A RUSSIA Acronym: Ruthlessly Undermining Small Satellite International Access

            In a universally contemned, knucklehead move, the Russian government used an anti-satellite missile to pulverize a deactivated satellite located in a low earth orbit 40 miles below the known trajectory of the International Space Station.  See, e.g., https://www.reuters.com/world/us-military-reports-debris-generating-event-outer-space-2021-11-15/; https://www.bbc.com/news/science-environment-5929910; https://apnews.com/article/space-exploration-science-business-697f5aa719331ab6e74102ebb06b52d8.

            Before explaining how this bonehead action did not have to risk life and property, let us make two contestable assumptions for the sake of argument:

1)         Anti-satellite technology has some legitimate and lawful, national defense uses, so the Russian technology test comports with the global treaty limiting space exploration and exploitation to “peaceful uses” “for the benefit and in the interests of all countries.”  See Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, available at: http://www.unoosa.org/oosa/en/ourwork/spacelaw/treaties/introouterspacetreaty.html; and

2)         Russian personnel determined that the test would not damage the International Space Station, or trigger any other sort of liability for harm, even though over 1500 additional pieces of space debris were created at a location certain to fall down toward earth and cross over the Space Station orbit.  See Convention on International Liability for Damage Caused by Space Objects; available at: http://www.unoosa.org/oosa/en/ourwork/spacelaw/treaties/introliability-convention.html.

Arguably, nations need to test anti-satellite technology under actual orbital conditions rather than blow up a mockup satellite on the ground.  There must be some benefit in examining the breadth and depth of a blown-up satellite debris field.  But did Russia have to target a dead satellite so close to, and above, the Space Station?

           News flash: both operational and out of service satellites experience gravity that pulls them down toward earth.  Most active satellites use “station keeping” fuel to maintain orbit, particularly geostationary satellites designed to last over ten years and to hover in a fixed location 22,300 miles above the equator.  Low earth orbiting satellites typically have short useable lives with no station keeping capability.  Their close proximity to earth offers a different value proposition: lower costs to build, launch and access, but short usable lives and the need to launch thousands of small “cubesats” to achieve ubiquitous coverage.

           Russian officials have yet to explain why they could not have identified and targeted a dead satellite located well below the Space Station.  Every other publicly disclosed satellite explosion has occurred in a location not likely to trigger any immediate collision, even though the debris field might eventually increase the odds.   The U.S., China, and India have complied with this safeguard.

            Luckily, the occupants of the Space Station, including two Russian cosmonauts, avoided harm, but the odds for a collision increase, even without the deliberate increase in the amount of space junk.  New broadband low earth orbiting satellite constellations, operate near each other and number in the thousands.  Even in low earth orbit, only a few hundred miles from earth, tiny specks of debris travel at speeds in excess of 15,000 miles per hour.

            If you have had a car windshield crack from a stone thrown at it by a truck, you can appreciate the potential for damage from small objects with high velocity. In low earth orbit low gravity and extreme speed combine to create the real potential for more than a crack or divot.  The worse case scenario, known as the Kepler Syndrome, (see https://en.wikipedia.org/wiki/Kessler_syndrome) renders most, if not all, of space unable to support satellite networks, because of the ever increasing risk of collisions.

            Way to go Russia!

 

      

          

Making Sense Out of the FAA’s Power Play on 5G

           With growing frustration, the U.S. Federal Aviation Administration has failed to get traction on its concerns about the potential for harmful interference between newly activated 5G spectrum, at 3.7 – 3.98 GigaHertz, and mission critical aviation applications that use spectrum higher up in the C-band.  The squabble persists, despite an FCC decision to create an additional 20 MegaHertz “Guard Band,” in addition to the already established 200 MHz of spectrum, that must remain fallow, unavailable for use by any 5G wireless carrier, no matter how far subscribers would be from an airport, or known flight paths. See https://www.fcc.gov/auction/107/factsheet.

Upset that neither the Executive Branch, nor the FCC would consider the matter seriously, the FAA has played its trump card: ordering aviators not to use existing flight management applications that operate via C-band spectrum presumed by the FCC to be well protected from any prospect for interference.  Wireless carriers have responded by offering to postpone for one month activation of the expensive and now controversial spectrum.  See, e.g., https://www.reuters.com/technology/att-verizon-delay-c-band-spectrum-use-pending-air-safety-review-2021-11-04/.

At this point, few if anyone, can conclude whether the FAA is falsely claiming the “sky is falling.”  However, no one wants to end up on the wrong side of an aviation disaster including the wireless carriers that have spent over $85 billion in auctions for newly “refarmed” C-band spectrum. 

Stakeholders forecast and speculate the prospects for interference, often with a bias, one way or the other.  For example, the lack of selectivity in cheap GPS receivers and cellphone chipsets, provided grounds for John Deere and other farming equipment manufacturers to oppose FCC efforts to abate an acute wireless spectrum shortage by authorizing market entry by ventures such as Legado, that proposed to use spectrum nearby, but also separated by an even larger Guard Band to protect GPS spectrum.   See, e.g., https://www.fb.org/news/coalition-asks-lawmakers-to-intervene-in-gps-related-fcc-ruling.

This remarkable debate has the potential to shave billions of dollars off the value of wireless carrier shares, call into question the certainty of dedicated spectrum reallocations costing billions of dollars, and perhaps even handicap the efficacy of U.S. wireless 5 and 6G initiatives at the International Telecommunication Union, the intergovernmental spectrum planning forum.

High stakes indeed. 

Refuting the “Laws” of Economics . . . One at a Time

            The Covid-supply chain debacle, and the short-term thinking that has created shortages of nearly everything, except for exculpatory excuses.  This “perfect storm” offers daily reminders that knucklehead behavior does not trigger punishment, despite the laws regularly treated as irrefutable in the economics courses I took.  Here are a few laws rendered inoperative just now.

Ridiculous, Knucklehead Decisions Generate Measurable Harm to Company Profit and Employee Career Trajectory

            Simply put, I cannot catch a break in this economy.  I live near State College, Pennsylvania “centrally located in the middle of nowhere.”  Under the best conditions, the supply chain to edge towns sometimes breaks down.  But with Covid as an excuse, empty shelves have increased and car rental companies cannot honor their “reservations.”  No one gets punished in the marketplace, or suffers from a poor performance evaluation.  In many instances, the lowest priced options have evaporated, but a higher priced, possibly higher margin alternative is available.  Better pick up two or more, just like the mindset of consumers in the former Soviet Union.

Right Now is a Great Time to Make Shoplifting Harder Even if It Adds 20 Minutes for Customers to Checkout          

            The local Walmart recently reduced by about 50% the number of self-checkout terminals.  The installation of three large television screens makes me think some genius senior manager thought greater surveillance by cameras and employees will cut product shrinkage.  I am sure the manager expects to receive a bonus for saving the company millions.

            Maybe not.  The time it took me to check out and pay increased by 20 minutes and the thought crossed my mind that I should abandon my cart and leave.  Walmart loses a sale and an over worked employee has to restock the shelves with my now abandoned products.  Additionally, the possibility exists that significant numbers of Walmart customers will vote with their feet and shop somewhere else, like the Aldi that just opened nearby.

            The economic rules, that consumer behavior and revenue streams matter, seem to have evaporated.  There is a great likelihood that no one at Walmart will detect the problem, or remedy it if identified.  The shoplifting obsessed executive will not suffer for having been “pennywise and pound foolish.” 

What impact would any group of boycotting consumers have against Walmart, or for that matter any of the legacy or low cost airlines that make every effort to goose revenues by reducing the value proposition of service?  Is Southwest Airlines going to suffer in the marketplace by failing to calibrate employee availability vis a vis upside incentives to restore service schedules to their pre-pandemic levels?  Will Enterprise stop overbooking reservations, because a significant number of bookings cannot be honored?

The customer may not always be right, but are we as expendable as it seems right now?

Challenging a NYT Column Singing the Praises of Platforms and Dismissing Their Network Effects

The September 4, 2021 edition of the New York Times contains an article written by Professor Jonathan A. Knee entitled Network Effects are Overrated.  The author generally dismisses as benign, or ineffectual just about anything platform intermediaries have undertaken, despite the prevailing view that these ventures impose significant costs and benefits on consumers and society.

Professor Knee appears to dismiss the ability of platform operators to lock in subscribers and create incentives for more consumers to “get on the bandwagon.”  He also dismisses any sense that high market shares reflect a “winner take all” sweepstakes in play. Apparently, the ability to accrue scale efficiencies is not the same thing as exploiting network effects, the ability to expand the subscriber base at low incremental costs.

Professor Knee has great optimism in the ability of market entrants to capture market share and for consumers to vote with their eyes, ears, and pocketbooks and churn out of dominant platforms such as Netflix, Google, Facebook, EBay, PayPal, Uber and others.

The column curiously ignores one of the fundamental characteristics of platform intermediaries: the ability to profit from operating in a two-sided market serving both downstream consumers and upstream advertisers, data analytics firms, election meddlers, purveyors of disinformation, government surveillance agencies, and vendors.

Broadband platform intermediaries have unprecedented opportunities to get multiple bites of the apple as exemplified by Google’s ability to sell advertising, but also generate fees as the auctioneer of ad placements.  Put another way, platform intermediaries can spread fixed costs and accrue positive network effects while also generating multiple profit centers up and down a complete market “food chain.” 

Previous platform intermediaries had limited opportunities to exploit both sides of a market without jeopardizing profits.  Fior example, cable television operators and newspaper owners had to calibrate both advertising and subscription rates to maximize profits.  Attempts at gouging typically would reduce overall profits as consumers and advertisers pursued better value propositions.

Lastly, some readers of this blog may remember with fondness how Word Perfect software offered a better user experience than Microsoft Word. That notwithstanding, network effects over time forced people like me to get on the Word bandwagon, because sticking with Word Perfect guaranteed conversion and compatibility hassles.

Never underestimate the power of firms able to exploit network effects, economics of scale, and access to both sides of an integrated platform marketplace.

Walmart The Price Gouger

When it comes to pricing, the conventional wisdom considers Walmart the regular low price leader, much like Southwest Airlines.  Think again.

These companies are no less willing to exploit gouging opportunities when available.  

Consider this rip off.  In June Walmart charged 50 cents for a gallon of spring or drinking water that my wife prefers when traveling.  Apparently, chlorinated water can wreck your bacterial balance among other bad things. A few days ago, Walmart charged 67 cents for this product, a 11+ percent increase reasonably attributable to pandemic costs, etc. 

Now Walmart is charging 98 cents, nearly a 100% increase.  

Walmart would be hard pressed to provide any cost plus basis for such a substantial increase in price in such a short period of time.  Sadly, there appears to be no way the so-called marketplace can discipline and punish such price gouging as insufficient numbers of people will cote with their feet and seek the 80 cent option available at Food Lion.

In this greedy, rip off, make up for lost profits environment, buyer beware,

What Rat You Out Smartphone Surveillance Do You Support?

At law school, I learned about the slippery slope of changing fact patterns that typically trigger a change in analysis and which side of a case I support. Sometimes the process is called a parade of horribles as the circumstances grow ever more problematic.  Such a continuum runs for wireless technologies essential for carriers to provide service, but also able to engage in unprecedented and largely unregulated surveillance, tracking, mining, and money making.

​Readers of this blog understand that cellular radio carriers need to monitor continuously the location of every subscriber with their handsets on.  Such tracking provides the basis for knowing how to route an inbound call to a subscriber and when to provide service (what used to be called dialtone) to a subscriber seeking to make an outbound call. The slope becomes both slippery and increasingly horrible as tracking technologies offer new profit centers for carriers, smartphone manufacturers, platform intermediaries, content providers, social networks, data analytical firms, marketers, advertisers and more.  These stakeholders typically do not pay consumers for access to data about wireless subscribers’ locations, conversations, texts, messages, app uses, etc.

At best, the quid pro quo involves an exchange of something “free,” but not without cost to the consumer.  At worse, consumers receive nothing, may not even know about what takes place and may suffer from the intrusion of privacy, revealed preferences, and analysis that tilts a market transaction in favor of the firm having acquired and analyzed surveillance data.

I hope that readers neither accept the notion that broadband users have no reasonable expectation of privacy, nor do they have anything to fear about data mining.  The miners repeatedly emphasize how they take pains to anonymize the data they collect.  Yet, we should know by now how easy it is for data analytical firms and marketers to identify individuals and know more about us than what the data protection promises claim to safeguard.

It is quite easy for data mining to rat out someone, because they know where we are and how we use our smartphones.  The domestic terrorists/patriots (depending on your politics) should have known that an operational smartphone in their possession regularly records their location, the destination of their calls and texts, and what apps were used.  This is evidenceavailable to law enforcement authorities.  In most instances, the carrier and the manufacturer of the smartphone willingly cooperate with authorities, often without expecting a search warrant. The slippery slope starts in the reasonable law enforcement/national security zone, but quickly moves into territory most of us do not support. 

Just who is doing the rating out?

If you, like most, support the use of wireless metadata, call records, etc. for law enforcement, what do you think about congressional or state legislatures using these surveillance technologies for investigations?  This data can identify who aided and abetted the crimes committed by others on January 6, 2021.  Some people, not physically located at the Capitol, may have actively conspired to execute the carnage.  

What rat you out surveillance technologies violate a reasonable expectation of privacy, and the right to be left alone?  Appreciate the irony that while we might agonize about whether and how these concepts support or block congressional investigations, data miners typically have no constraints, because the terms of service grant a free reign.

Tracking Inconsistent Zigs and Zags in Telecom Policy Research

Sponsored researchers surely embrace Oscar Wilde’s view that “consistency is the last refuge of the unimaginative.”  Why bother building a multi-year record of empirical evidence when there are ample publishers and even appellate court judges (and their law clerks) waiting for intellectual support no matter how suspect.

Just now, I am seeing how both wireless and wireline carriers have unleashed a torrent of inconsistent advocacy research.  On one hand, the conventional wisdom dished from this group and their sponsored researchers was the “fact” that network neutrality and other regulations directly and negatively impact investments made in infrastructure.  Former FCC Chairman Amit Pai made a point to repeat this assertion early and often and it became gospel truth, so much so that cherry-picked and quite questionable “research” became the foundation for the appellate court affirmance of the Restoring Internet Freedom Order.

Now, circumstances and motivations have changed with the Covid pandemic offering a true test whether carriers have made sufficient plant investment, both under the disincentivizing network neutrality regime and free of it.  No one has convinced me that a single regulatory or degregulatory initiative substantially impacts carrier investment decisions one way or the other, particularly because of far more impactful factors such as interest rates and the normal ebb and flow of technological development cycles.  

Carriers did not close their wallets when network neutrality rules were in force.  That is corroborated by ample current evidence—now touted by the carriers-- that during the pandemic, U.S. carriers were able to meet rising demand for bandwidth.  If the carriers had scrimped on investment, because of the horrendous burdens imposed by network neutrality, how could their networks show such resiliency and ability to accommodate significant increases in subscribership and bandwidth requirements? It shows me that the need to stay competitive and to install new technology, such as 5G, trumped any incentive to forestall investment to make a regulatory and public policy statement.

Additionally, carriers cannot credibly oppose municipal broadband networks and expanded universal service subsidies if they persist in spreading the gospel that network neutrality forced underinvestment.

We no longer hear that consumers do not want, and will not pay for something better than 25 megabits per second download speeds and 3 megabits per second upload speeds.  We no longer hear that carrier networks are woefully underfunded and unable to satisfy consumer requirements. Such assertions now would support the case for market failure and the need for taxpayer funded networks, because the carriers have no interest in building.  Of course, now that Covid has unleashed a torrent of new universal service money, who can dispute the premise that incumbent carriers want to tap the gravy train.

By the way, the new FCC has yet to reinstitute network neutrality, but I am not seeing any new evidence of substantial increases in network investment by carriers still freed from the unconscionable burdens previously imposed.

Who needs consistency?

When a Confirmed Reservation Means Nothing of the Sort

A few hours before the time for delivery of a rental car, a local rep called to renege: no apology, no explanation, no offer to mitigate damages; nothing but nastiness.

I'm confused about the email Enterprise previously sent me about a "confirmed" reservation.  What would a reasonable person understand confirmed reservation to mean?  Perhaps a better question: what prevented Enterprise from blocking rentals it knew (or should have known) that no vehicle would be available?

This shameful episode has absolutely nothing to do with force majeure that absolves a contracting party from liability for abrogating a contract.  How could Enterprise not consider the impact of Covid recovery and chip shortages?

Enterprise can fail to perform duties in a contract it created with impunity, but in most transactions, "no show" consumers have to incur 100% of the financial loss. You miss the flight, you lose.  You cannot make it to the concert, tough.  How can Enterprise not suffer any consequences for its negligence . . .dare I say fraud?

Libertarian economists typically would answer by suggesting the company would suffer revenue declines and an even worse reputation.  Maybe not, particularly when lax antitrust law enforcement allows markets to concentrate.

Enterprise can have a cavalier attitude toward misrepresenting rental car availability, because the company suffers no significant penalty for its contemptable behavior.

For what it's worth: shame, shame, shame on Enterprise Rent-A-Car.

I do not feel better, and I will be without transportation of any sort for 4 days as my wife uses our single vehicle to care for an ailing parent.  So much for cutting my CO2 load.

And on the Left: Preciousness With a Dash of Sanctimony

             Regular readers of this blog know that I have clear contempt for snark and deliberate mistruths propagated by newspapers whose authors ought to know better.  The Wall Street Journal regularly fails to satisfy a basic smell test when a writer, for example, tries to convince that wireless carrier market concentration promotes competition, and no household could ever need triple digit (100+ megabits per second) transmission speeds.

             Being an equal opportunity curmudgeon, I want to take to task the New York Times for the lesser offense of pomposity.  It appears that this “newspaper of record” has an unconditional style book requirement that every acronym must explicitly represent a single word, in sequence.

             For example, before revising an article using an acronym for megabits per second, the Times dutifully used m.p.s. See https://www.nytimes.com/2021/05/17/business/infrastructure-rural-broadband.html.  How precious.  Everyone else in the world uses the following Mbps or mbps.  See, e.g., https://www.wsj.com/graphics/faster-internet-not-worth-it/. 

            In a revision to the article, the Times now spells as megabits per second each time it is used rather than use m.p.s.

             The Wall Street Journal complies with the proper acronym, even as it wraps itself around empirical evidence and statistics that it infers as proving that “households are paying a premium for services they don’t need.”  Right on the acronym, but try telling a family of 4, each streaming video at the same time, that they could not possibly need platinum service.

             A pox on both their houses.

 

           

Infrastructure Ransomware Targets Are Not Victims

            Companies, like Colonial Pipeline, accrue rich margins for the essential service they provide.  Whether by regulator-granted monopoly franchise, being first to market, or operating in what appears to be a dull, low growth business, infrastructure companies have become complacent.  Having sunk substantial funds in the ground, they rarely perceive the need to make significant, additional investments in such areas as network security. 

             Infrastructure companies owe their customers and the nation a duty of care that includes ongoing efforts to protect their networks from harm, including remote access by criminals and government agents intent on mischief, extortion, espionage, or terrorism.   This duty should be baked into the mindset of infrastructure managers, instead of the conventional wisdom that they can generate higher annual Christmas bonuses, stock prices, and share dividends by scrimping on research, network security enhancements and efforts to protect their investments from now predictable hacking. 

             If someone breaks into your locked car, by smashing a window, the court of public opinion and insurance companies, typically consider you a crime victim, worthy of sympathy and support.  On the other hand, if you kept the car unlocked, or inadvertently left your electronic door opener in the vehicle, compassion and reimbursement evaporate. 

             Colonial Pipeline and other mission critical service providers know that they must keep their networks locked and secured.  Scrimping on these tasks does not pass the smell test, nor does an assertion that infrastructure providers are helpless and have no ability to guard against bad actors who can succeed in hacking networks, often by simply duping employees to click on a credible looking link that triggers a download of malware. 

             As for telecommunications infrastructure, Congress, the Executive Branch, and the Federal Communications Commission recognize both the importance and vulnerability of the broadband networks.  However, they have emphasized the need to blacklist companies and order the removal of equipment by telephone companies, rather than concentrate on comer protection. The FCC relies on mostly anecdotal evidence that Chinese equipment can provide “back door” access for surveillance, espionage, service outages and disruption of equipment supply chains. 

            No one in the federal government appears concerned that private and public harms can result not only based on the nationality of equipment manufacturers, but also from failure of network operators to strengthen network security.  A substantial, long standing body of law, case precedent and commercial best practices imposes a high duty of care by telecommunications carriers and even providers of services whose content rides along the carriers’ transmission conduits. 

             Instead of placing the burden squarely on telecommunications carriers, the FCC appears to think it can solve national security problems by targeting foreign governments.  This strategy offers no protection against sabotage executed via equipment manufactured by domestic companies and friendly, foreign ventures. 

             The FCC has a longstanding, policy of relying on market forces to meet consumer wants, needs, and desires.  Consumers have near complete freedom to attach devices, such as Wi-Fi routers and cable modems, to telecommunications networks.  The only qualifier: the attached device cannot harm the network.   

             What about the potential for the network to cause harm to the user?  Despite blacklisting several Chinese carriers and equipment manufacturers, consumers remain vulnerable to network harm.  Worse yet, the network provider incurs no liability for such harm, and even if its lax attitude toward network security facilitated the harm.  No law currently exists that even imposes the duty to notify subscribers quickly about hacks and stolen consumer data. 

             Apparently bad stuff happens to infrastructure and the provider has no responsibility even to make reasonable efforts to anticipate and minimize harm. 

Side-by-Side Truth and Mistruth in the Wall Street Journal

             Even as the Wall Street Journal continues to provide important news reporting, its opinion pieces grow ever snarkier and more deceitful.  In the April 23, 2021 edition, readers will see varying degrees in the representation of the truth contained in two opinion pieces, each referring the American Civil Liberties Union.

             In an opinion authored by the Editorial Board,  the Journal notes that the ACLU, true to its longstanding mission, has joined conservative groups in opposing legislation in California requiring organizations qualifying as charities to disclose the identity of their contributors.  (See https://www.wsj.com/articles/donor-disclosure-arrives-at-the-supreme-court-11619217816).

           In this opinion, one could infer that the Journal authors see the ACLU as fair minded, still willing to take controversial and perhaps counterintuitive sides in litigation.

             In another opinion piece in the same online edition, (see https://www.wsj.com/articles/how-to-have-more-police-shootings-11619213893?mod=trending_now_opn_1), Holman W. Jenkins, Jr. appears to suggest that any arrested person risks death by resisting, even after police have subdued the arrestee.  Did Mr. Jenkins imply that any degree form of resisting arrest entitle police to punish the arrestee, seemingly with no constraint? 

             Mr. Jenkins also even parts company with his usually like-minded editorial writers at the Journal, at least insofar as his perception of the ACLU.  Unlike the Editorial Board opinion noting the ACLU remains an advocate, even for conservative-championed privacy and First Amendment freedom, Mr. Jenkins characterizes the current ACLU as “lately morphed into a pro-censorship promoter of progressive causes.”

             Has Mr. Jenkins concluded that he should continue to target and vilify the ACLU even when it shares his views?

Can You Hear Me Now?—The Wireline Edition

Regardless of the business cycle and overall economy, tradespeople in my rural enclave follow a different drummer.  Most work when they feel like it and never seek to maximize income.  There’s often a leisure pursuit worth prioritizing: the start of the hunting or fishing season, a county fair, a family event. It drives me crazy when year after year a scheduled premises visit does not happen, and calls do not get returned.

Today sets a new low point.

After agreeing on terms for the replacement of PVC conduit and wire between my septic tank and basement alarm, (a long story about rural living) both the electrician and excavator have balked at doing the job.  Apparently there are more lucrative uses for their time, or they have concluded the offered rate simply was too low.  There’s a State College surcharge for everything based on the assumption that all residents are rich and can afford to pay more than residents in other, nearby locales.

Today, the electrician claimed the phone line was bad when I called him  A landline-to-landline call was bad?  I don’t think so.  I offered to call him back, at which point he hung up on me.  A 70 year old retiree sinks to gutless, passive aggressiveness.  Why not tell me: “I don’t feel like doing the job,” or even “I bid too low and will do the job only if you pay me more.”

He couldn’t do that, instead offering some lame and quite dishonest complaint about telecommunications line clarity . . . to someone who knows about toll grade, wireline technology.

Throughout my career, soon to end in retirement from Penn State, I have framed my work ethic based on a simple credo: “Anything worth doing, is worth doing well.”  

Apparently, the generations have merged and can’t be bothered.

Fun With Math: How the Wall Street Journal Doubles Down on Vilifying Green Power Generation

            Just about everyone, with some complicity in the Texas power shortage, persist in blaming green power sources for failing at the worst possible time.  The Wall Street Journal has doubled down with more math purporting to prove wind power failures caused all ills.  See https://www.wsj.com/articles/texas-spins-into-the-wind-11613605698.

            The Journal Editorial Board reports that while wind power represents a lot less than 42% of the total electricity generating capacity in Texas, during the calamity, its share of currently online and used capacity rose to 42% of the total.  Then its share declined severely to 8%.  It appears that the Board wants everyone to conclude that wind power generation failures caused the power shortfall in light of the difference between 42% and 8%.

            Shamelessly the Wall Street Journal and ever other oil and gas boosters are blowing smoke.

            How could a niche power player end up delivering 42% of current production capacity in Texas?  Might other sources of power have failed miserably to operate at peak demand?  Put another way, how could wind power become such a major source of electricity without the usual producers suffering extraordinary outages?  Wind power market penetration rising from about 10% to 42% occurs only if other generation technologies cannot maintain their market share by generating electricity commensurate with current demand.

            The Journal conveniently ignores the fact that oil and gas generation of power failed so substantially that a minor alternative source became essential.  Additionally, all the blame shifters cannot seem to wrap their brains around the concept of making power generation of all sorts resilient in both hot and cold weather extremes.  Both legacy and new power generators can operate in these environments had producers made the necessary investment. 

            In Texas, investing for extremely rainy and cold days apparently is not worth the cost, until it is. 

            Penny wise and pound foolish.

             

           

Did the Wall Street Journal Deliberately Lie to Vilify Reliance on Wind Power?

             Today, the Editorial Board of the Wall Street Journal reports that wind power represents 42% of the currently generated power in Texas and that freezing weather reduced output to 8%: “The problem is Texas’s overreliance on wind power that has left the grid more vulnerable to bad weather. Half of wind turbines froze last week, causing wind’s share of electricity to plunge to 8% from 42%.” See https://www.wsj.com/articles/the-political-making-of-a-texas-power-outage-11613518653.

            Does 42% strike you as an overestimate?  Multiple sources report that the current generating capacity from wind power in Texas actually represents about 17.4-25%.  See https://comptroller.texas.gov/economy/fiscal-notes/2020/august/ercot.php; https://www.expressnews.com/business/article/Wind-overtook-coal-as-a-power-source-in-Texas-15875284.php; https://www.statesman.com/story/news/2021/02/14/historic-winter-storm-freezes-texas-wind-turbines-hampering-electric-generation/4483230001/.

            The Journal and Texas Governor  Greg Abbott (see https://nymag.com/intelligencer/2021/02/what-gov-greg-abbott-gets-wrong-about-texas-power-failures.html) appear hellbent on blaming green power generation for the outages in the state.  Such a convenient and false target.  Might the lack of regulations requiring back up power have played a role?  How about the creation of an independent power grid manager with virtually no interconnection with backup power sources?  Who needs consumer safeguards-even for an unquestioned public necessity—when the marketplace can solve any and all problems?

            Yet another example where rather than try to determine the truth, people who know better see the advantage in creating false statistics to “prove” a point.

            Lies, damn lies and statistics.  Maybe the the authors wrote 24% and the numbers got reversed.  Of course, the Wall Street Journal would never lie to make a point.

 

 

 

 

Network Neutrality: Cause and Effect

Perhaps you might join me in wondering how sponsored researchers managed to convince FCC Chairman Pai and others that network neutrality regulation singularly caused a near immediate drop in infrastructure investment by U.S. carriers.  How do you isolate the variable of “regulation” from, for example, the investment cycle in migrating from 4G to next generation 5G wireless plan.

Set out below, are two FCC charts that track capex incurred by the major U.S. wireless carriers from 2010 to 2019:

            S

 

Source: https://www.fcc.gov/20th-mobile-wireless-competition-report-quick-facts

Source: https://docs.fcc.gov/public/attachments/FCC-20-188A1.pdf

 From 2010 to 2019, the FCC toggled between imposing network neutrality requirements and eliminating them. For purposes of our direct comparison of a regulatory or deregulatory action and subsequent impact on investment, keep these years in mind:

 2010, the FCC approved the first FCC Open Internet Order creating network neutrality rules and regulations; 2014, the D.C. Circuit partially reverses the FCC on grounds that some of the network neutrality requirements imposed common carrier duties on private, non-common carriers; 2015, the FCC respond to the appellate court reversal with the 2015 Open Internet Order reclassifying broadband Internet as Title II regulated common carrier telecommunications service; 2016, the D.C. Circuit defers to the FCC and largely upholds the Commission; 2017-2018, the Ajit Pai led FCC signals its priority in reversing the 2015 Open Internet Order and does so in 2018 with the Restoring Internet Freedom Order.

Does wireless carrier investment correlate up or down with the changing regulatory regime? It sure does not look like it to me.  Even stakeholders, when communicating with buy side Wall Street analysts, emphasize competitive necessity and the business cycle for next generation network investment. 

Regulation does not matter significantly, until it becomes the sole predictor of investment in a different forum.          

 

Local Broadcast Market Concentration Promotes More Local News Operations?

            At the eleventh hour, the Ajit Pai-led FCC released an economic study examining the impact of market size and concentration on the number of local news operations.  See Kim Makuch & Jonathan Levy, Market Size and Local Television News, OEA Working Paper 52 (rel. Jan. 15, 2021); available at: https://docs.fcc.gov/public/attachments/DOC-369214A1.pdf.  While the authors explicitly stated that “this paper does not analyze the total quantity of local news (i.e., number of hours, which has been rising or its content,” I am certain that had Chairman Pai retained his position, he would have relentlessly touted the paper as unimpeachable, empirical proof that further concentration in the broadcast marketplace serves the public interest. 

             I appreciate that well financed and profitable media ventures can exploit scale economies and the efficiency possibly accrued. Ventures with deeper pockets can afford to hire staff to create local content.  Long ago, Bruce Owen in a book he wrote (Television Economics) and elsewhere explained how mergers and market concentration can actually generate more program format diversity.  Rather than duplicate a format, a radio station can generate higher revenues by opting to offer a new format, rather than duplicate one already available.  Arguably, format proliferation contributes to a generous sense of what qualifies as “diversity.”

             One can readily count the number of radio formats, e.g., talk, adult contemporary, oldies, news, etc.)  However, counting truly independent local news providers is a far more daunting task than the paper implies, or what Chairman Pai would claim.

             While I am math challenged, I infer from the paper that one can count additional local news providers and that larger markets can support more local news dissemination.  However, the authors extrapolate that point to assert the possible counterproductive impact of current FCC rules limiting further concentration, with existing rules that establish a floor in terms of the number of broadcast voices a single market must have to warrant consideration of a proposed acquisition and usually prohibit mergers of stations that both have local market share in the top 4 of all stations.

             The paper counts the number of broadcast local news operations with a simple yes or no assessment.  Does the station offer local news, or does it not? 

             The question whether a station offers local news is different from whether it constitutes a new and independent source of local news.  The paper’s counting process does not differentiate between truly local and repurposed content made to look local.  Would it surprise you that some so-called local content is reality is centrally produced material lightly edited to appear local?  Have we forgotten how Sinclair Broadcasting issued “must run” edicts to its stations mandating the local dissemination of content created at the Mother Ship?  See https://www.nytimes.com/2017/05/12/business/media/sinclair-broadcast-komo-conservative-media.html.

             In the worst case scenario, the Makuch & Levy paper could be cited by advocates to bolster a finding the paper never intended to reach and surely did not offer empirical proof. Once again, we get a relentless cascade of “proofs” that market concentration promotes competition and all things good, even if the counting process becomes partisan and politicized.  Would the paper count as a net addition in local news operations a simulcast, or rebroadcast of a news program aired by another station with common ownership?  Would the paper count a station that has no net increase in employee numbers, but manages to generate a news program by cobbling together video press releases, content from the Mother Ship and clips from another local station having the same national owner?

             Recently, Gray Broadcasting filed a Friend of the Court brief in the Prometheus case showcasing how it acquires local market laggards and upgrades their news operations with much commercial success.   See https://www.supremecourt.gov/docket/docketfiles/html/public/19-1231.html.  I helped write a brief challenging the premise that market concentration promotes localism and the proliferation of video on demand content from Netflix and others warrants the relaxation of ownership rules in light of robust competition (scroll down the Supreme Court link to the Dec. 23, 2020 Brief amici curiae of Media Law and Policy Scholars).

             Sadly,  stakeholder advocacy, economic models, wishful thinking and results-driven decision making convert conjecture into gospel truth.  Former FCC Chairman Pai masterfully convinced a lot of people with an endless assertion that network neutrality created a multi-billion dollar reduction in infrastructure investment.  If he says it long enough and frequently enough, it becomes true even though, for example, the recently released 2020 Market Competition Report shows stable wireless plant investment even after the FCC eliminated the network neutrality investment disincentive.   See 2020 Communications Marketplace Report,  GN Docket No. 20-60, Fig. II.A.26, Wireless Capital Expenditures by Provider 2016 – 2019, 38 (rel. Dec. 31, 2020); available at: https://docs.fcc.gov/public/attachments/FCC-20-188A1.pdf.

             Yet again, a reminder that there are “lies, damn lies and statistics.”