Today I opened my Hotmail account and found that I now have an expanded 250 megabytes of storage space! This, of course, is Microsoft's long anticipated response to the introduction of Google's Gmail service last spring which boasts 1 gigabyte of storage and Yahoo's subsequent expansion to 100 MB (now 250MB). Larger account sizes make it easier for users to share all kinds of data (photos, documents, etc.) and allow users to store files online in their accounts.

The interesting thing about the dynamic and consumer friendly email market is that it is a sector of the communications industry that has matured and advanced with minimal regulatory oversight. Email carriers operate in an unregulated market and this morning my inbox benefited from the competitive forces that this environment engenders.

The email storage wars demonstrate that the communications industry will remain dynamic because of advances in network capacity and compression techniques, not distortionary taxes and regulations. With millions of users worldwide, free email accounts have become the ultimate 'universal service.'

FYI: If you are still waiting for your own 250MB upgrade from Hotmail, a Microsoft spokesperson explained that they "expect to have completed the roll out in the US by the end of the calendar year."

Comm Daily (subscription required) reports today that state regulators do not anticipate federal preemption over broadband over powerline (BPL):

State regulators don't see a VoIP-like FCC preemption of broadband over power lines (BPL), said Mich. PSC Comr. Laura Chappelle, who heads the NARUC BPL task force. "I don't see the FCC or FERC [Federal Energy Regulatory Commission] as overly anxious to jump and try to preempt BPL," she told us.

Commissioner Chappelle is correct, though I feel sorry for any regulator who has to try and untangle the regulatory conundrums that BPL presents. With a regulated electric utility, the costs for the BPL infrastructure are in theory all collected through the electric rates that consumers pay. Thus, the incremental facility costs for BPL are zero, or so some would argue. Of course, one company's incremental cost of zero is another's predatory price, which is a consumer counsel's double recovery.

The cost allocation is quickly insoluble -- how much of BPL's cost is allocated to the regulated, electric side and how much to the competitive, broadband side? And how the regulator answers this question determines whether or not BPL is viable in the marketplace. Of course, if the regulator allocates all the costs to the electric side, the cost picture for BPL looks quite good. On the other hand, if costs are allocated to the broadband side, electric rates go down but the broadband cost may not be competitive. Complicating all of this: there is no principled way to do the cost allocation.

This is a little like the line-sharing context, where the incremental cost of the high frequency portion of the loop is zero. However, since the HFPL has economic value, there must be a positive price -- and hence an allocated cost -- to the HFPL. Trouble is, you can only theoretically describe that the cost should be allocated, you can't determine what it really is.

Like I said, cost allocation for BPL must be done, and the states would appear to be the ones to do it -- but I don't envy them.

"One of Yogi Berra's famous sayings is: 'When you come to a fork in the road, take it!' But what is good enough for Yogi is not good enough for the Commission. Not now. This time the FCC must take the right fork in the road. In light of the reality of the competitive alternatives that already exist in the telecommunications marketplace, not to mention still more potential competition in the wings, it is time for the Commission to opt for the Dynamic Deregulation vision."

The above is from the conclusion of the new scorecard I released today regarding the FCC's forthcoming UNE action. The Commission is at yet another fork in the road in this long-running play. How the Commission grades out on the scorecard's benchmarks will determine whether it takes the right (deregulatory) fork, or merely another wrong (overly regulatory) fork.

Stay tuned!

As most policymakers digest Thanksgiving turkey, the debate heated up further regarding how telephone companies will be compensated for use of their traditional networks when they are used to connect "voice over IP" (VoIP) calls. FCC Chairman Powell issued a carefully worded statement regarding a recent filing by one major telephone company about a new service option by which Internet voice providers can connect to the telephone company's network. Critics have assailed the plan as an attempt to perform an "end run" around ongoing compensation proceedings, while the company underscores that it will comply with any forthcoming FCC rulings and that the new service is optional (TRDaily, Nov. 24, 2004 - subscription required). Powell's statement does not clarify whether the FCC has permanently rebuffed a call to suspend and investigate the new service. But it does make clear that pressure to resolve these network compensation issues will continue to mount as use of Internet voice services grows.

Business Week paints what may be an overly-optimistic picture on the growing "resolve" in DC to facilitate the digital TV transition, but reports that there is "an informal proposal circulating from the Federal Communications Commission staff to end analog TV broadcasts by 2009," at which time the analog TV spectrum could be made available for wireless services.

Great moments in indecency regulation:

Despite my colleagues' assurance that there appeared to be a safe distance between the prostitute and the horse, I remain uncomfortable. I respectfully dissent.

If you're looking for context, you really don't want to know. (And how many perverted hits do we get from Google with that headline?)

She believes in privacy rights, except when she doesn't believe in them (LA Times registration required):

A San Diego Gas & Electric Co. executive is suing California Public Utilities Commissioner Loretta M. Lynch, alleging that she helped a TV station record what he thought was a private conversation with her -- and that ended up on the air as part of an investigative report on the PUC.

Well, the FCC is surely correct in recommending that Congress not mandate that cable operators be required to offer channels on an a la carte basis. Did you see the SBC news release concerning its deal with Microsoft that will enable it "to provide next-generation television services using the Microsoft TV Internet Television (IPTV) Edition software plaktform." SBC says the deal is valued at $400 million over 10 years.

According to SBC, its Internet-based service will change the way people experience television: "Finally, customers will watch what they want, when they want--from a virtually unlimited and interactive content selection." SBC says it plans on the availability of the IP-based television in late 2005.

I know, I know--the date almost certainly is hyped up a bit, and it likely will slip. It may be 2006, or 2007, or....but Internet Television is surely coming. And it will be "a la carte" out of the kazoo, beyond John McCain's fondest dreams. The marketplace and technology are driving this.

And this too: The regulatory metaphysicians are likely to have a field day arguing about the classification of Internet Television unless Congress acts in the not-too-distant future to free all digital services from the traditional stovepipe regulatory mandates.

And speaking of Congress, this too: Think about all that valuable spectrum that will be devoted to provision of over-the-air digital TV service by "broadcasters" at the same time that many people incresingly will be satisfying most of their video fix through non-spectrum delivered Internet TV.

The Register has an interesting commentary on OFCOM's directive to British Telecom to fix itself in three months or face the threat of divestiture.

It's Rural America Week for telecom issues on the Hill. Commissioner Adelstein got the nod for a full stint at the FCC and, as part of the "Consolidated Appropriations Act," the FCC's consideration of a primary line restriction is now moot. A previous posting discussing the pros and cons of a primary line restriction is available here, but for now it is apparent that political considerations will temper the possibility of meaningful USF distribution reform.