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Regulatory Comments "It’s been said, of the newest technology, that speed could change everything. If only we could cross a certain speed threshold, our basic infrastructure would catalyze new opportunities we can scarcely even conceive of..."
“It’s been said, of the newest technology, that speed could change everything. If only we could cross a certain speed threshold, our basic infrastructure would catalyze new opportunities we can scarcely even conceive of. All government needs to do is prime the pump: fund a demonstration project to prove that we can do it, and markets will follow. The demand may not be there yet, but “if you build it, they will come…”
“There are some impediments to the sort of broadband connectivity people actually do want — most importantly local and state regulations that reduce competition and increase the cost of new facilities. The FCC should consider ways to encourage state and local governments to reduce these regulatory barriers rather than create an expensive new program to subsidize a particular technology (fiber) picked because of an arbitrary, top-down decision that people should have a certain speed – even if they don’t yet want it. The FCC should heed the wisdom of Australia’s new Communications Minister who explained his government’s decision to abandon plans for a national fiber-to-the-home network in favor of subsidizing far less expensive, but slightly slower, fiber-to-the node connectivity…”
“It’s been said, of the newest technology, that speed could change everything. If only we could cross a certain speed threshold, our basic infrastructure would catalyze new opportunities we can scarcely even conceive of. All government needs to do is prime the pump: fund a demonstration project to prove that we can do it, and markets will follow. The demand may not be there yet, but “if you build it, they will come.”
Regulatory Comments "In the 1996 Telecommunications Act, Congress created a cluster of Universal Service Programs to ensure that schools, libraries, high-cost areas and the poorest Americans are connected to the telecommunications networks..."
“In the 1996 Telecommunications Act, Congress created a cluster of Universal Service Programs to ensure that schools, libraries, high-cost areas and the poorest Americans are connected to the telecommunications networks. As those networks have been transformed by technological change, those subsidy programs have become increasingly disconnected from the reality of modern communications technologies. The Commission’s Notice of Proposed Rulemaking on modernizing E-rate marks the next administrative step towards crafting a new framework for the USF program.
No one doubts the need for modernization, but sensible modernization requires ensuring that taxpayer dollars are used efficiently to achieve clearly conceived and effective goals. In particular, that means rigorously justifying any bandwidth “targets” in terms of actual needs, pedagogical efficacy, and tradeoffs…”
TOTM Today’s oral argument in the D.C Circuit over the FCC’s Net Neutrality rules suggests that the case — Verizon v. FCC — is likely to . . .
Today’s oral argument in the D.C Circuit over the FCC’s Net Neutrality rules suggests that the case — Verizon v. FCC — is likely to turn on whether the Order impermissibly imposes common carrier regulation on broadband ISPs. If so, the FCC will lose, no matter what the court thinks of the Commission’s sharply contested claims of authority under the Telecommunications Act.
Read the full piece here.
TOTM On Monday the DC Circuit hears oral argument in Verizon v. FCC – the case challenging the FCC’s Open Internet Order. Following the oral argument . . .
On Monday the DC Circuit hears oral argument in Verizon v. FCC – the case challenging the FCC’s Open Internet Order.
Following the oral argument I’ll be participating in two events discussing the case.
Popular Media My new FSF Perspectives piece, Let Them Eat Cake and Watch Netflix, was published today. This piece explores a tension in Susan Crawford’s recent Wired . . .
My new FSF Perspectives piece, Let Them Eat Cake and Watch Netflix, was published today. This piece explores a tension in Susan Crawford’s recent Wired commentary on Pew’s 2013 Broadband Report.
I excerpt from the piece below. You can (and, I daresay, should!) read the whole thing here.
In her piece, after noting the persistence of the digital divide, Crawford turns to her critique of both Pew’s and the FCC’s definition of “high-speed internet” – 4 Mbps down/1 Mbps up – and the inclusion of mobile Internet access in these measurements. She argues that this definition … is too slow. What if you wanted to watch two HD quality videos at once over a single connection? […] But the digital divide isn’t about people today not being able to watch movies on Netflix. And it’s definitely not about people today not being able to use future service that may or may not require the sort of infrastructure Crawford wants the government to build. […] It’s about the (very real) concern that, as civic and democratic institutions increasingly migrate online, those without basic Internet access or knowledge will be locked out of a vital civic and democratic forum. […] None of [applications central to concerns about the digital divide] require bandwidth sufficient to stream high-quality video. Indeed, none of them should require such capacity. Another very real concern related to the digital divide is that various groups with disabilities – the deaf and blind, for instance – are already unable to avail themselves of these online forums because they rely too much on sophisticated multimedia formats to provide basic information. […] I would suggest that a better target for Crawford’s efforts – if she is really concerned about lessening the digital divide (and I do fully believe that her convictions are well meaning and sincere) – would be to advocate for government institutions and other civic and democratic forums to develop online applications that do not require high-speed broadband connections. […] In a world where consumers perceive a non-zero marginal cost for incremental bandwidth consumption – perhaps, as an example, a world with consumer bandwidth caps – there would be consumer demand for lower-bandwidth versions of websites and other Internet services. Rather than ratcheting bandwidth requirements consistently up – increasing the size of the digital divide – the self-interested decisions of consumers on the fortunate side of that divide could actually help shrink that divide. […] The tragic thing (though, to economists, not surprising) about demands that the Internet economy disobey laws of supply and demand, that Internet providers offer consumers a service unconstrained by scarcity, is that such demands create the Internet-equivalent of bread lines. They are, in fact, the wedge that widens the digital divide.
In her piece, after noting the persistence of the digital divide, Crawford turns to her critique of both Pew’s and the FCC’s definition of “high-speed internet” – 4 Mbps down/1 Mbps up – and the inclusion of mobile Internet access in these measurements. She argues that this definition … is too slow. What if you wanted to watch two HD quality videos at once over a single connection? […]
But the digital divide isn’t about people today not being able to watch movies on Netflix. And it’s definitely not about people today not being able to use future service that may or may not require the sort of infrastructure Crawford wants the government to build. […] It’s about the (very real) concern that, as civic and democratic institutions increasingly migrate online, those without basic Internet access or knowledge will be locked out of a vital civic and democratic forum. […]
None of [applications central to concerns about the digital divide] require bandwidth sufficient to stream high-quality video. Indeed, none of them should require such capacity. Another very real concern related to the digital divide is that various groups with disabilities – the deaf and blind, for instance – are already unable to avail themselves of these online forums because they rely too much on sophisticated multimedia formats to provide basic information. […]
I would suggest that a better target for Crawford’s efforts – if she is really concerned about lessening the digital divide (and I do fully believe that her convictions are well meaning and sincere) – would be to advocate for government institutions and other civic and democratic forums to develop online applications that do not require high-speed broadband connections. […]
In a world where consumers perceive a non-zero marginal cost for incremental bandwidth consumption – perhaps, as an example, a world with consumer bandwidth caps – there would be consumer demand for lower-bandwidth versions of websites and other Internet services. Rather than ratcheting bandwidth requirements consistently up – increasing the size of the digital divide – the self-interested decisions of consumers on the fortunate side of that divide could actually help shrink that divide. […]
The tragic thing (though, to economists, not surprising) about demands that the Internet economy disobey laws of supply and demand, that Internet providers offer consumers a service unconstrained by scarcity, is that such demands create the Internet-equivalent of bread lines. They are, in fact, the wedge that widens the digital divide.
Filed under: federal communications commission, law and economics, markets, net neutrality, regulation, telecommunications Tagged: bandwidth caps, Crawford, digital divide, FCC, net neutrality
Written Testimonies & Filings "Today’s video marketplace is shaped by a byzantine set of rules from a bygone era..."
“Today’s video marketplace is shaped by a byzantine set of rules from a bygone era. In the 1990s, cable was as mighty as the Byzantines themselves were at the height of their power: Cable’s control over the single physical conduit to the home gave cable providers gatekeeper power over video programming, much as the Byzantines’ control over the Eastern Mediterranean gave them control over commerce.
But cable today is simply one of several competing conduits for video programming distribution. Today’s regulations were intended to prevent cable from thwarting the rise of satellite DBS service. They have succeeded: Virtually the entire country has access to the two primary DBS providers in addition to a cable provider. Meanwhile, telcos like AT&T and Verizon have offered a fourth alternative to cable in a third of the country. Even more importantly, the MVPD paradigm is increasingly being challenged by consumers either switching to an OVD like Netflix, Hulu or Amazon (“cord-cutting”) or cutting back on their MVPD subscription and relying, in part, on an OVD (“cord-shaving”)….”
“Rather that continuing to try to tweak the laws of a bygone era, Congress should embrace the default tool for dealing with market power across the economy: antitrust law. Properly applied, antitrust is perfectly capable of governing a market in which programmers have clear property rights for their content. Indeed, antitrust is the best tool for policing market power in evolving (if not perfectly competitive) markets, to ensure that distributors with market power do not use their power to harm consumers, while recognizing the benefits that come from experimentation in new ways and business models for delivering video content to consumers….”
Popular Media Over at Forbes Berin Szoka and I have a lengthy piece discussing “10 Reasons To Be More Optimistic About Broadband Than Susan Crawford Is.” Crawford has . . .
Over at Forbes Berin Szoka and I have a lengthy piece discussing “10 Reasons To Be More Optimistic About Broadband Than Susan Crawford Is.” Crawford has become the unofficial spokesman for a budding campaign to reshape broadband. She sees cable companies monopolizing broadband, charging too much, withholding content and keeping speeds low, all in order to suppress disruptive innovation — and argues for imposing 19th century common carriage regulation on the Internet. Berin and I begin (we expect to contribute much more to this discussion in the future) to explain both why her premises are erroneous and also why her proscription is faulty. Here’s a taste:
Things in the US today are better than Crawford claims. While Crawford claims that broadband is faster and cheaper in other developed countries, her statistics are convincingly disputed. She neglects to mention the significant subsidies used to build out those networks. Crawford’s model is Europe, but as Europeans acknowledge, “beyond 100 Mbps supply will be very difficult and expensive. Western Europe may be forced into a second fibre build out earlier than expected, or will find themselves within the slow lane in 3-5 years time.” And while “blazing fast” broadband might be important for some users, broadband speeds in the US are plenty fast enough to satisfy most users. Consumers are willing to pay for speed, but, apparently, have little interest in paying for the sort of speed Crawford deems essential. This isn’t surprising. As the LSE study cited above notes, “most new activities made possible by broadband are already possible with basic or fast broadband: higher speeds mainly allow the same things to happen faster or with higher quality, while the extra costs of providing higher speeds to everyone are very significant.” Even if she’s right, she wildly exaggerates the costs. Using a back-of-the-envelope calculation, Crawford claims that slow downloads (compared to other countries) could cost the U.S. $3 trillion/year in lost productivity from wasted time spent “waiting for a link to load or an app to function on your wireless device.” This intentionally sensationalist claim, however, rests on a purely hypothetical average wait time in the U.S. of 30 seconds (vs. 2 seconds in Japan). Whatever the actual numbers might be, her methodology would still be shaky, not least because time spent waiting for laggy content isn’t necessarily simply wasted. And for most of us, the opportunity cost of waiting for Angry Birds to load on our phones isn’t counted in wages — it’s counted in beers or time on the golf course or other leisure activities. These are important, to be sure, but does anyone seriously believe our GDP would grow 20% if only apps were snappier? Meanwhile, actual econometric studies looking at the productivity effects of faster broadband on businesses have found that higher broadband speeds are not associated with higher productivity. * * * So how do we guard against the possibility of consumer harm without making things worse? For us, it’s a mix of promoting both competition and a smarter, subtler role for government. Despite Crawford’s assertion that the DOJ should have blocked the Comcast-NBCU merger, antitrust and consumer protection laws do operate to constrain corporate conduct, not only through government enforcement but also private rights of action. Antitrust works best in the background, discouraging harmful conduct without anyone ever suing. The same is true for using consumer protection law to punish deception and truly harmful practices (e.g., misleading billing or overstating speeds). A range of regulatory reforms would also go a long way toward promoting competition. Most importantly, reform local franchising so competitors like Google Fiber can build their own networks. That means giving them “open access” not to existing networks but to the public rights of way under streets. Instead of requiring that franchisees build out to an entire franchise area—which often makes both new entry and service upgrades unprofitable—remove build-out requirements and craft smart subsidies to encourage competition to deliver high-quality universal service, and to deliver superfast broadband to the customers who want it. Rather than controlling prices, offer broadband vouchers to those that can’t afford it. Encourage telcos to build wireline competitors to cable by transitioning their existing telephone networks to all-IP networks, as we’ve urged the FCC to do (here and here). Let wireless reach its potential by opening up spectrum and discouraging municipalities from blocking tower construction. Clear the deadwood of rules that protect incumbents in the video marketplace—a reform with broad bipartisan appeal. In short, there’s a lot of ground between “do nothing” and “regulate broadband like electricity—or railroads.” Crawford’s arguments simply don’t justify imposing 19th century common carriage regulation on the Internet. But that doesn’t leave us powerless to correct practices that truly harm consumers, should they actually arise.
Things in the US today are better than Crawford claims. While Crawford claims that broadband is faster and cheaper in other developed countries, her statistics are convincingly disputed. She neglects to mention the significant subsidies used to build out those networks. Crawford’s model is Europe, but as Europeans acknowledge, “beyond 100 Mbps supply will be very difficult and expensive. Western Europe may be forced into a second fibre build out earlier than expected, or will find themselves within the slow lane in 3-5 years time.” And while “blazing fast” broadband might be important for some users, broadband speeds in the US are plenty fast enough to satisfy most users. Consumers are willing to pay for speed, but, apparently, have little interest in paying for the sort of speed Crawford deems essential. This isn’t surprising. As the LSE study cited above notes, “most new activities made possible by broadband are already possible with basic or fast broadband: higher speeds mainly allow the same things to happen faster or with higher quality, while the extra costs of providing higher speeds to everyone are very significant.”
Even if she’s right, she wildly exaggerates the costs. Using a back-of-the-envelope calculation, Crawford claims that slow downloads (compared to other countries) could cost the U.S. $3 trillion/year in lost productivity from wasted time spent “waiting for a link to load or an app to function on your wireless device.” This intentionally sensationalist claim, however, rests on a purely hypothetical average wait time in the U.S. of 30 seconds (vs. 2 seconds in Japan). Whatever the actual numbers might be, her methodology would still be shaky, not least because time spent waiting for laggy content isn’t necessarily simply wasted. And for most of us, the opportunity cost of waiting for Angry Birds to load on our phones isn’t counted in wages — it’s counted in beers or time on the golf course or other leisure activities. These are important, to be sure, but does anyone seriously believe our GDP would grow 20% if only apps were snappier? Meanwhile, actual econometric studies looking at the productivity effects of faster broadband on businesses have found that higher broadband speeds are not associated with higher productivity.
* * *
So how do we guard against the possibility of consumer harm without making things worse? For us, it’s a mix of promoting both competition and a smarter, subtler role for government.
Despite Crawford’s assertion that the DOJ should have blocked the Comcast-NBCU merger, antitrust and consumer protection laws do operate to constrain corporate conduct, not only through government enforcement but also private rights of action. Antitrust works best in the background, discouraging harmful conduct without anyone ever suing. The same is true for using consumer protection law to punish deception and truly harmful practices (e.g., misleading billing or overstating speeds).
A range of regulatory reforms would also go a long way toward promoting competition. Most importantly, reform local franchising so competitors like Google Fiber can build their own networks. That means giving them “open access” not to existing networks but to the public rights of way under streets. Instead of requiring that franchisees build out to an entire franchise area—which often makes both new entry and service upgrades unprofitable—remove build-out requirements and craft smart subsidies to encourage competition to deliver high-quality universal service, and to deliver superfast broadband to the customers who want it. Rather than controlling prices, offer broadband vouchers to those that can’t afford it. Encourage telcos to build wireline competitors to cable by transitioning their existing telephone networks to all-IP networks, as we’ve urged the FCC to do (here and here). Let wireless reach its potential by opening up spectrum and discouraging municipalities from blocking tower construction. Clear the deadwood of rules that protect incumbents in the video marketplace—a reform with broad bipartisan appeal.
In short, there’s a lot of ground between “do nothing” and “regulate broadband like electricity—or railroads.” Crawford’s arguments simply don’t justify imposing 19th century common carriage regulation on the Internet. But that doesn’t leave us powerless to correct practices that truly harm consumers, should they actually arise.
Read the whole thing here.
Filed under: antitrust, regulation, technology, telecommunications Tagged: at&t, Broadband, Comcast, Crawford, FCC, Google Fiber, Susan Crawford, Time Warner Cable, Verizon Wireless
Regulatory Comments AT&T's petition presents the FCC with a stark choice: Bootstrap the regulations of a dying 20th century technology platform onto the networks of the future, to ever-diminishing consumer benefits, or take the lead in coordinating the transition to “Internet Everywhere”...
AT&T’s petition presents the FCC with a stark choice: Bootstrap the regulations of a dying 20th century technology platform onto the networks of the future, to ever-diminishing consumer benefits, or take the lead in coordinating the transition to “Internet Everywhere”—Internet analyst Larry Downes’ term for a single IP-based networking standard built into all next-generation infrastructure and equipment.
A wide range of disparate, private wired and wireless networks using a variety of different hardware and software protocols are now converging on native IP technologies—sometimes by accident but increasingly by design. Once doubted, IP has now been embraced by traditional wireline, mobile, cable and satellite providers, as well as incumbent and next-generation content providers. Data, voice, and video are all converging onto a single standard, available wherever and whenever consumers want it. Internet Everywhere in the near future is within our grasp—if only the Commission does what is necessary to allow and encourage it.
While we believe the FCC has a crucial, long-term role to play in shepherding the IP Transition, as outlined in TechFreedom’s Comment, this Reply Comment argues that the FCC should resist the urging of many commenters in this docket to erect regulatory barriers, however well-meaning, to protect consumers from harms that have not materialized and are unlikely ever to do so.
Instead, the Commission should adopt a clear program to facilitate the successful transition to an all-IP network by ensuring that it is unencumbered by inappropriate, legacy regulations. To start, the FCC should approve AT&T’s petition. While the resulting trials are carried out, the agency should move to identify a date certain for concluding the IP Transition. And at the same time, the agency should make clear its intention to refrain from applying interconnection mandates and the apparatus of Title II to the IP network, thereby preempting conflicting state regulations that would otherwise derail the agency’s efforts.
