In December, Reps. Upton and Walden announced that they intend to update the Communications Act, which saw its last major revision in 1996. Today marks the deadline to submit initial comments regarding updating the Act. Below is my submission, which includes reference to a Mercatus paper by Raymond Gifford analyzing the Digital Age Communications (DACA) reports. These bipartisan reports would largely replace and reform our deficient communications laws.

Dear Chairman Upton, As you and Rep. Walden recently acknowledged, U.S. communications law needs updating to remove accumulated regulatory excess and to strengthen market forces. When the 1934 Communications Act was passed, there was a national monopoly telephone provider and Congress’s understanding of radio spectrum physics was rudimentary. Chief among the Communication Act’s many flaws was giving the Federal Communication Commission authority to regulate wired and wireless communications according to “public interest, convenience, and necessity,” an amorphous standard that has been frequently abused. If delegating this expansive grant of discretion to the FCC was ever sensible, it clearly no longer is. Today, eight decades later, with competition between video, telephone, and Internet providers taking place over wired and wireless networks, the public interest standard simply invites costly rent-seeking and stifles technologies and business opportunities. Like an old cottage receiving several massive additions spanning decades by different clumsy architects, communications law is a disorganized and dilapidated structure that should be razed and reconstituted. As new technologies emerged since the 1930s—broadcast television, cable, satellite, mobile phones, the Internet—and upended existing regulated businesses, the FCC and Congress layered on new rules attempting to mitigate the distortions. Congressional attempts at reforming communications laws have appeared regularly ever since the 1996 amendments. During the last such attempt, in 2011, the Mercatus Center released a study discussing and summarizing a model for communications law reform known as the Digital Age Communications Act (DACA). That model legislation—consisting of five reports released in 2005 and 2006—came from the bipartisan DACA Working Group. The reports addressed five areas: 1. Regulatory framework; 2. Universal service; 3. Spectrum reform; 4. Federal-state jurisdiction; and 5. Institutional reform. The DACA reports represent a flexible, market-oriented agenda from dozens of experts that, if implemented, would spur innovation, encourage competition, and benefit consumers. The regulatory framework report is the centerpiece recommendation and adopts a proposal largely based on the Federal Trade Commission Act, which provides a reformed FCC with nearly a century of common law for guidance. Significantly, the reports replace the FCC’s misused “public interest” standard with the general “unfair competition standard” from the FTC Act. Despite the passage of time, those reports have held up remarkably well. The 2011 Mercatus paper describing the DACA reports is attached for submission in the record. The scholars at Mercatus are happy to discuss this paper and the cited materials below—including the DACA reports—further with Energy & Commerce Committee staff as they draft white papers and reform proposals. Thank you for initiating discussion about updating the Communications Act. Reform can give America’s innovative technology and telecommunications sector a predictable and technology-neutral legal framework. When Congress replaces command-and-control rules with market forces, consumers will be the primary beneficiaries. Sincerely, Brent Skorup Research Fellow, Technology Policy Program Mercatus Center at George Mason University

Resources

Digital Age Communications Act (DACA) Working Groups Reports.

JEFFREY A. EISENACH ET AL., THE TELECOM REVOLUTION: AN AMERICAN OPPORTUNITY (1995).

Raymond L. Gifford, The Continuing Case for Serious Communications Law Reform, Mercatus Center Working Paper No. 11-44 (2011).

PETER HUBER, LAW AND DISORDER IN CYBERSPACE: ABOLISH THE FCC AND LET COMMON LAW RULE THE TELECOSM (1997).

There is bipartisan agreement that the 1996 Telecom Act was antiquated only shortly after President Clinton’s signature had dried on the legislation. There is also consensus that spectrum policy, still largely grounded in the 1934 communications statute, absolutely distorts today’s wireless markets. And there is frequent criticism from thought leaders, right and left, that the FCC has been, for decades, too accommodating to the firms it regulates and too beholden to the status quo (economist Thomas Hazlett quips the agency’s initials stand for “Forever Captured by Corporations”).

For these reasons, members of Congress every few years announce their intention to reform the 1934 and 1996 communications laws and modernize the FCC. Yesterday, some powerful House members unexpectedly reignited hopes that Congress would overhaul our telecom, broadband, and video laws. In a Google Hangout (!), Reps. Fred Upton and Greg Walden said they wanted to take on the ambitious task of passing a new law in 2015.

Much depends on next year’s elections and the composition of Congress, but hopefully the announcement spurs a major re-write that eliminates regulatory distortions in communications, much as airlines and transportation were deregulated in the 1970s–an effort led by reformist Democrats.

About ten years ago, more than fifty scholars and technologists crafted reports which constituted the Digital Age Communications Act (or DACA) that is largely deregulatory (a majority of the group had served in Democratic administrations, interestingly enough). In 2005, then-Sen. Jim DeMint proposed a bill similar to the working group’s proposals. The working group’s recommendations aged very well in eight years–which you can’t say about the 1996 Act–and represents a great starting point for future legislation.

As Adam has said the DACA reports have five primary reform objectives:

– Replacing the amorphous “public interest” standard with a consumer welfare standard, which is more well-established in field of antitrust law – Eliminate regulatory silos and level the playing field through deregulation – Comprehensively reform spectrum not just through more auctioning but through clear property rights – Reform universal service by either voucherizing it or devolving it to the States and let them run their own telecom welfare programs; and – Significantly reforming & downsizing the scope of the FCC’s power of the modern information economy

DACA redefines the FCC as a specialized competition agency for the communications sector. The FCC largely sees itself as a competition agency today but the current statutes don’t represent that gradual change in purpose. The FCC is slow, arbitrary, Balkanizes industries artificially, and attempts to regulate in areas it isn’t equipped to regulate–the agency has a notoriously bad record in federal courts. These characteristics create a poor environment for substantial investments in technology and communications infrastructure. The DACA proposals aren’t perfect but it is a resilient framework that minimizes the effect of special interests in communications and encourages investments that improve consumers’ lives.

Yesterday it was my privilege to speak at a Free State Foundation (FSF) event on “Ideas for Communications Law and Policy Reform in 2013.” It was moderated by my friend and former colleague Randy May, who is president of FSF, and the event featured opening remarks from the always-excellent FCC Commissioner Robert McDowell.

During the panel discussing that followed, I offered my thoughts about the problem America continues to face in cleaning up communications and media law and proposed a few ideas to get reform done right once and for all. I don’t have time to formally write-up my remarks, but I thought I would just post the speech notes that I used yesterday and include links to the relevant supporting materials. (I’ve been using a canned version of this same speech at countless events over the past 15 years. Hopefully lawmakers will take up some of these reforms some time soon so I’m not using this same set of remarks in 2027!)

I) The fundamental problem we face in the world of communications and media policy today is easy and diagnose and, at least in theory, easy to remedy.

The Problem= asymmetrical regulation / “unlevel playing field”

• Policymakers are imposing different regulatory policies on different layers of the modern information ecosystem. (This is sometimes referred to as the “regulatory silos” problem.)
• Regulatory silos and unlevel playing fields create 3 additional problems. They:

1. are unfair to those players who suffer under more onerous rules;
2. threaten to roll the old onerous rules on newer and less regulated speech and communications platforms and technologies; and,
3. create uncertainty and threatens investment and innovations.

The Solution (again, simple in theory but not in political reality) = level the playing field by deregulating down to achieve parity instead of regulating up

II) Let’s get more concrete about how to accomplish that sort of liberalization and level the playing field. Three simple reform ideas can help:

1. “MFN clause for communications and media policy”: To the extent Congress continues to place ground rules on the information sector at all, it should consider borrowing a page from trade law by adopting the equivalent of a “Most Favored Nation” (MFN) clause for communications and media policy. In a nutshell, this policy would state that: “Any operator seeking to offer a new service or entering a new line of business, should be regulated no more stringently than its least regulated competitor.” Such a MFN for communications would ensure that regulatory parity exists within this arena as the lines between existing technologies and industry sectors continue to blur. Placing everyone on the same deregulated level playing field should be at the heart of telecommunications policy to ensure non-discriminatory regulatory treatment of competing providers and technologies at all levels of government. In other words, to level the proverbial playing field properly, we should “deregulate down” instead of regulating up to place everyone on equal footing.
2. “Moore’s Law” for information technology laws and regulations: With information markets evolving at the speed of Moore’s Law, public policy must as well. Toward that end, every new technology proposal should include a provision sunsetting the law or regulation 18 months to 2 years after enactment. And this principle should apply retroactively so that old rules are sunset on a rapid timetable. If Congress deems them vital, they can always be reauthorized. [See my Forbes column on this proposal.]
3. Comprehensive FCC reform, downsizing & defunding: You can’t truly deregulate communications and media markets if the primary regulator (the FCC  in this case) remains large and is constantly growing its budget and responsibilities. Regulators exist to regulate! Only by downsizing and defunding them can we truly deregulate these markets. (Alfred Kahn and the Democrats taught us that in the late 1970s when the comprehensively deregulated airline and transportation markets and then moved to abolish the agencies that oversaw those sectors as well. They understood that the very existence of those agencies was a major contributing factor to economic inefficiency and crony capitalism.)

III) If wasn’t that long ago that this sort of an approach was considered the model for how to move forward

Following the lead of the Democrats who deregulated airlines and transportation sectors in the late 1970s, a number of scholars in the 1990s and 2000s devised comprehensive reform proposals for communications and media markets. (Two old PFF projects built on this):

• “The Telecom Revolution”: May 1995 proposal from @ a dozen different free-market think tank analysts to replace the FCC with a much smaller agency.
• “Digital Age Communications Act” project (“DACA”): a 2005-06 set of proposals from over 50 non partisan academics to make the FCC behave more like the FTC. [See this paper by Ray Gifford for a concise summary of the project and all the proposals).

Generally speaking, both projects focused on same 5 reform objectives:

1. Replacing the amorphous “public interest” standard with a consumer welfare standard, which is more well-established in field of antitrust law
2. Eliminate regulatory silos and level the playing field through deregulation
3. Comprehensively reform spectrum not just through more auctioning but through clear property rights
4. Reform universal service by either voucherizing it or devolving it to the States and let them run their own telecom welfare programs
5. Significantly reforming & downsizing the scope of the FCC’s power of the modern information economy

• If we can get those 5 things done, we will have accomplished true deregulation of America’s information marketplace.  What we don’t want is another fiasco like the Telecommunications Act of 1996, which represented an effort at managed competition. That law intentionally avoided providing clear deregulatory guidance and instead delegated broad and remarkably ambiguous authority to the FCC. This left the most important deregulatory decisions to the FCC and, not surprisingly, the agency did a very poor job of following through with a serious liberalization agenda.
• Again, regulators generally don’t deregulate themselves! It is against their self-interest. Congress must impose restraint on the agency and limit (or, better yet, end) its powers.

IV) Some will say communications & media markets are too important to deregulate. But the exact opposite is true.

• America’s Founders thought media was important enough that they made sure that the First Amendment clearly stated that “Congress shall make no law” as it pertains to freedom of speech and the press. They got it exactly right.
• We need to return to that Constitutional prime directive for information markets and start removing the layers of unjust and unnecessary regulation that have encumbered these markets for the past 100 years. America’s communications and media policy should once again be the First Amendment, not the Communications Act of 1934 or the Telecom Act of 1996.
• What we need, to borrow the title of Richard Epstein’s book of the same title, is “simple rules for a complex world.”  Those simple rules include: the law of contract, torts and common law, anti-fraud statutes, etc.
• Such simple rules can govern our complex information ecosystem the same way they govern every other sector of our capitalist economy. We don’t need a sector-specific regulator or body of regulation for communications, media, and the Internet.

[Video clip of my remarks from the FSF panel follows.]

It was my pleasure this week to host a terrific panel discussion about the future of broadband policy and FCC reform featuring Raymond Gifford, a Partner at the law firm of Wilkinson Barker Knauer, LLP,  Jeffrey Eisenach, a Managing Director and Principal at Navigant Economics and an Adjunct Professor at George Mason University Law School, and Howard Shelanski, Professor of Law at Georgetown Law School who previously served as Chief Economist for the Federal Communications Commission and as a Senior Economist for the President’s Council of Economic Advisers at the White House. We discussed two new papers by Gifford and Eisenach on these issues.

Gifford discussed his new Mercatus Center Working Paper on “The Continuing Case for Serious Communications Law Reform.” Gifford’s paper outlines what substantive FCC reform would entail and considers what antitrust agencies and enforcement can teach us about the way the FCC should work going forward.  Eisenach discussed his important new paper on “Theories of Broadband Competition,” which similarly considers how competition oversight of broadband markets could be modeled after modern antitrust principles.  Shelanski offered his thoughts on both papers. It was an interesting discussion and I encourage you to watch the entire thing.

During the discussion period, we debated the likelihood that serious communications policy / FCC reform could occur in the current political environment.  I argued that the stars just don’t line up at this time to achieve such reforms. However, keep in mind that many deregulatory experiments in the past sometimes started slowly and then something sparked sudden action.  Scholars have noted (see McCraw’s “Prophets of Regulation”) sometimes just a couple of key players (such as Alfred Kahn in the airline context) were able to change the underlying dynamics of deregulation very rapidly to push through long-lasting reforms.

The key difference between then and now, of course, is that, back then, liberal Democrats in Congress and the Carter Admin came to understand how regulation was having a deleterious impact on marketplace competition and consumer welfare.  I simply cannot find a single Democrat who makes that same case today for the communications or media sectors.  And if telecom / media reform remains a highly politically charged, partisan issue, then the hopes for reform remain quite slim. But I haven’t given up all hope just yet!

Anyway, watch the event video for more discussion on this matter.

PFF has just published the transcript for an event we hosted last month asking “What Should the Next Communications Act Look Like?”  The event featured (in order of appearance) Link Hoewing of Verizon, Walter McCormick of US Telecom, Peter Pitsch of Intel, Barbara Esbin, 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.  The folks at NextGenWeb were kind enough to make a video of the event and post it online along with a writeup, so I’ve included that video along with the event transcript down below the fold.

What Should the Next Coummunications Act Look Like [PFF Event Transcript] http://d1.scribdassets.com/ScribdViewer.swf

I was very pleased to hear this announcement today from leading Senate and House Democrats regarding a much-needed update of our nation’s communications laws:

Today, Senator John D. (Jay) Rockefeller IV, Chairman of the U.S. Senate Commerce, Science, and Transportation Committee, Rep. Henry A. Waxman, the Chairman of the House Committee on Energy and Commerce, Senator John F. Kerry, the Chairman of the Senate Subcommittee on Communications, Technology, and the Internet, and Rep. Rick Boucher, the Chairman of the House Subcommittee on Communications, Technology, and the Internet announced they will start a process to develop proposals to update the Communications Act. As the first step, they will invite stakeholders to participate in a series of bipartisan, issue-focused meetings beginning in June. A list of topics for discussion and details about this process will be forthcoming.

This is great news, and an implicit acknowledgment by top Democratic leaders that the FCC most certainly does not have the authority to move forward unilaterally with regulatory proposals such as Net neutrality mandates or Title II reclassification efforts.

I very much look forward to engaging with House and Senate staff on these issues since this is something I’ve spent a great deal of time thinking about over the past 15 years. Most recently, Mike Wendy and I released a paper entitled, “The Constructive Alternative to Net Neutrality Regulation and Title II Reclassification Wars,” in which we outline some of the possible reform options out there. We built upon PFF’s “Digital Age Communications Act Project,” (DACA) which was introduced in February of 2005 with the ultimate aim of crafting policy that is adaptive to the frequently changing communications landscape. You can find all the white papers from the 5 major working groups here.  I also encourage those interested in this issue to take a look at the video from this event we hosted earlier this month asking, “What Should the Next Communications Act Look Like?” Lots of good ideas came up there.

Anyway, down below I have included the video from that event as well as a better description of the DACA model for those interested in details about how that model of Communications Act reform would work. I think DACA holds great promise going forward since it represents a moderate, non-partisan approach to reforming communications policy for the better.  I pulled this summary from the paper that Mike Wendy and I recently penned:

In 2005-06, The Progress & Freedom Foundation brought together over 50 scholars—a nonpartisan collection of lawyers, economists, engineers and other experts—with the ultimate aim of crafting a new regulatory framework more appropriate for a frequently-changing communications landscape. The resulting Digital Age Communications Act (DACA) project proposed scraping the old regulatory “silos” (Title II for telecom, Title III for broadcast, Title VI for cable) and replacing them all with a Federal Trade Commission-like “unfair competition” standard. Under DACA, the FCC would retain some baseline regulatory authority to oversee the marketplace, but this authority would be limited and based upon more settled principles of competition law and economics—essentially, streamlined antitrust regulation. Serious anticompetitive actions that lead to demonstrable consumer harm would still be policed and punished under this model. But this would be done on a limited, case-by-case basis without prejudging business models or practices or by imposing prophylactic regulatory regimes. In essence, DACA stood for the proposition that an ex post approach to regulatory oversight was preferable to ex ante forms of preemptive and prophylactic regulation by the FCC. Indeed, the DACA model was based on a model we already have in place: antitrust laws and the adjudicatory process administered by the Federal Trade Commission. The DACA experts, therefore, advocated not that the FCC be abolished, but that an FTC-like enforcement model be imported into the FCC. To be clear, this is regulation. In fact, when the DACA working group released its initial framework in June 2005, some critiqued the plan on the grounds that it did not do enough to tie the hands of regulators. Others argued that there was no need to import a competition policy regime into the FCC when the FTC and Department of Justice remain perfectly capable of enforcing antitrust laws where anti-competitive conduct can be proven. While those concerns are understandable, they’re also not very practical. Scrapping the FCC is untenable, especially since the FCC still engages in some sector-specific forms of regulation (spectrum standards, interconnection mandates, universal service administration, etc.) that Congress would likely insist remain within the hands of a sector-specific regulator. Nonetheless, the DACA framework would be vastly superior to the sort of heavy-handed regulatory approach currently on the books, or the even stricter “Mother, may I?” approach that some Net Neutrality proponents favor. DACA has the added advantage of not being as susceptible to the problems of regulatory creep and regulatory capture.

Click To Play

Noting that the Telecom Act has become ” irrelevant to the ecosystem that has developed,” Verizon’s Executive Vice President Tom Tauke today called for Congress to overhaul the nation’s archaic communications laws and the regulatory regime that the Federal Communications Commission (FCC) is currently attempting to pigeonhole the Internet and entire Digital Economy into.  It’s an excellent speech, and I encourage you to read the entire thing (which I have embedded down below the fold in a Scribd reader).

“[T]he test for government intervention in the marketplace is to prevent either harm to users or anti-competitive activity,” he said. He rightly noted that, in an age of technological convergence and vigorous cross-platform competition, the old silo-based approach of the Telecom Act — with its various Titles for outmoded market definitions — no longer makes any sense. He noted:

by the very nature of the Internet Ecosystem, many are working together or competing in other company’s turf. Computer companies sell phones, and quite successfully. Search engines sell open operating systems. Network providers create their own apps stores. That means that the value proposition to the consumer is really a package created by many companies acting together with little, if any, regard to their previous corporate histories. So no set of companies should be immune from scrutiny.

Of course, a regulatory regime already exists that accomplishes this goal: antitrust law. But Tauke’s proposal isn’t quite that sweeping. He doesn’t call for the FCC to be dynamited the ground and to just shift everything into the antitrust bucket, which some of us would prefer. Instead, he speaks generically about the need for a more sensible process — most likely still enforced by the FCC — that would work as follows:

we could structure a process that uses the innovative, flexible and technology-driven nature of the Internet to address issues as they arise. Instead of the traditional rule-making process, federal enforcement agencies could structure themselves around an ongoing engagement with Internet engineers and technologists to analyze technology trends, define norms to guide such questions as network management, and understand in advance the implications of new, emerging technologies.

Moreover, he advocates greater reliance on expert technical opinion and interaction to help inform the policy process:

Technology leaders and experts from all players involved in the Internet should set up voluntary organizations and forums to provide advice, recommendations, and advisory opinions to government agencies. This will help inform the agencies’ role as backstops that deter damaging activities that undermine the vibrant competition and openness that defines the Internet.

Again, he doesn’t really make it clear who will be administering this new process; his focus on getting Congress to clear out the old regulatory cobwebs and adopt a fresh policy approach for the Digital Age.

Of course, it remains to be seen if anyone in Congress will bite. Many policymakers’ idea of “reform” is to just layer on more misguided regulations to the old system. It’s like attempting to renovate a dilapidated old home by adding a fresh coat of paint and new window treatments. That fact is, the foundations are still crumbling.  Fundamental change is needed, and fast.

I was hoping that Tauke would come right out and endorse what continues to be the best “third way” alternative out there: Progress & Freedom Foundation’s “Digital Age Communications Act” or “DACA” framework. In 2005-6, PFF brought together over 50 leading scholars–a non-partisan collection of lawyers, economists, engineers and others—with the ultimate aim of crafting a regulatory framework that is adaptive to the frequently changing communications landscape. The resulting Digital Age Communications Act  proposal advocated tearing down the old regulatory paradigms and replacing them all with a Federal Trade Commission-like “unfair competition” standard.

Under DACA, the FCC would retain some baseline regulatory authority to oversee the marketplace but this authority would be quite limited and would be based on more settled principles of competition law and economics (namely, streamlined antitrust regulation). Serious anti-competitive corporate actions that lead to demonstrable consumer harm would still be policed and punished under DACA. But this would be done on a limited, case-by-case basis without prejudging business models or practices or by imposing prophylactic regulatory regimes. In essence, DACA stood for the proposition that an  ex post form of regulatory oversight was infinitely preferable to ex ante forms of preemptive and prophylactic regulation by the FCC.

To be clear, this is regulation. And, on a personal note, when the DACA working group released its initial framework in June 2005, I dissented to the plan on the grounds that DACA did not do enough to tie the hands of regulators. Moreover, I argued that there was no need to import a competition policy regime into the FCC when the Federal Trade Commission and Department of Justice remain perfectly capable of enforcing antitrust laws when anti-competitive conduct can be proven.

Nonetheless, the DACA framework would be vastly superior to the sort of heavy-handed regulatory approach that some defenders of the ancien regime still favor.  DACA has the added advantage of not being as susceptible to the problems of regulatory creep and regulatory capture.

Tauke didn’t go quite that far today, but I do hope that if Congress got around to reopening the Telecom Act and freshening up public policy in this area that they’d give DACA a second look.  It’s a reasonable “third way” approach that would satisfy many of the goals of traditional regulatory policy regime without all the excess baggage. Tom Tauke’s call for Congress to at least reopen and reconsider the broken old regime is the first step toward that goal.

Prepared Remarks of Verizon EVP Tom Tauke http://d1.scribdassets.com/ScribdViewer.swf

PFF has just released the transcript of an excellent panel discussion I moderated last week entitled, “Let’s Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum.”  As I’ve mentioned here before, one of the hottest issues in DC right now is the question of broadcast TV spectrum reallocation.  Blair Levin, who serves as the Executive Director of the Omnibus Broadband Initiative at the Federal Communications Commission, recently raised the possibility of reallocating a portion of broadcast television spectrum for alternative purposes, namely, mobile broadband. Such a “cash-for-spectrum” swap would give mobile broadband providers to spectrum they need to roll out next generation wireless broadband networks while making sure broadcaster receive compensation for any spectrum they hand over.  The FCC just recently released a public notice on “Data Sought on Users of Spectrum,” (NBP Public Notice # 26) that looks into the matter. “This inquiry,” the agency says,” takes into account the value that the United States puts on free, over-the-air television, while also exploring market-based mechanisms for television broadcasters to contribute to the broadband effort any spectrum in excess of that which they need to meet their public interest obligations and remain financially viable.” Meanwhile, the House Energy and Commerce Communications Subcommittee is set to hold a hearing on the issue next Tuesday.

PFF’s panel discussion on this issue featured an all-star cast of characters, including opening remarks by Blair Levin, and a terrific discussion ensued. [You can hear the full audio from the event here.]  Down below I have highlighted some of the major points each speaker made during the discussion and also embedded the complete transcript in a Scribd reader.  Also, just a reminder that my PFF colleague Barbara Esbin and I authored a short paper on this issue recently: “An Offer They Can’t Refuse: Spectrum Reallocation That Can Benefit Consumers, Broadcasters & the Mobile Broadband Sector.”

• Blair Levin, Executive Director of the FCC’s Omnibus Broadband Initiative, began the discussion by describing how additional spectrum will be needed to expand wireless broadband and why spectrum currently held by broadcasters would be a good option.  In addition to identifying spectrum that has the technical qualities to support broadband, he explained, “You also would look at things like where there’s an economic gap between the current use and potential wireless use.  You would want to look at bands where maybe there are regulations which constrain the market mechanism.  You also might want to look at bands where you can have a meaningful reallocation of spectrum while, nonetheless, preserving current uses.”
• Coleman Bazelon, Principal at The Brattle Group, presented findings from his recent paper on the value of spectrum currently held by broadcasters if it was reallocated to commercial mobile or wireless broadband uses. “This analysis shows that there are significant gains from reallocating the broadcast band, and I think the takeaway should be that there are significant gains, not that its $42 billion or $51 billion, but that its tens and tens of billions of dollars,” Bazelon stated.
• David Donovan, President of the Association for Maximum Service Television, Inc., questioned the estimates of the additional value of broadcast spectrum that could be gained if it was auctioned for other uses.  “If you are valuing over the air television broadcasting and its importance to the American public, using a snapshot based on an auction valuation at a particular point in time is really highly inappropriate,” he stated. “The business model of broadcasting is heavily regulated. … and that defines, of course, the value, just like heavy zoning defines the price of land.”
• Kostas Liopiros, Principal of The Sun Fire Group, discussed the technical feasibility of using various blocks of spectrum for wireless broadband use.  “Only additional spectrum can produce the required gains of capacity in the future, but if the gains capacities are oriented towards wireless broadband, for national wireless broadband capability, you need to focus on the right type of spectrum,” he explained.
• John Hane, Counsel in the Communications Practice Group of Pillsbury Winthrop Shaw Pittman LLP, warned of the legal difficulties of modifying broadcast licenses.  “Extinguishing licenses requires a hearing, potentially hundreds of them, each one affecting one or more Congressional districts.”  Although the FCC is able to modify a license without the licensee’s consent, he continued, “that is a very long and complicated process with an uncertain time frame.  If there really is a spectrum crisis, the stick approach …is not going to solve it very fast.”
• Paul Gallant, Senior Vice President of Concept Capital, discussed the possible effects of Congress involvement in auction of broadcast spectrum.  If broadcasters are reluctant to modifying their business model, Gallant explained, it might be beneficial for them to have Congress involved in such a deal.  However, he warned that Congressional involvement could also result in uncertainty for the broadcasters.  “It is not clear, if Congress does pass a bill, whether broadcasters come out better or worse than they would if they had worked something out with the FCC.  The main reason is there is tremendous budget pressure in Congress today.  They are looking for new sources of revenue,” Gallant explained.
• Andrew Jay Schwartzman, President and CEO of Media Access Project, expressed that he was resistant to the idea of auctioning spectrum.  “It isn’t property,” He stated.  “They favor incumbents.  They’re rigged.  They don’t generate the revenues that OMB and Congress seem to think they will.” He also warned of the possible impact of auctions on innovation. “Auctions lock in existing technology and near-term foreseeable technology. The people who are able and willing to bid are basing it on technology that they know they can generate and that does not allow the spectrum to be used in better ways coming down the road.”

Transcript of Dec 1 PFF Event on Broadcaster TV Spectrum Reallocation [PFF – Thierer] http://d1.scribdassets.com/ScribdViewer.swf?document_id=23980532&access_key=key-wdpoolnrm5gxq1xu7c6&page=1&version=1&viewMode=list

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.

Broadcast TV Spectrum Reallocation (Thierer & Esbin – PFF) http://d1.scribdassets.com/ScribdViewer.swf?document_id=22365493&access_key=key-2cs1sry5qv9xd3x6d5bv&page=1&version=1&viewMode=list