Last summer, my PFF colleague Barbara Esbin and I explained that, while many consumers dislike not being able to get popular smartphones like the iPhone on the wireless network of their choice, such exclusive deals actually benefit consumers. Barbara summarizes her testimony (PDF) as follows:
the dynamic created by the exclusive arrangement between Apple and AT&T that produced the iPhone allowed the two companies to bridge the gap between the technologies of today and the disruptive innovations of tomorrow. Moreover, it is undeniable that the breakthrough success of the iPhone has spurred a wave of competitors. If every wireless carrier had been able to sell the iPhone when it was initially released, I noted, it seems unlikely there would have been as much carrier support for developing competing products like the Google G1, RIM Blackberry Storm, Samsung Instinct or Palm Pre.
Looks like we can count on another tax landing on our cell phones soon thanks to the taxaholics in the Obama Administration. According to Jeff Silva of RCR Wireless:
Though details on the Obama budget are few and far between, some information was made available. The administration estimates that spectrum license fees would raise $4.8 billion over the next 10 years.
Don’t be fooled into thinking that wireless carriers will just eat those fees. Those fees will be coming to bill near you soon in the form of another stupid government tax burden on our wireless phones.
You know, because we’re not already paying enough in taxes on our phones.
(P.S. I’m actually a little surprised that the “progressives” in this administration would support this proposal since a tax on mobile phones will end up being about as regressive as taxes can get.)
When the history books are finally written, I think it’s clear that outgoing FCC Chairman Kevin Martin will likely go down as one of — if not the — most aggressively pro-regulatory Republican chairman in the agency’s history. Despite his occasional claims of believing in free markets and his support for a couple of legitimately deregulatory decisions, his tenure at the FCC has generally been characterized by a growth of government power, spending, and bureaucracy. But don’t take my word for it; read the report he issued last week called “Moving Forward,” which to some of us looks more like moving backwards (or at least stuck in the same ol’ mud).
Martin, however, touts his regulatory actions and expansion of FCC power as uniformly pro-consumer. Martin is just another in the long line of statists who claims that consumer welfare can only be enhanced by adding layers of government mandates and regulatory red tape. History teaches us a different lesson: That regulation and bureaucracy typically stifle innovation and competition and hurt consumer welfare in the process. Moreover, there are some constitutional considerations and limitations that should trump — or at least limit — the powers of unelected bureaucrats to run roughshod over our rights. But hey, who cares about those meddlesome little things like the First, Fifth, Tenth, or Fourteenth Amendments?! Certainly not Kevin Martin.
What’s equally troubling about Martin’s tenure at the agency is the track record of mismanagement and the bad blood that seemingly surrounds everything and everyone he comes in contact with. The picture painted in the House Energy & Commerce Committee’s 110-page report, “Deception and Distrust: The FCC Under Chairman Kevin J.Martin,” is not a pretty one — although the report failed to mention that waste, mismanagement, and other regulatory shenanigans have been going on at this agency under the days of Democratic rule, too.
Martin’s response to the House report was all too predictable: The evil corporate interests are out to get me! “[M]ost of the criticisms contained in the Majority Staff Report,” Martin says in a letter released a few days ago, “reflect the vehement opposition of the cable and wireless industries to my policies to serve and protect consumers.”
Whatever.
I’m just glad this nightmare is over. Hopefully Martin’s tenure will serve as a cautionary tale for a future Republican administration: If you actually believe in free minds and free markets, try vetting the guy you install at the FCC to make sure he’s a true believer as well.
Today, President Bush signed S. 602, “The Child Safe Viewing Act.”(CNet story here). The measure requires the Federal Communications Commission (FCC) to conduct an inquiry to examine the availability of, and methods of encouraging the use of, advanced blocking technologies that help parents protect their children from transmitted video and audio programming that the parents determine to be indecent or objectionable. The FCC has 270 days to complete the report.
I wrote about the measure more extensively when it passed the Senate back in October. As I noted in then, the measure was modified slightly when it passed through the Commerce Committee last year, but it still contains some provision that could be problematic. Specifically, as part of the FCC’s required study, the bill commands the FCC to “consider advanced blocking technologies” that:
- may be appropriate across a wide variety of distribution platforms, including wired, wireless, and Internet platforms;
- operate independently of ratings pre-assigned by the creator of such video or audio programming.
Those two provisions are cause for concern since they raise the specter of what I referred to as “convergence-era content regulation” in a PFF paper about the bill last year. It does so in two ways. First, it opens the door to FCC bureaucrats investigating media content controls for wireless and Internet platforms, something it has never been empowered to do before. Second, by specifying that these new advanced content blocking technologies should “operate independently of ratings pre-assigned by the creator,” the law seems to imply that existing voluntary rating and labeling systems cannot be trusted. That is a dangerous presumption that suggests the FCC might be able to come up with better media ratings on its own.
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Back in the mid- and even late 1990s, I was engaged in a lot of dreadfully boring telecom policy debates in which the proponents of regulation flatly refused to accept the argument that the hegemony of wireline communications systems would ever be seriously challenged by wireless networks. Well, we all know how that story is playing out today. People are increasingly “cutting the cord” and opting to live a wireless-only existence. For example, this recent Nielsen Mobile study on wireless substitution reports that, although only 4.2% of homes were wireless-only at the end of 2003…
At the end of 2007, 16.4 percent of U.S. households had abandoned their landline phone for their wireless phone, but by the end of June 2008, just 6 months later, that number had increased to 17.1 percent. Overall, this percentage has grown by 3-4 percentage points per year, and the trend doesn’t seem to be slowing. In fact, a Q4 2007 study by Nielsen Mobile showed that an additional 5 percent of households indicated that they were “likely” to disconnect their landline service in the next 12 months, potentially increasing the overall percentage of wireless-only households to nearly 1 in 5 by year’s end.
And one wonders about how many homes are like mine — we just keep the landline for emergency purposes or to redirect phone spam to that number instead of giving out our mobile numbers. Beyond that, my wife and I are pretty much wireless-only people and I’m sure there’s a lot of others like us out there.
Anyway, I’ve been having a strange feeling of deva vu lately as I’ve been engaging in policy debates about the future of the video marketplace. Like those old telecom debates of the last decade, we are now witnessing a similar debate — and set of denials — playing out in the video arena. Many lawmakers and regulatory advocates (and even some industry folks) are acting as if the old ways of doing business are the only ways that still count. In reality, things are changing rapidly as video content continues to migrate online.
I was reminded of that again this weekend when I was reading Nick Wingfield’s brilliant piece in the
Wall Street Journal entitled “Turn On, Tune Out, Click Here.” It is must-reading for anyone following development in this field. As Wingfield notes:
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http://penny-arcade.com/comic/2008/9/26/
Speaking of snakes, I am just returned from a camping trip along the Appalachian trail in the Michaux Forest, quite out of wireless reception range. Several days’ heavy rain had washed the forest clean, left the moss glowing green and the mushrooms, salamanders, crayfish, and frogs quite content. There one combats the same problems confronted by earlier settlers–mice (and the snakes they attract), staying dry and tolerably warm, the production of decent meals, and keeping small children from wandering off into the woods. Why do some people enjoy briefly returning to this world? Despite being one of those people, I can’t say. Now I am back and my day is easy and comfortable (comparatively), with time to spare contemplating the meta-structures of finance, property, and capital. Let’s all hope these structures are not nearly as fragile as our confidence in them, which, judging from the tone of remarks at last week’s ITIF conference on innovation, has fallen quite low. Continue reading →
Boynton Beach, Florida’s experiment with municipal wi-fi has ended. [Add it to the list of recent failures]. According to the
South Florida Sun-Sentinel:
There’s a roadblock in Boynton Beach‘s information superhighway. The city’s Community Redevelopment Agency decided this month it has no more money for free wireless Internet service in its district. Boynton Beach was the first city in Palm Beach County to offer Wi-Fi three years ago. It operated 11 “hot spots,” or access points, paying $44,000 annually for vendors to keep the system running. But the CRA dropped vendors who failed to meet their contracts. Other companies wanted to sell the Community Redevelopment Agency new equipment, but in a tough budget year, offering free wireless was no longer viable, said the agency’s executive director, Lisa Bright. […] “There is clearly no way for it to be a revenue generator at this time,” Bright said. “It’s premature for us to go to the next level.”
Whenever I read one of these articles about the small town or mid-sized town wi-fi experiments failing so miserably I have to admit that I am a bit surprised. After all, many muni wi-fi supporters have argued that it is precisely in those communities where government support is most necessary and will be most likely to fill in gaps left by sporadic / delayed private broadband deployment. Frankly, I always thought this was the best argument for muni wi-fi and it’s why I made sure to never go on record as opposing
all government efforts, even though I am obviously a skeptic and don’t like the idea of wagering taxpayer money on such risky ventures. (By contrast, I could just never see the reason for government subsidies of wi-fi ventures in major metro areas with existing private broadband operators. Like Philly and Chicago.)
But the fact that many small town or mid-sized town wi-fi experiments are failing is really interesting because it must tell us something about either (a) the
viability of the technology or (b) demand for such service. Now, many municipalization believers will just say that clearly (a) is the case and argue that we just need to wait for Wi-Max solutions to come online and then all will be fine. It certainly may be the case that Wi-Max will help boost coverage in low density areas, but is that really the end of the story? What about demand? What really makes me mad when I read most of these stories about current failed experiments is that they rarely give us any solid numbers about how many people utilized the services. To the extent any journalists or analysts are out there contemplating a story or study on this issue, I beg you to dig into the demand side of the equation and try to find out how much of the currently muni-wifi failure is due to technology and how much is due to demand, or lack thereof. Of course, government mismanagement could also be a culprit. But I suspect there is a far less demand for these services than supporters have estimated.
Just FYI, the latest update of my booklet on “Parental Controls and Online Child Protection: A Survey of Tools & Methods” is now live. The new version, Version 3.1, provides minor updates to all sections of the book and a new appendix of relevant research in the field. I issue major updates early each year and 1 or 2 tweaks during the course of the year to reflect the evolution of the parental control and online child safety market and debate. 
For those not familiar with the report, it explores the market for parental control tools, rating schemes, education efforts, and initiatives aimed at promoting online child safety. I believe that the parental controls and content management tools cataloged in the report represent a better, less restrictive alternative to government regulation. As I conclude after evaluating that state of the market: “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.”
The report is available free-of-charge on the PFF website, and the previous editions of the report are housed there too in case you want to see how it has evolved over the past two years. For those interested in taking a quick look at the report, I have embedded it down below the fold as a Scribd file. Finally, as is always the case, I encourage readers to send me updates and suggestions for how to improve the report and I will incorporate them into future versions.
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Several of us here have outlined our reservations about the proposal to allocate a block of the Advanced Wireless Services (AWS) spectrum for a free, nationwide wireless service. (Here’s a filing I signed on to that critiques the portion of the plan that requires censorship of the entire band once allocated).
But, strictly from an economic perspective, this is the best overview and critique of the plan I have seen so far: “The Static and Dynamic Inefficiency of Abandoning Unrestricted Auctions for Spectrum,” by Bob Hahn, Allan Ingraham, Greg Sidak, and Hal Singer. It’s a response to a paper favoring the M2Z plan that was penned by Simon Wilkie of USC, who also formerly served as the Chief Economist of the FCC. (Wilkie’s work on behalf of M2Z can be found on the M2Z site here). It’s a good debate and I encourage you to look at both papers if you are interested in this issue.
Global handset manufacturing giant Nokia has purchased the shares they didn’t already own in Symbian, Ltd., the company formed in 1998 as a partnership among Ericsson, Nokia, Motorola and Psion and the developer of the Symbian mobile operating system, by far the world’s leading OS for “smart mobile” phones with 67% of the market, followed by Microsoft on 13%, with RIM on 10% (source).
But wait, there’s more (per Engadget)!
Here’s where it gets interesting, though: rather than taking Symbian’s intellectual private for Nokia’s own benefit, the goods will be turned over to the Symbian Foundation, a nonprofit whose sole goal will be the advancement of the Symbian platform in its many flavors. Motorola and Sony Ericsson have signed up to contribute UIQ assets, while NTT DoCoMo (which uses Symbian-based wares in a number of its phones) will be donating code as well.
Other Symbian Foundation members include Texas Instruments, Vodafone, Samsung, LG, and AT&T (yep, the same AT&T that currently sells precisely one Symbian-based phone), so things could get interesting. The move clearly seems to be a preemptive strike against Google’s Open Handset Alliance, LiMo, and other collaborative efforts forming around the globe with the goal of standardizing smartphone operating systems; the writing was on the wall, and Symbian didn’t want to miss the train. Total cash outlay for the move will run Nokia roughly €264 million — about $410 million in yankee currency.
Other reports note that the Symbian Foundation will eventually take Symbian open source, and that this move is as much as response to Apple’s closed iPhone platform as it is to Gogole’s open Android and LiMo platforms. (Although it is intriguing to note that AT&T, Apple’s exclusive U.S. partner for the iPhone, is among the backers of the new Symbian Foundation, perhaps indicating that even AT&T is hedging its bets.)
The fact that we will soon see
three open source platforms (counting Google’s Android and LiMo) competing for market share provides yet another measure of the exceptionally high degree of competition in the wireless industry. Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.