Today, the Federal Communications Commission (FCC) voted along party lines to adopt a Notice of Inquiry opening a new proceeding to regulate the Internet by reclassifying it under Title II of the Communications Act. FCC Chairman Julius Genachowski calls this his “Third Way” plan. In a PFF press release, I issued the following response:

In its ongoing ‘by-any-means-necessary’ quest to regulate the Internet via Net Neutrality mandates, Chairman Genachowski’s FCC continues to flaunt the rule of law and magically invent its own authority as it goes along. If this Chairman wants to bring the Net under his thumb and regulate broadband networks like plain-vanilla public utilities, he should ask Congress for the authority to pursue such imperial ambitions. As the law stands today, the FCC has no such authority. Indeed, the unambiguously deregulatory thrust of the Telecom Act of 1996 stands in stark contrast to Chairman Genachowski’s outdated vision for Big Government Broadband. The FCC stands on the cusp of killing one of the great deregulatory success stories of modern economic history by reviving the discredited regulatory industrial policies of the 19th Century. The revisionism about that epoch is dead wrong: Price controls and protected markets limited choice and stifled innovation. With the agency rolling back the regulatory clock in this fashion, today marks the beginning of the Internet’s “Lost Decade” of stymied investment, innovation, and job creation as all sides wage battle over the legality of reclassification and its implementation.

My dear friend, fellow space/IT/priavcy/communications lawyer and now PFF Adjunct Fellow Jim Dunstan just published this PFF paper, which I thought I’d share with you (PDF)

The FCC’s Title II “Lite” (as a Lead Balloon!) & the Looming Broadband Tax

by James E. Dunstan, PFF Adjunct Fellow, Progress Snapshot 6.9

FCC Chairman Genachowski has set forth his vision—a “Third Way”[1]—for overcoming the D.C. Circuit’s recent decision in the Comcast case concluding that the FCC lacked jurisdiction for sanctioning Comcast for allegedly blocking subscribers using peer-to-peer software or otherwise throttling bandwidth to heavy users.[2] The Court concluded that the FCC’s “ancillary jurisdiction” under Title I of the Communications Act was insufficient authority to step in and regulate Comcast’s broadband services.  Since then, all of the Washington telecommunications intelligentsia has speculated at the FCC’s next move.  Now we have it.

Chairman Genachowski’s “Third Way” is a form of Title II “lite,” where the FCC will reverse its prior decisions dating back decades that declare the Internet and broadband connections “information services,” and instead bifurcate the Internet into two segments: the “Internet” itself, and the “connections to” the Internet.  Under the “Third Way,” the FCC would continue to treat the “Internet” itself (whatever that actually means) as an “information service” (Title I) but declare all connections to the Internet to be “telecommunications services” (Title II).[3] Armed with a ten-page memo from his General Counsel,[4] the Chairman argues that this policy reversal is on sound legal ground and will instantly reverse the “problem” caused by the Comcast decision.

Setting aside the fundamental question of who caused this “problem” (a Federal Court of Appeals concluded that it was the FCC who violated the Communications Act, not Comcast), the Chairman’s “Third Way” may turn out to be a third rail, with the real potential for destroying the Internet as we know it.

Remember how Voice over Internet Protocol (VoIP) was going to revolutionize the telephone market by offering services for a fraction of the price of traditional telephone companies because it wasn’t saddled with traditional telephone infrastructure costs but instead rode along broadband connections?  Unfortunately, VoIP has all but died a slow and painful death on the FCC’s regulatory rack:  Over time, the FCC heaped more and more Title II regulation upon VoIP providers, increasing barriers to entry for new competitive services.  Without even formally branding VoIP a telecommunication service subject to Title II, the FCC first imposed 911 obligations,[5] then CALEA obligations,[6] and ultimately required interconnected VoIP providers to pay into the Universal Service Fund.[7] What was rolled out as a cheap additional voice alternative for the tech-savvy became just another service under the FCC’s heavy thumb, which drove most small VoIP providers out of business, unable to shoulder the huge regulatory costs of being de facto Title II carriers.  Even worse, as of May, 2009, a VoIP provider can’t even go out of business without first getting FCC permission to die, even if it had begun offering service in the era before the FCC stepped into regulate.[8]

While the Chairman asks us to trust him that he’ll handle broadband with a light regulatory touch (so-called “forbearance”), one look at how VoIP was treated must lead us to conclude that all manner of regulatory hell potentially faces each carrier providing an onramp to the Internet, if the FCC goes its “Third Way.”  But the part of this proposed regulatory course that’s most disturbing is the way in which this Commission is likely to both grant itself regulatory powers Congress never intended and in one fell swoop impose the largest single new tax in its history.  This is a side of the story that has somehow flown under the radar.

When the FCC recently issued its National Broadband Plan (NBP),[9] as required by Congress, the document was long on promise (“100 Mbps to 100 million Americans by 2020”), but short on ways to pay for broadband deployment to the 5-7% of Americans without real access to even slow broadband speeds (below 3 Mbps).  As it turns out, the Comcast case provides the FCC with the perfect vehicle to fund aggressive broadband deployment: the Universal Service Fund.  As with so much of government, if you want to understand policymaking, just follow the money.

FCC General Counsel Austin Schlick’s legal memorandum supporting the “Third Way” makes no mention of the Universal Service Fund.  In contrast, Chairman Genachowski’s statement talks about USF three times.  It is the goal of this FCC, he says, as part of the National Broadband Plan, to overhaul the USF and transform a $9 billion program subsidizing basic telephone service to homes and broadband connections to schools and libraries, into a program to subsidize deploying broadband to rural areas and subsidize subscriber fees in high cost areas and for those with low incomes.

Of course, this is the same USF with some of the largest percentages of waste, fraud, and abuse of any government program.  The GAO estimates that in 2008 alone, some $1.3 billion was improperly paid out, with some 23.3% of payments made under the High Cost program being made in error.^[10] This is also the same fund where the “contribution factor” (a fancy word for tax, since all contributing carriers pass that amount right along to you and me in our monthly bills) has increased from around 5% in 1999 to a current contribution factor of 15.3%,^[11] and that contribution factor would be far higher had not the FCC capped out-of-control payments from the High Cost program to avoid bankrupting the fund.  And this is going to be the funding mechanism for the National Broadband Plan?

Most likely, it will.  If the FCC gets its way and is able to grant itself new jurisdiction over broadband by declaring it a “telecommunications service” under Title II, with or without forbearance, all broadband connections will become subject to USF contributions.[12] According to the Organization for Economic Co-Operation and Development (OECD), the average subscription price for broadband in the United States in 2009 was $49.25 a month.^[13] Applying the 15.3% contribution factor, the average broadband subscriber in the United States may soon have to pay $7.50/month more for service—a new $90 annual tax.  With approximately 80 million broadband connections in the United States, that’s a cool $7.2 billion in new funds available to USF—instantly nearly doubling its size to over $16 billion a year.  Eureka! The FCC has just figured out how to pay for its National Broadband Plan without having to go back to Congress (which, in theory, holds the sole power to tax).

As the somewhat esoteric legal debate rages over the FCC’s jurisdiction under Title I or Title II, this “Third Way” of Title II “lite,” or the legality of reclassification, keep a close eye out for any mention of “Universal Service Fund reform.”[14] That’s a clever code phrase for bringing broadband connections into the USF, and sticking you and me with the bill.

Related PFF Publications

• Ancillariness, the Definition Wars, and the Next Communications Act, Barbara Esbin, Progress on Point 17.8, May 6, 2010.
• FCC Comments of Barbara S. Esbin In the Matter of Preserving the Open Internet, Broadband Industry Practices, Barbara Esbin, Jan. 14, 2010.
• Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction, Berin Szoka & Adam Thierer, Progress Snapshot 5.11, Oct. 2009.
• Net Neutrality: A Further Take on the Debate, Barbara Esbin, Progress on Point 16.26.
• FCC Reform: Scalpel or Steamroller?, Barbara Esbin, Progress on Point 15.15, Sept. 2008.
• Report from the DACA Working Group on Regulatory Framework, Mar. 2006.
• Report from the DACA Working Group on Universal Service, Dec. 2005.

[1] Julius Genachowski, Federal Communications Commission, The Third Way: A Narrowly Tailored Broadband Framework, May 6, 2010, www.broadband.gov/the-third-way-narrowly-tailored-broadband-framework-chairman-julius-genachowski.html.

[2] Comcast Corp. v. FCC, No. 08-1291 (D.C. Cir. 2010), http://pacer.cadc.uscourts.gov/common/opinions/201004/08-1291-1238302.pdf.

[3] The Internet has been defined as the ”international computer network of both Federal and non-Federal interoperable packet switched data networks,” 47 U.S.C § 230(f)(1) or “collectively the myriad of computer and telecommunications facilities, including equipment and operating software, which comprise the interconnected world-wide network of networks that employ the Transmission Control Protocol/ Internet Protocol, or any predecessor or successor protocols to such protocol, to communicate information of all kinds by wire or radio,” 15 U.S.C § 6501(6).  In essence, then, the Internet itself is nothing more than the sum of its connections.

[4] Austin Schlick, FCC General Counsel, A Third-Way Legal Framework for Addressing the Comcast Dilemma, www.broadband.gov/third-way-legal-framework-for-addressing-the-comcast-dilemma.html.

[5] E911 Requirements for IP-Enabled Service Providers, WC Docket Nos. 04-36, 05-196, First Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd 10245 (2005).

[6] In the Matter of Communications Assistance for Law Enforcement Act and Broadband Access and Services, Second Report and Order and Memorandum Opinion and Order, FCC 06-56 (released May 12, 2006).

[7] See infra note 12.

[8] In the Matter of IP-Enabled Services, FCC 09-40, ¶ 2 (rel. May 13, 2009)(“we extend to providers of interconnected VoIP service the discontinuance obligations that apply to domestic nondominant telecommunications carriers under section 214 of the Communications Act of 1934, as amended (the Act). Consequently, before an interconnected VoIP provider may discontinue service, it must comply with the streamlined discontinuance requirements under Part 63 of the Commission’s rules, including the requirements to provide written notice to all affected customers, notify relevant state authorities, and file an application for authorization of the planned discontinuance with the Commission”).

[9] http://www.broadband.gov/plan/

[10] See Testimony of Kay L. Daly, Director for Financial Management and Assurance, General Accounting Office, before the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, Committee on Homeland Security and Governmental Affairs, U.S. Senate, April 22, 2009 (available at www.gao.gov/new.items/d09628t.pdf).

[11] Since telecommunication rates themselves have increased over the past 10 years, the actual amount paid by consumers into the USF has increased close to four-fold.

[12] 47 U.S.C. § 254(d) requires that “Every telecommunications carrier that provides interstate telecommunications services shall contribute [to the USF].”  The FCC imposed this requirement on VoIP providers in 2006 after concluding that interconnected VoIP providers are “providers of interstate telecommunications” under this section, but without even finding it necessary to reach the issue of Title II classification.  Yet the FCC made clear that, “To the extent interconnected VoIP services are telecommunications services, they are of course subject to the mandatory contribution requirement of section 254(d).”  Report and Order & Notice of Proposed Rulemaking, Universal Service Contribution Methodology, ¶¶ 34-36, June 27, 2006, http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-94A1.pdf.

[13] www.oecd.org/dataoecd/22/42/39574970.xls.

[14] As John Steele Gordon noted recently in Commentary:

Roscoe Conkling, senator and Republican political boss of New York State in the 1870s and 1880s, once remarked that “when Dr. Johnson said that ‘patriotism is the last refuge of a scoundrel,’ he was obviously unaware of the possibilities inherent in the word ‘reform.’”

The Global Reform Dodge, Commentary Magazine Blog, May 3, 2010, www.commentarymagazine.com/blogs/index.php/gordon/288381.

The national broadband plan drafted by Federal Communications Commission staff has a lot of goals in it. Goals for broadband infrastructure deployment include:

1. Make broadband with 4 Mbps download speeds available to every American
2. Over the long term, have broadband with 100 Mbps download and 50 Mbps upload speeds available to 100 million American homes, with 50 Mbps downloads available to 100 million homes by 2015
3. Have the fastest and most extensive wireless broadband networks in the world
4. Ensure that no state lags significantly behind in 3G wireless coverage
5. Ensure that every community has access to 1 Gbps broadband service in institutions like schools, libraries, and hospitals

The plan also outlines a number of policy steps that the FCC and other federal agencies could take to help accomplish these goals.

So far, so good. But to truly hold federal agencies accountable for achieving these objectives, we need more than goals, measures, and a list of policy proposals. We also need a realistic baseline that tells us how the market is likely to progress toward these goals in the absence of new federal action, and some way to determine how much the specific policy initiatives affect the amount of the goal achieved.

Here’s what will happen in the absence of a well-defined baseline and analysis that shows how much improvement in the goals is actually caused by federal policies: The broadband plan announces goals. The government will take some actions. Measurement will show that broadband deployment improved, moving the nation closer to achieving the goals. The FCC and other decisionmakers will then claim that their chosen policies have succeeded, because broadband deployment improved.

But in the absence of proof that the policies cause a measurable change in outcomes, this is like the rooster claiming that his crowing makes the sun rise. Scientists call this the ” post hoc, ergo propter hoc” fallacy: “B happened after A, therefore A must have caused B.” (Brush up on your Latin a little more, and you’ll even find out what Mercatus means. But I digress.)

Enough abstractions. Let me give a few examples.

The first goal listed above is to ensure that all Americans have access to broadband with 4 Mbps download speeds. In his second comment on my March 17 “Broadband Funding Gap” post, James Riso notes that the plan acknowledges that 5 out of the 7 million households that currently lack access to 4 Mbps broadband will soon be covered by 4th generation wireless. That means coverage for 83 percent of the households that lack 4 Mbps broadband is already “baked into the cake.” 

Accurate accountability must avoid giving future policy changes credit for this increase in deployment, because it was going to happen anyway.  (Of course, policymakers need to avoid taking steps that would discourage this deployment, such as levying the 15 percent universal service fee on 4th generation wireless.) The relevant question for evaluating future policy changes is, “How do they affect deployment to the remaining 2 million households?”

Similarly, the goal of 50 Mbps to 100 million households by 2015 seems to have been chosen because cable and fiber broadband providers indicate that they plan to cover more than that many homes by 2013 with broadband capable of delivering those speeds (pp. 21-22). Future policy initiatives should get zero credit for contributing toward this goal unless analysis demonstrates that the initiatives increased deployment of very high speed broadband over and above what the companies were already planning.

If you think this point is so basic that it’s not worth mentioning, you haven’t read enough government reports. Post hoc, ergo propter hoc is endemic, and not just on technology-related topics. For example, both sides regularly display this fallacy whenever the unemployment figures get released: “Unemployment increased after Obama’s election, therefore his administration caused the unemployment.” “The recession started when Bush was president, therefore his administration caused the unemployment.” These are at best hypotheses whose truth, untruth, and quantititive significance needs to be established by analysis that controls for other factors affecting the results.

Just take this as an advance warning on reporting results of the national broadband plan: Tone down the triumphalism.  

Note: For those of you who just can’t get enough discussion of the national broadband plan, Jerry Brito and I will have a dialog on other aspects of the plan in a future podcast that will be available here on Surprisingilyfree.com.

Just in case you missed Adam Thierer’s unhinged rant, My Swan Song Moment: I Will Take Elmo Hostage in the Name of First Amendment Freedoms!, you’ll want to go back and read it after watching this:

http://www.youtube.com/v/NUYaHBvVS5o&hl=en_US&fs=1& Not exactly a highpoint in the history of deliberative democracy or rhetoric (in the best sense), but I suppose it beats wading through the 376 page National Broadband Plan… Anyway, given all this talk about increasing funding for the Corporation for Public Broadcasting as a way of “saving media,” I do have to wonder: Just how far will we go in allowing taxpayer-funded muppets to rally public support for this (or future) administration’s policy agenda? I mean, if the White Houe had put Oscar the Grouch on national TV to lobby for health care socialization “reform” by explaining whatever trash-related chronic medial conditions are responsible for making him so darn cranky, I think some folks would rightly have been upset. Yes, I’m trying to be funny here but, seriously, where’s the line between harmless fun and… inappropriate use of taxpayer-funded resources for political purposes? I’m not sure. The administration probably crossed that line last September when President Obama gave a speech to kids and the Department of Education sent a proposed lesson plan to schools nationwide (later withdrawn) suggesting that pre-K-6 teachers have their students “write letters to themselves about what they can do to help the president.” But is Elmo’s meeting with Chairman Genachowski ok as a way of rallying kids—and, more importantly, their parents and everyone else who finds it cute—around a policy agenda? Any thoughts on where this line should be drawn?

The FCC today released an executive summary of its National Broadband Plan, which is supposed to be delivered to Congress tomorrow.  Of course, executive summaries by their nature are brief and usually don’t explain the underlying logic and evidence supporting the conclusions. Here are a few highlights, some possible interpretations, and things to look for when the full plan gets released tomorrow:

Recommendation: “Undertake a comprehensive review of wholesale competition rules to help ensure competition in fixed and mobile broadband.” This could signal that the FCC plans to re-impose “unbundling” or “line sharing” regulations, which would require broadband companies to let competitors use their lines and other facilities at regulated rates. Such initiatives would likely undermine broadband deployment and investment.  Economic research by my GMU colleague Tom Hazlett and others finds that broadband investment, competition, deployment in the US took off only after the FCC eliminated line-sharing requirements. Christina Forsberg and I summarized a lot of this research here.

Recommendation: “Make 500 Mhz of spectrum available for broadband within ten years … Enable incentives and mechanisms to repurpose spectrum.” This is a fantastic recommendation. A Mercatus Center review of the costs of federal telecommunications regulations found that federal spectrum allocation, which prevents spectrum from being reallocated to uses that consumers value highly (like broadband), is by far the costliest federal regulation affecting telecom and the Internet. This recommendation indicates the FCC leadership would like to auction a lot more spectrum and share the proceeds with existing users (like broadcasters) in order to overcome resistance to reallocation. It’s not quite a market in spectrum, but it might be the closest the FCC can come.

Recommendation: “Broaden the USF contribution base to ensure USF remains sustainable over time.” Uh-oh. I’m not sure what this means, but if means that broadband subscribers will have to start payng into the FCC’s universal service fund (USF), watch out! Most economic studies find that consumer demand for broadband is very price-sensitive. That means if the FCC slaps broadband with universal service fees (which currently exceed 10 percent), we’ll see a big drop in broadband subscribership — maybe by 4-7 million subscribers. This is , of course, precisely the opposite of what the FCC wants to accomplish!

Recommendation: “Reform intercarrier compensation, which provides implicit subsidies to telephone companies by eliminating per minute charges over the next ten years…” Another excellent idea.  “Intercarrier compensation” refers to payments phone companies make when they hand traffic off to each other. Small, rural phone companies usually receive the highest per minute payments — as much as 15-30 cents per minute! This is a huge markup on long-distance phone service — another price-sensitive service!

Recommendation: Provide subsidies so that rural areas can have broadband with download speeds of 4 MB.  It will be interesting to read in the full plan where this 4 MB figure came from. Does it reflect the speed of service that a lot of Americans currently have, so these subsidies are just supposed to help equalize opportunities for rural residents? Or does it reflect some balancing of the costs and benefits of subsidizing broadband in rural areas?  Or is this a magic number experts believe subscribers need, regardless of the choices consumers actually make in the marketplace and regardless of what it costs?

The executive summary also lists a set of goals, such as ensuring that every American has the ability to subscribe to “robust” broadband service, having 100 million households with access to 100 MB broadband, and ensuring that the US has the fastest and most extensive wireless networks of any nation.  When the full plan comes out, look carefully at whether or how the FCC plans to measure accomplishment of these goals.  More importantly, look to see whether the FCC explains how it will quantify how much its own policies actually contribute to these goals over time. The FCC is famous for NOT doing these kinds of things, so let’s see if the broadband plan signals a new era in accountability.

FCC Chairman Julius Genachowski’s comparison of broadband with electricity in a speech this week has generated mixed reviews in the blogosphere. Manny Ju says that this shows Genachowski “gets it” — that he understands the transformational power of broadband and how it will come to be regarded as a ubiquitous necessity in the years ahead. Scott Cleland is more alarmed: “The open question here is electricity transmission is regulated as a public utility. Is the FCC Chairman’s new metaphor intended to extend to how broadband should be regulated?”

It may surprise some technophiles, but this kind of discussion even predates electricity. The advent of the railroads in the 19th century brought similar arguments.  Railroads were usually a heck of a lot cheaper way of hauling goods and people across land than the next best alternative at the time: wagons. Railroads were “The Next Big Thing” that no town could do without — especially if the town lacked access to navigable waters. Lawmakers handed out subsidies (often in the form of land grants), then regulated railroads to control perceived abuses, such as discriminatory pricing for different kinds of traffic or traffic between different locations. Henry Carter Adams, the godfather of economic regulation in the U.S., said all shippers deserved “equality before the railroads.” Even today, commentators lament the rural towns that people abandoned because they lacked rail access. Deja vu all over again! 

As long as we’re deja-vuing, let’s remember a few little problems America encountered down the railroad regulatory track:

1. Subsidies created “excess capacity” — that is, more capacity than customers were willing to pay for. In some cases, subsidies attracted shady operators into the railroad business whose main goal was to get land grants or sell diluted stock offerings to the public, not build and operate railroads. 

2. Regulation ended up caretlizing railroads and propping up rail rates, which faced downward pressure because of the excess capacity.

3. When another low-cost, convenient alternative (trucking) came along in the 1930s, truckers got pulled into the cartel when they too were placed under Interstate Commerce Commission regulation to keep them from undercutting rail rates.

4. Despite cartelization, by the late 1970s, 21 percent of the nation’s railroad track was operated by bankrupt railroads, even though the railroads had shed unprofitable passenger service to Amtrak earlier in the decade. Part of the reason was excessive costs: Because access to freight rail service was still considered a right, regulation prevented railroads from abandoning money-losing lines. Part of the reason was restraints on competition: The regulatory passion for “fair” pricing kept railroads from competing aggressively with each other or with truckers. When the Southern Railway introduced its 100-ton “Big John” grain hopper cars in the 1960s, for example, it couldn’t offer shippers lower rates in exchange for high volume until it appealed an Interstate Commerce Commission all the way to the Supreme Court.

By the late 1970s, a Democratic president, a bipartisan majority in Congress, and economists across the political spectrum agreed that railroad regulation needed a radical overhaul. Regulatory reforms made it easier for railroads to abandon unprofitable service, in many cases turning track over to new, lower-cost short lines and regional railroads. Prices for more than 90 percent of rail traffic were effectively deregulated. At the same time, Congress deregulated rates and entry on interstate trucking routes. This encouraged rail-truck competition and also allowed each mode to specialize in serving those markets it could serve at lowest cost.

Rail rates fell, and railroads came out of bankruptcy. The current system is hardly perfect, but most economic research suggests that most consumers, shippers, and railroads are much better off now than they were under the old regulatory system.  (For reviews of scholarly research on this, check out Clifford Winston’s paper here  or my article here.)

Will we repeat the cycle with broadband? I don’t know, but to this railfan, the current broadband debate is looking soooo retro — as in 19th century!

By Berin Szoka & Adam Thierer

We learned from The Wall Street Journal yesterday that “Federal Communications Commission Chairman Julius Genachowski gets a little peeved when people suggests that he wants to regulate the Internet.” He told a group of Journal reporters and editors today that: “I don’t see any circumstances where we’d take steps to regulate the Internet itself,” and “I’ve been clear repeatedly that we’re not going to regulate the Internet.”

We’re thankful to hear Chairman Julius Genachowski to make that promise. We’ll certainly hold him to it. But you will pardon us if we remain skeptical (and, in advance, if you hear a constant stream of “I told you so” from us in the months and years to come). If the Chairman is “peeved” at the suggestion that the FCC might be angling to extend its reach to include the Internet and new media platforms and content, perhaps he should start taking a closer look at what his own agency is doing—and think about the precedents he’s setting for future Chairmen who might not share his professed commitment not to regulate the ‘net. Allow us to cite just a few examples:

Net Neutrality Notice of Proposed Rulemaking

We’re certainly aware of the argument that the FCC’s proposed net neutrality regime is not tantamount to Internet regulation—but we just don’t buy it. Not for one minute.

First, Chairman Genachowski seems to believe that “the Internet” is entirely distinct from the physical infrastructure that brings “cyberspace” to our homes, offices and mobile devices. The WSJ notes, “when pressed, [Genachowski] admitted he was referring to regulating Internet content rather than regulating Internet lines.” OK, so let’s just make sure we have this straight: The FCC is going to enshrine in law the principle that “gatekeepers” that control the “bottleneck” of broadband service can only be checked by having the government enforce “neutrality” principles in the same basic model of “common carrier” regulation that once applied to canals, railroads, the telegraph and telephone. But when it comes to accusations of “gatekeeper” power at the content/services/applications “layers” of the Internet, the FCC is just going to step back and let markets sort things out? Sorry, we’re just not buying it.

Chairman Genachowski may sincerely believe that a clear, bright line can be drawn between the “infrastructure layer” (which he’s certainly going to regulate) and what he likes to think of as “the Internet” (which he promises not to regulate). But as we warned last October, the day after the FCC launched this NPRM:

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. The reality is that regulation always spreads. The march of regulation can sometimes be glacial, but it is, sadly, almost inevitable: Regulatory regimes grow but almost never contract… The basic premise of neutrality regulation is already being proposed for other layers of the Internet….  whatever the FCC might say today, any large online intermediary with a popular platform potentially faces the threat of “network neutrality” mandates—because every platform is essentially a “network,” too. We’re not just talking about “search neutrality” (Google as well as Microsoft) but also about “device neutrality” (mobile handsets), “app neutrality” (Apple’s iTunes store, Facebook’s developers and Google’s Android mobile OS) and so on for social networking, email, instant messaging, online advertising, etc.

We explained how the intellectual foundations for this regulatory creep have already been laid by groups like Free Press and Public Knowledge and law professors like Columbia’s Tim Wu (father of “Net Neutrality”), Harvard’s Jonathan Zittrain (father of “API/device Neutrality”), and Seton Hall’s Frank Pasquale (father of “Search Neutrality”). Joining this intellectual vanguard of Internet regulation is George Washington law school professor Dawn Nunziato, whose new book, Virtual Freedom: Net Neutrality and Free Speech in the Internet Age, is a veritable manifesto for expansive neutrality regulation (especially of Google)—and how the First Amendment (“Congress shall make no law…”) should be twisted not just to allow such regulation of speech platforms, but to require it! Even Wu, whose work blazed a trail for these others, is pretty clear about the breadth of his original vision for “neutrality” regulation, as his popular Net Neutrality FAQ makes clear:

The promotion of network neutrality is no different than the challenge of promoting fair evolutionary competition in any privately owned environment, whether a telephone network, operating system, or even a retail store. Government regulation in such contexts invariably tries to help ensure that the short-term interests of the owner do not prevent the best products or applications becoming available to end-users.

Zittrain, Pasquale, and Nunziato don’t pull any punches either: They don’t shy away from flirting with nebulous neutrality definitions and wide-ranging government powers to regulate. So we don’t have to imagine what the “slippery slope” might look like: There are plenty of very smart and highly influential legal academics out there hard at work sketching out precisely where the path Chairman Genachowski has started us down will ultimately lead.

It’s no less clear why we’ll wind up marching down that path, no matter what the current FCC leadership intends.

1. The current net neutrality rulemaking sets a profoundly dangerous legal precedent of essentially unlimited claims of “ancillary jurisdiction”: As our friends at the Electronic Frontier Foundation (who have a soft spot for net neutrality in theory) put it, “If ‘ancillary jurisdiction’ is enough for net neutrality regulations (something we might like) today, it could just as easily be invoked tomorrow for any other Internet regulation that the FCC dreams up (including things we won’t like).” Our PFF colleague Barbara Esbin carefully dissected this issue for the Commission in her recent filing in this proceeding.
2. As explained above, the general regulatory principle of controlling “gatekeepers” doesn’t end with infrastructure.
3. As EFF notes, “Experience shows that the FCC is particularly vulnerable to regulatory capture.”
4. Now that FCC has opened the door to micro-managing online business practices in the name of “neutrality,” the companies that have made America the leader in the Digital Revolution are already turning on each other in a dangerous game of brinksmanship, escalating demands for regulation and playing right into the hands of those who want to bring the entire high-tech sector under the thumb of government—under an Orwellian conception of “Internet Freedom” that makes corporations the real “Big Brother,” and government, our savior.

This strategy of political escalation will thus quickly steamroll over whatever promises made today to narrowly cabin the principle of neutrality regulation—and end in “Mutually Assured Destruction.” That’s why we referred to the day the FCC started down this path back in September as “The Day Internet Freedom Died.”

If that title sounds melodramatic, take a step back and consider that, back in 1996, Congress decided to enshrine in law the principle that the Internet is different from traditional media: Apart from an ill-considered effort to censor online indecency and obscenity (which was quickly struck down by the Supreme Court as unconstitutional) and the enforcement of intellectual property and criminal laws, Congress decided to take a purely laissez-faire approach to the Internet.  As Barbara reminded the Commission in her net neutrality filing, “Section 230(b)(2) flatly declares that it is the policy of the United States ― to preserve the vibrant competitive free market that presently exits for the Internet and other interactive computer services, unfettered by Federal or State regulation.”

So Chairman Genachowski’s decision to revert to the common carrier model of the railroad era marks a fundamental break with the approach Congress decided we would take to the Internet. The DC Circuit will likely soon rule that the FCC has vastly overstepped its authority in trying to set Internet policy without any clear grant of authority from Congress to do so.

Wireless Innovation & Investment Notice of Inquiry

In fact, the same kind of thinking is already being extended by this FCC in a number of other arenas using a flurry of innocuous-seeming “Notices of Inquiry.” While these notices purport only to ask questions, they either:

1. Foreshadow where the Commission intends to go in proposing new regulations based on its nearly limitless conception of its own regulatory authority;
2. Are intended to pressure Congress to give the agency more statutory authority; or
3. Are intended to intimidate industry into “playing ball” so the FCC won’t actually have to stick its neck out by trying to write rules to regulate Internet activities that are clearly beyond its existing authority and might well be unconstitutional even if Congress ever did expand that authority.

Exhibit A is the language in the Commission’s August 2009 Wireless Innovation and Investment Notice of Inquiry, (paragraph 60, pg. 21) that suggests the FCC is angling to become the Federal Cloud Commission:

As other approaches, such as cloud computing, evolve, will established standards or de facto standards become more important to the applications development process? For example, can a dominant cloud computing position raise the same competitive issues that are now being discussed in the context of network neutrality? Will it be necessary to modify the existing balance between regulatory and market forces to promote further innovation in the development and deployment of new applications and services?

Good morning, Google!  Hello, Facebook! Is anyone out there in the cloud listening to the rumbling thunder of federal regulation? What began as academic theory in a law school ivory tower is coming soon to a regulatory agency near you! But wait… there’s more!

National Broadband Plan Public Notice #21 (Cloud Computing)

Last November, as part of the Commission’s ongoing effort to develop a National Broadband Plan, the FCC released a request for information “on data portability and its relationship to broadband.”  (NBP Public Notice #21) “The Commission seeks tailored comment on broadband and portability of data and their relation to cloud computing, transparency, identity, and privacy,” the notice says.  Here was the second item on the list of things the Commission said it was investigating (p. 2):

When considering the portability of data, we also consider the processes through which data are moved. In this context, we seek comment on how to identify and understand cloud computing as a model for technology provisioning…. What types of cloud computing exist (e.g., public, hybrid, and internal) and what are the legal and regulatory implications of their use? … To what extent are consumers protected by industry self-regulation (e.g., the Cloud Computing Manifesto), and to what extent might additional protections be needed? … What specific privacy concerns are there with user data and cloud computing? What precautions should government agencies take to prevent disclosure of personal information when providing data? Is the use of cloud computing a net positive to the environment? Are there specific studies that quantify the environmental impact of cloud computing?

We suppose some might claim there’s nothing wrong with the FCC looking into these issues, and that the agency’s interest in cloud computing is entirely benign. (Never mind the fact that the Federal Trade Commission already enforces the privacy policies of cloud computing providers and is looking hard at online privacy.)  Seeing all these open-ended questions about something so obviously beyond the scope of the FCC’s authority just makes the potential for—and perhaps even inevitability of—regulatory creep hard to miss.  Eventually, when a regulatory agency asks enough questions, especially the sort of questions highlighted above… well, to paraphrase Master Yoda:

Open-ended inquiries about new regulations are the path to the Dark side. Inquiries lead to agency oversight. Agency oversight leads to regulation. Regulation leads to suffering for innovators and consumers alike.

Again, we’re not just inventing bogeymen here. It’s quite clear that regulatory advocates want to take neutrality regulation into “the Cloud.” As Jason Lanier, author of the popular book You Are Not a Gadget summarizes one of his key themes:

While there is a lot of talk about networks and emergence from the top American technologists, in truth, most of them are hoping to thrive by controlling the network that everyone else is forced to pass through. Everyone wants to be a “Lord of a Computing Cloud.”

In Lanier’s dystopia of techno-feudalism, the Lords oppressing the poor digital “peasants” certainly aren’t just those running broadband service providers. It’s the Google, Facebooks, and Twitters of the world. It’s similar to the “sharecropper” concern raised by Nick Carr in his book The Big Switch. Complaints like those will only grow in the years to come, and few will buy—or even pause to remember—the distinction Chairman Genachowski seems to stand on now between infrastructure and “the Internet.”

National Broadband Plan Public Notice #29 (Privacy)

The “Recovery Act” passed in January 2009 tasked the FCC with formulating “a detailed strategy for achieving affordability of such service and maximum utilization of broadband infrastructure and service by the public.” The FCC seized this as an opportunity to solicit suggestions as to how regulate the use and collection of data by the private sector on the grounds that concerns about privacy might somehow be slowing broadband adoption.

Chairman Genachowski’s flurry of open-ended inquiries about new regulation are clearly intended to give a bully pulpit to regulatory advocates to demand that the FCC issue the very sort of Internet regulations the Chairman purports to abhor (or that Congress give the agency authority to do so). But most of these notices at least appear to be objective requests for comments written independently of the groups the Commission seems so eager to hear beg for Internet regulation. But in this case, the Commission dispensed with that tedious formality and just outsourced the writing of the inquiry itself to one of the outside groups clamoring the loudest for data regulation in the name of “privacy”: our friends at the Center for Democracy & Technology, with whom PFF has worked closely on many free speech issues in the past.

CDT is on to something when they write that “Consumers will not embrace broadband if they have a sense that everything they do online will be watched by government officials.” We’ll join with them in the fight to protect consumers’ privacy from the Real Big Brother—government!—but once again, as with net neutrality, advocates of regulation see government as the protector of our digital liberties (if only we can forever make sure noble civil-libertarians are in charge of the regulatory apparatus of the state!). So CDT has it exactly backwards when they say: “Consumer privacy concerns encompass not only what companies do with their data, but also the extent to which the government accesses it.” And instead of just suggesting that the FCC’s National Broadband Plan include a recommendation that Congress clean up the antiquated laws intended to limit government surveillance, CDT pushes for sweeping regulations that would affect the ability of most online services and sites to collect and use the data they need to improve their services, innovate, and maybe even try to make some money on advertising to support all the free content and services they give away.

Thus, instead of focusing on the clear harm from government, the FCC’s outsourced inquiry goes after online operators as “privacy proxies” for concerns about government action. At least Congress actually asked for the FCC’s recommendations in this case, unlike all the other inquiries the agency has launched sua sponte. But as Berin noted in his comments on this inquiry, the Recovery Act allowed the FCC to “recommend only those policies that it concludes will, on net, help achieve “affordability” and ‘maximum utilization’ of broadband.” That means the Commission would actually have to consider the many trade-offs inherent in the private sector use of data before recommending regulation: If the Internet ecosystem is impoverished by government intervention, however well-intentioned it may be, users will have that much less reason to adopt and “utilize broadband.” So the FCC would have a lot of cost-benefit analysis to do before it could actually make the kinds of regulatory recommendations CDT wants. And we suspect that, on the whole, that analysis wouldn’t turn out the way CDT thinks it would.

Child Safe Viewing Act Notice of Inquiry

In a somewhat similar vein, Congress last year asked the agency to examine how well parental control technologies work to allow parents to filter objectionable content online. So while the FCC may have had, for once, the authority to ask broad questions, it’s startling just how broad those questions were. The Commission obviously has no authority over video games or virtual worlds, online video distribution networks or video hosting sites, mobile web content, MP3 players or iPods, P2P networks, VCRs or DVD players, PVRs or TiVo, Internet filters, safe search tools, laptops, and so on. And yet, all these things (and much more) were mentioned in the Commission’s Child Safe Viewing Act Notice of Inquiry.

The proceeding raises the prospect of what Adam has called “convergence era content regulation” since it opens the doors to FCC meddling on a number of new fronts in the name of “protecting children.” Although the Commission’s final report to Congress stopped short of calling for an substantive expansion of the agency’s content regulatory regime, it teed up another proceeding, discussed next. (And if Congress hasn’t moved more quickly to grant the FCC new power in this area, it’s probably because they’re busy trying to figure out how to get around a line of First Amendment cases that consistently require government regulation to yield to “less restrictive” alternatives like parental control tools and education.)

Empowering Parents & Protecting Children Notice of Inquiry

This wide-ranging inquiry reads like the ultimate “fishing expedition” by a regulatory agency—fishing for new jurisdictional authority to regulate, that is!  The questions asked are too broad, far-flung and various to catalog here (we’ll have a big filing coming in the matter soon), but the Commission asks about extending to Internet media the model of the 1990 Children’s Television Act, which imposes “public interest” obligations on broadcasters and cable operators to offer “education” content while also strictly limiting how much advertising may be shown during children’s TV. The Commission also alludes, ominously, to the V-chip model for requiring universal ratings for television and hints that it would really like for “current laws [to] be updated to reflect this convergence and to keep pace with changes in technology” (¶ 41).

The Commission mentions only in passing at the very end of the Inquiry that it “has varying degrees of statutory authority with respect to different media. We ask commenters, in proposing any action, to discuss the source and extent of the Commission’s authority to take the action, or whether new legislation would be needed to authorize such action” (¶ 58). Translation: “Uh, yeah… so… we know we don’t have a statutory leg to stand on here, but we think it’d be really cool if we did, so let’s just all, you know, kinda brainstorm about what kind of regulation we could be imposing here and what kind of law we’d need get Congress to pass to make it all legal. Or if you have any creative ideas on how we could get away with just making up the jurisdiction thing on our own, that’d be even better!”

YouTube, you’re first on the list of targets for the kind of online video regulation the FCC is hinting at here—and none too subtly. But why stop there? The FCC’s laundry list of complaints aren’t limited just to video, but could apply to essentially all online media. But this is all in the name of “protecting the children,” and Chairman Genachowski doesn’t want to regulate the Internet, so we really don’t need to worry—right?

Future of Media Notice of Inquiry

Most recently, in late January, the Commission launched the ambitiously-named “Examination of the Future of Media and Information Needs of Communities in a Digital Age.” The FCC asks a number of good questions about how government could get out of the way of media struggling to reinvent themselves in the digital era by scrapping outdated regulations. The inquiry also tips its hat to the vital importance of advertising in supporting media. But it’s otherwise pretty bad news as a harbinger of a “Chill Wind” for the future of a free press in this country, as Ken Ferree, PFF’s former president and current board member noted.

In particular, the Commission comes right out with a “trial balloon” about imposing public interest obligations on online operators—the very thing it hinted at slightly more delicately in the “Empowering Parents” inquiry mentioned above:

Broadcasters have certain public interest obligations, including that they provide programming responsive to the needs and issues of their communities and comply with the Commission’s children’s programming requirements. Cable and satellite operators have their own responsibilities…  Should such obligations be applied to a broader range of media or technology companies, or be limited in scope?

OK, so we’re not going to “regulate” online content operators; we’re just going to impose “public interest” obligations on them to provide certain kinds of content preferred by politicians. Right… and if Google News or YouTube don’t do enough to “serve the public interest,” what then? Will the Federal Search Commission take away Google’s search license or cloud computing license?

Of course, we don’t mean to suggest that even the “Federal Cloud Commission” would ever be so unsubtle as to create a formal licensing system when they can probably achieve the same ends with far less obvious regulation. But how is this all going to work, exactly? Again, this is exactly the kind of hopelessly vague regulatory morass Congress had in mind when it declared that the federal government would avoid “fettering” the “vibrant competitive free market … for the Internet and other interactive computer services” with regulation.

The FCC goes on to revive the kinds of broad net neutrality ideas discussed above in asking:

How would policies related to “open Internet” or “universal broadband” or other FCC policies about communications infrastructure affect the likelihood that the Internet will meet the information needs of communities? Are there search engine practices that might positively or negatively affect web-based efforts to provide news or information?

In other words, “Tell us why and precisely how we should start regulating search engines in order to help ‘save  news.'” Google, here’s looking at you, kid! You want to keep your search license, dontcha? Well, just do what the nice men from Washington want and there won’t be any trouble.

Finally, the Commission opens the door to the noxious proposal for a “public option” for media, which Adam has lambasted. Here’s what the Commission says:

In general, what categories of journalism are most in jeopardy in the digital era? What categories are likely to flourish? While much is still to be determined as media companies test various business models and payment approaches in the coming years, based on what is known now, are there news and information needs that commercial market mechanisms alone are unlikely to serve adequately?

Don’t worry, it’s not as if government will exercise control over the media companies it funds if the media-socialist fantasies of the neo-Marxist Robert McChesney and his ironically-named “Free Press” group actually come true. Nope, government’s just here to help!

We’d all do well to remember that subsidies always come with strings attached—namely, regulation. That’s the Golden Rule: “He who has the gold, makes the rules!”

Conclusion

Chairman Genachowski, with all due respect, if you don’t like people suggesting that the FCC may be positioning itself to regulate the Internet and digital media platforms, then you might want to take a careful look at what your agency has been doing. You should think hard both about the precedents that will be set by “neutrality” regulation for online content and services, and also about the quasi-regulatory effect that your agency’s flurry of open-ended inquiries will have on the operators you claim not to want to regulate.

What will future Chairmen do with these precedents? What will emerge from every “Pandora’s Box” you’ve opened with each new sweeping inquiry? The answer, we fear, is an endless parade of new Internet regulations—and the death by a thousand cuts of real Internet freedom.

Good ideas, supported by evidence, eventually matter.

That’s the conclusion I reached after reviewing the outline the FCC’s broadband task force presented to the commission yesterday. Here are some ideas perceptive scholars have been discussing for a long time that are apparently going to be part of the National Broadband Plan:

• “Private sector investment is essential; new funding is limited.” So I guess the Interstate Highway System won’t be the funding model for universal broadband. Whew!
• “Policy changes require the consideration of unintended consequences.”
• “Competition drives innovation and better choices for consumers.”
• Wireless broadband needs a big new chunk of spectrum, and policymakers need to consider reallocating broadcast TV spectrum and spectrum reserved for use by the federal government.
• “Market forces should be applied to all [spectrum] bands, though other policy objectives should play a role in allocation decisions.”
• Fundamental reform of the Universal Service Fund, which subsidizes phone service very inefficiently, should actually be done, not just talked about.
• Universal service reform should include reform of “intercarrier compensation,” the charges phone companies pay each other when they hand off traffic.
• “USF policies should be designed to achieve measurable outcomes with transparency, oversight, and accountability.”

Most of these ideas were considered wacky, ideological, politically unrealistic, or just not relevant a few decades (or even a few years) ago.  Now they are the mainstream.

That doesn’t mean everything is wonderful with the National Broadband Plan. The FCC is supposed to plan how broadband will be used to promote consumer welfare, civic participation, public safety, education, health care, energy independence, community development, worker training, and a host of other legislative goals. In many cases there may be a fundamental tension between consumer welfare — a term of art in economics that means resources are allocated so that consumers get the selection of goods and services they are most willing to pay for, with the quality attributes they most prefer, at the best possible prices — and the other goals, which often involve planners deciding what consumers should want. Similarly, FCC Chairman Genachowski’s comments illustrate some decisionmakers’ disturbing tendency to conflate access (the service is available to those who want it) with adoption (everybody actually chooses to use it). Technophiles sometimes have an annoying habit of assuming that those of us who fail to adopt the latest info tech gadget or service must be ignorant rubes who don’t understand the glories of being hooked up to a fat information pipe 24/7 — rather than careful shoppers who have better things to do with our time than read Yahoo OMG! while driving. For this reason I fully expect to be annoyed by the National Broadband Plan, as well as gratified to see that some good ideas have finally made it from the Ivory Tower to real-world policy application.

But there’s enough good stuff in there to stick with “gratified” for at least one day.

In a speech yesterday, FCC Chairman Julius Genachowski pledged to revisit the Federal Communications Commission’s universal service programs for telecommunications as part of the National Broadband Plan: 

 The key points for today are these: USF is a multi-billion dollar annual fund that continues to support yesterday’s communications infrastructure. The goal of universality is as important as ever — and to meet our country’s innovation goals, we need to reorient the fund to support broadband communications. This is a thorny issue, with no shortage of practical and statutory challenges. We need to wring savings out of the system, protect consumers, avoid flashcuts, while ultimately moving USF in the direction it needs to go to support our 21st century platform for innovation. 

The USF program spends approximately $7 billion annually. Most of the money goes to subsidize phone service in “high cost” areas. Eeuww – phone service.  So twentieth century! All of us who have not yet shifted 100% of our personal communications to Facebook and Twitter pay for the universal service fund via surcharges of about 12 percent on our wireless and  wireline phone bills, including VOIP. (Dirty little secret: you also pay for universal telephone service if you use a wireless broadband card, because each card is assigned a phone number.) 

Genachowski’s comment follows some rather interestingly-timed announcements from the FCC’s broadband task force. On November 13, the task force asked for public comment on the role the universal service fund and “intercarrier compensation” (another, more opaque set of transfers from consumers in general to rural phone companies) should play in the national broadband plan. Comments are due December 7. Five days after soliciting comments, on November 18, the FCC announced that the structure of the universal service fund is one of the “critical gaps” in the path to universal broadband.

I doubt the FCC has telepathically determined what the parties will say in the comments they file on December 7, but there’s no need to. The FCC has ground through so many rounds of comments on universal service reform that the problems and potential solutions are well-known. At a conference on universal service about five years ago, I recall one speaker commented, “Everything that can be said about universal service has already been said, but not everyone’s had a chance to say it, so that’s why we still have conferences on it.” About a year ago, the FCC almost used a court-imposed deadline as an opportunity to actually reform universal service and intercarrier compensation, but the commissioners failed to reach consensus.

Here are some major problems with the universal service fund, in no particular order:

• It subsidizes voice phone service with built-in incentives for inefficiency on the part of providers.
• It subsidizes wireless voice service without limiting the subsidy to one essential connection per household, so it has effectively created an entitlement to both wired and mobile phone service in rural areas.
• The FCC does not measure or track the outcomes produced by the subsidies to see what they actually accomplish for the public. (Section 201 of the draft Boucher-Terry USF reform bill would require the FCC to adopt outcome-oriented performance measures.)
• The contribution mechanism acts like a percentage tax that discourages use of price-sensitive services like long-distance, wireless voice, and wireless broadband.
• The “death of distance” has slashed long-distance phone charges, which means wireless bears a growing percentage of the burden and the funding mechanism may well be unsustainable.

(For more detail on these issues, read the assortment comments on USF reform by various Mercatus Center colleagues and me here, here, here, here, here, here, here, here, here, and here. BTW, did I mention this issue has been beaten to death?)

So is the FCC jumping the gun, rushing to judgment on universal service before the comments are in?  Heck no. It’s about time.

As someone who follows the federal regulatory process, I was amazed to see this in a recent American Spectator post about White House technology advisor Susan Crawford’s return to the University of Michigan Law School:

But White House sources say that she ran afoul of senior White House economics adviser Larry Summers, who claimed he and other senior Obama officials were unaware of how radical the draft Net Neutrality regulations were when they were initially internally circulated to Obama administration officials several weeks ago … In the end, the proposed regulations were slightly moderated from the original language FCC chairman Julius Genachowski, a Crawford ally, circulated.

Unlike regulatory agencies that are considered part of the executive branch, the Federal Communications Commission is an “independent” regulatory agency — which means the president cannot fire its five commissioners. Before executive branch agencies can propose a regulation, it must be reviewed by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA). No administration has yet tried to bring independent agencies like the FCC under OIRA review.

Typically, congressional and private watchdogs scream bloody murder when they see the White House trying to influence independent agencies. But I haven’t heard any barking about this one.

Personally, I think independent agencies’ regulations should be subject to OIRA review. I don’t mind letting the president and his advisors have their say on regulations proposed by people he appointed. But I’d like to see it happen through the formal OIRA review process, where the public knows it’s happening and knows what the rules are.

For example: If you want to know which proposed regulations OIRA has reviewed, go here.  If you want to know the standards OIRA uses to review regulations, go here. If you want to know what outside parties have met with OIRA to discuss regulations, go here.

I like the idea of having a neutral Internet that allows me to go where I want to go and read what I want to read, all for the price of my monthly subscription.  Sure, it took me awhile to figure out why anyone would want to access skype on an iphone (after all, an iphone is already a phone!), but now I can see why some people might enjoy making free international calls without having to plop down in front of the ol’ PC wedged into the guest bedroom.

At the same time, I don’t see a pressing need for regulation to ensure that we get whatever degree of neutrality is practical. Even in his speech announcing that he would propose net neutrality rules, FCC Chairman Genachowski could cite only the same three old anecdotes that have been tirelessly trotted out by others as proof that new regulation is required.  Sure, by Washington standards, that’s two more anecdotes than are usually required to justify issuing a regulation. But it’s hardly proof of a broad, systemic problem that requires new rules (as Jerry Brito and I argued here.)

Nevertheless, as the saying goes, “You can’t beat something with nothing.”  So I suggest a positive agenda to promote sustainable net neutrality. 

Many of the arguments for a non-neutral net are based on the assumption that last-mile bandwidth is, at least sometimes, congested — or may soon become that way as people use more bandwidth-intensive applications. One solution is for the network operator to prioritize some packets over others, so if I have a heart attack, my wife’s VOIP call for an ambulance doesn’t get crowded out by the neighbor’s kid playing video games with his buddies in Australia.  Another solution, though, is to make sure the network operators have adequate ability and incentive to build plenty of bandwidth. As an economist, I understand that some network management or usage-based pricing might be less expensive for consumers than building massive bandwidth. But that’s no reason to persist with policies that artificially constrain bandwidth. 

For wired broadband, a positive agenda to promote sustainable net neutrality means avoiding regulations that impair incentives for investment that increases the capacity of the last-mile network. For wireless broadband, that means freeing up more spectrum to be auctioned for commercial wireless services.  

And while you’re at it, FCC, maybe you can do something about the NIMBY problem that prevents me from receiving a decent 3G broadband signal in my house.  Now that would expand last-mile bandwidth and promote competition to boot!

Forbes.com has just published an editorial that Berin Szoka and I penned about yesterday’s net neutrality announcement from the FCC.

The Day Internet Freedom Died

by Adam Thierer & Berin Szoka

There was a time, not so long ago, when the term “Internet Freedom” actually meant what it implied: a cyberspace free from over-zealous legislators and bureaucrats. For a few brief, beautiful moments in the Internet’s history (from the mid-90s to the early 2000s), a majority of Netizens and cyber-policy pundits alike all rallied around the flag of “Hands Off the Net!” From censorship efforts, encryption controls, online taxes, privacy mandates and infrastructure regulations, there was a general consensus as to how much authority government should have over cyber-life and our cyber-liberties. Simply put, there was a “presumption of liberty” in all cyber-matters.

Those days are now gone; the presumption of online liberty is giving way to a presumption of regulation. A massive assault on real Internet freedom has been gathering steam for years and has finally come to a head. Ironically, victory for those who carry the banner of “Internet Freedom” would mean nothing less than the death of that freedom.

We refer to the gradual but certain movement to have the federal government impose “neutrality” regulation for all Internet actors and activities—and in particular, to yesterday’s announcement by Federal Communications Commission (FCC) Chairman Julius Genachowski that new rules will be floated shortly. “But wait,” you say, “You’re mixing things up! All that’s being talked about right now is the application of ‘simple net neutrality,’ regulations for the infrastructure layer of the net.” You might even claim regulations are not really regulation but pro-freedom principles to keep the net “free and open.”

Such thinking is terribly short-sighted. Here is the reality: Because of the steps being taken in Washington right now, real Internet Freedom—for all Internet operators and consumers, and for economic and speech rights alike—is about to start dying a death by a thousand regulatory cuts. Policymakers and activists groups are ramping up the FCC’s regulatory machine for a massive assault on cyber-liberty. This assault rests on the supposed superiority of common carriage regulation and “public interest” mandates over not just free markets and property rights, but over general individual liberties and freedom of speech in particular. Stated differently, cyber-collectivism is back in vogue—and it’s coming very soon to a computer near you!

“Net Neutrality” proponents insist, however, that only regulation can save us from nefarious corporate schemers out to quash our rights and destroy all innovation. Over the last decade, a cabal of activist-minded cyber-law professors have successfully turned the world of Internet policy upside down by persuading an entire generation of law students, policymakers, and a number of large Internet companies that “Internet Freedom” means the very opposite of what it used to mean. Borrowing tactics that would have made Orwell proud, they have convinced many in the public and the policymaking community that the old Internet Freedom is slavery, in that we are all just tools of Corporate Big Brother. Thus, they offer us a new Internet Freedom: Neutrality über alles! Their freedom, as in Orwell’s Oceania, is not a freedom from the State, but a gleaming utopia that can only be created by the State.

We see the triumph of this thinking with Chairman Genachowski’s proclamation that, “This is not about government regulation of the Internet. It’s about fair rules of the road for companies that control access to the Internet. We will do as much as we need to do, and no more, to ensure that the Internet remains an unfettered platform for competition, creativity and entrepreneurial activity.”

Yet, no matter how vociferously the proponents of FCC-enforced “neutrality” insist that it is not regulation they seek, the reality is that the steps they counsel would put the FCC in the driver’s seat for a host of Internet economic and social issues. Internet companies and technologies will come to be regulated like crusty old “common carriers” and broadcast stations that must serve some amorphous “public interest.”

But as the FCC’s long history of meddling in media and communications markets makes clear, micro-management of dynamic markets is a recipe for economic stagnation, strangled innovation, and speech controls. And the path to regulation does not end with infrastructure providers. The specter of neutrality haunts not just today’s Internet service providers but also all high-tech innovators, like Google, Apple, Facebook, Microsoft and their descendents. Although the FCC’s original mandate was mostly to deal with spectrum “interference”—something that could have been, and actually was being, dealt with using property rights—the agency quickly expanded its mission: Broadcast regulation metastasized into government control over speech, innovation, campaign advertising and a “fairness doctrine” for news coverage. Likewise, Net Neutrality mandates will give rise to neutrality mandates for other areas.

The slope is slippery and we’re already heading down it: The push for “Wireless Neutrality” is already well under way and the FCC is currently investigating Apple’s rejection of the Google Voice application for the iPhone. Thus, “Net Neutrality” leads to “Device Neutrality” and “Application Neutrality,” but the same rationale would apply equally to any circumstance in which access to a communications platform is supposedly limited to a few “gatekeepers.” Some academics have already proposed a “Federal Search Commission” to deal with accusations of “search bias.” At the end of the day, we’ll need a full-blown Federal Information Commission with a Search Bureau, a Cloud Computing Division and several other ministries to micro-manage the many flavors of neutrality regulation.

The path back toward real Internet freedom lies in restoring the presumption of liberty enshrined in the First Amendment, which is not a sword with which the government can ensure fairness, diversity or openness, but a shield against government meddling in media, communications and online markets.

Blogger’s Note: I posted this blog entry over at BroadbandCensus.com earlier in the day. It’s the first of series this week — One Web Week — in which I’m taking a step back to look at the issue of broadband data and broadband transparency from a bit of a longer time frame. And today couldn’t be a more timely day to do so, with Genachowski’s speech highlighting a new sixth principle of Network Neutrality: broadband transparency! -Drew Clark

WASHINGTON, September 21, 2009 – Broadband data is important for the future of our country – and public and transparent broadband data is even more important.

Today, at this moment, new Federal Communications Commission Chairman Julius Genachowski is making a speech in which he is highlighting the vital principle of public and transparent broadband data.

For three years now, this principle has been the core belief animating my efforts as a journalist, and as the entrepreneur founding BroadbandCensus.com. Now, as we enter the fourth year since this saga began, it’s time to take stock and reflect on what BroadbandCensus.com has accomplished.

And with One Web Week having arrived, I’d like to lay out this history from a personal perspective. In this series of blog posts, I’m going to speak about what we’ve been through, who we have worked with to advance the principles of public and transparent broadband data, and what we ultimately aim to achieve at BroadbandCensus.com.

• Today’s topic: The debate begins, with the Freedom of Information Act lawsuit in 2006.
• Tomorrow’s topic, on One Web Day: The founding of BroadbandCensus.com in the fall of 2007.
• Wednesday topic: The Broadband Census for America Conference in September 2008, and our work with the academic community to foster public and transparent broadband data-collection efforts.
• Thursday’s topic, in advance of the U.S. Broadband Coalition’s report to the Federal Communications Commission: BroadbandCensus.com’s involvement with the National Broadband Plan in 2009.
• The concluding topic, on Friday morning: The role BroadbandCensus.com and broadband users have to play in the creation of a robust and reliable National Broadband Data Warehouse.

The Beginnings: Why I Sued Kevin Martin’s Federal Communications Commission

BroadbandCensus.com was founded in October 2007 after I spent nearly a year and a half with the Center for Public Integrity, a non-profit investigative journalism organization based here in Washington. But the quest for public and transparent broadband data goes back further.

For more than 15 years, I have covered the politics of telecom, media and technology. Most of that was spent at the National Journal Group in Washington, a key source of inside information about policy and lobbying. My aim there, as it is now, was to ensure that all the facts are brought to the table, that divergent viewpoints are fairly represented, and that questions asked go to the center of the debate.

When it came to broadband, the looming questions were and still are: where do we have broadband in the United States, and who is offering it? What kind of service is promised, and are carriers delivering on those promises?

In 2006, issues of broadband policy lurked in the background of many major political and media controversies: Net neutrality, online piracy, media ownership and control, the build out of high-speed networks, both wired and wireless, and the role of Web 2.0 in government and society. Whatever the ultimate resolutions for each of these controversies, the first step was better broadband data.

At this time, I headed the Center for Public Integrity’s media and telecommunications project, “Well Connected.” We were expanding its focus on media ownership to the new source of media control: the nation’s broadband infrastructure.

The Federal Communications Commission had a database about the carriers that offer broadband by ZIP code. This database is created from the carriers filing the Form 477 with the FCC. The FCC publishes other databases of the locations of radio and television broadcasters, and of cable companies. We asked for a copy of the Form 477 database in August 2006. At that time, we cited the Freedom of Information Act.

An FCC staff member called me to discuss arrangements for getting our electronic copy. When I called the FCC staffer back, less than 45 minutes later, he told me that he had been instructed not to talk to me further. From that point on, only Kevin Martin’s lawyers would do the talking.

The FCC missed their 20-day deadline to timely respond to our FOIA letter. On September 25, 2006, the Center for Public Integrity filed suit in federal district court , seeking to enforce our FOIA request. We asked the district court to grant us access to the Form 477 database, with information about subscriber numbers redacted (if necessary). The end result would be a database with the names of the carriers that offer broadband on a ZIP code basis.

Even though the FCC has been collecting the Form 477 since 2000, and already has a database of all of this information, they have only ever released the number of providers within a ZIP code, and not the names of the providers. Even then, the agency only released the number if the number was four or more – out of an excessive concern for identifying carrier information.

That’s like saying that the government will restrict the release of information it has about how many gas stations there are in your town if there are not four or more gas stations in town. In any case, the government won’t tell you the names of the gas stations, or where you can find them, so that you can buy gas. And most definitely, they won’t share the prices at which the gas stations sell gas.

“We filed suit against the FCC to obtain the data that the public and policy-makers need in order to get a complete and accurate picture of the current state of broadband,” I said at the time.

Broadband Providers Seek to Forestall Publication of Carrier-Level Broadband Data

I’ve recounted the story of the FOIA litigation at great length, in June 2007, in a story, “Center Spearheads Efforts to Disclose Broadband Data,” and in February 2009 in Ars Technica, “US broadband infrastructure investments need transparency.”

We were seeking something quite straightforward: the identities of broadband carriers that offer service within a particular geographic location. At the time, we were seeking ZIP code information, because that was the best information that the FCC had. I and many others have long recognized that ZIP codes are extremely problematic and coarse unit of measurement. And that is why it is extremely positive that, in July 2009, the NTIA declared that it needed broadband information by Census block.

But in 2006 and 2007, getting carrier-level broadband data by ZIP would have been a good first step. Then-Chairman Kevin Martin, of course, was never a fan of public disclosure. After his agency nixed any sort of collaboration or compromise in approaching our FOIA request, Martin sought to shore up support from industry. On December 15, 2006, the agency issued a “Public Notice to Service Providers Who Filed FCC Form 477s With The Commission And Sought Confidential Treatment Of The Information Submitted.”

AT&T and Verizon Communications, along with the Wireless Communications Association International, intervened in the lawsuit. Others filed as “friends of the court,” on the side of the FCC. The public notice and the interventions forced Judge Rosemary Collyer to recuse herself from the case, as she owned stock in AT&T. The case went to Judge Ellen Huvelle.

“As a non-profit publisher of investigative journalism committed to transparent and comprehensive reporting both in the U.S. and around the world, the Center for Public Integrity believes that making data about the names of the broadband provider on a ZIP code-by-ZIP code basis would allow consumers to ‘truth-check’ the FCC data,” I wrote at the time. “Adding citizen-provided information about the speed, quality and price of such connections would, in turn, create a robust collection of information further informing telecommunications-related public policy debates.”

In their defense, the carriers said that disclosure would cause them competitive harm – the legal standard for denying the disclosure of data under the Freedom of Information Act.

In our legal briefings, the Center noted “that all of the major communications companies – including cable, wireless and telecom players – already provide ZIP code lookup of service availability on their Web sites.” If the information was not available on web site, the information was readily available by calling up the carrier and asking if service was available at that address. Because such information was already readily-discoverable, aggregating the data on a single web site would not cause competitive harm, either.

Among those who intervened in the suit, some sincerely believed that disclosure would have caused them harm. Others litigated merely because of the possibility of a negative FOIA precedent. Whatever the case, Kevin Martin’s FCC certainly went all-out to defend restrictions on data.

In its legal briefings, the FCC argued that releasing the data would lead to competition in communications. “Disclosure could allow competitors to free ride on the efforts of the first new entrant to identify areas where competition is more likely to be successful,” the agency told the federal district court in Washington.

It was supremely ironic that that the FCC and the communications industry were fighting our efforts to obtain public and transparent broadband data at the same time that Congress and the FCC began to clamor for precisely that which we were seeking: better broadband data to address a range of policy concerns.

Together with my friend Scott Wallsten, then of the Progress and Freedom Foundation (later with Technology Policy Institute, and now at the FCC), the Center for Public Integrity organized a Conference on Broadband Statistics on June 28, 2007, at the National Academy of Science.

Scott and I gathered an assemblage of many people, including officials from Comcast, Verizon, AT&T, ConnectKentucky, plus leading academics and policy practitioners in the field, including experts from Information Technology and Innovation Foundation, Pew Internet and American Life Project, and the University of Texas at Austin, to consider precisely these questions. Audio from the June 2007 conference is available here; a transcript of the proceeding is available here.

More recently, Wallsten’s appointment as the economics director of the FCC’s broadband task force has prompted some controversy. But Wallsten has always been supportive of my efforts – and those of others in the field – to push for greater disclosure of broadband data. See “What Disconnect?,” and “Hiding the Broadband Map.”

The Aftermath: Kevin Martin and Me

Unfortunately, the Center lost the lawsuit when Judge Huvelle ruled against the Center in August 2007, and again in October 2007 after a motion for reconsideration. I’ll talk briefly in Tuesday’s blog post about the founding of BroadbandCensus.com in the aftermath of this defeat, and on Wednesday about BroadbandCensus.com’s efforts, in 2008, to advance public and transparent broadband.

But it’s worth fast-forwarding to get to the end of the Kevin Martin story.

Martin’s tenure at the FCC was marked by his repeated jokes about how he led the FCC like the KGB. That would seem to be of a piece with denying Freedom of Information Act requests like the one I initiated.

Yet I never anticipated just how pointed his criticism of public and transparent broadband data could be. I had been invited to speak at the National Association of Regulatory Utility Commissioners’ and the FCC’s joint conference on broadband deployment and data at the FCC, in San Jose, on November 6, 2008 – two days after the presidential election.

In my presentation, on the background to and requirements of the Broadband Data Improvement Act, I referred to the Center’s FOIA lawsuit, quoted in the section above, about how the FCC didn’t want disclosure of carrier data to lead to greater competition. Kevin Martin interrupted my presentation seven times! He disagreed with my characterization of the FCC’s position on broadband data.

“It was actually also because the carriers do not want it to be disclosed, and so it was not provided in a public way,” Martin first interjected. I disagreed with him, saying that “The FCC chose through its discretion over a period of time not to release information about carrier by carrier level.”

To which Martin replied, “I am not going to have an argument with you over it. I think we should move on…. This is not about FOIA litigation. No one is interested in that.”

I came back with, “I am just pointing out that the law does not need to be changed for the FCC to release this data.”

And that still isn’t the end of the story.

Two weeks later, on November 18, 2008, Kevin Martin was back in Washington for what appeared to be his final swan song: accepting an award at the Phoenix Center for Advanced Legal and Economic Public Policy Studies at the National Press Club. Martin gave his remarks, and was praised by the Phoenix Center. After chatting with journalists for a few minutes, we all went our separate ways.

Later, as I was walking over to the elevator to depart, I saw the elevator door closing on Kevin Martin and his long-time chief of staff, Dan Gonzalez.

Martin opened the doors by pushing the open button, and I walked in. Martin asked me what I had in my hands. It was a box with flyers, so I handed him a flyer from BroadbandCensus.com, and told him a bit about our next upcoming activity as the elevator went to the ground floor.

As we stepped into the lobby, I asked Martin if he had a nice trip back from the broadband data conference in San Jose.

He chuckled somewhat under his breath, and then said: “You may not believe this, but I think what you are doing is a good thing. I just can’t end up giving it to you.”

About BroadbandCensus.com

The FCC announced today that it will consider adopting net neutrality rules. The announcement comes in a speech by Chairman Julies Genachowski, which you can read here and watch here. Genachowski says,

To date, the Federal Communications Commission has addressed these issues by announcing four Internet principles that guide our case-by-case enforcement of the communications laws. … The principles were initially articulated by Chairman Michael Powell in 2004 as the “Four Freedoms,” and later endorsed in a unanimous 2005 policy statement[.] … Today, I propose that the FCC adopt the existing principles as Commission rules, along with two additional principles that reflect the evolution of the Internet and that are essential to ensuring its continued openness.

By suggesting that they must be codified, Genachowski is implicitly (if not explicitly) conceding that the FCC’s Internet principles are a mere policy statement and not a binding and enforceable rule. I’ve explained why this is the case previously. So, someone should call the D.C. Circuit, considering the Comcast case, and let them know their job just got a lot easier.

Second, Genachowski gives “limited competition” as a reason to consider regulation. However, the best available data from the FCC show that 98% of zip codes have 2 or more broadband providers, 88% of zip codes have 4 or more broadband providers, and 77% of zip codes have 5 or more broadband providers. That said, some have questioned whether the FCC’s data are accurate, and the FCC’s next broadband report is supposed to have data gathered at the census tract level for a more detailed set of speed categories. So, the FCC is proposing a regulation before it has completed an ongoing study to discover whether there is a real problem. It’s almost as if Kevin Martin is still running the place.

Just when you thought the FCC’s investigation of the wireless industry couldn’t get any stranger, TechCrunch reports that the Commission has sent letters to AT&T, Apple, and Google inquiring about Apple’s recent decision to reject the Google Voice app from the iPhone App Store (as Berin discussed yesterday).

It’s been over two years since the original iPhone was launched, but it seems the FCC still doesn’t get it: the iPhone is very clearly a closed platform — a prototypical walled garden — and Apple has the final say on what applications users can install. When you buy an iPhone, you’re not simply buying a piece of hardware, but actually a package deal that includes software, hardware, and a wireless contract. Is this anti-consumer? 26 million consumers don’t think so. The iPhone 3GS, the latest version of the phone, is selling so fast that Apple’s CFO says they can’t make enough to meet demand!

Of course, the iPhone model isn’t for everyone. I, for one, don’t own one because I’m an obsessive tinkerer and prefer a phone that’s as open as possible. But not everyone shares my preferences. As mentioned above, over 26 million iPhones have been sold since June 2007, so openness clearly isn’t make-or-break for a lot of consumers. Who knows, maybe some people actually trust Apple and like the comfort of knowing that every app they can get comes with a seal of approval from Cupertino.

The FCC’s letter to Apple demands an explanation for why Google Voice was rejected. If Apple’s explanation doesn’t satisfy the FCC’s criteria — which, by the way, are entirely unclear — then what? Will the FCC force Apple to accept Google Voice? Say what you will about Apple’s app store track record, but the prospect of federal regulators having the final word on which applications smartphone owners can install hardly seems pro-consumer. The FCC can’t even figure out how to run its own website!

In some ways, the iPhone has perhaps been too successful for its own good. It’s so popular that many consumers seem to no longer view it as just another product but instead as an item to which they are entitled. Thus, bureaucrats and Congresscritters in search of political points are making a big fuss over the fact that the iPhone isn’t everything to everyone. Why can’t it be wide open? Why isn’t in available on every carrier nationwide? Why is it so expensive to purchase without a service contract?

The answers to these questions lie in the rational self-interested decisions made by Apple and AT&T. The iPhone exists not just to make consumers happy (which it’s been exceedingly successful at doing), but also to make money for Apple and AT&T. And what’s wrong with that? Both firms arguably took a big risk on the iPhone, with Apple putting big bucks on the line to develop it and AT&T accepting an unprecedented arrangement with Apple to hand over a sizable chunk of wireless revenues.

Rewarding penalizing Apple and AT&T’s iPhone gamble with stricter regulations may make some iPhone owners happy in the short run, but it will also make phone developers wary about taking iPhone-esque gambles in the future. Why invest hundreds of millions to hopefully concoct the next big device if the price of success is political predation? (See Barbara Esbin and Berin Szoka’s paper, Should the FCC Kill The Goose That Laid The Golden iPhone, for more on this).

As we often say on TLF, if you don’t care for the iPhone’s App Store, get another phone! There are dozens of smartphones out there that compete with the iPhone. The Palm Pre, LG Versa, Samsung Omnia, and HTC G1 are just a few notable examples.

Want a phone that’s wide-open? Try the G1 — its Android OS is open source and even comes in an unlocked flavor that’s designed for developers. If you love Google Voice, then try a Blackberry — unlike the iPhone, Google Voice works great on Blackberries.

The FCC should stop wasting its time on futile attempts to make already-competitive markets even more so.  Instead, the Commission should be focusing on how to free up the airwaves, most of which remain out of reach of innovators because of outdated rules.

The Senate Commerce Committee held a hearing yesterday where a number of Senators as well as Julius Genachowski, the new Chairman of the Federal Communications Commission, did a lot of fretting about the state of the modern children’s television programming marketplace.  According to the Wall Street Journal, Senate Commerce Committee Chairman Jay Rockefeller (D-WV):

suggested that a “little red button” be required on TVs so that a child could push the button to find out how a show is rated. Democratic Sen. Mark Pryor of Arkansas agreed that a red button might help since parents often have difficulties figuring out which shows are appropriate for their children to watch.

Well, I have some good news for the Senators: There are already quite a few little buttons on every remote control made today, and at least one of those buttons can pull up an on-screen guide to get more program info! (Another of them can turn the TV off!) Moreover, the ratings for just about every program already appear at the beginning of each show, and sometimes in between. And you can find out plenty more online about every TV show under the sun if you care to look.  So, I’m not sure what that fuss is all about, and we certainly don’t need to mandate “little red buttons” on every TV set when program information can be found in so many other ways.

What is more troubling about all the hand-wringing taking place at the hearing, as well as the talk of reopening the Children’s Television Act of 1990 to potentially impose more content mandates on video programmers and distributors, is that: (1) there doesn’t seem to be much appreciation for just how much wonderful children’s programming is out there today compared to the past, and (2) there doesn’t seem to be much recognition of the serious First Amendment issues at stake when government gets involved in the messy business of regulating video programming.

On that first point, let me just reiterate what I have found after conducting an exhaustive survey of the market for children’s programming in my ongoing PFF special report, Parental Controls & Online Child Protection: A Survey of Tools & Methods.  I found that the overall market for family and children’s programming options continues to expand quite rapidly. Thirty years ago, families had a limited number of children’s television programming options at their disposal on broadcast TV.  Today, by contrast, there exists a broad and growing diversity of children’s television options from which families can choose. The list below highlights just some of the more popular family- or child-oriented networks available on cable, telco, and satellite television today. And this list continues to grow rapidly.

• ABC Family Channel (http://abcfamily.go.com)
• Animal Planet (http://animal.discovery.com)
• Anime Network (www.theanimenetwork.com)
• Black Family Channel (www.blackfamilychannel.com)
• Boomerang (www.cartoonnetwork.com/tv_shows/boomerang)
• Cartoon Network (www.cartoonnetwork.com)
• Discovery Channel (www.discovery.com)
• Discovery Kids (http://kids.discovery.com)
• Disney Channel (www.disney.go.com/disneychannel)
• Encore WAM!
• Familyland Television Network (www.familyland.org/content/Content.aspx?CategoryID=51)
• FUNimation (www.funimation.com)
• Hallmark Channel (www.hallmarkchannel.com)
• Hallmark Movie Channel (www.hallmarkmoviechannel.com)
• HBO Family (www.hbofamily.com)
• History Channel (www.history.com)
• KTV – Kids & Teens Television (www.ktvzone.com)
• Learning Channel (http://tlc.discovery.com)
• National Geographic Channel (http://channel.nationalgeographic.com/channel)
• Nickelodeon (www.nick.com)
• Nick 2
• Nick Toons (http://nicktoonsnetwork.nick.com/home.html)
• Noggin (www.noggin.com)
• N Channel (www.the-n.com)
• PBS (www.pbs.org)
• PBS Kids (http://pbskids.org/go)
• Science Channel (http://science.discovery.com)
• Showtime Family Zone
• Sprout (www.sproutonline.com)
• Starz! Kids and Family (http://www.starz.com/appmanager/seg/s?_nfpb=true&_pageLabel=starz_kids_family)
• Toon Disney (http://psc.disney.go.com/abcnetworks/toondisney)
• Varsity World (www.varsityworld.com)

Importantly, this list does not include the growing universe of religious / spiritual television networks. Nor does it include the many family or educational programs that traditional TV broadcasters offer. Finally, the list does not include the massive market for interactive computer software or websites for children.  All of this begs the obvious question: What more is it that policymakers want?

More offerings are always welcome, of course.  But, on a personal note, as the parents of two young kids (ages 5 and 7), my wife and I regularly struggle to sort through all the wonderful video programming options at our disposal.  We often find ourselves swimming through an ocean of choices available from our local broadcasters and multichannel video provider. Moreover, our kids are spending an increasing amount of time watching snippets of video via kid-oriented online search portals like KidZui and Glubble. Such online walled gardens offer a safe place for parents to find terrific online content for their kids.

I have to admit, all the choices my kids have today have left me a bit jealous!  I grew up in small central Illinois town with a couple of crummy (Iowa-based!) broadcast stations that were barely visible on our TV (and usually only when my Dad made me hold the antenna and stick my arms up in the air to get reception!) There was also one local cinema in town that usually showed old movies from the ‘50s and ‘60s that few kids cared to see.  And that was generally the extent of video choices for kids in our town.  Sure, the 1970s brought us Sesame Street as well as Mister Rogers (if that was your cup of tea).  Today, however, we still have those shows and much, much more.  Our kids now enjoy an unprecedented cornucopia of media alternatives and, contrary to what some policymakers would have us believe, many of them are extremely high-quality in nature.  My parents would have likely given anything to just have even one network as incredibly enriching as Noggin at their disposal in the ‘60s and ‘70s.  Instead, on the occasions that the TV had to become a babysitter and nothing worthwhile was on the tube, I usually ended up watching trashy soap operas.  (Don’t even get me started on “Days of Our Lives.” I could write a short history of the show’s 1975-1982 seasons!)

Speaking of trashy shows, there was a lot of talk at yesterday’s hearing about the “need to protect our children from harmful content,” as Sen. Rockefeller began the hearing by arguing.  But as I have shown in my parental controls report, not only are there more and better quality options to steer your kids toward today, but it is easier than ever before to steer them right to those preferred options and lock down everything else in sight.  As I concluded in that report:

there has never been a time in our nation’s history when parents have had more tools and methods at their disposal to help them decide what constitutes acceptable media content in their homes and in the lives of their children. […] parents now have [many tools and techniques] at their disposal to better control media content and raise their children as they see fit. That is not to say that media and communications technologies don’t continue to play a major role in our society and culture. But… parents have been empowered with tools, controls, strategies, and information, that can help them devise and then enforce a media plan for their families that is in line with their own values.

So, again, it must be asked: What is the problem here?

Finally, it should be noted that any effort by Congress or the FCC to tinker with video programming marketplace will eventually run up against serious First Amendment concerns and eventual court challenges.  In a previous session of Congress, before he became Chairman of the Senate Commerce Committee, Sen. Rockefeller aggressively pushed for expanded content controls, not just for broadcast television, but for cable and satellite platforms as well.  In a 2005 PFF report on Sen. Rockefeller’s “Indecent and Gratuitous and Excessively Violent Programming Control Act of 2005,” First Amendment attorney Robert Corn-Revere of the law firm Davis Wright Tremaine argued that efforts to expand the horizons of FCC regulation to cover more content and platforms “would be almost certain to fail a constitutional challenge.”  Likewise, in a 2007 PFF white paper, constitutional law expert Laurence H. Tribe of the Harvard Law School, noted that the old “it’s-for-the-children” rationale for such content regulation is exactly backwards:

the malleability of children—how easy it is to mold their minds and to influence them—counts against and not in favor of centralized governmental controls. One of the arguments that you will often find is, yes, it’s all very well to believe in free speech between consenting adults but we’re talking about kids here and their minds are like plastic and they are being molded and shaped and, therefore, we have greater power to protect them. Therefore, you should keep your hands off them because they are so easy to shape. No, no, no. The argument is not that kids are malleable and therefore, Big Brother should be empowered. The argument is that kids are malleable and, therefore, families should be empowered. Parental authority should be at the center of decision making.

Indeed. And, as already noted, parents have more tools and strategies to exercise that authority than ever before, as well as more programming options to choose from. Policymakers should be celebrating these modern media marketplace developments, not bemoaning them.  We are blessed to be living in the Golden Age of children’s video programming.

Over at TVNewsday, Harry A. Jessell writes:

I don’t like the way the new FCC is shaping up. There’s something missing.

My concern has nothing to do with Julius Genachowski, whom the president has reportedly tapped for chairman….

What I’m having trouble with are the names popping up for the Republican seat….

All [the rumored candidates] work or used to work on Capitol Hill. They are basically experts on policymaking, crafting legislation and Washington politics, but not much else.

The seat is turning into a reward for loyalty and a test of whose boss has the most clout.

Bad idea.

As the professed champion of business, the Republicans should award the seat to a businessman or a businesswoman.

I’m talking about somebody who has actually done some hiring and firing, made a payroll in tough times, sweated a big sale, produced goods or services, acquired another company, got a loan to expand operations or survive a downturn and struggled to untangle and comply with federal regulations.

There’s a double standard here.

Ajit Pai, for example, who is one of the Republican candidates, is Deputy General Counsel of the FCC.  He served as Chief Counsel of the U.S. Senate Judiciary Committee’s Subcommittee on the Constitution, Senior Counsel at the Office of Legal Policy at the U.S. Department of Justice, Deputy Chief Counsel of the U.S. Senate Judiciary Committee’s Subcommittee on Administrative Oversight and the Courts, an Honors Program trial attorney in the Telecommunications Task Force at the U.S. Department of Justice’s Antitrust Division and a law clerk to Judge Martin L.C. Feldman of the U.S. District Court for the Eastern District of Louisiana. He graduated with honors from Harvard College and from the University of Chicago Law School, where he was an editor of the University of Chicago Law Review.

Sounds an awful lot like the background of Julius Genachowski or, for that matter, President Obama.

Aside from Pai, each and every one of the Republican candidates is highly accomplished and is easily as qualified as any other recent FCC nominee.

As the title of his column, “Wanted: A Broadcaster for the FCC,” suggests, Jessell wants a special interest advocate to fill the vacant seat.

Who might that be?  Jessell doesn’t say.

The FCC is supposed to regulate and deregulate in the public interest, not in the interest of established commercial entities just because they have to hire and fire, make a payroll in tough times, sweat a big sale, produce goods or services, acquire another company, get a loan to expand operations or survive a downturn and struggle to untangle and comply with federal regulations.

In short, the purpose of the FCC is not to ensure the profitability of the entities it regulates, but to ensure that innovation can flourish.  Innovation leads to more competitors, new or better services and ultimately lower prices.  Sometimes established firms must be allowed to fail.

The problem with the FCC is that it has become a special interest playground.  It ought to be eliminated, of course.  But since that isn’t possible at the moment, we ought to insist on having commissioners who are experienced in communications policy, and, yes, who understand policymaking, crafting legislation and Washington politics.  They should be principled and diplomatic.  They should have the temperament to be able to compromise or to respectfully dissent, depending on the circumstances.  They should grasp, but not feel beholden to special interests.

If anything, Senate staffers are more likely to have acquired these skills, not less.

So I say, yes, perhaps we need a Senate staffer who has been schooled in the public interest, not an executive who is beholden to a special interest.