Friday, March 30, 2012
A Truly Free Market TV Marketplace
Wednesday, March 28, 2012
FCC Process Reform Bill
Back in June 2011, I testified at a hearing before the House Commerce Committee on the bill. While I questioned the need for a couple of its provisions, my testimony, on the whole, was genrally favorable towards most of the bill. My testimony is here.
Tuesday, March 27, 2012
Overburdening Wireless With by Overlapping Taxes
A study released in January by scholars at the Mercatus Center focuses on the high levels of taxation that wireless services and wireless consumers are faced with today. We've blogged about this unfortunate situation in prior posts.
In their study, "Wireless Taxes and Fees: A Tragedy of the Anticommons," Matthew Mitchell and Thomas Stratmann point out that combined federal, state and local taxes on wireless are about twice as high as the average retail sales tax. As the title suggests, the authors persuasively contend that wireless tax policy suffers from a "tragedy of the anticommons." That is, too many governments have the ability to tax wireless services, creating high levels of taxation for services for which consumers show a high degree of price sensitivity. In the authors' words:
When numerous interests are allowed to tax a single base, each does so without regard to the effect of its tax on the others. The problem can lead to over-taxation of the resource and to underutilization of the good or service being taxed. The problem is exacerbated when numerous levels of government have access to the same tax base.
The study offers another reminder about the need for tax reforms at the federal and state levels. For instance, FCC reforms of USF contributions are necessary to reduce the surcharge (that is effectively a tax) imposed on wireless consumers' monthly bills. Meanwhile, states need to better coordinate and streamline the multiple taxes assessed by tax jurisdictions within their borders and to bring overall tax rates on wireless services into line with general sales tax rates. States also need to ensure that so-called fees imposed on wireless services are not imposed for extraneous governmental purposes.
Monday, March 26, 2012
Repurposing the FCC
The need for more spectrum capacity for mobile broadband operators is real. Hence, the need for repurposing spectrum is real.
Sunday, March 25, 2012
Conference Video Now Available
Thursday, March 22, 2012
FCC Must Free Cableco/CLEC Mergers From Section 652 Strictures
Saturday, March 17, 2012
"Terrestrialization" - A New Word in FCCland
"We believe in terrestrialization of the MSS spectrum," Jay Monroe, chairman and CEO of Globalstar, Inc., said during a session this morning at the Satellite 2012 conference in Washington. "It's important to our long-term financial health."
Anyone ever heard of that word before? Didn't think so. But we make up new words in FCCland pretty often.
Wednesday, March 14, 2012
The Internet World: Will It Remain Free From Public Utility Regulation?
When I selected the conference theme the particular year that mostly stuck in my mind was 2002. Yes, 2002. That was the year the FCC, in the first of a series of deregulatory rulings, determined that broadband Internet services "should exist in a minimal regulatory environment that promotes investment and innovation in a competitive environment." At the same time, the Commission emphasized it would "avoid simply extending existing rules that were crafted to govern legacy services provided over legacy networks." The Commission defended its decisions establishing a minimal regulatory environment for broadband all the way up to the Supreme Court – and won, in the landmark 2005 Brand X decision.
The regime that the Michael Powell-led Commission in 2002 wanted to avoid applying to broadband Internet services was the legacy common carrier regime, or traditional public utility regulation, which has as its hallmark a prohibition against unreasonable discrimination and regulation of prices. As then-FCC Chairman Bill Kennard put it colorfully in 1999, he didn't want the FCC to “pick up this whole morass of regulation and dump it wholesale" on broadband. To do so, he said, “would not be good for America.”
So, back to this year's annual conference theme: "The Internet World: Will It Remain Free From Public Utility Regulation?" I understand, of course, there are differing perspectives. But in my view, it is certainly not at all settled that the Internet will remain free from public utility-type regulation. Consider the FCC's recently adopted net neutrality mandates, with the common carrier-like nondiscrimination obligation, at their very core. Or consider FCC proposals to extend further already suspect program carriage obligations and to adopt new regulations governing the functionality and features of set-top video navigation devices. Or rules to regulate the rates for data roaming for smartphones. Or requirements imposed in connection with the Comcast-NBC Universal transaction regulating the terms and conditions for access to Comcast-NBCU's proprietary programming by Internet video providers. And so forth and so on.
So, there is plenty of fodder for a lively and informative discussion at FSF's conference concerning Internet regulatory policy. And that is what I anticipate.
In thinking about the conference over the last several days, and especially the panel topic, "Convergence, Competition, and Consumer Choice," I found myself going back in my mind to Ithiel de Sola Pool's ground-breaking book, Technologies of Freedom, published in 1983. Not only did I find myself going back to it in my mind; I pulled it off the bookshelf.
If I could assign only one pre-conference reading assignment, it would be de Sola Pool's prescient book. (Don't worry! I understand I can't hand out reading assignments.)
Keep in mind that Technologies of Freedom was written almost three decades ago. But already there was emerging what de Sola Pool – and others -- saw as a increasing diversity of communications and media outlets resulting from new electronic technologies. In other words, he saw increasing "convergence, competition, and consumer choice."
What makes Technologies of Freedom so powerful – and relevant today – is that de Sola Pool recognized it was entirely possible, even with more competition and more consumer choice, for the government, rather than deregulating and according free speech protection to the new communications technologies, to take the opposite course: Regulate all the media with legacy common carrier-like, speech-restrictive regimes.
Assuming you can't read the entire book, here are a few excerpts, especially relevant to the conference theme, that are well worth considering:
"The electronic modes of twentieth century communication, whether they be carriers or broadcasters, have lost a large part of the eighteenth and nineteenth century constitutional protections of no prior restraint, no licenses, no special taxes, no regulations, and no laws."
* * *
"The FCC claims the right to control which broadcast stations a cablecaster must carry...Telephone bills are taxed. A public network interconnecting computers must be licensed and, according to present interpretations of the 1934 Communications Act may be denied a license if the government does not believe that it serves 'the public convenience, interest, or necessity.'"
* * *
"The mystery is how the clear intent of the Constitution, so well and strictly enforced in the domain of print, has been neglected in the electronic revolution. The answer lies partly in changes in the prevailing concerns and historical circumstances from the time of the founding fathers to the world of today; but it lies at least as much in the failure of Congress and the courts to understand the character of new technologies."
* * *
"Historically, the various media that are now converging have been differently organized and differently treated under the law. The outcome to be feared is that communications in the future may be unnecessarily regulated under the unfree tradition that has been applied so far to the electronic media. The clash between the print, common carrier, and broadcast models is likely to a vehement communications policy issue in the next decades."
Just so. Although de Sola Pool was writing even before the rise of the Internet, he was surely prescient in his worry that "[t]he outcome to be feared is that communications in the future may be unnecessarily regulated under the unfree tradition that has been applied so far to the electronic media." And he was correct in predicting, at the time he wrote in the early 1980s, that the clash between the free and the unfree models was likely to be with us for decades to come.
The clash is surely still with us in 2012. And that is why I think this year's annual telecom policy conference will be so important in elucidating the issues. I am very proud of our entire line-up of outstanding speakers, including our keynoters, the Wall Street Journal's Steve Moore, FCC Commissioner Mignon Clyburn, and White House Deputy CTO for Internet Policy Danny Weitzner. I am confident the program sessions will be educational and informative, as well as lively and entertaining.
I have my own opinions, of course. Like de Sola Pool, I think the "outcome to be feared is that communications in the future may be unnecessarily regulated under the unfree tradition." But I am always excited about hearing differing perspectives, learning more, and questioning conventional wisdom. I know you are as well, and that's why I hope to see you at next Tuesday's conference at the National Press Club.
The conference agenda is here. In order to attend, you must register by rsvp-ing to Kathee Baker at: firstname.lastname@example.org
PS – There will be plenty of food for thought. But, in addition, for those who have registered in advance, we will be serving a complimentary continental breakfast and lunch.
Monday, March 05, 2012
Tennis Channel Carriage Ruling a False Start Under First Amendment
In a December blog post titled "Tennis Channel Ruling: No Mere Foot Fault," FSF President Randolph May described the Tennis Channel's Section 616 "program carriage" complaint. An administrative law judge (ALJ) ruled it was unfair discrimination when Comcast said no to the Tennis Channel's request – made during an existing contract term – to be included in the same programming tier as the Comcast-affiliated Golf Channel and Versus (now NBC Sports Network). The ALJ ordered Comcast to carry the Tennis Channel on terms similar to the Golf Channel and Versus.
The ALJ's Tennis Channel ruling raises serious First Amendment problems. It has now been appealed to the full FCC for review. Hopefully, the Commissioners will take First Amendment principles seriously and reverse the ALJ's ruling.
Section 616 prevents multichannel video programming distributors (MVPDs) from preferring affiliated video programming over non-affiliated programming if it "unreasonably restrain[s] the ability of an unaffiliated video programming vendor to compete fairly." Whatever the FCC's obligations under Section 616, its actions must still be consistent with the First Amendment. This includes the Constitution's general prohibition of government censorship of speech based on content.
Content-based restrictions are presumptively unconstitutional and the government bears the burden of justifying them. The government is also generally prohibited from telling people what they must say. And it is well established that MVPDs are entitled to First Amendment protections like any other association or individual.
The ALJ's Tennis Channel ruling is especially problematic because it is unmistakably content-based. The ALJ analyzed and compared the respective programming of the Tennis Channel with the Golf Channel and Versus. This included the extent of overlap between the respective channels in terms of programming genres, target audiences, advertisers, and ratings. Deeming the Tennis Channel "similarly situated" to Versus and the Golf Channel, the ALJ concluded unfair discrimination against Tennis Channel resulted from certain business and editorial decisions made by Comcast, such as channel and tier placement. Comcast's Washington D.C. system, for instance, carries Versus on channel 7 and the Golf Channel on channel 11, but places the Tennis Channel on 735. And Comcast places Versus and the Golf Channel on its Expanded Basic or Digital Starter tiers while placing the Tennis Channel on its less popular Sports Tier.
As a remedy, the ALJ's ruling "requires Comcast to carry Tennis Channel at the same level of distribution that it carries the Golf Channel and Versus. Comcast Cable otherwise has full discretion in determining the level it chooses to carry the three channels." It also requires Comcast "to provide Tennis Channel with equitable treatment (vis-à-vis the Golf Channel and Versus) as to Channel placement."
In so doing, the ALJ's ruling gives very short shrift to First Amendment's protections for a speaker's editorial judgments. Newspapers, for instance, are protected from government intrusion on their editorial judgments about the numbers of pages for each issue, what sections they will include, what articles they will run, and what ads they will print. The U.S. Supreme Court's ruling in Miami Herald Publishing Company v. Tornillo (1974) recognized the protected status of such editorial judgments. It struck down a statute requiring newspapers to give equal space to political candidates to reply to published criticisms.
Here the ALJ tried to brush aside concerns about rights of editorial discretion. The ALJ asserted Comcast could still choose not to carry any of those three channels – but if it did choose to carry either of its affiliated channels then it would have to carry the Tennis Channel on similar terms. However, this attempted work-around won't work at all if First Amendment requirements are taken seriously.
The Supreme Court's political campaign speech rulings in Davis v. FEC (2008) and Arizona Free Enterprise Club's Freedom Club PAC v. Bennett (2010) held that First Amendment limits are not avoided just because government gives speakers the ability to avoid speech restrictions and penalties by abandoning or altering the content of their speech.
The conditional nature of the ALJ order's remedy also undermines any claim that restrictions on Comcast's editorial discretion are justified by its promotion of diversity and competition in the video programming market. How could the ALJ's order be said to promote programming diversity if Comcast drops the Tennis Channel along with its affiliated channels?
Lastly, it's worth considering that the entire program carriage regulatory framework stands on shaky ground. 1990s analog-era cable regulations were upheld from First Amendment challenge on the basis of a perceived local cable "bottleneck." But as I explained in my blog post "Video Competition Should Lead FCC to End Old Regulation," the days when cable providers enjoyed a 90% market share are long gone.
Cable's market share has fallen to about 60% of video subscribers. Two nationwide direct broadcast satellite (DBS) providers serve over 30 million. Telco entrants serve approximately 6.5 million. Meanwhile, online video delivery from websites or video gaming console apps via broadband offers explosive platforms for video programming. Availability of unaffiliated video programming to consumers has also grown. And the number of vertically integrated video programming has declined from more than 50% of all cable programming in prior years to less than 20% today. These rapid, disruptive changes in the video market belie bottleneck rationales for reducing free speech protections for MVPDs.The Constitution sets the basic framework and limits on the implementation of the Communications Act. For the FCC, this means that First Amendment protections must be its first-order concern in reviewing Section 616 program carriage complaints like the Tennis Channel's. If the Commissioners take free speech protections seriously, they should reverse the ALJ's ruling.