Wireless & Spectrum Policy

Let’s Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum

by Adam Thierer on November 10, 2009 · 6 comments

Along with my colleague Barbara Esbin, the Director of PFF’s Center for Communications and Competition Policy, I have just released a new paper on discussing the possibility of reallocating a portion of broadcast television spectrum for alternative purposes, namely, mobile broadband. As I discussed here before, Blair Levin, the Executive Director of the FCC’s Omnibus Broadband Initiative, has been suggesting that it might be possible to craft a grand bargain whereby broadcasters get cash for some (or all) of their current spectrum allocations if they return spectrum to the FCC for reallocation and re-auction, likely to mobile broadband services.

In our paper, “An Offer They Can’t Refuse: Spectrum Reallocation That Can Benefit Consumers, Broadcasters & the Mobile Broadband Sector,” [PDF] Barbara and I argue that:

the benefits of such a deal could be enormous for wireless broadband providers, developers of digital technologies, and consumers. Expanding the pool of spectrum available for next-generation wireless broadband offerings will ensure that innovative new networks, devices, and services are made available to the public on a timely basis. Ultimately, that will mean more high-speed choices for consumers, especially those in rural areas harder to reach with high-speed wireline networks. Finally, more generally, anything that moves us in the direction of a freer market in spectrum is a good thing.

But fairness to broadcasters lies at the heart of this spectrum reallocation plan. If a deal can’t be structured that broadcasters would find acceptable, they should not be forced to come to the table. When we speak of an offer they can’t refuse, we mean one so attractive that no rational businessperson or investor would pass it up. It is essential broadcasters be willing partners in the deal, and be full participants in the process of shaping its contours.

Read the entire thing here, or below the fold as a Scribd document. Continue reading →

6 comments

event reminder: “Coase’s FCC at 50” (Thur. 9am at George Mason Law School)

by Adam Thierer on October 26, 2009 · 5 comments

Just a reminder about this week’s event on the 50th anniversary of Ronald Coase’s seminal article, “The Federal Communications Commission.” As Jerry noted here before, Coase’s critique of the political allocation of radio spectrum, and his arguments for achieving efficient allocation by allowing the government to sell rights to the spectrum, has had a profound effect on the course of communications policy. This event will explore the impact of Coase’s ideas and the legacy of his article and life’s work on communications and media policy.

This event will take place on Thursday morning at 9:00 in Hazel Hall, Room 121 (ground floor) at the George Mason University School of Law in Arlington. The event is being co-hosted by The Mercatus Center at George Mason University and The Progress & Freedom Foundation and Jerry Brito and I will be co-moderating the session.

Opening remarks will be given by Commissioner Robert M. McDowell of the Federal Communications Commission and his remarks will be followed by a panel discussion that includes:

Prof. Thomas W. Hazlett, George Mason University School of Law
Dr. Jeffrey A. Eisenach, Empiris LLC & George Mason University School of Law
Dr. Evan Kwerel, Federal Communications Commission
John Williams, Federal Communications Commission

We hope you can make it! Please RSVP here.

5 comments

Surprises in the Open Internet NPRM

by Hance Haney 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.

Continue reading →

14 comments

Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction

by Berin Szoka on October 23, 2009 · 43 comments

by Berin Szoka & Adam Thierer, Progress Snapshot 5.11 (PDF)

Ten years ago, Nobel Prize-winning economist Milton Friedman lamented the “Business Community’s Suicidal Impulse:” the persistent propensity to persecute one’s competitors through regulation or the threat thereof. Friedman asked: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft?” After yesterday’s FCC vote’s to open a formal “Net Neutrality” rule-making, we must ask whether the high-tech industry—or consumers—will benefit from inviting government regulation of the Internet under the mantra of “neutrality.”

The hatred directed at Microsoft in the 1990s has more recently been focused on the industry that has brought broadband to Americans’ homes (Internet Service Providers) and the company that has done more than any other to make the web useful (Google). Both have been attacked for exercising supposed “gatekeeper” control over the Internet in one fashion or another. They are now turning their guns on each other—the first strikes in what threatens to become an all-out, thermonuclear war in the tech industry over increasingly broad neutrality mandates. Unless we find a way to achieve “Digital Détente,” the consequences of this increasing regulatory brinkmanship will be “mutually assured destruction” (MAD) for industry and consumers.

New Fronts in the Neutrality Wars

The FCC’s proposed rules would apply to all broadband providers, including wireless, but not to Google or many other players operating in other layers of the Net who favor such broadband-specific rules. With this rulemaking looming, AT&T came after Google with letters to the FCC in late September and then another last week accusing the company of violating neutrality principles in their business practices and arguing that any neutrality rules that apply to ISPs should apply equally to Google’s panoply of popular services. In particular, AT&T accused Google of “search engine bias,” suggesting that only government-enforced neutrality mandates could protect consumers from Google’s supposed “monopolist” control.

The promise made yesterday by the FCC—to only apply neutrality principles to the infrastructure layer of the Net—is hollow and will ultimately prove unenforceable. Continue reading →

43 comments

Cash-For-TV-Spectrum Scheme vs. A Property Rights Solution

by Adam Thierer on October 21, 2009 · 21 comments

Potentially huge FCC development here, and one they actually has some sense to it. According to Kim McAvoy over at TV News Check.com:

FCC broadband czar Blair Levin earlier this month met with leading TV broadcasters in Washington to discuss the nation’s urgent need for more spectrum for wireless broadband access to the Internet and the possibility of broadcasters’ relinquishing most of their spectrum to help meet that demand. According to sources familiar with the Oct. 8 meeting with the board of the Association for Maximum Service Television (MSTV), Levin suggested broadcasters might want to consider returning their spectrum in exchange for a share in the billions of dollars that would come from the auction of the spectrum to the wireless industry.

Broadcasting would retain just enough spectrum so that each station could provide a lifeline standard-definition service to the millions of TV viewers who still rely on over-the-air reception. Broadcasters could no longer offer over-the-air HD and second channels and mobile video would be off the table, but they could continue to provide a single channel of TV to every home in their markets as they do today — in full-blown HD via cable and satellite carriage and SD via the over-the-air lifeline service.

Wow, this is a very big deal, folks, since we are talking about a mother lode of prime spectrum that could be put to any variety of excellent alternative uses. The problem is, broadcasters will—rightly, in my opinion—protest that they have occupied that spectrum for a long, long time and they have something akin to a property right in their allocations. Of course, paying them to relocate might be a very sensible way to get them off that spectrum voluntarily. But the question is whether they should be forced off of it and whether that is even legal. No doubt, any attempt to force them off would be held up in court for many years because of inevitable legal challenges.

There is another solution: Just give the broadcasters a full, unencumbered property right in their spectrum and let them sell it or use it however they wish. Some will protest that it’s not “fair” and that the broadcasters should never be given a property right in something they did not pay for to begin with. Yet, at some point we have to stop the endless search for what I have referred to as a “spectrum reparations policy” and just get on with life.

I think everyone can now agree that the old command-and-control regulatory regime for “zoning” spectrum has retarded innovation. Imagine if we told Apple back in the 1980s that, because they started in the PC business, they could never leave the PC business and offer other innovations. That would have been nuts! We’d never have the iPhone today. But that’s U.S. spectrum policy for broadcasting in a nutshell. As a broadcaster, it is illegal for you to repurpose your spectrum for alternative uses. Stated different, spectrum innovation is a crime. How pathetic.

It’s time to change the rules and move forward. I applaud Blair Levin and the FCC for offering at least one solution, but if it doesn’t work, we should try the other: property rights and flexible use rights in spectrum. And here are 4 or 5 other ways to get the job done.

21 comments

Intel “Holiday Mobile Etiquette” Poll

by Adam Thierer on October 20, 2009 · 3 comments

I’ve ranted on here before about technological etiquette, or that lack thereof by many people. (See my tedious screed from 3 years ago: “A Few Snooty Words about Technological Etiquette.” Man, I was really angry when I wrote that piece!) As much as I love technology and defend its unrestricted use, I think it’s important to encourage social norms about proper technology use to make it less likely people will call government in to act as a nanny.

That’s why I found this new “Intel Holiday Mobile Etiquette” poll so intriguing. According to the poll, which was conducted by Harris Interactive and sponsored by Intel:

most online U.S. adults (80 percent) feel there are unspoken rules about mobile technology usage, and approximately 7 in 10 (69 percent) agreed that violations of these unspoken mobile etiquette guidelines, such as checking e-mails, sending text messages and making phone calls while in the company of others, are unacceptable.

Hmmm… While I’m glad that such a large majority still have a sense of propriety about such things, this sounds like a case of people saying one thing when they likely do quite another. Then again, my perspective might be biased by life in a big city where people have PDAs practically glued to their hands full-time. I’ve even grown accustomed to people staring at their digital devices more than me during conversations and meetings. Of course, that could just be because I am so damn boring. [My colleague Jim Harper will, no doubt, suggest the latter.] Regardless, I just remain shocked by how people feel they simply must take every call, answer every email, or do whatever else on their devices in the presence of crowds or others. In my rant from 3 years ago, I offered “Two Simple Rules of Techno-Etiquette” that I will reiterate here as the first steps down the path to techno-etiquette recovery:

(1) If you absolutely MUST take that cell phone call or answer that e-mail right away, try saying this: “Excuse me, do you mind if I do this real quick?”

(2) Do not EVER, under any circumstances, answer a cell phone call while you are in a restaurant, movie theater or other public establishment where relative quiet is expected. If you have to take the call, go outside.

Seriously, would that be so hard?

3 comments

Wal-Mart, Cell Phones & Mobile Marketplace Pricing Competition

by Adam Thierer on October 17, 2009 · 34 comments

Wal-Mart is often cast as a villain by some labor unions, local politicians and small retailers, but for the average consumer Wal-Mart has been a savior: A relentless price-cutting machine that instantly changes the dynamics of every market it touches. Indeed, when Wal-Mart decides to jump into a sector by offering a new good or service in its stores, something akin to “the Southwest effect” on steroids kicks in: That market segment is often transformed overnight in that the good or service Wal-Mart starts delivering is essentially instantly commoditized. For the seller of that good or service, this is both a blessing and a curse: They gain the massive market reach that goes along with being in Wal-Mart’s 8,000 retail stores. On the other hand, they instantly surrender any semblance of pricing power they once had. And this typically also puts downward pressure on prices not just for the particular good carried in the Wal-Mart stores, but for that entire market segment more generally. [This exact scenario is currently playing out in the book marketplace as Wal-Mart has gone to war with Amazon in cost-cutting bonanza.]

The reason I bring all this up is because, as most of you probably already heard, Wal-Mart jumped into the prepaid cell phone business this week with the launch of Straight Talk:

a new solution in no-contract cellular, exclusively at more than 3,200 Walmart stores nationwide starting October 18, 2009. Straight Talk will bring to the market a new low price for no-contract wireless service with two prepaid plans now available to customers nationwide at $30 and $45 a month. Straight Talk will only be available in Walmart stores and online at www.Walmart.com and www.StraightTalk.com. The average U.S. adult spends $78 on his or her cell phone bill to receive 1000 minutes a month. By switching to the $30 Straight Talk plan, for example, the average 1,000 minutes-per-month consumer could save more than $500 per year and still be on a reliable nationwide network.

I don’t want to overplay the significance of this development, but I really do believe that Wal-Mart’s presence in this field is significant, at least for entry-level mobile phones. While it would be easy for those of us who use more advanced smartphones to shrug off the Wal-Mart announcement, it would be a mistake for reasons made clear by David Worthington over at Technologizer: Continue reading →

34 comments

Event Oct. 29: Coase’s FCC at 50

by Jerry Brito on October 14, 2009 · 5 comments

This month marks the 50th anniversary of Ronald Coase’s seminal article, The Federal Communications Commission. Coase’s critique of the political allocation of radio spectrum, and his arguments for achieving efficient allocation by allowing the government to sell rights to the spectrum, has had a profound effect on the course of communications policy.

While Coase’s ideas have been vindicated, and a market in radio property has developed, what impact have they had on the FCC? What is Coase’s legacy, and how salient are his ideas for the future of spectrum allocation? A distinguished set of speakers will address these questions at the event, “Ronald Coase’s The Federal Communications Commission at 50,” co-hosted by The Mercatus Center at George Mason University and The Progress & Freedom Foundation.

Opening remarks will be given by Commissioner Robert M. McDowell of the Federal Communications Commission. The remarks will be followed by a panel discussion on the themes presenting in the landmark book. Participants will include:

Prof. Thomas W. Hazlett, George Mason University School of Law
Dr. Jeffrey A. Eisenach, Empiris LLC & George Mason University School of Law
Dr. Evan Kwerel, Federal Communications Commission
John Williams, Federal Communications Commission (invited)

“Ronald Coase’s The Federal Communications Commission at 50,” will be held Thursday, October 29th from 9:00am to 12:00pm in Hazel Hall, Room 121 (ground floor) at the George Mason University School of Law in Arlington. Please RSVP after the jump.

Continue reading →

5 comments

Wireless Innovation is Alive & Well: Two New Reports Set the Record Straight

by Adam Thierer on October 11, 2009 · 20 comments

The smell of high-tech regulation is increasingly in the air these days and many lawmakers and some activist groups now have the mobile marketplace in their regulatory cross-hairs. Critics make a variety of claims about the wireless market supposedly lacking competition, choice, innovation, or reasonable pricing. Consequently, they want to wrap America’s wireless sector in a sea of red tape. Two important new studies thoroughly debunk these assertions and set the record straight regarding the state of wireless competition and innovation in the U.S. today. These reports are must-reading for Washington policymakers and FCC officials who are currently contemplating regulatory action.

First, Gerald Faulhaber and Dave Farber have a new report out entitled “Innovation in the Wireless Ecosystem: A Customer-Centric Framework.” Here’s what Faulhaber and Farber find:

the three segments of the wireless marketplace (applications, devices, and core network) have exhibited very substantial innovation and investment since its inception. Perhaps more interesting, innovation in each segment is highly dependent upon innovation in the other segments. For example, new applications depend upon both advances in device hardware capabilities and advances in spectral efficiency of the core network to provide the network capacity to serve those applications. Further, we find that the three segments of the industry are also highly competitive. There are many players in each segment, each of which aggressively seeks out customers through new technology and new business methods. The results of this competition are manifest: (i) firms are driven to innovate and invest in order to win in the competitive marketplace; (ii) new business models have emerged that give customers more choice; and (iii) firms have opened new areas such as wireless broadband and laptop wireless in order to expand their strategic options.

They continue on to address the policy issues in play here and discuss the “consumer-centric” approach they recommend that the FCC adopt: Continue reading →

20 comments

Is Apple’s “Top-Down” App Store Really a Barrier to Innovation?

by Adam Thierer on October 8, 2009 · 8 comments

Over at his new blog, our old TLF colleague Tim Lee has an interesting post up about “The Problem with Top-Down ‘App Stores’” in which he argues that “when app store approval becomes mandatory, it becomes a major impediment to the success of high-tech platforms.” But I have to wonder if the facts support that assertion. Here’s how I commented on his site:

Tim… What I don’t hear you articulating here is your vision of what a “bottom-up” app store would look like and why it would really produce vastly superior results. Nor do I hear you saying anything about the legitimate concerns that the handset makers might have about the security or stability factors associated with certain applications. I’m not saying those problems are extensive, but at the margins they could be real depending on the nature of the program and how it interacts with the handset and/or network.

Second, there needs to be some sense of proportionality here, at least about the iPhone (I can’t speak for the Palm experience). In just a little over a year, there’s been 2 billion downloads of over 85,000 apps from over 125,000 developers. So, when you talk about Apple’s approval process being “plagued by.. problems” and “rejections for trivial or non-sensical reasons” and “long delays in the review process have become a staple of the tech blogosphere” I think you are giving the impression that this is somehow the norm when it is very much the exception to the rule. Perhaps you would be willing to itemize the examples for us. Once you do, I’d appreciate you doing the math on what that looks like as a percentage of the total 85,000 apps that are already out there on the market today. I am willing to bet the result is something like 0.000001%.

Again, a sense of proportionality is really key here. While I am not an Apple fan and agree they have a bit too much of a control streak for my tastes, it’s hard to argue with results. In this case, a closed, top-down system has produced some fairly spectacular results.

I’m sure Tim will have more to say so head over to his blog for more discussion.

8 comments

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