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Video with Some Thoughts on FCC’s National Broadband Plan

by on March 15, 2010 · 7 comments

Details are starting to trickle out about the Federal Communications Commission’s (FCC) National Broadband Plan, which is due out tomorrow. Someone just posted the Executive Summary here. I haven’t had a chance to go through it all yet, but I’m looking forward to learning more about what the agency’s plans are on this front.

On Friday (again, before seeing any details), I offered some fairly mushy comments about the idea of national “plan” to the gang over at the excellent new site, FiveQsOnTech.com.  The site has a great format: Five questions on technology and policy asked and answered (usually on tape) by technology policy wonks. I’m honored to be among the first couple of experts featured on the site, along with Markham Erickson of the Open Internet Coalition and Rob Atkinson of ITIF.

In the first 3 minutes of this second of the two videos I appear in, I offered some thoughts about “The Plan”:

http://www.youtube.com/v/sBRL2RfdMk4&rel=0&color1=0xb1b1b1&color2=0xcfcfcf&hl=en_US&feature=player_embedded&fs=1

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The Cut-and-Paste Splinternet

by on March 8, 2010 · 5 comments

The way Ben Kunz puts it in a new Business Week article, “Each device contains its own widening universe of services and applications, many delivered via the Internet. They are designed to keep you wedded to a particular company’s ecosystem and set of products.”

I like Ben’s article a lot because it recognizes that “walling off” and a “widening universe” are not mutually exclusive. If only policymakers and regulators acknowledged that. They must know it, but admitting it means acknowledging their limited relevance to consumer well-being and a need to step aside. So they feign ignorance.

Many claim to worry about the rise of proprietary services (I, as you can probably tell, often doubt their sincerity) but I’ve always regarded a “Splinternet” as a good thing that means more, not less, communications wealth. I first wrote about this in Forbes in 2000 when everyone was fighting over spam, privacy, content regulation, porn and marketing to kids.

Increasing wealth means a copy-and-paste world for content across networks, and it means businesses will benefit from presence across many of tomorrow’s networks, generating more value for future generations of consumers and investors. We won’t likely talk of an “Internet” with a capital-“I” and a reverent tremble the way we do now, because what matters is not the Internet as it happens to look right now, but underlying Internet technology that can just as easily erupt everywhere else, too.

Meanwhile, new application, device and content competition within and across networks disciplines the market process and “regulates” things far better than the FCC can. Yet the FCC’s very function is to administer or artificially direct proprietary business models, which it must continue to attempt to do (and as it pleads for assistance in doing in the net neutrality rulemaking) if it is going to remain relevant. I described the urgency of stopping the agency’s campaign recently in “Splinternets and cyberspaces vs. net neutrality,” and also in the January 2010 comments to the FCC on net neutrality.

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Can These Numbers Be Right? FCC Paperwork Nightmare = 57 Million “Burden Hours”!

by on March 6, 2010 · 9 comments

by Adam Thierer & Berin Szoka

We’re hoping that the Government Accountability Office (GAO) has made some sort of mistake, because it’s hard to believe its latest findings about the paperwork burden generated by Federal Communications Commission (FCC) regulatory activity. In late January, the GAO released a report on “Information Collection and Management at the Federal Communications Commission” (GAO-10-249), which examined information collection, management, and reporting practices at the FCC. The GAO noted that the FCC gathers information through 413 collection instruments, which include things like: (1) required company filings, such as the ownership of television stations; (2) applications for FCC licenses; (3) consumer complaints; (4) company financial and accounting performance; and (5) a variety of other issues, such as an annual survey of cable operators.  (Note: This does not include filings and responses done pursuant to other FCC NOIs or NPRMs.)

Regardless, the FCC told the GAO that it receives nearly 385 million responses with an estimated 57 million burden hours associated with the 413 collection instruments. A “burden hour” is defined under the Paperwork Reduction Act as “the time, effort, or financial resources expended by persons to generate, maintain, or provide information to a federal agency.” And the FCC is generating 57 million of ‘em! Even though we are frequently critical of the agency, these numbers are still hard to fathom. Perhaps the GAO has made some sort of mistake here. But here’s what really concerns us if they haven’t made a mistake. Continue reading →

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Will the FCC’s Nat’l Broadband Plan Be “Full Employment for Lawyers”?

by on February 24, 2010 · 5 comments

Today I am attending, and speaking at, a terrific event in downtown DC sponsored by the Catholic University Law School on“Implementing the National Broadband Plan: Perspectives from Government, Industry, and Consumers.” It’s being held at the offices of the law firm of Wiley Rein LLP.  Edward Lazarus, Chief of Staff to FCC Chairman Julius Genachowski kicked off the event with a nice keynote address talking about the broad goals of the FCC’s coming National Broadband Plan. Lazarus broke the ice by joking with the crowd — which is heavily made up of communications industry lawyers — that “The FCC is doing everything it can to provide full employment for telecom lawyers.  Whatever else we are failing at, we are succeeding at that.” Again, it was a joke, so I don’t want to make too much out of it, but…  No, strike that, I do want to talk about that for a minute! Because this is actually a very important question: Exactly how much bureaucracy and deadweight loss to the economy (in the form of more lawyering and lobbying) is going to accompany the National Broadband Plan?

Two years ago, I posted an essay on “Lawyers, Lawsuits and Net Neutrality Regulation,” in which I attempted to highlight the uncomfortable fact that Net neutrality regulation will likely lead to a bureaucratic nightmare at the FCC and a lawyer’s bonanza once the lawsuits start flying in court. Of course, now we have Net neutrality regulations and a National Broadband Plan pending at the FCC, so the potential for bloated bureaucracy will only grow larger. Do you think I am exaggerating? Well, here are some facts to consider from our recent experience in the field of “telecom reform.”  In the years following passage of the Telecom Act, entire forests fell because of the thousands of pages of regulatory and judicial interpretations that were handed down trying to figure out what that word meant. In fact, let’s take a quick tally of the paperwork burden the FCC managed to churn out in just three major “competition” rules it issued in an attempt to implement the Telecom Act and define the “cost” of unbundled network elements (“UNEs”):

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Why Google Wants In On The Broadband Game

by on February 10, 2010 · 4 comments

It’s been a busy week in the Googlesphere. Google made headlines earlier this week when it aired a televised ad for the first time in the company’s history, and again yesterday when it unveiled Buzz, its new social networking platform. Today, Google announced bold plans to build an experimental fiber-to-the-home broadband network that’s slated to eventually deliver a whopping gigabit per second of Internet connectivity to 500,000 U.S. homes.

Google’s ambitious broadband announcement comes as welcome news for anybody who pines for greater broadband competition and, more broadly, infrastructure wealth creation in America. To date, Google has dabbled in broadband in the form of metro Wi-Fi, but hasn’t embarked on anything of this scale. Laying fiber to residences is not cheap or easy, as Verizon has learned the hard way, and Google will undoubtedly have to devote some serious resources to this experiment if it is to realize its lofty goals.

It’s important to remember, however, that Google is first and foremost a content company, not an infrastructure company. Google’s generally awesome products, from search to video to email, attract masses of loyal users. In turn, advertisers flock to Google, spending billions in hopes of reaching its gigantic, precisely-targetable audience. This business model enables Google to invest in developing a steady stream of free services, like Google Voice, Google Apps, and Google Maps Navigation.

So it won’t be too surprising if Google’s broadband experiment doesn’t initially generate enough revenue to cover its costs. In fact, I’m skeptical that Google even anticipates its network will ever become a profit center. Rather, chances are Google won’t be at all concerned if its broadband service doesn’t break even as long as it bolsters the Google brand and spurs larger telecom companies to get more aggressive in upgrading their broadband speeds (which, indirectly, benefits Google).

Google’s broadband agenda is great news for consumers, of course. Who can complain if Google is willing to invest in building a fiber-to-the-home broadband network and is willing to charge below-cost prices? Not me!

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Some good ideas in the FCC's National Broadband Plan

by on December 17, 2009 · 2 comments

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.

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Is the FCC jumping the gun on broadband and the universal service fund?

by on December 2, 2009 · 0 comments

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.

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Is the FCC Becoming the Federal Cloud Commission?

by on November 19, 2009 · 32 comments

Federal Cloud CommissionHmmm… What am I missing? I cannot lay my finger on a single line in the Communications Act of 1934, the Telecommunications Act of 1996, or any statute in between that gives the Federal Communications Commission (FCC) the authority to regulate cloud computing.  And yet, like any good stickler for jurisdictional authority, my PFF colleague Barbara Esbin keeps bringing to my attention little FCC chirps here and there which suggest that the agency is slowly positioning itself to become the Federal Cloud Commission. For example, back in September, Barbara brought to my attention this passage in the Commission’s recent Wireless Innovation and Investment Notice of Inquiry, (paragraph 60, pg. 21):

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?

In my earlier essay about this, I noted that these questions should serve as a wake-up call for Google and other cloud-based providers who think that “neutrality” mandates will end at the infrastructure layer of the Net.  As Berin Szoka and I argued in our paper on “high-tech mutually assured destruction,” regulatory regimes grow but almost never contract.  And I’m even less optimistic about the FCC limiting its regulatory aspirations after the latest thing Barbara Esbin brought to my attention.

Today, 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: Continue reading →

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BroadbandCensus.com’s Contribution to the Transparency Debate

by on September 21, 2009 · 7 comments

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.

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ECFS: The FCC’s Comedo-Tragedy of E-Government & Transparency

by on September 11, 2009 · 24 comments

Read Part II here

In February, Congress passed the Obama Administration’s “(Five Year) National Broadband Plan,” part of the so-called “Stimulus.” (As economist Russ Roberts put it, government “stimulus” is “like taking a bucket of water from the deep end of a pool and dumping it into the shallow end.”) The Plan transfers $7.2 billion from taxpayers to broadband providers in subsides to promote broadband build-out. More than 10,000 comments have been filed on the plan. Once you get past the constitutional nicety of whether Congress has the power to subsidize “internal improvements” like broadband (it doesn’t), you might wonder just how well your money will be spent by all these techno-supplicants for the latest craze in corporate welfare.

The good news is that these comments are available online. Hurray for transparency! The bad news is that… they’re available online—specifically on the FCC’s Electronic Comments Filing System (ECFS). Anyone who’s used the web more recently than 1998 will cringe the first time they try to use ECFS to find anything, as Jerry has noted. Apart from the cumbersome, highly unintuitive interface, the problem is that there’s no way to search the text of comments ! You can only search pre-defined fields like like “law firm,” and if you don’t enter a value in precisely the right way, you get nada.

Bill Cline, the Chief of the Reference Information Center for the FCC’s Consumer & Governmental Affairs Bureau tries hard to put the best face on this farce of e-government, explaining: Continue reading →

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