Wednesday, December 11
Rarely can public figures glimpse their potential legacy the day they begin service. More often, their significance is only understood decades later. Yet newly confirmed Federal Communications Commission Chairman Tom Wheeler has the rare chance to anticipate his impact at the outset as President Obama’s second-term standout, assuming he seizes the unique opportunity afforded by time, place, and fate.
Wheeler arrives at the FCC at a critical time for the agency and the nation. The FCC is an agency in transition, overseeing a communications sector in revolution, powering an evolving economy despite a dysfunctional Congress and a struggling recovery.
The government writ large, meanwhile, is playing a historically outsized role. Whether measured by taxes, spending or regulation, it is hard to find a prior period over the past 50 years when the federal government exerts greater influence in our economy. A former financial services CEO recently advised his successor that ‘‘your number one client is the government.’’ Many fear Wall Street has become addicted to Federal Reserve interventions. Taxpayers foot more than $1 trillion in annual health care bills, even before Obamacare expands coverage. More than half of all citizens are net recipients of government largess, receiving more in benefit and transfers than they pay in taxes. Over the past century, the number of pages in the tax code has ballooned 18,034 percent.
Yet one bright exception has been the high-tech economy, where the government has played a far less intrusive role. While trade policy, immigration, and federal support for basic research and STEM (science, technology, engineering and mathematics) education have been essential, the sector has seen no bailouts, no hand-outs, no too-big-to-fail-outs. Government intervention in tech has been minimal, especially relative to heavily regulated services, and energy.
Not surprisingly, tech’s freedom from command-and- control regulation has enabled breakneck innovation, furious competition and the fundamental reshaping of how Americans live, work, play, and learn. Technology is transforming education, health care, retail, and manufacturing, and creating new jobs for skilled workers. Yet this non-stop innovation is bringing our most dynamic new sector into conflict with an anachronistic regulatory framework, threatening future progress ab- sent visionary change.
Enter Chairman Wheeler.
At the FCC, Wheeler inherits a regulatory regime designed decades ago for an earlier era. Voice and video services are regulated under separate provisions of the Communications Act of 1934 (Title II and Title VI, respectively) based on assumptions of a permanent monopoly and massive barriers to entry. The Act and its subsequent amendments fundamentally fail to acknowledge the competitive alternatives created by the technological and marketplace convergence of the broadband age. Today’s FCC-enforced regulatory framework was designed for a world without Netflix Inc., Skype Communications, Google Inc., or iPhones — a world without the Internet. Thus, the agency remains stuck in the past, distinguishing among companies based on the technology they use and their legacy status under the Act. Consumers make no such distinctions.
To be the chairman that our economy needs, Wheeler should reorient his agency around three primary goals:
First, the FCC should narrow its mission. Previous efforts to regulate siloed monopolies are no more needed than TV antennas. Leave competition policy to competition authorities, and focus on core FCC competencies such as public safety, consumer protection, and universal service for those most in need. Remove regulations that face backwards, such as those covering the increasingly obsolete copper TDM (time-division multiplexing) telephone networks, which fewer and fewer consumers use.
Second, Wheeler should declare ‘encouraging investment’ a core purpose of the agency. Private investment has driven fierce competition across Internet plat- forms while barriers to entry have fallen. With $17 trillion in federal debt, taxpayers cannot foot the bill for today’s 4G and fiber-to-the-home deployments or tomorrow’s even bolder new networks. Nor should we ask them to. Private investment will continue provided policy makers give some measure of regulatory certainty that the ‘‘rules of the road’’ will not change arbitrarily, and all investors will compete on level playing fields.
Finally, Wheeler must work to make the FCC the government’s most efficient, transparent, and predictable agency. Decisions should be data-based, rather than outcome-oriented, considered and delivered within reliable timeframes.
So far, Wheeler has placed a high priority on auctioning spectrum — and without preordaining winners or losers. He also has initiated long-overdue efforts to get the IP transition under way as soon as January, looking favorably towards approving real-world market trials that will help reduce inefficient investment in old technologies that siphon money away from new high speed broadband infrastructure.
In short, early signs from Wheeler’s commission are most promising.
Mehlman served as assistant secretary of commerce for technology policy from 2001 to 2004 and is founding co-chairman of the Internet Innovation Alliance and founding partner at Mehlman Vogel Castagnetti
To read the insights of Mehlman’s Internet Innovation Alliance co-chairman, Rick Boucher, visit the Telecom- munications Law Resource Center’s BNA Insights
Reproduced with permission from Telecommunications Law Resource Center, 2013 TERCN 1, 12/4/13. Copyright © 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
Tuesday, December 10
Last week I highlighted the “rear-view” mirror perspective of certain competitive local exchange carriers (“CLECs”) regarding the IP Transition. This week, the CLECs have taken their strategy to preserve antiquated telephone networks and technology by extending the status quo one step further.
In 2011, FCC Chairman Wheeler headed the FCC’s Technology Advisory Council that recommended the upgrade and modernization of the nation’s telephone networks to make them high-speed broadband capable by 2018… a bold and visionary goal. Network operators responded to the challenge by committing to build out a new broadband network by 2020.
To bring this “Fourth Network Revolution” to life, however, plans, tests, and addressing operational issues must begin ASAP…now.
The FCC has before it one of the first IP Transition implementation issues to arise. It is whether to approve AT&T’s request to allow its wholesale business customers to keep their current contracts, while it stops offering long-term contracts—greater than 36 months—for old telephone-based services. Such a reasonable step would help accelerate the transition to new IP network-based technologies that Wheeler’s TAC envisioned.
AT&T’s request should have gone into effect December 10. Yet the CLECs, who never fail to miss an opportunity to embrace the rapid deployment of 21st century broadband services, are once again the main roadblock. The CLECs have figured out that if you successfully force incumbents to continue to offer antiquated telephone services via long-term contracts, it will essentially mean that carriers such as Verizon and AT&T will be forced to continue operating, maintaining and investing in the old copper telephone networks, rather than devoting all efforts to the IP Transition.
CLEC opposition now means that AT&T’s request is being delayed by the FCC.
This is the latest example of CLECs seeking government intervention in order to slow the IP Transition. Pure rent-seeking, so that they can continue to use old, 20th-century TDM and copper-based networks rather than focus their efforts on investment and deployment of their own next-generation networks.
So I guess the CLECs’ executives really meant what they said at the New America Foundation last week when they spoke of wanting to use the decades-old network for “decades” more. That’s a far cry from the TAC’s goal of 2018 or AT&T’s efforts to modernize its entire network by 2020. All very convenient for them, but let’s call this what it is: narrow, self-interested advocacy in favor of an old business model rather advancing the national goal of a prompt IP Transition.
Last week, the participants at the NAF panel said they had “written the book” on the IP Transition. This week, it seems more they’re like writing a book on delay.
Monday, December 09
In more FCC news, late last week the Commission announced it was delaying its incentive spectrum auction. As Alina Selyukh of Reuters reports:
The U.S. Federal Communications Commission, as long predicted, now plans to hold the so-called incentive auction of broadcast airwaves in mid-2015, a year later than originally intended, the agency chairman said on Friday.
The FCC is now drafting rules for the auction that would reshuffle the ownership of valuable frequencies among TV stations, as well as wireless carriers, which are clamoring for faster speeds and better services for their devices.
There have been rumors that cable giant Comcast is interested in merging with fellow giant Time Warner Cable, but as Fortune‘s Dan Mitchell reports, even without a formal announcement, the idea is already expected to get a thumbs down from the FCC:
It’s impossible to predict what might happen if Comcast were to make a bid for all of Time Warner Cable, but as things stand, it seems unlikely that it would be approved, at least without conditions.
One Commissioner who would be in favor of the deal, Mitchell reports, is Ajit Pai, although the Republican member of the FCC doubts his fellow Commissioners would feel the same way.
Recently, the FCC made waves when it announced it was easing restrictions on the use of electronics onboard flights. Over at the Commission’s blog, two members of the FCC explain what they’re after:
Today, technology has evolved to allow the provision of mobile wireless service onboard aircraft without causing harmful interference to terrestrial networks. This has been done internationally for years, and we are confident it can be done here at home – we will develop a full technical record on the proposal to make sure that’s the case.
To be absolutely clear, the FCC is not proposing to mandate that cell phone use be permitted aboard aircraft. Many are concerned that adoption of this proposal will result in a less-enjoyable travel experience caused by other passengers engaging in unreasonably loud phone conversations during flight. As frequent flyers ourselves, we understand and empathize with these concerns, but it is important to keep in mind that it is not within the FCC’s jurisdiction to set rules governing concerns about passenger behavior aboard aircraft. That role is properly left to the FAA and the airlines after consultation with their customers.
Sounds reasonable, as does this line from the same blog post:
The FCC’s proposal reflects its obligation to review and eliminate or modify rules that are no longer justified. As the expert agency charged with overseeing technology policy and interference issues, we believe it is appropriate for the Commission to consider this matter fully.
Here’s hoping the FCC continues to “review and eliminate or modify rules that are no longer justified” as network providers fully upgrade to all-Internet networks.
Thursday, December 05
After years of heated public debate, the fight over how the word “GIF” is pronounced has finally be settled. The ruling body: the game show Jeopardy!. Via Alexis Kleinman at the Huffington Post:
On Tuesday night’s episode of “Jeopardy!,” the smartest man on television, Alex Trebek, officially announced something many of us already knew to be true: “GIF” is meant to be pronounced with a soft “G.”
To celebrate the end to our long pronunciation nightmare, here’s an endless GIF of Alec Baldwin pouring himself a glass of scotch. Enjoy.
Speaking of spectrum, Phil Goldstein at Fierce Wireless reports that a big player in the satellite game is planning to participate in an upcoming auction:
Dish Network has officially registered its intent to bid in the FCC’s upcoming 1900 MHz PCS H Block spectrum auction—and it is likely to secure a significant amount of licenses since it is the only major company planning to participate in the auction. If Dish is successful in winning H Block licenses, the company would notably improve its already significant spectrum portfolio.
The FCC released a list of bidders for the H Block on Wednesday; the auction is scheduled to start Jan. 22. The commission said 14 bidders entered complete applications and an additional 20 bidders submitted incomplete applications that they can correct by Dec. 18.
DISH has long made it known that it wishes to get into the highly competitive wireless business, so their jumping into the auctions isn’t really surprising.
According to Brendan Sasso of The Hill, the Senate Commerce, Science and Transportation Committee will be holding a hearing on the FCC’s upcoming spectrum auction on December 10. Expected to be discussed will be a nationwide public safety network and whether limitations should be imposed on the auctions, which many lawmakers and industry groups warn would severely diminish returns from the auctions.
Wednesday, December 04
Today the New America Foundation hosted an event on “Making the Network Work,” focusing on telecommunications and business markets with the nation’s leading competitive local exchange carriers (“CLECs”).
The participants claimed they have “written the book” on the IP transition, based on significant marketplace gains resulting from their investments in modern networks, deployment of thousands of miles of fiber, and the success of their high end and secure Enterprise service offerings.
Yet, while consumers, industry, Congress and the FCC have all acknowledged the need to upgrade America’s antiquated telephone networks, CLECs cling to old 20th century telephone networks and the desire to preserve the status quo. Instead of advocating how best to accelerate the delivery of next generation high-speed broadband networks and services to the American consumer, XO Communications’ CEO appeared to suggest that policymakers focus on the “many places where the old copper network will be in place for decades, [and that she]…doesn’t see that changing.”
The CLEC “rear-view” mirror approach also seeks to extend the rules governing outmoded telephone networks to modern competitive broadband networks, and ensure continuation of special regulatory treatment for services provided in the highly competitive business market. The CLEC effort to preserve the status quo is evident in their opposition to any effort to allow telephone companies to grandfather existing copper network contracts and prepare for new offerings once the upgrade to high-speed broadband networks is complete.
CLECs also seek government intervention to manage how the nation’s existing and highly successful Internet networks interconnect with one another. Today, Internet providers privately negotiate “IP Peering and transit” agreements for their interconnection needs. These arrangements have existed since the creation of the Internet and have been critical to the massive growth of broadband services to the American consumer.
Surprisingly, in their call for greater government intervention, however, not one CLEC provided evidence or offered a substantiated claim of an existing market failure. Rather than invest and compete in a vibrant and robust broadband market, CLECs seek FCC intervention to prop-up business models based on a dying copper network.
Thankfully, we heard a different message from new FCC Chairman Tom Wheeler, in his first major address, at Ohio State University this week, where he affirmed that he is “a rabid believer in the power of the marketplace” and that his focus will be to see “what, if any action (including governmental action) is needed to preserve the future of network competition” (Wheeler’s emphasis).
Wheeler said that he seeks to use the tools of government regulation “in a fact-based, data-driven manner” and that if “a market is competitive, the need for FCC intervention decreases.” That is what is happening in the marketplace.
The Chairman cited the example of cellphone unlocking — where carriers are responding to demands for consumers to be able to unlock their phones, without formal government action.
Similarly, light-touch government oversight has allowed the Internet to flourish and has brought robust competition to wireless and wired broadband markets to the benefit of the American consumer.
With regard to interconnection arrangements, Chairman Wheeler needs to look no further than the marketplace. Just last week, competitors Verizon and Vonage provided the latest example of providers reaching mutually beneficial interconnection agreements through commercial negotiations. This follows a similar agreement that Verizon achieved with Comcast last year.
That’s the way it has always worked, is working, and will continue to work — if only regulators don’t rush in to dictate a false “solution” where the market is working.
Monday, December 02
Speaking of online shopping, Amazon made waves yesterday when CEO Jeff Bezos revealed in a 60 Minutes interview that the company was exploring delivering orders by drone. As Lily Hay Newman of Gizmodo writes, it’s not that crazy of an idea:
Bezos says that the project, which is heavily in the R&D stage right now, couldn’t debut before 2015 even if Amazon were ready because of FAA regulations, but even then PrimeAir will probably still be a few years out. Bezos estimates that it will be another four or five years. He told 60 Minutes, “It will work and it will happen, and it’s gonna be a lot of fun.”
The goal is for PrimeAir to do quick and light deliveries (Bezos called out kayaks as an item that the drones probably won’t be able to handle) around something like a 10-mile radius. The drone fleet would be greener than using trucks because it would be all electric, and people’s stuff would find them wherever they were based on GPS coordinates they entered at checkout. It’s not much of a stretch to think about the service using phone tracking so a PrimeAir drone could deliver extra tupperware to whichever grassy knoll your picnic ends up on.
To show just how PrimeAir will work, Amazon put together this video.