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September 24th, 2018 at 9:40 am
The FCC Must Move to Stop the Local Internet Power Grab

More than thirty years ago, Congress gave local governments the power to impose “franchise fees” and other regulations on cable television service.  It was part of a broad framework for shared national and local authority over cable television in the 1984 “Cable Act,” which laid the foundation for the cable (and eventually satellite) TV boom of the 1980s and beyond.

By contrast, local governments have very limited power to tax or regulate the internet.  Unlike television, which has a long tradition of serving independent local markets with discrete programming, options, and infrastructure, from the beginning it’s been clear that the internet is inherently national and interstate and can only be effectively regulated at the federal level.  That has been core federal policy for decades, as most recently expressed in the 2017 Restoring Internet Freedom Order, which concluded that, “regulation of broadband Internet access service should be governed principally by a uniform set of federal regulations, rather than by a patchwork that includes separate state and local requirements.”

But recently, a number of local franchising authorities have tried to upend that federal policy and claim the right to impose local taxes and regulations on the internet by seizing on the fact that some broadband providers also offer cable television services.  Now, the Federal Communications Commission (“FCC”) is rightly working to put a stop to this local government internet power grab – moving to make clear that the Cable Act only allows local franchising boards to tax and regulate cable companies based on their cable television operations.

If every local franchising board in the country can impose its own rules and fees on internet providers, the freewheeling and open internet we all enjoy today will slowly grind to a halt.  The resulting cacophony of regulation will overwhelm operators, slowing down cyberspace and making it less reliable and less secure.  It will drive away new investment needed to continue to achieve ever-increasing speeds users have come to take for granted.  And it will confuse consumers who expect the internet to be a consistent experience everywhere they go.

This is the exact harm federal policy strives to avoid.  As the FCC explained, “allowing state or local regulation of broadband internet access service could impair the provision of such service by requiring each ISP to comply with a patchwork of separate and potentially conflicting requirements across all of the different jurisdictions in which it operates.”

For that reason, the FCC’s “Section 621 Proceeding” must move quickly to shut down the local power grab by making clear that neither the Cable Act nor any other source of local regulatory power authorizes franchise boards to tax or regulate the internet or any other non-cable-television businesses.

The future of the internet and our unfettered access depend on it.

July 13th, 2018 at 9:37 am
The Price and Importance of Innovation

America’s pharmaceutical innovators lead the world, saving and improving people’s lives on a daily basis.  But relentless efforts to move toward a single-payer system and impose destructive price controls threaten our continuing progress.

Drug maker Biogen recently announced exciting results of a clinical trial for a new drug to treat Alzheimer’s disease. Yet, despite the promise that this could be a breakthrough that gets us closer to a cure, the medical community and families with loved ones suffering from the disease are holding their collective breath.

Why? Because we’ve been down this road before.

Alzheimer’s is one of the most complex and pernicious medical conditions that we face, with no known cure and an immense emotional and economic toll. Worse, the rate of diagnosis is increasing and estimates suggest the cost of the disease has already surpassed $259 billion.  According to one Alzheimer’s Association spokesperson, it will “bankrupt Medicare.” By 2050, the cost of care for Alzheimer’s patients could exceed $1 trillion annually.

That is a crisis medical professionals are rushing to solve, but progress has been slow. An estimated 99.6 percent of Alzheimer’s drug “candidates” (i.e. experimental drugs designed to treat Alzheimer’s) fail.

In 2018 alone, high profile failures in Phase 3 clinical trials from drug makers like Eli Lilly and Merck represent decades of work and hundreds of millions of dollars in research yielding little to no results. Even Biogen’s announcement, as promising as it is, has only a 50 percent chance of gaining FDA approval, according to analysts.

The issue of high drug prices is real, but too often the public doesn’t understand the immense risk – and cost pharmaceutical companies take on to research and develop new treatments for devastating diseases like Alzheimer’s. While everyone hopes Biogen’s new drug is a success, many drugs – including many recent potential treatments for Alzheimer’s – never make it through the clinical trials to market. What’s worse, the lack of transparency in our health care payment system drives costs up even further.

Drug makers invest hundreds of millions of dollars and more into developing new treatments and cures, with no guarantees their research and development will yield results.  That risk must be protected to ensure the continued motivation to strive for better treatments and new cures.

Efforts to cap prices and leverage government buying power via a single-payer system threaten to curtail research and delay or eliminate future cures. It’s a gamble that the United States cannot make, both for our own health and for future generations.

April 26th, 2018 at 5:51 pm
Help Modernize the U.S. Sugar Program: Text “SUGAR” to 52886

We at CFIF have long sounded the alarm regarding the federal sugar policy morass.

There may be no uglier illustration of the crony capitalism, government meddling in our economy and bureaucratic mandates anywhere within our federal government.  And the program demonstrably ends up costing far more jobs and hurting far more American consumers than it benefits, as we noted in January:

It costs almost three times as many jobs as it claims to protect;  results in American consumers and manufacturers paying double the cost for a product that consumers and industries in other countries pay;  eliminates over 100,000 American manufacturing jobs;  and costs Americans approximately $3 billion per year.

But now there’s something you can do to bring about positive change.  Our friends at the Alliance for Fair Sugar Policy have launched a simple and effective grassroots tool to help generate messages to Congress.

There’s nothing that grabs the attention of Senators and Representatives and drives them to action more than hearing from actual constituents. Accordingly, please take just a short moment to view the image below and take action by simply texting “SUGAR” to 52886.

February 27th, 2018 at 11:06 am
Net Neutrality Déjà Vu
Today, “netroots” activists are holding yet another “Day of Action” to save their version of “net neutrality” (government overregulation via Title II). According to Battle for the Net, the goal of this internet-wide push is to “flood the Senate with messages in support of using the CRA.”  Here’s our question:  How many times are we going to see this issue be turned into political theatre?

The so-called consumer groups involved, along with certain media outlets and Members of Congress, scream every chance they get that the internet as we know it is in serious danger of ceasing to exist unless the Obama-era Title II regulatory stranglehold is restored never mind that the Title II utility-style regulatory scheme, not imposed until 2015, makes the internet weaker, not stronger.

At the end of the day, this entire fight is about how to enforce practical internet policy. With the imposition of Title II, the Obama-Wheeler FCC granted unprecedented government authority and mother-may-I control over the free marketplace, diminishing industry investments in the process.  The current FCC, under Chairman Ajit Pai’s leadership, rightly decided to restore sanity to internet policy, prioritizing free market principles and light-touch regulation the way it was practiced for decades under bipartisan administrations.

The light-touch approach is how the internet thrived and will continue to remain truly free and open. It’s also how to protect America’s position as a global innovation leader.

This latest effort by Senate Democrats to hit the reverse button and go back to the investment-killing Title II scheme via a Congressional Review Act (CRA) vote serves zero legitimate policy purpose. It’s nothing more than a political stunt. After all, if they truly wanted to get serious about cementing the principles of “net neutrality,” they would come to the table and work with Republicans on a sustainable legislative solution, something they have refused time and again to do.

September 27th, 2017 at 12:02 pm
Net Neutrality “Day of Advocacy” – A Reality Check

Today, activist organizations, including Free Press, Public Knowledge and Fight for the Future, plan to descend upon Capitol Hill offices to underscore their disapproval of Federal Communications Commission (FCC) Chairman Ajit Pai’s proposed plan to repeal the Obama Administration’s 2015 “Open Internet Order” classifying Internet Service Providers (ISPs) as public utilities under Title II of the 1934 Communications Act.

In anticipation of their effort, the Center for Individual Freedom teamed up with the Taxpayers Protection Alliance to provide Congress with a “Reality Check” of key messaging and themes to expect from those groups as they visit with lawmakers.

Read the document here.

July 24th, 2017 at 5:57 pm
CFIF Joins Coalition Urging Congressional Reversal of CFPB’s Anti-Arbitration Rule

The Center for Individual Freedom (CFIF) today joined a coalition made up of more than two dozen free-market organizations on a letter urging Congress to use the Congressional Review Act to reverse a new rule by the Consumer Financial Protection Bureau (CFPB) that prevents financial services companies from using arbitration to resolve customer disputes.

“The CFPB’s arbitration rule has been described as ‘Christmas in July’ for America’s trial lawyers – and rightly so,” the coalition stresses in the letter.  “According to the CFPB’s own finding, the rule will cost consumers billions of dollars and unleash over 6,000 class action lawsuits every five years. This rule is an obstacle to the efforts to right America’s fiscal ship and create jobs and prosperity for the American people.”

The letter, which was organized by the Center for Freedom and Prosperity, can be read in its entirety here (PDF).

Read the Center for Freedom and Prosperity’s official press release here.

February 15th, 2017 at 5:21 pm
The Tax Code Isn’t Working for America
There’s perhaps no greater defining mark of American politics today than the polarization that plagues our discourse.  Acrimony has become the default posture of the major political parties and their supporters on even the most mundane issues.

But there is one issue—a major issue—that holds enormous bipartisan potential, despite the political animus:  the need for comprehensive tax reform.  Yes, disagreement naturally exists over some of the details on how to reform the tax code, but few argue against the need and urgency to do so.

The U.S. tax code is almost surreal in its complexity, making it impossible for most people and businesses to prepare their own returns. Roughly 70% of Americans rely on some form of paid assistance with their taxes, and the tax preparation industry is forecast to generate an incredible $11 billion in revenues in 2018. That’s a lot of money that could be better spent in productive ways in the real economy.

Small businesses, in particular, bear the brunt of the tax code’s many problems, creating significant and ongoing drag on our economy.  And all U.S. businesses have to contend with a growth-killing 35% corporate tax rate, the highest among OECD countries.

Today, most businesses’ competitors reside not just next door and down the street, but across the globe.  It’s no wonder why most of America’s global competitors have been cutting corporate tax rates for many years—to make it easier for their businesses to compete in the global marketplace. With its enormous complexity and sky-high rates, the U.S. tax code, meanwhile, actively stifles growth, entrepreneurship, innovation, investment and job creation.

The current tax code is broken. It must be simplified and set fair rates for businesses of every size. Only when this happens will the United States once again be the best place in the world to start and run a business.

The time for tax reform is now!

October 26th, 2016 at 11:59 am
Begrudgingly Celebrating the 30th Anniversary of the Tax Reform Act of 1996
Entrepreneurs and small businesses are being crushed by an outdated, confusing and counter-productive tax code. And businesses aren’t the only ones being squeezed.  The United States has the highest business tax rate in the world, which is costing American families $3,000 per year in spending power.

Yet despite these challenges, last week marked a staggering 30 years since Congress last passed major tax reform.

Working together, the next president and Congress can deliver for America’s taxpayers by simplifying the tax code and setting a fair business rate of no higher than 25 percent within the first 100 days.

It’s time for Congress to get to work!

May 30th, 2016 at 9:40 am
Video: Honoring the U.S. Armed Forces

On Memorial Day, CFIF salutes all the men and women of the U.S. Armed Forces for their bravery, honor and service to our country.



March 16th, 2016 at 11:38 am
Merrick Garland and the Second Amendment

President Obama officially nominated DC Circuit Chief Judge Merrick Garland to fill Justice Antonin Scalia’s seat on the U.S. Supreme Court.  The president dedicated a considerable amount of time during his announcement speech to make the case that Judge Garland is a “consensus” nominee.

But who is Judge Garland and how does he view the U.S. Constitution?

While much will be written and analyzed about Judge Garland and his judicial record in the coming days and weeks, Carrie Severino, a former clerk to Supreme Court Justice Clarence Thomas and Chief Counsel and Policy Director at the Judicial Crisis Network, provides some insight to help answer that question.  In a piece for National Review’s Bench Memos titled “The ‘Moderates’ Are Not So Moderate: Merrick Garland,” Severino wrote last week:

Garland has a long record, and, among other things, it leads to the conclusion that he would vote to reverse one of Justice Scalia’s most important opinions, D.C. vs. Heller, which affirmed that the Second Amendment confers an individual right to keep and bear arms.

Back in 2007, Judge Garland voted to undo a D.C. Circuit court decision striking down one of the most restrictive gun laws in the nation. The liberal District of Columbia government had passed a ban on individual handgun possession, which even prohibited guns kept in one’s own house for self-defense. A three-judge panel struck down the ban, but Judge Garland wanted to reconsider that ruling. He voted with Judge David Tatel, one of the most liberal judges on that court. As Dave Kopel observed at the time, the “[t]he Tatel and Garland votes were no surprise, since they had earlier signaled their strong hostility to gun owner rights” in a previous case. Had Garland and Tatel won that vote, there’s a good chance that the Supreme Court wouldn’t have had a chance to protect the individual right to bear arms for several more years.

Consensus nominee?  You decide.

March 16th, 2016 at 10:19 am
AP: Obama to Nominate Judge Merrick Garland to U.S. Supreme Court

Several news sources, including the Associated Press, are reporting that President Obama will nominate Judge Merrick Garland to fill Justice Scalia’s seat on the U.S. Supreme Court.

From the AP piece:

WASHINGTON (AP) — President Barack Obama will nominate federal appeals court judge Merrick Garland to the Supreme Court, congressional sources said Wednesday. …

Garland is the chief judge for the United States Court of Appeals for the District of Columbia Circuit, a court whose influence over federal policy and national security matters has made it a proving ground for potential Supreme Court justices. …

Congressional sources spoke on condition of anonymity because Obama had not yet announced his choice. …

Obama planned to introduce his pick at 11 a.m. in the White House Rose Garden.

March 12th, 2016 at 10:09 pm
Tell Representative Rob Bishop to Say No to Obama’s “Super Restructuring” Bailout of Puerto Rico
The Center for Individual Freedom (“CFIF”) today launched a radio advertisement in Utah warning against the dangers posed by the Obama Administration’s “Super Restructuring” proposal for Puerto Rico.

Right now, House Natural Resources Committee Chairman Rob Bishop (R-UT) is considering the creation of an unprecedented restructuring regime to address Puerto Rico’s debt crisis. This restructuring mechanism, proposed by the Obama Administration, goes far beyond the authority that states possess under Chapter 9 of the U.S. Bankruptcy Code by allowing Puerto Rico to stiff bondholders who now enjoy constitutional guarantees of repayment in favor of bailing out government pensions.

Such a blatant and dangerous violation of Puerto Rico’s Constitution is neither a credible nor conservative solution to the Puerto Rican debt crisis.

As multiple governors have noted in letters to Congress, the precedent set by such a “Super Restructuring” regime would have major consequences for states, including Utah. Borrowing costs would skyrocket for state governments, harming their ability to finance critical services and infrastructure projects, and the value of retirement funds that hold Puerto Rico and other guaranteed state bonds would plummet.

Perhaps even more alarming: If enacted by Congress, this plan could pave the way for a series of Puerto Rico-like events to occur across the country. If Congress demonstrates a willingness to rewrite bankruptcy rules to bail them out, high-spending, debt-ridden states will be even less likely to cut spending and balance their budgets.

CFIF’s radio ad urges all Utahns to call Representative Bishop’s office at (801) 625–0107 and tell him to protect taxpayers and bondholders by saying “no” to the Obama Administration’s “Super Restructuring” bailout of Puerto Rico’s bloated, irresponsible government.

March 10th, 2016 at 8:16 pm
Mississippi Should Not Gamble With Taxpayer Dollars

Five things Mississippi taxpayers should know and worry about the Gulf Coast “Fiber Optic Ring”

1)  A new plan proposes to use a portion of Mississippi’s British Petroleum (BP) oil spill settlement to build a government-owned broadband network in South Mississippi. The network or “Fiber Ring” would, in theory, connect a dozen Gulf Coast cities across three counties. Local officials estimate that it could cost over $100 million.

2)  So far, the state has promised $5 million of the BP funds towards the Fiber Ring, though it is not a fiscally sound proposal.  In fact, there’s no indication of where the additional $95 million needed to finance this project will come from, but taxpayers will likely foot the bill.

3)  Government-owned networks rarely succeed, and residents already have access to high-speed Internet provided by private companies. Competing with the private sector will only force taxpayers to subsidize a costly failure.  Private Internet Service Providers (ISPs) already bring high-speed broadband to 97 percent of Harrison County residents, according to BroadbandNow.com.

4)  When the government enters a broadband market, prices for consumers do not decrease.  In fact, government-owned broadband networks have been found to charge consumers more than private firms, for similar services.

5)  Other regions have tried (and failed) at building and running government-owned broadband networks.  Here’s a look at some of the results:

Burlington Telecom, VT
Burlington Telecom was started in 2008 to provide telecommunications services to the citizens of Burlington, VT.  The network floundered, and by 2014, it owed $33.5 million to Citibank.  The city reached a final settlement in which it agreed to pay about a third of what was owed, and turned to the private sector for help financing the settlement.

Memphis Networx, TN
Memphis Networx was started as a public-private partnership by Memphis Light, Gas, and Water Division (MLGW) in 1999.  By 2007, the network had failed and MLGW sold Networx to Colorado holding company Communications Infrastructure Investments for $11.5 million after losing about $28 million in public funds on the venture.

UTOPIA, UT
UTOPIA was started in 2002 to provide Internet services to 11 cities in Utah.  The network’s initial capital investment was $135 million, and by 2014 the debt had climbed to $500 million.  The cities involved have been looking for a private buyer to take over their network for several years.

CDE Lightband, TN
CDE Lightband was started in 2007 with a $16 million loan from the Clarksville Electric Power Board’s electric division to its broadband division.  In 2009, the utility was approved to take an additional $4.5 million in loans to finance the network, leaving taxpayers and utility ratepayers on the hook for the debt.

Help CFIF spread the word.  Email this link to your colleagues, friends and family members in Mississippi and/or share it on social media.  To download a copy of CFIF’s educational fact sheet about the Gulf Coast “Fiber Optic Ring,” click here (.pdf).

February 16th, 2016 at 9:05 am
Hypocrite Chuck Schumer

Following the tragic news of Supreme Court Justice Antonin Scalia’s passing, Senate Majority Leader Mitch McConnell and other Republican lawmakers rightly have been arguing that Scalia’s replacement should be left to the next President.

Predictably, Senator Charles Schumer (D-NY), Harry Reid’s hand-picked replacement to become the Senate Democrat leader following Reid’s retirement in 2016, is crying foul.  On ABC’s “This Week,” Schumer bemoaned, “You know, the kind of obstructionism that Mitch McConnell’s talking about, he’s harkening back to his old days.”

But it was Schumer, back in July 2007, who argued in a speech to the American Constitution Society that, except for in extraordinary circumstances, the Senate should block any Supreme Court nominations made by President George W. Bush during his remaining time in office.  At the time, Schumer said:

We should reverse the presumption of confirmation. The Supreme Court is dangerously out of balance. We cannot afford to see Justice Stevens replaced by another Roberts, or Justice Ginsburg by another Alito.

Schumer went on to add:

We should not confirm any Bush nominee to the Supreme Court, except in extraordinary circumstances.

For the record, there were 18 months left in George W. Bush’s term when Schumer argued that the Senate block any additional nominees the President may have made to the Supreme Court.  The nation is now less than seven months away from electing Obama’s successor.

February 2nd, 2016 at 3:10 pm
CFIF Scores Victory in Campaign Finance Case
On January 21, 2016, a three-judge panel on the U.S. Court of Appeals for the D.C. Circuit unanimously ruled in favor of the Center for Individual Freedom (“CFIF”) in Van Hollen v. FEC, a campaign finance case addressing free speech and compelled disclosure.

The decision marks the second time in the case that the Court of Appeals reversed a decision by District Court Judge Amy Berman Jackson, who twice struck down a Federal Election Commission (“FEC”) rule requiring non-profit organizations that spend more than $10,000 per year on electioneering communications to disclose only donors who give “for the purpose of furthering electioneering communications.”

Congressman Christopher Van Hollen (D-Maryland) brought suit against the FEC, hoping to force organizations engaged in electioneering communications to disclose all donors who contribute over a certain amount, regardless of whether they intended for their donations to fund such speech.

Anticipating that the FEC, due to its split membership, might not appeal any adverse decision at the district court level, CFIF intervened to protect free speech interests and to preserve a right to appeal.

The Court of Appeals’ decision, authored by Judge Janice Rogers Brown and joined by Judges David Sentelle and Raymond Randolph, reversed the district court and upheld the FEC rule as being consistent with the requirements of Chevron and the Administrative Procedure Act.  The court also acknowledged the burdens that compelled disclosure impose on free speech and association guaranteed by the First Amendment.

“By affixing a purpose requirement on BCRA’s disclosure provision, the FEC exercised its unique prerogative to safeguard the First Amendment when implementing its congressional directives,” wrote Judge Brown. “Its tailoring was an able attempt to balance the competing values that lie at the heart of campaign finance law.”

CFIF was represented in the case by Thomas W. Kirby, Jan Witold Baran, Caleb P. Burns and Samuel B. Gedge of Wiley Rein, LLP.

To read the full entire D.C. Circuit Court decision, click here (PDF).

January 21st, 2016 at 11:36 am
Coalition of 45 Organizations Urges Support for Making the Ban on Internet Access Taxes Permanent
In a letter to Senate Majority Leader Mitch McConnell and Senate Minority Leader Harry Reid, the Center for Individual Freedom (“CFIF”) today joined a coalition of more than 40 other organizations representing tens of millions of consumers from across the nation to urge support of a permanent extension of the Internet Tax Freedom Act currently embedded in H.R. 644, the Trade Facilitation and Trade Enforcement Act.
“In the 17 years since Congress first passed a ban on Internet access taxes, the Internet has evolved from a luxury into a necessity of modern life. ITFA helped to spark this revolution,” the letter states.  “Without ITFA, it is likely that Internet services would be taxed at the high rates of tax imposed on traditional telecommunications services, which often are more than double the rate of tax imposed on other goods and services.”
The letter concludes by urging the U.S. Senate “to act swiftly and decisively to pass a permanent extension of ITFA.”
To read the letter in its entirety, click here (.pdf).
To read the coalition press release, click here.

In a letter to Senate Majority Leader Mitch McConnell and Senate Minority Leader Harry Reid, the Center for Individual Freedom (“CFIF”) today joined a coalition of more than 40 other organizations representing tens of millions of consumers from across the nation to urge support of a permanent extension of the Internet Tax Freedom Act currently embedded in H.R. 644, the Trade Facilitation and Trade Enforcement Act.

“In the 17 years since Congress first passed a ban on Internet access taxes, the Internet has evolved from a luxury into a necessity of modern life. ITFA helped to spark this revolution,” the letter states.  “Without ITFA, it is likely that Internet services would be taxed at the high rates of tax imposed on traditional telecommunications services, which often are more than double the rate of tax imposed on other goods and services.”

The letter concludes by urging the U.S. Senate “to act swiftly and decisively to pass a permanent extension of ITFA.”

To read the letter in its entirety, click here (.pdf).

To read the coalition press release, click here.

December 11th, 2015 at 1:41 pm
Time to Make the Ban on Internet Access Taxes Permanent

When the clock strikes midnight tonight, the federal moratorium blocking states and localities from taxing Internet access and shackling electronic commerce with multiple and discriminatory taxes will expire.  Consumers beware.

Congress first passed the federal law banning state and local governments from taxing Internet access in 1998. Since then, the moratorium has been extended on a temporary basis five times – a move that, among other benefits, has helped keep access to the Internet affordable for citizens and families of all economic levels. 

With the current ban set to expire, however, a number of state and local governments are eager to impose new taxes on the Internet. According to a recent report by the American Action Forum, lifting the ban on Internet access taxes could cost consumers as much as $16.4 billion.

That’s why the Center for Individual Freedom yesterday joined an impressive coalition of national free-market organizations on a letter urging Congress to pass H.R. 644, a trade bill that contains language to finally make the Internet tax ban permanent, something for which we have been advocating for well over a decade. 

To be sure, few in Congress dispute the benefits of keeping the Internet tax ban in place.  Except for a handful of Members of Congress who continually work to hold the policy hostage to the completely separate issue of whether the federal government should give states and localities new powers to force out-of-state retailers to collect and remit sales taxes on their behalf, the ban on Internet access taxes probably would have been made permanent long ago.

Fortunately, the House of Representatives today passed H.R. 644 by a vote of 256-158.  It’s time for the Senate to end the political games and follow suit.

November 17th, 2015 at 9:30 pm
“President Obama’s Cynical Refugee Ploy”

To understand the Syrian refugee crisis, Walter Russell Mead’s analysis in The American Interest is a must read and then must read again.  Mead is not a politician; he’s a Professor of Foreign Affairs and Humanities at Bard College and Professor of American foreign policy at Yale University.
 
He asks and answers, in no uncertain terms, “Why is there a Syrian refugee crisis in the first place?”

Read the piece here.

October 8th, 2015 at 12:46 pm
Prosecutor Punches Back on the Politics of Benghazi

Chairman Trey Gowdy’s blistering letter to Elijah Cummings.  Read it here.

May 13th, 2015 at 8:03 pm
The Two Faces of T-Mobile

The recent release of the Apple Watch was a momentous occasion that has become routine for American consumers: another breakthrough mobile product hitting the marketplace. Whether new devices or continuous improvements to smartphones and other devices on which we all rely, almost all of us use gadgets that just ten years ago would have been considered science fiction.

Less well known to consumers is the technical foundation of the entire ecosystem upon which such devises operate. Specifically, wireless spectrum is the invisible infrastructure that carries data between devices and to the broader Internet. Wireless companies compete fiercely for this resource so that they can provide good service for their customers.
 
That’s why – despite the fact that the Federal Communications Commission (FCC) is auctioning off coveted broadcast spectrum next year, an eternity in tech terms – the jockeying between potential bidders has already started. Two of the major players in particular, Sprint and T-Mobile, have been ceaselessly calling for the FCC to create auction rules that benefit them at the expense of their competitors. Their latest request is for a larger set-aside to limit the amount of spectrum on which competitors AT&T and Verizon can bid. 

This isn’t the first time the two companies have made such a request.  The FCC didn’t accept it last time, and it shouldn’t now as the only change is that Sprint and T-Mobile now are pushing their shared agenda through the recently (and conveniently) formed “Save Wireless Choice” coalition.

This is a terrible idea for several reasons, not the least of which is the fact that Sprint and T-Mobile are dynamic companies that compete fiercely in the wireless industry. Don’t just take our word for it. On a recent call with Wall Street analysts, T-Mobile CEO John Legere bragged that T-Mobile has “a great spectrum portfolio. That’s allowed us to be smart and opportunistic,” and claimed that the company was “off to an incredible start to 2015 with the best customer growth in the industry fueled by disruptive Un-carrier moves and the network that continues to be America’s fastest.”  Similarly, Sprint CEO Marcelo Claure asserted that he “couldn’t be more confident that now [Sprint has] the right plan to be successful” and acknowledged Sprint’s “rich spectrum portfolio.”
 
Legere and Claure’s comments to Wall Street make their plea to the FCC – that they cannot compete with AT&T and Verizon in the upcoming auction or in the industry long-term – completely disingenuous. Furthermore, Sprint chose to sit out of the recent AWS-3 auction, and it was DISH, not AT&T or Verizon, that outbid T-Mobile most on licenses it sought but didn’t win.
 
Indeed, it was DISH’s shady dealings during the AWS-3 auction that demonstrate the danger of rules that favor certain players over others in the marketplace. DISH used shell companies to take advantage of the FCC’s Designated Entity program, a program that is supposed to help small companies buy spectrum by giving them a discount.  That sleight of hand with DISH will cost taxpayers a stunning $3.3 billion unless the FCC investigates and rejects the taxpayer-funded discount.
 
At the end of the day, Sprint and T-Mobile are massive, competitive companies backed by large, foreign corporations, Softbank and Deutsch Telekom. Even if that were not the case, the recent experience with DISH should be a giant red flag about the unintended consequences of rules that favor certain companies.
 
In order for consumers to continue reaping the benefits of the wireless revolution, they need more spectrum to be allocated in the most efficient way possible. In the 2016 incentive auction, that means straightforward rules that treat all bidders equally. This principle has taken us to where we are right now, and it would be a mistake to jeopardize this progress by giving in to the self-serving pleading of two companies.