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Posts Tagged ‘FCC’
November 13th, 2014 at 10:16 am
Podcast: From ObamaCare to Title II Internet Regulation
Posted by CFIF Staff Print

In a recent interview with CFIF, Phil Kerpen, President of American Commitment, discusses the Supreme Court’s decision to grant cert in the ObamaCare subsidies case, how a key architect of ObamaCare made news recently by boasting about taking advantage of “the stupidity of the American voter,” and what’s wrong with President Obama’s intervention in the FCC’s plans to regulate the Internet. 

Listen to the interview here.

October 27th, 2014 at 10:22 am
Title II Reclassification: Not Just Unwise, But Also Illegal
Posted by Timothy Lee Print

Those of us who oppose the Obama Federal Communications Commission’s (FCC’s) effort to bridle the Internet  with so-called “net neutrality” regulation have explained at length why reclassifying the Internet as some sort of 1930s-style public utility under Title II is a dangerous idea.

Perhaps we we haven’t devoted appropriate time, however, to explaining why it’s almost certainly illegal.

As a broader policy matter, the vague and muddled calls from the extremist left to reclassify broadband typically don’t extend beyond an emotional demand for federal bureaucrats at the FCC to “do something.”  Or, as we often put it, they seek to impose a “fix” for an Internet that isn’t at all “broken.”  Accordingly, they go about offering substantive policy proposals as if lunching at a salad bar stocked with bad ingredients.  They pick and choose bad items, assembling what they consider a perfect combination.

But what they instead create is a Frankenstein-like monstrosity.

And in terms of legality more specifically, the FCC would be treading onto extremely unstable ground if it opts to follow the demands of far-left activists by rushing headlong into this dubious Title II reclassification proposal.  The fact of the matter is that the FCC has long contended that the Internet is a Title I service.  Therefore, in order to reclassify, the law requires it to meet a higher burden of proof as to why it got the initial classification wrong.  Hysterical activism from the far left that has tended to characterize this debate won’t suffice, whether as a matter of law or a matter of logic.  The FCC has already twice lost this legal battle in court (first in 2010, and again in 2014).  Rather than stubbornly tempt a third judicial rebuke of its effort to impose “net neutrality,” it would be better to learn its lesson as it proceeds with its rulemaking effort.

And that’s only with regard to traditional wired networks.  When it comes to wireless Internet (like the 4G/LTE smartphone technology), the law actually expressly prohibits the FCC from imposing Title II-type rules.  That clarity may not discourage the net-roots fringe from demanding reclassification, but it most certainly should stop the FCC from exceeding its legal mandate and once again blatantly flouting both the letter and spirit of applicable law.

Despite six years of effort to the contrary from the Obama Administration, we remain a nation of laws, not men.  That timeless principle does not yield to extremists’ pursuit of the “net neutrality” unicorn.

To date, and through previous administrations of both parties over the past two decades, the FCC has avoided attempting to classify Internet service under Title II for good reason:  it is bad policy and bad law.  Everyone except those clinging to an ideologically extreme position on the matter have recognized that reality.  We therefore cannot allow such Title II extremists to suddenly divert us from the “light touch” regulatory course that has made the Internet one of the most beneficial and revolutionary innovations in human history.  There’s too much to lose.

August 15th, 2014 at 7:22 am
Podcast – Net Neutrality: A Solution in Search of a Problem
Posted by CFIF Staff Print

In an interview with CFIF, Mike Wendy, director of Media Freedom, discusses how so-called “Net Neutrality” is a solution in search of a problem and why heavy-handed government regulations are not good for consumers or investment.

Listen to the interview here.

August 3rd, 2014 at 5:38 pm
FCC Should Focus on Releasing More Spectrum, Not Maligning Network Optimization Practices
Posted by Timothy Lee Print

Back in the days before nearly everyone possessed a cell phone, people who needed to place calls while away from home often used pay phones.  In many circumstances, it was considered common courtesy to make conversations as quick as possible, so that the next person in line could make their calls.  In crowded areas, however, some pay phones actually enforced time limits in a form of usage optimization.

Fast forward to today, with another form of optimization at issue.

In a recent letter to Verizon, Federal Communications Commission (FCC) Chairman Tom Wheeler proclaimed himself “deeply troubled” by Verizon’s announcement that it will extend its Network Optimization policy to 4G LTE devices.  “Network Optimization,” or “network management,” is not a new concept.  It enables wireless carriers to deliver the best possible service to the highest volume of customers, by optimizing the data speeds of the heaviest 5% of unlimited plan customers, but only when a specific cell site is significantly congested.  It serves as a necessary tool to ensure the best network experience for all customers, which should logically be the number one priority for wireless providers.

Under Verizon’s announced extension, customers affected will be those using a 3G or 4G LTE device on an unlimited data plan, who have fulfilled their minimum contract term, who are among the top 5% of data users and who are connected to a cell site experiencing high demand at that time.  In practice, that essentially means a person streaming a movie while playing a video game in the middle of Times Square for days on end – not the average consumer sending emails or scrolling through Facebook.

Chairman Wheeler’s letter, however, did not come as a surprise.  Unfortunately, it the type of action that we’ve witnessed all too often from President Obama’s other past FCC Chairmen.  To wit, they habitually flex their regulatory muscles and ostentatiously harass wireless providers in order to placate the 1% of digital elites, at the expense of everyday consumers.  The simple fact is that every national wireless carrier employs some similar type of network management practice, because it serves the best interest of consumers.  The US wireless market it is highly competitive, and carriers must strive to satisfy consumer demand or invite customer defection.

If Chairman Wheeler truly seeks to ensure that consumers receive the highest-quality wireless service, he would instead refocus the FCC’s best efforts toward releasing more spectrum, which constitutes a critical lifeline for the wireless industry, and which has the potential to resolve looming network congestion issues.  The FCC’s core mission is to manage spectrum – not to needlessly intervene in private market business decisions.

Accordingly, Chairman Wheeler should redirect his efforts away from government overreach designed to help the proverbial “1%” of digital elites, and more toward measures that actually matter to and benefit the 99%.

May 30th, 2014 at 9:37 am
Take Action to Stop Net Regulation

President Obama’s Federal Communications Commission (FCC), bowing to the demands of liberal special interests, is actually considering a scheme to regulate the Internet like a public utility. And if they get their way, this egregious government overreach into the broadband economy will almost certainly kill job creation, harm consumers and bring a significant amount of investment and innovation to a screeching halt.

Simply put, the federal government micromanaging the Internet under Title II of the Telecommunications Act is a dangerous scheme, one that Congress must halt and the FCC must abandon. That’s why the Center for Individual Freedom this week activated StopNetRegulation.org, a project dedicated to ensuring the Internet remains free from heavy-handed government regulations and stopping this latest power grab by the Obama administration.

Join the fight by visiting StopNetRegulation.org.  While there, use the web form to quickly and easily contact your Members of Congress and the FCC.

April 22nd, 2014 at 3:11 pm
FCC Micromanagement Could “Blow Up” Planned Spectrum Auction
Posted by Timothy Lee Print

Does the federal government have too little on its plate these days, or too much?  The American public is unequivocal on that question, with a record 60% telling Gallup that bureaucrats are wielding too much power.  Only 7% say “too little.”

Despite that ugly reality, the Federal Communications Commission (FCC) seeks to increase its level of micromanagement over our telecommunications market.  The auction of spectrum from television stations to wireless carriers is obviously long overdue, and ideally would improve service quality and speed within that growing market.  Unfortunately, the FCC intends to limit participation in bidding on highly valuable low-frequency airwaves by excluding the largest and most successful carriers in many markets.  As Bret Swanson observes at TechPolicyDaily.com, that threatens to “blow up” the entire auction:

Because the auction depends on inducing the broadcasters to give up their spectrum in the first place, if two of the largest prospective bidders are limited, or sit out entirely, the whole thing could blow up.  Without the two largest bidders, prices are likely to be much lower, and broadcasters might say, no thanks.  No broadcaster participation, no new spectrum for new mobile innovations.”

The wireless industry has brought innovation scarcely imaginable even five years ago, but that vitality will be jeopardized if bureaucrats pursue this sort of overregulation and abandon the regulatory light touch approach.  As Swanson ominously notes:

The FCC is about to take a huge risk with a hugely successful U.S. industry.  It’s also openly favoring and disfavoring specific firms, something U.S. law used to try to avoid.  The added irony, although it shouldn’t matter in a country that values the Rule of Law, is the favored firms are both foreign and the two disfavored are domestic.”

Instead if new FCC micromanagement, what we need is an open and fair incentive auction.  Allowing the market to work, unencumbered by such bureaucratic arbitrariness, will unleash more of the profound potential that the wireless marketplace possesses to spark new social, economic and technological realities for America’s consumers.

February 21st, 2014 at 11:09 am
CFIF TechNotes
Posted by Timothy Lee Print

The tech policy arena in recent days has understandably been dominated by two issues in the news – the proposed Comcast/Time-Warner Cable merger and the refusal of Net “Neutrality” proponents to allow that pernicious campaign to finally die a justified death.

Regarding the Comcast/Time-Warner  Cable merger, the Heritage Foundation’s James Gattuso offers one of the better primers.  He rightly criticizes the anti-merger hyperbole, and notes that the agreement is actually a sign of increased competition, not diminishing competition:

To begin with, these companies do not compete with each other.  Comcast and Time-Warner Cable (not to be confused with Time-Warner, the media firm from which TWC was hived off in 2009) operate in geographically distinct cable TV franchises around the country.  They do not overlap.

Moreover, while they are the largest and second-largest cable TV firms nationally, that metric is largely meaningless.  The paid television marketplace includes many other competitors, ranging from telecommunications firms such as Verizon and AT&T to satellite providers such as DIRECTV, to a growing band of Internet TV providers such as Netflix and Apple TV.  It’s a diverse marketplace, in which Comcast and TWC together serve barely 30 percent of subscribers. (In fact, Comcast has pledged to divest cable systems to keep the share below that figure). “

The Wall Street Journal provided the same reassurance, confirming that “a merged Comcast and TWC still has plenty of competition”:

[U]nlike the markets for beer, air travel and wireless, cable companies don’t compete with each other.  They have local franchises and compete against telephone, wireless and satellite companies.  So there’s no market overlap between systems owned by Comcast and those of Time Warner Cable.  Comcast, which is dominant in Philadelphia, will get millions of new customers in New York and Los Angeles.  But how can dominance in one geographic region give Comcast new pricing power in a different area?”

And the following day, the  Journal’s Holman Jenkins takes a nice swipe at the toxic un-dead specter of Net “Neutrality” as it relates to the proposed merger:

But standing in the way is the tired concept of ‘net neutrality,’ beloved by regulators and mau-mau groups but never enacted by Congress and frequently questioned by the courts. Yet now, thanks to America’s deranged merger approval process, Time Warner and Comcast risk having just such rules imposed on them (and no one else) as extortion for regulators approving their deal.”

With federal overregulation already exacerbating what has been the most sluggish economic recovery in recorded U.S. history, and with the American public listing big government as the nation’s foremost threat, the bottom line is that bureaucratic interference via Net “Neutrality” or in the private proposed merger of Comcast and Time-Warner remains a bad idea.

On a different and more optimistic note to end the week, however, Notre Dame philosophy professor Don Howard and the Manhattan Institute’s Mark Mills anticipate the upcoming arrival of self-driving automobiles, so long as overactive government regulators referenced above don’t spoil the party:

The self-driving-car solution is clear.  Congress should pre-empt Nhtsa and the trial lawyers and pass a National Autonomous Vehicle Injury Act.  The Fords and Nissans and Googles and Qualcomms should voluntarily create an Autonomous Vehicle Event Reporting System.  And industry players should also create a National Autonomous Vehicle Compensation System.  (Vaccine compensation is funded with a de minimis tax on each dose.)  Last November, Nhtsa Administrator David Strickland told Congress that ‘in addition to the devastation” that “crashes cause to families, the economic costs to society reach into the hundreds of billions of dollars.  Automated vehicles can potentially help reduce these numbers significantly.’

That potential has already been realized, whether regulators understand it or not.  If the human toll from highway accidents were a disease and we knew there was a cure, it would be immoral not to marshal every corner of government and industry to deploy it.”

So allow the private sector to move forward, whether through voluntary mergers or technological innovation, beyond the interference of overzealous government regulators.  What a novel concept.

November 25th, 2013 at 2:32 pm
CFIF TechNotes
Posted by Timothy Lee Print

This week’s CFIF TechNotes – happy Thanksgiving week, and enjoy!

(1)  At Wireless Week, Representative Greg Walden (R – Oregon) warns the Federal Communications Commission (FCC) against spectrum caps in upcoming auctions:

Walden and other Republicans are warning the FCC not to pick winners and losers in the auction and to allow as much participation as possible.  ‘I don’t think it’s fair to take perhaps some of the biggest bidders out of the process in the beginning,’ Walden said.  ‘Remember, part of the requirement here is to generate maximum revenues for the taxpayers.’”

(2) From Reuters, T-Mobile eyes an airwaves purchase from Verizon Wireless, according to sources:

T-Mobile US is looking to buy wireless airwaves from larger rival Verizon Wireless to bolster its mobile network capacity for data services, a source familiar with the matter said on Tuesday.  While T-Mobile has approached Verizon about buying the spectrum, the process is still in the early stages, according to the source, who asked not to be named. The source was not authorized to discuss the matter.  T-Mobile, the No. 4 U.S. mobile service provider, might have to pay as much as $3 billion for the airwaves, which are not being used by Verizon, according to one analyst estimate.  The airwaves would give T-Mobile additional network capacity to help it catch up with its bigger rivals in delivering high-speed wireless services.”

(3) From The New York Times, FCC Chairman Tom Wheeler calls for transforming the technology used by phone systems:

Americans could soon be one step closer to getting that videophone they were promised in the 1960s.  The chairman of the Federal Communications Commission said on Tuesday that the agency would begin ‘a diverse set of experiments’ next year that would begin to move the nation’s telephone system from its century-old network of circuits, switches and copper wires to one that transmits phone calls in a manner similar to that used for Internet data.  The Internet-based systems allow more information to be transmitted at one time, making possible the addition of video to phone calls, as employed by services like Skype and Vonage.  While consumers can already use those services, most of the legacy telephone networks still use analog technology, employing an out-of-date system of physical switches that is expensive to keep operating.”

(4) From The Wall Street Journal, “FCC to Begin Acting on Phone-Network Upgrade”:

AT&T and other legacy phone providers have been looking to retire the old networks in favor of new, IP-based phone systems that are often delivered by broadband, both wired and wireless.  But it has been unclear how many of those old rules would be applied to the new networks, in part because the FCC previously decided against classifying broadband Internet as a telecom service, which would subject it to greater regulatory oversight.  ‘Our current infrastructure has served us well for almost a century but it no longer meets the needs of America’s consumers.  The transition to broadband and IP services that has already begun is driven by consumers who are moving to the Internet and choosing to connect in ways not imagined just a decade ago,’ AT&T’s Jim Cicconi said in a response published online.  The transition to IP technology has yielded many benefits, such as greater speed and capabilities.”

(5)  And from Broadcasting & Cable, even Senator Charles Schumer (D – New York) has urged the FCC to refrain from attempting to adopt incentive auction rules that would limit the participation of any wireless carriers:

‘It is the responsibility of the Commission to structure the auction so that broadcasters will realize substantial benefit for choosing to put spectrum up for auction, broadcasters who will have to move to new channel assignments can be adequately compensated, and so that the auctions can generate maximum revenue in order to adequately fund FirstNet,’ Schumer wrote in a letter to FCC Chairman Tom Wheeler.”

November 21st, 2013 at 10:06 am
Positive FCC News: Chairman Calls for IP Transition Testing
Posted by Timothy Lee Print

America’s century-old telephone networks using analog and physical switch technology served us well from the days of Alexander Graham Bell to the dawn of the Internet.  Twenty-first century technology, however, demands a smooth and rapid transition to Internet-Protocol (IP) services.

Fortunately, there’s actually good news coming out of the Federal Communications Commission (FCC) on that critical issue.  As noted by The New York Times, FCC Chairman Tom Wheeler announced this week that he’s directing staff to commence trials for the much-needed transmission:

The chairman of the Federal Communications Commission said on Tuesday that the agency would begin “a diverse set of experiments” next year that would begin to move the nation’s telephone system from its century-old network of circuits, switches and copper wires to one that transmits phone calls in a manner similar to that used for Internet data.  The Internet-based systems allow more information to be transmitted at one time, making possible the addition of video to phone calls, as employed by services like Skype and Vonage.  While consumers can already use those services, most of the legacy telephone networks still use analog technology, employing an out-of-date system of physical switches that is expensive to keep operating.  Those old networks make possible what is known in the communications industry as Plain Old Telephone Service, or POTS, and they use types of switches that in many cases are no longer manufactured, telephone company executives say.  The outdated switches limit the ability of companies to expand the networks to carry more traffic and impede a company’s ability to refurbish equipment.”

Some of the usual anti-market activist suspects, such as Public Knowledge, fear that the FCC’s comparatively limited authority to overregulate the Internet in the same way that it did existing telephone networks will mean a reduced ability of federal regulators to meddle as communications technology advances.  The reality, however, is that the transition to broadband and IP services has already begun as consumers freely migrate to more advanced connection methods.

The FCC should focus on what works in the real world, rather than hobble technology’s advance on the basis of unfounded fears, so this week’s announcement marks a welcome and positive milestone.

November 4th, 2013 at 2:43 pm
CFIF TechNotes
Posted by Timothy Lee Print

(1)  In a Daily Caller commentary entitled “Conservatives and Libertarians Should Support America’s Copyright Protections, Not Malign Them” I highlight the causal connection between U.S. intellectual property (IP) protections and our unmatched artistic and technological dominance:

America’s system of copyright and intellectual property (IP) protections, which incentivize creators and reward their efforts, has resulted in the most innovative, influential, artistic, and prosperous nation in human history.  No country or alternative system even rivals our record of creative preeminence in music, movies, television shows, news, and literature.”

On that basis, I also address some myths regarding proposed Congressional legislation entitled the Free Market Royalty Act (FMRA):

That bill would finally end terrestrial radio’s special government privilege against paying performance rights that artists are allowed to negotiate with all other forms of use.  Simply put, the proposed legislation doesn’t “regulate the market” as Khanna claims.  More accurately, the FMRA seeks to create a more level playing field for all forms of broadcast.  Currently, artists aren’t compensated when their works are played on terrestrial radio, except through a cumbersome licensing process.  This bill would change that and allow them to negotiate.”

(2)  Over at AEI’s TechPolicyDaily.com, Jeffrey Eisenach and James Glassman wrote that “It’s Time to Move Ahead at the FCC”:

The DISCLOSE Act was proposed in 2010 by Sen. Charles Schumer (D-NY) and Rep. Chris Van Hollen (D-Md) in the wake of the Citizens United decision by the U.S. Supreme Court.  The act, in our view, was genuinely pernicious and in all likelihood unconstitutional.  For example, it would prohibit political contributions by recipients of TARP (Troubled Asset Relief Program) money and by any firm that received government contracts of more than $10 million.”

The authors agree with Senator Ted Cruz (R – Texas) that it is “understandable and appropriate” to raise questions, but that now the FCC can hopefully move on and act in ways that spawn innovation, incentivize investment and reduce costs for consumers.

On that note, as reported in USA Today, “The U.S. Senate on Tuesday confirmed venture capitalist Thomas Wheeler to head the FCC and, as a commissioner, Mike O’Rielly, who had been an advisor to Senate Minority Whip John Cornyn, R-Tex.”   With these confirmations, the FCC now has a full roster.

to reduce costs for consumers, spawn faster innovation, and incentivize more capital investment. Let’s get on with it. – See more at: http://www.techpolicydaily.com/communications/time-move-ahead-fcc/#sthash.8RccQpA5.2w29Hnf4.dpuf
hether the mandatory disclosure provisions of DISCLOSE Lite are constitutional is highly questionable, and we seriously doubt the FCC has authority to impose such requirements on its own.   In any case, it would be completely inappropriate for an independent regulatory agency like the FCC to even attempt unilateral action, especially in the face of strong opposition.  It is perfectly understandable and appropriate for Sen. Cruz to raise these question – See more at: http://www.techpolicydaily.com/communications/time-move-ahead-fcc/#sthash.8RccQpA5.2w29Hnf4.dpuf

(3)  At HighTechForum.org, Richard Bennett writes in a piece entitled “IP Transition:  The One Percent Problem” that “the way forward is to incentivize the formation of private firms operating with diminishing levels of public subsidy”:

The hardest thing to do in Washington is to unwind a body of regulation with a long history, and the telephone has been around forever in technology terms.  In 1876, Alexander Graham Bell picked up a telephone and said:  “Mr. Watson–come here–I want to see you.”  In 1913, The Justice Department made an out-of-court settlement with AT&T that allowed it to operate as a government-sanctioned monopoly as long as it provided universal service within a defined territory and allowed other telephone systems to interconnect with its network to serve others.  By 1984, technology changes made this arrangement untenable and the Justice Department’s anti-monopoly suit against AT&T broke the company up into a number of parts.  After 12 years in which the nation’s telecom business was run out of a judge’s chambers, Congress finally passed the Telecommunications Act of 1996, imposing new obligations meant to promote competition for local and long-distance telephone service.  By 2010, the Telecom Act was irrelevant as telephone users had began to end their Plain Old Telephone Service (POTS) subscriptions in favor of mobile telephony and broadband.  Today POTS is not economically viable.”

(4)  On The Hill’s technology blog, Kate Tummarello and Brendan Sasso update us on events affecting the FCC and FTC:

The government shutdown has forced the Federal Communications Commission to delay the planned auction of the “H block” of wireless spectrum.  The commission had set the auction for Jan. 14, but on Monday, the agency announced that date will be bumped back to Jan. 22.  House FTC hearing postponed: The House Commerce, Manufacturing and Trade subcommittee has postponed Thursday’s planned hearing on the future of the Federal Trade Commission.  The House canceled Thursday’s session so members can attend the funeral of Rep. Bill Young (R-Fla.).”

(5)  At Politico, Brooks Boliek writes an update piece entitled “FCC Forced to Play Catch-Up After Shutdown”:

The FCC is delaying high-profile actions, including a key spectrum auction, as it plays catch-up after the government shutdown.  Acting Chairwoman Mignon Clyburn had originally scheduled an auction for the so-called H-Block for Jan. 14.  The auction, which will be the first major airwaves sale since 2008, is now slated to start on Jan. 22, the FCC announced today.  That could push it into next year’s fiscal battles.  The bill that just passed Congress funds the government through Jan. 15 and raises the debt ceiling through Feb. 7.  The shutdown delays add new pressure to the FCC, which is in the midst of major policy initiatives and stuck at three commissioners with two nominees stalled in Congress.  The H-Block is the first of a string of planned auctions designed to get more airwaves into the marketplace to feed data-hungry smartphones and power high-speed communications systems.  The commission lost critical planning time with most of its nearly 2,000 staffers furloughed for 16 days.  ‘These schedule changes are necessary to give potential bidders and commission staff additional time for planning and preparation,’ the FCC said in a public notice issued Monday.”

(6)  At Mountain View Voice, Angela Hey details online education innovations in “Coursera Educates Five Million Students and Revenues Start Growing”:

Mountain View’s Coursera offers free online courses from the world’s leading universities.  Today, at the Global Mobile Internet Conference in San Francisco’s Moscone Center, Stanford professor Andrew Ng described why he co-founded Coursera, which launched in 2012.  The conference, which is also held in Beijing, features mobile apps, wearable devices and connected cars.  Ng is director of Stanford’s artificial intelligence laboratory.  At Stanford he can teach 400 students.  With Coursera he taught 100,000 students in his machine learning class.  The other co-founder is Daphne Koller, a Stanford professor of computer science.  Five million students have registered Coursera accounts to take MOOCs (massive open online courses).”

(7)  Over at Forbes, Steve Forbes himself laments how telecom sector regulations simply aren’t keeping appropriate pace with technological change in “Government Should Mandate that Car Makers Invest Billions in Horse-Drawn Carriages!”:

Should Ford Motor have to reintroduce the Model T instead of investing in new cars that meet the needs of today’s consumers?  Should Apple be made to bring back the Apple II instead of investing in new products?   Should dental device makers be forced to invest in drills powered not by electricity but by foot pedals?  Crazy?  Not in telecommunications.  Special interests want to require traditional landline telephone companies like Verizon and AT&T to increase investment in antiquated technologies like copper-based telephone services that most consumers are choosing not to use.  These phone companies are restricted by archaic regulations that were put in place back when the Bell system was a monopoly.  Consumers then had one option, the landline phone.”

(8)  Finally, over at Broadcasting & Cable, John Eggerton writes on points of left-right agreement and disagreement in “Public Knowledge, AT&T Weigh in with Hill on IP Trials”:

Public Knowledge and AT&T agree on five touchstones for the IP transition but disagree on AT&T’s suggested trials, according to testimony for an Oct. 23 House Communications Subcommittee hearing on the transition.  Harold Feld, senior VP of Public Knowledge, delineated those values in his testimony as follows:  service to all Americans, interconnection and competition, consumer protection, reliability, and public safety.  Feld adds that AT&T’s suggested IP transition trials should be rejected.  However, AT&T countered Feld’s statement, saying the FCC should expedite those ‘real world tests.’  Feld will tell the legislators that test trials are needed, but they must be guided by those values and they should not be the trials AT&T has offered up.  In his prepared testimony AT&T senior VP James Cicconi complimented Feld on ‘identifying the key consumer protections needed for a successful IP transition.  We may end up differing on details,” he said, “but their framework is sound.  Clearly the fundamental principles of universal connectivity, interconnection, consumer protection, reliability and public safety are hallmarks of our Nation’s commitment to communications and cannot be lost in this process.’  Cicconi says its trials offer ‘clear benefits’ with no costs and says AT&T is not looking for the IP world to be a regulation-free zone.  ‘We understand that there will be a set of core consumer protections that exist,’ he said.  ‘While I might disagree with the FCC on particular matters, I would concede readily the FCC can play a strong role in protecting consumers, and it has demonstrated that in recent years.  Public safety should fall within the FCC’s consumer protection mandate as well.’”

And those are your CFIF TechNotes for this week!

October 21st, 2013 at 3:56 pm
CFIF Technotes
Posted by Timothy Lee Print

(1)  Writing in The Wall Street Journal, Representatives Fred Upton (R – Texas) and Greg Walden (R – Oregon) on how the Obama Administration continues to “put the brakes on business,” including FCC red tape and regulatory uncertainty:

On Sept. 26, the Federal Communications Commission adopted a Notice of Proposed Rulemaking outlining potential new media-ownership rules that eliminate the so-called UHF discount.  The change would affect how the FCC determines whether a station owner has approached a 39% cap on nationwide audience that can be reached by a single owner.  The proposed FCC rules aren’t just complicated.  They won’t even be final until next year at the earliest because the FCC can take however long it sees fit—sometimes more than a decade—to promulgate rules.  Even worse, the commission says whatever rules the FCC dreams up in the future will be applied retroactively.  So between now and when the new guidelines become final, no one knows the rules of the game.  And companies have to be prepared at all times to adhere to a new set of regulations that are still a glimmer in the FCC’s eye.  This leaves one of the economy’s only flourishing industries at the mercy of bureaucrats in Washington.”

(2) From The Washington Post, encouraging analysis entitled “How the FCC Plans to Clear the Air for More Mobile Data”:

To fix the coming crunch, federal regulators think they’ve come up with the right solution: Give companies like Verizon and AT&T a lot more frequencies on the wireless spectrum to play with. But where will all those extra channels come from? That’s where the television industry comes in. If all goes according to plan, next year hundreds of TV stations will get a big check to shut down operations and give up their spectrum. Then the agency will turn around and sell that invisible treasure to the wireless companies so that when you fire up your data connection, you won’t get caught in an online traffic jam. All told, the FCC hopes to take about 20 channels worth of spectrum that are currently licensed to various TV stations across the country and auction them off to the wireless companies in various local markets.”

(3) From Jim Kohlenberger writing at GigaOM, a clarion call to free much-needed spectrum for commercial wireless use:

To advance the emerging connected device revolution, we need to continue to free up spectrum for commercial wireless use, and accelerate the transition to IP networks.  At GigaOM’s Mobilize conference on October 16, I’ll be talking about some of the ways we can do this.  President Obama has already taken important steps to make more spectrum available and accelerate the transition to faster and more capable next-generation IP-based wireless LTE networks.  It is absolutely essential that we continue to invest and upgrade our next-generation networks today in order to keep pace with innovation and meet the wireless demands of consumers and businesses tomorrow.”

(4) From Bloomberg, a report on FCC observers’ recommendations for quick action if and when its new commissioners are confirmed:

Once confirmed, the new chairman of the FCC should spell out the agency’s perspective on the issues facing the modern telecommunications sector, industry analysts said Oct. 15 at a panel hosted by the Technology Policy Institute.  The FCC should ‘take a look at where the industry is today, [ask] what are the challenges ahead, is there a role for regulation in that, what is it and how should we, in fact, plan for that?’  Jim Cicconi, AT&T’s senior vice president of external and legislative affairs, said Oct. 15.  This requires the FCC to ‘modernize its approach and its outlook and, frankly, modernize some of its regulations,’ he said. Cicconi said he believes the FCC has an oversight role as telecommunications companies and customers migrate from wired copper telephone networks to IP-based networks.  AT&T has a pending proposal with the commission to coordinate tests at wireline facilities which would replace their time-division multiplexed facilities with IP-based alternatives.

Cicconi urged the FCC to avoid setting spectrum caps that would prevent larger carriers from bidding on certain bands in the upcoming incentive auction. ‘The notion of setting artificial limits seem purely designed to advantage one set of companies and disadvantage another,’ he said. AT&T isn’t against ’something that is set up to be even-handed,’ Cicconi said.  ‘I think it is possible to do that with the current spectrum screen.’”

(5) From the State Telephone Regulation Report, a story on calls for fewer obstructive regulation from the FCC as we move forward in the IP transition:

Fewer regulations are needed by states and the FCC to promote competition and to move the IP transition forward, said speakers at the Telecommunications Summit at Murray State University in Kentucky Oct. 9.  The deregulation of telecom services by the Indiana Utility Regulatory Commission helped to spread investment and innovation in the state by AT&T and Comcast, said Commissioner Larry Landis.  State commissions have the opportunity to work with the FCC to change policies in the states, said Landis:  ‘States have a unique perspective to bring to the process, and they understand the need to share a vision as well as each having their own.’  The IP transition is a multi-year change that doesn’t need to be hampered by FCC regulation before the technologies are fully developed, said Hank Hultquist, AT&T vice president-federal regulatory.  ‘IP is a remarkably flexible protocol that allows you to operate different technologies on the same network.’  IP does provide some solutions to old technologies that will take time to adopt, said Hultquist.  Some customers were upset that Verizon deployed Voice Link as the sole service in Fire Island, N.Y., because it did not have faxing capability, he said.  ‘You can do faxing with scanning, but I’m skeptical that this should be handled in the transition or the network,’ because increasingly scanning can take the place of sending faxes, he said.  It will also take time to make sure IP interconnection works, said Hultquist.  ‘We don’t want to replicate problems.’  Rural providers are concerned about the IP transition because they base revenue on long-distance calls, which would cost them money on IP networks, said Hultquist.  ‘The revenue flow would go away and these providers want a way to resolve that.’”

(6) From The Hill, an update on confirmation hearings for FCC and FTC nominees ready to proceed:

The Senate could confirm President Obama’s nominees to the Federal Communications Commission and Federal Trade Commission as early as Wednesday night.  Tom Wheeler, President Obama’s pick for FCC chairman, and Michael O’Rielly, a nominee for a Republican commission seat, have been placed on a fast track for Senate approval, according to a document circulated on Capitol Hill Wednesday.  The confirmations would likely come after the Senate votes on a deal to lift the debt ceiling and end the government shutdown on Wednesday night.  The Senate Commerce, Science and Transportation Committee approved Wheeler’s nomination by a voice vote in July.  O’Rielly and McSweeny testified before the panel last month, but the committee hasn’t voted on either nomination.  Sen. Ted Cruz (R-Texas) has indicated he might block Wheeler’s nomination unless he promised not to require more disclosure about the groups paying for political advertisements.”

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October 14th, 2013 at 3:08 pm
CFIF Technotes
Posted by Timothy Lee Print

(1)  A new study from the Internet Innovation Alliance (IIA) shows how American consumers continue to abandon old-fashioned wireline telephone service, but Federal Communications Commission (FCC) bureaucratic inaction in the transition to all Internet Protocol networks (the “IP Transition”) threatens harm to consumers, our economy and market competition:

To ensure that ILECs can continue to provide innovative solutions for consumers and compete effectively against other platforms, they must be free to make the best use of their capital. That, in turn, means dedicating their capital to IP – and fiber – based broadband networks, rather than tying it up in obsolete copper-based circuit-switched networks.  At the end of 2012, the ILECs’ share of the consumer voice, broadband-access, and video markets was 34%, 14%, and 10% respectively.  It is time to stop treating the ILECs as monopolies that must be hobbled and start treating them as useful assets whose health is important to this nation’s economy and global competitiveness.”

(2)  Similarly, Raymond J. Keating of the Small Business & Entrepreneurship Council (SBE Council) summarizes how the FCC’s upcoming auction of low-frequency spectrum currently used by TV broadcasters over to wireless firms is fraught with bureaucratic overreach and market interference, citing a study by Duke University’s Leslie Marx:

This incentive auction would have the TV broadcasters getting a split of the proceeds from the auction.  But some, like the Justice Department’s Antitrust Division in a filing with the FCC, argue that the auction rules should be set to provide an advantage for smaller carriers – such as Sprint and T-Mobile – over the largest mobile service providers, i.e., AT&T and Verizon.  Unfortunately, some fail to understand the competitive market process and how businesses gain market share.  Others more cynically are attempting to use government to manipulate the rules of the game in their own favor.”

(3)  Bloomberg.com reports on more positive news for the FCC, however, courtesy of the U.S. Supreme Court:

The U.S. Supreme Court turned away a challenge by five power companies to new federal rules that lower the fees telecommunications companies must pay to attach lines to electric utility poles.”

(4)  Over at The Wall Street Journal, meanwhile, Holman Jenkins puts on his usual must-read clinic.  In his latest piece, Jenkins details successful Internet service providers’ efforts to “tunnel under the regulatory morass that inhibits physical broadband deployment”:

All this renders even more quaint the scrap over ‘net neutrality.’  Verizon is battling in a U.S. appeals court the FCC’s effort to impose this regulatory conceit on the broadband industry – with certain bloggers insisting that if Verizon wins, it will represent “the end of the Internet,” because, you know, there’s not enough competition to make sure broadband operators don’t “censor” the Internet in their own interest by blocking access to websites that compete with their own services.  Uh huh.  The truth is, competition has been more than adequate so far to police the Internet, and now competition is getting jacked up a serious notch as the video explosion stimulates a deluge of new investment. Now if the regulatory establishment would just take ‘yes’ for an answer.”

(5)  USA Today highlights how mobile communications advances have improved natural disaster relief:

Natural disasters are on the rise.  Reported incidents have more than doubled since 1980, and in 2010 alone, the combined impact of earthquakes, hurricanes, floods and other calamities forced 42 million people to flee their homes.  Thankfully, advances in mobile communications have spread to all corners of the globe, providing the victims of disasters much easier contact with relief workers, and each other.”

(6)  The Hill’s Technology Blog details House Energy and Commerce Committee Vice-Chairwoman Marsha Blackburn’s (R – Tennessee) comments on FCC interference with private telecom investment:

The Federal Communications Commission (FCC) has a ‘regulatory addiction and … penchant for picking winners and losers’ and the laws governing the agency need a ‘substantial overhaul,’ House Energy and Commerce Vice-Chairwoman Marsha Blackburn (R – Tenn.) said Wednesday.  The agency is hurting the telecommunications industry and crowding out private investment because it ‘is fixated on growing its jurisdictional footprint and expanding its influence in other areas,’ Blackburn said, speaking at a Telecommunications Industry Association event.”

(7)  Fiercetelecom.com reports on the TIA 2013 tradeshow, where keynote speakers from AT&T and Verizon lamented the federal regulatory murkiness that inhibits the TDM-to-IP transition:

AT&T and Verizon envision a blended wireless and wireline service world, but regulatory executives from both telecos said during a policy keynote session at the TIA 2013 tradeshow that a lack of regulatory clarity in transitioning their legacy TDM networks to IP is a key barrier.

‘In 2009, the FCC set some very ambitious objectives, one of which was a complete shutdown of the TDM architecture and merge to IP by 2017,’ said James W. Cicconi, Senior Executive Vice President of External and Legislative Affairs for AT&T.  ‘We’re here in 2013, and no single thing that I can discern has been done to advance that objective.’  Cicconi said that he has gotten little, if any guidance from the FCC on the next step.

And Craig Sillman, Senior Vice President of Public Policy for Verizon, said that while the telco has benefitted from a ‘light touch’ regulatory approach for advancing its wireless business, legacy voice service regulations have hindered its wireline moves.”

(8)  Finally, Mobile World Live reports on a wide range of CEOs repeating their call for lighter regulation:

The opening keynote session at Mobile World Congress brought together the chief executives of AT&T, China Mobile, Telecom Italia, Telefónica and Vodafone.  Under the theme of mobile operator strategies, talk of digital revolution and unprecedented industry transformation – spurred on by LTE and cloud-based technologies – was dominant…   But if the rapid development of networks and digital eco-systems is to continue, and help boost GDP in the process, much more investment will be required.”

The biggest takeaway from this week’s Technotes?  The FCC has its work cut out for it if it truly seeks to advance innovation and modernization.

September 16th, 2013 at 7:04 pm
Remember Obama Phones?

Looking for a job? How about getting trained by a government contractor to “forge signatures and falsify data”?

National Review is reporting that a former employee at TerraCom, Inc., a cell phone provider under the federal government’s Lifeline program, was encouraged to use the tactics to help boost the company’s revenues from $32.6 million in 2011 to $52.3 million in 2012.

Though a drop in the bucket for a line-item that costs $2.189 billion, the revelation serves as a reminder for how bad the so-called “Obama Phone” program has been administered.

So does this: “Lifeline’s costs have increased by 166 percent in the past five years,” according to NR.

Hmm… that means the program, around since the 1980’s, dramatically spiked in 2009 and hasn’t stopped since. Any guess as to what – or who – is responsible?

July 12th, 2013 at 3:30 pm
FCC Spectrum Screen Should Encourage Competition, Not Pick Winners and Losers
Posted by Timothy Lee Print

Last week, the Federal Communications Commission (FCC) approved a pair of sequential purchases:  (1)  Sprint’s purchase of the remainder of Clearwire’s spectrum, and (2)  the Japanese company SoftBank’s purchase of Sprint.  So far, so good.

Here’s the problem.  Those interrelated transactions presented the FCC with a perfect opportunity to reform the so-called “spectrum screen,” a tool that measures spectrum available for wireless use in order to ensure competition in the wireless market.  Unfortunately, the FCC failed to make any reform whatsoever to that spectrum screen framework, which will only serve to create even more regulatory uncertainty and discourage critical wireless infrastructure investment.

The screen framework has been, and can continue to be, a useful tool for assessing competitive effects of spectrum.  But until that framework is brought up-to-date to reflect all spectrum available and useable for mobile wireless services, the tool remains outmoded and flawed, effectively artificially picking winners and losers.

With the FCC’s inaction last week, a 2008 decision (the last time the FCC visited the spectrum screen issue) continues to guide spectrum aggregation policy.  In that decision, the FCC chose to ignore the bulk of Clearwire’s 2.5 GHz spectrum, counting only 55.5 MHz of it toward the screen.  By not revisiting the spectrum screen when it green-lighted last week’s transactions, the FCC continued to discount a large portion of spectrum available for wireless use.  It’s difficult to understand their rationale.

Sprint continues to advocate for its own interests, insisting that only one-third of its Clearwire spectrum should be included in the spectrum screen.  Sprint bought the remainder of Clearwire’s spectrum to pave the way for the SoftBank deal, to leverage the value of Clearwire’s network and to optimize Clearwire’s spectrum.  So while the FCC chooses not to tally all of Clearwire’s available BRS/EBS spectrum, SoftBank gained rights to the 2.5 GHz band.   In contrast, when AT&T previously acquired WCS licenses at 2.3 GHz, the FCC found that the spectrum was usable for mobile wireless services and made changes to the screen.

Curiously, the FCC’s order last week maintained that the three-way deal was not the appropriate vehicle for reviewing the spectrum screen because, from the Commission’s point of view, no spectrum was being swapped.  SoftBank, however, owns no U.S. airwaves.  Moreover, the FCC had previously ascribed Clearwire’s spectrum to Sprint.  Thus, the FCC oddly seems to believe that such an exchange of spectrum is not a transfer.

The FCC’s position not to adjust the spectrum screen in the recent transfer of spectrum to a Japanese owned company is disturbing, especially given that it is currently considering imposing—on an ad hoc basis—a spectrum screen on America’s two largest domestic wireless companies in the upcoming spectrum auction.

The spectrum screen, used properly and applied in a competitively neutral manner, can be a useful tool to protect competition in the wireless marketplace.  But the FCC should stop trying to exploit it to pick “winners and losers” in the marketplace.  Instead, the FCC should update its existing screen to ensure that it incorporates all available spectrum suitable for mobile wireless services.  Only then will it provide the market with the business certainty necessary to advance further infrastructure investment and wireless innovation.

September 21st, 2012 at 10:51 am
Podcast: Times of Uncertainty at Home and Abroad
Posted by CFIF Staff Print

Timothy Lee, Vice President of Legal and Public Affairs at CFIF, discusses the increased regulatory uncertainty for the Internet sector and U.S. economy caused by FCC and Obama Administration policies, and American foreign policy in an age of uncertainty in the Middle East.

Listen to the interview here.

September 17th, 2012 at 3:33 pm
FCC’s Genachowski Glorifies “Psychology of Abundance,” Adds Uncertainty to Internet Sector and Economy
Posted by Timothy Lee Print

Is this what our Internet sector and economy need?  More uncertainty from the Federal Communications Commission (FCC) and Obama Administration?  The tech sector remains a positive outlier in terms of job creation, innovation, new networks and private investment, but regulatory misdirection threatens all of that.

The latest affront involves usage-based pricing for Internet service.  In order to facilitate Internet growth and accommodate ever-increasing consumer demand, service providers must be granted flexibility to at least explore alternative pricing models.  The outdated, flat-rate, all-you-can-eat model increasingly threatens service quality, as a small number of Internet users sap capacity through data-heavy applications like videogames and online video.  To illustrate, viewing a single streamed high-definition film consumes approximately four gigabytes of data.  Utilities aren’t forced to charge a flat rate regardless of electricity use, so why should Internet service providers be straightjacketed in that way?  It’s not fair, and it’s not effective.

Enter FCC Chairman Julius Genachowski, who just four months ago explicitly praised pricing flexibility and experimentation in the name of fairness and efficiency:

Business model innovation is very important particularly in new areas like broadband.  There was a point of view that said a couple of years ago that really there was only one permissible pricing model for broadband, and I didn’t agree with that and the Commission didn’t agree with that.  And we said that business model experimentation and usage-based pricing could be a healthy and beneficial part of the ecosystem that could help drive efficiency in networks, increase consumer choice and competition and increase fairness, because it can we said result in lower prices for people who consume less broadband.  So experimentation in this area with those goals in mind is something that’s completely appropriate.”

Other voices on the political left actually concurred, including Tim Wu, the man who coined the deceptive term “Net Neutrality.”

Speaking to a different audience last week, however, Genachowski appeared to reverse himself.  “Anything that depresses broadband usage,” Genachowski claimed, “is something that we need to be really concerned about.”  He added, “We should all be concerned with anything that is incompatible with the psychology of abundance.”

A “psychology of abundance?”  Easy to say when you’re not the once providing that so-called “abundance.”  Perhaps Genachowski is unfamiliar with the timeless economic adage, “There’s no such thing as a free lunch.”  Or perhaps he simply says whatever he thinks his present audience wants to hear.

Regardless, Genachowski’s latest comments only add regulatory uncertainty to an atmosphere that already faces too much of it.

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June 11th, 2012 at 1:59 pm
Coalition to FCC: Approve Verizon/SpectrumCo Deal Now

In a letter delivered on Friday, a coalition of 14 free market organizations, including the Center for Individual Freedom (”CFIF”), urged the Federal Communications Commission (”FCC”) to approve a private deal between Verizon and cable companies that will free currently unused spectrum to help alleviate the growing “spectrum crunch” that many wireless consumers – particularly those in densely populated areas of the country – are already feeling.

The letter, which was organized by ATR’s Digital Liberty, reads in part:

Demand for wireless broadband is more than doubling annually, but vast swaths of valuable spectrum – the lifeblood of mobile communications – remain unavailable to wireless carriers. Consumers in densely populated urban areas are already suffering from inadequate wireless capacity. While meeting this robust demand will require wireless carriers to adopt an ‘all-of-the-above’ approach, increasing spectrum availability is unquestionably the most fundamental and cost-effective means to meet wireless demand.

Unfortunately, spectrum auctions that will enable wireless carriers to bid on additional spectrum remain years away. Verizon Wireless’s proposed transfer presents a rare and crucial opportunity to deploy currently unused spectrum for wireless broadband. The spectrum at issue is ideally situated in the 1700/2100 MHz AWS bands, covering over 80 percent of the U.S. population (259 million POPs). Consumers will see substantial net benefits from expanded coverage enabled by additional spectrum, especially compared to more costly and time-consuming undertakings such as cell splitting.

With demand for wireless broadband more than doubling annually, the FCC’s own estimates predict that demand for wireless spectrum will exceed supply in 2013.  Yet Obama’s FCC has done little if anything at all to make additional and much-needed spectrum available to wireless network operators. 

In fact, under the Obama Administration the FCC has worked to delay and outright block private-sector deals to alleviate the growing spectrum crunch.  Last year, the FCC took unprecedented steps to block the then-pending AT&T-T-Mobile merger, going so far as to publicly release a biased draft staff report in opposition to the merger that the commissioners themselves never approved and quite  possibly didn’t even read.  Had that merger been approved, AT&T was promising to deploy high-speed mobile broadband to 95 percent of all Americans.  And the FCC has been over-scrutinizing and slow-walking approval of the Verizon-SpectrumCo deal since December.

Read the full coalition letter to the FCC here.

May 11th, 2012 at 3:27 pm
The FCC: Where “economic logic does not penetrate”

When it comes to highlighting federal inanity, Holman Jenkins hits a home run with his take in a Wall Street Journal article on the current FCC’s bureaucratic approach to the wireless industry.

As Jenkins describes the situation, “Like food rotting on a dock, only politics and policy prevents spectrum from getting where it’s needed.”

Jenkins goes on to articulate the point by aptly noting that wireless companies are “being starved of spectrum [their] customers would willingly pay for because of an archaic government allocation system in which economic logic does not penetrate.”

So why care?  Primarily because the wireless industry’s massive investment involved in developing spectrum for the public’s use is one of the few unmitigated bright spots in the US economy. Wireless carriers delivered approximately $27 billion in investment in U.S. mobile networks last year alone.  And continued wireless investment holds the potential to revolutionize our nation’s educational system, healthcare and so much more.

In employment terms, a Deloitte study last fall pegged 4G wireless investment as creating between 371,000 and 771,000 new jobs.  That includes the teams that deploy new cell towers, engineers and software developers, among others.

But the government’s dithering threatens to sideline billions in new investment that would otherwise be pumped into the economy and drive these benefits for consumers.

What’s especially ironic about the delays is that Obama’s FCC Chairman Julius Genachowski has repeatedly sounded the alarm about the “looming spectrum crisis” that threatens “continued innovation in broadband wireless.”  Similar acknowledgements continually have been made directly from the White House.  Yet, when it comes to spectrum policy, the FCC and the Obama Administration have been driven by politics and ideology instead of sound economics and logic — a mindset that not only exacerbates the spectrum problem, but threatens (if not stops cold) private investment to deal with the problem.

Indeed, when wireless providers seek to overcome government obstacles to spectrum and move to address the crunch on their respective networks, they are met with hostility.  Jenkins points to the two obvious examples:

To meet demand of its customers for more and more bandwidth, AT&T laid out $39 billion for T-Mobile, a retreating, second-rank player, only to have the proposal nixed by Washington after many months of torture.

Verizon has been undergoing months of torture over its proposal to buy, for $3.9 billion, several blocks of spectrum sitting idle in the hands of cable TV companies.

That, coupled with the FCC’s counterproductive obsession with putting use conditions on auctioned spectrum to the point of rendering it less desirable or frankly, economically unfeasible, is only making the spectrum problem worse.

Everyone, including the FCC and the Obama Administration, agrees that the spectrum crunch must be resolved… and fast.  “The solution,” as Jenkins points out, “is to permit any spectrum that’s immediately deployable to be immediately deployed by those who can make use of it.”  And it must be deployed without burdensome government conditions and discriminatory bidder qualifications to ensure its most efficient use.

In other words, the FCC and Obama Administration must set aside politics and ideology, stop trying to pick winners and losers in an effort to shape some utopian vision of perfect competition in an already ultra-competitive market and allocate more spectrum for consumer use… now.

April 13th, 2012 at 2:28 pm
T-Mobile, Victim of Abusive FCC Last Year, Now Asks FCC to Cripple a Market Competitor
Posted by Timothy Lee Print

Just months ago, T-Mobile became another unjustified casualty of the arbitrary and capricious Federal Communications Commission (FCC).  It was bad enough that the FCC curiously opposed T-Mobile’s proposed merger with AT&T, which would have upgraded wireless service for tens of millions of American consumers and created thousands of new jobs.  Compounding that injustice, however, the FCC committed the unprecedented transgression of releasing a confidential staff report that inaccurately maligned the proposed merger’s justifications.

Sadly, T-Mobile now seeks to employ that same FCC as a bureaucratic bludgeon to cripple a market competitor, by asking it to block a private spectrum purchase by Verizon Wireless.   Whereas T-Mobile announced a few months ago that, “The U.S. wireless industry will remain fiercely competitive”  by allowing acquisition of 50 MHz of T-Mobile’s spectrum as part of the AT&T deal, it now claims that Verizon’s proposed acquisition of 20 MHz of unused spectrum will somehow “unduly tip the scales” in Verizon’s favor.  Moreover, T-Mobile itself seeks to acquire 20 MHz of spectrum, which it claims is in the public interest and “seeks only to assign spectrum licenses and no other assets.”

CFIF supported T-Mobile’s right to enter into a bargained-for exchange between private parties during its proposed merger with AT&T, which the FCC and Obama Justice Department improperly blocked.  But by the same token, it should not turn around and attempt to interfere with other parties’ market transactions.  T-Mobile is a subsidiary of Deutsche Telecom, the world’s fourth-largest telecommunications company, which itself is partly owned by the German government.  So it’s not exactly David fighting Goliath, unable to contend in the marketplace without exploiting the FCC as some sort of protective big brother.

Verizon Wireless merely seeks to purchase unused spectrum, which will bring desperately-needed wireless service improvements for U.S. consumers.  That’s none of T-Mobile’s business, and the FCC is not some sort of instrument to be used as a competitive weapon.

March 19th, 2012 at 4:37 pm
Spectrum Stall: FCC and Big Labor Impeding Innovation and Economic Opportunity
Posted by Timothy Lee Print

With the unemployment rate holding steady above 8% for over three long years now, it’s obvious that the United States must pursue policies that spur rather than retard job creation and economic growth.  One continuing economic bright spot already exists in the telecommunications sector, where several prospects for generating new jobs exist.  Unfortunately, federal bureaucrats continue to obstruct those prospects.  The leading current example is spectrum and, specifically, Big Labor special interests pressuring the Federal Communications Commission (FCC) to block telecom companies from buying unused wireless broadband.  That pressure only serves to obstruct economic recovery, because more access to spectrum for service providers would mean greater incentive to invest, and in turn more business opportunities that would raise revenue and create jobs.

For example, a recent study by NDN found that from April 2007 to June 2011, broadband companies created some 1,585,000 new jobs in their transition from 2G to 3G wireless technologies and Internet infrastructure.  NDN also noted that “the investments being undertaken today to upgrade wireless network and Internet technologies from 3G to 4G hold comparable promise for job creation.”  Similarly, a Deloitte study from last year agreed with NDN’s assertion, estimating that U.S. investment in 4G networks could generate anywhere from $25 to $53 billion in economic revenue between 2012 and 2016.  Furthermore, according to their study, these investments could produce between 371,000 and 771,000 new jobs and account for $73 billion to $151 billion in GDP growth.

Unfortunately, union bosses oppose spectrum transactions in favor of their own self-interest.  For instance, in comments filed with the FCC, the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) falsely claimed that the transaction “agreements would appear to limit the availability of competitive services, dividing up geographic service areas for particular companies, leading to reduced investment in infrastructure, job losses, and ultimately, higher prices for consumers.”  As noted above, however, independent studies refute their allegation and attest to the economic and job benefits of allowing spectrum to be sold to companies that will apply it toward better customer service.  The spectrum sale will not only boost the economy and create jobs, but also benefit consumers by alleviating the oncoming spectrum crunch.   Greater access to spectrum will also create additional incentive to invest more toward innovation, which in turn means new devices, applications and services.  Providers will be able to upgrade their networks to a 4G LTE that has further geographic reach, faster downloads and greater capacity.

If the FCC continues to obstruct the sale , however, the quality of Internet service and our economy more generally will suffer due to the gradual exhaustion of existing spectrum.  In order to ensure that the domestic telecom sector continues to flourish, spectrum must therefore be made available to those who need it and who have the ability to use it in the most constructive way.   Union leaders should stop playing games that harm actual workers, and the FCC must put an end this obstruction.