Thursday, December 13, 2018

T-Mobile-Sprint Merger Would Benefit Resellers and Hybrid Services

In the Free State Foundation’s comments submitted to the FCC regarding the proposed merger between T-Mobile and Sprint, FSF rebutted claims that the potential merger would harm resellers, or mobile virtual network operators (MVNOs). FSF scholars showed that a combined T-Mobile and Sprint would accelerate 5G deployment, giving MVNOs a third nationwide option for 5G access in addition to Verizon and AT&T. Tracfone, the nation’s largest MVNO, made similar sentiments in its comments, stating that a merged T-Mobile and Sprint would increase mobile broadband access in rural areas, where competition from a third provider is lacking.
In their comments, FSF scholars examined T-Mobile and Sprint’s spectrum holdings, capital investments, and financial obligations and determined that the two companies, alone, would not be able to compete with Verizon and AT&T with regard to timely deployment of 5G networks:  
It appears unlikely that T-Mobile and Sprint separately would have the capital resources necessary to invest in and timely deploy nationwide 5G networks that could compete effectively with AT&T and Verizon. Furthermore, build-out and operation of a next-generation mobile wireless network involves significant costs in migrating subscribers onto the new network and closing down older-generation networks. Such migration would be particularly challenging to T-Mobile and Sprint separately given their relatively smaller pool of financial and spectrum resources.
In other words, the T-Mobile-Sprint merger would accelerate small cell deployment and increase the likelihood of consumer access to three or more nationwide 5G providers. But MVNOs, which purchase network capacity from mobile network operators (MNOs), like Verizon and AT&T, and resell the service rather than building out their own facilities, also would benefit from having access to an additional nationwide 5G network.
FSF’s comments said the following:
Based on observations that T-Mobile and Sprint are the largest wholesalers of mobile wireless network capacity to mobile virtual network operators (MVNOs) – or “resellers” – it has been claimed that the reduction of one wholesaler could raise wholesale prices for MVNOs and therefore harm consumers by causing their retail subscribers’ prices to rise. However, given the competitive conditions of the wireless market identified above – including the new T-Mobile’s likely enhanced ability to compete with wireless market leaders AT&T and Verizon – it is quite unlikely that wholesale prices would significantly increase post-merger. A rigorous economic analysis should be required to demonstrate that significant and non-transient price increases are likely to occur before the Commission should credit such an argument as a possible merger related concern. And even assuming such a demonstration were made, it is unlikely that concern would outweigh the 5G and other potential benefits of the proposed merger.
In September 2018, Tracfone, the largest MVNO in the U.S. with 22 million customers, announced that it supports the T-Mobile-Sprint merger for this exact reason. In comments submitted to the FCC, Tracfone said:
While today’s wholesale market for MVNOs is generally competitive, the existing four nationwide MNO’s from which TracFone can purchase network capacity are not equivalent alternatives in all markets. In rural areas, T-Mobile and Sprint historically have not offered sufficient coverage and/or speeds in these geographic pockets of the United States.
With the merger of T-Mobile and Sprint, and the resulting more rapid deployment of a nationwide 5G network with broader coverage, greater capacity, higher throughput and lower latency, the wholesale market place will be more competitive with three full service competitors, rather than two. The increase in competition should have the greatest effect in rural areas. The resulting excess capacity would be available for MVNOs in these areas as a third option that has not been available in the current marketplace.
Moreover, in a recent Perspectives from FSF Scholars, Randolph May and I discussed how cable providers are now offering mobile services as hybrid mobile network operators (HMNOs) that use a combination of their own facilities and leased networks. (Comcast’s “Xfinity Mobile” is one example.) Cable providers, too, would benefit from more options for nationwide 5G networks when offering their hybrid mobile services.
As HMNOs and MVNOs continue to use a facilitates-based MNO to deliver their own mobile services, the T-Mobile-Sprint merger would provide cable providers and MVNOs with a third option for a 5G network in addition to Verizon and AT&T.

Tuesday, December 11, 2018

Robert Crandall: Legislators and Regulators Must Exercise Humility

In August, Dr. Robert Crandall, a member of the Free State Foundation’s Board of Academic Advisors, authored a report titled “The Effects of Rapid Technological Change on Regulatory Policies in the Communications Sector.” Dr. Crandall discusses how regulation in industries characterized by rapid technological change often leads to counterproductive constraints on firms.

The report examines four cases studies of regulation in the communications sector:
  • The artificial distinction between “local” and “long-distance” calling in telecommunications regulation
  • The 1996 Telecommunications Act’s costly failure with regard to local network unbundling
  • Deregulation, reregulation, and deregulation of cable television rates
  • The AOL-Time Warner Merger

Dr. Crandall uses these examples to explain how well-intentioned regulation can lead to unintended consequences that have detrimental effects on consumers, like foregone investment in broadband infrastructure. He states:

In each of these examples of policymaking in the communications sector, technological change – and the associated market changes – helped to render a policy decision unnecessary or irrelevant. In each case, legislators and regulators could not predict the future changes in market conditions brought about by changing technologies and consumers’ adaptation to these changes, leading to serious policy errors with adverse effects on consumer welfare.

Dr. Crandall concludes that regulators should be careful not to impede investment in new technologies, like 5G, through regulatory interventions. And in the context of mergers, agencies generally should not impose regulatory conditions of approval because oftentimes technological innovation quickly renders the conditions outdated or irrelevant.

As I stated in a blog last week, U.S. mobile data traffic is projected to grow fivefold from 2017 to 2022 and the deployment of 5G technology is expected to create 3 million jobs, $275 billion in investment, and $500 billion in annual economic activity. In order for consumers to enjoy these projected economic benefits, as Dr. Crandall states, legislators and regulators must exercise humility when considering laws and regulations in the dynamic broadband marketplace.

Monday, December 10, 2018

FCC Proposal Keeps Text Messaging Free From Unnecessary Regulation and Spam

At its December 12 meeting, the FCC will vote on a sensible proposal to keep popular wireless messaging services free from public utility regulation. By declaring texting and other wireless messaging services are Title I "information services," the FCC will ensure messaging service providers have flexibility to protect consumers from spam and other unwanted messages. 

For several yearsFree State Foundation President Randolph May and I have urged the Commission, in comments filed with the agency and in publications, to declare text messaging services to be lightly-regulated Title I information services. We applaud the Commission's proposal, finally, to provide deregulatory certainty for messaging services.

In today's competitive communications marketplace, wireless service providers routinely offer consumers messaging services bundled with voice and mobile broadband services. Text messaging or short messaging services (SMS) typically involve person-to-person transmission of texts up to 160 characters long. Multi-media messaging services (MMS) are person-to- person transmission of photos or video clips. The popularity of wireless messaging services is reflected in CTIA's estimate that, in 2017, American consumers sent a combined 1.77 billion SMS and MMS messages. 

As the Commission's draft proposal states: "The Communications Act, as amended, divides communications services into two mutually exclusive types: highly regulated 'telecommunications services' and lightly regulated 'information services.'" The Commission proposes to declare that SMS and MMS wireless messages meet the statutory definition of Title I information services because they involve the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications. 

For starters, when SMS and MMS messages are sent by users, they are routed through servers on mobile networks, stored on those networks, and forwarded to the recipients when their devices are able to receive them. Thus, the proposal finds: "This storage and retrieval capability is analogous to email service, which has been recognized under Commission precedent as an information service and similarly involves storage and retrieval functionality." 

Additionally, the Commission rightly recognizes adoption of its proposed Title I classification determination "will empower wireless providers to continue their efforts to protect consumers from unwanted text messages." Pointing to an estimated 2.8% spam rate for SMS compared to an over 50% spam rate for email, the Commission draft concludes:

[C]ontinuing to empower wireless providers to protect consumers from spam and other unwanted messages is imperative in light of the fact that the growth and popularity of SMS and MMS wireless messaging services have made them an attractive target for bad actors and spammers.

A Title II declaration would make it more difficult to combat unwanted messages. As the proposal says: "[I]n the context of voice service, under Title II, the Commission has generally found call blocking by providers to be unlawful, and typically permits it only in specific, well-defined circumstances." Under a Title II regime, messaging service providers would be restricted in their ability to stop spam from reaching consumers, thereby flooding consumers with messages they don't want.   

Finally, no good reason exists for increased regulation. SMS and MMS services emerged from and thrive in a competitive, essentially unregulated environment. Consumers have choices among competing wireless providers offering messaging service. Data cited in the draft Communications Market Competition Reportindicates that at the end of 2017, 92% of the population had access to at least four 4G LTE providers. Also, over-the-top applications and email are other popular means of communication, providing further competitive market checks on service provider behavior. Meanwhile, messaging service providers are subject to the Federal Trade Commission's authority to take action against unfair and deceptive trade practices. Antitrust is another available resource for safeguarding competition in the market. 

The Commission should adopt its proposed declaratory ruling on text messaging in order to preserve a light-touch regulatory environment and to allow service providers to continue to prevent consumers from getting spammed. 

Thursday, December 06, 2018

VoIP Services in Minnesota Surmount Another Hurdle

Back in October 2017, my Free State Foundation colleague Seth Cooper published the blog, "The Case for Keeping VoIP Free from Legacy Regulation." Indeed, FSF scholars have argued for a decade  or more that VoIP services are "information services" and should not be subject to common carrier regulation, either at the federal or state level.

After release of the FCC's Restoring Internet Freedom Order, Seth pointed out January 2018 blog that the case for non-regulation of VoIP services was bolstered.

Then, in September 2018, the Eighth Circuit affirmed a lower federal court opinion rejecting the Minnesota Public Utility Commission's claim that Charter Advanced Services' Spectrum Voice VoIP service should be subject to state regulation as a telecom common carrier.  See the opinion here in Charter Advanced Services v. Lange, where the Eighth Circuit holds that, pursuant to federal policy, Charter's VoIP service is an "information service," and that the FCC policy of non-regulation of information services precludes state regulation.

Now comes the news that on December 4th the Eighth Circuit issued an order denying the Minnesota petitions for rehearing and rehearing en banc.

This is good news because, as a matter of law, Charter's VoIP should be classified as an "information service" which, by virtue of such classification, preempts state telecom regulation. And, as a matter of policy, there certainly is sufficient competition in the market in which VoIP services compete to eschew public utility-type telecom regulation, whether by the FCC or states like Minnesota. (There are few other states that have tried to regulate VoIP services. Vermont is one presently asserting jurisdiction over Comcast's VoIP service. Vermont should take the hint and devote its resources, more productively, to other matters.)    

Indeed, more good news would be word that Minnesota and Vermont are abandoning their efforts to subject VoIP services to public utility regulation and, instead, devoting their attention to updating their state telecom laws to account for the technological advances and market-driven changes that have rendered these legacy laws outdated.

Video Data Is the Leading Contributor to Rapid Traffic Growth

On November 26, 2018, Cisco released its Visual Network Index (VNI): Forecast and Trends, 2017-2022. This annual report is useful to policymakers, entrepreneurs, and consumers because it projects growth of broadband devices and network technologies at the national, continental, and global level. Given the projections, the report should be particularly useful in getting policymakers to focus on the need to remove regulatory and other impediments to deploying broadband infrastructure. Cisco deserves credit for producing this valuable resource.
According to Cisco, the significant rise in Internet traffic experienced over the past decade or so is expected to continue for the next five years as connections increase and networks expand. The proliferation of video applications is by far the most significant driving force behind exponentially increasing Internet traffic. On a global level, video traffic comprised 75% of Internet data in 2017 and it will increase to 82% by 2022. In the United States, video traffic comprised 81% of all Internet traffic in 2017 and it will increase to 82% by 2022.
As the graph below shows, global Internet traffic will grow threefold from 2017 to 2022, at the same rate as Internet traffic growth in the United States.
Global Internet Traffic: Cisco Forecasts 396 Exabytes per Month by 2022
Overall, the amount of Internet traffic and the number of users and devices throughout the world is astounding. By 2022, there will be 4.8 billion Internet users (60% of the global population), up from 3.4 billion in 2017. And those users will connect to 28.5 billion networked devices, up from 18 billion in 2017. In the United States by 2022, there will be 317 million Internet users (94% of the population) connecting to 4.6 billion networked devices. That means there will be 13.6 networked devices per capita by 2022, up from 8.1 per capita in 2017.
The graph below shows the extraordinary global growth projected across all Internet-enabled devices.
Global Devices and Connections Growth, 2017 - 2022
While overall Internet traffic and devices are growing at a phenomenal rate, mobile traffic is growing twice as fast as fixed traffic. The United States has been a leader in the growth of mobile traffic, which is expected to increase fivefold from 2017 to 2022. Over that same span, global mobile traffic is expected to grow even faster than the U.S. mobile traffic.
Here are some key findings regarding the growth of mobile broadband throughout the world:
  • Average smartphone usage will grow from 5.1 GB per month in 2017 to 26.1 GB per month in 2022.
  • Global mobile traffic will increase sevenfold between 2017 and 2022.
  • Global mobile traffic will grow nearly twice as fast as fixed Internet traffic from 2017 to 2022.
  • Video will comprise 79% of global mobile traffic by 2022, compared to just 59% in 2017.
  • Global mobile traffic by 2022 will be equivalent to 38x the volume of the entire global Internet in 2005.

Here are some of the key findings regarding the growth of mobile broadband in the United States:
  • The average mobile connection speed will grow threefold from 2017 to 2022, reaching 39 Mbps.
  • U.S. mobile traffic will reach 5.7 exabytes per month by 2022, up from 1.2 exabytes per month in 2017.
  • U.S. mobile traffic will grow fivefold from 2017 to 2022, a compound annual growth rate of 36%.
  • U.S. mobile traffic will grow two times faster than fixed IP traffic from 2017 to 2022.
  • U.S. mobile traffic by 2022 will be equivalent to 12x the volume of the entire U.S. Internet in 2005.

The United States has been a global leader in mobile device innovation and the deployment of mobile broadband networks. Advanced 4G networks offer exponentially superior reliability, capacity, speeds, and security for mobile traffic compared to previous mobile network technologies. Now, we are on the cusp of deploying 5G mobile network technology, which will deliver speeds at least 10 times faster than 4G and enable “smart cities” to more efficiently use local services such as energy, utilities, transportation, and public safety. Deployment of 5G technology is expected to create 3 million jobs and $500 billion in annual economic activity.
Since my February 2017 blog regarding Cisco’s most recent mobile traffic update, the FCC has adopted a number of items that should spur innovation and investment in U.S. broadband networks, both mobile and fixed. Adoption of the Restoring Internet Freedom Order, proposed in May 2017, repealed the public utility-style regulations imposed in the Title II Order. Internet service providers increased broadband investment in 2017 after a two-year decline. Moreover, the FCC has adopted a number of wireless and wireline infrastructure items that remove state and local regulatory barriers. These should accelerate 5G wireless deployment. (See here and here.) Lastly, the Commission has identified a number of spectrum bands for commercial assignment and allocation, which will be tremendously valuable as consumers continue to demand more mobile data. (See here and here.)
Again, Cisco’s report is an important tool. It should help U.S. policymakers understand that mobile and fixed data services require additional spectrum to match the forecasted growth and to make the social and economic benefits of 5G a reality. To promote 5G and the emergence of other broadband technologies, policymakers at the federal, state, and local levels must avoid imposing unnecessary new regulatory burdens and continue to remove existing ones. Also, Congress and the FCC should continue to remove, or at least minimize, impediments to infrastructure investments in order to ensure continued innovation and growth in the dynamically competitive market for broadband services.

Monday, December 03, 2018

Signing of USMCA Spotlights International Copyright Protections

On November 30, President Trump and leaders from Canada and Mexico officially signed the proposed United States-Mexico-Canada Agreement (USCMA). Completion of the trade agreement's negotiation was announced in October. If approved by Congress, USMCA will replace the North American Free Trade Agreement (NAFTA). 

USMCA contains several provisions to better secure Americans' copyright protections. FSF President Randolph J. May and I address many of those provisions in our Perspectives from FSF Scholars paper, "Modernizing International Copyright Agreements to Combat Copyright Infringement." Among its pro-copyright provisions, USMCA would help American owners of sound recordings the full scope of public performance rights. Additionally, USMCA provides for stepped up enforcement through increased civil and criminal penalties for infringing activities such as "stream-ripping" and "camcording." 

However, USMCA incorporates language similar to the Section 512 "notice-and-takedown" provision contained in current U.S. copyright law. Section 512 is outdated and ineffective in protecting digital music and video content from mass infringement on popular user-upload websites. Future trade agreements and treaties should avoid that language. Congress and the Trump Administration should work to reform and update the notice-and-takedown system. We discuss these aspects of Section 512 in further detail our Perspectives paper, "Modernizing Civil Copyright Enforcement for the Digital Age Economy: The Need for Notice-and-Takedown Reforms and Small Claims Relief."

Thursday, November 29, 2018

EU Commission Approves T-Mobile-Tele2 Merger in the Netherlands

No doubt that in analyzing market impacts and competitive concerns, every proposed merger is different. The analysis is necessarily fact-intensive, or should be. Unfortunately, there are some who generally fall back on well-worn mantras, such as "big is bad," or in the case of the wireless market, "less than four facilities-based competitors" is unacceptable.

With this in mind, I find the EU Commission's approval of T-Mobile NL's acquisition of Tele2 NL very interesting. EU Commissioner Margrethe Vestager, cdertainly no slouch when it comes to antitrust enforcement, said: "Access to affordable and good quality mobile telecom services is essential in a modern society.  After thoroughly analysing the specific role of T-Mobile NL and the smaller Tele2 NL in the Dutch retail mobile market, our investigation found that the proposed acquisition would not significantly change the prices or quality of mobile services for Dutch consumers".

Key facts: The merger involved the third and fourth largest wireless operators in the Dutch retail market. After the merger, the combined company would have approximately a 25% market share. The EU Commission certainly didn't accept the notion, accepted in some quarters as almost religious dogma, that a national wireless market must have at least four facilities-based carriers in order to be effectively competitive.

Now, back in the states, T-Mobile's proposed merger with Sprint would combine the third and fourth largest carriers. After the merger, their combined share of the facilities-based wireless market would be approximately 30%, still trailing either of the two largest U.S. providers, Verizon and AT&T, in market share. 

Also, noteworthy, turning back complaints from mobile virtual network operators that they would be disadvantaged, the EU declared: "[T]he investigation showed that any potential change in conditions for virtual mobile network operators due to the proposed merger would not have a serious impact on the level of competition in the Dutch mobile telecoms market."

Again, I am not saying, of course, that the EU's decision should dictate the outcome of the FCC and the Department of Justice T-Mobile-Sprint transaction reviews. As I said at the outset, the analysis of each merger is fact-intensive.

I am just saying…that the EU Commission decision is worth considering.

P.S. For much more regarding the context in which the proposed T-Mobile/Sprint merger should be evaluated by the U. S. authorities, see the Free State Foundation's comments and reply comments filed in the FCC's transaction review proceeding.

Monday, November 26, 2018

Amazon Should Not Receive Government Handouts

Last week, Amazon announced that it will build its highly sought-after second "headquarters" (HQ2) in two separate locations, agreeing to move to Arlington, VA, and Queens, NY. Taxpayers in Maryland and Montgomery County should be pleased that they will not have to pay the $8.5 billion offered to Amazon to induce it to build HQ2 in Montgomery County.
Without having to pay a dime, Montgomery County, which like Arlington borders Washington, DC, still should experience positive spillover economic benefits.

Amazon likely will use HQ2’s close proximity to Washington, DC, in part, to continue lobbying the federal government for various regulatory changes – some good and some bad. As one of the two largest companies in the United States, with a market cap that exceeded $1 trillion in early September, Amazon does not need and should not receive government handouts or special regulatory advantages. Instead, governments at all levels should reduce tax and regulatory barriers that stifle competition and reduce investment and innovation.
After receiving bids from 238 cities across the United States and effectively creating a bidding war, Amazon decided last week that it would locate HQ2 in Arlington, VA, and Queens, NY, with more than 25,000 employees in each location. Maryland offered $6.5 billion in tax incentives and Montgomery County threw in an additional $2 billion. But had Amazon agreed to place HQ2 in Maryland, taxpayers in Maryland and particularly in Montgomery County would have paid for Amazon’s new headquarters.
While perhaps you can't fault the company for attempting to get as many government handouts as possible, Maryland’s government should do what is best for the residents, not what is best for Amazon.
The argument in favor of offering tax incentives to Amazon is that HQ2 would stimulate the local economy and create more than $8.5 billion in long-term economic benefits. Sage Policy Group performed an economic impact study which found that HQ2 would create more than $17 billion in annual economic activity in Maryland. At the time this study was performed, it was assumed that Amazon would deploy one HQ2 with 50,000 jobs, as opposed to two headquarters, each with 25,000 jobs. But even assuming HQ2 would have created 50,000 new jobs in Montgomery County, one of the touted benefits in the study is that Amazon would contribute $280 million in annual county taxes and $483 million in annual state taxes. If Amazon accepted the $8.5 billion handout, it would have taken Amazon more than seven years to create a net positive tax contribution to Montgomery County and more than thirteen years to create a net positive tax contribution to Maryland.
Of course, had Amazon accepted the deal, it would have been under no obligation to pay back the tax incentives. What would have stopped Amazon from moving HQ2 to a new location after a few years? Taxpayers would bear all the costs with little benefits, particularly Maryland taxpayers who live far from Montgomery County who would not experience any of the increased economic activity created by HQ2.
Montgomery County and Maryland officials now have a combined $8.5 billion that can be allocated to services that will directly impact the state and local residents. Whether this means more funding for schools, roads, or tax breaks for the current residents, Maryland is likely much better off using this money in other ways.
Importantly, because Arlington, VA, a suburb of Washington, DC, will become the location of one of Amazon’s second headquarters, Montgomery County’s local economy will experience spillover economic benefits. Amazon’s move to the DC area will bring 25,000 new jobs and those new employees will spend their money on housing, food, and entertainment throughout the area. Sage’s study states that an HQ2 located in Montgomery County would positively impact DC, and Northern Virginia, as well as Maryland’s Anne Arundel County, Baltimore City, Baltimore County, Frederick County, Howard County, and Prince George’s County. So under the same locale-related assumption, an Arlington-based HQ2 should positively impact Montgomery County and other Maryland jurisdictions. Spillover effects do not stop at state borders, so Maryland should experience some of the indirect economic benefits of Amazon moving to the DC area without having to spend $8.5 billion in taxpayer money. Moreover, additional companies may consider the Washington, DC, area as a good home for their headquarters, and Maryland can use this opportunity as a way to reinvent its sales pitch to prospective companies – by lowering tax rates and eliminating costly regulations that stifle entrepreneurial and economic activity.
Despite a whopping $8.5 billion left on the table, I am not claiming that Amazon chose Virginia over Maryland due to its tax and regulatory policies. I don't have evidence for that. But that does not mean that Maryland’s improving but still sub-par business climate does not deter other companies from setting up shop within the state. (See these blogs here, here and here.) Instead of attempting to persuade companies – including one of the world's largest firms – to move to Maryland with promises of government handouts, the state and localities should remove, or at least reduce, barriers to entry. This will induce businesses across many industries to locate their headquarters in Maryland.

Thursday, November 15, 2018

Neomi Rao Nominated to the U.S. Court of Appeals for the D.C. Circuit

Earlier this week, President Donald Trump nominated Neomi Rao, Administrator at the Office of Information and Regulatory Affairs (OIRA), to replace Judge Brett Kavanaugh on the U.S. Court of Appeals for the D.C. Circuit. We were very pleased that Neomi Rao gave a keynote speech at the Free State Foundation’s tenth annual telecommunications policy conference on March 27, 2018 at the National Press Club. The video of her keynote speech begins around the 2:41:00 mark.

Saturday, November 10, 2018

Veterans Day 2018

As Veterans Day approaches, on this 100th anniversary marking the end of World War I, our thoughts turn to honoring – and thanking – our nation's veterans for their service. Some veterans, of course, have paid the ultimate sacrifice.
In the past, as readers of this space know, I have written at this time about the history and meaning of Veterans Day and, broadly, why it is important that we honor, in different ways, our veterans.
This time, I'm going to write about a matter closer to home – that is, "closer to home" in the sense of more usual Free State Foundation communications policy fare. I want to call attention to the importance of the FCC's Lifeline program to veterans.
Lifeline is the program that subsidizes telecommunications service for eligible low-income persons. As I said in a recent post, "Lifeline Matters," for at least two decades, I've been a supporter of a properly-run Lifeline program as a "safety net" for low-income persons who otherwise might not be able to afford telecom services. By properly-run, I mean that it is appropriate – indeed, necessary – that the FCC implement measures to curtail waste, fraud, and abuse in the program.
Now, for our veterans. According to recent comments filed by TracFone Wireless, Inc., approximately 1.3 million veterans (12 percent of all Lifeline support beneficiaries) participate in the Lifeline program. I suspect that many readers will be surprised by the size of that number. I am.

But the reality is that veterans, just like all other Americans, often need a safety net too. And, sometimes, as a result of their service, veterans' needs for communications services are more acute than for the population at large.

As TracFone put in its comments:

The Lifeline program plays an essential role in connecting those veterans with opportunities and essential resources. Broadband access allows veterans to stay connected not only with healthcare professionals, 911 emergency services, housing and veteran support services, but also family and friends. It enables veterans to connect with current and future employers and pursue an online education.

TracFone has heard from veterans directly through the Lifeline Facts Campaign about how the Lifeline program has improved their lives. Veterans suffering from a traumatic brain injury, for example, explained how they depend upon their Lifeline connection and mobile device to receive phone calls and automatic reminders about upcoming doctor’s appointments and when to take medication. Other veterans emphasized how important connectivity is for veterans who return home with limited or no support systems, and that it is nearly impossible to obtain a job in the 21st Century without an email address and phone number.

There is no need to belabor the point. To its credit, the Commission has been attentive to the needs of veterans in other contexts. Here I just want to use the occasion of Veterans Day to urge the Commission to keep veterans in mind as it considers the impact of its various Lifeline proposals. In short, to the extent that the Commission acts in a way that generally imperils the Lifeline program, its actions may well impact the 1.3 million veterans in the program too.

In my comments filed in the Commission's Bridging the Digital Divide for Low Income Consumers proceeding in February 2018, I addressed two measures of concern relating to the continued sustainability of the Lifeline program.

Please refer to my comments for more detail, but in short: 

  •  I contended that the Commission should not adopt the proposal to discontinue Lifeline support for service provided over non-facilities-based networks. I stated that "while promoting increased facilities investment is, most often, a worthwhile objective, the primary purpose of the Lifeline program is to promote the affordability of communications services for low-income persons." With resellers presently serving approximately 70% of Lifeline subscribers, I said "the reality today is that facilities-based providers currently are serving only a minority of Lifeline subscribers, so that discontinuing support for resellers would be very disruptive to the program."
  •  I also supported the proposal to allow providers to meet the minimum service standard through plans that provide subscribers with a particular number of “units” that can be used either for voice minutes or broadband service. I called the proposal "a pro-consumer choice, pro-empowerment, pro-market-oriented proposal worthy of adoption." This seems like a sensible way to give Lifeline customers, including veterans, more flexibility to decide how best to meet their own needs. There is no good reason to assume that Lifeline customers cannot determine themselves how to use the quantity of service available to them under their Lifeline plan.
  • Indeed, the Commission ought to reexamine in their entirety the minimum standard regulations adopted in 2016 under the leadership of previous FCC Chairman Tom Wheeler. In their current form, the inflexibility of the mandated standards limiting consumer choice is inconsistent with market-oriented principles. And the mandated increases in the minimum service standard requirements in coming years, in effect diminishing subsidy support, likely will mean the service will become less affordable and limit program participation.
Of course, many of our nation's veterans, especially those who have fought bravely in the service of our country, need various types of help, "lifelines" if you will. Here I have focused only on one. But Veterans Day is a good time to think about other needs and ways of helping as well.

Thursday, November 08, 2018

Federal Court Rules Maryland 6th District Violates Constitution

On Wednesday, a three-judge federal court panel ruled that Maryland unconstitutionally drew the boundary lines for the 6th Congressional District. The decision, which comes one day after the midterm elections, requires Maryland to submit new boundary lines for the 6th and contiguous districts by March 7, 2019.
Governor Larry Hogan, who was reelected for a second term on Tuesday, made the following statement about the decision:
This is a victory for the vast majority of Marylanders who want free and fair elections and the numerous advocates from across the political spectrum who have been fighting partisan gerrymandering in our state for decades. With this unanimous ruling, the federal court is confirming what we in Maryland have known for a long time — that we have the most gerrymandered districts in the country, they were drawn this way for partisan reasons, and they violate Marylanders’ constitutional rights.

Only House Republican On Net Neutrality CRA Petition Does Not Get Reelected

On Tuesday’s election night, Republican Representative Mike Coffman lost his bid for reelection in Colorado’s 6th Congressional district by about 25,000 votes to Democrat challenger Jason Crow. Notably, Congressman Coffman was the only Republican member of the House to sign the Congressional Review Act (CRA) resolution discharge petition intended to negate the FCC’s Restoring Internet Freedom Order which repealed the Obama FCC’s Title II public utility-style regulations imposed on broadband Internet service providers. But Coffman’s pro-net neutrality efforts apparently did not help him get reelected.
When Coffman signed the CRA discharge petition in July 2018, he made multiple statements regarding his disappointment with the FCC’s Restoring Internet Freedom Order.
Interestingly, by signing the CRA discharge petition, Coffman indicated that he agreed with those who want to restore the Obama FCC's order imposing public utility-type regulation on Internet service providers.
In a just a few months, Mike Coffman will no longer be a member of Congress. Some have called his efforts to cross party lines to become the lone Republican to sign the CRA discharge petition a “bold” move. I'm sure there were other factors that played a role in Rep. Coffman's defeat, but taking a position in favor of repealing the Restoring Internet Freedom Order certainly didn't help him.

Monday, November 05, 2018

Spectrum Matters Matter

I know it's a somewhat cutesy title. But spectrum matters do matter. Now more than ever with burgeoning demand for various spectrum-dependent services.

On October 25, 2018, President Donald Trump issued a Presidential Memorandum on Developing a Sustainable Spectrum Strategy for America's Future. This is a welcome development if only because it elevates the priority to be placed on spectrum matters within the Trump Administration.

The memorandum explains that additional spectrum access is not only important for the U.S. economy, especially with 5G wireless technology on the horizon, but it is also important for protecting national security. Given the growing spectrum demand, President Trump recognized that the U.S. must focus spectrum matters with some sense of urgency:

In the growing digital economy, wireless technologies expand opportunities to increase economic output of rural communities and connect them with urban markets, and offer safety benefits that save lives, prevent injuries, and reduce the cost of transportation incidents. American companies and institutions rely heavily on high-speed wireless connections, with increasing demands on both speed and capacity. Wireless technologies are helping to bring broadband to rural, unserved, and underserved parts of America. Spectrum-dependent systems also are indispensable to the performance of many important United States Government missions. And as a Nation, our dependence on these airwaves is likely to continue to grow.

Those demands have never been greater than today, with the advent of autonomous vehicles and precision agriculture, the expansion of commercial space operations, and the burgeoning Internet of Things [IoT] signaling a nearly insatiable demand for spectrum access. Moreover, it is imperative that America be first in fifth-generation (5G) wireless technologies — wireless technologies capable of meeting the high-capacity, low-latency, and high-speed requirements that can unleash innovation broadly across diverse sectors of the economy and the public sector.

To the point that timeliness matters, the presidential memorandum requires federal agencies, including the National Telecommunications Information Administration and the FCC to report within 180 days "on the status of existing efforts and planned near- to mid-term spectrum repurposing initiatives."

NTIA and the FCC are to be commended for their efforts during the last two years to make more spectrum available to enable the offering of innovative new services. So, to suggest that the Presidential Memorandum should spur the affected agencies to act with even greater dispatch is not to be critical.

Here I want to take note of two spectrum bands, by way of example, that are the subject of repurposing initiatives that hold the promise, if resolved in a timely manner, of making spectrum available that can be used to meet the growing demand for wireless services and for what the memorandum calls the "burgeoning Internet of Things."

First, the 5.9 GHz band. In 1999, the FCC assigned the 5.9 GHz band to Dedicated Short Range Communications (DSRC), which was intended to be used for vehicle-to-vehicle safety communications. But in the almost two decades since, the spectrum has remained largely unused for its intended purpose, while automotive safety technologies have been developed in the marketplace using non-5.9 GHz frequencies. Even automakers have stated in comments filed with the Department of Transportation and the FCC that they are moving beyond the DSRC technology to other non-DSRC automotive safety wireless technologies.

On October 29, 2018, the FCC released a report on its first of three phases for testing to determine if Wi-Fi can operate in the 5.9 GHz band without interfering with DSRC. In part the report stated: "We recognize there have been a number of developments since the three-phase test plan was announced in 2016 — such as the introduction of new technologies for autonomous vehicles, the evolution of the Wi-Fi standards, the development of cellular vehicle-to-everything (C-V2X) technology, and the limited deployment of DSRC in discrete circumstances."

In connection with the report's release, FCC Commissioner Michael O'Rielly stated: "The reality is that the entire debate has gravitated away from the type of sharing regime envisioned in the testing. Instead, the Commission should move past this and initiate a rulemaking to reallocate at least 45 megahertz of the band, which is completely unused today for automobile safety." FCC Commissioner Jessica Rosenworcel issued a statement to the same effect.

This is an instance in which the FCC should move forward with dispatch looking towards repurposing this band for the use of unlicensed Wi-Fi services. Repurposing the 5.9 GHz band could lead to more Wi-Fi offloading, which, in turn, could free up spectrum for future 5G mobile networks and spur additional next-generation services and innovations.

Second, the L-band. NTIA and the FCC also should move forward as promptly as possible to facilitate action on Ligado Network's application to use the fallow L-band spectrum to deploy its satellite and mobile network. As Free State Foundation Senior Fellow Seth Cooper stated in a June 2018 blog, the L-band spectrum can deliver advanced satellite technology in combination with terrestrial mobile technology, but, for now, it remains unused pending the resolution of interference claims. In May 2018, Ligado filed an amendment to its spectrum license modification applications in which it stated:

Mid-band spectrum like the spectrum licensed to Ligado is vital to U.S. leadership in 5G because of its reliability and suitability for high-quality coverage and capacity deployment. If the Modification Applications are approved, Ligado will be uniquely positioned to leverage the potential of this mid-band spectrum by offering next-generation network capabilities. Ligado would concentrate on targeted deployments that deliver focused, highly secure and ultra-reliable communications over custom private networks to specific geographic locations that serve the industrial Internet of Things and the emerging 5G markets, particularly in critical infrastructure industry sectors such as rail, trucking, utilities, public safety, and oil and gas.

A May 2016 report by economist Coleman Bazelon projected that Ligado’s hybrid network would generate between $250 and $500 billion in social welfare benefits by relieving growing demand pressure for mobile wireless broadband services. Ligado has affirmed its intent to invest $800 million in satellite and terrestrial network infrastructure with the prospect of creating approximately 8,000 jobs.

If Ligado's applications ultimately are granted, the projected social, economic, and national security benefits to the public, and to the nation, appear to be substantial. I understand that there are continuing claims from various quarters asserting that Ligado's proposed network raises still-unresolved interference concerns, despite Ligado's efforts over the last couple of years to address the concerns in a constructive fashion. Perhaps in this instance – as with the 5.9 GHz band and others too – President Trump's Memorandum will provide the federal agencies involved with a renewed commitment to act in a way that facilitates the repurposing of the L-band spectrum. As Seth Cooper and I said in reply comments in July 2018 in response to Ligado's recent application amendment, working with NTIA, "the Commission should do all it can to reach a final decision on the application modifications in a timely manner."

Of course, sometimes a memorandum is just another memo. But President Trump's Spectrum Strategy Memorandum ought to be more than just another memo. I am not suggesting that it purports to dictate the outcome of the two proceedings discussed here or any others. But I hope that, in this instance, the directive is a signal the Trump Administration intends to address America's growing spectrum needs as "efficiently and effectively as possible" and with a sense of dispatch.