New BroadbandNow Report Further Demonstrates Affordability of Broadband

A report released on August 18, 2021, by BroadbandNow provides additional proof that the number of U.S. consumers with access to affordable broadband service is both vast and growing rapidly.

In "Evidence of Falling Broadband Prices Grows Despite Overall Spike in Inflation," a recent Perspectives from FSF Scholars, I compared USTelecom broadband pricing information to Consumer Price Index (CPI) data released by the U.S. Bureau of Labor Statistics.

The former revealed that, between 2020 and 2021, the cost of connectivity fell across the board: entry level tier prices dropped by 9.1 percent, the most popular tier prices by 7.5 percent, and the highest speed tier prices by 2.3 percent.

By contrast, and over the same time period, the latter demonstrated that the cost of other in-demand consumer goods – various food items, electricity, fuel oil, and gasoline – increased by an average of over 7 percent.

Free State Foundation President Randolph May and I highlighted similar data in May 2021's "Biden Broadband Plan: Claims That Broadband Is 'Too Expensive' Are Unfounded," a direct response to unsupported assertions contained in the American Jobs Plan Fact Sheet released by the White House at the end of March.

BroadbandNow's "The State of Broadband in America, Q2 2021," provides still more evidence that competitive marketplace forces are driving down prices at an impressive pace.

Specifically, the report finds that, as of the second quarter of this year, 87 percent of Americans were able to subscribe to "low-priced" high-speed Internet access service – that is, offerings priced at $60 per month or less – providing speeds that meet the FCC's definition of "broadband": 25 megabits per second (Mbps) downstream and 3 Mbps upstream.

Impressive in isolation, that figure reflects incredible and rapid progress: an increase of 10 percentage points from just three months prior (Q1 2021) and, amazingly, over 35 percentage points since Q1 2020.

The report also notes that the percentage of Americans with access to "low-priced" offerings at even faster speeds – 100 Mbps downstream and 25 Mbps upstream – grew by 11 percent over that same brief period of time.

NDAA Markup Should Steer Clear of FCC's Careful L-Band Order

Today, I posted the following tweet thread about the FCC's April 2020  order approving Ligado Networks' deployment of wireless services in the L-Band and the September 1, 2021 markup hearing scheduled for the National Defense Authorization Act (NDAA) for Fiscal Year 2022:

1) U.S. leadership on #5G is more important to the future of the free world than ever. @LigadoNetworks' planned 5G commercial wireless network using L-Band spectrum -- which has @FCC approval -- will play a vital role in ensuring that global leader on 5G is America, not China.

— Seth Cooper (@CooperFSF) August 30, 2021

3) @FCC's order approving Ligado Networks' L-Band use followed a careful process. It complied with APA, factored public comments, used staff engineering expertise + GPS safeguards. @FCC's decision should not be thwarted by last-minute amendments to NDAA via an uncareful process.

— Seth Cooper (@CooperFSF) August 30, 2021

Congress and the President Should Act to Combat Online Piracy

Here's the way that the Wall Street Journal's August 25^th story, "Hollywood Movies Flood Piracy Sites Hours After Release" begins: "Millions of people are watching high-quality, pirated online versions of Hollywood’s top movies sooner than ever after their releases, undermining potential ticket sales and subscriber growth as the industry embraces streaming."

The WSJ story details the extent to which the Disney hit "Black Widow" appeared worldwide on leading piracy sites shortly after its theater and streaming release. And the article recites the facts and figures relating to the piracy of other recent film hits.

If you think the increasing epidemic of pirated movies (and music too!) doesn't matter, think again.

There are many such corroborative reports, but a recent study, released after a year-long investigation by the online consumer safety group Digital Citizens Alliance, reveals that the bad actors who operate in the illegal underground market for pirated movies, TV shows, and other forms of content theft are reaping an estimated $1.34 billion in annual revenues through advertising on websites and illicit streaming apps. In other words, piracy is a "big business."

The tangible harm resulting from massive online theft is obvious. The financial rewards realized by legitimate creators, producers, and distributors of content will be diminished and this will limit the amount of content created, produced, and distributed. To the extent that pirates can reap huge illicit financial gains from their theft, the financial rewards available to the law-abiding will shrink. And so will the incentives to create, produce, and distribute all manner of content.

However significant the adverse impact from piracy of movies, music, and other online content – and it is – there is another, perhaps less immediately tangible, adverse impact that is equally important. The continued escalation of pirated intellectual property – that is, the willful stealing of others' property – undermines the rule of law and respect for the Constitution's protection of copyrighted works. The Founders included the Copyright Clause in Article I, Section 8 of the Constitution to secure what they understood to be a fundamental inalienable natural right in the protection of property, in this instance, intellectual property. The Founders understood, and the Constitution incorporates this understanding, that every man and woman possesses a natural right to enjoy the fruits of his or her own labors.

For much more on the constitutional imperative for government to secure the protection of copyrighted works, please see "The Constitutional Foundations of Intellectual Property – A Natural Rights Perspective," co-authored with my Free State Foundation colleague Seth Cooper. There, you'll find a deep – but I think interesting! – dive into the historical, philosophical, and jurisprudential principles underpinning the Constitution's Intellectual Property Clause. You'll discover that the case for securing copyrights is not just a pragmatic or utilitarian one, but, more fundamentally, a moral imperative.

And for much more on the extent of online piracy, the harm it causes, and recommendations of specific measures that Congress and executive branch officials should take to combat it, please see this sampling of recent Free State Foundation papers by either Seth Cooper or both of us.

"Fighting Online Piracy Will Boost the American Economy and Jobs" (June 29, 2021)

"Congress Should Modernize Digital Copyright Law to Protect Americans' Content" (May 28, 2021)

"Copyright Law Needs Modernization, Not a Restatement" (March 5, 2021)

"Congress Must Modernize Copyright Law to Curb Mass Online Theft" (November 5, 2020)

"Congress Should Preserve Anti-Circumvention Rights: The Online Market for Movies and Music Depends on DMCA Section 1201" (October 6, 2020)

 

 

Ninth Circuit Turns Down State Copyright Claims in Narrow Decision

On August 23, a panel of the U.S. Court of Appeals for the Ninth Circuit determined that the California copyright statute's protections for the "exclusive ownership" of sound recordings made before 1972 did not include the right of public performance. In so doing, the Ninth Circuit reversed a District Court decision that I wrote about in a March 2015 blog post. Back in 2015, state copyright claims regarding public performances of pre-72 sound recordings had fared well in court. But as the Ninth Circuit observed in Flo & Eddie, Inc. v. SiriusXM Radio, Inc., those claims did not find favor at the appellate level. 

In sum, the Ninth Circuit panel in Flo & Eddie determined that the there was no common law recognition of public performances in sound recordings when California first used the term "exclusive ownership" into its 1872 copyright statute. And the Ninth Circuit panel concluded there was no evidence sufficient to overcome the presumption that the common law rule of no public performance rights was changed by the statute's use of that term in 1872 – or in 1982, when California revised the statute.

The legal question about whether public performance rights in pre-72 sound recordings is offered under state law seemed to be a strong candidate for resolution by California's highest court of law rather than by federal courts. In fact, that question was certified to the California Supreme Court in a related case called Flo & Eddie, Inc. v. Pandora Media, Inc. But the California Supreme Court dismissed that case before deciding the question. That dismissal was prompted by Congress's passage of the Music Modernization Act of 2018 (MMA). 

The MMA, signed into law by President Donald Trump, finally recognized public performance rights in copyrighted sound recordings pressed before 1972. Thus, on a prospective basis, copyright owners of pre-72 sound recordings enjoy public performance rights when their creative works are digitally transmitted on satellite radio or by Internet webcasters. And most claims regarding public performances of pre-72 sound recordings prior to the MMA were resolved in a major class action settlement. Although the MMA preempted most state law claims regarding pre-72 sound recordings, Flo & Eddie's claims remained alive – at least until the Ninth Circuit's decision. But in light of the MMA and the legal settlement, the Ninth Circuit's decision ultimately is a narrow one. 

Maryland's "Connect Maryland" Broadband Initiative

 Maryland Governor Larry Hogan has announced that the state will commit another $100 million to the the $300 million investment that was announced in March as part of a bipartisan budget agreement to allocate federal funding from the American Rescue Plan Act. Together, these funds - $400 billion - are part of what Governor Hogan calls the "Connect America" initiative designed to close remaining digital divides.

The funds will be used both to deploy broadband in parts of the state that lack access to broadband networks and to subsidize service for low-income individuals.

The objective of closing remaining digital divides by closing both deployment and affordability gaps is a worthy one. But $400 million is a lot of new funding - on top of that which already has been expended. It will be especially important, if the funds are not to be used in an inefficient and wasteful fashion to carefully target the expenditures to meet the initiative's objectives - and then to carefully monitor the expenditures.

 

District Court Permits Takings Claims for State's Use of Copyrighted Works

On August 18, the U.S. Eastern District of North Carolina issued a reconsideration order in Allen v. Cooper that permits the Plaintiff copyright owner to amend its complaint and assert Takings Clause and constitutional claims for a state agency's use of his property. The case is on remand from the U.S. Supreme Court, which ruled that Plaintiff Allen's copyright claims were barred by the 11th Amendment. As the District Court's intriguing opinion explained, a Supreme Court decision handed down changed the law from what it had been in 2017 when Plaintiff Allen's Takings Clause claims were dismissed. A Hollywood Reporter article published on August 19 helpfully summarizes the decision, which holds out promise for copyright owners to obtain some sort of relief when their copyrighted property is used without just compensation.

In response to the Supreme Court's decision in Allen v. Cooper I wrote a July 2020 Perspectives From FSF Scholars paper titled "Congress Should Stop States From Infringing Copyrights." The U.S. Copyright Office has been conducting a study of the issue of copyright infringements in the state and state sovereign immunity. The Office's report has been scheduled for an August 31, 2021 release date. Perhaps that release date will be pushed back in order for analysis of the District Court's reconsideration order in Allen v. Cooper. Regardless, the matter of copyrights and state sovereign immunity remains a topic that deserves attention by Congress. 

FTC Commissioner Phillips' Recent Comments on Changes to Transaction Review Process, Proper Focus of Antitrust Law

In a series of recent posts to the FSF Blog, I have highlighted instances where the two Republican FTC Commissioners, Noah Phillips and Christine Wilson, have voiced concerns regarding changes to the process by which the agency reviews transactions.

Appearing on a panel at the Technology Policy Institute's just-concluded Aspen Forum 2021, Commissioner Phillips was afforded an opportunity to expand upon his recent public statements. His remarks were noteworthy.

When asked to assess the performance of Lina Khan during her first two months as FTC chair, Commissioner Phillips responded in relevant part that:

There are some changes being made that I think are good things. I like the concept of open meetings. I think it's good to show the public … who we are and what we're doing. 

There are some changes that I don't like as much…. Something that I said recently is I'm concerned that some of the policies we're adopting are essentially aimed at undoing the Hart-Scott-Rodino merger review legislation. That was a piece of legislation adopted by the Ford Administration in 1976 and it has been one of the great "win-wins" in antitrust law over the decades. 

Businesses got an answer to their question and didn't have to waste a lot of money. Government enforcers got a chance to look at transactions before they happened, and didn't have to deal with hostile judges who didn't want to "unscramble the eggs." And it's been really good to give the opportunity to the government to review mergers, to give answers to businesses, and, ultimately, and this is the point, to help consumers.  

But I fear that some of the steps we're taking now will make that process less effective and less efficient and less fair. And so there are certainly some things we're doing … that I'm not a fan of. It's early days, and we'll see what happens.

In response to a question regarding the FTC's merger-review backlog, Commissioner Phillips stated the following:

What I will say is that we have deliberate and public policies right now of holding off on making decisions. So, for example, we adopted a policy, and … this was under Acting Chair Slaughter, when companies sought early termination … for deals that were non-problematic, that no one had an issue with, companies used to be able to come to the government and say, "Hey, you're not interested in this, can we just go ahead and do it?" And now we're saying, "No, you can't. You just have to wait. Not for any reason. Just because." That, to me, adds some needless friction to markets.

Another example, we announced a policy that in more cases we're going to be demanding of companies to give us prior approval rights for future mergers in our consents. And one thing I fear here is that this is just going to make doing consents harder. Resolving things ahead of time harder. 

Now I know a lot of people are worried that consents don't work well. And I know people don't want to say, "Yes," they don't want to say, "Yes, I'm ok with this merger." But the whole congressional scheme from 1976 forward depends upon the ability of the agencies to get things done. Sometimes we  sue… sometimes we go to court. But in order to bring those cases, we're going to have to resolve others. And I just worry that we are needlessly impeding our ability to do so.

Later in the discussion, Commissioner Phillips made a comment very much in line with a July 2021 Perspectives from FSF Scholars critical of calls to expand the focus of antitrust law beyond the relatively narrow "consumer welfare" standard that has prevailed for half a century.

In "Failure Everywhere? The Expansion of Goals for Antitrust," Timothy Brennan, Professor Emeritus, School of Public Policy, University of Maryland-Baltimore County (UMBC) and a member of the Free State Foundation's Board of Academic Advisors, argued that attempts to achieve too much through antitrust law in actuality are likely to produce the opposite result:

Expanding the range of goals to pursue with antitrust may end up not only doing a poor job protecting consumer welfare, but also will impede achieving the equity, employment, fairness, and other social objectives motivating the critics of traditional antitrust ….

In responding to moderator Tom Lenard's question whether the United States has a "serious and growing market power problem," Commissioner Phillips made a similar point:

What I do think … is a problem in some of the discussion that … everyone is having is that almost everything that people view as negative, either that a particular firm is doing, or that they see in society, let's say, the redistribution of wealth from labor to capital, they tag as a problem of market power. So: company does a bad thing, you will see infinite number of people on Twitter talk about how, if we had competition, we wouldn't have that. 

My question is, "Why? Why do we assume that's true?" If, in fact, the thing that we're seeing would not be the result of normal competition, there I think you have an argument. But there are times when bad things happen, and the cause of that is not a lack of competition. And so the solution of antitrust will not lead to better results….

And so one of the concerns that I have … about introducing all of these new features, especially ones that aren't naturally borne out by the competitive process, which is why we have regulation: to solve those externalities where the market won't. One of my concerns is, if you're trying to solve everything at once, you'll solve nothing at all.

Ligado Networks and Mavenir Move Ahead on Next-Gen Wireless Buildout

As mentioned in a blog post from July of this year, Ligado Networks has been developing its mixed mobile-satellite wireless network, which will operate using its licensed L-Band spectrum. Once deployed, Ligado's network will offer 5G private network and IoT capabilities that will create jobs and boost the U.S. economy. To this end, Ligado has reached agreements with equipment manufacturers, and its latest announced partnership is with the OpenRAN vendor Mavenir. See Free State Foundation President Randolph May's tweet on this announcement, with a link to the press release: 

The announcement that @LigadoNetworks is partnering w/ @Mavenir to advance the connectivity of its #5G mobile satellite network is imp't, esp. now. The combo will support millions of mobile devices used in critical #infrastructure industries. See: https://t.co/4pwfsAUk6G

— Free State Foundation (@FSFthinktank) August 18, 2021

Verizon/TracFone Merger Now Has a Clearer Path to FCC Approval

Pending before the FCC is Verizon's proposed acquisition of TracFone, a mobile virtual network operator (MVNO) that had 21 million subscribers at the end of 2020. MVNOs aren't facilities-based providers. Rather, they purchase wireless network on a wholesale basis from facilities-based providers like AT&T, T-Mobile, and Verizon and then they resell those services to consumers. Prepaid wireless service offerings by MVNOs have been especially popular with cost-conscious consumers. 

On August 13, I was quoted in Communications Daily in response to news that many prior opponents of Verizon/TracFone are now supportive of the merger because of pledges Verizon has made to provide continuing services with the Lifeline program. Leaving aside the issue of whether those pledges ought to have been necessary or the merits of those pledges, it safe to conclude that the Verizon/TracFone merger would result in economic efficiencies because an acquired TracFone would save on costs of obtaining wireless network services at wholesale. And since the Verizon/TracFone merger would not result in the loss of a facilities-based provider, the FCC's approval of the merger ought to be a foregone conclusion.  Moreover, as I was quoted in saying in CommDaily: "A timely and straightforward FCC decision on Verizon/Tracfone likely would make any state PUC reviews go more smoothly, given that state regulatory assertions of authority over wireless mergers already are on thin legal ground in light of Section 332 of the Communications Act."

Latest Wireless Industry Survey Reveals Continued Growth in Investment, 5G Deployments, and More

The 2021 annual survey of the wireless industry conducted by CTIA details steadily increasing investment, rapidly expanding 5G deployments, and a robust response to the spike in demand driven by COVID-19.

Released by CTIA on July 27, 2021, the 2021 Annual Survey Highlights present a compelling portrayal of progress and performance during a year over which the pandemic cast a heavy shadow.

A few highlights:

• Private investment in mobile networks increased for the third consecutive year, reaching a five-year high of $30 billion. Capital expenditures to date exceed $600 billion.
• 5G networks were deployed at a pace exceeding that achieved by 4G networks and in 2020 covered 300 million Americans, compared to only 200 million twelve months prior. First launched in 2019, 5G already is available to 90 percent of the country.
• In the last two years, mobile carriers constructed nearly 68,000 new cell sites, an achievement facilitated by wireless infrastructure reforms implemented by the FCC.
• Total mobile data consumption exceeded 42 trillion megabytes in 2020, an increase of more than 200 percent since 2016. Over the past decade, mobile data traffic has grown by a factor of 108.

"Death by a Thousand Cuts": FTC Commissioner Wilson Sounds the Alarm in Response To Latest Change To Transaction Review Process

The Federal Trade Commission's Democratic majority, led by newly-installed Chair Lina Khan, already has made several modifications to the process by which the agency reviews transactions. These changes worry its Republican Commissioners.

The most recent example is a August 3, 2020, Press Release announcing that, unable to conclude its review of proposed deals within the statutory periods established by the Hart Scott Rodino (HSR) Act, the FTC has started sending letters warning those companies that proceed to closing that they "are doing so at their own risk."

On previous occasions, Republican Commissioners Noah Phillips and Christine Wilson have voiced their concerns publicly regarding this troublesome trend. For example, and as I noted in a July 23, 2021, Free State Foundation blog post, Commissioners Phillips and Wilson both issued statements objecting to the partisan decision to rescind the 1995 Policy Statement Concerning Prior Approval and Prior Notice Provisions in Merger Cases.

And in her July 28, 2021, Oral Statement to the House Committee on Energy & Commerce's Subcommittee on Consumer Protection and Commerce, Commissioner Wilson expressed alarm regarding "the agency's abrupt departure from regular order." A July 29, 2021, post to the FSF Blog reporting on her testimony recounted her conviction that "traditions and norms have been jettisoned."

In response to this latest action, Commissioner Wilson once again has made the decision to speak her mind.

In a statement released on August 9, 2021, Regarding the Announcement of Pre-Consummation Warning Letters, Commissioner Wilson declares that she is "gravely concerned that the carefully crafted HSR framework is suffering death by a thousand cuts." Grounding the August 3, 2021, Press Release in the broader context of other recent agency decisions, she argues that "these actions raise the costs of doing mergers and threaten to chill harmful and beneficial deals alike."

Before 1976, transactions were reviewed after the fact. As Commissioner Wilson recounts, this was less than ideal for all concerned: the government, businesses, and consumers. Congress, in passing the HSR Act, addressed this uncertainty by requiring that the parties to certain deals provide pre-merger notifications to the FTC and Department of Justice.

According to Commissioner Wilson, the announcement that the agency is sending warning letters, rather than completing its investigations within the time allotted by statute (or negotiating extensions thereof), suggests a return to the pre-HSR era. As the Press Release notes, the form letters make clear that the "investigation remains open" and "the agency may subsequently determine that the deal was unlawful." In the Commissioner's words, we once again find ourselves in an uncertain regulatory environment where, ex post, the FTC may attempt to "unscramble the eggs."

Questioning the stated justification for this change – an increase in the number of filings and a lack of agency resources – and referencing the fact that "[w]e know the Biden Administration has called for a review of the existing merger guidelines" that could result in the government catching a higher percentage of transactions in its net, Commissioner Wilson speculates that perhaps "something else is afoot."

In conclusion, Commissioner Wilson argues that such a fundamental change "defies the will of Congress" – and therefore should be undertaken only by Congress.

PRESS RELEASE: NTIA's Case Against Ligado Undercut by Agency Documents

The following statement may be attributed to Free State Foundation Director of Policy Studies and Senior Fellow Seth Cooper:

Documents from 2013 that recently have gained notice cast doubt on the validity of the Department of Defense and Department of Commerce's opposition to Ligado Network's use of L-Band spectrum for commercial wireless services. A July 2013 memo signed by Interdepartment Radio Advisory Committee (IRAC) members of the Army, Navy, Air Force, and Commerce Department, and NASA shows that at that time those federal agencies had no serious reservations about prospective use of L-Band spectrum by Ligado's predecessor,  Lightsquared. An October 2013 email from a Department of Defense official also indicates that those federal agencies were generally in favor of L-Band spectrum being used for commercial wireless services. This history undercuts those federal agencies' present pushback against Ligado's network, which will operate at significantly reduced power levels compared to what Lightsquared proposed, and subject to FCC-enforceable safeguards. The FCC's 2020 order that authorized Ligado to operate in the L-Band was based on careful technical analysis, and the agency documents from 2013 bolster the case for the Commission to reject any reconsideration of that order.

Cable Mobile Wireless MVNOs: 6.5 Million Subscribers and Counting

Over the last few years, Free State Foundation scholars have taken note of the potential competition in the mobile wireless market from entrant cable providers, including Comcast's Xfinity Mobile and Charter Communications' Spectrum Mobile. These cable mobile virtual network operators (MVNOs) combine their broadband network capacity and mobile hotspots with leased spectrum. For a helpful summary of the latest reported numbers, see the July 30 article by Diana Goovaerts in FierceWireless titled "Cable MVNOs add 550,000 wireless subs in Q2." According to the article, cable providers now have a combined total of 6.5 million mobile wireless subscribers. At the end of the first quarter of 2020, there were about 2.5 million combined subscribers. And at the end of the second quarter of 2019, there were about 2.1 million. These cable wireless MVNOs now offer 5G services. At some point, cable wireless MVNOs may be offloading mobile traffic onto their own licensed spectrum in select areas, thereby saving spectrum leasing costs. Expect to hear more about competitive cable MVNOs in the time ahead.