Wednesday, April 19, 2017

Maryland’s Broadband Privacy Bill Was a Solution in Search of Problem

On April 4, 2017, the Maryland State Senate allowed for the late introduction of the Internet Consumer Privacy Rights Act of 2017. The bill was introduced just days before the legislative session ended, purportedly as a response to President Trump signing the repeal of the Federal Communications Commission’s (FCC) unnecessary and overly burdensome Broadband Privacy Order. The Maryland bill showed that Maryland policymakers misunderstand how Internet service providers (ISPs) and edge providers, like Google and Facebook, use the advertising business model to offer innovative and consumer-friendly services.
Fortunately, the bill went nowhere during the legislative session. Nevertheless, because it was introduced, it’s worth examining why the effort was misguided.
Consumers expect consistent, common sense rules throughout the entire Internet ecosystem. Had the FCC’s broadband privacy regulations gone into effect, there would have been asymmetric privacy regulations between ISPs and edge providers, like Google. The FCC’s Broadband Privacy Order would have enabled Google and Facebook, which currently dominate over 60% of the online advertising market, to capture an even larger share of the market by creating additional privacy regulations for only ISPs. One Maryland Senator called the repeal of the Broadband Privacy Order an “emergency.” But the status quo regarding broadband privacy did not change with the repeal because the FCC’s rules never actually went into effect. And given that ISPs only have access to 30% of consumer data, it was not an emergency before the FCC adopted the Broadband Privacy Order, and it is not an emergency now that Congress and President Trump have repealed those unnecessary regulations.
The Maryland bill would have banned ISPs in Maryland from displaying “certain advertisements to a consumer” and refusing “to provide services to a consumer because the consumer refuses to take a certain action.” In an August 2016 Perspective from FSF Scholars entitled “FCC Privacy Rules Would Harm Consumers by Creating Barriers for ISP Advertising,” I explained how ISPs and edge providers use the advertising business model as a means of offering, without charge, innovative services to consumers.
ISPs cannot offer free data and sponsored data services and businesses often cannot offer public WiFi without ISPs collecting consumer data. The advertising revenue that ISPs generate from these services is the incentive they have to offer free services and content. Maryland’s bill would have banned ISPs from refusing to offer services and content to consumers who choose not to share their consumer information, which, literally, is the business model that enables consumers to enjoy free services. Had the Maryland legislation been adopted, ISPs may well have stopped offering free data services and businesses might well have stopped offering public WiFi to any consumers in Maryland, because the law would have heavily restricted ISPs from delivering targeted advertising.
Many practical questions would have arisen about the enforcement of these rules because the Internet economy does not end at state borders. What makes the relationship between a consumer and an ISP a Maryland or state-level issue? If a person has a home address in Maryland but accesses the Internet elsewhere, do the rules apply to that individual? If a Maryland resident travels to Virginia or Pennsylvania and uses his or her mobile device, do the rules no longer apply? If ISPs refused to offer innovative services to Maryland consumers because of these burdensome regulations, this may have pushed residents and businesses into neighboring states where they could connect to free data services and offer public WiFi with tailored advertising.
In a March 2017 Perspectives from FSF Scholars entitled “The Right Way to Protect Privacy Throughout the Internet Ecosystem,” Daniel Lyons, a member of FSF’s Board of Academic Advisors, discussed how, in the short term, the FCC should enact privacy rules that mirror existing Federal Trade Commission (FTC) practices, adjudicating privacy matters on a case-by-case basis. And in the long run, he says that repealing the Title II common carrier classification in the FCC’s Open Internet Order would “return privacy jurisdiction back to the FTC, where it belongs.”
Thankfully, the Maryland privacy bill died a quick death. That’s the right result for Maryland residents and businesses who value the availability of innovative Internet services, along with information they want without charge. 

Tuesday, April 18, 2017

Susan Crawford's at It Again: Just One More Thing

Earlier today I published a blog, “Susan Crawford’s at It Again,” responding to Ms. Crawford’s latest piece published in the New York Times in which she  – once again – urges that the Internet be regulated as a public utility. As I said, her entire argument is based – as it always has been – on the false claim that American consumers “don’t have a choice” when it comes to Internet service providers. In my blog, I showed why this claim is wrong on several counts.

I’ll just add here this short note: There is a further problem, in addition to those I identified, with Ms. Crawford’s assertion that "nearly 75% of Americans have at most one choice for high speed data.” Apparently, she is basing her claim on Fig. 4 of the FCC’s report “Internet Access Services: Status as of December 2015,” released in November 2016. The 75% figure, however, is not for percentages of individuals served by X number of providers, but rather for the percentage of census blocks served by X number of providers. A census block is just an area of land that may have one structure on it and no residents, or perhaps several structures with only a few hundred people.

Because surely there is more broadband deployment – and more competition – where more people reside, a population-weighted measure of deployment almost certainly would look quite different and show even more choices available. In any event, as the FCC itself says in its report relied on by Ms. Crawford, taking note of its use of census blocks rather than population: “Accordingly, the number of providers shown in Figure 4 does not necessarily reflect the number of choices available to a particular household and does not purport to measure competition.”

Despite this explicit disclaimer, Ms. Crawford used the FCC data, which does not purport to measure the number of choices available to consumers or to measure competition, to do just that.

Just one more reason to question her long-standing call for public utility regulation of the Internet.

Susan Crawford's at It Again: Agitation for Regulation by Mischaracterization

Susan Crawford’s at it again – engaging in agitation for regulation by mischaracterization.

For many years, Ms. Crawford has advocated that Internet service providers (“ISPs”) be regulated as public utilities. She does so again in her latest fact-distorted piece published in the New York Times.

If you are convinced that the Internet should be subject to rigid government control like a nineteenth-century public utility, perhaps nothing will dissuade you. But if facts matter at all, consider what’s misleading about Ms. Crawford’s overheated advocacy. Her entire argument is based – as it always has been – on the false claim that American consumers “don’t have a choice” when it comes to Internet service providers. Here is the entire basis upon which her latest argument rests:

These five companies [Comcast, Charter, Verizon, CenturyLink, and AT&T] account for over 80 percent of wired subscriptions and have almost total power in their territories. According to the Federal Communications Commission, nearly 75 percent of Americans have at most one choice for high-speed data.

In evaluating Ms. Crawford’s claim, initially it’s worth pointing out that in her book, Captive Audience, published in 2013, she asserted, without a smidgen of doubt, that “cable companies” – and especially Comcast – represented the only choice American consumers had for high-speed data services. Indeed, she proclaimed that cable already had “decisively” won the battle. As I pointed out in one of my reviews, Ms. Crawford’s misleading narrative was “based entirely on substantially narrowing the market definition” by defining the relevant market as broadband speeds above 100 Mbps.

Well, as President Ronald Regan once famously, said, “There you go again.”

Ms. Crawford now claims that five companies account for over 80% of wired subscriptions. Please note that three of those five are not cable companies that Ms. Crawford steadfastly asserted, in her 2013 book, already had captured the broadband market.

But let’s move on.

There are two very fundamental analytical problems with Ms. Crawford’s claim that consumers “don’t have a choice” of Internet service providers. First, she limits her analysis to “wired” subscriptions only. And, just as she did in her book, she chooses to define “high speed data” very narrowly, without ever acknowledging she is doing so. Both of these limitations distort current marketplace realities in a way that artificially narrows – and thus mischaracterizes – the actual ISP choices available to American consumers.

It is simply wrong to exclude all non-wired ISPs as “choices.” Indisputably, consumers increasingly are accessing the Internet through wireless broadband providers. According to a study by the Department of Commerce’s National Telecommunications & Information Administration, American consumers at all income levels are rapidly substituting mobile broadband usage for fixed wireline usage. Indeed, the NTIA study showed that the proportion of online households that relied exclusively on mobile broadband service at home doubled between 2013 and 2015, from 10 percent to 20 percent. Thus, according to NTIA, the study showed “[m]obile Internet service appears to be competing more directly with wired Internet connections.” There is little doubt that, today, even more households are wireless-only when it comes to accessing high-speed data. While Ms. Crawford chooses to focus only on wired providers, highly competitive wireless broadband service providers carry an increasing proportion high-speed Internet traffic.

Moreover, in addition to excluding terrestrial mobile broadband from consideration, Ms. Crawford’s limited market view excludes satellite broadband. Not surprisingly, she fails to mention the recent announcement by Hughes that it plans to offer satellite broadband across the country at speeds of 25Mbps. The FCC’s own data show that, even in December 2015, satellite providers offered broadband service across the country at speeds of at least 10 Mbps.

But aside from excluding all non-wireline broadband providers, the second fundamental problem with Ms. Crawford’s claim is that, relying on FCC data from December 2015, she excludes as a consumer “choice” any alternative service that might provide less than 25 Mbps. To be sure, available speeds offered by ISPs are increasing continually across all technological platforms – a fact that Ms. Crawford ignores.  For example, even in 2015, over 95% of American consumers had access to three or more mobile broadband providers at speeds ranging from 13 Mbps to 20 Mbps, and almost 90% had a choice of four. For many consumers, at present, Internet access at broadband speeds in this range satisfies their demands, and represents, for them if not for Ms. Crawford, a perfectly acceptable choice.

You can read Ms. Crawford’s latest piece until the proverbial cows come home, and you won’t find a word about the huge capital investments – exceeding $1.5 trillion and counting – already incurred by private sector Internet providers in building out advanced broadband networks. Suffice it to say that the real-world economics of constructing and operating networks that require massive capital investments has never been her concern. But that’s a whole other story.

In Captive Audience, Susan Crawford argued passionately in 2013 that “America needs to move to a utility model” for the Internet. She’s still at it and unlikely ever to change.

Perhaps, like Ms. Crawford, you may believe that Internet providers should be government-controlled public utilities. That is certainly your prerogative. Please just don’t base that belief on the clearly erroneous assertion that nearly 75% of Americans have only one choice for high-speed data. That’s simply not true.


Friday, April 14, 2017

Comcast Enters the Wireless Broadband Market with Xfinity Mobile

On April 6, 2016, Comcast announced that it will launch a wireless phone and broadband service called Xfinity Mobile. Xfinity Mobile will be available to Comcast’s existing consumers with the goal of building a bigger base of pay-TV, landline, and Internet subscribers.
Xfinity Mobile will offer unlimited data for $65 per month per line and $45 per month per line for customers who subscribe to Comcast’s X1 TV plan. Xfinity Mobile also will offer a mobile service for $12 per gigabyte.
With the support of Apple and Samsung’s latest smartphone models, Comcast’s Xfinity Mobile will have nationwide coverage by renting Verizon’s mobile network. In addition to nationwide coverage, Xfinity Mobile customers also will have access to Comcast’s network of 16 million Wi-Fi hotspots.
Comcast’s entry into mobile market is product of dynamic competition and permissionless innovation. Since FCC Chairman Ajit Pai took office in January 2017, the Commission has pursued a free market-oriented approach to communications policy and this has led to the emergence of unlimited data plans and new entrants in the mobile broadband market.

Monday, April 10, 2017

AT&T Agreed to Buy Straight Path Communications

Today, AT&T announced it will buy Straight Path Communications Inc., a deal valued at $1.6 billion. Straight Path is one of the largest holders of 28 GHz and 39 GHz millimeter-wave spectrum, which are frequencies that the FCC has approved for the use of 5G wireless technology. With this purchase, AT&T is preparing to build one of the largest 5G networks in the country, competing with Verizon, Sprint, and T-Mobile.
Collectively, mobile broadband providers are expected to invest $275 billion over the next seven years, creating over 3 million jobs and $500 billion in economic activity. This purchase by AT&T will streamline the deployment of 5G technology and the vast consumer benefits that will come with faster and more reliable mobile connections.

Monday, April 03, 2017

Congress Should Implement a Dig Once Policy

In an October 2015 blog, I urged Congress to pass the Broadband Conduit Deployment Act of 2015, which would have reduced the costs of broadband deployment by requiring most major highway projects to include the construction of broadband conduit. Unfortunately, the proposal did not pass, but a discussion draft version of the House bill, the Broadband Conduit Deployment Act of 2017, has emerged. Congress should implement a “dig once” policy and subsequently increase access to broadband throughout the United States.
If introduced and adopted, the draft legislation would require state governments to evaluate the need for broadband conduit with respect to covered highway construction projects. If there is any anticipated need in the next 15 years, the draft legislation would implement a so-called “dig once” policy. Along highways where conduit is needed, the Department of Transportation will install “an appropriate number of broadband conduits” at a size that is “consistent with industry best practices and is sufficient to accommodate potential demand.” In other words, a dig once policy means that the construction costs of digging up hard surfaces along highways to install conduit will be incurred once.
A dig once policy would streamline broadband deployment by reducing the costs of building infrastructure. According to a study by the Government Accountability Office, dig once policies can save 25% to 33% in construction costs in urban areas and approximately 16% in rural areas. By lowering construction and deployment costs for broadband providers, a dig once policy would avail more resources for innovative services, encourage investment in rural and remote areas, and invite competitors into the broadband marketplace.
Not only would a dig once policy help deploy advanced broadband networks in under-served areas and help close the gap of the digital divide, but it would pave the way for next-generation 5G networks. Increasing broadband deployment will create backhaul for the implementation of 5G technology and the emergence of “smart cities.”  As I stated in a January 2017 blog, 5G technology will create vast consumer benefits with regard to public safety, health care, and transportation, leading to a projected $275 billion in investment, 3 million jobs, and $500 billion in gross domestic product. A dig once policy would streamline the creation of these economic benefits by supplying a backbone for small and rural towns to rely on when employing 5G and smart technologies.
Dig once is a common-sense bipartisan policy. By lowering the costs of deployment for broadband providers, consumers throughout the United States will enjoy more competition, better service quality, and lower prices.
Congress should implement a dig once policy as soon as possible.