anti-fraud procedures). A direct subsidy is more or less how the US and state governments help lower-income families afford products and services like energy, food, housing, and education. For energy bills there’s LIHEAP. For grocery bills there’s SNAP and WIC. For housing, there’s Section 8 vouchers. For higher education, there’s Pell grants.

Programs structured this way make transfers fairly transparent, which makes them an easy target for criticism but also promotes government accountability, and gives low-income households the ability to consume these services according to their preferences. If you want to attend a small Christian college, not a state university, Pell grants enable that. If you want to purchase rice and tomatoes, not bread and apples, SNAP enables that. The alternative, and far more costly, ways to improve consumer access to various services is to subsidize providers, which is basically how Medicare the rural telephone programs operate, or command-and-control industrial policy, like we have for television and much of agriculture.

Because the FCC is maintaining the consumer subsidy and expanding the menu of Lifeline options to include wired broadband, mobile broadband, and wifi devices, there’s much to commend in the proposed reforms. Continue reading →

Yesterday, almost exactly one year after the FCC classified Internet service as a common carrier service, Sen. Mike Lee and his Senate cosponsors (including presidential candidates Cruz and Rubio) introduced the Restoring Internet Freedom Act. Sen. Lee also published an op-ed about the motivation for his bill, pointing out the folly of applying a 1930s AT&T Bell monopoly law to the Internet. It’s a short bill, simply declaring that the FCC’s Title II rules shall have no force and it precludes the FCC from enacting similar rules absent an act of Congress.

It’s a shame such a bill even has to be proposed, but then again these are unusual times in politics. The FCC has a history of regulating new industries, like cable TV, without congressional authority. However, enforcing Title II, its most intrusive regulations, on the Internet is something different altogether. Congress was not silent on the issue of Internet regulation, like it was regarding cable TV in the 1960s when the FCC began regulating.

Former Clinton staffer John Podesta said after Clinton signed the 1996 Telecom Act, “Congress simply legislated as if the Net were not there.” That’s a slight overstatement. There is one section of the Telecommunications Act, Section 230, devoted to the Internet and it is completely unhelpful for the FCC’s Open Internet rules. Section 230 declares a US policy of unregulation of the Internet and, in fact, actually encourages what net neutrality proponents seek to prohibit: content filtering by ISPs.

The FCC is filled with telecom lawyers who know existing law doesn’t leave room for much regulation, which is why top FCC officials resisted common carrier regulation until the end. Chairman Wheeler by all accounts wanted to avoid the Title II option until pressured by the President in November 2014. As the Wall Street Journal reported last year, the White House push for Title II “blindsided officials at the FCC” who then had to scramble to construct legal arguments defending this reversal. The piece noted,

The president’s words swept aside more than a decade of light-touch regulation of the Internet and months of work by Mr. Wheeler toward a compromise.

The ersatz “parallel version of the FCC” in the White House didn’t understand the implications of what they were asking for and put the FCC in a tough spot. The Title II rules and legal justifications required incredible wordsmithing but still created internal tensions and undesirable effects, as pointed out by the Phoenix Center and others. This policy reversal, to go the Title II route per the President’s request, also created First Amendment and Section 230 problems for the FCC. At oral argument the FCC lawyer disclaimed any notion that the FCC would regulate filtered or curated Internet access. This may leave a gaping hole in Title II enforcement since all Internet access is filtered to some degree, and new Internet services, like LTE Broadcast, Free Basics, and zero-rated video, involve curated IP content. As I said at the time, the FCC “is stating outright that ISPs have the option to filter and to avoid the rules.”

Nevertheless, Title II creates a permission slip regime for new Internet services that forces tech and telecom companies to invest in compliance lawyers rather than engineers and designers. Hopefully in the next few months the DC Circuit Court of Appeals will strike down the FCC’s net neutrality efforts for a third time. In any case, it’s great to see that Sen. Lee and his cosponsors have made innovation policy priority and want to continue the light-touch regulation of the Internet.

This article originally appeared at techfreedom.org.

Today, the FCC voted on a Notice of Proposed Rulemaking that would  force pay-tv or multichannel video programming distributors (MVPDs) to change their existing equipment to allow third-party set-top boxes to carry their signals. Currently, MVPD subscribers typically pay $15–20/month to lease set-top boxes from their cable, satellite, or telco video provider. Those set-top boxes allow subscribers to view video programming on their TVs and, in some cases, also provide access to online video distributors (OVDs) such as Netflix and Hulu. However, Chairman Wheeler and some interest groups say those leasing fees are too high, that MVPDs have a stranglehold on video programming, and that the set-top box market must be opened to competition from third parties.

“Regulating set-top boxes may do serious damage to video programmers, especially small ones and those geared to minorities,” said Berin Szoka. “That’s why Congressional Democrats, minority groups and other voices have urged caution. Yet FCC Chairman Tom Wheeler blithely dismisses these concerns, insisting that ‘this is just the beginning of a fact-finding process.’ Do not believe him. If that were true, the FCC would issue a Notice of Inquiry to gather data to inform a regulatory proposal. Instead, the FCC has issued a Notice of Proposed Rulemaking. That means the FCC Chairman has already made up his mind, and that the agency is unlikely to adjust course.”

This is simply the latest example of the FCC abusing the rulemaking process by bypassing the Notice of Inquiry,” concluded Szoka. “Every time the FCC does this, it means the gun is already loaded, and ‘fact-finding’ is a mere formality. It’s high time Congress put a stop to this pretense of objectivity and require the FCC to begin all major rulemakings with an NOI. That key reform was at the heart of an FCC reform bill initially proposed by Republicans in 2013 — but, tellingly, removed at the insistence of Congressional Democrats.”

The FCC’s proposal is based on the recommendations of the Downloadable Security Technology Advisory Committee (“DSTAC”), which was directed to investigate this issue by Congress in the STELA Reauthorization Act of 2014.

The FCC is also abusing the advisory committee process—once again,” argued Tom Struble, Policy Counsel at TechFreedom. “The Commission acts as if the DSTAC unanimously supported the NPRM’s proposal. In fact, the DSTAC recommended two alternative approaches, only one of which was taken up by the FCC. This is only the most recent example of the FCC abusing the advisory committee process, denying broad input from stakeholders and steering the committee to issue recommendations that suit the administration’s policy preferences. The FCC should have used an NOI to seek comment on both the DSTAC recommendations. But at the very least, Chairman Wheeler should drop his absurd pretense that the FCC is merely beginning a fact-finding process.”

This article originally appeared at techfreedom.org.

Twenty years ago today, President Clinton signed the Telecommunications Act of 1996. John Podesta, his chief of staff immediately saw the problem: “Aside from hooking up schools and libraries, and with the rather major exception of censorship, Congress simply legislated as if the Net were not there.”

Here’s our take on what Congress got right (some key things), what it got wrong (most things), and what an update to the key laws that regulate the Internet should look like. The short version is:

  • End FCC censorship of “indecency”
  • Focus on promoting competition
  • Focus regulation on consumers rather than arbitrary technological silos or political whim
  • Get the FCC out of the business of helping government surveillance

Trying, and Failing, to Censor the Net

Good: The Act is most famous for Section 230, which made Facebook and Twitter possible. Without 230, such platforms would have been held liable for the speech of their users — just as newspapers are liable for letters to the editor. Trying to screen user content would simply have been impossible. Sharing user-generated content (UGC) on sites like YouTube and social networks would’ve been tightly controlled or simply might never have taken off. Without Section 230, we might all still be locked in to AOL!

Bad: Still, the Act was very much driven by a technopanic over “protecting the children.”

  • Internet Censorship. 230 was married to a draconian crackdown on Internet indecency. Aimed at keeping pornography away from minors, the rest of the Communications Decency Act — rolled into the Telecom Act — would have required age verification of all users, not just on porn sites, but probably any UGC site, too. Fortunately, the Supreme Court struck this down as a ban on anonymous speech online.
  • Broadcast Censorship. Unfortunately, the FCC is still in the censorship business for traditional broadcasting. The 1996 Act did nothing to check the agency’s broad powers to decide how long a glimpse of a butt or a nipple is too much for Americans’ sensitive eyes.

Unleashing Competition—Slowly

Good: Congress unleashed over $1.3 trillion in private broadband investment, pitting telephone companies and cable companies against each other in a race to serve consumers — for voice, video andbroadband service.

  • Legalizing Telco Video. In 1984, Congress had (mostly) prohibited telcos from providing video service — largely on the assumption that it was a monopoly. Congress reversed that, which eventually meant telcos had the incentive to invest in networks that could carry video — and super-fast broadband.
  • Breaking Local Monopolies. Congress also barred localities from blocking new entry by denying a video “franchise.”
  • Encouraging Cable Investment. The 1992 Cable Act had briefly imposed price regulation on basic cable packages. This proved so disastrous that the Democratic FCC retreated — but only after killing a cycle of investment and upgrades, delaying cable modem service by years. In 1996, Congress finally put a stake through the heart of such rate regulation, removing investment-killing uncertainty.

Bad: While the Act laid the foundations for what became facilities-based network competition, its immediate focus was pathetically short-sighted: trying to engineer artificial competition for telephone service.

  • Unbundling Mandates. The Act created an elaborate set of requirements that telephone companies “unbundle” parts of their networks so that resellers could use them, at sweetheart prices, to provide “competitive” service. The FCC then spent the next nine years fighting over how to set these rates.
  • Failure of Vision. Meanwhile, competing networks provided fierce competition: cable providers gained over half the telephony market with a VoIP service, and 47% of customers have simply cut the cord — switching entirely to wireless. Though the FCC refuses to recognize it, broadband is becoming more competitive, too: 2014 saw telcos invest in massive upgrades, bringing 25–75 Mbps speeds to more than half the country by pushing fiber closer to homes. The cable-telco horse race is fiercer than ever — and Google Fiber has expanded its deployment of a third pipe to the home, while cable companies are upgrading to provide gigabit-plus speeds and wireless broadband has become a real alternative for rural America.
  • Delaying Fiber. The greatest cost of the FCC’s unbundling shenanigans was delaying the major investments telcos needed to keep up with cable. Not until 2003 did the FCC make clear that it would not impose unbundling mandates on fiber — which pushed Verizon to begin planning its FiOS fiber-to-the-home network. The other crucial step came in 2006, when the Commission finally clamped down on localities that demanded lavish ransoms for allowing the deployment of new networks, which stifled competition.

Regulation

Good: With the notable exception of unbundling mandates, the Act was broadly deregulatory.

  • General thrust. Congress could hardly have been more clear: “It is the policy of the United States… to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.”
  • Ongoing Review & Deregulation. Congress gave the FCC broad discretion to ratchet down regulation to promote competition.

Bad: The Clinton Administration realized that technological change was rapidly erasing the lines separating different markets, and had proposed a more technology-neutral approach in 1993. But Congress rejected that approach. The Act continued to regulate by dividing technologies into silos: broadcasting (Title III), telephone (Title II) and cable (Title VI). Title I became a catch-all for everything else. Crucially, Congress didn’t draw a clear line between Title I and Title II, setting in motion a high-stakes fight that continues today.

  • Away from Regulatory Silos. Bill Kennard, Clinton’s FCC Chairman, quickly saw just how obsolete the Act was. His 1999 Strategic Plan remains a roadmap for FCC reform.
  • Away from Title II. Kennard also indicated that he favored placing all broadband in Title I — mainly because he understood that Title II was designed for a monopoly and would tend to perpetuate it. Vibrant competition between telcos and cable companies could happen only under Title I. But it was the Bush FCC that made this official, classifying cable modem as Title I in 2002 and telco DSL in 2005.
  • Net Neutrality Confusion. The FCC spent a decade trying to figure out how to regulate net neutrality, losing in court twice, distracting the agency from higher priorities — like promoting broadband deployment and adoption — and making telecom policy, once an area of non-partisan pragmatism, a fiercely partisan ideological cesspool.
  • Back to Title II. In 2015, the FCC reclassified broadband under Title II — not because it didn’t have other legal options for regulating net neutrality, but because President Obama said it should. He made the issue part of his re-assertion of authority after Democrats lost the 2014 midterm elections. Net neutrality and Title II became synonymous, even though they have little to do with each other. Now, the FCC’s back in court for the third time.
  • Inventing a New Act. Unless the courts stop it, the FCC will exploit the ambiguities of the ‘96 Act to essentially write a new Act out of thin air: regulating way up with Title II, using its forbearance powers to temporarily suspend politically toxic parts of the Act (like unbundling), and inventing wholly new rules that give the FCC maximum discretion—while claiming the power to do anything that somehow promotes broadband. The FCC calls this all “modernization” but it’s really a staggering power grab that allows the FCC to control the Internet in the murkiest way possible.
  • Bottom line: The 1996 Act gives the FCC broad authority to regulate in the “public interest,” without effectively requiring the FCC to gauge the competitive effects of what it does. The agency’s stuck in a kind of Groundhog Day of over-regulation, constantly over-doing it without ever learning from its mistakes.

Time for a #CommActUpdate

Censorship. The FCC continues to censor dirty words and even brief glimpses of skin on television because of a 1978 decision that assumes parents are helpless to control their kids’ media consumption. Today, parental control tools make this assumption obsolete: parents can easily block programming marked as inappropriate. Congress should require the FCC to focus on outright obscenity — and let parents choose for themselves.

Competition. If the 1996 Act served to allow two competing networks, a rewrite should focus on driving even fiercer cable-telco competition, encouraging Google Fiber and others to build a third pipe to the home, and making wireless an even stronger competitor.

  • Title II. If you wanted to protect cable companies from competition, you couldn’t find a better way to do it than Title II. Closing that Pandora’s Box forever will encourage companies like Google Fiber to enter the market. But Congress needs to finish what the 1996 Act started: it’s not enough to stop localities from denying franchises video service (and thus broadband, too).
  • Local Barriers. Congress should crack down on the moronic local practices that have made deployment of new networks prohibitive — learning from the success of Google Fiber cities, which have cut red tape, lowered fees and generally gotten out of the way. Pending bipartisan legislationwould make these changes for federal assets, and require federal highway projects to include Dig Once conduits to make fiber deployment easier. That’s particularly helpful for rural areas, which the FCC has ignored, but making deployment easier inside cities will require making municipal rights of way easier to use. Instead of rushing to build their own broadband networks, localities should have to first at least try to stimulate private deployment.

Regulation. Technological silos made little sense in 1993. Today, they’re completely obsolete.

  • Unchecked Discretion. The FCC’s right about one thing: rigid rules don’t make sense either, given how fast technology is changing. But giving the FCC sweeping discretion is even more dangerous: it makes regulating the Internet inherently political, subject to presidential whim and highly sensitive to elections.
  • The Fix. There’s a simple solution: write clear standards that let the FCC work across all communications technologies, but that require the FCC to prove that its tinkering actually makes consumers better off. As long as the FCC can do whatever it claims is in the “public interest,” the Internet will never be safe.
  • Rethinking the FCC. Indeed, Congress should seriously consider breaking up the FCC, transferring its consumer protection functions to the Federal Trade Commission and its spectrum functions to the Commerce Department.

Encryption. Since 1994, the FCC has had the power to require “telecommunications services” to be wiretap-ready — and the discretion to decide how to interpret that term. Today, the FBI is pushing for a ban on end-to-end encryption — so law enforcement can get backdoor access into services like Snapchat. Unfortunately, foreign governments and malicious hackers could use those backdoors, too. Congress is stalling, but the FCC could give law enforcement exactly what it wants — using the same legal arguments it used to reclassify mobile broadband under Title II. Law enforcement is probably already using this possibility to pressure Internet companies against adopting secure encryption. Congress should stop the FCC from requiring back doors.

With great fanfare, FCC Chairman Thomas Wheeler is calling for sweeping changes to the way cable TV set-top boxes work.

In an essay published Jan. 27 by Re/Code, Wheeler began by citing the high prices consumers pay for set-top box rentals, and bemoans the fact that alternatives are not easily available. Yet for all the talk and tweets about pricing and consumer lock-in, Wheeler did not propose an inquiry into set-top box profit margins, nor whether the supply chain is unduly controlled by the cable companies. Neither did Wheeler propose an investigation into the complaints consumers have made about cable companies’ hassles around CableCards, which under FCC mandate cable companies must provide to customers who buy their own set-top boxes.

In fact, he dropped the pricing issue halfway through and began discussing access to streaming content:

To receive streaming Internet video, it is necessary to have a smart TV, or to watch it on a tablet or laptop computer that, similarly, do not have access to the channels and content that pay-TV subscribers pay for. The result is multiple devices and controllers, constrained program choice and higher costs.

This statement seems intentionally misleading. Roku, Apple TV and Amazon Fire sell boxes that connect to TVs and allow a huge amount of streaming content to play. True, the devices are still independent of the set-top cable box but there is no evidence that this lack of integration is a competitive barrier.

Continue reading →

People are excited about online TV getting big in 2016. Alon Maor of Qwilt predicts in Multichannel News that this will be “the year of the skinny bundle.” Wired echoes that sentiment. The Wall Street Journal’s Geoffrey A. Fowler said, “it’s no longer the technology that holds back cable cutting–it’s the lawyers.”

Well, I’m here to say, lawyers can’t take all the blame. In my experience, it’s the technology, too. Some of the problem is that most discussion about the future of online TV and cable cutting fails to distinguish streaming video-on-demand (SVOD) and streaming linear TV (“linear” means continuous pre-programmed and live “channels”, often with commercials, much like traditional cable). Continue reading →

For tech policy progressives, 2015 was a great year. After a decade of campaigning, network neutrality advocates finally got the Federal Communications Commission to codify regulations that require Internet service providers to treat all traffic the same as it crosses the network and is delivered to customers.

Yet the rapid way broadband business models, always tenuous to begin with, are being overhauled, may throw some damp linens on their party. More powerful smart phones, the huge uptick in Internet streaming and improved WiFi technology are just three factors driving this shift.

As regulatory mechanisms lag market trends in general, they can’t help but be upended along with the industry they aim to govern. Looking ahead to the coming year, the consequences of 2015’s regulatory activism will create some difficult situations for the FCC.

Continue reading →

The FCC’s Open Internet Order is long and complex and the challenge to it is likewise difficult to untangle. The agency regularly engages in ad hoc rulemaking that results, per Judge Posner, in “unprincipled compromises of Rube Goldberg complexity among contending interest groups viewed merely as clamoring suppliants who have somehow to be conciliated.” The Open Internet Order is no exception and therefore faces several legal vulnerabilities.

In my view, the soft underbelly of the Order is the agency’s position that ISPs are not First Amendment speakers. While courts are generally very deferential to agencies, they are not deferential on constitutional questions. Further, the court panel (two Democrat appointees, one Republican appointee), unfortunately, was not in the carriers’ favor. The major carriers, however, have focused their arguments on whether the agency should receive deference in classifying Internet access as a telecommunications service.

That said, it’s possible the major carriers could get at least a partial win with their arguments. That likelihood is increased because Alamo Broadband and Dan Berninger raised the First Amendment problems with the Order. Given the strength of the First Amendment arguments, the Court might shy away from reaching the issue of whether ISPs are speakers. Below, some thoughts on the moments during oral arguments that surprised me and what went according to predictions.

The Unexpected

A receptive ear in Judge Williams re: the First Amendment arguments. (Good for: ISPs) The First Amendment arguments went better than I’d expected. Alamo and Berninger’s counsel, Brett Shumate, argued the First Amendment issues well and had good responses for skeptical questions. Shumate found a receptive ear in Judge Williams, who seemed to understand the serious First Amendment risks posed by the Order. Williams repeatedly brought up the fact that MetroPCS a few years ago tried to curate the Internet and provide its customers free YouTube, only to face resistance from the FCC and net neutrality activists.

The other two judges were more skeptical but Shumate corrected some misconceptions. The biggest substantive objection from Srinivasan, who sounded the most skeptical of the First Amendment arguments, was that if the Court reaches the First Amendment issues, it has determined that the FCC has reasonably classified Internet access as a common carrier service. He suggested that this means the First Amendment issues mostly disappear. No, Shumate explained. Congress and the FCC can call services whatever they want. They could declare Google Search or Twitter feeds a common carrier service tomorrow and that would have zero effect on whether filtering by Google and Twitter is protected by the First Amendment. Tatel asked whether Section 230’s liability protections suggest ISPs are common carriers and Shumate corrected that misconception, a subject I have written on before.

A major FCC concession that ISPs have to option to change their offerings and escape common carrier regulation. (Good for: ISPs) Title II advocates are spinning the terse First Amendment exchanges as a victory. I’m not convinced. The reason the arguments didn’t generate more heat was because the FCC lawyer made a huge concession at the outset: ISPs that choose to filter the Internet are not covered by the Open Internet Order.

FCC lawyer: “If [ISPs] want to curate the Internet…that would drop them out of the definition of Broadband Internet Access Service.”

Judge Williams: “They have that option under the Order?”

FCC lawyer: “Absolutely, your Honor. …If they filter the Internet and don’t provide access to all or substantially all endpoints, then they drop out of the definition of [BIAS] and the rules don’t apply to them.”

This admission seriously undermines the purposes of the Order. The FCC is stating outright that ISPs have the option to filter and to avoid the rules. That seems to mean that Comcast’s Stream Internet protocol television service, where it is curating streaming TV programs, is not covered by the rules. If Facebook’s Free Basics or a similar service launched in the US giving free, limited access to the Web, that is not covered by the Order. Finally, this means that the many broadband packages that offer family-friendly filtering are outside of the FCC’s rules. It’s not clear how much remains to be regulated since all ISPs reserve the right to filter content and each filters at least some content.

Judge Tatel directing most questioning. (Good for: wash) Many view Judge Tatel as the “swing vote” but I was surprised at the relative quiet from Williams and Srinivasan. Tatel was the most inquisitive, by my listening. He was much more skeptical of some of the FCC’s arguments regarding interconnection than I expected but also more skeptical of the First Amendment arguments than I expected.

Little discussion of Chevron Step 0. (Good for: FCC) Many on the free-market side wanted to make this case about Chevron Step 0 and the notion that Title II is too economically and socially significant to warrant deference. Unfortunately, at oral argument there was very little discussion of Chevron Step 0.

The Expected

Focus on agency discretion. (Good for: FCC) The judges generally seem to see this as a straightforward Chevron case and the questions focused on Chevron Step 1, whether there is ambiguity in the statute about “offering telecommunications” for the FCC to interpret. As expected, the FCC did fairly well in their arguments because these technical issues are very hard to untangle.

On Chevron Step 2, whether the reinterpretation of “telecommunications service” to include Internet access was reasonable, the US Telecom attorney was strong. He leaned heavily on the fact that in Section 230, which amends the Communications Act, Congress announces a national policy that the Internet and specifically Internet access services, should remain “unfettered by Federal regulation.” That would seem to preclude the FCC from using, at the very least, its most powerful regulatory weapon–common carriage–against Internet access providers. Even if “telecommunications service” is ambiguous, he stated, it was unreasonable to include Internet access in that definition.

Focus on whether mobile broadband can be properly classified under Title II. (Benefit: ISPs) As many commentators have noted, the idea that the traditional phone network and the mobile broadband network can be classified as the same interconnected network is far-fetched. Each judge seemed very skeptical of the FCC’s argument and Tatel suggested there was a lack of adequate notice.

Srinivasan pointed out that striking down the wireless rules and maintaining the wireline rules would mean that using the same tablet in different areas of your house would lead to different regulatory treatment, depending on whether you’re on the cellular broadband network or Wifi. Title II supporters think this is pretty clever gotcha but communications law already abounds with seemingly absurd FCC- and court-created legal distinctions. (The FCC invents its own absurd distinction and offers vastly different regulatory treatment for DNS operated by an ISP v. DNS operated by literally anyone else.)

Conclusion

Predictions about major regulatory cases are notoriously difficult. I’ve read (and made) enough predictions about big court cases to know that prognosticators almost always get it wrong. If that’s the case, at least consider one thought-provoking outcome: the rules are largely struck down because the FCC provided inadequate notice on most of the major issues of classification.

If the rules, in contrast, were sustained under Chevron and judged to have had adequate notice, the Court would likely need to confront the First Amendment issues. I don’t think Tatel and Srinivasan, especially, want to rule on these hard constitutional questions. The judges must know the Supreme Court has, as Prof. Susan Crawford says, an “absolutist approach” to the First Amendment that protects speakers of all kinds. Sustaining the rules means the FCC risks a loss on First Amendment grounds on appeal that would nearly eliminate the ability of the FCC to regulate the Internet. For that reason, and because of the notice problems, the Court may strike down the rules on notice and comment grounds, thereby preserving the ability of the FCC to take a fourth bite at the apple.

On October 7th I appeared on a webinar hosted by Prof. Barry Umansky and Ball State’s Digital Policy Institute about the FCC’s Title II case before the DC Circuit Court of Appeals, US Telecom Association v. FCC. The other panelists were Andrew Schwartzman of Georgetown University and Stuart Brotman of Harvard Law School and the Brookings Institution. Check it out, but here’s a brief summary of our hour-long discussion. Continue reading →

Last Friday I attended a fascinating conference hosted by the Duke Law School’s Center for Innovation Policy about television regulation and competition. It’s remarkable how quickly television competition has changed and how online video providers are putting pressure on old business models.

I’ve been working on a project about competition in technology, communications, and media and one chart that stands out is one that shows increasing competition in pay television, below. Namely, that cable providers have lost nearly 15 million subscribers since 2002. Cable was essentially the only game in town in 1990 for pay television (about 100% market share). Yet today, cable’s market share approaches 50%. This competitive pressure accounts for some cable companies trying to merge in recent years.

Much of this churn by subscribers was to satellite providers but it’s the “telephone” companies providing TV that’s really had a competitive impact in recent years. Telcos went from about 0% market share in 2005 to 13% in 2014. This new competition can be tied to Congress finally allowing telephone companies to provide TV in 1996. However, these new services didn’t really get started until a decade ago when 1) digital and IP technology improved, and 2) the FCC made it clear by deregulating DSL ISPs that telephone companies could expect a market return for investing in fiber broadband nationwide.

Pay TV Market Share TLF

UPDATE:

And below is market share data going back ten more years to 1994 using FCC data, which uses a slightly different measurement methodology (hence the kink around 2003-2004). I’ve also omitted market share of Home Satellite Dish (those large dishes you sometimes see in rural areas). Though HSD has negligible market share today, it had a few million subscribers in the mid-1990s. I may add HSD later.

Pay TV Market Share TLF 1994-2014