I had planned a definitive, thorough discussion of the recent state demands (CA, MI, KS and counting) that the carriers submit their agreements for approval to the state commissions. A correspondent has beaten me to the punch with a pretty thorough analysis. With permission, I reprint it here:

Since we are dealing with voluntary agreements, the analysis must start with
47 U.S.C. § 251(a)(1), which states:

Result: Several states likely will assert jurisdiction over these new agreements, destroying hopes of confidentiality or package deals (as a result of nondiscrimination and pick and choose requirements). ILECs faced
with this possibility will tend to offer inflexible one-size-fits-all deals, making agreement with CLECs less likely.

This analysis seems plausible to me, complete with the pessimistic conclusion that contracts will be forced back to a standard-offer tariff, much like the current SGATs, and the related pick-and-choose inflexibility. In particular, I think that the second and third bullitt points of the potential problems will give the contracting carriers' difficulty. It seems clear that the FCC is going to have to provide guidance on this, and quickly.

Just started reading the new biography of Ted Williams by Leigh Montville on the plane back to Denver. Seems that Tom Yawkey was slow to take a ken to this new-fangled medium, TV:

"I started doing Red Sox games in 1951," broadcaster Curt Gowdy says. "We used three cameras to cover the entire game. One from first base, one from third, one behind the plate. I went to [owner] Tom Yawkey at the end of the season and said, 'I think we could use a fourth camera from centerfield to show the balls and strikes. I think it would be a great addition.'
"Yawkey surprised me. He didn't want it. He said television coverage would become too good. People would stay home from the ballpark. We didn't get it." [p. 4]

I am not sure there is any profound insight for public policy in the inability of businesses to adapt to new media. I think the market will work this out over time and reward those with the clairvoyance to realize its import and commercial potential.

And, so far, the biography of Williams is quite compelling. It almost makes me able to stand the American League, but of course this was before that Jacobin innovation, the DH.

The last major carrier to publicly reveal their negotiate not litigate strategy, AT&T released their "roadmap to facilities-based competition" today.

As with any opening offer in a negotiation, it is one that reaches for the stars. (To paraphrase Qwest's Dick Notebaert at our CEO luncheon yesterday, in the beginning of commercial negotiations "I want to take all of your margin, and you want to take all of mine.") For instance, the proposal would ensure that UNE-P will stay around for at least another six years and a $1 UNE-P rate increase would be locked into place until, among other things, a batch hot cut process is put into place by RBOCs.

AT&T's David Dorman is correct in stating that this is a "huge paradigm shift away from business as usual," but obviously it remains to be seen whether it is only a temporary one. AT&T has the most to lose in a non-regulatory solution, so it likely will be the last to make a deal. In light of Notebaert's comments at our luncheon yesterday on Qwest's "near death experience," its deal with Covad on line sharing and its announcement earlier this week that it will not charge terminating access on pure VoIP providers (a move that, incidentally, could give a boost to the Level 3 Forbearance petition), I view the Qwest/MCI negotiations currently taking place in Denver as the litmus test on whether the larger carriers will be able to avoid another round in the courts.

I opened my Senate Commerce Committee testimony this morning: "I find myself in the unanticipated situation of agreeing with every Reed Hundt just said..." My testimony is here. Mr Hundt's is here, and he really did talk sense on the spectrum takeback for wireless broadband.

News.com reports that a "whopping 68 percent of cellular customers are generally satisfied with the quality and coverage of their service," according to a Jupiter Research study released today. Only 10 percent of customers are dissatisfied.

One conclusion from the study is that as long as wireless carriers market themselves as low-cost carriers, they don't need to provide the best service to compete. Consumer expectations are driving a competitive marketplace? Makes you wonder whether the additional costs imposed on wireless consumers by something like, say, a Consumer Bill of Rights will be worth it. Never mind extending archaic quality of service standards to new services like VoIP.

Today the President spoke about technology to community college officials in Minneapolis. His speech hit on hydrogen fuel cells and digital medical records before turning to broadband. In addition to support for a permanent ban on Internet access taxes, Bush called for reducing regulatory hurdles to investment, easier access to federal lands to build facilities and standards for broadband powerline.

Drawing on a favorite pastime in Crawford, Bush had this to say: "[w]e're going to continue to support the Federal Communications Commission. Michael Powell -- Chairman Michael Powell, under his leadership, his decision to eliminate burdensome regulations on new broadband networks availability to homes. In other words, clearing out the underbrush of regulation, and we'll get the spread of broadband technology, and America will be better for it."

The President asserted "America leads the world because of our system of private enterprise and a system that encourages innovation. And it is important that we keep it that way. See, I think the proper role for government is not to try to create wealth, but to create an environment in which the entrepreneurial spirit flourishes." He is on to something with that innovation idea. The speech is here. AP and Reuters have coverage. Senator Kerry's broadband proposals are due out any day.

The California PUC has laid down the gauntlet to SBC and Sage Telecom to file their interconnection agreement under section 252 of the Telecommunication Act. The letter is here.

To my understanding, both SBC and Sage have refused to do so, Sage going so far as to say it will rescind the agreement if it has to be filed. Qwest and Verizon have also publicly stated that they will resist any directions to file with the states.

I am not wholly unsympathetic to the state position here, to the extent they are inclined to do things by rote. If it looks like an interconnection arrangement, then they think they have the right to review it. However, the states are missing that this insistence on filing -- much like the pick and choose rule -- utterly destroys any incentives for parties to reach privately negotiated arrangements. If everything must be filed and subject to an abstract "non-discrimination" requirement, then nothing can be negotiated in advance by the parties. In the end, the incumbent in particular can do nothing but come up with a single, standard "take it or leave it" standard offer.

Of course, a cynic would say that this is exactly what the states want -- to prevent any private negotiation and keep their hands deeply involved in a regulatory/supervisory process where they dictate the interconnection rights, terms and prices. Oh, wait, I am a cynic.

Well, if ever a staff deserved appreciation it is the hard-working crew at PFF. How do you think us so-called thinkers put out so much good work and organize so many good events--if I do say so myself. We couldn't accomplish half of what we do without them.

So, we topped off our Staff Appreciation Week, with lunch at our perennial favorite, Lauriol, where they know what to put on the fire when they see us coming. The food was good, of course. The conversation stimulating--"Say, did you do any net protocol conversions last night?" "No, but I caught the tail end of a discussion of UNE-Ps on TechTV!" And the Margaritas....Well, some of the staff may still be in Margaritaville. [Ray was in Denver, sipping his beer and eating his cheeseburgers, while watching the snow fall. His spirit hovered over the Margaritas.]

Thanks to Jane, Becca, Brooke, Andrea, and Marcia and everyone else for your good work and dedication throughout the year.

According to a recent item in Technology Daily [subscription required], two Harvard doctoral fellows and a media professor from the University of Leipzig in Germany claim that diversity of viewpoint on the Internet is a myth. They cited as evidence (1) individuals' poor knowledge of how search engines operate, (2) the online marketing techniques of various commercial and political entities, (3) the lack of transparency of search-engine technologies, (4) and the unregulated nature of the medium.

Ben Edelman, one of the Harvard doctoral candidates sums of their findings this way: "All these concerns reflect classical questions of media policy and media regulation, market concentration, media power, the protection of minors, the separation of advertising from content and media literacy...These are classical questions and classical challenges coming up with search engines in a new light. Of course, we need to find new ways to address them."

It's been a few months since a new FCC office was created, anyway. What about an "Office for the Regulation of Search Engines To Prevent Market Concentration, Media Power, Protection of Minors, and the Separation of Advertising Content and Media Literacy". There's no reason to leave its mission vague.

But before doing so, I'd love to have the docs over to my place to follow my mouse for 15 or 20 minutes while she crawls around the most astonishingly diverse, most easily accesible medium ever created.

The opening scene of The West Wing last night seemed eerily familiar to a scene from any day at PFF. In the scene, and the rest of the episode, President Bartlett was speaking of Schumpeterian virtues. The fictitious president quoted creative destruction and the long-run value added through short-run losses in a free market system. The Schumpeter reference was all the more poignant after Ray's blog the other day. It's nice to see that the icons of Austrian economics are finally reaching a broader audience than just think tankers and academics.