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FCC Protects Job Destroyers, Not Job Creators

Art Brodsky of Public Knowledge makes a compelling case that the Federal Communications Commission is refusing to take actions that will create thousands of jobs. And his estimate is probably low.

Smartly, he doesn't just pin it on the FCC, where the stumbling block appears to be Chairman Genachowski (both Copps and Clyburn already want to help the innovators and true job creators) but also on Congress

To explain:

Once upon a time, the old, old AT&T was the sole supplier of telephones and other equipment to consumers and businesses. The FCC, in a series of market-opening orders, culminating in the 1968 Carterfone ruling, finally freed the non-AT&T world to provide telephone equipment. Through the years, consumers and businesses had many more choices as new companies sprang up to provide home phones, business phones, and business switching equipment for voice and data. Anyone could buy a phone and plug it in. At one telephone equipment show in the mid-1980s, a small California computer company said it was going to enter the telephone business, but only put up an empty booth promising products later. (Whatever happened to those Apple guys and their phones, anyway?)

...

One reason is that the FCC over the years succumbed to the Big Telecom campaign to put all the little guys out of business through subterranean means that the public would never see (like charges big phone companies levy to connect to their network). Another is that the FCC gave up the authority over Internet access (broadband), which leads to its current troubles in trying to justify legally how to get an open Internet and will likely lead to future controversies over how to support broadband deployment (universal service).

Right now, it doesn't matter whether Democrats or Republicans appoint FCC Commissioners so long as 3 of the 5 commissioners are more concerned with what benefits a few massive companies rather than the vast majority of businesses and citizens.

FCC Logo

This is exactly why communities are smart to build their own networks -- they have more control and are less damaged by the poor decisions and waffling of the federal bodies charged with making telecom policy.

AT&T, CenturyLink, Comcast, and the other big cable/telephone companies keep consolidating -- killing jobs directly by laying off workers and then killing jobs indirectly by raising the prices they charge for their unreliable services that compare poorly with overseas competitors. But this allows them to invest heavily in lobbyists and legislatures, which is their comparative advantage (certainly not expertise in telecom).

We need an FCC that cares about small businesses and citizens, but more importantly, we must ensure that smart, innovative communities are able to invest in themselves regardless of what decisions the FCC makes.

Should FCC Only Fund Competitors to Community Broadband?

I recently joined some other grassroots groups in talking to FCC Commissioner Copps about the ways the FCC could improve access to telecommunications for most Americans -- you know, the mission of the Federal Communications Commission.  This was the day before FCC Chairman Genochowski announced the broad outline of Universal Service Reform.  

Presently, it appears that the FCC will broadly adopt the industry's plan of taking more money from subscribers and spreading it among private companies and coops that are providing services in rural America.  We have called up on the FCC to recognize the important role of community broadband networks and make them eligible recipients of USF funds but the FCC appears to be ready to double down on its past mistakes of relying on absentee-owners who have little incentive to actually provide reliable services at affordable prices.  (Fred Pilot has also called upon the FCC to make this change.)

The result is that communities like rural Sibley County in Minnesota's farm country may build their own next-generation broadband network, only to find the federal government subsidizing a vastly inferior DSL network from a competitor. This is a fiscally irresponsible approach that prioritizes the profits of a few private companies over what is best for the vast majority of private companies and residents in communities that need networks that are actually accountable to them.  

If you care about this issue, you should ask the Rural Broadband Policy Group or Media Actions Grassroots how you can help.  They have been working to break through the beltway bias against solutions that encourage local self-reliance.

The FCC will soon release its USF reform approach and I fear it will do very little to actually help communities while doing a lot to help a few companies continue to receive federal funds while ignoring community needs.  It is long past time the FCC stop entrusting our communications future to absentee landlords and look to community networks ... or at least locally owned private alternatives embodied by WISPs. 

While we prefer networks that are democratically accountable to the communities, local private ownership would be vastly preferable to the waste we see with the present system.

Attention Community Networks: The FCC Needs Information

We have long urged the FCC to include community networks in discussions around subjects like Universal Service Fund reform -- where communities are better poised to build the networks they need than private companies. The good news is that the FCC is now listening; the bad news is that they are listening during a short window in the middle of August. Doh!

Nonetheless, we urge as many of you as possible to file whatever information you can to inform the FCC. Public Knowledge and the Benton Foundation are coordinating a filing to make it easier on you -- a recent email copied below explains further. Please contact me or one of the people below if you have any questions - getting good information in front of the FCC is essential for them to make the right decision. From Public Knowledge and Benton:

In reforming this portion of the fund the FCC has requested addition information on the idea of communities “self-provisioning” their broadband service.  Specifically the Commission is considering requiring all fund recipients to open up their networks to self-provision communities at reasonable rate.  Right now this requirement would be limited to self-provisioners that are in areas where USF recipient may have facilities nearby BUT the USF recipient is not providing service to the self-provisioning community.

We think that small, independent or community based ISPs are just the kind of folks the FCC envisions to be “self-provisioning” an unserved community.  Public Knowledge and the Benton Foundation are working together to document input from current “self-provisioners” to help answer some of the questions in this proceeding.  If you are interested in participating you can either file a comment on your own by August 24, 2011 or work with PK and Benton’s attorneys to put together a coordinated filing.

Note: You can file confidential information with the FCC in the proceeding using the procedures outlined in this document.

If you are interested in working with PK and Benton please answer the following questionnaire with as much detail as possible and email to Amina Fazlullah or John Bergmayer by August 24th 2011

The FCC needs data on how various kinds of small, independent, community-based, or other ISPs serve their customers.

  • How much does it cost you to serve your average customer?
  • What are your main costs (equipment, backhaul, customer support...)?
  • What is your main source of funding (payments from customers, grants, etc)?
  • What kind of entity are you (a sole proprietorship, a nonprofit, a corporation, etc)?
  • How many people do you employ?  Are they based in your local community or elsewhere?
  • Is it cheaper for you to serve your average customer, than it would be for an outside carrier to serve that same customer?
  • What are the characteristics of your area that make you well-suited to serve it?  
  • Are there features of the geography or population distribution that call for custom solutions? 
  • Does your service require customer support of a level that larger carriers might be unsuited to provide?
  • If you were to make use of a small fund that enabled you to purchase extra equipment, what would you buy first?  How many extra customers would this help you to serve?
  • If you were to make use of a small fund that enabled you to purchase extra equipment, what would you buy first?  How many extra customers would this help you to serve?
  • Do other providers serve your area?  If so, how does your service compare with theirs?
  • Please provide whatever other information you think would be relevant to the FCC in deciding whether to direct funds to organizations like yours.

Comcast: Internet Access is Temporarily a Civil Right

You can now read this post at Huffington Post also.

As a condition of its massive merger with NBC, the federal government is requiring Comcast to make affordable Internet connections available to 2.5 million low-income households for the next two years.

In promoting the program, Comcast's Executive VP David Cohen, has made some unexpected admissions:

“Access to the internet is akin to a civil rights issue for the 21st century,” said David Cohen, Comcast’s executive vice president. “It’s that access that enables people in poorer areas to equalize access to a quality education, quality health care and vocational opportunities.”

It was only after the federal government mandated a low-cost option for disadvantaged households that Comcast realized everyone could benefit from access to the Internet. Sadly for Comcast, it has done a poor job of reaching those disadvantaged communities, by its own admission:

"Quite frankly, people in lower-income communities, mostly people of color, have such limited access to broadband than people in wealthier communities."

This is why so many communities are building their own next-generation networks - they know that these networks are essential for economic development and ensuring everyone has "access to a quality education, quality health care and vocational opportunities." And they know that neither Comcast nor the federal government are going to make the necessary investments. They need a solution for the next 20 years, not just the next 2.

Community Networks Map

Comcast has a de facto monopoly in many communities. Modern cable networks offer much higher capacity connections than older phone networks using DSL. So unless you are one of the few Americans served by a community fiber network or FiOS, you probably have two choices in broadband: relatively faster connections from a cable company or relatively slower connections from the phone company. Private sector competition is not around the corner - overbuilding a massive provider like Comcast is very difficult, which is why so few companies try.

Due to the limited competition, Americans pay their cable companies too much for access to the Internet. Consider that Tacoma residents pay less for the same services as those in Seattle, because Tacoma long ago built its own cable network.

Comcast uses its vast profits to lobby Congress and the Federal Communications Commission to repeal rules that stop big cable and phone companies from slowing down competitors like Netflix.

This is the rub. Comcast builds and operates networks to maximize its profit -- a model that simply does not fit essential infrastructure like the Internet. Who would invest in FedEx if UPS owned the roads and set the rules for access?

The question is how to solve this age-old problem. Even Comcast recognizes that its normal approach leaves millions behind. We can do better.

Chattanooga, Tennessee; Lafayette, Louisiana; Reedsburg, Wisconsin; Windom, Minnesota; Cedar Falls, Iowa; Wilson, North Carolina; Monmouth, Oregon; Highland, Illinois; Kutztown, Pennsylvania; Spanish Fork, Utah, and many others have built networks that actually put community needs first.
Chattanooga has the nation's most advanced citywide network. Tiny Kutztown has kept an extra $2 million in its citizens pockets through lower bills over the past 10 years. Rural Windom kept employers in town when incumbent providers could not meet their needs.

Smart communities invest in themselves rather than depending on big, absentee corporations. Requiring Comcast to provide affordable broadband connections is better than not, but continuing to let Comcast effectively decide who can afford access to the Internet is madness.

Don't Sell the Public Airwaves to the Highest Corporate Bidder

During the recent budget negotiations, one plan called for taking valuable wireless spectrum that is intended to be used as a commons and auctioning it off the massive corporations to monopolize. Rather than enabling a whole new generation of wireless technologies that would create countless jobs and ongoing opportunities for innovation (some have described it as Wi-Fi on steroids), it would have created a one-time cash infusion while further consolidating the incomparable market power of AT&T and Verizon. Preserving as much spectrum as possible as unlicensed commons allows communities, small businesses, and activists to build the wireless networks they need because they cannot afford to license spectrum for their sole use.

Wally Bowen wrote the following op-ed urging a more sensible approach. Fortunately, the spectrum auction was dropped from the plan - but it will undoubtedly come up again. This was originally published in the Charlotte Observer on July 31 and is reprinted here with permission.

U.S. House Republicans are pushing a proposal to sell off some of the nation's most valuable real estate as part of a debt-ceiling deal, apparently unaware of the harm it will do our economy.

This real estate is a portion of the public airwaves so valuable that it's been called the "Malibu beachfront" of the electromagnetic spectrum. This lower-frequency spectrum, previously reserved for broadcast radio and TV, is far superior to "Wi-Fi" frequencies used for Internet access - and for innovative devices ranging from microwave ovens and cordless phones to garage-door openers and baby monitors.

This prime spectrum can deliver broadband speeds that support high-definition video for telemedicine in rural and other underserved areas. This spectrum is especially plentiful in rural America, and could help connect millions of low-income citizens to affordable broadband services. It could also spark a new wave of high-tech innovation and job-creation far greater than the Wi-Fi boom of the last 25 years.

Wi-Fi Logo

The genius behind the first wave of Wi-Fi innovation was unlicensed spectrum. Though these higher frequencies were once considered "junk bands" by radio engineers, designating them for unlicensed access gave innovators the freedom to experiment. It also gave investors incentive to take risks in launching new products.

Unfortunately, the GOP-backed plan would gut the huge market potential of this high-octane spectrum by selling it to the highest bidders: incumbent carriers more interested in shutting-out competition than in igniting the next great high-tech boom. Once auctioned, the spectrum would be licensed, creating enormous barriers-to-entry and disincentives for innovators, entrepreneurs and investors.

Oddly, House members pushing this auction plan - inappropriately called the "Spectrum Innovation Act" - acknowledge unlicensed spectrum's market advantage. But their mechanism for providing unlicensed spectrum is bizarre.

The bill would allow companies - and presumably the public - to place bids for this spectrum either as licensed or unlicensed. This never-before-tried auction would then pit the highest bid for licensed spectrum against the sum of all bids for unlicensed use. If the latter exceeds the former, the U.S. Treasury would reap the proceeds and the nation's economy would reap the rewards of the next unlicensed Wi-Fi boom.

But common sense should red-flag this auction scheme as unworkable. Even if companies and concerned citizens attempted to coordinate bids for unlicensed use, laws against collusion would have to be set aside. And why would smaller firms risk their money if they can assume larger firms like Google and Microsoft will do the heavy-lifting? Clearly, this proposed auction scheme is cover for a cynical spectrum-grab that would rob us and future generations of this prime electromagnetic real estate.

Let's hope lawmakers come to their senses quickly and dismiss the lobbyists pushing this self-serving scheme.

The amazing array of wireless devices developed over the past 25 years proves that unlicensed spectrum attracts investment, spurs innovation and unleashes the power of competitive markets. Unlicense this next-gen spectrum and let the innovators and job-creators get to work.

Tethering, Verizon, and the Problem with Public Interest Requirements

When Verizon won an auction to use the 700MHz band of the spectrum to deliver mobile broadband, it promised to adhere to a set of openness rules that included allowing customers to use applications and devices of their choosing. But Verizon is now blocking "tethering" apps that allow us to use our cell phones as a modem for our computers.

Wendy Davis at MediaPost offered more context:

Whether it's legal for a wireless carrier to cripple tethering services is unclear. Verizon agreed to follow open Internet principles as a condition of acquiring the spectrum that it uses for 4G wireless phones. One interpretation of that condition is that the company shouldn't attempt to restrict tethering on its 4G network -- though apparently it's still free to do so on the 3G network.

But aside from neutrality issues, Verizon's move clearly seems hard to justify from a pricing standpoint. Given that the company is already going to charge new users based on the amount of data they consume, there's no reason for it to also impose a surcharge for tethering.

Free Press filed a complaint with the FCC to investigate:

Free Press Logo

Free Press will file a complaint today with the Federal Communications Commission against Verizon for violating the rules that govern the licenses for its LTE network. Licensees of the C Block of the upper 700 MHz block, over which Verizon runs its LTE network, may not “deny, limit, or restrict” the ability of their customers to use the applications or devices of the customers’ choosing.

Recent reports reveal that Verizon has been doing just that by asking Google to disable tethering applications in the Android Market. Tethering applications, which allow users to make their phones into mobile hot-spots, implicate the customers' ability to use both the applications and devices of their choice. Free Press argues that by preventing customers from downloading tethering applications from the Android Market, Verizon is restricting not only the applications available to them, but also limits use of tethered devices such as laptop or tablet computers. [Read the Full Complaint here]

Free Press Policy Counsel Aparna Sridhar noted:

“In 2007, Verizon argued aggressively against the adoption of these basic openness protections. Having lost that policy battle but won the auction for the spectrum licenses, Verizon has adopted a new regulatory strategy: simply ignore the rules on the books. The Commission must move quickly to investigate and stop these harmful practices.”

This is the problem with imposing public interest requirements, and more generally, regulating companies that are providing essential infrastructure. Companies like Verizon are incredibly powerful and regularly ignore rules they do not like, understanding that they can delay any rule or punishment for years. They can often delay long enough for DC to change administrations or simply grow weary of trying to defend the public interest (often when the public has no idea what is happening).

If the US pursued a policy where the infrastructure elements were publicly owned and independent service providers competed on top of that infrastructure, we would have more tools to prevent abusive practices. For one, companies would have to adhere to the rules in order to use the infrastructure. For another, we would have more providers competing, allowing people to switch away from abusive carriers -- a luxury many do not have currently given our duopolistic telecom markets.

This matter of tethering is incredibly important for the future of mobile access to the Internet, as explained by Barbara van Schewick (always a worthwhile read):

The questions raised by the complaint are too important to be decided without public participation: The C Block of the 700 MHz band is currently the only spectrum that is subject to mobile network neutrality rules.[1] Knowing that there is at least some part of the mobile spectrum that is protected by basic network neutrality principles is important for users, innovators and investors. Whether the openness conditions indeed afford protection depends, however, on how they are interpreted and enforced. Thus, the proceeding has important implications for many businesses, innovators and users in the Internet ecosystem, so they should have a chance to have their voice heard, too. In addition, as I explain in the letter, the proceeding raises important issues regarding openness in mobile networks in general.

FCC Logo

The good news is that the FCC has told Verizon is must respond to Free Press' complaint. The bad news is that we have no idea how long it will take to resolve this and whether the FCC, which has maintained a cozy relationship with the big carriers through Republican and Democratic Administrations, will actually protect the public. The FCC has two stellar Commissioners that regularly defend the public interest and two commissioners that regularly stand with the carriers. And the current Chair … well, he caved to AT&T and Verizon rather than standing for principles he defended for years and Obama campaigned on.

Thanks to Free Press, Barbara van Schewick, and all the others who are defending the public good.

Preserve Unlicensed Spectrum - White Spaces At Risk

If the future is wireless, we have to preserve unlicensed spaces. To explain: most wireless stuff uses licensed spectrum - where only a single entity has permission from the FCC to use a specific wavelength of spectrum. While this is great for those who can afford to license spectrum (companies like AT&T and Verizon), it is not particularly efficient because the rest of us cannot use those wavelengths even if AT&T and Verizon aren't (which is particularly a problem in rural areas).

Contrast that approach with Wi-Fi, which uses unlicensed spectrum. There are portions of spectrum where the FCC has said anyone can do anything. This is why we do not need permission to set up wireless networks in our house.

Last year, the FCC made a great decision to make "white spaces" wireless technology unlicensed -- which will allow more of us (again particularly in rural areas) to use white spaces without having to get permission. Because this decision creates a larger potential market, we would have more manufacturers interested in creating gear -- meaning more innovation and a lower cost to establish wireless networks (that are far more powerful than Wi-Fi allows).

But now Congress is considering reversing that decision and licensing that spectrum to generate a few billion dollars of one-time revenue for the government -- at a cost of far more than billions of dollars of lost opportunities, particularly in rural America where these unlicensed white spaces are the only real opportunity to rapidly deliver broadband in the short term.

In short, keeping these white spaces unlicensed will be far better for rural economies, innovation, and productivity than a one-time infusion of cash into the federal government.

These decisions are going to made shortly, so I encourage everyone to check out Public Knowledge's Action Alert calling on us to contact our members of Congress to oppose this approach.

Understanding User Fees and the Community's Right-of-Way

A friend once told me about his battle with the local government over whether it would charge him a fee for inspecting the house he wanted to begin renting out (he had bought another house but didn't want to sell the first in a down market). His house was well maintained and he said he would be happy to schedule the inspection whenever convenient for the City but absolutely would not pay a fee so they could inspect his house.

Consider this from a different perspective. The local government should make sure that rental properties meet certain standards (building and fire codes if nothing else). This means inspections. Who should pay for the inspections? It boils down to two choices: the property owner or the tax-base at large. It seems more fair to charge property owners at least a portion of the cost as they benefit the most from being able to rent out their property.

I make this point to lead into another discussion about managing the Right-of-Way (ROW), the city-owned property used for utilities. An article in TribLive about a town near Pittsburgh fighting to keep its cable fees offers insight into a national discussion about fees for using the ROW.

Hempfield charges utilities $750 for a right-of-way permit, $500 for a renewal, and $250 for a construction permit, according to a township ordinance.

Ferguson said without the fees, the township would not be able to monitor the work.

"We use the monies, those permit fees, to pay staff to make sure they repair roads as they're supposed to," Ferguson said. "Part of the fee is ... for our inspectors to go out and make sure they (utilities) complete the job right."

Ferguson said utility companies sometimes dig up new roads to install or repair lines and leave the road in shambles afterward.

"Taxpayers should not be required to pay the staff to make sure utility companies do the right thing," he said.

FCC Logo

Telecommunications providers have long claimed that local government fees are unreasonable and getting the necessary permits is too difficult. But when asked to document such claims, they rarely do. The FCC is currently examining whether it believes the fees charged by local governments are fair.

While we believe it would be counter-productive for local governments to make it too difficult to access the ROW, we simply have seen very little evidence that it is a common practice. What we do see is a history of massive companies like AT&T using their vast lobbying power to limit local authority in ways that transfer costs from companies like AT&T to the community to benefit AT&T's shareholders.

The next interesting question will be what the FCC does about it. It will be hard to watch the FCC, which believes it does not have the power to protect local authority against state laws limiting their ability to build broadband networks, go ahead and overrule local authority to require telecom companies to properly compensate local governments for use of the ROW.

For Rent photo used under creative commons license, courtesy of HowNowDesign

The Hypocrisy of Those Seeking a Level Playing Field

At least once a week in my 48 months of public service, I was told by someone that the purpose of the Commission was to create a "level playing field." No one meant it.  The proponents of this view wanted someone else to be burred under their "level" field.  And I never believed our job was "leveling."  Should a jury declare a defendant neither guilty nor innocent, but only express a neutral view?

Community Groups Oppose AT&T Takeover of T-Mobile

We at the Institute for Local Self-Reliance signed on to a letter organized by our friends at the Media Action Grassroots Network asking the FCC and Department of Justice to thoroughly review AT&T's proposed takeover of T-Mobile -- read the press release.

“Our communities cannot afford higher prices and less choices. We need the FCC and DOJ to block this takeover if it's found to be in violation of antitrust law and does not meet public interest obligations,” said Betty Yu, National Organizer for MAG-Net.

"If AT&T takes over T-Mobile, it will be a disaster for all mobile phone users. It will stifle information, choice and innovation- and lead to higher prices and fewer jobs nationwide, added CMJ's Policy Director, amalia deloney. "It's a real jobs and democracy killer.”

The groups also contend the takeover will disproportionately harm consumers of color, who rely on their cell phones to access the Internet more than whites. While 10 percent of whites access the Internet only from their phones, 18 percent of blacks and 16 percent of English-speaking Latinos depend on affordable wireless coverage to get online.

And an excerpt from the letter [pdf]:

The impact that this merger would have on affordable mobile phone service, broadband access and adoption, openness on the mobile web and broadband competition presents a real threat to our communities. We hope that the Department of Justice and Federal Communications Commission will examine AT&T's proposed acquisition of T-Mobile with appropriate scrutiny and protect our communities by blocking this merger.

We intend to host a series of open and participatory meetings in our communities to discuss this merger, and we hope that FCC Commissioners will commit to joining us. It is only by communicating directly with people and hearing our stories that you will feel our deep concerns with this merger and the devastating impact it would have on our communities.

We continue to advocate for universal, affordable, fast, and reliable broadband, which to us means a wired connection eventually to all homes that are connected to the electrical grid. But in the meantime, one cannot dispute that mobile access to the Internet is an essential tool for many communities and that this merger will raise their prices and make it harder for low-income communities to afford modern communications.

Further, we are deeply skeptical that further consolidation in this industry is anything but bad news for people and small businesses -- AT&T already has too much market power, allowing it to keep prices too high and investment too low.