Facebook and Kids

Free State Foundation Distinguished Adjunct Senior Fellow Deborah Taylor Tate has published another important piece in the Tennessean on privacy protection for kids online.  It is called, "Facebook Should Not Be for Kids."

As always with this former FCC Commissioner's essays, this one too is well worth your attention. Even  on those occasions when I may disagree with her, about one thing I have no doubt: She cares deeply about protecting children.

The True Meaning of Internet Freedom

These two words – "Internet freedom" – are ricocheting around cyberspace almost as fast as neutrons and protons bouncing around inside an atom's nucleus. Well, almost as fast.

Both Republicans and Democrats – and most everyone else – proclaim to be in favor of Internet freedom. Here's a Fox News article, "The 2012 Political Tug of War for the Internet," that describes the political effort to capture the "Internet Freedom" flag. If you like, you can quickly find many others to the same effect.

The article points out that the Republican Party platform has a plank expressly headed, "Protecting Internet Freedom," and the Democrats almost surely will follow suit next week. Indeed, the article quotes President Obama stating: "Internet freedom is something I know you all care passionately about; I do too."

So, no worries? We're all for "Internet freedom" now?

Not so quick.

            I am reminded of Abraham Lincoln's remark: "The world has never had a good definition of the word liberty. We all declare for liberty, but in using the same word we do not mean the same thing."

            We all may declare for "Internet freedom," but we do not necessarily mean the same thing.

My own definition is closer to what I think the Republicans have in mind, but you're welcome to yours, of course.

The Republican platform declares:

"The Internet has unleashed innovation, enabled growth, and inspired freedom more rapidly and extensively than any other technological advance in human history. Its independence is its power. The Internet offers a communications system uniquely free from government intervention."

And it also states that the current Administration, "through the FCC's net neutrality rule, is trying to micromanage telecom as if it were a railroad network."

I understand there are various dimensions that might be considered under the rubric of Internet freedom. For example, the Fox News article refers to the controversy over the proposed SOPA legislation as one such aspect.

But, to my mind, the idea, as the Republican platform puts it, that the Internet should be "uniquely free from government intervention," is fundamental to a proper understanding of "Internet freedom." And, because net neutrality regulation, pursuant to mandates recently adopted by the Federal Communications Commission, necessarily involves government intervention, opposition to net neutrality regulation is central to a proper understanding of Internet freedom.

Based on the contrasting positions taken in Congress by party leaders, which are likely to be reflected in the contrasting party platforms when the Democrats' finalize theirs, there is a gulf separating the Democrats' and the Republicans' understanding of Internet freedom. And it essentially comes down to this: Net neutrality regulation is an essential element of Internet freedom for most Democrats. (Note I said "most" because there are certainly individual exceptions, including a number of Hill Democrats; I am referring here mainly to party positions.)

Those favoring net neutrality claim to fear that, without government intervention, Internet service providers might "discriminate" among users or content providers or may block access to web sites. In this view, government must intervene to prevent such discrimination or blocking from occurring.

Those opposing net neutrality fear that the greater threat to Internet freedom arises from giving the government the power – or, more accurately, the government arrogating unto itself the power – to determine whether private Internet providers are "discriminating" among users or content providers, or to force Internet providers to carry content they may prefer not to transmit. This fear is enhanced by the knowledge that net neutrality's "discrimination" prohibition is inherently vague, and, therefore, that the range of bureaucratic discretion is inherently large, if not unbounded.

This divergence is reflected, too, in different understandings of the First Amendment's role. For most of those who favor net neutrality regulation, including those FCC commissioners who voted for it, such regulation presents no First Amendment free speech problem. The pro-regulatory forces claim that net neutrality mandates are consistent with the First Amendment because the government is merely ensuring that private Internet providers do not interfere with the speech of users and content providers.

But, for many, including me, who oppose the FCC's mandates to enforce "neutrality" on the Internet, this conception turns the First Amendment on its head. The First Amendment's free speech guarantee is intended to protect against government censorship of private party speech, not to authorize government regulation of the speech of private parties in the name of enforcing neutrality.

The Free State Foundation, along with TechFreedom, the Competitive Enterprise Institute, and the Cato Institute, recently filed an amicus brief in the D.C. Circuit Court of Appeals making just such an argument that the FCC's net neutrality regulations violate the First Amendment. If you are interested, I commend the brief to you. And I first set forth such argument in my 2007 law review article, "Net Neutrality Mandates: Neutering the First Amendment in the Digital Age."

Now I understand that those who favor net neutrality regulation generally abandoned the "net neutrality" moniker a couple of years ago in favor of the "open Internet" label. And now they seek to claim "Internet freedom." But history teaches us that what matters, of course, much more than the label attached to actions are the actions themselves.

So, to return to Abraham Lincoln. In using the same words, we do not necessarily mean the same thing. But I hope I have made clear that my conception of Internet freedom is inconsistent with net neutrality regulation. And that, generally, the Internet should remain, as the Republican platform states, "uniquely free from government intervention."

That's the true meaning of "Internet freedom." 

FSF Job Positions

The Free State Foundation has a job opening for someone with the requisite qualifications and free market orientation..... 

Job Opening for Senior Policy Analyst: The Free State Foundation, a growing non-profit, non-partisan free market-oriented think tank with an emphasis on communications and Internet policy, is seeking to hire an economist, lawyer, or other professional with experience regarding regulated industries. Some existing expertise regarding communications and Internet policy is a definite plus. The ability to analyze market structure and competition in dynamic markets characterized by rapid technological advances as well as to perform cost-benefit analysis of regulatory proposals is required. Excellent writing skills and the ability to write lucidly from a free market perspective for policy audiences is a must. Applicants must possess either a JD degree or a Master’s degree with at least 4 years experience. Flexible working arrangements, including the option for part-time and off-site work, are possible. FSF offers competitive compensation. Send resume to info@freestatefoundation.org . For information on FSF, visit http://www.freestatefoundation.org.

Job Opening for Policy Analyst: Depending on the timing and circumstances, there may be positions available for junior policy analysts as well. Prior experience and expertise regarding communications and Internet policy is a definite plus. Flexible working arrangements are possible. Send resume to info@freestatefoundation.org . For information on FSF, visit http://www.freestatefoundation.org.

An American Dream

I want to call your attention to an especially nice piece, "Jose Mas Builds American Dream," published in the Miami Herald by Free State Foundation Distinguished Adjunct Senior FellowDeborah Taylor Tate.

As usual, Debi's piece looks forward rather than backward, and to optimism rather despair. And she highlights one sterling example for optimism in the story of Jose Mas.

Here is the way she concludes her piece:

"Perhaps our leaders in Washington might want to look south — outside the Beltway —to find a jobs plan that is working. They might even want to call this son of a Cuban immigrant. Just look for him under “the American dream.”

For the whole story, click here.

A Dystopian UTOPIA

With many local governments confronting severe fiscal difficulties, you'd think they would be content to just focus their attention on trying to deliver essential public services in an efficient, economically sound manner.

You might think so.

But some cities and counties, and in some instances states, can't resist the temptation to get into running businesses that are much better left to the private sector – like building and operating telecom and broadband networks.

These government telecom ventures rarely turn out well.

Take, for example, the Utah Telecommunication Open Infrastructure Agency, with the once touted, but now unfortunate, acronym "UTOPIA".  UTOPIA is a decade-old government-run fiber optic project that is supposed to provide broadband services to eleven Utah cities.

In truth, UTOPIA ought to renamed DYSTOPIA.

Like most municipal communications networks, from the outset UTOPIA's promised benefits have fallen far short. On the other hand, UTOPIA's burdens on the public fisc – and the taxpayers – have far exceeded government projections, even as these burdens have been revised upwards on an ongoing basis.

Utah's Office of Legislative Auditor General recently prepared a lengthy report for the Utah State Legislature concerning UTOPIA's performance to date. Here are some of the key findings:

"[S]ince 2003, UTOPIA has had nine consecutive years of operating losses. These annual deficits have caused serious damage to the agency’s financial position. At the end of fiscal year 2011, UTOPIA had total net assets of negative $120 million."

"UTOPIA originally planned to build a broadband network in three years and to achieve a positive cash flow in five years. However, it has not met that schedule. Instead, the cost of financing and operating the network increased before UTOPIA could provide a substantial number of customers with service. As a result, revenues have not been sufficient to cover its costs. Year after year, as operating deficits have accrued, the agency has developed a large negative asset balance."

"Most of the bond proceeds have been invested in poorly utilized and partially completed sections of network. As a result, the network is not generating sufficient revenue for the agency to cover its annual debt service and operating costs."

"The use of debt to cover the cost of operations and debt service is symptomatic of an organization facing serious financial challenges."

"In addition to UTOPIA’s problems with poor planning, mismanagement, and unreliable business partner performance, a lack of sufficient customers is also a cause for the agency’s slow progress."

The Auditor General's Report is filled with facts and figures, almost of them dismal – or dystopian – if you will. You can read through the report and draw your own conclusions.

Here is what Utah's leading newspaper, the Deseret News, concluded in an August 3 editorial following the release of the legislative audit:

"Early projections presumed that UTOPIA's massive broadband network would be profitable within its first five years and have a subscriber base of 49,000 by 2007. Yet as of April 2012, it has a paltry 9,300 subscribers, and profitability is nowhere in sight."

"This is causing an impossible strain on the local municipalities that pooled their resources to make UTOPIA possible. The participating member cities have to scrounge up $13 million a year in sales tax revenues to keep UTOPIA going. Adverse economic conditions make that money a lot harder to come by than it was when the project was on the drawing board. Clearly, there are far more important civic priorities that ought to take precedence over the UTOPIA boondoggle. This constitutes an inexcusable waste of valuable public resources."

"UTOPIA's network duplicates more innovative projects taking place in the private sector. The free market recognizes the need for a robust communications infrastructure, and it has been able to provide customers with these services in a timely and cost-effective manner. Private enterprise doesn't have the ability to dip into public monies when their operations don't produce enough cash — they either sink or swim on their own merits. That's why the state should sell UTOPIA assets to the companies that would be in a position to use them profitably."

I have never taken an absolutist position that there might not be exceptional circumstances under which it may be appropriate for municipal governments to build and operate telecom networks. But UTOPIA's unfortunate experience, along with that of other government-run networks, provides a cautionary tale that such instances should be extremely rare. And a precondition for considering government ownership must be that no private providers are offering service in the area and none have indicated an intention to do so. Even then, of course, governments should proceed with the utmost caution. For there likely are good reasons, from an economical and practical point of view, why private operators are not yet offering service.

The cities that comprise the UTOPIA venture could do their citizens – and perforce their taxpayers – a favor by getting out of the telecom business. Indeed, they have an obligation to do so. History has shown that running a telecom network is a highly capital-intensive and complicated business much better left to private enterprise.

The FCC's Section 706 Report and Wireless Broadband Build-Out

A Maryland county's rejection of a wireless carrier's plan to build a cell tower on private property and improve service coverage was the subject of a prior blog post, "Wireless Tower Construction Is Critical To Maryland's Consumers and Economy." It is essential that local governments perform a more constructive role regarding wireless infrastructure build-out that includes inter-governmental coordination to ensure that public property is made available for new wireless facility placement.

Growing demand for wireless data services has created a pressing need to build new wireless towers to accommodate surging wireless traffic flows. Local consumers and communities stand to benefit from the economic opportunities offered by next-generation wireless networks, including e-commerce, e-health and video applications.

There is also a constructive role for the FCC in removing barriers to infrastructure investment and wireless broadband deployment. The next Section 706 Broadband Progress Report is now being circulated at FCC. That soon-to-be released Report offers the FCC a prime opportunity to address wireless facility siting. FCC adoption of clearer rules and policy regarding federal limits on local government approval processes can help reduce wireless infrastructure permits being improperly denied or delayed.

In Howard County v. T-Mobile the U.S. District Court for the District of Maryland upheld the County Board's rejection of a permit application to build a 100-foot monopole on a church property. The District Court applied a highly deferential standard in reviewing the Board's zoning decision. A local school district's bureaucratic response in turning down T-Mobile's requests to place a tower on school property and the Board's reliance on a burden of extra production of evidence regarding sight distance were deemed sufficient to uphold the Board's ruling.  

Section 332(c) of the Communications Act prohibits local government actions that have "the effect of prohibiting the provision of personal wireless service." Current jurisprudence, however, make it very difficult for wireless carriers to ever gain a favorable ruling under this provision. Federal case precedents offer only general considerations about what constitutes, in practical effect, a prohibition of wireless services. Absent blanket bans on wireless facility siting by local governments, carriers are typically required to establish, among other things, "a legally cognizable deficit in coverage amounting to an effective absence of coverage." In explaining this factor, the District Court cited Fourth Circuit precedent for the proposition that "the record must clearly demonstrate that there is an absence of service in a particular part of the country."

In this case, the District Court concluded that "the record does not clearly demonstrate an absence of service in this area" or a "legally cognizable gap in service" because: (1) T-Mobile already had towers and antennas in the general area; (2) a T-Mobile expert witness testified that the carrier's coverage in the area was unreliable but not "completely lacking"; and (3) T-Mobile's expert catalogued dropped call rates of 5.42%, 6.26%, and 2.68% over three months, exceeding T-Mobile's goal to keep the drop call rate at or below 2%. In light of those dropped call rates District Court concluded "the record does not clearly demonstrate an absence of service in this area."

However, dropped calls are hardly the only wireless service quality issue. Sufficient signal strength and speeds are also necessary for wireless broadband service. And it is particularly important for wireless service providers to deploy infrastructure that meets projected future wireless data traffic demands.

There appears to be a judicial reluctance to further define what constitutes "a legally cognizable deficit in coverage amounting to an effective absence of coverage." For instance, in a Fourth Circuit decision from earlier this year Judge Andre Davis wrote that, "[o]ur review of an effective-prohibition claim might look different if there were properly promulgated FCC regulations setting particular threshold coverage levels subsection (B)(i)(II) entitles a company like T-Mobile to provide." The judicial reticence appears to be based on concerns that the judiciary avoid instilling public policy judgments though its rulings. 

Accordingly, the FCC should take steps to clarify what constitutes an effective prohibition of wireless service by local governments under Section 332(c). And it should do so as part of a broader effort to bring greater specificity to how Section 332(c) applies to all aspects of the local government approval process for wireless facility siting.

The FCC's 2011 Section 706 Broadband Progress Report lamented the apparent lack of access to broadband experienced by more than 20 million Americans. In the Report, the FCC declared that broadband is not being deployed to all Americans in a timely manner. Congress declared that in such circumstances the FCC shall take immediate action to accelerate deployment of advanced communications services such as wireless broadband "by removing barriers to infrastructure investment and by promoting competition in the telecommunications market."

One might criticize the FCC's numbers, starting with the agency's exclusion of 3G wireless networks from its wireless broadband service coverage count. But removing regulatory barriers to infrastructure investment should always be the preferred policy. In any event, if the FCC takes its own declaration about lack of timely deployment seriously it should target wireless facility siting permit approval denials and delays by local governments. After all, the FCC acknowledged in its 2011 Wireless Competition Report that obtaining regulatory approvals from state and local governments is a significant constraint for wireless service providers that need to add or modify wireless facility sites.

The FCC can establish forward-looking threshold coverage levels that take next-generation wireless network capabilities and demands into account. The agency's 2011 Section 706 Report regards 4G networks as setting the present standard for wireless broadband coverage. So it follows that removing barriers to deploying infrastructure should mean calibrating expected coverage levels to next-generation wireless broadband capabilities. Anything less should be considered to amount to "an effective absence of coverage."

The Public Notice issued by the FCC in preparing its forthcoming Section 706 Report solicited public comment to compile a record regarding the local government approval process for wireless tower facilities. So the Report offers a perfect opportunity for the FCC to further spotlight where local government obstruction to investment in wireless infrastructure can be removed.

The Commission's Report should sketch out a basic roadmap for addressing local government denials and delays in approving wireless facility siting. The FCC should follow through with a declaratory order or proposed rulemaking to carry out its duty to remove barriers to wireless infrastructure investment and promote competition in the market.

Wireless Tower Construction Is Critical To Maryland's Consumers and Economy

Cell towers are a critically important input for next-generation wireless broadband services. With wireless Internet use projected to surpass wireline Internet use by 2015, tens of thousands of new towers and distributed antenna systems will need to be built each year to support rapidly rising wireless data traffic.

But in too many instances local governments deny or significantly delay permit applications for new towers. A case in point is the ongoing dispute over a Maryland county's rejection of one carrier's application to build a wireless tower. Howard County v. T-Mobile provides some important takeaways regarding the economic opportunity and other costs of blocking cell tower construction.

In February 2011 the Howard County Board of Appeals denied T-Mobile's conditional use permit to build a 100-foot concealed monopole on a church property. The Board concluded that the wireless carrier failed to demonstrate it made a "diligent effort" to locate its proposed facility on a government structure. The Board also concluded T-Mobile failed to demonstrate that "[t]he ingress and egress drives will provide safe access with adequate sight distance."

In March the U.S. District Court for the District of Maryland upheld the Board's ruling. But what appear to be uncontested facts call the Board's ruling into question. First, T-Mobile did contact a local public school facilities management office. The carrier's inquiry was apparently turned down via telephone and later confirmed in writing. Since T-Mobile's inquiry did not follow the school district's formal written policy, the Board rationalized that its effort was not diligent.

Second, the District Court concluded that "[a] review of the record reflects that it certainly contains substantial evidence that the sight distance is adequate." The proposed site for the tower was on a church property in possession of a special zoning exception since 1980. A County Technical Staff Report concluded that zoning regulations relating to sight distance were "inapplicable." A County Hearing Examiner similarly found that the driveway appeared to offer adequate sight stance. And according to the District Court's opinion, "the Board acknowledged that adequate sight distance existed, but it reiterated its position that there was no evidence from which it could [be] concluded that access to the proposed facility was safe."

The District Court therefore upheld the Board's decision by applying a highly deferential standard of review. Such a highly deferential standard allows local governments to reject wireless facility permit applications for shallow reasons and in the face of facts supporting approval.

The results in this case include costly delays in litigating the dispute and in deploying infrastructure for improving wireless service for the area. Now, more than two-and-a-half years after T-Mobile first filed its permit application, the case is going before the U.S. Court of Appeals for the 4th Circuit.

Appealing this ruling is worthwhile simply on account of the weak factual support for the Board's position. The 4th Circuit might find that the Board's rationale is too thin to support its rejection of T-Mobiles permit application.

There is also a question as to whether Maryland law requires closer judicial scrutiny of local government rulings such as the one by the Howard County Board. T-Mobile has argued that Maryland case precedents call for an independent judicial review of the record that considers the merits of the permit application itself. The 4th Circuit might clarify whether a less deferential standard is called for in wireless facility siting cases in Maryland than in Virginia.

It's only fair to point out that Howard County has approved a number of other wireless towers. And the 4th Circuit might decide that the discretion of local government bodies in administering zoning regulations controls the case. But whatever the 4th Circuit decides, there are critical public policy considerations that should be kept in mind by state and local policymakers in all cases involving wireless tower siting.

Administrative delays and tower siting denials that lack solid factual support invite lengthy and costly lawsuits.

Lack of necessary wireless infrastructures means that consumers in local communities lose opportunities for enjoying improved services and additional choices.

Economic opportunity costs are also a factor for underserved communities where lack of wireless facilities inhibits service. States and local communities must have infrastructure in place to support innovation and attract business enterprise, lest neighboring states and communities offer more attractive alternatives. These considerations are critical for states like Maryland that face interstate competition with neighbors, like Virginia, that rate high in hospitality to business entrepreneurship.

Whether in Maryland or any of the other 49 states, public officials should play a constructive role in promoting next-generation wireless deployment rather than an obstructive role. Local governments should be proactive in coordinating wireless facility placement on government property. They should ensure that local government policies regarding public rights-of-way or any comprehensive land use plans factor future technology infrastructure demands, including wireless siting facilities. Where possible they should liaison with other local government authorities inside their jurisdiction to further such placement. Inter-governmental coordination and cooperation with wireless service providers can speed up the process, avoid costs of disputes, and reduce or avoid public opposition.

State and local government officials should pursue policies to accommodate the infrastructure needs for next-generation wireless broadband networks. Doing so will put local consumers and their local economies in the best position to take advantage of the long-term opportunities for economic growth offered by next-generation wireless networks.