I am pleased to offer my thoughts on universal service funding reform: Remedies for Universal Service Funding Compassion Fatigue, 39 Santa Clara High Tech. L.J. 395 (2023); available at: https://digitalcommons.law.scu.edu/chtlj/vol39/iss4/2/.
Thursday, November 16, 2023
New Publication: REMEDIES FOR UNIVERSAL SERVICE FUNDING COMPASSION FATIGUE
Friday, October 20, 2023
Network Neutrality Redux and the Return of Falsehoods and Disinformation
Despite vowing to eschew involvement in the latest Network Neutrality drama, I cannot sit back and let stand the resumption of the distorted gospel preached by the anti-network neutrality crowd. This group has legitimate criticisms, many of which I have tried, via hundreds of law review pages—to analyze, and even endorse, in specific instances.
For example, see Freedom to Discriminate: Assessing the Lawfulness and Utility of Biased Broadband Networks, 20 VANDERBILT JOURNAL OF ENTERTAINMENT AND TECHNOLOGY LAW, 655-708 (2018); https://scholarship.law.vanderbilt.edu/jetlaw/vol20/iss3/2/; Grey nuances in the black and white debate over subsidized Internet access, 41 TELECOMMUNICATIONS POLICY 1017-1026 (2017); http://dx.doi.org/10.1016/j.telpol.2016.10.002; Network Neutrality and Consumer Demand for “Better Than Best Efforts” Traffic Management, 26 FORDHAM INTELLECTUAL PROPERTY, MEDIA & ENTERTAINMENT LAW JOURNAL, 71-102 (Fall, 2015); http://www.fordhamiplj.org/publications/network-neutrality-and-consumer-demand-for-better-than-best-efforts-traffic-management/; Internet Protocol Television and the Challenge of “Mission Critical” Bits, 33 CARDOZO ARTS & ENTERTAINMENT LAW JOURNAL, No. 1, 47-87 (2015);http://www.cardozoaelj.com/wp-content/uploads/2014/01/Frieden-FINAL.pdf.
Even current FCC Commissioners, who
ought to know better, will trot out the same clearly untrue parade of
horribles.
Network
neutrality regulation will not create a suffocating Internet rate regulation
regime. The Democratic majority has
clearly exempted broadband internet access from Title II common rate
regulation. By the way, Title II still explicitly applies to wireless telecommunications,
like cellphone service, and no one can credibly claim that carriers are
severely constrained by overpowering FCC
oversight. Network neutrality orders have
always applied light-handed regulatory oversight.
Title II of the Communications Act does not impose some atavistic, old school “public utility” regulation. Despite the growing efforts of the Supreme Court to prevent regulatory agencies from responding to changed circumstances, the FCC has frequently recalibrated its Title II regulatory toolkit over time. My prior blog post https://telefrieden.blogspot.com/2023/10/upcoming-limits-on-fcc-statutory.html noted that an expansive reading of West Virginia. v. EPA, https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf might prevent the Commission from streamlining and reducing regulation, unless the Court can craft language that creates an exemption for deregulatory initiatives that require a new and improved statutory interpretation.
A doctrinal and wrong-headed insistence
on legislative clarity, ironically could prevent the FCC from improving
regulations and make them better in light of fast changing technological and
marketplace conditions. Bear in mind
that the last major revision to the Communications Act of 1934, took place in
1996, a time preceding the emergence of a mission critical Internet for most
people. It appears that some of the six
conservative Supreme Court Justices now expect Congress to act early and often
in revising the Communications Act. If Congress
fails to act—and we surely can expect that--then apparently the FCC is powerless
to respond to changed circumstances.
Over several decades, I have tried
to explain that much of the problems in applying statutory definitions to
Internet access, stems from the FCC’s insistence that a single classification
must apply. The FCC created mutually exclusivity
between telecommunications services and information services in 1998 in
response to a letter of inquiry from a Senator Ted Stevens. See Federal-State
Joint Board on Universal Service, CC Docket No. 96-45, Report to Congress, 13
FCC Rcd 11501(1998).
Nothing in the Communications Act
prevents the FCC from recognizing that technological and marketplace
convergence creates service offerings that combine basic and enhanced,
telecommunications and information services. Our wireless handsets offer basic
plain old telephone service, texting, which used to be a legacy telecommunications
service, and other services that combine data processing/information services
with telecommunications carriage.
The FCC
does not have to insist on an either/or dichotomy, Nothing in the Communications Act mandates
this. We have had to tolerate decades
long regulatory toggling between telecommunications service and information
service, because the FCC cannot wrap its head around the reality that
convergence requires a nuanced and admittedly more complicated blend of
definitions. Sometimes the statute does
not even provide a definition, such as “advanced telecommunications capability.”
The FCC interprets these words to include broadband, but the Republican
Commissioners want to ignore the word telecommunications and instead insert
information service. This sure looks
like overreaching, legislating by unelected bureaucrats so reviled by the
right. Then again, some of them want to
convert social networks into involuntary common carriers to deny them any sort
of First Amendment editorial freedom.
Lastly (I
hope!), we really ought to laugh at the false notion that a single regulatory
initiative will exclusively impact the aggregate level of infrastructure
investment carriers will make in a given year.
Former FCC Chairman Ajit Pai preached this gospel relentlessly and it
became a truth for anti-network neutrality advocates. One has to ignore the
carriers’ business plans and the ebb and flow of technology investment as a
function of innovation and product life cycles.
To believe the network neutrality
investment disincentive canard, one would have to discount the billions
invested in new 5G spectrum and network upgrades. I expect sponsored, voodoo economists to “prove”
a decline in carrier network investment going forward. Should aggregate investment actually decline,
this outcome more likely results from the winding down of 5G investments, not
the onset of innovation and investment stifling regulation.
Thursday, October 19, 2023
The Resilient Advertiser-Support Video Content Model
Changes in the rates for Netflix and other video content show a major nudge (make that push) toward a cheaper advertiser-supported option. Just now, Netflix has raised its ad-free plans to $11.99-22.99 monthly, but kept its newly offered ad-supported plan at $6.99. https://www.cbsnews.com/news/netflix-price-increase-2023/. Apparently, the company can accrue higher revenues and profits by combining monthly subscriber payments with advertising revenues. I expect the number of advertising minutes to creep up incrementally, but who counts?
The more
things change, the more they remain the same.
Not too long ago, pundits touted the pay per view, and all you can eat
pricing models, often with no advertising.
HBO considered ad free a competitive advantage underscoring its premium
status. Now, the new HBO, called Max, offers an ad-supported option, for $9.99
compared to the $15.99-19.99 ad-free option. https://www.cabletv.com/hbo-max.
The
ad-support model comes at a time when consumers appear inclined to trim their
monthly video content expenditures.
Increasingly, cable subscribers have “cut the cord,” no longer willing
to pay an average $112.70 monthly for an array of content, much of which they
do not watch. https://cordcuttersnews.com/the-average-cable-tv-bill-from-comcast-spectrum-more-is-now-112-70-a-month-just-for-tv-in-2023/.
Why pay a cable operator $9.42 or more a month for ESPN channels (https://www.sportico.com/business/media/2023/sports-tv-cable-bundle-license-to-print-money-1234734446/)
if you don’t care about sports programming?
The
resiliency of the advertiser supported pricing model presents consumers with a
mixed bag. On one hand, advertising
interferes with the flow of programming, especially long form content, such as
movies. While Max currently emphasizes
that it will interrupt programming with comparatively fewer minutes, it will
join the bandwagon of incrementally more and more ads. I recently watched programming on Amazon’s
Freevee, https://www.amazon.com/gp/video/splash/freevee_findus
and YoutubeTV. It seemed that viewers face
a sequence of 5 minute content blocs followed by 5 minutes of advertising. A two hour movie extends well beyond three
hours.
On the
other hand, while you have to tolerate interruptions, you do not have to
consume the products and services advertised.
You are not a complete “free rider,” as you still pay for a subscription,
but there are growing out of pocket savings compared to the ever increasing ad
free option.
Content
vendors will do more with less as they reduce programming expenses. Another economic fact of life comes to mind:
you get what you pay for. Expect a
speedy decline in the value proposition from streaming video.
Tuesday, October 17, 2023
Upcoming Limits on FCC Statutory Interpretations Unless It Deregulates
The activist, results-driven Supreme Court appears ready to limit severely the ability of the Federal Communications Commission and other independent regulatory agencies to interpret ambiguous statutory language and answer essential questions about statutory meaning, even when vastly changing markets and technologies makes such work essential. Lacking humility and common sense, the Court appears hellbent to outlaw statutory interpretation like what kinds of services fit within the following ambiguous words Congress crafted, circa 1996: “advanced telecommunications capability.” 47 U.S.C. § 1302(a), codified by the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, (1996)
If one
applies basic jurisprudence, telecommunications means what Congress defined it
to be in the applicable statute, i.e., 47 U.S. Code § 153 – Definitions. It
just so happens that Congress did provide a definition of advanced
communications services, information service, telecommunications, and telecommunications
service. Applying the yet to be reversed
Chevron Doctrine, the FCC has no need to interpret unambiguous statutory
language, because it can apply the plain meaning.
However, Congress
failed to provide a definition for something that is both advanced and
telecommunications. The legislature did
not define “advanced telecommunications capability.” Heretofore, no one has questioned
the lawfulness of the FCC’s determination that this undefined category includes
broadband, Internet access. Additionally,
no one has challenged the lawfulness of the FCC’s determination that its
universal service mission, spelled out in Section 254 of the Telecommunications
Act, includes promoting affordable access to broadband, interpreted by the
Commission to fit somewhere within the definition of advanced
telecommunications and/or information services.
Just now,
the Court finds it mission critical to ignore regulatory agency expertise,
because deference might legitimize more, different, or possibly even improved
regulation. Apparently, any recalibration
expands the dreaded regulatory state, managed by unelected officials intent on
micromanaging our lives and depriving us of life, liberty, and the pursuit of
happiness.
How ironic,
that no one raised a peep when the FCC unilaterally decided to reclassify as an
information service a legacy technology for decades fitting snugly in the telecommunications
category. With an eye toward expanding
further the array of convergent services that combine both basic and advanced
telecommunications capabilities, in 2018 then FCC Chairman Ajit Pai championed
a new determination that paging, texting, and short messaging was much more sophisticated
and “advanced” than simply keying in letters and numbers on a telephone handset. See Petitions for Declaratory Ruling on
Regulatory Status of Wireless Messaging Service, Declaratory Ruling, 33 FCC
Rcd. 12075 (2018); available at: https://docs.fcc.gov/public/attachments/FCC-18-178A1.pdf.
In a Declaratory
Ruling, the FCC asked and answered whether it should shift its classification of
texting from “old school” basic, common carrier telecommunications to something
advanced and largely unregulatable information processing. Most short messaging still involves keying in
letters and numbers on a wireless handset, but clever statutory reinterpretation
made it possible for a deregulatory-driven FCC to take matters into its own
hand without awaiting new legislation.
With the
Supreme Court’s newfound antipathy to regulatory agency overreach, would the
FCC’s reclassification of texting as data processing pass muster now? If so, why would deregulatory freelancing not
constitute unlawful overreach by a regulatory agency unwilling to await new
statutory instruction?
Sunday, October 15, 2023
Show Me One Merger or Acquisition That Promotes Competition or Enhances Consumer Welfare
I marvel how sponsored researchers have perpetuated the myth that mergers and acquisitions are great events. Can anyone provide an example how consumers benefits? How did removing Sprint from the marketplace make the wireless ecosystem more rewarding to consumers? TMobile improved their quality of service, but no longer offers lower prices, or innovations. Anyone care to assert that the company remains an iconoclastic champion of competition and enhanced consumer welfare?
Why companies
merge reminds me of the question why robbers target banks. There’s money in banks and higher revenues,
less competition, better stock prices, more annual bonuses, and less senior
management wear and tear when markets concentrate. Why spend sleepless afternoons competing when
you can reduce the number of competitors making it more likely that the cartel can
fix prices. That’s what has occurred in meat
packing, healthcare, commercial aviation, insurance companies, car rentals, and
every other concentrated marketplace
There’s an
inconvenient fact that U.S. wireless subscribers pay some of the highest rates
globally. See, e.g., https://communitytechnetwork.org/blog/why-is-the-internet-more-expensive-in-the-usa-than-in-other-countries/;
https://kushnickbruce.medium.com/at-ts-wireless-profits-are-outrageous-at-t-s-5g-wireless-prepaid-prices-are-obscene-compared-dc15c57926f;
https://themarkup.org/2020/09/03/cost-speed-of-mobile-data-by-country;
https://www.quora.com/Why-are-phone-plans-in-the-US-so-expensive-compared-to-other-countries-not-hate/.
Statistics do show a long-term
reduction in cost based on increasing minutes of use and data consumption,
i.e., the per voice minute or per megabyte of data price has dropped precipitously. As markets evolve and carriers accrue greater
economies of scale, prices should decline.
However, the rate of decline in the U.S. pales in comparison to that occurring
just about everywhere else. Recently, U.S.
carriers have raised, not further reduced rates. See, e.g., https://www.cnn.com/2023/03/06/tech/verizon-plan-price-increase/index.html.
Also, the three national carriers remarkably have the same prices for service,
with differentiation a matter of which “free” content subscription is offered.
I also cannot wrap my mind around
the persistent view that markets can be viewed from a static and fixed vertical
and horizontal template. The
conventional wisdom views market “food chains” in a discrete, mutually
exclusive frame where ventures compete, or not.
Horizontally, companies must compete, because they operate in the same
market. Vertically, they target separate
markets and accordingly do not compete.
This is a simplistic
and ill-conceived conceptualization of how markets operate. Of course, ABC, CBS, Fox, and NBC compete on
a horizontal plane for advertising revenues and viewers’ attention. If two of these companies sought to merge, a
court might interpret the Sherman Act as a bar, based on the sense that market
concentration would harm consumers. But
if any one these multinational giants wanted to acquire a wireless carrier, a
reviewing court would have no concerns, based on the false notion that a
content creator and distributor has no interest in, or impact on the wireless
telecommunications marketplace. If a
venture does not directly compete with a merger or acquisition target, then
where is the actual or potential harm to consumers?
There’s
plenty, because markets do not conveniently operate in mutually exclusive ecosystems.
Vendors of video content have an interest in distributing their content in
wireless markets. They might consider a
wireless carrier acquisition as a way to reduce their carriage costs, or a way
to raise consumers’ total out of pocket costs, because a complete service requires
both content and delivery of the content to screens.
Consider
the recent approval of Microsoft’s $69+ billion acquisition of Activision. https://www.nytimes.com/2023/10/13/technology/microsoft-activision-blizzard-deal-closes.html.
Reviewing courts and oversight bodies dismissed antitrust
concerns, based on the simple notion that Microsoft, a software vendor, was
acquiring a computer game content vendor.
As the two ventures presumably did not compete, no harm no foul.
Yes foul,
if you free your mind of this ridiculous locked in frame of mutual
exclusivity. Microsoft surely operates
in gaming markets. The company sells a
gaming computer, Xbox. It has created an
operating system for gaming and surely wants that software to become dominant
in the wireless gaming marketplace. Did
anyone think that Microsoft would use the compelling content available from
Activision as a lure for consumers to migrate to devices, operating systems, and
platforms controlled by Microsoft? Where is the enhanced consumer welfare in a
more concentrated marketplace for games, gaming devices, gaming platforms, and
gaming operating systems?
I
understand that in capitalism, companies do not operate as charities. They generate
revenues to reward shareholders and to earn more money. It’s their money, but our marketplace.
Tuesday, August 1, 2023
Lessons in Humble Pie
As a parent, college educator, husband, middle child, retiree, etc. I have had my share of humble pie. It's calorie free and oh so dislodging. Like everyone, I deserve comeuppances and getting knocked down a few notches.
But (of course, a but was coming) . . . today marks a high or low point in my diet.
I just completed a draft of my first law review manuscript after having retired from Penn State. I intend on continuing to make contributions to the academic literature and recently received the honorific title of Academy Professor, in recognition of my ongoing work. This 15,000 word manuscript took six months to prepare, and some of the comprehensive footnotes required hours of research, writing, and editing.
I am proud of the work. Imagine my surprise when not more than 20 minutes transpired before I received my first rejection.
The law review submission process involves the use of a monopoly platform intermediary that handles the formatting and online delivery of manuscripts to editors of law reviews. Unlike in other disciplines, law review authors submit the same work to multiple prospective publishers. Younger, ambitious law professors strategize how to get an offer from the best possible publisher. The intermediary platform operator, known as Scholastica, encourages the maximum number of submissions and offers to notify editors when authors seek expedited consideration, because they have an offer in hand and hope to secure one from a more prestigious journal.
This automated process saves time, but requires payment for each delivery. I took great pains to draft a compelling abstract and the all important "pitch letter." How disappointing to receive a rejection in less time that it would have taken to read the abstract and pitch letter. Adding insult to injury, and humble pie volume, the rejecting journal had previously published one of my articles.
Are law review editors relying on artificial intelligence to process and make a judgment about manuscripts? Could the rejecting journal management, with or without computerized help, make a publication decision based on the title of the manuscript? Maybe.
In any event, as I increasingly fade away, I at least can feel proud that I have a new lifetime achievement in humble pie.
Thursday, July 20, 2023
Nipping in the Bud Any Reassessment of Merger Guidelines
The Department of Justice and Federal Trade Commission have released for public comment proposed new guidelines designed to address "the many ways mergers can weaken competition, harming consumers, workers, and businesses." See https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-doj-seek-comment-draft-merger-guidelines. Rather than participate in a thorough debate on the merits of the new government guidelines, a variety of stakeholders have launched a preemptive strike to discredit the inquiry and individuals like FTC chairwoman Lina M. Khan.
1) Chicago School emphasis on consumer welfare and price ignores harmful secondary and tertiary impacts.
2) Vertical and horizontal mergers are not necessarily separate transactions.
3) Mergers rarely enhance competition.
4) Platform intermediaries, operating in two-sided markets, can adversely impact horizontal, vertical, secondary, and tertiary markets.
It's a racket as my wife would say. I am certain that so-called consumer stakeholders also have financial underwriters singing the praises of the proposed guidelines. However, these groups have substantially less funding available, because few stakeholders can see the direct monetary harm that would result from implementation of the guidelines.
Friday, July 14, 2023
Blog Catharsis
Even recognizing that few people will ever come across my blog, some degree of catharsis and validation accrues. I am glad to get something "off my chest," no matter how ineffectual.
Toward that end, I have decided to share some of the minor and sometimes major irritants that result from living in a digital, mediated, ecosystem. Here's a starting list of digital artifacts that drive me crazy:
1) Comcast's customer service bot includes background typing sounds ostensibly to make subscribers assume the bot is thinking and working hard at customer care.
2) Verizon's PagePlus reseller, uses low paid, off shore customer service reps who do nothing more than read from scripts. They have no ability to solve most problems and lie to subscribers that someone more qualified will call back within the hour. PagePlus also lies in emails to subscribers about how a rep tried to call, but no one answered. I have an answering machine and only once got a recorded message from Pageplus.
3) Mastercard refused a credit card application based on my lack of "credit experience." Apparently, I have not been in debt enough times.
4) On line orders for a new magazine subscription may take 4-6 weeks for "processing."
5) Toll free calls to various customer service reps often get cut off. Lately an algorithm predicts the likely holding time. Is 90 minutes too long?
To be continued.
Vanguard Saves Millions By Requiring Most Clients to Print Out Statements
The money crunchers at Vanguard Investments recently changed their rules to make their mailing of hard copy documents an expensive option. Previously, one could avoid a $25 fee for each account (I have four) by investing over $1 million, until VG raised the figure to $5 million.
This change in customer care has nothing to do about the environment. VG really, really wants to avoid the substantial cost in printing and mailing documents. Just unbundle that task from the concept of service and, tah dah, VG saves millions. In doing so, they also tick off just about every one of their customers.
VG obviously has no clue about the expense and hassle in home-based document printing. As a retiree, I have no convenient way to print lengthy documents at the expense of an employer. My HP inkjet printer guzzles ink, and HP makes every effort--including likely illegal ones--to prevent the use of reused cartridges.
Contrast VG's sneaky and ham-handed environmentalism, with what Fidelity and T. Rowe Price do. They gladly send statements pre-punched for easy insertion into a loose leaf binder.
This process may seem old school, but maybe Fidelity and T. Rowe Price know something about investor behavior that VG wants to ignore: investors like hard copies of their statements and they also like to compare performance by referencing different monthly statements.
Try toggling monthly statements on line and you might see the benefit in having hard copies.
Vanguard has increased my printing duties substantially. Would it be over reacting to take my business elsewhere?
Wednesday, June 28, 2023
The Making of a Digital Curmudgeon
OK, I recognize that I have never been this old and the elderly—bless their hearts—tend to stick with the reliable and proven. They (we) typically appreciate frugality, but willingly pay a premium when the value proposition seems fair. On the other hand, we realy, really resent getting nickled and dimed by bogus new billing line items.
Wednesday, May 3, 2023
Market Forces Preempted by Rising Risk and Regulation?
This might not be the best time for the U.S. Chamber of Commerce to make the case that rising risk and regulation are harming the marketplace and consumers. See Public Policy Risks Soar Amid Growing Trend to Regulate Rather than Legislate and Partisan Approach to Lawmaking. A content analysis of companies' 10-K filings with the Securities and Exchange Commission quantifies a rise in risk disclosures, with increases in key works such as data privacy, immigration issues, labor, and intellectual property.
Friday, April 7, 2023
The Highly Questionable Assertion that Regulation Stifles Innovation
Big Pharma and Big Telecom endless repeat as gospel truth the highly questionable assertion that government oversight stifles innovation. Facing the prospect for Medicare administrators, newly authorized to negotiate or even set caps on the prices of a very few drugs, Big Pharma has launched an outreach offensive stating as a given that such action will "stifle innovation" and "harm consumers." See, e.g., Tomas J. Philipson, The Deadly Side Effects of Drug Price Controls, The latest Medicare guidance will stifle pharmaceutical innovation—and it’s worse than we thought, WALL STREET JOURNAL (April 5, 2023); available at: https://www.wsj.com/articles/medicare-drug-price-controls-will-make-america-sicker-research-innovation-negotiations-private-insurers-b503b4ba.
Saturday, March 4, 2023
Premiumization: A New Word and Another Sneaky Way to Increase Profit Margins
The Sat. March 4, 2023 edition of the New York Times introduces a new word describing another way companies can offer consumers a "gentrified," higher priced product or service that accrues a higher profit margin. See https://www.nytimes.com/2023/03/04/business/economy/premium-prices-inflation.html.
Sunday, February 19, 2023
Weaponization of Inner Space Column in the Cleveland Plain Dealer
You might have an interest in my "explainer" about the Chinese surveillance balloon and the likely dangerous repercussions: https://www.cleveland.com/opinion/2023/02/china-balloon-surveillance-marks-new-worrisome-expansion-of-areas-where-provocation-could-spark-armed-conflict-rob-frieden.html