by Larry Downes and Geoffrey A. Manne
Now that the election is over, the Federal Communications Commission is returning to the important but painfully slow business of updating its spectrum management policies for the 21st century. That includes a process the agency started in September to formalize its dangerously unstructured role in reviewing mergers and other large transactions in the communications industry.
This followed growing concern about “mission creep” at the FCC, which, in deals such as those between Comcast and NBCUniversal, AT&T and T-Mobile USA, and Verizon Wireless and SpectrumCo, has repeatedly been caught with its thumb on the scales of what is supposed to be a balance between private markets and what the Communications Act refers to as the “public interest.” Continue reading →
Why do mobile carriers sell phones with a subscription? My roommate and I were debating this the other night. Most other popular electronics devices aren’t sold this way. Cable and satellite companies don’t sell televisions with their video service. ISPs don’t sell laptops and desktops with their Internet service. Bundling phones with mobile service subscriptions is pretty unique. (The only mass-market analogs I can think of are satellite radio and GPS service.)
Why might this be? Continue reading →
Tomorrow the Federal Communications Commission (FCC) is testifying at a House Energy and Commerce Committee oversight hearing on spectrum auctions. The hearing is focused on the implementation of the broadcast incentive auction required by the Middle Class Tax Relief and Job Creation Act of 2012 (“Spectrum Act”), though the members will likely address other issues as well, including mobile spectrum aggregation.
I expect several questions regarding the FCC’s commitment to comply with the legislation as enacted by Congress. FCC Commissioner Ajit Pai has questioned whether several of the agency’s proposals in its auction proceeding are consistent with the Spectrum Act. The FCC’s recent proceeding to consider mobile spectrum aggregation has since raised troubling new questions regarding the agency’s willingness to comply with Congressional directives regarding spectrum auctions. If the FCC adopts new limits on spectrum holdings as suggested by its mobile competition reports, Verizon and AT&T would be prohibited from bidding in the incentive auction. Contrary to Congressional intent, the incentive auction would be rigged before it even begins. Continue reading →
When CLECs say “packet mode,” don’t let the doublespeak fool you. They are asking for heavy-handed economic regulation of the Internet itself, just like many countries at the ITU.
Last week, I wrote about the failure of the CLECs to provide consumers with the additional choices in communications services Congress had envisioned in 1996. I noted that, now that the antiquated telephone network is about to sunset, CLECs must bear responsibility for their own decisions to forgo investment in their own infrastructure and rely on lines leased with temporary government subsidies. The desperation of CLECs to avoid this reality is apparent in their use of doublespeak to conceal their true intent: convincing the FCC to regulate the Internet like plain old telephone service. Continue reading →
Rather than invest and deploy new networks offering millions of consumers with additional choices for high speed Internet access, CLECs are investing in the regulatory process in hopes the FCC will save them from the inconvenience and expense of transitioning to all-IP infrastructure. The FCC should not allow the self-interest of CLECs to stand in the way of the IP-transition or the delivery of high speed Internet services to millions of residential consumers who demand more choice.
Shortly after AT&T announced “Project Velocity IP,” its plan to invest an additional $14 billion to provide high-speed Internet access to 99 percent of customer locations in its wireline service area, I blogged about the broad consensus among policymakers, pundits, and industry players in support of the announcement. But, “you can never please all of the people all of the time.” Now that the initial buzz around the announcement has abated, the inevitably unpleased few have gone on the offensive.
The few who cannot be pleased by Internet transformation are “competitive local exchange carriers,” also known as “CLECs.” These companies were created in the mid-1990s to provide both residential and business consumers with an additional choice for telephone service, but after the dot-com bubble burst, CLECs chose to limit their offerings to more lucrative business customers in downtown metro areas. They typically do not offer service to residential consumers or businesses that demand additional options in more suburban and rural areas.
While companies that serve all types of American consumers are investing in the transformation of their outdated telephone systems into the all-Internet protocol (IP) infrastructure of the 21st Century to deliver high-speed Internet services to residential consumers, CLECs claim the IP-transition is a “waste of resources” and a “distraction.” Rather than invest and deploy new networks offering millions of consumers with additional choices for high speed Internet access, CLECs are investing in the regulatory process in hopes the FCC will save them from the inconvenience and expense of transitioning to all-IP infrastructure. The FCC should not allow the self-interest of CLECs to stand in the way of the IP-transition or the delivery of high-speed Internet services to millions of residential consumers who demand more choice. Continue reading →
Yesterday AT&T announced that it would invest an additional $14 billion in the next three years to expand its 4G LTE network to cover 300 million people and expand its wired all-IP broadband infrastructure to 75 percent of its customer locations throughout its 22-state wired service area. For many consumers, this investment will provide their first opportunity for access to high-speed broadband at home. For many others, it will provide their first opportunity to make a choice among competing providers of high-speed broadband services. This impressive commitment to transition outdated communications infrastructure to an all-IP future will benefit millions of consumers and accelerate our Internet transformation nationwide. Continue reading →
“All this top-40s music sounds the same.” I think we’ve all heard this sentiment. The nature of regional radio broadcasting almost requires a regression to the mean in musical tastes. A radio station cannot be all things to all people. I suspect most people will be surprised to learn that some of the most innovative radio broadcasts are taking place at hundreds of stations across the country—and only few people can listen to them. These stations, known as low power FM (LPFM), carry niche programming like independent folk rock music, fishing shows, political news, reggae, blues, and religious programming. (And one station in Sitka, Alaska consists entirely of a live feed of whale sounds.) Continue reading →
If the FCC stops moving forward on Internet transformation, the universal service and intercarrier compensation reform order will become a death warrant for telephone companies.
CLIP hosted an event earlier this month to discuss Internet transformation. What is Internet transformation? In a recent op-ed, FCC Commissioner Ajit Pai noted that it “is really two different things—a technology revolution and a regulatory transition.”
The technology revolution began with the commercialization of the Internet, which enables the delivery of any communications service over any network capable of handling Internet Protocol (IP). According to the National Broadband Plan, the “Internet is transforming the landscape of America more rapidly and more pervasively than earlier infrastructure networks.” In little more than a decade, the Internet destroyed the monopoly structure of the old communications industry from within and replaced it with intermodal competition. Continue reading →
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!)
Continue reading →
We spend a lot of time here defending the simple proposition that flexible free-market pricing is a good thing. You would think that in 2012 we wouldn’t need to do so, but there’s a growing movement afoot today by some academics, regulatory activists, and public policymakers to have government start asserting more authority over broadband pricing. In particular, they want Congress, the FCC, or state officials to investigate and possibly even regulate efforts by wireline and wireless broadband carriers to use usage-based pricing and data caps as a method of calibrating supply and demand. This was the focus of my last weekly Forbes column, “The Specter Of Broadband Price Controls.” In the piece I note that:
Data caps and usage-based pricing are forms of what economists refer to as price discrimination. Although viewed with suspicion by some policymakers and regulatory-minded academics and activists, price discrimination is widely recognized to improve consumer welfare. Price-differentiated and prioritized services are part of almost every industrial sector in our capitalist economy. Notable examples include airline and hotel reservations, prioritized shipping services, amusement park passes, and fuel and energy pricing. Economists agree that price discrimination represents a sensible way to calibrate supply and demand while ensuring the fixed costs of doing business get covered. Consumers benefit from such pricing experimentation by gaining more options while firms gain more certainty about investment and service decisions.
This is confirmed by an excellent new Mercatus Center working paper on “The Impact of Data Caps and Other Forms of Usage-Based Pricing for Broadband Access,” by Daniel A. Lyons, an assistant professor of law at Boston College Law School. Lyons explains why a return to price controls for communications would be monumentally misguided. Continue reading →
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