Friday, April 29, 2016

Anatomy of Defective Legislation: The No Rate Regulation of Broadband Internet Access Act, H.R. 2666

             The U.S. House of Representatives has passed a bill that would prohibit the FCC from regulating Internet Service Provider rates.  While one surely can appreciate the merits of such legislation, House Republicans have created a remarkably flawed document.

            The drafters do not seem to understand that the Communications Act, which the bill would amend, vests the FCC with jurisdiction in Section 208 to oversee “charges, classifications, regulations or practices.”  H.R. 2666 creates the kind of ambiguity that allows the FCC to remedy through its preferred statutory interpretation, because one person’s rate regulation is another’s lawful regulation of charges, classifications and practices.

            The Supreme Court has created something called the Chevron Doctrine that creates a model for assessing whether courts should defer to regulatory agency legislative interpretation.  While agencies like the FCC must apply the clear meaning of an unambiguous law, court must defer to reasonable agency interpretations when the applicable law is ambiguous.

            On its face, H.R. 2666 is ambiguous, because one could readily argue that this bill does not repeal Sections in the Communications Act that authorize the FCC to investigate complaints about carrier billing and treatment of information about customer network usage (Sec. 222) as well as issues that affect out of pocket cost, but can be deemed something other than a rate.

            In the Internet ecosystem, ISPs often negotiate agreements that do not involve rates and even the exchange of money.  Instead they use customer information as a marketable currency of great value to advertisers.  Data mining configures and analyses ISP subscriber behavior that can be monetized, but not converted into applicable rates and tariffs.

Monday, April 25, 2016

Set Top Box Death Watch—Are You Kidding?


            A new rationale has appeared on the media landscape explaining that the FCC needn’t bother trying to promote set top box competition, because these devices will soon disappear. Who knew?  Apparently not Comcast which has spent much time, money and effort promoting its new and costly X1 box, nor other incumbents who have attempted to explain how they need a perpetual monopoly. 

            So let me get this straight.  The cable industry has done nothing to promote set top box competition, yet even with outright opposition to an unfettered marketplace the requirement to install and use a cable-company supplied box will evaporate soon.

            This does not pass the smell test, particularly in light of the cable industry's concerted efforts to block competition, to thwart next generation “cable-ready” television sets and to tout as an adequate solution a sorry performing CableCard technology that prevents many value adding features from functioning, including electronic programming guide navigation.

            Around and around the spin goes, unwittingly promoted by newspapers who should know better than to publish undisclosed, sponsored research.  In my capacity as telecom and Internet researcher, I make a point to read anything and everything, including blatantly wrong and obviously sponsored advocacy masquerading as “research.”

            Let’s be clear: the cable industry wants to milk its set top box monopoly for as long as possible.  Had the FCC not acted—in the waning days of the Obama Administration—no one would have attempted to dislodge the status quo.  Comcast would not have embraced Roku and a nominal set top box alternative and you wouldn’t see bogus explanations why the set top box monopoly does not exist.

            Speaking of alternatives, incumbents point to Internet Protocol Television as proof positive that consumers have plenty of substitutes to mandatory set top box access to video content.  Ah yes, another half-truth: there are video access options, like Hulu, but there are no alternatives to set top box access to cable television supplied content.  It’s quite glib and wrong to equate Hulu’s relatively limited inventory as the functional equivalent to that available via cable television.  Certainly the cable industry makes that argument in justifying its substantially higher monthly rates, but of course you aren’t supposed to remember that bit of self-congratulations in the context of the set top box debate.

            Readers: follow your noses, trust your instincts and check your wallet.  The disinformation swirling around you on the matter of set top box competition is designed to confuse and obfuscate.  Can there be any basis for thinking a single rental option offers consumers a better value proposition than competitive access to multiple boxes, like that becoming available for IPTV?  Have you looked at your year-over-year set top box rental costs?

            By why believe me?  I have no advocates, agents and publicists touting my work and securing placement in major papers.  I simply follow my nose, common sense and the money trail without sponsorship of course.

Friday, April 22, 2016

Lies, Damn Lies, Statistics and Mistruths in the Set Top Box Debate

            As expected, incumbent cable companies and their select group of new allies, such as Roku, (see http://www.wsj.com/articles/how-the-fccs-set-top-box-rule-hurts-consumers-1461279906) have launched a major disinformation campaign pushing back at the FCC’s initiative to promote set top box competition.  In a nutshell, the rebuttal has offered several remarkably bogus rationales for maintaining the status quo: it’s a Google-generated ploy to access video content without charge just as Google has done with Internet content; regulation is bad; the cable industry has an exemplary record of deploying cutting edge set top boxes; and there’s no problem requiring government intervention in light of the fast paced introduction of new video content access options.

            It comes across as particularly rich to read how Roku now supports the cable industry after years of struggle with it.  Might Roku’s new found support result from the exclusive deal the company cut with Comcast to provide a low cost alternative to monthly set top box rentals?  Isn’t it amazing that despite years of claims that there could never be any single, low cost alternative to the cable industry-supplied set top box, lo and behold the engineers have achieved the undoable!

            Here’s another inconvenient truth: consumers used to access cable without the need for set top boxes; then they couldn’t.  The cable industry dithered for decades on making television sets compatible for both downstream content delivery and upstream navigation commands.  Apparently it was technologically IMPOSSIBLE for true “two way” access via television sets and alternatives to the cable industry rented set top box, until now.

            The cable industry also disputes the revenue levels they have managed to squeeze out from subscribers.  It rejects FCC and other estimates of an average yearly cost of about $230, largely because of voodoo accounting that differentiates what consumers see on their monthly bills.

            The cable industry also congratulates itself on the set top box innovation on display.  Bear in mind that most consumers have used the same box for years.  Ask yourself: how many times has the cable company offered to replace your existing box for new one?  Conveniently Comcast has a new box available, but I’ve had the same box for over 15 years.

            The set top box debate is rife with disinformation and outright lies.  The vilification of Google mystifies me.  If you take the cable industry position, hook, line and sinker, Google amazingly will be able to capture all video content with no payment to copyright holders.  Worse yet, the company will be able to delete and replace advertising.  Google also will rob the cable industry of any incentive to create content and the cable industry will evaporate as Google expands its vacuum cleaner, market capture.

            Newsflash: Google has to comply with copyright, FCC and other requirements.  By law Google cannot meddle with video content it processes.  Google’s market entry has raised the likelihood that consumers will have access to a competitive set top box market as well as the long denied opportunity to access video content from a wire without a box, an option that used to exist before the cable industry came to its business senses.

Thursday, March 10, 2016

One Minute on How Washington and the Law Screw the Powerless


            Start the clock.

            After neglecting the issue for years, the FCC Democrats seek to reduce rip off in-mate calling rates to between 11 and 14 cents per minute.  See https://www.fcc.gov/document/fcc-takes-next-big-steps-reducing-inmate-calling-rates; https://www.fcc.gov/consumers/guides/inmate-telephone-service; http://arstechnica.com/tech-policy/2016/03/in-blow-to-inmates-families-court-halts-new-prison-phone-rate-caps;

 
            The two major inmate calling companies, which had offered incredibly lucrative kickbacks to jails, retain the services of the best counsel money can buy, roughly $600 an hour. 

            These quite talented counsel, one of whom I worked with many years ago, seek and secure an injunction on grounds that the FCC lacks lawful authority to interfere with the sweetheart contracts with jail administrators.

            The grant of an injunction typically means the court buys the telephone company’s legal arguments.  Put another way, the court won’t reject incredible rip off, kickbacks as unconscionable and void against public policy.  So it’s appears that if you’re in jail, you should have to pay up to $17 in fees for the privilege of making a telephone call and the rate should gross exceed by one cent per minutes or less cost of the call to people outside the pen.  How dare the FCC interfere with the “sanctity of contract!”
 

            Add to the mix a snarky and mean-spirited “I told you so” by a righteously indignant Republican FCC Commissioner. See https://www.fcc.gov/document/commissioner-pai-dc-circuit-staying-inmate-calling-rate-regulation

            Get the picture?

Why Should We Care? 

            We should care, because of the reverse logic used by counsel and accepted by the D.C. Circuit.  It goes like this: inmate calling services can offer incredibly generous kickbacks to jails, because they can charge incredible rates.  The FCC has no rate ceiling on interstate long distance calls having eliminated such a consumer safeguard based on a finding that robust competition would generate fair and cost-based rates.  Of course there are in jail monopolies which can charge anything they want in light of the now eliminated caps.  If the telephone companies offer a kickback, then no one complains other than the inmates and their families and why should we care about them.  They are convicted criminals and family members of convicted criminals.
 
            An FCC attempt to supersede a lawful contract exceeds the Commission’s lawful authority having deregulated long distance telephone service.  So the argument goes around in circles with no one apparently looking at the rates vis a vis the kickbacks.

            No one can argue that the rates are cost based and fair, but of course that doesn’t stop the Attorney General of Arkansas and others from cheering on the kickbacks. See  http://arkansasag.gov/news-and-consumer-alerts/details/rutledge-d.c.-circuit-grants-stay-of-costly-fcc-order.

            Instead they can make the argument that once willing parties have entered into a binding contract, the FCC cannot subvert it by identifying how cruel, unusual, harmful and the contract is. 

 

             

Saturday, February 20, 2016

So Set Top Box Competition Victimizes Incumbents, Harms Minorities, Enriches Google and Increases the Number of Set Top Boxes Consumers Have to Use??????

            Opponents to cable/satellite set top box competition have come up with creative and outlandish rationales for maintaining the status quo.  I didn’t see a claim that competition will kill jobs, but I have seen remarkable and irresponsible predictions of scenarios impossible to occur.

            Let’s consider three of the most outrageous claims.
 
            1)         Google hegemony

            AT&T, Comcast and the major trade association for the cable industry (among others) have strongly implied that big, bad Google is behind the FCC’s initiative and of course this means that the FCC has catered to the company’s ever growing needs for free content which it can offer as its own and monetize through advertising.  See, e.g., http://www.attpublicpolicy.com/privacy/exposing-some-myths-aboutgoogles-set-top-box-proposal/. If this is true, what took Google so long to achieve success?

            This assertion gains traction only for people who have never heard of the Aereo Supreme Court case and lack the time or inclination to read the FCC’s Notice of Inquiry; available at: https://www.fcc.gov/document/fcc-proposes-unlock-box.

First, the FCC document constitutes a request for comments on a set of initiatives and conclusions the FCC tentatively proposes.  There are no specific rules and regulations forthcoming, but that does not prevent incumbent stakeholders from offering a parade of horribles.

            The FCC clearly states that it has no intention to interfere with existing and future commercial arrangements relating to channel placement, advertising, intellectual property law, etc.  The Commission also notes that the much ignored CableCard option has had no impact on such arrangements.  I saw nothing in the NOI that somehow empowers new set top box competitors to preempt such commercial arrangements, to steal programming and to eviscerate existing commercials and insert their own.

            Bear in mind that set top box manufacturers do not qualify for a compulsory copyright license conferred to multichannel video programming distributors (“MVPDs”), like cable and DBS.  The Aereo case precedent sets a high standard for a venture to qualify as an MVPD: using thumb-sized antennas did not work, nor would a set top box.

            The FCC simply proposes that cable and satellite content distributors come up with one open interface specification that will enable set top box manufacturing by others lacking a direct commercial relationship with an incumbent.  An open interface does not suddenly render video content vulnerable to piracy, nor does it authorize the competitive set top box manufacturer to “repurpose” content by asserting ownership and complete freedom to replace existing advertising.

The Commission notes that existing CableCards don’t impact the content stream, nor do they provide set top box manufacturers the opportunity to subvert copyright and contract law.  Future competitive set top boxes will not confer such power to Google, consumers or anyone else.  Plain and simple.

        2)         Proliferation of set top boxes

             Ignoring the remarkable rents they have captured, year after year, incumbents brazenly imply that the FCC will increase consumers’ costs given the need for duplicate set top boxes.  So with all the engineering expertise in the world, there is no possible way for a single set top box to perform all necessary functions?  This assertion does not pass the smell test, much like the inability of the cable industry to complete its work on technical specifications for television sets that can talk to a cable headend and receive content from it.  The cable industry never finalized “true twoway,” because it did not want to do so.  If FCC Commissioner Pai wants an ecosystem where consumers do not have to use a set top box, he can blame the cable industry for deliberately stifling such an initiative.  See https://apps.fcc.gov/edocs_public/attachmatch/FCC-16-18A5.docx.

            Incumbents do not want set top box competition, or a return to “cable ready” televisions requiring no set top box, because the rental revenues are massively lucrative.

             3) Set top box competition hurts minorities
 
            Incumbents attempt to bolster their arguments with a clever and cynical strategy: claiming that set top box competition will harm minorities by making it easier to ignore minority programming.  So a more sophisticated search process harms minorities even though obviously it represents a more sophisticated set top box?

            Are we to infer that it’s better to have expensive and unrefined set top boxes, instead of more powerful and customizable devices that might reduce the serendipity of channel-surfing?
            What a remarkable exploitation of minorities!

Thursday, February 18, 2016

Set Top Box Competition: What’s Not to Like?

            Only in this pay to play, partisan world could two out of three FCC Commissioners rise in opposition to an overdue initiative to save consumers billions of dollars.  Cable and DBS companies will join the opponents along with sponsored researchers who will trot out all sorts of bogus rationales.

            I’ll start by using two words to dismiss what appears to be the first gambit rationalizing a monopoly set top box marketplace.  The narrative goes something like this: “Why fix something that isn’t broken?  Just look at those so-called Tivo boxes.  Have you seen their prices?

            My response in two words: umbrella pricing.  Tivo charges what the market will bear, and in an artificially uncompetitive market it can use the outrageous set top box rental box rates to establish an equally outrageous sale price.

            If the FCC removes the government-sanctioned near monopoly, then cable, DBS and set top box manufacturers simply will have to sharpen their pencils and offer consumers a far better value proposition.

            Competition opponents will bolster their arguments for maintenance of the status quo by framing the FCC initiative as overbearing and unnecessary regulation.  How is it not deregulation when government eliminate previous rules that fostered a monopoly making it possible for above market set top rental and sale prices?

            This long overdue deregulatory effort reminds me of the adage about the stock market where bulls make money, and bears make money, but pigs get slaughtered.  Premium television companies have gouged consumers for years on a device that has become bundled with service.  Technological initiatives, which made it possible to offer more channels and compress more signals, also eliminated the ability of consumers to buy “cable ready” television sets useable without a set top box.  So the box has become a necessary device and pay TV operators get the privilege of charging a monopoly price, because they have no incentive to achieve progress on an open interface for competitive boxes that can provide both upstream navigation functions and downstream piracy prevention. 

            Cable operators have a lame, hassle-filled option available that they make every effort to obscure: the cable card.  Join the crowd if you have never heard of this option, one that typically requires an appointment with the “Cable Guy” to plug the card in, at considerable expense for the premises visit.

            The lack of set top box competition runs counter to a 60 year Carterfone precedent favoring the right of consumers to attach technically compatible devices like telephones, cable modems and wireless routers.  Incumbents do not want a free consumer option as they lust over the rental fees they cannot charge. 

            Consumers should think of an ecosystem where they have to pay a monthly rate to carriers for the privilege of attaching a modem, router and telephone.  We do not standard for such extortion, but even now inertia and ignorance of the ripoff allows cable operators to charge $10 a month for a cable modem that costs less than $50.  Bear in mind that unlike wireless handsets, consumers use the same cable modems and wireless routers for years. 

            Incumbents also will try to characterize the set top box as so complex in functionality that there could not possibly be a common interface usable by companies like Roku, Apple, Google and any television set manufacturer.  Nonsense.  Of course cable operators have never gotten around to finding a way for television sets to have “true two way” access to security and program guides, but their nonfeasance does not make the task undoable.

            In a nutshell: set top box competition does what I would have expected Republican regulators to applaud--competition unfettered by regulations that created a fake monopoly that has extracted billions from consumers.

Monday, February 15, 2016

Latest Publications: Conflict in the Network of Networks: How Internet Service Providers Have Shifted From Partners to Adversaries

The Hastings Communications and Entertainment Law Journal (Volume 38, No. 1 pp. 63-90) has just published an article of mine that examines the peering process.  I show that peering "partners" no longer have a common and shared mission.  Instead the parties become opponents on compensation and interconnection arrangements as occurred between Netflix and Comcast.

The article reports on the FCC's concerns about peering and the prospect for government oversight established in the 2015 Open Internet Order.  I suggest that the FCC refrain from intervening unless and until a stakeholder files a formal complaint based on the assertion that the parties cannot achieve a a commercially negotiated arrangement.

Monday, January 25, 2016

Latest Law Review Publication

The Fordham Intellectual Property, Media & Entertainment Law Journal recently published an article of mine entitled: Network Neutrality and Consumer Demand for "Better Than Best Efforts" Traffic Management.  It's available for free at: Better Than Best Efforts Routing.
I examine the cross-currents of neutrality concerns with consumers' demand for high quality, full motion streaming of “mission critical,” “must see” television.  Of course gigabit networks offer a rising tide for all traffic.  I consider instances where tradeoff have to occur.

Comcast Plays By Its Own Rules

Few companies can get away with charging consumers for service yet delivered.  Comcast does.

Few companies can impose late payment fees for service not yet rendered, but of course Comcast does.

To add insult to injury, a Comcast bill did not arrive and the company will not alert subscribers using email addresses other than the company's.

To add further insult, Comcast imposed a $9.50 late fee, but agreed to waive it in light of my payment history.  Of course the company's representative conveniently "forgot" to key in the credit which by the way can only apply to a future bill.

Brian Roberts whines about consumers who don't want to pay for content. 

Here's a newsflash: consumers don't like being cheated and taken for granted by a company intent on squeezing every last dime, lawfully or not.

Maybe someone at Comcast ought to read the FCC's Truth in Billing requirements.

Tuesday, December 29, 2015

Did Comcast’s Local Broadcast Retransmission Costs Rise 65% Last Year?

            Leave to Comcast management to convert a cost of doing business into a profit center.  Cable television operators have to negotiate “retransmission fees” with local broadcasters who do not elect the option of compulsory, “must carriage.”  These fees have risen significantly (but not 65% in one year) largely resulting from increased costs to broadcast networks for “must see” content such as NFL football.

            Comcast could treat retransmission fees as a cost of doing business and absorb them, or pass them through as a line item on the bill.  The company opted to create a line item, but one having no relationship to actual costs incurred.  Comcast uses a standard price for its Broadcast TV Fee meaning that the charge to subscribers has no relationship to the actual cost incurred by the company and the number of stations carried in any specific locality. 

            In a matter of a two years Comcast has converted a minor, symbolic reminder to subscribers of rising carriage costs, to a major cash cow.  Comcast started with $1.50, but now raised the rate  by 65% from the $3 to $5. 

            Very clever Comcast.  I’m sure senior management thinks most consumers are too stupid, or lazy to know that retransmission carriage rates have not risen 65% in a year.

            The only way to respond to such greed and cavalier attitude is to cut the cord.  Broadcast signals cost nothing to receive off air other than your tolerance for advertising.  Of course Comcast  penalizes cord cutters who still need its broadband service.  So called naked broadband costs more than when it’s bundled with a cable television tier.  Very clever Comcast.

Capitalism at it best!

Monday, December 28, 2015

Do Righteous Indignation and Hyperbole Persuade People?

             After writing over one hundred painstakingly researched and edited journal articles I wonder whether I’ve made a woeful error.  These days it seems that righteous indignation, bombast and stretching the truth captures attention, headlines, grant funding, status and gravity.  I feel foolish for emphasizing empiricism and full documentation.

            Yet again the Wall Street Journal reminds me of what I should be doing: identifying villains and saviors in the telecommunications policy world.  Today L. Gordon Crovitz vilifies President Obama, FCC Chairman Wheeler and the FCC.  See http://www.wsj.com/articles/the-obamanet-overreach-1451259176.  He claims that this triumvirate has so burdened and regulated the Internet that it “now [is] known as Obamanet.”

            So using Obama as a prefix provides a not subtle signal that another “curtains for the free world debacle” has occurred.  Already there’s an Obamaphone, which Mr. Crovitz and his colleague believe is available for free wireless telephone service, despite the fact that a bilateral consensus has supported universal service funding for dozens of years, and service is limited to low income applicants that can prove they qualify for subsidized (not free) service.

            Why does Mr. Crovitz resort to such hype when he could identify real flaws with the FCC’s Open Internet Order?  He would rather vilify and convert a rumor into a fact than generate arguments on the merits.  Apparently Mr. Crovitz knows the President personally directed Chairman Wheeler and the 2 other Democratic Commissioners to change legal strategies for justifying limited Internet regulation.  Of course Mr. Crovitz offers no verifiable evidence.  Instead, he implies that it is an absolute given that the President intervened.  News flash: the Executive Branch regularly participates in the FCC policy making process and an entire agency within the Department of Commerce (the National Telecommunications and Information Administration) serves as the President’s advocate.  Apparently, the President can’t issue statements and create videos favoring a desired policy for the FCC to take.  I’ll remember this the next time a Republican President tries to use his Bully Pulpit to influence decision making by an independent regulatory agency.

            I cannot help but wonder whether opponents of Messrs. Obama and Wheeler might achieve greater impact if they relied on facts and used inside voices.

One Mystery of the Universe Solved: Why Just About Every Comcast Subscriber Hates the Company

            Recently Comcast CEO Brian Roberts concluded that subscribers hate his company, because they don’t want to pay for content. http://bgr.com/2015/12/14/comcast-ceo-brian-roberts-interview/.  Simple, glib conclusion, but quite wrong. 

            Subscribers do not mind paying for content if they feel they receive fair value.  How many times have you heard someone complain about the cost of Netflix service?  People do pay for content and gladly so.  Just ask the millions of subscribers to Hulu, SiriusXM, etc.

            People don’t like getting ripped off.  People don’t like paying for something they don’t want, but can’t seem to avoid like the dozens of cable channels they never watch.

            People don’t like getting nickeled and dimed, or inconvenienced.  Comcast has done both to me in the last few weeks.  First a company technician refused to repair a set top box claiming my service tier did not qualify for access to one.  The technician seemed not to know that even lowly basic tier subscribers are entitled to a “free” set top box now needed even for viewing certain basic tier channels.

            After repeated calls and a second day waiting for a technician, the company issued a $20 credit, but of course there’s a catch.  I had to pay the full billed amount after which a credit would accrue in a subsequent bill.  So the company issues a credit only after receiving an overpayment.  Clever; too clever.

            To compound the confusion, Comcast or the U.S. Postal Service managed not to get a bill delivered.  Of course Comcast never informed me of an overdue payment, by email.  Instead they issued a $9.50 late payment fee and implied dark and negative consequences should they have to refer my debt to a collection agency.

            Mr. Roberts just about everyone hates your company, because of its obsession with squeezing every last dime it possibly can, regardless of the value proposition.  What else could explain the creation of a new line item called Broadcast TV Fee for local carriage, already paid for in the basic tier charge?  What else could explain the 65% increase in that fee summarily announced in the bill I never received?

Tuesday, December 8, 2015

The Regulatory Uncertainty Red Herring


            I wish I had a dollar every time I see and hear regulatory uncertainty vilified. In telecommunications regulation and policy, stakeholders involve RU as the reason for any ailment. RU prevents capital investment; RU stifles innovation; RU kills jobs; RU hurts national competitiveness.   RU causes the common cold.

            Here’s a news flash: unless one operates in a market completely free of regulation, there always will be some degree of uncertainty what the future regulatory climate will be.  Speaking of uncertainty, who knows what the cost of capital will be in a year, what law suits will confound a particular company; what technological innovation will challenge the status quo?

            Regulation constitutes one of very many variables for which a commercial venture cannot control.  Companies have to deal with it, but in this day telecom executives speak in complete opposites depending on the audience. To Congress, the FCC and the court of public opinion corporate executives trout out RU as a terrible scourge.  To buy side analysis and in commercial practice the very same executives accept RU as one of many variables in business.

            Has RU prevented wireless companies from making substantial sunk investments in next generation network spectrum and plant?  If RU is such an abomination how can AT&T CEO Randall Stephenson tell one constituency AT&T has had to curb capex investment while at the same time the company pays 45 billion dollars to acquire DirecTV and may offer its own mobile video streaming service? 


            So let me get this straight: RU curbs innovation and investment even as billions of dollars in mergers, acquisitions and new ventures continue to sprout.  

Everything You Ever Wanted to Know About Network Neutrality


            During my sabbatical from Penn State last term, I embarked on several network neutrality deep dives.  I have generated the following publications:

Conflict in the Network of Networks: How Internet Service Providers Have Shifted From Partners to Adversaries, COMMUNICATIONS & ENTERTAINMENT LAW JOURNAL (in production).

Network Neutrality and Consumer Demand for “Better Than Best Efforts” Traffic Management, FORDHAM INTELLECTUAL PROPERTY, MEDIA & ENTERTAINMENT LAW JOURNAL (in production).

Ex Ante Versus Ex Post Approaches to Network Neutrality: A Comparative Assessment, 30 BERKELEY TECHNOLOGY LAW JOURNAL, No. 2, 1562-1612 (2015).

Déjà vu All Over Again: Questions and a Few Suggestions on How the FCC Can Lawfully Regulate Internet Access, 67 FEDERAL COMMUNICATIONS LAW JOURNAL, No. 3, 325-376 (2015).

What’s New in the Network Neutrality Debate, 2015 MICHIGAN STATE LAW REVIEW 739-786.

Internet Protocol Television and the Challenge of “Mission Critical” Bits, 33 CARDOZO ARTS & ENTERTAINMENT LAW JOURNAL, No.  1, 47-87 (2015).

            I can send a copy or web link upon request.


Thursday, December 3, 2015

So Why Would Verizon and Other Carriers Want to Spend Yet More Billions on Content?

            Perhaps you’ve read the relentless and false recitation of an assertion that the Wall Street Journal, American Enterprise Institute and others have treated as the gospel truth: that incumbent carriers such as Verizon and AT&T have substantially reduced capital expenditures this year solely because of the FCC’s Open Internet Order. 

            It strikes me that there has not been enough pushback against the bogus notion that would not pass muster with peer review.  First, one can detect a reduction in capex if and only if the definition of capital investment is limited only to transmission facilities.  Only with a narrow and ludicrous definition can one find a reduction of any sort. Using a widely accepted definition, incumbent carriers have continue to make sizable investments, this year particularly through mergers and acquisitions.
            Just now there is speculation that Verizon might acquire portions of Yahoo’s assets.  Why would Verizon waste billions of dollars on content, if it thought that regulation and/or regulatory uncertainty would somehow prevent it from profitably delivering the content?
            The capex false claim becomes down right fraudulent when experts, who ought to know better, attribute their calculation of reduced capex, as solely caused by a single regulatory event.  So help me out here: how did they narrow 100% of causality to a single regulatory event?  How did they eliminate other variables such as the possibility that this particular year did not require a major upgrade in wireline or wireless broadband plant?  How did they managed to ignore the billions invested in companies whose business plan assumes ample ways to deliver product to paying subscribers?
            As the hearing about the FCC’s Open Internet Order begins, I hope the court applies the rule of law and not advocacy masquerading as statistics. I have major problems with the FCC’s tactics and strategies, but I hope empiricism matters more than a clever and deceitful “outreach campaign.”

Wednesday, November 4, 2015

That $200,000 Degree Comes Without a Warranty

            Even with 25 years of teaching experience, I have to undergo an audition of sorts with my undergraduate students.  Increasingly, I fail in the sense that I cannot motivate many to uphold their end of the bargain by showing up, staying on task, preparing for class and mastering basic concepts.

            I face a major personal and career quandary probably solved only if I can find an alternative to teaching undergrads.  Little makes sense these days.  I remain enthusiastic, young for my age and eager to share my research, insights and experience with students who have declared telecommunications as their undergraduate major.  Topics like an Internet of Things, 5G wireless, IPTV, Internet 2.0, television everywhere, etc. keep me engaged and intellectually curious.
            Most of my students don’t have a clue.  They operate under the mistaken assumption that professors should entertain in the mode of a talk show with little expectations and demands.  Instructors lose in the court of student opinion if they are too demanding, their courses too hard and their exams too tough.  Deviate from happy talk and students perceive professorial messages as both condescending and yelling.

            How did it get so bad?  For my part, I have seen a significant and accelerating decline in students’ command of the spoken and written word, even as they have quite high opinions of themselves and an elevated sense of what entry level job is appropriate. 

            Set out below are the top ten disconnects in my world.

1)         Professors are human.  I don’t think many students appreciate how much it hurts when they don’t attend classes, fall asleep, decide not to take any notes and spend most of their time texting and interacting with the Internet cloud via their smartphones.  Most professors—apparently until their reach my age—could have generated higher earnings in the so-called real world.  They consciously chose to teach.
            On a good day, I consider student distraction, if not disinterest, as part of the gig which requires regular servings of humble pie.  On a bad day, I feel humiliation and dismay.  The educational process requires work on both sides.  I try to make my courses engaging and helpful, but I cannot make them an entertainment vehicle.

2)         We know how to teach.  Student regularly blame instructors for any performance shortcoming, but realistically most teachers have ascended the learning curve and achieved competency after 5 or so years.  The promotion and tenure process, as well as regular teaching evaluations by peers confirms that poor teachers either wash out, or understand the lack of fit in the classroom.
3)         We want students to succeed.  While I like the band Pink Floyd, I don’t see much “dark sarcasm in the classroom.”  I am self-effacing, over the top with enthusiasm and keenly aware of the trust in me placed by tuition underwriters.  I teach in a College of Communications where most students do not pursue graduate school.  I understand and embrace the mission of preparing students for immediate employment.

4)         Students cannot multi-task.  I will never convince any student that multi-tasking results in poor performance of the two or more activities attempted at the same time.  If students think they can text and drive at the same time, they surely think they can text and learn at the same time. 
5)         Few understand the unconditional need to take notes, preferably by hand.  In the last few years, many students have given up taking notes in class. They consider instructor power point slides sufficient, or they think they can do without any record.  As innervating as it can be, note taking requires students to synthesize and process the conversation.  Studies confirm note taking by hand improves student comprehension far better than typing into a laptop.

6)         Student performance follows a curve.  Students have grown to expect high grades and a curve to make their performance better than any raw test score.  We have a toxic combination of grade inflation and inflated student grade expectations.  With every Millennial student getting a medal for showing up at any competition, they expect similar accolades in class, despite the fact that performance falls along a curve.
7)         When students’ performance lags, they attribute it to external factors.  Some of the worst student performances on tests I prepare range close to random selection, i.e., 25% on a multiple choice test with four answer options.  When confronted with an absolutely awful test score, many simply attribute it to a test, or class that is “too hard.”  How then could anyone score an uncurved A in my classes?  At Penn State, where I teach, the range of student caliber ranges from kids who could not afford to go to Harvard, but got admitted, to folks simply here to pickle their livers.

8)         90% of life is showing up.  Parents and other tuition underwriters do not know how often students blow off classes.  I try to qualify the mistake in practical terms: every hour of in-class instruction at Penn State costs about 8 cases of beer.  I also offer this baseball analogy: “Life is like baseball.  You win some; you lose some; some get rained out.  But you have to dress for every game.”
9)         Professors hate it when students whine and grade grub.  Professors have had to dumb down courses and lower their expectations.  Despite these adjustments, students regularly complain when they don’t receive the grade they expected.  Gen Xers pretty much accepted a C when they didn’t make an effort in class, but today’s students often expect an A with little effort.  Should a professor impose demands and rigor, she will trigger negative comments in student evaluations which administrators may use as evidence of inferior teaching.

10)       Professors lose enthusiasm and hope when students don’t uphold their end of the bargain.  Instructors do not want to bore students, or themselves.  When a majority of the class has their heads down in rapt smartphone attention, professors wonder if teaching is nothing more than a job, as opposed to a career, or calling.
             My 25 year teaching career has arrived at a point where I wonder whether I am wasting my limited time on earth.  Dear reader, please offer advice and alternative career/job leads!

Thursday, October 29, 2015

The Internet of Infallible Algorithms


            Capital One, a major credit card issuer, offers customers access to a streamlined credit report.  Upon examining my score, I found a B rating for oldest line of credit in light of having had a card only for 12 years.  One needs 15 years for an A rating.

            Hmmmm.  My Bank of America credit card states “Cardholder since 1997,” yet repeated efforts to get that company to correct its mistake have failed.  I keep getting canned responses from—get this—a collection agency that has expended its service wingspan to providing unhelpful “answers” to bank algorithm failures.

            Bank of America has violated the Fair Credit Reporting Act by refusing to correct a credit mistake within 30 days of notification.  The algorithm lists my start date as 2003 and that becomes the truth notwithstanding what my card says, or the verifiable truth of the matter.

            So the next time a credit card company has to issue you a new card due to a security breech understand that the clock starts at zero in terms of line of credit vintage.

            In other words banks and their algorithms win every time.  They are infallible and there is no way to correct a mistake.

            This should trouble you as the future promises more algorithms and things making decisions and determining “facts.”  In my case, my credit rating takes a hit based on a clearly wrong calculation of time.

            It’s a matter of time before you find yourself immersed in a dispute that you cannot win, because the algorithms knows all and serves as judge, jury and executioner.

Monday, October 26, 2015

Teaching Millennials

            Teaching mostly college juniors and seniors provides me with the opportunity to observe cutting edge early adopters of new technology.  I am mostly invisible; they regularly walk into me, not looking up from their smartphones as they walk.  I don’t even try this maneuver.

            Sadly, having to teach/entertain Millennials has a much worst aspect that probably will bring an end to my full time academic career.  It has reached a point where I am not certain even a 20% core of capable and conscientious students exist.  Only on a good day can I achieve direct eye contact with this 20% as they at least temporarily look up from their smartphones.
            But what likely will send me packing is a new deterioration in student-teacher relations regarding grades.  My Gen X and earlier students accepted a C minus knowing they really did not even deserve this grade, but were grateful to receive it..  On students’ transcripts a C minus translates into a C and eliminates the need for re-enrollment.

            Millennials largely believe they should receive something higher despite failing to take notes, participating in the discussion, or generating test performances above the already generous C minus.
            This semester, I experienced a remarkably animated and lawyerly bunch when I reviewed the first test of the semester.  The normally passive and distracted group became quite agitated when their answers did not conform to mine.  Surely their answers were as good, or better than mine.  How could I know better?  What does my 50,000 hours of experience mean in the first place?

            I cannot express to you the frustration I felt, despite regularly consuming heaping portions of humble pie as a Professor these days. On student when out of his or her way to lodge a caustic, unfair and untrue set of allegations on that special place on the web called Rate My Professor.com.  Remarkably that rating appears on the first page of a Google search using my name.  I found that out when I looked to see whether there was any press coverage of my Plenary Panel participation at a major global conference in Budapest hosted by the International Telecommunication Union. No ITU World Telecom Forum coverage, but Rate My Professor. Com has a new insight of how mean, loud, rude and unfair I am.
            For the record I cannot yell thanks to vocal cord surgery.  Of course I do have a lawyer tone which to some may come across as yelling.  The test mean was 72 and I goose scores a few points with a generous curve.  It may tell you something that the test range ran from a high of 94 to a low of 30.

            If you think college teaching and an academic career is a cake walk, think again.

It's Still the Cable Company--Part 179

            After months of regular and largely uninterrupted cable television service my home Video On Demand access suddenly evaporated.  Research on the regularly appearing error code showed that the problem occurred due to a weak upstream signal to the headend.

            As dealing with Comcast customer service rivals dental work, I tried several self-help options available on the web site, include several reset commands from the headend to my set top box.  No luck.
            Step two involved multiple calls to Comcast to make the case for a premises visit.  Understandably Comcast does not want to authorize a “truck roll” in light of the cost.  So customer service representatives—all of them in the U.S. India and possibly China—forced me to make the case repeatedly.  It got old fast, particularly having to undertake the same steps that did not work previously.

            Step three involved the first premises visit, a most unsatisfying event.  The technician arrived and noticed that I had cord shaved, downgrading my service to basic cable.  According to him, I am not entitled to on demand service, notwithstanding clear evidence to the contrary on the Comcast web page.  The technician left without replacing the set top box, or doing anything constructive. 
            This frustrated my wife and me.  Was this yet another Comcast upsell strategy, or could the technician honest believe I was not entitled to the on demand service?  How am I to order movies and add to me monthly bill?

            Step four involved yet more calls to customer service, various tweets on the 2 Comcast sites and an email nominally sent to the customer care VP of the company.  There seems to be fake, or unhelpful customer service and a real version should you make enough of a stink.

            Several days passed before Comcast agreed to send another technician with instructions to fix the problem.  The solution: removal of a defective and long unnecessary signal splitter installed by the company.
            There is not much good news to report.  Comcast still has deplorable customer service designed to prevent real people from providing a real solution.  The company still farms out customer service to individuals with limited English competency.  Nobody followed up, but a company representative did make good on her promise of a $20 bill credit based on the much touted guarantee for on time service remedies.

            Nothing much has changed and apparently the company still doesn’t really care.

           

Monday, October 19, 2015

Incumbents’ Incentives and Disincentives to Invest in Existing and Next Generation Networks

            Recently anti-network neutrality researchers and advocates have made an assertion that does not make sense to me.  First, they claim incumbent carriers have substantially curbed capital expenditures in plant.  Then they attribute the decline as largely resulting from the FCC’s Open Internet Order.

            Such work would not pass muster under peer review, nor does it pass an informal “smell test.” On the latter screen, why would both AT&T and Verizon make multi-billion dollar investments in legacy content distribution (DirecTV) and content (AOL) if they did not think they could use access to a far larger set of consumers as a way to provide more service bundles?  Put more simply: why would a legacy carrier skimp on its infrastructure after having paid handsomely for content that needs distribution to consumers?
            AT&T touts the DirecTV acquisition as making it possible to offer a “quad-play” bundle of video, wired broadband, wireless broadband and voice; see: http://www.att.com/gen/general?pid=18235#fbid=jUSgILGxbqx. Verizon sees AOL as providing a way to diversify into content and improve its web advertising service skills.

            Even as certain stakeholder want regulators, legislators and judges to think an open Internet would shut the investment tap, they also want to tout how much more plant investment we have vis a vis other nations and regions.  Who needs a universal service subsidy mechanism when we lead the world in 4G and fiber deployment?  Recently Verizon announced an expedited schedule for 5G research and development. See http://www.fiercewireless.com/tech/story/verizon-test-5g-2016/2015-09-08.
            As a professor, I have the luxury of time to review everything I possibly can.  I make an effort to maintain an open mind on each and every subject.  I pay a high premium for not having “cast my lot” with one or the other camp and for having an independent (if unreliable) point of view.

            So if you don’t care to rely on my unsponsored perspective on the matter of whether incumbents suddenly have stopped investing in the future consider this from a clearly right of center source, the Financial Times:

            “AT&T is a big spender, investing more in infrastructure in the first half of this year than any other corporation in the US. Over the past five years it has ploughed nearly $140bn into its network, and it plans to spend a further $21bn this year and more still in 2016.

           “‘I fundamentally believe if you are not a number one or two investor in this industry, you get left behind,’ Mr Stephenson recently told analysts.’”  See David Crow, Telecoms: Showtime for AT&T, FINANCIAL TIMES (October 15, 2015); available at: http://www.ft.com/intl/cms/s/0/70c15980-7321-11e5-a129-3fcc4f641d98.html#axzz3p1qj8qH3.

Thursday, September 10, 2015

The Myth of Broadband Investment "Disincentivization"

            Some people, who really should know better, have combined one questionable statistic with an absolutely unreasonable inference.  Ostensibly to bolster their argument that the FCC’s Open Internet Order will either enslave or impoverish carriers, sponsored researchers and one or two easily-persuaded FCC Commissioners make this unsustainable leap of faith:

            Wireline broadband providers have reduced plant investment following the FCC’s Open Internet Order.  Therefore, the entire cause of this diminution investment results from the Order.
            Might there be alternative statistics that identify where the money is going and what, if anything, has caused this sudden conservation of capital?

            First, when considering capital expenditure by companies such as Verizon, converging markets and technologies, surely require an examination of the many places money might go.  Verizon might perceive no competitive necessity to invest in wireline broadband.  Additionally the company might prioritize investments in wireless plant, as part of a major strategy to migrate from wired to wireless content distribution technologies.  Verizon is aggressively jettisoning its wireline plant and state franchises.
            Speaking of content, didn’t Verizon recently come up with a cool $4.4. billion to buy AOL whose major assets are content-based?  Would Verizon skimp on all content distribution technology after having just made a significant investment in content?  Didn’t AT&T just get conditional approval to spend over $45 billion to acquire DirecTV, whose major asset combines access to content and broadband distribution of it?

            On the issue of incentive to invest, just today I read how Verizon already wants to commit substantial funds for next generation, 5G wireless broadband distribution technology. See http://www.verizon.com/about/news/verizon-sets-roadmap-5g-technology-us-field-trials-start-2016.  Bear in mind that Verizon Wireless operates under the Title II, common carrier, telecommunications service provider “public utility” regulatory model that some consider such an investment buzz kill.  Verizon seems to well tolerate this regulatory burden and still manage to invest billion in plant.
            It bears repeating time after time: competitive necessity constitutes the major catalyst for capital expenditures, including next generation network plant. 

            Verizon knows it has to enhance the value proposition for wireless broadband.  And it surely knows the lack of competition means it does not have to extend its FiOS plant, or rush to add funds to wireline technologies about which it does not care.

Tuesday, September 8, 2015

Verizon’s “Free” Mobile Streaming Service and the Many Questions About Sponsored Data

           When one of the two mega-wireless carriers in the U.S. announces a mobile streaming service, the FCC soon will have to confront head on what carriers can and cannot do by way of advertiser supported data consumption. 

           At first impression, what’s not to like about Verizon’s Go90 gambit? See http://www.nytimes.com/2015/09/08/business/media/verizon-to-offer-free-mobile-tv-with-an-eye-on-millennials.html?emc=eta1&_r=0. The smartphone surely has the capability of offering a competitive alternative to other screens in the video marketplace including television sets and PC monitors.  If a third party wants to subsidize my consumption of “must see” video, well thank you very much!  I am a classic free rider likely to consume the video content without necessarily paying for the advertised products and services. 

           In class I regularly make references to beer, one of the essential food groups for my students.  Most get the economic concept of free ridership when I explain how much I enjoy the Clydesdale advertisements for AB Inbev Budweiser, without having to buy the beer.

            Free rider opportunities notwithstanding, there is a closer question whether sponsored data constitutes permissible price discrimination.  Bear in mind that carriers like Verizon and Comcast can absorb the cost of content carriage, or receive advertising revenues making it possible for consumers to watch content without seeing their often skimpy data allocation evaporate.  Netflix has not banked on competitors having the same zero cost of content delivery.

            So would Netflix have a legitimate (and lawful) complaint about how sponsored data violates the FCC’s Open Internet Order?  In the Internet Service Provider tilting the competitive marketplace for information, communications and entertainment (“ICE”) by taking the cost of content carriage out of the consumer’s cost calculation?

            I part with my network neutrality true believers on this issue, because not all price and quality of service discrimination violates the Communications Act of 1934.  The practice has to be “unfair” and the discrimination has to be “harmful.”  I can envision plenty of instances where sponsored data enhances consumer welfare, particularly free riders distributed throughout the range of incomes.

           

 

Wednesday, September 2, 2015

The Impact of Regulation on Broadband Investment

           Several sponsored researchers have floated the notion that network neutrality and Title II common carrier regulation constitute the major reason why U.S. broadband carriers apparently have reduced capital expenditure in new and replacement physical plant.  Does this pass the smell test?  Is there any empirical data proving causality?  Would these allegation pass muster under appropriate peer review?

           Let’s get one principle straight: capex in most industries primarily correlates with competitive necessity and the life cycle of sunk investments.  In the U.S., wireless cellular radio companies bear the burden of streamlined Title II common carrier regulation.  Such regulation has not dissuaded these carriers from sinking billion in spectrum auctions and in plant investment.  The FCC swears that broadband access providers will encounter even less regulatory oversight than wireless carriers.

           Similarly, a year over year analysis of capex might have little to do by way of regulation impact on the incentive to invest and much more on whether and when a carrier needs to invest in new, or replacement infrastructure. Ventures with very high plant investments typically also have capacity that comes online or offline in very large increments.  For example, a satellite company like Intelsat, Dish, Sirius-XM and DirecTV will show a significantly higher plant investment in years when it has to replace an in-orbit and soon to be deactivated satellite.  Variability in capex has nothing to do with whether regulation ebbs and flows in terms of severity, or burden.

          I will concede that telecommunications management may tinker with capex as political leverage for less regulation.  AT&T CEO Randall L. Stephenson has said as much, but do you really think he would ration capex if it would render his company and its services comparatively inferior to what other wireless carriers offer?

          Telecommunications carriers and their sponsored researchers also like to trot out “regulatory uncertainty” as a capex disincentive.  In the same breath, they also like to claim regulation operates as an unconstitutional “taking” of their property and the capex they previously made.  Newsflash: regulation in telecommunications constitutes a cost of business that incumbents and prospective market entrants alike have to take into consideration.

          Bottom line: regulation and uncertainty about the future of regulation has limited impact on capex decision making.  If a carrier can make do with less investment it will do so.  Right now most airlines are replacing kerosene guzzlers with more efficient and cheaper models.  They might also “right size” inventory with smaller aircraft.  Such a reduction in overall passenger capacity and in investment responds to marketplace conditions not whether aviation regulators have become more aggressive.  The same concept applies to telecommunications.