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.          

 

The FCC’s 2018 Broadband Report: How Do You Politicize a Statistical Report?

            One of the blessings and curses of my calling includes the perceived duty to read as many key FCC documents as possible.  Of late, it challenges my credulity, serenity and faith in the democratic process.

            Consider the FCC’s 2018 Broadband Deployment Report, https://apps.fcc.gov/edocs_public/attachmatch/FCC-18-10A1.docx.  Until this year, the FCC dutifully provides statistics, perhaps framed in ways to support a policy objective.  But until now, not one statistical report included a partisan jab.  Despite lots of blabber about empiricism and humility, someone thought it fair and balanced to couple regularly reported statistics with an unsupported assertion that the 2015 Open Internet Order singularly caused a decline in the pace of increased subscribership and network performance during the last two bummer Obama years.

             In a statistical report, mandated by law, the FCC deliberately fails to consider other factors that may explain a slowing in broadband deployment and adoption, such as a maturing marketplace, the affordability of broadband service, particularly for rural and low income individuals, and carrier investment emphasis in content having recently concluded a major rollout of next generation 4G wireless broadband networking capacity.

            In a bizarre attempt at having its cake and eating it too, the FCC attempts to show how broadband deployment suffered under Chairman Wheeler, but of course Chairman Pai has quickly righted wrongs so that the FCC can conclude that broadband deployment now satisfies the so-called Section 706 congressional mandate to determine whether every American has adequate broadband access.

            In a remarkably failed triple bank shot, the 2018 Broadband Report notes how rural broadband deployment has gravely slowed down, even as elsewhere it reports that rural penetration has reached 98%.  Might serving the last few unserved rural areas in American trigger the highest cost per household passed?  Might reaching the last 2-3% become infeasible, or at least result in slower progress?  Apparently there’s no reason other than the network neutrality burdens.

FCC Preemption of State Network Neutrality Initiatives

            In a less emphasized, but important initiative, the FCC set out its preemption of any state attempt to legislate network neutrality rules.  See Restoring Internet Freedom Order at ¶194 onward.  OK, I get this logic: Internet traffic has a fundamental and inseparable interstate characteristic.  Balkanized policies could generate costs and confusion.

            However, there are a number of inconvenient precedents that make the FCC’s preemption appear as results-driven at the behest of powerful stakeholders keen on having the Commission  foreclose progressive states from possibly demonstrating the upside benefits of an open Internet and the absence of all the dire predictions of reduced innovation, investment and “freedom.”

            First let’s marvel at the irony of a Republican majority waxing poetic about the benefits in federal preemption of the states.  So much for the talk about how state Public Utility Commissions operate closer to where the “rubber meets the road.”  So much for relying on states serving as laboratories to identify best practices.

            Next, let us look at some on the reasons the FCC has declined to preempt, or triggered judicial reversal when it attempted to preempt.  Municipal Wi-Fi comes to mind, because that service involves irrefutable, interstate service, e.g., from the global Internet cloud to places like Chattanooga, Tennessee and Wilson, North Carolina where incumbent carriers did not want municipalities to have the option for self-help when these carriers refrained from providing broadband.

            In Tennessee v. FCC, the 6th Circuit Court of Appeals (832 F.3d 597) reversed the FCC’s state preemption attempts based on multiple rationales that might have the same impact on  network neutrality preemption.  The court was able to differentiate the matter of municipal provision of broadband from the broader matter of whether and how the FCC could preempt state law.  Section 253 of the Telecommunications Act of 1996 contains some rock solid language favoring preemption when a state “prohibits” or has the effect of prohibiting “the ability of any entity to provide any interstate or intrastate telecommunications service.”  Notwithstanding that rather clear and explicit language, the 6th Circuit opted to read Section 253 as imposing no bar on the power of a state legislature—no doubt urged on by stakeholders keen on preserving any and all future options—to foreclose municipal governing entities from providing a service increasingly viewed as essential.

            The court also noted how the FCC previously refrained from preempting when it had an opportunity to do so where a state enacted a law prohibiting any sort of municipal provision of telecommunications service.  See Nixon v. Missouri Municipal League, 541 U.S. 125 (2004). Additionally, the court read Section 706 of the Telecommunications Act of 1996 as not including preemption as one of the tools available to promote affordable and ubiquitous broadband access from places like Wilson where broadband access would not be available unless the municipality acted, because no incumbent  had any interest. 

            Does this make sense and pass your smell test?  Would the court of public opinion defer to the wisdom of their elected officials to preclude the formation of any new municipal water authority even in instances where the incumbent goes bankrupt and no commercial venture wants to acquire the assets?

            Just now we have traditional views of federalism conveniently superseded by loftier notions of federal deregulatory consistency.  In the case of network neutrality, the FCC and its beneficiaries want to prevent states from enacting laws, rather than have such laws upheld and considered primary.  Why has state law become something readily swatted away by an all-powerful federal authority?

Wireline vs. Wireless Broadband: Alternative or Complementary Technologies?

            If a market has many facilities-based competitors, the justification for regulatory oversight abates and the invisible hand of the marketplace can do wonder for consumers.  Few would disagree with that premise.

            The problem lies in whether competition exists right now, not something hypothetical, or prospective.  Sponsored economists, serving incumbent carriers, have long argued that regulators should start disbanding on the prospects of future, “contestable markets,” because the process of disengaging may take a long time.

            I prefer to see quantifiable, empirical evidence that competitors, operating their own installed networks, seek to serve the same consumer population right now.  FCC Chairman Ajit Pai has a more liberal standard leading to an unequivocal conclusion that wireless and wireline network operators robustly compete already.  Having reached that conclusion, it then follows that the FCC can announce “Mission Accomplished” and proceed to eliminate any and all regulatory safeguards in place to remedy, or abate market shortcomings.

            Is the broadband marketplace robustly competitive?  Do consumers readily and frequently choose between and among wireless and wireline broadband carriers?  Here’s my litmus test: when broadband consumers cut the wireline cord at home and rely solely on their “unlimited” wireless subscriptions, we will have reached the Promised Land.  Put another way, wireless and wireline technologies will compete as “functional equivalents” when consumers shut down their Wi-Fi wireless routers at home and remove smartphone instructions to look for and switch to Wi-Fi networks.  Why bother if the wireless subscription provides the same bit rate, data allowance and performance?

            Just now, who other than sponsored researchers and FCC Commissioners believe that wireless networks offer the same bitrate, data allowance and performance as wireline networks?  These two technologies complement and augment, rather than offer a substitute. 

            If you don’t believe me, consider what the wireless carriers write in their service contracts. The transmission bit rate—even for 4G service--does not match wireline speeds.  Wireless carriers warn that even advertised transmission speeds may decline under real world demand. Even so called unlimited wireless plans have soft usage caps triggering throttled 2G service when a power user requires service from a congested tower, or simply exceeds a 20-30 Gigabyte cap. Wireline broadband service typically has no cap and in markets where carriers like Comcast have introduced caps, the allowance ranges up to 1 Terabyte (1000 Gigabytes). Bear in mind that wireless carriers throttle video streams, because their networks cannot operate as robustly as wireline networks having no such limitation.

            Yet again, I am reminded that there are lies, damn lies and statistics.  But now even the statistics can be falsified to support a party line.

The High Cost of Independence in Telecommunications Policy Analysis

            For over 25 years, I have strived to find the truth without regard to political party and economic doctrine.  My work fits no definitional template, or litmus test.   This fierce independence comes at a significant price.

            In these partisan times, the failure to make a team commitment places on in either, or both of two undesirable camps: 1) unreliable, “not one of us”; and 2) ignorable and invisible.

            For so many years, I though independence offered the opportunity to provide the “straight dope,” i.e., to offer unsponsored insights, the real deal.  On the plus side, independence has enhanced my qualifications to serve as an unbiased industry observer, legal analysist and forecaster.  On the negative side, few stakeholders and even the media want transparent analysis.  Stakeholders want advocates and they handsomely pay to use scholar-created “research” to promote their legislative and regulatory agenda.  So much sponsorship money sloshes around that the refusal to tap in generates questions about the value of one’s work.

            In light of a 24 hour news cycle, most journalists now appear content, or resigned, to interview and quote from scholars with a particular, often financially sponsored, viewpoints.  They offer no analysis leaving it up to consumers to make their own determination of the truth.

            Recently the Wall Street Journal had a front page article reporting on the breadth and reach of Google-sponsored, academic work.  See http://www.wsj.com/podcasts/google-academic-influence-campaign-paying-professors/832B4701-43E8-498E-B527-76AD0D54E553.html.  The list contained far too many “false positives,” but it does provide ample evidence of what Google does to affect policy, just like more established ventures such as AT&T, Comcast and Verizon. 

            I did not make the list.  I should note that Google did provide financial support for one project, but the scope of editorial oversight proved uncomfortable.

            I don’t know whether to revel in this confirmation of independence, or to regret not joining the ranks of some very impressive scholars. Are scholars not on this and similar lists nobodies, because no one paid for their work making it close to valueless?

            I continue to hope that there will remain a place for unsponsored research which can have financial support, but no explicit or implicit expectation of outcome.  Of course there will always be well-funded place for sponsored advocacy that masquerades as research.  The policy making process –and sadly most media outlets as well—function largely on the assessment and balancing of divergent viewpoints. 

            But unsponsored, independent research continues to dwindle in volume, significance and impact at a time when industry, government and the learned community need it to offer, fair-minded strategic planning insights.

Likely and Behind the Scenes Changes at the FCC

            It should come as no surprise that the Federal Communications Commission will substantially change its regulatory approach, wingspan and philosophy under a Trump appointed Chairman.  One can readily predict that the new FCC will largely undo what has transpired in previous years.  However, that conclusion warrants greater calibration.

            As a threshold matter, the new senior managers at the FCC will have to establish new broad themes and missions.  They have several options, some of which will limit how deregulatory and libertarian the Commission can proceed.

            Several ways forward come to mind:

            1)         Channeling Trump Populism—the FCC can execute President Trump’s mission of standing up to cronyism and rent seeking, even when it harms traditional constituencies and stakeholders.

            2)         What’s Good for Incumbents is Good for America—the FCC can revert to the comfortable and typical bias in favor of incumbents like Comcast, Verizon, AT&T and the major broadcast networks.

            3)         A Libertarian Credo—the FCC can reduce its regulatory wingspan, budget and economic impact by concentrating on limited core statutory mandates, such as spectrum management.

            4)         Humility—without having the goal of draining the FCC’s pond, senior managers can temper their partisanship and snarkiness by refraining from mission creep.

            Each of the above scenarios hints at major and equally significant, but unpublicized changes at the agency.  A populist FCC equates the public interest with what the court of public opinion supports.  For example, most consumers like subsidies that make products and services appear free.  A populist FCC responds to consumers by interpreting network neutrality rules as allowing zero rating and sponsored data plans.

            However, a populist FCC risks overemphasis on public opinion that stakeholders can energize as occurred when companies like Netflix and Google used their web sites for 24/7 opposition to the Stop Online Piracy Act and when Jon Oliver motivated 4 million viewers to file informal comments favoring network neutrality on the overburdened FCC web site.

            On the other hand, a populist FCC can remind rural residents of how much they count in this new political environment.  The FCC can validate rural constituencies by refraining from modifying—if not eliminating--inefficient and poorly calibrated universal service cross-subsidies.  Most telephone subscribers in the U.S. do not realize that they are paying a 10%+ surcharge on their bills to support universal service funding, most of which flows to incumbent telephone companies.  Consumers would quickly contract compassion fatigue if knew about this sweetheart arrangement.

            The favoring incumbents scenario has a long and tawdry history at the FCC.  If the new FCC reverts to this model, the Commission will largely give up fining companies for regulatory violations.  Additionally, it might purport to reintroduce economic analysis to its decision making by adopting incumbent-advocated, but highly controversial templates.  For example, incumbents have touted the “Rule of 3” to support further industry consolidation.  This rule is nothing more than an advocacy viewpoint that markets with 3 competitors generate most of the consumer benefits accruing from markets with more than 3 competitors. Having only 3 competitors may work if 1 of them does not collude and match the terms, conditions and prices offered by the other 2.  But in many markets—think commercial aviation—having only 3 operators risks markets organized to extract maximum revenues from consumers with little incentive to innovate and compete.

           

            An incumbent friendly FCC likely will approve mergers and acquisitions with limited, if any, conditions and negotiated conditions.  This kind of FCC will approve AT&T’s acquisition of Time Warner despite President Trump’s disapproval.  The FCC probably also would have no problem with a wireless marketplace duopoly of AT&T and Verizon controlling 90+% of the national market, because the Commission will have largely abandoned the use of a specific market penetration caps and other indices (such as the Herfindahl-Hirschman index) to identify dangerously concentrated markets.

            Many press analysts assume the FCC will embark on a libertarian bent, possibly leading to the elimination of the agency.  I believe the press has misread advocacy items written by Trump Transition Team members who couldn’t easily pitch a short term gig at the FCC and who readily acknowledge the perennial need for core functions performed by the agency.  A libertarian FCC strictly limits its statutory interpretations and does not seek to expand its regulatory wingspan.  However, the national interest—surely including the corporate interests of incumbents—requires the FCC to participate in global standard setting, radio frequency allocation and Internet governance.  The national interests suffers if the FCC does not attend intergovernmental forums and does not forge alliances with other governments keen on reigning in the motivation of global forums to favor specific governments and expand its reach and significance.

            Last, but not least, the new FCC could emphasize humility and bipartisanship using its independence and expertise to determine what best serves the public interest.  This requires abandonment of results-driven decision making and creative statutory interpretation.  I really like this option.

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

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

            Let’s consider three of the most outrageous claims.

 
            1)         Google hegemony

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

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

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

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

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

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

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

        2)         Proliferation of set top boxes

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

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

             3) Set top box competition hurts minorities

 

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

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

            What a remarkable exploitation of minorities!

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

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

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

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

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

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

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

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

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

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

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

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

Do Righteous Indignation and Hyperbole Persuade People?

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

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

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

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

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

Ted Cruz’s Bumper Sticker Reference to Network Neutrality as Obamacare for the Internet

            It’s quite understandable for a politician to summarize complex issues and to distill them into pithy bumper sticker slogans.  So it comes as no surprise that Senator Ted Cruz (or his staff) would come up with the glib analogy between Obamacare and network neutrality.

            Yet again our elected officials fail us with media-ready quips.  From my unsponsored vantage point, I can agree that the President should avoid overstep and respect the role of independent regulatory agencies such as the FCC.  But I surely can take umbrage at Senator Cruz’s sloganeering.

           The network neutrality debate suffers from politicization and more broadly much of the FCC’s work product has become politicized, and interpreted as partisan.  Similarly, anyone who writes about FCC subjects ends up being assigned to one, mutually exclusive camp, or the other.

             I reject such cubby holing.  Should you read my considerable work on network neutrality, you would see someone striving to find the truth and a proper way forward.  My work does not fit into any single camp.

            Robust and sustainable broadband competition does not exist in the United States for first and last mile access despite the blessing of having two wireline options (DSL and cable modem).  Data caps, latency, questions about congestion, equipment costs etc. preclude treating wireless as a functional equivalent to wireline at least for the time being.

            On the other hand, I do not support converting Internet Service Providers into utilities, or thinking that Title II reclassification will solve all ills.

            I do not think the Internet should be completely neutral either.  If I want to view "must see" television, e.g., a Penn State football game, or a Netflix movie, I want my ISP and every other carrier involved in carrying "mission critical" bits to handle them with priority, "Most Favored Nation” treatment.  

            On the other hand (I am an academic!), I don't want Comcast deliberately messing with a competitor’s traffic to extort additional payment.  Netflix should have the option for securing "better than best efforts" routing, but I don't want Comcast to have the ability to penalize small ventures that do not have the traffic volume to cause congestion, or have the funds to pay a surcharge that Comcast does not deserve.

            So I am no one’s true believer.  For this I am ignored and/or defriended by parties on both side.

            Whatever became of reasonable disagreements and civility?

How the FCC’s 8th Broadband Report Became a Referendum on the Marketplace

           Only in this hyper-partisan environment can an FCC report become a stalking horse for libertarianism and antipathy to limited government efforts to stimulate broadband supply and demand. The Report (available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-12-90A1.doc) offers a well-researched and appropriately granular analysis of broadband market penetration in the United States.  It provides ample evidence of progress, but candidly acknowledges that a significant portion of rural America, populated by 19 million people, have no broadband access and are unlikely to have the privilege without government developmental support.   Perhaps this Report has triggered such vigorous opposition, because several years ago a previous Report had a “mission accomplished” theme based on a toting up of even slow speed broadband options that were considered available to all within a zip code area even if only one subscriber existed.

            The Report has triggered vigorous dissent from the two Republican Commissioners, sponsored researchers and libertarian leaning publications by stating what I thought was obvious: there are plenty of areas in America where marketplace forces work against the offering of any affordable broadband access option, particularly wire-based services. I will go so far as to use two words that apparently cannot be uttered: market failure.  

            Broadband wireline options from carriers such as Verizon and AT&T do not even serve many urban and suburban locales.  These carriers are hell bent to jettison their rural customers and the obligation to service as carriers of last resort offering telephone service.  They have doubled down on wireless and do not seem to care about declining DSL subscribership and the need to migrate to faster transmission speed services outside the metered and more expensive wireless option. Smaller carriers do want to provide broadband services and generally have expressed support for FCC efforts to extend universal service subsidies.

            Some time ago both Democratic and Republican Commissioners at the FCC typically would thank the staff for doing such a comprehensive and conscientious job in preparing a Congressionally-mandated Report.  They would consider factors such as the public interest as their foremost concern, not whether they could accrue brownie points for their party and its ideology.  FCC Commissioners of both parties gladly supported extraordinary and admittedly too generous and inefficient universal service programs.  These initiatives included “rate integration” that required carriers to average in the higher costs of providing telephone service in non-continental United States locales, e.g., Alaska, Hawaii, Puerto Rico and the Virgin Islands.  No one balked at providing “free” satellite earth stations to Pacific island residents whose governments have an affiliation with the United States, e.g., The Federated States of Micronesia.  Nobody invoked Ann Rand to suggest that rural residents should suffer any cost disadvantage for the various upside opportunities from living in the hinterland.

            Now a Report to Congress somehow has all sorts of underlying messages.  By truthfully answering a question posed by Congress that more work needs to be done to achieve ubiquitous and affordable broadband, the FCC apparently is foreshadowing a broad agenda to preempt the marketplace.   See Larry Downes, How the FCC sees Broadband's 95% Success as 100% Failure, Forbes (June 23, 2012); available at: http://www.forbes.com/sites/larrydownes/2012/08/23/how-the-fcc-sees-broadbands-95-success-as-100-failure/.  And what kind of preemption would there be?  Most subsidies flow directly to the carriers!  But instead of acknowledging that carriers stand to benefit financially from such subsidies, opponents of candor strive to see some hidden agenda, including an effort by the FCC to impose network neutrality—if not the public utility, common carrier regime—on broadband.  

            At an unprecedented rate, the entire telecommunications policy ecosystem has become so politicized as to ignore the first principle of serving the national interest.  Instead we have warring parties arguing over whether and how government is subverting market forces that time and again work against making service available absent government efforts to stimulate supply and demand.

           

Who's Behind That Blog?

An assignment in a Media and Democracy course I teach at Penn State invites students to select a telecommunications advocacy web site for analysis. I want my students to decode the message and attempt to identify whether a bias exists and who financially supports the site. The exercise typically fails miserably.

Too many students accept at face value a web site's pledge or representation of independent analysis. Most students cannot infer that a site that advertises books by Ann Coulter trends to the right and one that talks about social justice trends to the left.

However, I cannot blame my students entirely. How are they to know that a noble sounding site seeking truth, justice and the American way is an "astroturf" (fake grass roots) organization fronting for a particular set of stakeholders? As a researcher in the network neutrality debate I risk personal attack, misrepresentation of my work, and assorted snarky debating tactics befitting a food fight. It would be an understatement to say it chills my desire to engage in the dialogue. Indeed it's not always a dialogue, or debate as the conference session or blog discussion gets nasty.

I should reiterate that I receive no funding from stakeholders in the network neutrality debate and that my view expressed in this blog are entirely my own.

No wonder telecommunications and information policy accrues suboptimal results in the United States. The process has become so partisan, political and doctrinal. There may come a time--not too distant--where people will recognize that the U.S. lost its best practices leadership in telecommunications infrastruture, because the stakeholders spent more time funding web sites and blogs as well as foolish litigation in lieu of doing what's needed to install and operate next generation networks.