New Rules for a New Age

By Brad

In a speech before the Media Institute yesterday, Craig Silliman, Senior Voce President of Public Policy for Verizon, argued that outdated regulations risk holding back innovation and investment. It’s a similar argument other telecom providers have made recently. As Silliman told the crowd:

[W]e need to ensure is that we do not let an increasingly outdated regulatory regime for the Internet ecosystem slow innovation and investment. The 1996 Telecom Act succeeded in what it was designed to achieve, but almost two decades later it is leaving the FCC struggling to shoehorn Internet-era technologies into phone-era regulations. I am not suggesting that the answer is to abolish all regulation. But I am suggesting that we need a 21st century policy framework that is designed for 21st century technologies and marketplaces, not 19th century ones.

We need to start by asking the right questions. It has been suggested that a key question for the next FCC chairman will be how to keep the FCC relevant in the Internet era. I believe that is the wrong question. I recognize, of course, that tactical battles to secure budgets and resources are part of any organization or entity, including the federal government. But a strategic view of policymaking starts by asking what objective we are trying to achieve, and then asking whether regulation is needed, why it is needed, and who is best placed to administer it.

The full speech is worth checking out.

Right Direction, Wrong Speed

By IIA

Late last week, the FCC’s Technology Transitions Policy Task Force announced it was issuing Public Notice seeking comment on proposed “beta” trials to transition America’s networks to all-IP. Below are reactions to the announcement from IIA leadership.

From Honorary Chairman and former Congressman Rick Boucher:

”The FCC’s recognition of the importance of the move from TDM to all-IP networks is a welcome building block, but it’s disappointing that comprehensive IP transition trials have not been authorized.  Only through a comprehensive examination can potential issues be identified and addressed and consumers be protected.”

From Co-Chairman Bruce Mehlman:

“The Commission is steering in the right direction, but traveling at the wrong speed. Fully committing to all-IP networks would bring the greatest benefits to consumers and best-equip America to compete on a global scale. Baby steps won’t keep pace with technology.”

From Co-Chairman Jamal Simmons:

“The three areas on which the FCC seeks comment are all important pieces of the puzzle, but instead of a piecemeal approach to figuring out challenges with the IP Transition, the Commission should quickly adopt a holistic strategy, including well-defined trials in designated wire centers, to bring broadband-enabled benefits in health care, education and entrepreneurship to all Americans.”

For further reading, check out FCC Commissioner Ajit Pai’s statement on the FCC’s Public Notice.

Agenda Items for the Next FCC Chairman

By Jamal Simmons

It’s official: current Federal Communications Commission (FCC) Chairman Julius Genachowski will be handing over the gavel on May 17th. While Commissioner Mignon Clyburn will lead the agency until Obama nominee Tom Wheeler gets confirmed and sworn in, it’s worth taking a look at the top two pressing issues Wheeler will face once he takes the helm of the Commission.

Agenda Item: IP Transition

The trend is undeniable. Americans are leaving their traditional phone service, dropping their standard connection in favor of wireless and IP-based phone connections. You’re probably one of them. If you have your home phone service bundled with cable, you might not even realize you no longer rely on the plain old telephone service (POTS) network.

With scores of people changing the way they communicate (some estimates peg the number at 500,000 people each month), network providers want to gradually sunset their old networks so they can concentrate billions in investment dollars to new, Internet-based services. In other words, they want to put their money where consumers want to go … and are going.

This transition to all-IP (Internet Protocol) networks won’t be as easy as flipping a switch. Ensuring everyone still has a reliable connection, especially seniors and those living in rural areas, is critical. That’s why AT&T submitted a proposal to the FCC for “beta trials” in select markets to identify potential pitfalls, an idea FCC Commission Ajit Pai strongly endorsed in a speech sponsored by the Hudson Institute back in March. As Pai said in his speech:

Right now, the most critical choice we face is whether to move forward with an All-IP Pilot Program. This program would allow forward-looking companies to choose a discrete set of wire centers where they could turn off their old TDM electronics and migrate consumers to an all-IP platform. Now, you may have noticed that when it comes to the IP transition, everyone has a prediction about what will or will not happen if carriers are allowed to provide services exclusively through an all-IP platform. But as we found out during yesterday’s “snowstorm”—what we Kansans call “weather”—predictions are no substitute for hard facts. Albert Einstein had it right: A “pretty experiment is in itself often more valuable than twenty formulae extracted from our minds.”

Fortunately, we don’t need to rely on formulae any longer. The FCC has sought and received comments on a proposal to create an All-IP Pilot Program. I’ve reviewed the record carefully. And having done so, I am proposing today that the FCC move forward with this program.

Going forward with beta trials is just part of the greater IP transition discussion Wheeler will no doubt be having as head of the FCC. Also on the burner will be regulations — specifically, what will be the regulatory framework in an all-IP world? The 1996 Telecommunications Act is by all accounts painfully outdated. Modernizing rules to keep pace with today’s technology in ways that encourage continued investment in network infrastructure and protect consumers will be critical for the IP transition to succeed. And Wheeler, from the driver’s seat of the FCC, will need to lead the discussion.

Agenda Item: Spectrum

Outgoing Chairman Julius Genachowski deserves a ton of credit for recognizing the coming “spectrum crunch” (as he’s coined it), but the FCC’s proposed solution to the problem — incentive spectrum auctions — is barely past the 50-yard line. The auctions are still being shaped, the details still being argued over. Some are pushing for limited involvement in the auctions by certain wireless providers. Others question whether enough broadcasters will participate to make a difference.

Meanwhile, thousands of Americans are adopting mobile broadband every day. They are firing up smartphones and tablets for the first time and pushing data into the ether. And all that data is joining the bits and bytes being pushed out from tens of millions of other people who are already relying on a wireless connection to the Internet for their daily activities.

To keep up with this flood of data traveling on their networks, wireless providers have been trying to make deals for spectrum left and right. But it’s still not enough, which means a lot will be riding on the FCC’s spectrum auctions. Will Wheeler and the other Commissioners successfully put together proceedings that are open to all qualified bidders? Auctions that maximize much-needed revenue for the Federal government? As my colleague Rick Boucher succinctly put it:

Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.

These are the two most critical issues Wheeler will face once he’s in charge of the FCC (and underlying both of those issues is the most important part of his job — increasing access for all Americans to participate in the technological revolution we are experiencing. High-speed access to the Internet only increases in importance as job searches, entrepreneurial opportunities, education and health care are all enhanced by being online). While some have criticized his selection given his past life running both the NCTA and the CTIA, such experience offers encouragement that he has the ability to successfully get the job done. As President Obama remarked during the announcement of his selection:

”If anybody is wondering about Tom’s qualifications… [He] is the only member of both the cable television and the wireless industry hall of fame.”

Here’s hoping Wheeler will one day be inducted into the FCC hall of fame as well.

Helping, Not Hurting Consumers

By Brad

In an op-ed for the Huffington Post, American Consumer Institute for Citizen Research President Steve Pociask worries the FCC may end up hurting consumers with its upcoming spectrum incentive auctions:

A basic principle of any well-designed auction process is that it is open and competitive. However, there are some unsettling news reports that this basic principle may be in jeopardy. For one, there has been some recent coaxing by the Department of Justice that the FCC may want to consider favoring its auction to benefit some small wireless providers over larger ones. Along the same lines, there have been suggestions that the FCC may consider rules to prevent the largest two wireless providers, AT&T and Verizon, from participating in the upcoming auctions. If recent headlines and comments from the FCC Chairman are any indication, Sprint and T-Mobile are “getting stronger” and the reality remains: “Every mobile operator out there, including the largest ones, needs more spectrum.”

Here is the problem—protecting competitors does not help competition, and that hurts consumers. Any action by the FCC that would intentionally benefit some competitors at the expense of others runs counter to the intent of Congress to constrain the FCC’s ability to limit participation in the upcoming spectrum auctions. When it comes to picking favorites in the market, that choice should stay with consumers, not regulators.

Back in February, our own Honorary Chairman Rick Boucher had similar thoughts on the FCC’s auctions:

History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”

On the Nomination of the Next FCC Chairman

By IIA

Below is our statement on President Obama nominating Tom Wheeler to replace Julius Genachowski as head of the FCC:

IIA Congratulates Wheeler on Nomination to Be Next FCC Chairman

Recommends modernization, innovation and humility as goals for regulators

WASHINGTON, D.C. – May 1, 2013 – The Internet Innovation Alliance (IIA) today issued the following statement in response to President Obama’s nomination of Tom Wheeler to be the next Chairman of the Federal Communications Commission (FCC):

“Tom Wheeler is well-equipped to lead the Federal Communications Commission during a time that is crucial to the continued expansion and advancement of Internet technology. We congratulate him on his selection to serve as the next chairman of the Commission.

“In this new role, we hope he focuses on enabling the infrastructure investments required to put high-speed broadband access in the hands of more Americans. This resource is critical for education, health and entrepreneurship, and government and business must work together to increase its availability.

“As the leadership transition at the FCC takes shape, we look forward to our continued work with FCC Commissioner Mignon Clyburn who has been named interim Chair of the Commission.  Her strong vision and focus on driving programs that will help bring high-speed broadband to more Americans is critical to the Administration’s technology policy goals.”

“As no one can predict the outcome of technological investments made today, modernization, innovation and humility should be the focus of regulators.”

A Nom For FCC Chair

By Brad

The Hill‘s Brendan Sasso reports President Obama has made his pick to replace outgoing FCC Chairman Julius Genachowski:

President Obama on Wednesday will nominate Tom Wheeler, a former telecom industry lobbyist, to head the Federal Communications Commission (FCC), a White House official confirmed to The Hill.

Commissioner Mignon Clyburn will be named as acting chairman until the Senate confirms Wheeler, the source said.

Leading the Charge

By Brad

In a piece for Politic365, Hispanic Leadership Fund President Mario H. Lopez (HLF is an IIA Member) writes about how the Hispanic community is leading the charge in adopting mobile broadband:

The modern Hispanic community is not only going mobile, but it’s outpacing the general population in doing so. Survey data tells an incredible story of how far our community has come in a short time in adopting new technologies. ComScore tells us that in two years (2010-2012), Hispanic adoption of smartphones increased from 43 percent to 57 percent whereas adoption of smartphones among the general population increased from 36 percent to 46 percent. And as recent data from Pew shows, 76 percent of Hispanics are more likely to use their mobile devices to go online.

Mobile Internet connectivity gives Hispanics access to the civic, health, social, and entertainment content that they crave. At a time when economic growth and employment remains sluggish, mobile Internet access allows Hispanics to search for work and take advantage of online training and education. Mobile Internet also keeps Hispanic entrepreneurs and innovators connected to their customers.

Keeping this positive trend going, Lopez argues, will take smart regulatory policy:

Opportunities available to Hispanics are on the rise, and our community is leveraging the economic and social benefits of mobile broadband to make the most of them. Policymakers in Washington must recognize this growing trend and do everything in the power to support it. In recent years the FCC has made some progress on the spectrum front.

It will be important for successors to outgoing FCC Chairman Julius Genachowski and Commissioner Robert McDowell to speed up that progress and act upon the need to free up more spectrum for commercial use. The use of broadband connectivity will continue to be a crucial factor in creating jobs and economic growth, spurring innovation, and generating educational opportunities for all Americans.

Boucher on Updating Regs

By Brad

Our Honorary Chairman Rick Boucher has an op-ed in The Hill on the need to modernize regs to keep up with today’s technology. Here’s a taste:

the development of the Internet has brought us to another critical juncture in communications policy as we consider how to complete the transition from the bygone era of plain old telephone service to the digital bonanza of the 21st century. It’s a critical transition, given the Internet’s increasingly dominant role in every part of our economy, as well as its ability to improve lives and help achieve important national goals. It’s also something that just about every stakeholder, including the Federal Communications Commission, regards as inevitable. As we move forward, the guiding principle must be to put consumers first.

You can read the full op-ed at The Hill.

FCC Commissioner Pai on the Need to Move to All-IP

By Brad

In a must-read opinion piece for the National Journal, FCC Commissioner Ajit Pai makes the case that America should be making a big push to transition to all IP-based networks:

America is in the midst of a technological revolution, what some call the IP Transition (“IP” stands for the Internet Protocol, which is the technical foundation for all these changes). IP-based networks are different from the copper-based networks of yesteryear in a fundamental way: They were not designed for voice service alone. Instead, IP-based technologies break down every kind of communication (voice, video, e-mail and more) into digital bits and transport those bits more efficiently and cheaply than ever before.

Despite these vast changes in the communications marketplace, the Federal Communications Commission hasn’t caught up. We still view the world as if consumers were at Ma Bell’s mercy, relying on copper lines to get basic voice service. As a result, we have a lot of obsolete rules on our books. (Just two months ago, the FCC finally repealed a rule first adopted by its Telegraph Division during the Great Depression!) These old rules aren’t just harmlessly yellowing with age. They are affirmatively discouraging companies from investing in next-generation networks.

You really should read the whole thing at the National Journal.

Suggestions for the Next Chairman

By Brad

Via Brendan Sasso of The Hill, suggestions for a new FCC Chairman are making their way to the White House:

A coalition of conservative groups is urging President Obama to pick a new Federal Communications Commission chairman who will take a light touch with new regulations.

“We need regulators who can resist the frequent urge to ‘do something’ about problems that are rapidly mooted by technological change anyway. Often, government’s best response is to do nothing,” the conservative groups wrote on Tuesday in the letter to Obama and Senate leaders.

President Obama not only has to name a replacement for Chairman Julius Genachowski, but one for Republican Commission Robert McDowell as well.

Where the Chairman is Landing

By Brad

At The Hill, Brendan Sasso writes about outgoing FCC Chairman Julius Genachowski’s next gig:

The Aspen Institute announced on Monday that Federal Communications Commission Chairman Julius Genachowski will become a senior fellow at the non-partisan think tank after he steps down from his post.

Genachowski will be the fifth FCC chairman in a row to join the Washington, D.C.-based policy organization after leaving the commission. He will work on the Aspen Institute’s communications policy program.

The Future FCC

By Brad

At the Washington Post, Cecilia Kang sat down with Phil Weiser, President Obama’s former senior advisor on technology and innovation. The topic: Challenges facing the FCC moving forward. The entire interview is worth checking out, but here’s an exchange on the IP Transition:

What is the role of the FCC in the phone-to-broadband transition?

All current policy is built on the use of legacy technology and thus the transition away from it is major challenge for the FCC. Rather than necessarily attempt to simply transfer all legacy policy into the IP work, the FCC will need to ask ‘What policy regimes and policy goals are important?’ Consider, for example, the issue of access to video programming by the hearing impaired: what approach closed captioning should apply to Internet-delivered TV programs? Similarly, there are questions about how to provide next generation 911 access in an IP world. Another big issue will be whether and how to oversee interconnection arrangements. In short, there are big opportunities and challenges because we don’t have to do things in the way we have done them so far.

More Spectrum, Less Problems

By Brad

Our Co-Chairman Jamal Simmons recently talked with Marc Strassman of Etopia News about our look at the evolution of March Madness online, the IP transition, the need for spectrum dedicated to wireless, and more. Here’s one of a number of clips we’ll be posting over the next few days.

The full interview is available at Etopia News.

Brave New IP World

By Jamal Simmons

Tossing the TV is more evidence in favor of phone companies transitioning to all-IP.

As Ryan Nakashima from the Associated Press recently reported, there’s a dramatic shift afoot in how people are consuming entertainment:

Some people have had it with TV. They’ve had enough of the 100-plus-channel universe. They don’t like timing their lives around network show schedules. They’re tired of $100-plus monthly bills.

A growing number of them have stopped paying for cable and satellite TV service and don’t even use an antenna to get free signals over the air. These people are watching shows and movies on the Internet, sometimes via cellphone connections.

According to Nakashima, these TV tossers have been given a name by the Nielsen group—“Zero TV” households—and their numbers are increasing. In 2007, there were just 2 million homes. Today? 5 million and counting.

While those numbers aren’t yet big enough for broadcasters and cable providers to hit the panic button, they show an undeniable trend. Things are changing fast, and consumers increasingly want more freedom in when and where they watch their favorite shows. The season premiere of Game of Thrones set a record for piracy, which tells you two things: HBO’s business model probably needs an overhaul, and more and more people are unwilling to wait to be entertained.

It’s easy to label millions of people illegally downloading a hit show as entitled, but they’re just the scouts in what will eventually be an all-out assault from consumers on traditional business models. And once the armada lands, we’ll need networks powerful enough to meet their demands.

Those networks will be all IP, or all Internet Protocol.

The transition to all IP networks will mean everything is done via the Internet — not just web surfing and streaming video, but home phone service as well. IP networks will also make viewing TV over the net more reliable and consistent, since it will give companies the ability to invest in upgrades without maintaining legacy networks people are increasingly abandoning.

This transition won’t happen overnight, nor should it. Millions of Americans still rely on traditional landlines, just as millions still happily pay for cable and watch broadcast TV over the air. Ensuring people can still depend on their home phones and watch their favorite shows is critical. The transition beta trials AT&T has proposed and the formation of the FCC’s Technology Transitions Policy Task Force to oversee regulatory concerns are good ways to step forward carefully.

The tide is definitely sweeping up toward an all IP future. The recent bump in TV viewers going online is just latest evidence. One day, we might all live in “Zero TV” households, and if everything goes smoothly — if government and industry work together — we won’t even notice how radically things have changed. The home phone will still be the home phone and TV will still be TV; the only difference will be how they’re delivered.

Blocking B-block

By Bruce Mehlman

A recent agreement between Verizon and AT&T over spectrum holdings has inspired complaints from the usual suspects.

In the agreement, AT&T will pay close to $2 billion to acquire 39 of Verizon’s lower 700 MHz B-block licenses. While that sounds complicated, all it really means is two innovators in a highly competitive industry have found a neat way to solve mutual problems… You know, the free market in action. And as with any free market solution to a problem—especially in the wireless industry—there are other competitors and interest groups aiming to block the deal from going forward.

It’s no secret the wireless industry is scrambling to keep up with consumer demand. To the delight of chiropractors everywhere, we are now a nation of slouchers, spending our days hunched over tiny screens. All this activity on our devices creates data, and all that data needs spectrum to travel from point A to point B. As a result, the airwaves are getting more and more crowded—a problem outgoing FCC Chairman Julius Genachowski accurately labeled the “spectrum crunch.”

The Commission’s upcoming spectrum incentive auctions will hopefully go a long way toward easing this crunch. But let’s face it, government is about as nimble as an iceberg, which means wireless providers need more than years-away government action to meet the needs of their customers. Since it’s impossible for the regulatory grind to keep up with consumer habits, it will take free market solutions to keep wireless customers satisfied.

Few technologies have been as quickly adopted as mobile broadband, and as a result, the wireless industry is a victim of its own success. With government assistance in freeing up airwaves a minefield of red tape, blocking deals between providers for spectrum drags the entire industry down. Companies like Verizon and AT&T are motivated by the need to please their customers. The question is, what motivates those trying to block them from doing so?

Suggests for the Chair

By Brad

As soon as FCC Chairman Julius Genachowski announced his departure from the Commission, interest groups immediately began promoting their ideal candidates. As Brendan Sasso of The Hill reports, the latest person to offer a recommendation is someone very familiar with the FCC:

Public interest advocates are urging President Obama to choose a chairman of the Federal Communications Commission who will fight for liberal causes such as increased competition, media diversity and net-neutrality regulations.
Michael Copps, a former FCC commissioner and acting chairman, along with dozens of public advocacy groups, laid out their priorities in a letter to President Obama on Thursday.

Public Knowledge, Consumers Union, Free Press, the New America Foundation, disability advocacy groups and Common Cause, where Copps now works, all signed on to the letter.

Among the list of potential nominees are venture capitalist Tom Wheeler, National Telecommunications and Information Administration head Larry Strickling, and Organization for Economic Cooperation and Development ambassador Karen Kornbluh.

Moving Telecom Policy Forward

By Brad

Our own Bruce Mehlman has an opinion piece in The Street today examining the current state of telecom policy and how outdated regulations are holding a vibrant industry back. Here’s a taste:

As with government, the ability of businesses to invest is not unlimited. When demanding investment in redundant copper networks to preserve the status quo for an ever-shrinking minority of consumers, policy makers directly rob investment from faster broadband networks that serve the ever-growing majority of consumers. That’s the wrong choice.

Today’s broadband marketplace is hyper-competitive, rapidly innovating and most enabled by less regulation and a lighter regulatory approach to advance the public interest and best serve consumers. It’s clear that outmoded telecommunications regulations designed in the pre-broadband, pre-smart phone era no longer advance America’s future.

You can read the full op-ed at The Street.

Where Things Are Going

By Brad

Our Honorary Chairman Rick Boucher has penned an op-ed for Reuters on the transition to all-IP networks. Here’s a taste:

As with the adoption of any new technology, the move to IP networks offers challenges and opportunities. A majority of Americans have already changed from voice-only telephone networks. Roughly 93 percent of U.S. households subscribed to switched-access phone service a decade ago, according to USTelecom, today it’s less than one-third and is projected to decline to one-quarter of households by the end of 2013.

Moving the dwindling number of consumers still on copper technology will likely require a public-private partnership that can ensure no one is left behind while also providing access to affordable 21st century technologies.

You can read the full op-ed at Reuters.

The Search for a New Chair

By Brad

Over at The Hill, Brendan Sasso warns President Obama is headed into a “political minefield” as he mulls a successor to FCC Chairman Julius Genachowski:

It’s an important choice for Obama, as the next chairman will face difficult decisions over how to provide enough airwaves for mobile devices, preserve the openness of the Internet and promote competition.

Tom Wheeler, a venture capitalist and fundraiser for Obama, was considered the clear favorite for the job just last week. But then a coalition of public interest groups sent a letter to the president bashing him, and 37 senators signed a letter supporting an alternative pick: FCC Commissioner Jessica Rosenworcel.

“Wheeler is still the front runner, but it isn’t as secure as it was a week or two ago,” another industry watcher said.

Quick Talk With Genachowski

By Brad

Speaking of the FCC, John Eggerton of Broadcasting & Cable has a short interview with outgoing Chairman Julius Genachowski. Here’s a taste, regarding the Commission’s upcoming spectrum auctions:

You mentioned incentive auctions. You are leaving with the incentive auctions still at the beginning of the process. What shape is it in?

In 2009, when I rang the alarm bell on a spectrum crunch, people said there was no spectrum crunch. In early 2010, when we introduced the incentive auction idea, people said that would never happen. The goals that I set out were to get the country focused on spectrum crunch, get the legislation passed and move forward on other steps to free up licensed and unlicensed spectrum. Things have moved much faster than anyone would have thought, and much more has gotten done than anyone would have predicted. Having said that, there are challenges ahead and they will be with us for a very long time. That is why one of the things I focused on was strengthening the agency so that it could continue to do the work of the American people for a very long time.

The full interview is worth checking out.