Tuesday, July 19, 2005

Duopoly Watch

US News has noticed that those darn duopolists -- DSL and cable -- keep confounding the consumer advocates and blackboard economists by engaging in vigorous price competition. If this continues, they will have to think of another potential catyclsm with which to justify regulation.

posted by Ray Gifford @ 2:15 PM | Broadband

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Monday, July 11, 2005

Post-Brand X: A Broader Look at Consumer Protection

The "consumer tragedy" rhetoric that has reared its ugly head in the aftermath of Brand X argues for revisiting what we mean by "consumer protection." Specifically, consumers aren't just looking for government assurances regarding rates and the like; they also want innovation and other attributes that make services more valuable -- which only markets, as opposed to regulators, can bring. I make this point in a letter to the editor that the Philadelphia Inquirer [sign-up required] saw fit to publish on Sunday.

posted by Kyle Dixon @ 6:47 PM | Broadband, Cable, Communications

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Thursday, July 7, 2005

A Vote of Confidence

We can all have opinions about where various markets are going and which technologies will be successful, but opinions that are backed up by real money have more credibility. That is why it was heartening, especially for those of us who have been watching the ups and downs of broadband over powerline (BPL) over the years, to see that Google, Goldman Sachs and Hearst - three presumably sophisticated investors - are investing $100 million in Current Communications, a small company that is a leader in BPL. Current is the company that is partnering with Cinergy to provide BPL in Cincinnati (the biggest BPL project now underway) and also partnered with Pepco in the pilot project in Potomac, Md. If successful, BPL will obviously be another broadband pipe and particularly beneficial for rural areas.

posted by Tom Lenard @ 3:02 PM | Broadband, Communications, Electricity

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Openness Post-Brand X: It begins . . .

The release this week of Public Knowledge's "Principles for an Open Broadband Future" is important in at least two respects, even for those of us who disagree with some of the white paper's arguments and conclusions. First, the paper underscores that, in the wake of the FCC's Supreme Court victory in Brand X, Capitol Hill is the new battlefield for advocates of Internet openness. Second, it underscores (for the most part, anyway) how much the openness debate has evolved since the FCC began its effort to promote broadband investment and innovation by declining to saddle these services with onerous regulation.

Continue reading Openness Post-Brand X: It begins . . . . . .

posted by Kyle Dixon @ 2:18 PM | Broadband, Cable, Capitol Hill, Communications, Innovation, Internet, Net Neutrality, Supreme Court

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Chairman Martin on Broadband

FCC Chairman Kevin Martin tells a good news story on broadband deployment today in The Wall Street Journal. He also brings a needed corrective to the OECD statistics that show the U.S. 12th in the world in penetration, pointing out that U.S. broadband growth rates are high and that no country ahead of us on the list has a more dispersed or rural population.

Most importantly, the Chairman signals his intention to bring all broadband players into regulatory parity in the wake of the Supreme Court's Brand X decision. This means his agenda will be to regulate DSL subscribers down the the same level of relative regulatory freedom that cable subscribers have after Brand X. The Chairman understands that providers must be "free of undue regulation that can stifle infrastructure investment."

Continue reading Chairman Martin on Broadband . . .

posted by Ray Gifford @ 9:02 AM | Broadband

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Thursday, June 30, 2005

FCC Regulation of Service Bundles??

The FCC has a proceeding open that, even after its Supreme Court victory in Brand X, suggests there may be some uncertainty about whether the agency will regulate one-price "bundles" of broadband and other services like voice. To read my SkyReport op-ed on this issue, click here.

posted by Kyle Dixon @ 1:30 PM | Broadband, Cable, Communications, Innovation, Internet, VoIP, Wireline

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Signs of a Not So Cozy Duopoly

Those who would retain the regulatory status quo of pervasive price regulation have switched epithets in the last year from "monopoly" to "duopoly." A duopoly, we are told, is just as bad because the two firms in the market will cozily divide up markets and share supracompetitive profits.

It appears someone forget the duopolists that this is how the textbooks demand they behave. SBC has again escalated the price wars with cable, offering three free months of TV and high-speed Internet service for defectors from cable.

Continue reading Signs of a Not So Cozy Duopoly . . .

posted by Ray Gifford @ 10:54 AM | Broadband, Spectrum

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Tuesday, June 28, 2005

Broadband Post-Brand X: The Long and Winding Road

As I have stated repeatedly, the FCC needed to win the Brand X litigation to carry out its plan to minimize regulation and thereby bring consumers the benefits of investment and innovation in competing broadband networks. Based on his reaction to Monday's Supreme Court decision affirming the FCC, Chairman Martin appears to agree. But even as we (or at least some of us) celebrate Monday's decision as a victory for consumers, it is important to remember that, for the FCC, this is only a first step down a long and winding road.

Continue reading Broadband Post-Brand X: The Long and Winding Road . . .

posted by Kyle Dixon @ 3:50 PM | Broadband, Broadband, Cable, Communications, Innovation, Internet, Net Neutrality, The FCC, Wireline

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Broadband Post-Brand X: The Long and Winding Road

As I have stated repeatedly, the FCC needed to win the Brand X litigation to carry out its plan to minimize regulation and thereby bring consumers the benefits of investment and innovation in competing broadband networks. Based on his reaction to Monday's Supreme Court decision affirming the FCC, Chairman Martin appears to agree. But even as we (or at least some of us) celebrate Monday's decision as a victory for consumers, it is important to remember that, for the FCC, this is only a first step down a long and winding road.

Continue reading Broadband Post-Brand X: The Long and Winding Road . . .

posted by Kyle Dixon @ 3:50 PM | Broadband, Broadband, Cable, Communications, Innovation, Internet, Net Neutrality, The FCC, Wireline

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Wednesday, June 22, 2005

Dixon Fails at Self-Promotion

PFF's Kyle Dixon speaks Thursday at Columbia University's CITI conference "Are Multiple Broadband Infrastructures Sustainable?"

posted by Ray Gifford @ 11:35 AM | Broadband

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Monday, June 20, 2005

The Origins of DACA

Tomorrow's DACA workshop represents a landmark for the project, and months of hard work by the working group, especially by Randy May and Jim Speta. The current draft report is not an end, but a beginning of the project and its five reports.

Mustering as much sincerity (and hopefully not too much institutional self-congratulation) as possible, I think it is a serious and important contribution to thinking about communications law reform.

Continue reading The Origins of DACA . . .

posted by Ray Gifford @ 8:22 PM | Broadband, Capitol Hill, Communications, The FCC

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Thursday, June 9, 2005

Video Over Fiber: Rhetorical Ironies and Inconsistencies

In the rhetoric of communications policy debates, the irony of telcos being criticized for (potentially) bringing another video service option to consumers goes without saying. The promise of fiber-based video offerings has generated a backlash of pleas that such offerings be subjected -- before they are barely launched -- to various fees, network build-out requirements and other so-called "social" obligations. As stated elsewhere, these pleas arise from several potential motives, only some of which may be self-interested. An equally-important point, however, may be that these pleas illustrate inconsistencies -- which are ultimately unsustainable -- in the rhetoric and related policy judgments associated with previously distinct services that are converging over IP networks.

Continue reading Video Over Fiber: Rhetorical Ironies and Inconsistencies . . .

posted by Kyle Dixon @ 8:28 PM | Broadband, Cable, Communications, Innovation, Internet, Universal Service

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Friday, June 3, 2005

Nebraska Broadband

While it is not posted online yet, the clerk's office of Nebraska's unicameral legislature confirms that Governor Dave Heineman signed into law LB 645 this afternoon. The bill establishes an 18-member Broadband Services Task Force. The task force has 18 months to study the effects on competition of municipal broadband provision and is specifically charged to look at the supply and the demand of broadband in Nebraska before formulating recommendations to the legislature (see pages 6-7 of the bill for the full scope of its charter.) In the meantime, public power (a very big deal in Nebraska) is sidelined from the broadband game. Specifically, political subdivisions of the state and public power entities that were not authorized to offer "broadband services, Internet services, telecommunications services, or video services" by January 1, 2005 have lost the ability to get in the game. In effect, Nebraska citizens have a moratorium on new municipal broadband efforts and a promise that the issue will come back in force in early 2007.

I seem to recall reading a very good piece related to this issue. Oh yes, here it is.

posted by Kent Lassman @ 3:40 PM | Broadband, Municipal Ownership, State Policy

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SBC Lowers Prices--Consumer Advocates Be Ready To Shriek!

The Wall Street Journal reports that SBC has lowered its DSL prices to $14.95 per month ($14.95!!!!). For those looking for robust competition in broadband markets, they need look no further. I await the the so-called consumer advocate crowd to begin brow-furrowing over predatory pricing. How dare SBC lower prices so...

posted by Ray Gifford @ 1:18 AM | Broadband

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Tuesday, May 31, 2005

Texas Tussle: Consumers Lose

The Wall Street Journal blames a coalition of cable and municipalities for defeating Texas's proposed statewide video franchising law, which would relieve the Bells' video offerings (and cables' too!) from city-by-city franchise negotiations -- otherwise known as shakedowns. Being subject to local franchising requirements will surely slow down the Bells' video rollout.

In this, consumers lose quicker entry and competition in the video and broadband markets. The Journal portrays the Texas loss as foreshadowing similar losses across the nation -- kind of like France's EU vote, but with much less world-historical consequence.

Were I a cynic, I would lament that we are forestalling video and broaband competition to instead increase in local government tax revenue. Perhaps with the additional revenue, the municipalities can build their own broadband systems since the private platforms are taxed so heavily. But I am not a cynic, so I will look to the last sentence of the Journal article quoting NCTA Head Kyle McSlarrow: "It may be appropriate that Congress affirm that these kinds of services be dealt with a very light economic regulatory touch,..." Now that would be the way to deliver all players from this local tax morass.

posted by Ray Gifford @ 2:16 AM | Broadband, Cable, State Policy

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Friday, May 27, 2005

Reality Check for Muni Wi Fi

CNET has a story today on some of the challenges cropping up for municipalities trying to jump on the "free Wi Fi" bandwagon. Of course, a great deal has been written on this issue (see here, and here) but it was the following line that really shook me.

"But once a system has overcome interference problems, the biggest concern is how to handle network abusers, such as spammers, illegal file-swappers and people launching virus attacks."

Continue reading Reality Check for Muni Wi Fi . . .

posted by Kent Lassman @ 3:03 PM | Broadband, Municipal Ownership, Wireless

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Monday, May 23, 2005

DTV and Wireless Broadband: Come Now, Folks . .

Last week's draft legislative proposal by House staff has generated some optimism regarding movement in the transition to digital TV. In addition to hastening the day when consumers can enjoy higher-quality and potentially more plentiful television programming, the DTV transition promises to jump-start deployment of wireless broadband and other competitive services even after roping off more spectrum for emergency services.

Yet the transition may stall again if Congress continues to miss the forest for the trees on the issue of subsidizing digital-to-analog "converter boxes." This obstacle, which seems small relative to the overall digital transition, suggests we should temper our optimism about recent progress with healthy unease that success still eludes us.

Continue reading DTV and Wireless Broadband: Come Now, Folks . . . . .

posted by Kyle Dixon @ 5:10 PM | Broadband, Capitol Hill, Communications, Spectrum, Wireless

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Broadband in the Exurbs

First of all, my apologies for using the unattractive and ambiguous term "exurb" in the title above, but the term favored by social scientists appears in the headline of a Washington Post story on the difficulties of getting broadband in rural areas. It's important that rural and exurban America have access to competitve broadband, and it's a worthy issue for local officials to examine. There are right and wrong ways, to approach this however, as I'll discuss below.

Let me begin by admitting my own bias here. I grew up in what generally would be considered exurbs, developments outside of Phoenix. (We'd keep moving out into the desert, but our neighborhood would quickly be considered suburbs due to the Valley of the Sun's absurd growth.) I was born in Klamath Falls, Oregon, halfway to nowhere. I have aunts and cousins in Monroe, Oregon, other aunts and cousins in Midland, Texas, and even an aunt in the Canadian Rockies, miles from any sign of civilization.

Continue reading Broadband in the Exurbs . . .

posted by Patrick Ross @ 2:05 PM | Broadband

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Thursday, May 12, 2005

The Broadcast Flag and Minimum Requirements for Broadband

As Ray noted last week, the D.C. Circuit rebuffed the FCC (again) for asserting authority it does not have. Yet despite the angst and juibilation surrounding the "broadcast flag" decision, the case did little to undermine the already-tenuous basis for the FCC to assert its so-called "ancillary" authority to regulate broadband "information services" under the Communications Act. The decision does, however, add more kindling to the fiery debate over which, if any, baseline obligations should be imposed on broadband to the extent competition justifies protecting these services from more intrusive regulation.

Continue reading The Broadcast Flag and Minimum Requirements for Broadband . . .

posted by Kyle Dixon @ 1:51 PM | Broadband, Communications, Internet, Net Neutrality, The FCC, VoIP

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Sunday, May 8, 2005

The Art of the DTV Deal: Continued

In response to my DTV Art of the Deal post, PFF Adjunct Fellow Joe Kraemer e-mailed the following thoughts, which I reprint here by permission:

1. In order for a [DTV deal] to emerge, there must be uncertainty on the part of all parties that a legislatively-mandated transition date in 2008 or 2009 will be enforced. In other words, the broadcasters must believe that there is a material probability that the date will be enforced while those organizations that want to use the vacated spectrum must believe that Congress may lack the will to enforce the date. Therefore, a legislatively mandated date creates the opportunity because it will paradoxically increase uncertainty [particularly with a presidential race in 2008].

2. The basis for paying the broadcasters an incentive would be the present value of accelerating the transition so that the alternative users would have access two or three years earlier than they otherwise would. The value of the incentive is not the absolute value of the spectrum.

3. The broadcasters would receive funds to cover transition costs, as well as an acceleration premium. There may be a need to set up some type of Transition Administrator that is outside the FCC and would authorize incentive payments based on actual progress towards vacating the spectrum.

Continue reading The Art of the DTV Deal: Continued . . .

posted by Ray Gifford @ 5:15 PM | Broadband, Capitol Hill, Spectrum, The FCC, Wireless

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Friday, May 6, 2005

What's Left of Title I After the Broadcast Flag Case?

The DC Circuit's vacation of the broadcast flag rule leaves the FCC's supposed Title I authority in tatters. The broadcast flag, a rule concocted as part of the compromise on the digital television transition, required broadcasters to "flag" digital content s as to make it harder to pirate.

Personally, I had no great enthusiasm for the flag, as I thought it inadvisable to found a new strain of intellectual property law in the FCC, an agency that has enough trouble with its current mandate. That said, the flag could be tolerated when seen in the context of the DTV transition as a whole, where its imposition was indispensible to the content industry signing-off. This "end justifies the means" thinking is not to be encouraged very often, but the value of completing the DTV transition is enormous, as I've spoken about here.

Title I always seemed a thin reed on which to premise a de facto copyright protection law, and now the DC Circuit has confirmed that it is not the empty vessel into which all sorts of broadband aspirational goals can be poured. Thus, this case has enormous implications for those who would want to regulate

Continue reading What's Left of Title I After the Broadcast Flag Case? . . .

posted by Ray Gifford @ 4:15 PM | Broadband, Cable, IP, The FCC

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Footnotes We Edited Out, or a Convoluted Solution to Redlining

One great use of a blog is to recycle things that you decided weren't good enough for a more formal paper. Blogs -- the refuse pile of discarded thoughts. Now, there's a great slogan.

In our Progress on Point on video services released earlier this week, Kyle and I discussed potential solutions to the "redlining" issue that cable raises against telephone company entry into the video market. But then we deleted it from the final version because it detracted from the pure principles we were trying to represent. Nonetheless, here is the notional idea for the edification of our blog readers:

[T]he Bells former and the cable companies current cries of "redlining" are based on the build out requirements requisite on their respective networks. Under the regulate down principle, the solution would be to compensate the incumbent for this implicit universal service obligation. We are not sure what the methodology would be or who the payors should be, and are certain that it should not be an ongoing payment obligation but should instead be one-time compensation for the sake of simplicity and administrability. To be sure, it would be a unseemly process fraught with ambiguity and difficulty. Under a rough justice principle, the answer may be to negotiate a one-time payment based on some rough notion (the skeptics could call it ransoming the market to continue the Stockholm Syndrome analogy) of what it owed, and for policymakers to be done with it.

Continue reading Footnotes We Edited Out, or a Convoluted Solution to Redlining . . .

posted by Ray Gifford @ 11:05 AM | Broadband, Cable, Wireline

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Thursday, May 5, 2005

CA Consumer Bill of Rights: It's Baaaaack . . .

This week's reincarnation of a "consumer bill of rights" in California dramatically illustrates the need to clarify the appropriate role for state communications regulators as part of overall telecom reform. But clarifying state and federal regulators' respective roles must go beyond considering who regulates; we also must consider why they regulate. Specifically, we must consider whether state regulation should attempt only to further basic social goals, or whether states should be allowed to engage in broader economic regulation.

Continue reading CA Consumer Bill of Rights: It's Baaaaack . . . . . .

posted by Kyle Dixon @ 5:47 PM | Broadband, Capitol Hill, Communications, Net Neutrality, VoIP

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Friday, April 29, 2005

Another Lesson from a Mad River, Courtesy of Professor Lessig

It's not often that the cable industry can count on help from Lawrence Lessig regarding "network neutrality" -- the question of whether cable modem and other broadband service providers should permit Internet users to access the content, applications and devices of their choice. And yet, Lessig appears to have conceded an argument on which cable may rely to resist regulation if the FCC wins the Brand X case in the Supreme Court. That case ultimately will decide whether the agency can classify cable modem service as a largely unregulated "information service" under the Communications Act. Lessig's concession, however, may not be enough to keep the FCC from enforcing net neutrality even if the Court hands the agency a victory.

Continue reading Another Lesson from a Mad River, Courtesy of Professor Lessig . . .

posted by Kyle Dixon @ 11:25 AM | Broadband, Cable, Communications, Net Neutrality, The FCC

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Friday, April 8, 2005

Arkansas-VON-VoIP

The VON Coalition has sent a letter to Arkansas legislators with the purpose of heading off state taxation of VoIP services. Ray wrote about it here; a follow-up is found here. While I've read the letter, I don't see it on their website and so a link will be forthcoming when available. Among other arguments, VON rightfully makes the point "VoIP transmissions are indistinguishable from other forms of data traffic - making voice traffic difficult to separate out from other e-mail and web surfing traffic for tax purposes." I particularly like VON's appeal to demand-side arguments regarding broadband. Nearly all policy proposals to increase broadband penetration focus exclusively on supply side effects. Not so with VON. This is good since understanding markets requires both sides of the equation.

posted by Kent Lassman @ 9:47 AM | Broadband, State Policy, VoIP

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Thursday, April 7, 2005

A Little Telecom Reform May Go a Long Way in the Short Run

As reported in National Journal's Tech Daily and TR Daily [subscriptions required], key staff and their bosses continue to predict that Congress will roll out telecom reform quickly over the coming months, rather than over the years predicted by conventional wisdom. Further, certain Congressional committees are reportedly trying to minimize the need to share control over telecom reform. Thus, one can add timing and turf battles to the list of reasons why policymakers and hangers-on should focus more on narrow approaches to telecom reform, at least in the near future.

Continue reading A Little Telecom Reform May Go a Long Way in the Short Run . . .

posted by Kyle Dixon @ 10:52 PM | Broadband, Capitol Hill, Communications, Innovation, Think Tanks

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Friday, April 1, 2005

Will Colorado Limit Taxation by Regulation?

Ray's post below spotlights an alarming trend: the application of traditional utility regulation to emerging, competitive services like VoIP. However, at least one state may swim against the current. The Colorado legislature is considering a bill to prohibit state and local taxation of VoIP and state regulation under the "telecommunications" statutes.

VoIP is by definition competitive therefore the old rules shouldn't apply. But state legislators there may also recognize the less obvious but salutary pressure created by tax competition. Will consumer enhancing VoIP providers spend more resources in Colorado or neighboring Nebraska? The policy climate matters. In addition, the Colorado law nods appropriately to FCC jurisdiction on E-911 standards. However, Section 8 of the proposed law suggests that it is necessary for the "immediate preservation of the public peace, health and safety." This clause is pro forma in Centennial State legislation. It preempts the referenda process that otherwise could "recall" and overturn a statute. Nonetheless, it is a stretch.

Word has it that one of the sticking points in the process has been an unclear assessment of how this bill would affect USF funding. Until USF is tackled comprehensively, many state proposals are trapped in limbo.

posted by Kent Lassman @ 11:40 AM | Broadband, State Policy, VoIP

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Wednesday, March 30, 2005

Voluntary Openness

More on Brand X -- along with the insightful posts of Randy and Kyle below, I'd like to direct you to an op-ed Kyle has on CNet News.com. There he champions the position of his old FCC boss and suggests that some voluntary steps by cable to both define and implement "openness" on the Internet might forestall mandates by policymakers that could be far worse.

posted by Patrick Ross @ 10:17 AM | Broadband

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Tuesday, March 29, 2005

Brand X: Whither FCC Deference?

Today's Supreme Court argument in the Brand X case raises an important question: why did the Justices downplay the idea that courts should defer to the FCC when it comes to interpreting the Communications Act? By all accounts, the Court said almost nothing about this issue. The answer may say less about the Court or the parties' arguments than about the conflicting policy goals surrounding the FCC's efforts to promote investment in broadband networks.

Continue reading Brand X: Whither FCC Deference? . . .

posted by Kyle Dixon @ 6:11 PM | Broadband, Cable, Communications, Supreme Court, The FCC

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Brand X

After listening to the Brand X argument this morning at the Supreme Court, this is my quick reaction:

"For the sake of sound communications policy in the digital broadband era, I hope the FCC and the cable industry prevail. Surprisingly, however, except for Justice Stephen Breyer's persistent questions, there was little discussion at the argument concerning the deference due the agency's interpretation regarding what, in my opinion, are inherently ambiguous statutory provisions - the definitions of "information" and "telecommunications" services. A key issue briefed in the case is whether the 9th Circuit erred in holding that the FCC's interpretation was entitled to no deference under the Supreme Court's Chevron decision that holds that agency's reasonable interpretations of ambiguous statutory provisions should normally be upheld. In light of the ambiguity in the statute, this is a pretty good case for the Court to show some deference to the agency."

posted by Randolph May @ 1:25 PM | Broadband

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Thursday, March 10, 2005

Broadband and Internet Voice: Lessons from a Mad River

The FCC's consent decree with rural telephone company Madison River Communications has re-fueled speculation about the best way to avoid unnecessary regulation of Internet voice and other broadband-related services. In explaining their decision to settle complaints that Mad River had blocked Internet voice calls on its network, agency officials reiterated the wisdom of avoiding regulation of this service according to the same formula the agency has employed to minimize regulation of broadband generally. Specifically, the FCC has attempted to assign these services to legal classifications under the Communications Act that are subject to relatively fewer requirements. One example of this formula is the FCC's decision to classify Vonage's offering as an "interstate service" that is not subject to state jurisdiction. Another is the FCC's classification of cable modem service as an "information service" that would remain largely unregulated under Title I of the Act (a case that is currently being reviewed by the Supreme Court in Brand X).

Previously, I have said that the FCC's approach is better-suited to avoiding regulation than first classifying broadband-related services as regulated common carrier services and then "forbearing" from such regulation. But reactions to Mad River reveal that, although the FCC's approach to regulating Internet voice and broadband-related services is the best alternative under the current Act, the industry nonetheless may experience substantial delay and uncertainty even under the FCC's approach, especially to the extent the agency succumbs to what might be termed "political pressures."

Continue reading Broadband and Internet Voice: Lessons from a Mad River . . .

posted by Kyle Dixon @ 6:02 PM | Broadband, Communications, The FCC, VoIP

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Thursday, March 3, 2005

Telco Video and Digital Must Carry: Making a "Problem" Worse

Recent reports suggest that the broadcast industry will ask Congress to reverse the FCC's recent decision to limit required carriage of digital broadcasts to one (of potentially many) video streams that can be broadcast over a chunk of spectrum that once could support only one analog TV channel. These efforts to obtain digital multicast "must carry" can be criticized simply on equity grounds. In addition to the possibility of broadcasting all of their programming over the air, broadcasters are guaranteed carriage of at least one "primary" video stream on the local cable system -- special treatment of which most video programmers can only dream. Thus, it seems more than fair to require broadcasters, using the programming and distribution resources already at their disposal, to make the remaining video streams that digital tranmission will permit sufficiently attractive that cable operators and other video distributors will want to carry those streams.

But proposals like multicast must carry that force video platform owners to carry other programmers' channels also can be faulted for another reason: they don't improve programmers' long-term prospects for enjoying the most competing outlets for distributing their video content. These mandates do nothing to encourage investment in newer ways to distribute video, such as telephone companies' efforts to provide video over fiber.

Continue reading Telco Video and Digital Must Carry: Making a "Problem" Worse . . .

posted by Kyle Dixon @ 5:54 PM | Broadband, Cable, Communications

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Something Funny Afoot in Florida

The President encourages, nay even pines for, municipalities to offer broadband services. Why? Because municipal broadband networks improve public education, health care and local economies. Each of these areas is harmed by private broadband providers. Certainly taxpayer funded, publicly owned and operated broadband is superior to the delivery offered by private markets. In addition, public networks will attract new private investment and there should be no worry about subsidization since large wireline carriers receive federal subsidies.

Okay, the jig is up. These are the arguments made by the Florida Municipal Electric Association to Governor Jeb Bush in a fifteen-page letter. While their invocation of the President's agenda is shocking, what is most stunning is the number and degree of misleading and contradictory arguments are made in effort to gain Governor Bush's opposition to legislation that would restrain municipal broadband investments.

Continue reading Something Funny Afoot in Florida . . .

posted by Kent Lassman @ 4:37 PM | Broadband, Municipal Ownership, State Policy

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Thursday, February 24, 2005

Cable-Telco Video Competition: Beyond Level Playing Fields

The battle continues to heat up between cable operators and telephone companies hoping to get into the video business. Today's Comm Daily [Lexis subscription required] reports on Verizon's legislative efforts in California to avoid a state law that would force VZ, where it is deploying fiber to support video service, to build out to the entire franchise area served by the incumbent cable provider. Not surprisingly, the local cable association has raised concerns with Verizon's bill. The statute from which VZ would be exempted if the proposed law passes has been described as an attempt to provide market competitors a regulatory "level playing field." But that unfortunate metaphor provides little guidance on how to piece through the many complex issues related to whether and how cable and telco video competitors should be regulated.

Continue reading Cable-Telco Video Competition: Beyond Level Playing Fields . . .

posted by Kyle Dixon @ 3:37 PM | Broadband, Cable, Communications, General, State Policy

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Friday, February 18, 2005

Philadelphia Wi-Fi

On CNet news yesterday, Frank Rizzo pointed out the potential pitfalls of Philadelphia's municipal Wi-Fi project. He points out some of the same problems inherent in most municipal telecom ventures: rising costs, low initial cost estimates, and most importantly, the fact that such ventures are unnecessary due to private competition. In the particular case of municipal Wi-Fi build out, another important aspect is the limitations of the technology and the emergence of better technologies, such as WiMax and 3G wireless.

posted by Mike Pickford @ 4:05 PM | Broadband

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Thursday, February 17, 2005

FCC on Wireless Broadband and Must Carry: No Lame Ducks Here

Lest loyal readers suspect that PFF has been so distracted by our attendance at far-flung conferences that we have overlooked happenings here in DC, I would note several FCC actions last week. These may be some of the agency's last actions before Chairman Powell takes his scheduled bow sometime next month.

The agency fell short of its own expectations in its ongoing effort to reform the tortured scheme by which carriers currently compensate each other for exchanging voice and data traffic between networks. This portends further delay in eliminating some of the Rube Goldberg-like complexity that continues to plague both traditional phone competition and universal service issues, as well as more recent concerns such as the deployment of Internet voice and broadband. Almost to make up for this disappointment, the agency managed to adopt a slew of consumer-oriented items regarding such issues as the national do-not-call registry, slamming and fees for changing long distance providers and rules to facilitate mobile satellite service to consumers and public safety officials.

But the more interesting actions last week concerned (1) the Commission's recommendations on how to promote the availability of wireless broadband access; and (2) the Commission's decision to mandate only one channel of digital programming on cable systems (so-called digital "must carry"). Taken together, these two actions reflect an ongoing commitment to promoting consumer choice in the digital environment.

Continue reading FCC on Wireless Broadband and Must Carry: No Lame Ducks Here . . .

posted by Kyle Dixon @ 11:05 PM | Broadband, Cable, Communications

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Wednesday, February 16, 2005

Rumblings from Boulder: Consensus and Next Steps in Telecom Reform

I echo Adam's praise of the Silicon-Flatirons (SF) conference on how to reform communications regulation amidst the "digital broadband migration," a concept FCC Chairman Michael Powell explored in a series of major speeches at previous SF conferences. (Of particular note in this regard was Powell's 2004 speech emphasizing the importance of achieving so-called "network neutrality" or "Net freedom" without preemptive regulation.) This weekend's conference underscored SF's reputation as an intellectual focal point for understanding and rationalizing the burgeoning field of "information law" -- an amalgam including communications law, intellectual property law, antitrust and competitive policy. To those wearied by the "he said-she said" of most telecom debates within the Beltway, this event in Boulder rightly has established itself as the thinking-person's policy conference. I would add to Adam's list of luminaries D.C. Circuit Judge Stephen Williams, Dale Hatfield, Mark Cooper and Qwest CEO Dick Notebaert.

Despite the wide range of strong opinions among participants, my take is that a rough consensus emerged on several key issues. This rough consensus provides much-needed guidance on how those who favor a "light touch" for regulation and those who would tolerate a heavier hand can come together to address the myriad issues arising from the emergence of digital technologies.

Continue reading Rumblings from Boulder: Consensus and Next Steps in Telecom Reform . . .

posted by Kyle Dixon @ 2:55 PM | Antitrust, Broadband, Capitol Hill, Communications, IP

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Tuesday, February 1, 2005

Digital Age Communications Act

We announced the Digital Age Communications Act Project this morning at a National Press Club Event. The nature of the project and participants can be followed here.

posted by Ray Gifford @ 1:31 PM | Broadband, Capitol Hill, Communications, The FCC, Wireless

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Thursday, January 27, 2005

Practicing Economics Without a License

I am not an economist, and neither is Larry Lessig. Tom Lenard is, and in an article in Regulation Magazine, Lenard suggests Lessig has been "practicing economics without a license."

At issue is a piece Lessig wrote called "Coase's First Question" in the previous issue of Regulation, in which Lessig claims there are two types of Coase practitioners -- "proper-Coaseans," who ask first if the resource in question should be the subject of property at all, and "property-Coaseans," who go straight to asking where the property right should reside. This, Tom argues, is clever language but distorts Coase's message.

Continue reading Practicing Economics Without a License . . .

posted by Patrick Ross @ 3:50 PM | Broadband

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Tuesday, January 18, 2005

CableCards, Competition and Modularity in the Digital Age

The FCC is considering whether to maintain, eliminate or delay further the deadline for cable companies to modify the set-top boxes they lease to customers so that they use the "CableCard" technology now visible in your local BestBuy. The cards, which you obtain from your cable provider, are security mechanisms that plug into a host of digital TVs, digital video recorders and other devices, thereby enabling those devices to read and display encrypted digital programming without obtaining a set-top box from the cable company.

There is a good argument that Congress did not mandate a "fully competitive" market for set-top boxes and other navigation devices as much as it simply instructed that consumers be given a choice to obtain those devices from folks other than the cable company. But even accepting the premise that the FCC should foster "device competition" in some ways, the current debate could benefit from a more rigorous evaluation of (1) incentives to innovate, and (2) the benefits consumers may reap if cable companies are allowed to continue their current involvement in the device market (i.e., leasing boxes to their customers that do not employ CableCards).

Before it decides what to do, the FCC should demand that the parties better explain the potential effect of the agency's decision on innovation and other consumer benefits, so that the agency's decision can fully reflect what competition means in this digital age.

Continue reading CableCards, Competition and Modularity in the Digital Age . . .

posted by Kyle Dixon @ 4:39 PM | Broadband, Cable, Communications

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Thursday, January 13, 2005

Municipal Broadband, Public Goods and Public Choice

There is much ongoing discussion of municipally-owned broadband projects, usually portrayed in this manner, as a battle between public-minded, well-intentioned politicians and greedy private firms who want to keep the forces of light from fulfilling the city's broadband dreams. Nevermind that good intentions are rarely sufficient basis for public expenditure. Despite utopian promises of economic development premised on building a a broadband network, this does not account for why private firms aren't doing it if this is the case. (See Laissez le Fiber Roulez)

"This is just like the government building sidewalks or roads," is one supporting analogy that is often used by municipal broadband proponents. The USA Today editorial approvingly quotes the City Parish Manager in Lafayette: "Installing fiber-optic cable, he credibly argues, is no different from laying down sidewalks or sewer lines." Unwittingly or not, the Manager is making what is called a "public goods" argument -- that a city or municipality needs to build this because it is a public goods.

Economist Tyler Cowen explains public goods here, and Nobel Laureate James Buchanan wrote an entire book on the subject, which is delightfully available online.

The arguments get more than a little involved, but the chief characteristics of a public good are non-rivalrous consumption and non-excludability. Thus a sidewalk is a good example of a public good -- one person can use it (for the most part) without interfering with others' use and you can't exclude others from its use. Because it's a public good, private markets will not supply it because there is an externality and a free-rider problem; that is, I will be able to use the sidewalk without paying for it. [But see, The Lighthouse in Economics, (discussed here) Ronald Coase's debunking of a classic public goods example that shows private markets come up with ingenious ways to solve public goods problems.] [Another interesting sidelight is that as consumption of roads becomes more rivalrous (in terms of congestion), that is becomes more acceptable to talk about private toll roads as a means to alleviate congestion. This also indicates, as Buchanan discusses, that nothing is a completely private or public good.]

What is striking about municipal broadband networks is that they have few, if any, characteristics of a public good. Broadband connections involve both rivalrous consumption and excludability (indeed, excludability is a rather important consumer demand in the guise of privacy concerns). Therefore, they are only public goods under the common parlance that some people might think they'd be good for the public. What these networks are, from an economic perspective, is a private good. And with private goods, we rely for the most part on private markets, absent market failure.

In other words, this is a meandering way of saying, the proponents will need to come up with a better analogy because the sidewalk and roads