Prepare For a Quite Impactful New Definition of “Trace Greenhouse Gases”

           While I concentrate on finding truth affecting telecommunications and information policy, I cannot self-censor on the latest insult from a Wall Street Journal columnist. Paul H. Tice wants U.S. citizens and their elected representatives to deem carbon dioxide, methane, and nitrous oxide “naturally occurring” “trace greenhouse gases, not lawfully subject to any sort of regulation by the Environmental Protection Agency.  See Trump Can Topple the Climate-Change House of Cards; https://www.wsj.com/opinion/trump-can-topple-the-climate-house-of-cards-clean-energy-paris-b1b0e4f8.

          Apparently, any process that increases the volume of these gases does not matter.  If any greenhouse gas naturally occurs in the atmosphere, then apparently human generated increase in volume does not matter, no matter what harm it causes.

          Wow!  With this logic, we can rationalize further emasculation of environmental protection by looking for any naturally occurring, potentially toxic material. As oil and other petroleum compounds naturally exist underground, then might any manmade petroleum product qualify for a regulatory exemption? How about uranium, sulfur, hydrogen, any of the other elements and “naturally occurring” compounds?

          Who needs science when we can consider any naturally occurring material a gift from the Almighty and thereby exempt from regulation, no matter what we mortals do with it.

Nine Information Economy Policy Reversals Coming to a Marketplace Near You!

          Presidential elections have real impacts arriving quickly.  I think the following changed policies and strategies will happen fast, because the glidepath is both well-lit and pre-planned.

1)       Low Earth Orbiting carriers, like Starlink, will qualify for universal service funding.  The FCC, under new management, will ignore any previous qualms about Starlink’s cost, bit rate, reliability, and other shortcomings compared to terrestrial options.  This means Starlink will qualify for over $800 million in universal service funding subsidies.  Elon Musk is getting quite a return on his presidential election investment.

2)       The FCC has a playbook it will follow to the letter. See https://static.project2025.org/2025_MandateForLeadership_CHAPTER-28.pdf. The Heritage Foundation has commissioned the generation of a comprehensive list of deliverables that will be implemented quickly, regardless whether President Trump has read any of Project 2025.  This executive delegates large portions of governance.

3)       The author of the FCC chapter, Commissioner Brendan Carr, will become Chairman. Just before the election, he claimed NBC had violated the statutory obligation to provide “equal time” to candidate Trump when Saturday Night Live had a skit that included a cameo appearance by Kamala Harris. 

Depending on your political preferences, Commissioner Carr effectively channels Trumpian initiatives, or seems intent on triggering headlines rather than recommending measured compliance with the law. At least for the equal time complaint, even Fox News reported that NBC quickly and fully performed its notification and time offer requirements. See https://www.foxnews.com/media/nbc-files-equal-time-notice-harris-snl-cameo-following-backlash.

4)       Public interest regulatory requirements will fade into the sunset.  Expect the FCC to remove “regulatory underbrush” that heretofore have established now minor limits on national and local market dominance. Broadcasting becomes a toaster with sound and pictures as suggested in 1981 by a former FCC Chairman, Mark Fowler. See https://www.britannica.com/biography/Mark-Fowler.

5)       Relaxed antitrust scrutiny, possibly eliminating the FCC’s review of mergers and acquisition parallel to what the Justice Department does.

6)       I expect Executive Branch agencies, including Defense, Homeland Security, NASA, Commerce, and the FAA, to lose the upper hand in spectrum sharing and relinquishment negotiations. A visible, vocal, and provocative Chairman Carr, will be able to push back on Executive Branch agency spectrum possessiveness, perhaps with some sort of Presidential blessing.

7)       Channeling former President Richard Nixon, see https://www.poynter.org/business-work/2017/trumps-threat-to-yank-tv-licenses-looks-a-lot-like-a-nixon-move-heres-why/, President Trump already has articulated the desire to sanction broadcast networks for assorted sins.  See https://www.brookings.edu/articles/donald-trump-has-threatened-to-shut-down-broadcasters-but-can-he/.

          President Trump probably will not be able to generate a passive and pliable news media by supporting a substantial deregulatory agenda at the FCC, while preserving the chilling effect of potential regulatory sanctions.  However, this tension will generate chaos that could extend to the issue of social network regulation and government-imposed sanctions for conservative bias, notwithstanding the First Amendment.

6)       More Fear, Uncertainty, and Doubt when Congress does not provide legislative specificity as required by the Supreme Court.  The abandonment of judicial deference to regulatory agency expertise, and the heightened expectation that Congress provide explicit statutory mandates, will create a backlog even a Republican managed legislature cannot avoid.

7)       The Executive Branch will embrace artificial intelligence in possibly creepy ways.  It is possible that generative AI will be used to evaluate the past performance of individual government employees in terms of “team player” affinity to the Project 2025 playbook.

8)       While previously leery of cryptocurrency, President Trump will reward his Silicon Valley benefactors with Executive Branch endorsements.

9)       Lastly, I expect Chicago School, libertarian doctrine to become gospel truth.  Even though we know free does not mean without costs, the Chicago School mandarins equate enhanced consumer welfare with reduced out of pocket costs.  The Trump administration and like-minded judges will ignore quite harmful impacts to individual and society that are not readily quantified.

         

 

 

 

        

Does the FCC Have a Safe Harbor to Deregulate Despite the 1994 MCI Case Precedent?

             The prior blog entry suggested that the Supreme Court would have to use a semantic sleight of hand to approve FCC deregulatory initiatives while vacating new or resurrected regulatory rules and requirements.  See https://telefrieden.blogspot.com/2024/04/does-supreme-court-conservative.html. On further review, I think there just might be a way to pull this blocked on one side, open on the other gambit.

             Despite all the speculation about pending foreclosure of regulatory agency discretion, there is a provision in the Telecommunications Act of 1996 that the Court might deem sufficiently clear to withstand the major question and ambiguity roadblocks: 47 U.S. Code § 160 - Competition in provision of telecommunications service.  See https://www.law.cornell.edu/uscode/text/47/160.

             This Section establishes three evaluative criteria for the FCC to use when considering a deregulatory proposal for Title II, telecommunications service providers:

 (1)       enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory;

(2)       enforcement of such regulation or provision is not necessary for the protection of consumers; and

(3)       forbearance from applying such provision or regulation is consistent with the public interest. 47 U.S.C. §160(a)(1)-(3).

             There’s a lot of wiggle room in the criteria for a pro marketplace-oriented FCC to abandon common carrier rules and regulations.  Despite all the conservative majority’s antipathy toward regulatory agency activism, Section 160 just might provide enough clarity to green light major deregulatory initiative.  

             No questions asked.

The Misguided Wisdom in Substituting the Generalist FTC for Sector-Specific FCC Expertise

            A number of important, fundamental questions about the scope and nature of government oversight lie within the broad and breathless debate over network neutrality.  Does the public benefit from government oversight by an agency with particular expertise in the industries overseen, or can a generalist agency do a better job?  A related question asks whether ex ante regulations, which anticipate problems, can better serve the public than ex ante remedies occurring after investigation.

            I firmly believe in the essentialness of sector specific expertise, but see ex ante network neutrality regulations as possibly constraining customized services that meet specific subscriber requirements.  For example, I believe the FCC would have the necessary expertise to differentiate between an ISP tactic that hurts consumers and competition and one that does not, e.g., many types of zero rating.

            To the best of my knowledge, no critic of the FCC—even ones keen on shutting it down—have gone on record stating that a generalist agency can and should assume responsibility for spectrum management.  Shifting that essential task to the Commerce Department, for example, probably would heighten the bias favoring retained government “ownership” of choice spectrum with less likelihood for consideration whether government agencies can do more with less.

            The Office of Chairman Pai has endorsed the generalist FTC in lieu of FCC investigation and sanctioning of anticompetitive, or consumer harming practices:

MYTH:  The Federal Trade Commission is not well equipped and has far fewer powers to protect consumers from misconduct by Internet service providers.

• FACT:  The Federal Trade Commission has broad authority to police unfair, deceptive, and anticompetitive practices online and has brought over 500 enforcement actions to protect consumers online, including actions against Internet service providers and some of the biggest companies in the online ecosystem.  And unlike the FCC, the Federal Trade Commission can order consumer redress (such as refunds) for violations of federal law.

See: https://www.fcc.gov/document/myth-vs-fact-chairman-pais-restoring-internet-freedom-order.

            If I read this correctly, Chairman Pai would pass off an important safeguarding function to a “sister agency” with no concern about impact on budget, staff numbers and jurisdictional wingspan.  Such magnanimity from someone whose position typically requires vigilance against reduction in function, relevance and budget.

            Perhaps Chairman Pai honestly believes the FTC has a better handle on the situation.  Alternatively, he does not think this, but considers it politically wise to abdicate responsibility so the problem will go away.

            The problem will not go away, but the cop on the beat will lack sector-specific expertise.  A particularly glaring deficiency will lie in content carriage issues at the lower layers of the stack of Internet Service Provider functions.  The FTC has greater experience with obvious snookery by content con artists.  Now it will reinvent the wheel on the many ways an ISP might use its platform intermediary function  and content/app carriage activity in anticompetitive and other harmful ways. 

            One last point: Chairman Pai appears to imply that the FTC can generate remedies to harmful behavior with financial and other sanctions that the FCC cannot.  The FCC surely can fine ventures under its jurisdiction.  Perhaps the Chairman has rushed to the conclusion that a reclassification of ISPs as information service providers removes any opportunity to sanction and penalize ISPs making the FTC the government agency of first, last and only resort.

            How humble.

FCC Chairman Pai's Results-Driven Decision Making

Hello All:

In a contribution to The Hill, I take issue with FCC's Chairman Pai's commitment to sound economics and empirical fact finding even as he engineers results-driven outcomes.  See http://thehill.com/blogs/pundits-blog/technology/332503-ajit-pai-too-focused-on-deregulation

Telephone Pedestals and the Second Amendment

            Once upon a time when telephone companies provided service via wires these companies secured free rights of way to install equipment and lines.  In many locations the companies replaced telephone poles with underground conduits.  When telephone companies needed to splice a service line to a home or business they installed a pedestal above ground.  These metal or plastic pedestals do not have a pleasing appearance even with the use of forest green coloration.  They were necessary splice points where telephone company technicians connected and disconnected service.

            Now that telephone companies want to provide anything but wireline telephone service it strikes me that they should lose the rights of way granted to them by state public utility commissions.  If a company does not provide common carrier telecommunications services, then surely it has no public utility right to take a portion of my property for their use free of charge.  Right?

            I mean if a telephone company no longer wants to serve as the carrier of last resort—or first resort for that matter—then they in effect should be deemed to have abandoned their right to secure a property interest in my land.  As information service providers, like VoIP service providers, former telephone companies no longer should have the right of eminent domain granted by states to bona fide public utilities.   It seems straightforward to me: if a common carrier opts to abandon its common carrier duties, then it should lose its rights of way over private property for lines that no longer provide common carrier services, and possibly won’t provide anything at  all.

            So when my telephone company terminates PSTN service access on my property, they can pull out their copper and by the way be sure to pull out the pedestal while you’re at it.  Oh and by the way, I don’t want to ever see you again on my property.  Going forward you would become a trespasser and I reserve all my Second Amendment rights to brandish a weapon to encourage one of your few information service contractors or employees to leave.

             Gee . . maybe the Tea Party, the National Rifle Association and I have something in common.

Research Questions About Terminating the PSTN

      Incumbent carrier initiatives to eliminate the PSTN and their carrier of last resort responsibilities may constitute on of the key evolving policy initiatives going forward. Here are some research questions worthy of investigation:

If consumers must migrate from POTS to a NGN (IP-centric) replacement, what are the net consequences in terms of consumers’ out of pocket costs, as well as network QOS, availability, reliability and  scalability? 

Can wireless networks accommodate the complete off loading of wireline traffic?  Would this offloading exacerbate spectrum  scarcity?

If incumbents continue to rely on wireline plant, e.g., U-verse, do they gain deregulation without conferring much upside consumer benefits?   For example most carriers offer unmetered (All You Can Eat") wireline service  at about $20 a month, but metered wireless service costs 2 or 3 times as much.
 

How would deregulation create incentives for carriers to migrate from copper to fiber media?

As many incumbents have eschewed POTS universal service funding, will they similarly avoid broadband subsidies tied to open network access requirements?

Will the migration remedy the digital divide, including areas with limited or no wireless service?

Terminating the PSTN

            A month or so ago Telecommunications Policy published my article entitled The Mixed Blessing of a Deregulatory Endpoint for the Public Switched Telephone Network.  At the time of publication I did not have the insights and clarity of purpose provided by AT&T’s bold initiative to couple a substantial increase in capital expenditure with the elimination of regulation. See http://www.att.com/Common/about_us/files/pdf/fcc_filing.pdf.

           AT&T couches its proposal as the progressive and timely replacement of copper-based telephone technology (Time Division Multiplexing) with a wireless-friendly and Internet-based standard.  Of course we should applaud new “sunk” investment in infrastructure and yes an Internet Protocol standard efficiently promotes technological and marketplace convergence.  But as I stated in the article there is more to this initiative than AT&T benevolence and competitive necessity.

            It has become clear to me that AT&T seeks to leverage “spade ready,” “job creating” investment for the following financial benefits:

1)         elimination of hundreds of thousands of jobs many of which are currently filled by union employees;

2)         billions of dollars in avoided tax liability generated by the coupling of new capital investment and the write off of most copper and obsolete switch assets that have artificially elevated values which, over the years, have rewarded AT&T and other incumbent wireline incumbents with excessive rates of return and universal service subsidies; and

3)         the replacement of common carrier regulated telecommunications services with a blend of mostly unregulated information services with a few residual telecommunications   services, such as basic wireless voice treated as common carriage, but subject to “streamlined” regulation.

           The quid pro quo that AT&T proposes surely will come across as reasonable if not generous to the uninformed and the purposefully ignorant legislator.  To be clear AT&T must upgrade its network in recognition that basic voice revenues—wireline and wireless—will decline substantially.  Why not leverage such necessary investment in exchange for a Christmas wish list of deregulatory—make that unregulatory—goals?

           Only in this purposefully ignorant and politicized environment can AT&T and other incumbents condition essential and commercially necessary change with regulatory changes that eliminate still needed safeguards.  Do we honestly think the migration from wireline service, backed up by carrier of last resort duties, to wireless service, with no geographical service mandates and rate oversight, will have no adverse impact of the current price, quality of service, availability, reliability, consumer protection and the public interest safeguards available to wireline consumers?  Didn’t AT&T claim that chronic spectrum shortages would prevent it from providing reliable service, or what that a red herring (or lie) to support its acquisition of T-Mobile?

            More fundamentally, does a change in baseline technology and medium eliminate the need for government oversight?  Exactly what does this shift do to the level of marketplace competition in basic and enhanced services?

Lessons From the Deregulation and Re-regulation of Broadcast Volume

            In 2010 Congress enacted and the President signed into law the Commercial Advertisement Loudness Mitigation Act whose requirements become enforceable now.  CALM reverses the FCC’s deregulation of commercial volume resulting in ever louder ads.  Broadcasters, cable television operators and satellite broadcasters must ensure that commercials and program content sound the same.

            In this time of extreme partisanship it’s remarkable to see representatives of both parties responding to constituents fed up with loud commercials, and disinclined to make do with frequent adjustments to the volume control on their remote controls.  Seems the unregulated marketplace for commercial volume led to an upward spiral, unmitigated by any notion of marketplace self-regulation.  I guess a libertarian would suggest that consumers could and should vote with their ears by changing the channel.

            Congress reached a better solution: regulation in the face of the inability of broadcasters to resist the temptation to offer advertisers a sneaky opportunity to “cut through the clutter” by raising the volume of their spots.  Of course the advantage proved short term when more and more commercials got louder and louder.

            The message here: sometimes society needs an adult in the room to prevent childish and potentially harmful behavior.  Left to their own devices broadcasters had no problem pumping up the volume to uncomfortable levels.  Even Congress rejected cavalier suggestions that consumers should bear the burden of self-help by changing channels, or turning down the volume.

            So how many jobs were lost in this market intervention?

Which is the Primary Driver of Telecom Investment: Strategic Opportunities or Deregulation?

Incumbent carriers have spent millions on a campaign aiming to convince legislators and regulators that regulation all but eliminates incentives to invest in plant—particularly next generation networks.  The campaign also tries to make deregulation appear as the single greatest “incentivizer” for such investments.

Forget about strategic opportunities, the broader business cycle, the cost of capital, technological change and declining market share in core industry sectors.  What really matters is coming up with a way to dislodge the FCC and other government agencies from regulating.  Then and only then can the market drive investment decisions.

So let’s look at recent instances where incumbent carriers want to make investments.  Using the simplistic premise these ventures have spent millions to pitch, money should flow more freely into sectors recently subject to less regulation.  If deregulation is the primary driver—or apparently the only one—then investment should take the route where regulation offers the least degree of resistance and “disincentivization.”

           
Consider the primary multi-billion dollar investment goals of Comcast and Bell Canada Enterprises, the largest phone company and 9^th largest corporation in the country.  If deregulation drives investment decisions, then Comcast must want to acquire NBC because Congress and the FCC have streamlined and reduced regulatory oversight.  Similar deregulation must be occurring in Canada as BCE wants to acquire complete control of CTV, a major broadcast television network.

           
In reality two major cable and telephone companies wants to vertically integrate and acquire content for strategic reasons having quite little to do with regulation and recent changes in the scope of government oversight.  Broadcast deregulation did not make NBC and CTV more attractive.  The long term viability of Comcast and BCE drove these companies to think control of content might provide greater profitability in the long run.  

Comcast and other incumbents have successfully framed regulation and deregulation as the primary drivers of whether such companies will employ more people, and invest more money at the very same time as billions in retained earnings flow to buying still highly regulated assets.

           

No Way to Put the Public Back in Public Utilities?

Several years ago many state legislatures embraced the concept that technological innovations would stimulate robust competition in previously monopolized industries such as electricity, gas and telecommunications. The legislatures so bought into the certainty of competition that laws created a glide path to deregulation and the near complete elimination of consumer safeguards. The legislature accepted the premise of lobbyists and sponsored academic researchers that public utilities should qualify for treatment as competitive businesses surely entitled to cut off services to nonpaying customers, an outcome that has contributed to 81 deaths in Pennsylvania. See http://www.centredaily.com/329/story/1026815.html.

With the passage of time, it has become quite clear that infrastructure industries with substantial investment needs do not typically have many facilities-based competitors, especially for the last mile of service to residential and small business consumers. Yet most state legislatures have not revise their laws, even after the Enron debacle showed how crafty public utility employees could exploit their less regulated status to create expensive, but artificial bottlenecks, congestion and shortages of power.

Having cut a deal based on the certain expectation of competition, state legislatures did not think to condition deregulation on confirmation that the competition arrived and flourished. Without such a safeguard, deregulated public utilities surely will claim that they relied on the promise of deregulation and any revision would unfairly and unlawfully confiscate their financial resources. So public utility consumers in many states have the worst of all worlds: deregulation based on competition that did not arrive and apparently no remedy for resumption of consumer safeguards in the absence of a self-regulating marketplace.

Stealth Deregulation

Wireless carriers in the United States and elsewhere appear to have come up with a clever new strategy to achieve deregulation: assume that it exists even in the absence of official agency action. Unlike the doubtful ploy of “think and grow rich,” carriers need only assume an outcome and act as though it has occurred. Absent contradiction by a regulatory agency or court the deregulatory assumption may stick.

Consider the example of wireless text messaging. Is this an extension of what common carrier paging companies offered, or has this basic service some how transformed into an information service? Bear in mind that the wireless carrier simply delivers alpha- numeric characters to a wireless handset. There is no information processing, no format conversion, no data manipulation, and no extensive storing and forwarding. Short messaging looks everything like paging attached to a handset capable of providing telephone calls.

So here comes the sleight of hand: because wireless telecommunications has become so popular, its success apparently justifies a regulatory hands off approach—the old “if it isn’t broke, don’t fix it approach.” But aggressive advertising budgets, large baskets of SMS minutes, and anything else contributing to wireless service popularity has nothing to do with whether an alpha-numeric transmission loses its telecommunications service characteristic. Nor does the popularity of a service somehow convert the service provider from a common carrier, subject to title II of the Communications Act, to an unregulated information service provider. And by the way just what costs and burdens would having to provide the service on a common carrier basis impose in the first place?

Common carriers probably do not have to accommodate every alpha numeric content source which seeks point-to-multipoint, “batch” distribution of a message. By analogy not every seeker of a short code NXX telephone number, like 611 access to a telephone company’s customer service department, can get them. But a refusal to provide service, as occurred when Verizon said no to the pro-life organization, NARAL, has to have some basis other than “we don’t want to carry your traffic based on the nature of the content or message transmitted.”

Public relations concerns, and not the threat of regulatory sanctions, prompted Verizon to rethink its refusal to provide service. This temporary embarrassment will not prompt wireless carriers to redouble their common carrier service commitment. Quite the contrary: expect wireless carriers to gear up their considerable in-house and funded third party resources to perpetuate the myth that alpha-numeric messaging no longer constitutes a telecommunications service.