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Posts Tagged ‘FCC’
August 12th, 2016 at 3:43 pm
Appellate Court Rejects FCC’s Government Broadband Effort
Posted by Timothy Lee Print

In this week’s Liberty Update, we highlight a humiliating new legal defeat for the Obama Administration in its continuing effort to evade legal reckoning for political persecution by the IRS.  Now, there’s yet another major court loss to report, this time against Obama’s overactive Federal Communications Commission (FCC).

Specifically, the Sixth Circuit Court of Appeals this week rejected FCC attempts to preempt individual state laws aimed at fostering private broadband innovation and growth.  For years, the Obama Administration has sought to encourage cities across the country to enter the broadband marketplace, thereby undermining private enterprises in the same business.  As CFIF has explained in our ongoing efforts to fight that effort, municipal broadband networks (otherwise known as government-owned networks or “GONs”) end up costing much more to build out and maintain than government officials expect or admit.  Moreover, consumers often pay 20% to 50% higher monthly bills than they would with private broadband providers.  It’s therefore no surprise that approximately 75% of GONs fail to realize a profit, causing many cities to fall even deeper into debt and end up selling their GONs at enormous losses.  The unfortunate experience in Provo, Utah provides a textbook illustration. Municipalities across America have better ways to spend taxpayer dollars than entering into competition against private broadband providers, not least because those private enterprises have invested $1.5 trillion in broadband infrastructure and continue to do so.

In order to shoehorn publicly-owned broadband through, Obama’s FCC resorted to infringing on individual state sovereignty by attempting to preempt state and local laws prohibiting these municipal boondoggles.  In other words, it attempted to govern how states could legislate within their own borders.  But the Sixth Circuit was having none of it.  The FCC order, it held, “essentially serves to reallocate decisionmaking power between the states and their municipalities.”

So mark down another embarrassing court defeat for the Obama Administration as it attempts to occupy as many sectors of the private economy as it can before time runs out in five months.

August 8th, 2016 at 12:07 pm
U.S. Copyright Office Joins Broad Criticism of FCC’s Destructive Cable Set-Top Box Proposal
Posted by Timothy Lee Print

CFIF and other conservative and libertarian groups strongly oppose a new proposal from Obama’s overactive Federal Communications Commission (FCC) to regulate cable television set-top boxes, and that opposition is widely shared among a bipartisan Congressional coalition and even the political left.

Now, even the U.S. Copyright Office has joined the voices criticizing the FCC’s misguided proposal:

The U.S. Copyright Office criticized a federal agency’s plan to open up the market for pay-TV set-top boxes in a letter to lawmakers on Wednesday.  The letter adds political pressure on Federal Communications Commission Chairman Tom Wheeler, who has been pushing since the beginning of the year for new FCC rules to open up the market for the costly set-top boxes…  ’As currently proposed, the [FCC] rule could interfere with copyright owners’ rights to license their works as provided by copyright law.’  That is because those who create programming, and hold the copyright on it, have negotiated specific deals with cable companies, and those deals could be upended if other companies also obtain access to the programming through their own set-top boxes.  The letter adds that the Copyright Office is ‘hopeful that the FCC will refine its approach as necessary to avoid conflicts with copyright law and authors’ interests under that law.’”

It’s pretty damning and humiliating that even a counterpart executive branch agency raps the highly-politicized FCC across the knuckles in such an open manner.

Nevertheless, it’s a welcome rebuke against the FCC’s proposal, which constitutes a 1990s-vintage, one-size-fits all mandate to make cable TV set-top boxes artificially compatible with third-party devices.  It additionally constitutes transparent crony capitalism, threatens consumer privacy, undermines the creative community and damages property rights by facilitating piracy of creative content.  And technologically speaking, the set-top box proposal freezes in place an outdated set-top box business model that private innovation and technological advance are already leaving in the dust, with cable companies and other entertainment industry entrepreneurs already abandoning traditional cable boxes in favor of apps and other devices owned and guided by individual consumers.

Hopefully, the Copyright Office’s welcome input helps drive a well-deserved nail into the proposal’s metaphorical coffin.

June 14th, 2016 at 6:13 pm
Divided Court Allows FCC to Use Law Intended to Reduce Internet Regulation to Increase Internet Regulation
Posted by Timothy Lee Print

Like most Americans, you probably had no idea that the Internet was somehow broken and in need of an Obama Administration “fix” via a Depression-era federal statute enacted for copper wire telephone technology.

And with good reason.  For two decades, America’s tech and Internet sectors have remained among the depressingly few areas of our economy that continued to flourish amid an era characterized by stagnating growth, employment and incomes.

Throughout the Obama tenure, however, his Federal Communications Commission (FCC) has attempted over and over to upend the “light touch” regulatory approach of both Democratic (Clinton) and Republican (Bush) administrations that allowed the Internet to flourish as it has.  Today, unfortunately, a sharply divided D.C. Circuit Court of Appeals finally affirmed the FCC’s most recent attempt to impose so-called “Net Neutrality” regulations that essentially equate to ObamaCare for the Internet.

As aptly summarized by Senior Circuit Judge Williams’s dissent, today’s decision allows FCC “use of an Act intended to ‘reduce regulation’ to instead increase regulation.”

Judge Williams cogently captured not only the legal illogic of the majority’s holding, but its real-world unintended consequences as well:

“The ultimate irony of the Commission’s unreasoned patchwork is that, refusing to inquire into competitive conditions, it shuns broadband service onto the legal track suited to natural monopolies.  Because that track provides  little economic space for new firms seeking market entry or relatively small firms seeking expansion through innovations in business models or in technology, the Commission’s decision has a decent chance of bringing about the conditions under which some (but by no means all) of its actions could be grounded – the prevalence of incurable monopoly.”

Fortunately, this doesn’t end the question.  The ruling will likely be appealed, and the FCC’s mismanagement can be corrected via Congressional action or new FCC leadership in a future presidential administration.

But beyond the specific issue in question, today’s unfortunate ruling illustrates again the importance of judicial branch appointments and composition as we approach the election of a president who will make those appointments.

use of an Act intended to “reduce regulation” to
instead increase regulation
May 25th, 2016 at 12:22 pm
Former Clinton Administration Official Rips FCC’s Set-Top Box Proposal as “Massive New Federal Regulation”
Posted by Timothy Lee Print

Alongside nearly every other conservative and libertarian organization of which we’re aware, CFIF opposes a toxic and wholly unnecessary new proposal from the Obama Administration’s Federal Communications Commission (FCC) to regulate cable television set-top boxes before the clock runs out on the Obama presidency.

But opposition extends across the political spectrum.  In today’s Wall Street Journal, former Clinton Administration Undersecretary of Commerce Ev Ehrlich excoriates the FCC’s proposed set-top box regulation for what it is — a crony capitalist, purloining, invasive, already-obsolete, anti-competitive, “massive new federal regulation”:

The Federal Communications Commission wants you, the consumer, to allow a new set-top box into your home that rearranges the programs you buy and inserts new advertising while tracking what you watch.  Movie studios, labor unions and civil rights groups all oppose it.  Why?  Because this ‘All-Vid’ proposal isn’t about the box fees the senators-turned-lobbyists decry.  Instead, it’s all about appropriating content.  Google and Amazon want to capture, repackage and profit from TV programming in their own competing services without having to pay for it…

If Google, Amazon or anyone else wants to build a better set-top box, they can do so the way these services have – in a way that respects federal privacy laws and negotiated licensing agreements with program producers.  Or they can actually license the content from creators, the way everybody else does, as opposed to demanding a gift from a captive FCC.”

Mr. Ehrlich gets it exactly right.

As we have stated, there is simply no realm of American life today that manifests badly-needed innovation, consumer choice, quality, affordability and sheer enjoyment than the video entertainment sector.  The variety and excellence of today’s video choices continues to expand at breakneck speed on (literally) a daily basis.  We therefore ask officials at all levels of government, as well as our 250,000 supporters and activists across the country, to oppose what Mr. Ehrlich rightly describes as a looming federal atrocity.

May 17th, 2016 at 11:04 am
Welcome to the Age of Asymmetrical Regulation
Posted by Timothy Lee Print

We are fortunate to live in what many have called the “Golden Age of Television,” a time when an explosion of creativity and innovation have collided to create more audience choice than ever before.

In light of that, the Federal Communications Commission’s (FCC’s) recent decision to “Unlock the Box” with their “AllVid” proposal seems especially puzzling.  Upon further reflection and considering the bigger picture, however, the misguided AllVid proposal regarding technology that is already antiquated and will soon  be entirely irrelevant is merely the most recent in a string of illogical and counterproductive proposals from the current FCC.

From the so called AllVid proposal to the FCC’s Privacy proposal, it is evident that we live not only in the “Golden Age of Television,” but also in the “Age of Asymmetrical Regulation.” Current regulations impose one set of rules upon incumbents in the telecommunications industry and another set of rules entirely for so-called  “edge” providers like Google. In fact, regulation under this FCC seems to deliberately create a crony capitalist environment where incumbents can’t compete and the edge providers alone can thrive.

Equally troubling is the abnormally notoriously close relationship between Google and the White House, a partnership that was extensively detailed in a recent piece in The Intercept. Not only did Google’s top lobbyist visit the White House 128 times, but during the company’s annual State of the Union YouTube interviews with the President, Google is reported to have planted questions on policy issues important to Google on at least 3 occasions. That conspicuous degree of access and flagrant favoritism suggests that it has contributed to the severely asymmetrical regulation that we continue to witness from this FCC.

Again and again we have seen examples of this type of successful rent-seeking behavior from Google, and their ilk, and the remedy is clear: the FCC must stop its transparent favoritism and heavy-handed regulation of the telecommunication incumbents.  Instead, it should focus on maintaining a level playing field. Regulating based on crony capitalist bias and personal friendship is not only wildly inappropriate, but also a recipe for interventionist disaster. Continuing to disproportionately impose destructive regulations on the telecommunications for the benefit of other favored sectors not only violates the rights of disfavored enterprises, it ultimately serves to stifle competition and innovation for years to come in same the way that all government interventions into the free market tend to do.

April 27th, 2016 at 6:45 pm
TechNotes: Market Continues to Work Without FCC Meddling
Posted by Timothy Lee Print

Throughout the Obama Era, his Federal Communications Commission (FCC) has destructively imposed regulation after regulation upon a tech and telecommunications market that was not broken.  Indeed, that sector has thrived like no other in the modern American economy.

An announcement today from Comcast provided just the latest evidence of that thriving market.

Specifically, Executive Vice President of Consumer Services Marcien Jenckes announced an Internet data trial that will introduce a terabyte data plan to its offerings.  Beginning June 1, data plans in trial markets will upgrade from 300 gigabytes to one terabyte, regardless of speed.

To place that in perspective, their average customer reportedly uses only 60 gigabytes per month – 940 gigabytes short of a terabyte.  A terabyte allows streaming of 700 hours of high-definition video, 12,000 hours of online gaming and 60,000 high-resolution photo downloads in a month.  Fewer than 1% of its customers even approach a terabyte in monthly usage, and even they will be free under the new plan to receive unlimited data for merely $50 more per month or individual increments of 50 gigabytes for $10.

In other words, the market is working without FCC “solutions” to non-existent problems.  This announcement offers merely the latest proof.

April 20th, 2016 at 4:01 pm
Xfinity Announcement Demonstrates Folly of FCC Set-Top Box Regulatory Proposal
Posted by Timothy Lee Print

Alongside other free market organizations, CFIF adamantly opposes a new proposal by the Obama Administration’s Federal Communications Commission (FCC) to regulate cable television set-top boxes.

More specifically, Obama’s FCC seeks to impose a 1990s-vintage, one-size-fits-all mandate to make cable TV set-top boxes artificially compatible with third-party devices.  As we have detailed, the proposed regulation constitutes crony capitalism in its worst form, it poses a threat to consumer privacy, it undermines the creative community and jeopardizes intellectual property protections by potentially facilitating piracy.  In addition to those problems, it also constitutes an anachronism in the sense that it freezes in place an outdated set-top box  model that is already being left behind by technological advance and private sector innovation.  Cable companies and other entertainment industry players are already abandoning traditional cable boxes in favor of devices owned and maintained by individual consumers as they choose.

Today’s announcement of the new joint Xfinity TV Partner Program between Comcast, Samsung and Roku provides just the latest example illustrating that dynamic.  Stated simply, consumers can access their cable subscription via the Xfinity TV Partner app that will be compatible with RokuTV and Roku devices.  Thus, without the need for a set-top box at all, customers can now access live, on-demand, cloud, DVR and other televised content on smart TVs and other IP-enabled technology.

What this shows is that the video entertainment and app markets continue to evolve alongside consumer demand, rendering the FCC’s set-top box proposal obsolete before it can even be imposed.  The new regulation would disrupt market innovation of this sort while threatening the privacy and piracy perils noted above.  Simply put, the marketplace is working, and this latest FCC “solution” to a non-existent problem will only create more problems.

As we have emphasized, and as any American who watches television well knows, there is no realm of contemporary life that manifests innovation, consumer choice, quality, affordability and sheer enjoyment than the video entertainment sector.  The variety and excellence of today’s video choices continues to expand at breakneck speed and literally on a daily basis.

Today’s news serves to confirm that reality, and demonstrates why leaders in Congress, the innovation community, consumer groups and everyday American consumers should stand together and oppose this latest FCC overreach.

April 20th, 2016 at 11:10 am
Piracy, Data and AllVid: If Past is Prologue, Creators Should Worry a Google Delivered Pay-TV Service Would Promote Pirated Content
Posted by Timothy Lee Print

This is an amazing time for the film and TV industry, as audiences have never possessed more entertainment choices on more platforms.

To illustrate, FX Networks recently conducted a study demonstrating that the total number of scripted series (think dramas and comedies, not reality-TV) across cable, satellite and online increased to 409 in 2015. That represents a 94% increase from 2009, with a 174% growth in scripted series on basic cable (181 vs. 66). What’s more, all this great content is widely available online. SNL Kagan recently released a report finding that “98% of premium films and 94% of premium TV series were digitally available on at least one of the online services that were reviewed.”

Given this explosion of creativity and innovation, a sense of growing and justifiable bewilderment in the creative community exists over a recent FCC proposal, commonly referred to as “AllVid,” that would force creators, networks, and pay-TV providers to give away their products and services for tech giants like Google to exploit for their own commercial purposes. The beneficiaries of this government handout would be free to repackage video content as they see fit, drop programming or bury it on the channel guide, add their own advertising and strip out existing ads, and mine viewer data – all without negotiating with cable programmers or distributors or adhering to privacy laws and regulations that apply to traditional providers.

Further, there is nothing in the proposed rule to stop tech companies from combining legitimate content with video from piracy sources. “Walking Dead” producer Gale Ann Hurd articulated these concerns well in a recent USA Today op-ed stating:

[The proposal] would also allow Google — and for that matter set-top box manufacturers from all over the world, including China (where rogue boxes are being built by the millions) — to create and market applications or boxes with software that will treat legitimate and stolen material exactly the same, and may in many cases help to steer consumers to piracy.”

Her concern regarding piracy-laden devices is legitimate. As just one recent example, the UK’s Police Intellectual Property Crime Unit arrested six people for selling Android set-top boxes modified to deliver illegal movies and TV shows. And Hurd’s concerns about boxes manufactured in China are made plain in this Forbes article.

Proponents of AllVid claim they merely want to show consumers “all their video,” meaning they want to mix and match content from YouTube and other online sources with pay-TV. Setting aside the fact that existing technologies like Roku and Apple TV already provide that capability, the creative community is understandably nervous about stolen content appearing alongside legitimate video if Google gets its way with the set top box proposal. As Hurd points out, “Google’s search engine does this today. Here’s what happens when I search “www.google.com/?gws_rd=ssl#q=watch+Fear+the+Walking+Dead">watch www.google.com/?gws_rd=ssl#q=watch+Fear+the+Walking+Dead">Fear the Walking Dead.

The role search plays in facilitating piracy is significant, so those concerns about the mixing of stolen online video with legal pay-TV content are well founded. According to one survey, 74% of consumers say they used a search engine when they first viewed pirated content. And researches at Carnegie Mellon University conducted an experiment conclusively demonstrating that search rankings drive consumer behavior. The more prominently pirated content appears in search results, the more likely consumers are to choose it.

Worse, TorrentFreak recently reported that Google Now is pushing links to piracy sites, even when consumers don’t engage in any search at all. As TorrentFreak explains:

Google can’t read people’s minds but it does harvest data from Google accounts in order to provide its Now services. That includes your search and location history, sites you’ve visited and the content of Gmail messages. It can also access your phone contacts, calendar entries and even certain apps.”

In this instance, after Google Now determined that user Ryan Raab had “shown an interest” in the movie “Deadpool,” it proactively delivered a link to one of the largest torrent sites in the world, 1337x (see the screenshot below).  The troubling nature of this behavior can’t be understated. Based on data collected across multiple services, Google’s algorithm unilaterally suggested Raab access stolen content – without any action on his part. The FCC’s proposal would only increase the likelihood that Google continues to engage in such irresponsible conduct.

Creators like Hurd have fought hard to keep the pay-TV environment piracy-free. But the FCC – in its eagerness to foment “innovation” – seems determined to compromise the integrity of the creative ecosystem that has produced an explosion of creativity and innovation. AllVid supporters see content merely as bait – a digital lure to attract their ultimate prize: data. If Google and the FCC succeed, creative content could be taken without negotiation or compensation and used by large tech companies to collect consumer viewing data – thereby undermining the economics of creation and consumer trust in one fell swoop.

Or as Hurd puts it, “I’m afraid that all of us who create, market and broadcast legitimate content will be like the zombies on my show: the walking dead.”

April 4th, 2016 at 3:53 pm
Bipartisan House Request to GAO: Investigate FCC’s Set-Top Box Proposal
Posted by Timothy Lee Print

We at CFIF recently highlighted a dangerous new regulatory proposal from the Obama Administration’s rogue Federal Communications Commission (FCC):  Its set-top box proposal that simultaneously embodies crony capitalism, regulatory overreach and technological sclerosis:

The latest manifestation is a new initiative from Obama’s overactive FCC to impose a one-size-fits-all mandate to make cable television set-top boxes artificially compatible with third-party entertainment devices.  In other words, even as cable companies themselves voluntarily move in the direction of abandoning traditional cable boxes and toward devices owned and maintained by individual customers as they so choose, the FCC wants to impose 1990s-style regulation on the industry.  That would essentially freeze in place the increasingly outdated model of set-top cable boxes even as it becomes increasingly anachronistic on its own.”

Fortunately, there’s good news to report.

Specifically, a bipartisan House Communications and Technology Subcommittee coalition led by Chairman Greg Walden (R – Oregon) and committee member Yvette Clarke (D – New York) sent a letter on Friday asking the nonpartisan federal Government Accountability Office (GAO) to investigate the FCC’s set-top box proposal.  For those unfamiliar with the GAO, it is popularly known as the “Congressional Watchdog,” and is more officially the agency that provides investigatory and auditing services to Congress of various institutions within the federal government.  The joint letter highlights their concerns and requests a formal GAO examination:

We are concerned that the agency’s efforts do not include a meaningful assessment of the effects on independent and diverse networks, whose business models may be greatly threatened and undermined by the FCC’s proposed rules.  The FCC must proceed with a better understanding of how their proposed rules could limit diversity and inclusion on our nations shared media platforms.  We are requesting that the U.S. Government Accountability Office examine the impact of the FCC’s proposal to change the rules regarding cable set top boxes on small, independent, and multicultural media programmers and content providers.”

This constitutes great news.

It shows a bipartisan Congressional concern over the broad array of potential damage that the FCC’s proposed set-top box regulation would inflict.  And Congress isn’t alone.  A diverse group of consumer groups, innovators, employers and businesses join in opposing the proposal, which offers optimism that it will be rightfully stopped before further damage occurs.

March 31st, 2016 at 5:13 pm
FCC Moves Forward With Unfair and Unnecessary New Broadband “Privacy” Rules
Posted by CFIF Staff Print

The Federal Communications Commission (FCC) today voted to move forward with consideration of proposed new “privacy” regulations targeted at Internet Service Providers (ISPs).  What follows is a statement by Center for Individual Freedom (CFIF) President Jeffrey Mazzella:

This latest effort by the FCC is nothing more than the Commission once again picking winners and losers in the marketplace. These regulations on ISPs do nothing to prevent the online data collection practices used profusely by others throughout the Internet economy, while constricting the development of new business practices and distorting the robust digital marketplace.

The prescriptive regulations voted on today also circumvent the Federal Trade Commission’s (FTC) expertise in this area. The FTC’s proven framework on privacy has worked to protect consumers for decades while encouraging the growth of the Internet we have today.

Rather than finding ways to cement the presence of FCC bureaucracy in our daily lives, the Commission should reconsider its regulations on so-called ‘privacy’ and instead focus on pro-growth solutions for a robust mobile marketplace.

###

March 21st, 2016 at 11:54 am
CFIF TechNotes: WSJ Hits FCC’s Set-Top Box Scheme in “Government by Google”
Posted by Timothy Lee Print

In recent weeks we’ve highlighted a destructive new initiative by the Obama Administration’s Federal Communications Commission (FCC) to impose a one-size-fits-all regulation forcing cable TV set-top boxes to become artificially compatible with third-party devices.  Translation:  in the ever-evolving home entertainment market, where cable companies themselves are already moving from traditional cable boxes toward devices owned by individual consumers, the FCC remains mired in a 1990s mindset and wants to regulate accordingly.  The FCC’s inexplicable proposal would freeze in place a technological state that is already outdated.

Check that.  Perhaps the FCC’s behavior isn’t so inexplicable at all.

This morning, The Wall Street Journal editorial board highlights many of the concerns that we and others address, but notes in “Government by Google” that crony capitalism constitutes the underlying foundation of the initiative:

The Federal Communications Commission has proposed rules that would force television providers to create a universal cable-box adapter.  This would hand over shows to companies – TiVo, Google – that would peddle programming as their own…

The new rule amounts to government-sponsored piracy in allowing TiVo and Google to broadcast programs that providers pay to distribute.  Google wouldn’t have to abide by carriage agreements or pay licensing fees, which is one reason content creators are pushing back.  The stealing would no doubt violate copyright.  Some 30 members of the Congressional Black Caucus sent a letter to FCC Chairman Tom Wheeler saying the rule would relegate minority programming to channels rarely visited by viewers.  Google prodded the supposedly independent FCC in 2014 to bust open cable boxes, and Chairman Wheeler followed orders.  The tech giant wants to sell ads against poached content, mowing over cable commercials and crushing advertising competitors.”

The federal government can’t be trusted to control our healthcare industry, our free speech rights, our children’s educational options, our Second Amendment rights and so on.  Why would control over our home entertainment choices or the constantly-advancing telecommunications industry somehow be any different?

The Journal concludes by noting another ominous element:  the Obama Administration’s mad rush to impose the remainder of its to-do list as the sun sets on its tenure:

The FCC rejected a similar proposal in 2010, but now the Democratic majority seems committed to ramming it through before President Obama leaves office.  Mr. Wheeler has already done great harm to his reputation by taking direction from the White House to regulate the Internet.  He’ll do even more damage if he does the cable-box bidding of Google.”

Well said.  Fortunately, a bipartisan Congressional consensus, the creative community, consumer groups and other elements stand ready to stop the FCC’s scheme at the legislative, judicial and regulatory levels.  Its up to the American electorate justifiably disgusted by crony capitalism and stifling federal overregulation to support them.

March 7th, 2016 at 11:52 am
WSJ’s Crovitz: Emails Expose Obama Administration Illegality in Pushing Internet Regulation
Posted by Timothy Lee Print

On this day in 1876, twenty-nine-year-old Alexander Graham Bell received a patent for inventing the telephone.

Now 140 years later, the Obama Administration continues its counterproductive and legally dubious effort to regulate the Internet as if it were little more than an old-fashioned telephone service of the Bell variety.  CFIF and other free-market groups have consistently opposed that effort, and courts have repeatedly rebuked the Obama’s Federal Communications Commission (FCC) various schemes to impose it.

Today, The Wall Street Journal’s “Information Age” columnist Gordon Crovitz details how a Senate committee has discovered evidence that the Obama Administration’s behavior in attempting to regulate the Internet as an old-fashioned utility violated the law.  In fact, even FCC regulators expressed shock at the degree to which their administrative independence was disregarded:

FCC staffers cited nine areas in which the last-minute change violated the Administrative Procedure Act, which requires advance public notice of significant regulatory changes.  Agency staffers noted ’substantial litigation risk.’  A media aide warned:  ’Need more on why we no longer think record is thin in some places.’  These emails are a step-by-step display of the destruction of the independence of a regulatory agency…  Mr. Obama’s edict resulted in 400 pages of slapdash regulations the agency’s own chief economist dismissed as an ‘economics-free zone.’”

Here’s why it matters in the real world, in terms of economics and innovation:  Crovitz notes that in just one year since Obama’s edict was imposed, “regulatory uncertainty has led to a collapse in investment in broadband.”  As CFIF has also detailed, he is correct in that unfortunate observation.

On a more encouraging note, however, Obama’s latest attempt to regulate the Internet in ObamaCare fashion is back before the same appellate court that has twice rebuked it on this issue.  As Crovitz wryly observes, “The Senate report should make fascinating reading for the federal appellate judges considering whether to invalidate the regulations…  The appeals court has plenty of evidence proving White House meddling with a supposedly independent agency.”

For the good of American consumers and continuing Internet innovation, we certainly hope so.

March 1st, 2016 at 10:56 am
Podcast: Exposing the Truth About the FCC’s Proposed Video Set Top Box Rule
Posted by CFIF Staff Print

In an interview with CFIF, Seth Cooper, Senior Fellow at The Free State Foundation, discusses what is wrong with the Federal Communications Commission’s proposed rule to “unlock set top boxes,” how it is going to impact programming and why the government should not be allowed to pick winners and losers.

Listen to the interview here.


January 25th, 2016 at 3:39 pm
Yes to Spectrum Auction, No to Double-Dipping
Posted by Timothy Lee Print

CFIF has long advocated auction of over-the-air television stations’ airwaves – or spectrum – by the Federal Communications Commission (FCC), which offers a critical free-market opportunity for the wireless telecommunications industry to avoid looming network congestion issues.  It’s one of those rare potential win/win opportunities as Americans increasingly rely on mobile devices, and it constitutes the core mission of what the FCC should rightfully be doing with its resources.

While strongly favoring spectrum auction, however, we’ve also consistently opposed crony capitalist efforts to game the system and corrupt this promising opportunity.  Just last week, for example, we highlighted our distaste for Dish Network’s scheme to exploit “small business” discounts for its own benefit.

Unfortunately, we may be witnessing another attempt at exploitation of the spectrum auction process.  Namely, television broadcasters offering spectrum in the upcoming incentive auction may possess the ability to sell it twice, as reported by Broadcasting & Cable’s Washington Bureau Chief John Eggerton:

According to a source familiar with their thinking, some ‘major’ broadcasters are looking at putting spectrum in the pot and, if they win, taking advantage of tax laws to keep that money in escrow and use more cash, or a loan, to bid on some of that reclaimed broadcast spectrum in the forward auction – they would need to use other money since reverse payments won’t be available until both sides of the auction close.  They could then sell or lease the spectrum to wireless carriers hungry for it.”

What would make such attempts particularly galling is that the broadcasters originally received that spectrum free of charge, so they’d be selling twice something they didn’t pay for even once.

FCC auction of spectrum for more productive use is to be applauded, and was a long time in coming.  But please, let’s keep it free of attempts at unjust enrichment via exploitation of byzantine regulatory mechanisms.

October 7th, 2015 at 8:40 am
FCC Shouldn’t Force Gov’t-Approved Design for Set-Top Cable and Satellite Boxes
Posted by Timothy Lee Print

Last night, like many nights, our family experienced what more and more American families experience when it comes to video entertainment at home:  option overload.  Not that this is a bad thing, of course.  Who wants to return to the days of three major networks dictating the limited number of things we can watch?  Today we enjoy a wealth of options unimaginable even five years ago.

Despite our ever-increasing wealth of options, some continue to ignore reality and push for government-imposed regulations that will only interrupt continued innovation and future choice for consumers.

These parties are urging the Federal Communications Commission (FCC) to revisit an embarrassing chapter in its regulatory past to force a government-approved design for the set-top boxes that allow cable and satellite TV customers to view programming.  The FCC’s previous regulation of these devices cost consumers tens of millions of dollars, and never created the market in alternative set-top boxes envisioned by regulators.  Specifically, some companies who would like to see the FCC engage in another attempt to “create” a market for their set-top products – products consumers stubbornly refuse to demand — are pushing for FCC regulations that would define the technologies cable and satellite companies use in manufacturing their set-top boxes.

The video marketplace has never had more choices in the number of devices and the number of platforms over which consumers can view video products.  There are gadgets and apps available for any number of devices to view any number of offerings, and yet there are those who would lock in the very set-top boxes that may be on their way out if the government would only leave the market to its own devices.

The FCC’s Downloadable Security Technology Advisory Committee (DSTAC, pronounced “DEE-stack”) issued a report in August which made no collective recommendation for any new FCC technology mandate on set-top boxes.  The panel reported what most younger video viewers have known for some time, namely, that there is “wide diversity” in networks, security, and communication technology choices across all pay TV platforms.

Although there is no doubt that interested parties will call for the government to regulate technology for set-top boxes, we urge the Commission to let consumers in the thriving market for video services sort out what devices and what technologies best serve their budgets, tastes, and viewing preferences.  To have the government lock in any present technology means cutting off future innovations.

We also need to respect the interests of content providers who have a right to negotiate the terms under which their content can be viewed.  And here again, apps can serve an important advancement for consumers and content providers, as the services provided by apps have exploded over the past few years as rights become available from content providers.

Simply put, consumers today are viewing video content using Amazon, Apple TV, Netflix, Roku, Cable and Satellite Apps, smartphones, tablets and web browsers.  The video market is thriving without government regulation and intervention.

Let’s hope the FCC can help video consumers by resisting the temptation to regulate in this exciting and rapidly changing world.

September 29th, 2015 at 3:45 pm
Progressive Policy Insitute Agrees: FCC Overregulation Threatens Private Internet Investment
Posted by Timothy Lee Print

As we have consistently highlighted, overregulation by Obama’s Federal Communications Commission (FCC) poses a grave threat to private investment in Internet service, which has thrived over two decades during both Democratic (Clinton) and Republican (Bush) presidencies because of a deliberately light regulatory approach.

The Progressive Policy Institute (PPI), in a report released this week, agrees.

In its fourth annual report on investment by American companies entitled “U.S. Investment Heroes of 2015:  Why Innovation Drives Investment,” PPI ranks the top 25 non-financial U.S. companies by their amount of domestic capital spending for 2014.  Notably, the survey highlights the danger that overregulation poses to investment and innovation, particularly in the telecommunications sector:

In the telecom industry, pro-investment policy should support ‘light touch’ regulation.  Here we have the makings of a natural experiment, since the FCC departed from this approach last February by imposing Title II regulations on broadband service.  So far in the first half of 2015, the telecom companies on our list are spending at an 11% slower pace than a year earlier.”

This offers yet another ominous warning, one that cannot be dismissed by Obama or Title II apologists as some sort of right-wing hit job.  The Clinton Administration commenced the regulatory “light touch” approach that PPI’s report references, which continued through the Bush Administration as the Internet remained one of the few bright spots in an otherwise troubled economy since 2008.  The PPI survey shows who the real extremists are, and thankfully offers a bipartisan roadmap for continued Internet investment and innovation:  less federal regulation, not more.

September 14th, 2015 at 2:58 pm
TechNotes: “ObamaNet Is Hurting Broadband”
Posted by Timothy Lee Print

Throughout the “Net Neutrality” debate over whether the federal government should begin regulating Internet service under 1930s Depression-era laws intended for copper wire telephone service, we and others have warned that Obama Administration efforts to impose such regulation would dangerously stifle private investment and innovation in the telecommunications sector.

In his weekly “Information Age” column today, L. Gordon Crovitz highlights how quickly our somber prediction has proven true.  In “Obamanet Is Hurting Broadband,” Crovitz summarizes how “The predictable effect of more regulation has arrived:  Investment is plummeting”:

New data show the Obama Administration’s decision to regulate the Internet as a utility has already caused a steep drop in Internet Investment…  [I]n the first half of 2015, as the new regulations were being crafted in Washington, major ISPs reduced capital expenditure by an average of 12%, while the overall industry average dropped 8%.  Capital spending was down 29% at AT&T and Charter Communications, 10% at Cablevision, and 4% at Verizon. (Comcast increased capital spending, but on a new home-entertainment operating system, not broadband.)  Until now, spending had fallen year-to-year only twice in the history of broadband:  in 2001 after the dot-com bust, and in 2009 after the recession.”  [emphasis added]

Since the 1996 Telecommunications Act, the Internet has thrived and played a central role in maintaining America’s status as the most prosperous, most entrepreneurial and most innovative nation in human history.  That didn’t happen by accident, nor was it due to coincidence.  Rather, it occurred precisely because the federal government during both the Clinton and Bush administrations refrained from suffocating it with destructive and politically-motivated overregulation.  But Obama apparently thought he had a better idea.  Unfortunately, we’re already witnessing the regrettable result.

Meanwhile, Gallup just released its annual survey of public approval of various sectors of American life.  Standing at or near the top once again are the computer industry, the Internet industry and the telephone industry, all with high net positives.  And at the bottom, once again, is the federal government, with an atrocious -29% net negative.

All of this suggests that we would likely be better off if the computer/Internet/telecom industries regulated the federal government, rather than vice-versa.

July 16th, 2015 at 10:49 am
Georgetown Study: FCC Title II Internet Regulation Will Reduce Internet Investment & Innovation Between 5% – 20%
Posted by Timothy Lee Print

As we at CFIF have discussed on numerous occasions, the Federal Communications Commission (FCC) effort to reclassify Internet service under Depression-era Title II regulations meant for copper-wire telephone service is a toxic idea on legal, economic and technological grounds.

Now, a new study from Georgetown University’s McDonough School of Business Center for Business and Public Policy provides additional intellectual heft and confirmation.  Entitled “Regulation and Investment:  A Note on Policy Evaluation Under Uncertainty, with an Application to FCC Title II Regulation of the Internet,” authors Kevin A. Hassett of the American Enterprise Institute and Robert J. Shapiro of the Georgetown Center for Business and Public Policy find that the FCC’s destructive maneuver will reduce Internet investment and innovation by an alarming 5% to 20%:

First, we showed that Title II regulation should be expected to increase costs, and therefore is the type of policy that should be expected to reduce investment.  Second, we reviewed the field-specific evidence that suggested that the scale of the negative effect would be quite large, from about 5.5 percent to as much as 20.8 percent.  Next, we documented that the ratio of investment to the capital stock would be expected to decline to roughly that extent if Title II regulation in the United States would be comparable to the regulatory framework of the OECD continental European countries in the first decade of the 21st century.  Next, we cited an analysis by a legal scholar that suggest that this analogy is reasonable.  Finally, we found that the negative effects on investment may well be significantly understated by these factors because the new regulation’s threshold effect will maximize the negative effects of uncertainty.”

The Internet has flourished to date, and become perhaps the most rapidly and profoundly transformative innovation in human history precisely because the federal government regulated with a light touch.  By reversing that regulatory stance that prevailed throughout both the Clinton and Bush Administrations, the Obama Administration FCC is placing continued innovation and investment at great risk.  This new study provides just the latest confirmation, and offers additional reason for Congress, the courts or even a future presidential administration to put a stop to it.

June 30th, 2015 at 2:10 pm
Two-Face T-Mobile 2.0
Posted by Timothy Lee Print

We recently described how T-Mobile was playing crony capitalist DC games and talking out of both sides of its mouth.  On one side, it told Wall Street that it’s in a great position.  On the other side, it pleaded with federal regulators in DC that it needs their help in order to remain competitive in the wireless marketplace.

The company CEO, whom The Wall Street Journal’s Holman Jenkins labeled “Potty-Mouth” Legere, is now doubling down on the company’s “Little Sisters of the Poor” message to DC and calling for a larger set-aside in the upcoming spectrum incentive auction.  The Obama Federal Communications Commission (FCC) already promised to set aside 30 MHz, but that just wasn’t enough for T-Mobile.  Now Mr. Legere and the Save Wireless Choice coalition – which conspicuously counts T-Mobile, Sprint, and DISH as members – are pushing for at least 40 MHz.

That set-aside proposal is a bad idea for several reasons.  First, T-Mobile wants the FCC to make it easier for it to get spectrum at below-market value without competing against AT&T and Verizon.  There’s no reason, however, to believe that T-Mobile can’t compete in a fair and open auction without federal bureaucrats tipping the scales in their favor.  Moreover, even if money were an issue, couldn’t T-Mobile’s multi-billion dollar parent company, Deutsche Telekom, come to its aid?

Consider the straightforward numbers:  Deutsche Telekom, a German company with a market cap over €70 billion, is a 66% stakeholder in T-Mobile.  Additionally, the German government maintains approximately a 1/3 stake in Deutsche Telekom.  Accordingly, offering T-Mobile an unjustified advantage translates into a giveaway to a foreign company and a foreign government.

But what about American consumers?  The set-aside could drive down auction revenue, which in turn means less money for the U.S. Treasury and less spectrum that’s sold and brought to market for the benefit of U.S. consumers.

FCC Chairman Tom Wheeler recently said that he thinks the set-aside should remain at 30 MHz and NOT get increased.  That’s a rare bit of moderately positive news, but if the FCC is really reviewing the set-aside in advance of its July 16th open meeting, it should eliminate this cronyist monstrosity entirely, and send Mr. Legere and his tin can packing.

April 23rd, 2015 at 11:18 am
Why the Fight Must Continue Against the FCC’s “Net Neutrality” Order
Posted by CFIF Staff Print

Timothy Lee, CFIF’s Senior Vice President of Legal and Public Affairs, discusses why the fight to overturn the FCC’s so-called ”Net Neutrality” Order should continue, litigation surrounding he Order, and why this isn’t just an issue for the telecommunications industry.

Listen to the interview here.