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iPhone, Android and the Rest: at the Mercy of Local Zoning Boards

by on September 8, 2011 · 2 comments

For CNET this morning, I have a long article reviewing the sad recent history of how local governments determine the quality of mobile services.

As it  turns out, the correlation is deeply negative.  In places with the highest level of user complaints (San Francisco, Washington, D.C.), it turns out that endless delays or outright denials for applications to add towers and other sites as well as new and upgraded equipment is also high.  Who’d have thought?

Despite a late 2009 ruling by the FCC that put a modest “shot clock” on local governments to approve or deny applications, data from CTIA and PCIA included in recent comments on the FCC’s Broadband Acceleration NOI suggests the clock has had little to no effect.  This is in part because the few courts that have been asked to enforce it have demurred or refused.

Much of the dithering by local zoning boards is unprincipled and pointless, a sign not so much of legitimate concerns over safety and aesthetics but of incompetence, corruption, and the insidious influence of  outside “consultants” whose fees are often levied against the applicant, adding insult to injury. Continue reading →

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The Spectrum Argument Lives, Debunking Letter-Gate, and Why the DOJ Is Still Wrong to Try to Stop the AT&T/T-Mobile Merger

by on September 2, 2011 · 615 comments

Milton Mueller responded to my post Wednesday on the DOJ’s decision to halt the AT&T/T-Mobile merger by asserting that there was no evidence the merger would lead to “anything innovative and progressive” and claiming “[t]he spectrum argument fell apart months ago, as factual inquiries revealed that AT&T had more spectrum than Verizon and the mistakenly posted lawyer’s letter revealed that it would be much less expensive to expand its capacity than to acquire T-Mobile.”  With respect to Milton, I think he’s been suckered by the “big is bad” crowd at Public Knowledge and Free Press.  But he’s hardly alone and these claims — claims that may well have under-girded the DOJ’s decision to step in to some extent — merit thorough refutation.

To begin with, LTE is “progress” and “innovation” over 3G and other quasi-4G technologies.  AT&T is attempting to make an enormous (and risky) investment in deploying LTE technology reliably and to almost everyone in the US–something T-Mobile certainly couldn’t do on its own and something AT&T would have been able to do only partially and over a longer time horizon and, presumably, at greater expense.  Such investments are exactly the things that spur innovation across the ecosystem in the first place.  No doubt AT&T’s success here would help drive the next big thing–just as quashing it will make the next big thing merely the next medium-sized thing.

The “Spectrum Argument”

The spectrum argument that Milton claims “fell apart months ago” is the real story here, the real driver of this merger, and the reason why the DOJ’s action yesterday is, indeed, a blow to progress.  That argument, unfortunately, still stands firm.  Even more, the irony is that to a significant extent the spectrum shortfall is a product of the government’s own making–through mismanagement of spectrum by the FCC, political dithering by Congress, and local government intransigence on tower siting and co-location–and the notion of the government now intervening here to “fix” one of the most significant private efforts to make progress despite these government impediments is really troubling.

Anyway, here’s what we know about spectrum:  There isn’t enough of it in large enough blocks and in bands suitable for broadband deployment using available technology to fully satisfy  current–let alone future–demand.

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Let me say something good about DOJ’s AT&T/T-Mobile decision …

by on August 31, 2011 · 5 comments

I can’t help but think that there might be  a big advantage of having the AT&T-T-Mobile merger go to court.  For once, the high-profile action everyone pays attention to will occur in an antitrust forum where the decision criterion is the effects of the merger on consumer welfare, period.   Regardless of what one thinks about the merger, it’s nice to see that we’ll finally have a knock-down, drag-out fight based on whether a big telecommunications merger harms consumers and competition.  That’s the antitrust standard the Department of Justice has to satisfy in order to prevent the merger. 

This will be a refreshing change from the Federal Communications Commission’s “public interest” standard, which allows the commission to object on grounds other than consumer welfare and demand all manner of concessions that have nothing to do with remedying anticompetitive effects of a deal. Case in point: Comcast must now offer broadband service for $9.95 per month to low-income households as a condition for getting approval to buy 51 percent of NBCUniversal. Now, I’m all for seeing low-income households get access to broadband, but subsidizing one subset of customers has little to do with mitigating any possible anticompetitive effects of allowing a cable company to own NBCUniversal. As FCC Commissioners McDowell and Baker said in their statement on that transaction, “Any proposed remedies should be narrow and transaction specific, tailored to address particular anti-competitive harms. License transfer approvals should not serve as vehicles to extract from petitioners far-reaching and non-merger specific policy concessions that are best left to broader rulemaking or legislative processes.” 

In short, if AT&T wins in court, the FCC should approve the merger promptly without additional conditions.

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Latest Industry USF Proposal

by on August 1, 2011 · 10 comments

A couple days before Congress announced a debt deal, half a dozen telecommunications companies filed a plan on July 29 with the Federal Communications Commission that attempts to resolve a much longer-running set of negotiations over big bucks.  The “America’s Broadband Connectivity” Plan seeks to replace Universal Service Fund subsidies for telephone service in rural areas with subsidies for broadband in rural areas.

Like the federal budget negotiations, the never-ending negotiations over USF get bogged down in arguments over distribution: who gets what.  Indeed, it’s almost exclusively an argument over which companies get what. But federal telecommunications policy is supposed to advance the overall public interest, not just haggle over what corporate interest gets what piece of my pie. Here is a quick take on the biggest strengths and weaknesses of the plan in terms of advancing overall consumer welfare. By “consumer welfare,” I mean not just the welfare of the folks receiving subsidized services, but also the welfare of the majority who are paying a 15 percent charge on interstate phone services to fund the USF.

BIGGEST STRENGTHS

Fixed-term commitment: Rural phone subsidies have become a perpetual entitlement with no definition of when the subsidies can end because the problem is considered solved.  The ABC plan proposes a 10-year commitment to rural broadband subsidies.  By 2022 the FCC should assess whether any further high-cost universal service program is needed. This idea remedies a significant deficiency in the current high-cost subsidy program, which doesn’t even have outcome goals or measures. (That’s why I like to sing the final verse from “And the Money Kept Rolling In” from Evita when I talk about universal service.  Free State Foundation President Randy May asked me for an encore of this at the end of the foundation’s July 13 program on universal service, available here.)

Intercarrier compensation: “Intercarrier compensation” refers to the per-minute charges communications companies pay when they hand off phone traffic to each other. The plan proposes to ramp down all intercarrier charges to a uniform rate of $0.0007/minute.  Economists who study telecommunications have pointed out for decades that high per-minute charges reduce consumer welfare by discouraging consumers from communicating as much as they otherwise would.  MIT economist Jerry Hausman, in a paper prepared for the filing, estimates that low, uniform intercarrier charges would increase consumer welfare by about  $9 billion annually.

Legacy obligations: Public utility regulation traditionally forced regulated companies to offer certain services or serve certain markets at a loss, then charge profitable customers higher prices to cover the losses. Judge Richard Posner referred to this opaque practice as “Taxation by Regulation“: the customers paying inflated prices get “taxed” to accomplish a public purpose, but they don’t know it.  Some of these obligations continue today as federal requirements applied to “Eligible Telecommunications Carriers” or state “Carrier of Last Resort” obligations.  The plan would remove these obligations for companies that are not receiving USF subsidies.

BIGGEST WEAKNESSES

Definition of broadband: The plan would continue to inflate the cost of rural broadband subsidies by defining “broadband” as 4 megabytes per second download and 768 kilobytes per second upload.  This means 3G wireless, satellite, and some wireless Internet service providers do not count as “broadband.” This decision more than doubles the number of households considered “unserved” and rules out some lower-cost technologies.  Jerry Brito and I have written extensively about both the economics and the legality of this.  Interestingly, the ABC coalition’s legal white paper arguing that the commission has legal authority to adopt the plan makes no effort to show that the commission has authority to subsidize 4 mbps broadband; it only shows the commission has authority to subsidize some form of broadband.

Alternative cost technology threshold: The plan includes an “alternative cost technology” threshold that allows substitution of satellite broadband for customers who would cost more than $256/month to serve.  Inclusion of a threshold is actually a strength. But the $256/month figure is way too high.  Satellite broadband with speeds of 1-2 mbps is now available for $60 – $110 per month.  Consumers who pay a 15 percent surcharge on their local phone bills to fund USF should not be expected to provide a subsidy of more than $200 per month.

Mobility: The plan appears to advocate subsidies for mobile broadband service in places where it is not currently available.  So now the rural entitlement expands to include not just basic broadband service in the home to stay connected, but also a mobile service that a lot of Americans don’t even buy unless their employers pay for it! I question whether mobile broadband satisfies the 1996 Telecommunications Act’s criteria for universal service subsidies, such as “essential” (not just nice) for education or public safety, or subscribed to by a “substantial majority” of households. These questions should be thoroughly examined before anyone receives subsidies for mobile broadband. At a minimum, households should be eligible for only one broadband subsidy — wireline or mobile — but not both.

 

 

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Net neutrality: the disaster that keeps on giving

by on July 29, 2011 · 7 comments

On CNET this morning, I argue that delay in approving FCC authority for voluntary incentive auctions is largely the fault of last year’s embarrassing net neutrality rulemaking.

While most of the public advocates and many of the industry participants have moved on to other proxy battles (which for most was all net neutrality ever was), Congress has remained steadfast in expressing its great displeasure with the Commission and how it conducted itself for most of 2010.

In the teeth of strong and often bi-partisan opposition, the Commission granted itself new jurisdiction over broadband Internet on Christmas Eve last year.  Understandably, many in Congress are outraged by Chairman Julius Genachowski’s chutzpah.

So now the equation is simple:  while the Open Internet rules remain on the books, Congress is unlikely to give the Chairman any new powers.

House Oversight Committee Chairman Darrell Issa has made the connection explicit, telling reporters in April that incentive auction authority will not come while net neutrality hangs in the air.  There’s plenty of indirect evidence as well.

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A Response to Andrew McLaughlin on Net Neutrality & “Freedom”

by on July 9, 2011 · 27 comments

Over on his Google+ page, cyber-guru Andrew McLaughlin posted a bit of a rant about libertarians and Net neutrality arguing, among other things, that “the pro-freedom position is to enforce net neutrality.” Needless to say, I disagree and posted a long comment explaining why and trying to help him and others on the Left understand the way libertarians generally look at this issue. For what it’s worth, I thought I would just repost my response to him here:
________

Andrew… I’m happy, as always, to engage in friendly debate with you about this, although I suspect from the tone of some of the others here that nothing I will say will convince them that opposition to Net neutrality regulation can be based on anything other than pure corporate whoring!

I’m always mystified by the highly selective nature of this rhetorical device when employed by some on the Left against libertarians. After all, as Tim Lee already alluded to in his comments above, we never seem to hear our Lefty friends trot out those arguments when they agree with us. For example, Berin Szoka and I filed an amicus brief in the Supreme Court last year in the BROWN v. EMA video game case along with Lee Tien and Cindy Cohn of EFF. Why is it that I did not hear one peep from any Lefties about my obvious corporate whoring in that matter! I mean, clearly, there’s no possible way that a libertarian could support First Amendment rights. I must have just been in it for video game industry money, right?

OK, I’m being snarky here. And I know this is not your position because I’ve known you a long time and know that you do not adopt such tactics even when we do, on occasion, disagree heatedly over a major policy issue.  But, even if I am wasting my breath, let me just say this to others: We libertarians in the academic and think tank world aren’t exactly living “Lifestyles of the Rich and Famous.” If we all just in it for the money than I can tell you that we are doing a tremendously shitty job at it! (In fact, most libertarian think tanks or organizations only have something like 5 to 10% corporate funding. The organization I work for has even less.) Seriously folks, we libertarians believe in our ideas and fight for them with the same passion that you fight for yours because of a heart-felt belief in the inherent rightness of our core principles. Continue reading →

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Netflix Falls Prey to Marginal Cost Fallacy & Pleads for a Broadband Free Ride

by on July 8, 2011 · 12 comments

Of all the shockingly naive and shamelessly self-serving editorials I’ve read by businesspeople in recent years, today’s Wall Street Journal oped by Netflix general counsel David Hyman really takes the cake. It’s an implicit plea to policymakers for broadband price controls. Hyman doesn’t like the idea of broadband operators potentially pricing bandwidth according to usage /demand and he wants action taken to stop it. Of course, why wouldn’t he say that? It’s in Netflix’s best interest to ensure that somebody else besides them picks up the tab for increased broadband consumption!

But Hyman tries to pull a fast one on the reader and suggest that scarcity is an economic illusion and that any effort by broadband operators to migrate to usage-based pricing schemes is simply a nefarious, anti-consumer plot that must be foiled. “Consumers and regulators need to take heed of what is happening and avoid winding up like the proverbial frog in a pot of boiling water,” Hyman warns. “It’s time to jump before it’s too late.”

Rubbish! The only thing policymakers need to do is avoid myopic, misguided advice like Hyman’s, which isn’t based on one iota of economic theory or evidence.

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FCC v. Pacifica Foundation at 33: Will This Be Its Last an Anniversary?

by on July 3, 2011 · 0 comments

Today is the 33rd anniversary of the Supreme Court’s landmark First Amendment decision, FCC v. Pacifica Foundation. By a narrow 5-4 vote in this 1978 decision, the Court held that the FCC could impose fines on radio and TV broadcasters who aired indecent content during daytime and early evening hours. The Court used some rather tortured reasoning to defend the proposition that broadcast platforms deserved lesser First Amendment treatment than all other media platforms. The lynchpin of the decision was the so-called “pervasiveness theory,” which held that broadcast speech was “uniquely pervasive” and an “intruder” in the home, and therefore demanded special, artificial content restrictions.

Back in 2008, when Pacifica turned 30, I penned a 6-part series critiquing the decision and discussing its impact on First Amendment jurisprudence:

In addition to those essays, I brought all my thinking together on this issue in a 2007 law review article, “Why Regulate Broadcasting: Toward a Consistent First Amendment Standard for the Information Age.”  Importantly, this could be the last year we “celebrate” a Pacifica anniversary. Earlier this week, on the same day it handed down a historical video game free speech win, the Supreme Court announced that next term it will examine the constitutionality of FCC efforts to regulate “indecent” speech on broadcast TV and radio. Here’s hoping the Supreme Court takes the sensible step of undoing the unjust regulatory mess they created with Pacifica 33 years ago. Speech is speech is speech. Lawmakers should not be regulating it differently just because it’s on TV or radio instead of cable TV, satellite radio or TV, physical media, or the Internet. Continue reading →

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Terrific Speech by FCC’s Rob McDowell on “Technology & the Sovereignty of the Individual”

by on June 29, 2011 · 10 comments

FCC Commissioner Robert M. McDowell delivered a terrific speech this week on “Technology and the Sovereignty of the Individual” at a broadband conference in Stockholm, Sweden.  The speech serves as another reminder that McDowell is one of those ultimate rare birds: a regulator who is a first-rate intellectual thinker and a great champion of individual liberty. It’s a beautiful statement in defense of real Internet freedom. I can’t recall ever seeing another federal official cite the great Bruno Leoni in a speech!

Here’s a sample of what Commissioner McDowell had to say:

To propel freedom’s momentum, policy makers should remember that, since their inception, the Internet and mobile connectivity have migrated further away from government control.  As the result of longstanding international consensus, the Internet itself has become the greatest deregulatory success story of all time.  To continue to promote freedom and prosperity, regulators should continue to rely on the “bottom up” nongovernmental Internet governance bodies that have a perfect record of keeping the ’Net working and open.  We must heed the advice of leaders like Neelie Kroes, who has consistently called on regulators to “avoid over-hasty regulatory intervention,” and steer clear of “unnecessary measures which may hinder new efficient business models from emerging.” I couldn’t agree more.  Changing course now could not only trigger an avalanche of international regulation, but it could halt the progress of freedom’s march as well.

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Brown v EMA and net neutrality?

by on June 28, 2011 · 1 comment

John Perry Barlow famously said that in cyberspace, the First Amendment is just a local ordinance.  That’s still true, of course, and worth remembering.  But at least today there is good news in the shire.  The local ordinance still applies with full force, if only locally.

As I write in CNET this evening (see “Video Games Given Full First Amendment Protection“), the U.S. Supreme Court issued a strong and clear opinion today nullifying California’s 2005 law prohibiting the sale or rental to minors of what the state deemed “violent video games.” Continue reading →

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