Thursday, July 03
In an op-ed for The Street, our Co-Chairman Bruce Mehlman argues that applying regulations from 1934 to today’s data services is a terrible idea. An excerpt:
Reclassification would lead to extreme uncertainty.
Regulatory uncertainty is the enemy of investment and innovation. Cisco (CSCO) CEO John Chambers recently wrote the FCC that his company “...is deeply troubled by the proposals” for reclassification, warning that $60 billion a year in broadband investment could be threatened.
Chambers argues that “If Title II regulation is brought to broadband Internet access services, investment in new infrastructure will be severely hamstrung. New, innovative services may not be brought to market because entrepreneurs fear telecommunications regulation.”
Here’s the basic problem: As technology advances and as companies work ever harder to meet growing consumer demand, the old distinction between companies that focus on “transmission” and those that focus on “content” is vanishing. Each can own networks; each can (and often does) provide data and voice services. Convergence and cross-platform competition are the order of the day, yet Title II would shackle ISPs and some of the world’s most innovative companies with a regulatory regime designed for the 1930s telephone monopoly. It makes no sense.
Check out Mehlman’s full op-ed.
Thursday, June 26
At The Hill, Julian Hattem reports there is renewed interest in updating America’s Telecommunications Act:
The top Republican on the Senate Commerce Committee is pushing for Congress to overhaul the law governing the Internet, television and phone service.
Sen. John Thune (R-S.D.), the ranking member of the powerful panel, said on Wednesday that the Senate would likely begin work to update the law next year, and seemed to shine on the notion that Republicans would have taken control of the upper chamber.
“The world moves so fast that it’s hard for even the most technologically savvy and digitally-connected person to keep up with everything, so it should be no surprise that our laws have fallen woefully behind,” he said at an event on Capitol Hill sponsored by the Free State Foundation, a free market-oriented think tank.
“We need 21st Century laws for a 21st Century world.”
One benefit of updating the 1996 Act would be a possible end to the never-ending — and exhausting — net neutrality debate once and for all. Here’s hoping Sen. Thune can rally the troops to make it happen.
Via Mike Dano of Fierce Wireless, a new report predicts that investment in wireless networks won’t be slowing down anytime soon — assuming policymakers don’t throw a wrench in a well-oiled machine, that is. As Dano writes:
According to a new report from the Telecommunications Industry Association, U.S. wireless carriers will spend a total of $159.3 billion on wireless network equipment and infrastructure during the next four years, up fully 40 percent from the $113.9 billion in cumulative spending during the previous four years.
Wireless carriers have been some of the biggest investors in America’s economy for years now, which is one of the reasons placing heavy-handed regulations on the industry is a really bad idea.
Tuesday, June 24
Eighty years ago this month, the Telecommunications Act of 1934 was created to regulate America’s nascent telephone service. At the time, only about 12 percent of U.S. families had phone service and rotary phones were the norm. Touch-tone phones wouldn’t appear for another three decades. This was the era of “party lines” and operators memorialized in movies sitting in front of large switchboards connecting callers to “KLondike 5-1234.”
As we mark the law’s 80th anniversary, now is not the time to slap the modern, high-speed, innovative and entrepreneur embracing Internet with rules that Congress designed for rotary telephones.
Keeping the Internet available to everyone is the right goal. However, applying Title II of the 1934 law, which treated traditional phone service as a public utility, to broadband could bring the pace of entrepreneurism and investment on the Internet to a crawl. Since 1996, when Congress last updated telecommunications laws, ISPs have invested more than $1.2 trillion. The average Internet connection speed in the U.S. has just hit a remarkable 10 Mbps, which is more than enough to stream an HD movie.
Suddenly putting the Internet under Title II could result in too much innovation needing pre-approval by the FCC. Instead of today’s “bottom up” dynamism in which consumer demands drive change, the web could become hostage to the federal government’s timetable. The spirit and freedom to innovate could depend on Congressional and FCC action.
Today’s Internet is the most free and accessible it’s ever been. That’s getting lost in the push for Title II regulation. America’s broadband deployment continues to rise and 70% of us now have broadband connections at home, according to Pew. People are spending more time online, enjoying real-time benefits with education, healthcare and entertainment.
The less drastic solution is reflected in the FCC’s two existing efforts to balance legitimate consumer interests with the need to maintain the Internet’s dynamism. The FCC’s 2005 Open Internet Policy Statement and its 2010 Open Internet Order both struck that balance.
Yes, the DC Court of Appeals overturned parts of the 2010 Order. But crucially, major ISPs continue to abide by the openness policies, which shows that they recognize the value of providing the freedom that Net users demand.
Belligerents making hyperbolic arguments from opposing corners dominate too many debates in Washington. Ensuring an open Internet doesn’t have to be one of those fights. Nobody wants to turn what we used to call the “information superhighway” into a four-lane toll road with federal monitors stationed at every onramp. Nor should there be an HOV lane only accessible for the wealthiest that leaves the rest of us stuck in a slow moving traffic jam.
Now is the time for common sense rules that are fair to consumers and companies and ensure high speed Internet access to individuals and entrepreneurs without the unintended consequences of 1930’s rotary phone era regulation.
Monday, June 23
At The Hill, Kate Tummarello reports that House Republicans want to take the net neutrality issue out of the FCC’s hands:
Republicans on a House panel want the country’s antitrust regulators, not its telecom regulators, to take the lead on net neutrality.
During a Friday hearing held by the House Judiciary Subcommittee on Antitrust Law, Republicans questioned the need for net neutrality regulation from the Federal Communications Commission (FCC).
“The Internet has flourished precisely because it is a deregulated market” and should be kept open through “vigorous application of the antitrust laws,” House Judiciary Chairman Bob Goodlatte (R-Va.) said.
The idea, according to Tummarello, is for the Federal Trade Commission to take the reigns:
“As regulatory proceedings continue to stretch on, a question I have is whether there might be a more efficient and more effective way to safeguard against potential discriminatory behavior than federal rulemaking,” Subcommittee Chairman Spencer Bachus (R-Ala.) said in his opening statement.
“That is where antitrust law comes in.”
Speaking of Twitter, Barbara Ortutay of the Associated Press crunched some numbers to find out how the social media service — and others like Facebook and Google+ — are faring during the World Cup:
Twitter and Facebook lit up in a World Cup frenzy this week as millions of people around the world took to social media to share in the ups and downs of the matches.
Defending champion Spain’s stunning elimination Wednesday after a 2-0 defeat to Chile generated a lot of buzz, though not as much as the Cup’s opening match between Brazil and Croatia.
Google, meanwhile, tracked more than 641 million World Cup-related searches. In the week leading up the U.S. team’s game against Ghana on Monday, there were 10 times more searches for the World Cup in the U.S. than for the NBA Finals, which were in progress at the time.
Via the site MuckRock comes a recently unearthed FBI document studying “Twitter Shorthand” such as “LOL,” “BRB,” and other acronyms. Check it out for yourself (CIOFY) here.
Friday, June 20
We’ll find out soon enough whether the U.S. soccer team can survive the World Cup’s “Group of Death” with two strong European competitors (England and Germany). But for broadband, it’s clear who’s winning: the U.S.
It’s basic economics that if we as a society want less of something—for instance, smoking—we will impose a tax on it or restrict it by regulation, and consumption will fall. The opposite is also true: if we want more of something, deregulation and lower taxes will, by the operation of markets, lead to more of it.
The price, availability and quality of broadband follows the same rules. If we want more and faster broadband—and we do—then excessive and inappropriate regulation of broadband, such as some activists’ proposals for “Title II” common carrier regulation, is the wrong way to go. On top of all the legal and technological problems Title II would bring, we can confidently predict that it would sharply inhibit broadband investment.
A new paper from Christopher Yoo of Penn Law School’s Center for Technology Innovation and Competition takes a fresh look at the data and shows that the US is far ahead of Europe on virtually every relevant metric of broadband deployment. The reason, not surprisingly, is that the US regulates broadband lightly while European countries impose investment crippling wholesale unbundling requirements on broadband providers.
Res ipsa loquitur, the lawyers like to say, and Yoo says exactly that: “The data speak for themselves, and the empirical evidence confirms that the United States is performing much better than Europe in the high-speed broadband race[.]”
Look at the data from different angles (as CTIC’s interactive micro-site permits), and it tells the same story: access to next-generation networks (over 25 Mbps), the U.S. leads 82% to 54%; access to next-generation networks in rural areas, 48% to 12%; and LTE coverage, 86% to 27%. Unsurprisingly given these figures, the U.S. (meaning U.S. network operators) invests more than twice as much per household as Europe does—$562 vs. $244. Better service, with less packet loss in the U.S.. And entry-level broadband prices are lower here, too.
Why is the U.S. winning? It all comes down to fundamentally different models of regulation and the incentives each provides for investment: Europe relies on regulations that treat broadband as a public utility and foster competition among multiple leased access providers on incumbent provider platforms. New entrants lease incumbents’ facilities at wholesale cost (also known as unbundling). The U.S. regulatory light- touch has generally left buildout, maintenance, operation and modernization of Internet infrastructure to private companies and focuses on promoting facilities-based competition, in which new entrants are expected to construct their own networks.
The regulatory structure government chooses directly affects broadband availability, quality and price.
Focus on that investment statistic for a minute: there’s over twice as much investment per household in the U.S. as in Europe, which leads to more coverage.
We’ve already had a glimpse of what can happen if the U.S. government tries a different path, that of Title II regulation. When the FCC announced in 2010 that it was considering Title II reclassification of broadband as a possible approach to ensuring network neutrality, there was an immediate negative effect on the stock prices of the network operators who were deploying broadband across the country. On average, the market capitalization of the four largest ISPs in the United States lost a combined $18 billion and the market value of one of those entities dropped 15% overnight. The ability of these companies to acquire the financing necessary for aggressive broadband deployment diminishes as their value in the market declines. This was but one early sign of the kinds of problems that broadband providers will encounter in continuing their world leading broadband deployment performance if the FCC turns to Title II regulation.
So the light regulatory model of the U.S. brings greater adoption, more investment, and faster speeds, while due to the heavy-handed leased access regime on which Europe built its policies, the continent is now lagging far behind.
None of this is surprising to anyone who knows a bit of economics, but it’s a useful reminder as the FCC considers what sort of rules would best achieve our nation’s broadband goals. We can ill afford to neglect history and economics by imposing telephone-era, public utility regulation that will dampen investment at precisely the moment when carriers will have to undertake even greater expenditures to acquire spectrum in the upcoming incentive auction and then spend more to deploy facilities to bring wireless broadband to the entire US population at 4G levels. As Yoo writes, “we have a real-world basis for assessing the impact of imposing telephone-style regulation on the Internet[.] As regulators in the United States contemplate rules for next-generation networks, it would be wise to consider how going down the path of stiff telephone-era regulation has fared elsewhere.”
Because whatever happens in Brazil, the U.S. has already beaten Europe in the broadband competition for economic growth.
Thursday, June 19
Today marks the 80th anniversary of the 1934 Communications Act. Signed into law by President Franklin D. Roosevelt, the Act was basically a shuffling of the Federal Radio Act of 1927 and the Mann-Elkins Act of 1910, which covered telephone service. From Wikipedia:
The stated purposes of the Act are “regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States a rapid, efficient, nationwide, and worldwide wire and radio communication service with adequate facilities at reasonable charges, for the purpose of the national defense, and for the purpose of securing a more effective execution of this policy by centralizing authority theretofore granted by law to several agencies and by granting additional authority with respect to interstate and foreign commerce in wire and radio communication, there is hereby created a commission to be known as the ‘Federal Communications Commission’, which shall be constituted as hereinafter provided, and which shall execute and enforce the provisions of this Act.”
While the 1934 Act served America quite well for over six decades, in 1996 it was given a much-needed overhaul to better reflect the technology of the day. But even that overhaul now seems like a bit of a relic, as today’s current broadband age — both wired and wireless — has completely revolutionized America’s communications.
With some activists currently calling for the FCC to reclassify broadband services under Title II, it’s worth remembering that Title II was originally part of the 1934 Act. In other words, those pushing for reclassification of broadband services want the FCC to use an 80 year old law to govern the modern Internet.
Rather than brute force a law on the books since before World War II, a smarter way to govern today’s Internet — and whatever shape the Internet takes in years to come — would be to once again revisit the Communications Act. A lot has changed in 80 years, after all, and relying on such an outdated framework for today’s technology could very easily do much more harm than good.
Wednesday, June 18
So this is pretty awesome. Following the U.S. team’s late goal against Ghana on Monday, this Vine video appeared showing Twitter reactions across the country when the U.S. took the lead.