Saturday, June 29, 2019

A Reasonable Lifeline Postponement Request

As readers of this space know, I'm a strong advocate of free market-oriented communications policies, while, at the same time, a long-time advocate of maintenance of a viable, properly-managed Lifeline program. There's no inconsistency, of course. The FCC's Lifeline program, through its provision of subsidies, provides a "safety net" for those qualifying low-income persons who otherwise may not be able to afford a basic level of communications service.

In other words, in the midst of much talk about closing "digital divides," the Lifeline program is directed towards providing support to those low-income persons who might fall on the wrong side of one of those divides.

With this background in mind, I am quite supportive of the Joint Petition to Pause Implementation of the December 2019 Lifeline Minimum Service Standards that was filed with the FCC by CTIA and certain public interest organizations on June 27. Specifically, the Petition asks the Commission to stay implementation of the December 1, 2019 (1) increase in the minimum required broadband data usage allowance, and (2) the phase-down in support for voice services in the Lifeline program. The Petition asks for the postponement until the Commission can consider the Wireline Competition Bureau’s State of the Lifeline Marketplace Report, due to be completed by June 30, 20121.
This is not to say that, at some point, it would not be appropriate to implement the mandates presently targeted by the petition, or at least similar ones. It is rather to say that, given developments since the Commission devised the mandates, implementation on the existing schedule may not be reasonable.
As the Petition points out, under the current schedule, the data usage allowance would jump from 2 GB to 9.5 GB per month on December 1. The petitioners credibly state that such a "flash jump" would also "significantly narrow consumer choice, limiting the variety of service plans available for eligible low-income consumers to choose and requiring eligible low-income consumers to purchase plans that might often include much larger increments of data usage than they need or want."
With regard to the scheduled December 1 phase-down in support for voice service, CTIA and the others state that "a significant number of eligible low-income consumers continue to prefer voice-only services or bundles of services that include more voice usage and less data usage." Indeed, they claim that almost 42% of Lifeline customers presently subscribe to plans that qualify for Lifeline by virtue of meeting minimum standards for voice service. The impending diminishment in support for voice services likely will adversely impact Lifeline customers by constraining the flexibility of service providers to tailor offerings affordability to meet Lifeline customers' demands.
Given the circumstances that exist at present, which the Commission could not have necessarily predicted at the time it devised the existing scheduled mandates, and given the pendency of the State of the Lifeline Marketplace Report, the petitioners' postponement request seems reasonable, and I hope the Commission will consider it such.

Tuesday, June 25, 2019

MEDIA ADVISORY: Senators Warren, Sanders, and Booker Improper Request Infringes First Amendment Rights

With regard to the letter dated June 24 sent by Senators Warren, Sanders, and Booker, to the Department of Justice and the FCC, the following statement should be attributed to Free State Foundation President Randolph May:

“Senators Warren, Sanders, and Booker wish to use Sinclair Broadcast Groups’s acquisition of 21 Regional Sports Networks and Fox College Sports from Walt Disney Company as a means to pressure Sinclair to alter what the Senators characterize as Sinclair’s 'partisan political messaging.’ In the context of matters involving principally sports programming, they say they are concerned about Sinclair’s efforts 'to inject conservative-tinged coverage into local markets.’

Of course, neither the Department of Justice nor the FCC has any business judging the content of Sinclair’s programming to assess whether it is 'partisan' or ‘ onservative.' For either agency to do what the Senators ask is inconsistent with the First Amendment’s guarantee of free speech and freedom of the press. The Senators know better — or surely should if they wish to run for president. Aside from whether their characterizations of Sinclair’s programming are even accurate, their purpose, an improper one, is to use government power to influence Sinclair’s editorial discretion.

It’s sad that Senators Warren, Sanders, and Booker are trying to misuse the agencies in this way. The media, which have an interest in promoting a proper understanding of the First Amendment, ought to call them out for it."  

Saturday, June 22, 2019

First Amendment First Principles

In its June 17 decision in Manhattan Community Access Corporation v. Halleck, the Supreme Court held, in another 5-4 split, that the public access channels on Time Warner's cable system in Manhattan do not constitute a "public forum" for free speech purposes. Therefore, the Manhattan Community Access Corporation, known as MNN, a private nonprofit corporation, did not violate the First Amendment when it denied access to the channels, based on the content of the programming, to two program producers. This is true even though New York City selected MNN to operate the public access channels on Time Warner's system and the city regulated various aspects of MNN's operation of the channels.

In an age when many people think – or at least proclaim – that they have a "right" under the First Amendment to say anything, anywhere, anytime, Justice Brett Kavanaugh's opinion for the majority explicating fundamental principles of First Amendment jurisprudence should be required reading. Surely, it's rare for a day to pass, in this age of overheated politics and overblown political correctness, without someone expressing outrage because their right to "free speech" supposedly has been violated. Maybe they have been banned from Facebook or Twitter, or just had a post removed. Or had a video removed from YouTube. Or had a proffered program rejected by the local public access channel. 

Okay. I'll grant that the disappointed individuals or entities may be upset. And they may even have good cause to be upset, depending on the reasons given for the denial of their wish to speak in their chosen venue.

But that doesn't mean they have a valid First Amendment free speech claim. Indeed, Justice Kavanaugh's opinion does a superb job in explaining why they don't. Here I am going to let the opinion do most of the work by quoting a few key parts expounding fundamental First Amendment principles that transcend the particulars of the MNN case:

"The Free Speech Clause of the First Amendment constrains governmental actors and protects private actors. To draw the line between governmental and private, this Court applies what is known as the state-action doctrine. Under that doctrine, as relevant here, a private entity may be considered a state actor when it exercises a function 'traditionally exclusively reserved to the State.'"

"The text and original meaning of those [First and Fourteenth] Amendments, as well as this Court’s longstanding precedents, establish that the Free Speech Clause prohibits only governmental abridgment of speech. The Free Speech Clause does not prohibit private abridgment of speech."

"By enforcing that constitutional boundary between the governmental and the private, the state-action doctrine protects a robust sphere of individual liberty."

"Under the Court’s cases, a private entity may qualify as a state actor when it exercises 'powers traditionally exclusively reserved to the State.' Jackson, 419 U. S., at 352. It is not enough that the federal, state, or local government exercised the function in the past, or still does. And it is not enough that the function serves the public good or the public interest in some way. Rather, to qualify as a traditional, exclusive public function within the meaning of our state-action precedents, the government must have traditionally and exclusively performed the function."

"[W]hen a private entity provides a forum for speech, the private entity is not ordinarily constrained by the First Amendment because the private entity is not a state actor. The private entity may thus exercise editorial discretion over the speech and speakers in the forum."

Now, the dissent vigorously contested Justice Kavanaugh's conclusion that MNN is a private entity and not a state actor. Given the factual context – MNN's designation by New York to operate the public access channels that the city obtained under a New York state law and the government's regulation of certain aspects of their operation – the contention that MNN's programming decisions amounted to government action was not frivolous, although I think Justice Kavanaugh has the better of the argument. But I don't want to delve more deeply into the "state action" question here.

Rather I want to emphasize that the next time you hear someone complain that their First Amendment rights have been trampled upon – and I guarantee you it will be soon – before jumping to their defense, consider the parameters within which the First Amendment operates.

Remember Justice Kavanaugh's admonition: "The text and original meaning of those [First and Fourteenth] Amendments, as well as this Court’s longstanding precedents, establish that the Free Speech Clause prohibits only governmental abridgment of speech. The Free Speech Clause does not prohibit private abridgment of speech."

This is what I call a foundational first principle.

Friday, June 21, 2019

The Importance of Combatting Digital Piracy

This week the Chamber of Commerce's Global Innovation Policy Center (GIPC) and NERA released a new report titled, "Impacts of Digital Piracy on the U.S. Economy." Anyone interested in protecting intellectual property rights, especially including copyrights, should read this important, if somewhat alarming, study.

The report chronicles the extraordinary growth of digital streaming video services just in the past few years. Now, according to the report, there are more than 500 licensed online video portals. And more streaming subscribers than paid TV subscribers. Not only are all the proliferating video streaming services providing consumers with an abundance of choices for enjoying an incredibly wide variety of content, but, not surprisingly, they have contributed significantly to economic growth and produced hundreds of thousands of new jobs.

All that is good.

But there is a dark side too – an alarming increase in digital piracy – which largely is the focus of the new GIPC/NERA report.

It's worth reading the entire report, but here are some of the key findings:

·     80% of digital piracy is now due to streaming, largely encouraged by the widespread proliferation of piracy devices and apps that make pirated content easier to access. 

·     Overall, approximately 26.6 billion viewings of U.S.-produced movies and126.7 billion viewings of U.S.-produced television episodes are digitally pirated each year, mostly from outside the U.S.

·     Digital video piracy deprives the U.S. economy of a minimum of $29.2 billion in reduced revenue each year.

Enough said to demonstrate that the losses resulting from digital piracy – the harm suffered by the artists and creators who labor to produce the pirated works, and the harm to the overall economy – demand attention from U.S. policymakers and those abroad.

My Free State Foundation colleague, Seth Cooper, and I have addressed the scourge of digital piracy many times in the past, and we've offered various proposals to combat it. Here are two FSF Perspectivesthat contain proposals for addressing digital piracy at home and abroad:

I submit that along with the new GIPC/NERA report, these Free State Foundation papers are worthwhile reading too.

Thursday, June 13, 2019

The Universal Service Fee - "Tax" - Hits a New High

The FCC’s Office of Managing Director has announced that the proposed universal service contribution factor for the third quarter of 2019 will be 24.4%, absent action by the Commission.

This is a new high for the USF fee that applies as a surcharge -- a tax, in effect -- to all interstate and international calls. In other words, a tax of 25%! The universal service programs won't be sustainable without meaningful reform.  

Wednesday, June 12, 2019

FSF President Randolph May on the State AG Lawsuit Against T-Mobile/Sprint Merger

The following statement regarding the proposed T-Mobile/Sprint merger may be attributed to Free State Foundation President Randolph May:

“The lawsuit filed by the Attorneys General of ten states to block the T-Mobile/Sprint is disappointing and misguided. It is noteworthy that all ten Attorneys General are Democrats, and that their counterparts in the other 40 states chose not to sign onto this unusual, if not unprecedented, maneuver.

Antitrust law should not be a matter of partisan politics or predilections, but rather a matter of adherence to widely accepted jurisprudential principles that know no party. The fact that all of the AGs bringing the lawsuit are Democrats is troubling but perhaps revealing.

In its essence, the principal focus of the AGs’ suit appears to rest on counting competitors rather than on assessing the impact of overall competition and consumer welfare. Because the proposed merger will make the combined T-Mobile/Sprint a stronger competitor to the top two wireless providers, it is likely to enhance competition — and consumer welfare — in the wireless market rather than reduce it. The lawsuit also errs in not taking into account the marketplace dynamics that dictate that the relevant market is broader than wireless providers only; it is a ‘ roadband' market that encompasses providers using various technological platforms, including cable, fiber, satellite, and combinations of these.

It may be that the Department of Justice itself has concerns with the proposed merger, and if so, that is the proper venue for consideration of the antitrust analysis that should take place and the state AGs surely can make their views known to the DOJ. In any event, most of the states, including those bringing suit, have little or no regulatory authority over wireless providers and little or no experience or expertise regarding the spectrum issues, including the prospects for 5G deployment, that are central to the merger’s rationale. The AGs should stand down.”

Tuesday, June 11, 2019

U.S. Policymakers Should Stick to Their 24 GHz Spectrum Band Plan

On June 3, the FCC announced winners in the successful auction of 5G-critical spectrum licenses in the 24 GHz band, raising $2 billion for the U.S. Treasury. Yet news outlets have reported on last-minute objections by agencies within the U.S. Department of Commerce to use of this spectrum that had been planned through a careful interagency process. U.S. policymakers shouldn't be deterred. It's important to the integrity of U.S. spectrum policy and to 5G deployment that the 24 GHz spectrum be used as planned. 

Rules regarding 24 GHz spectrum use were established through a five-year interagency process, and they are consistent with longstanding FCC standards limiting out-of-band emissions. Agencies in the Commerce Department have made claims, apparently without reliable and verifiable evidence, that 5G operations in the 24 GHz band could interfere with a weather sensor in an adjacent band. But their calls to change rules for the 24 GHz band, now echoed by some members of Congress, threaten the integrity of the interagency process and U.S. spectrum policy in international circles. Changes to rules would upend the investment-backed expectations of auction winners and hamper 5G deployment.

Indeed, there are many reasons to be skeptical of claims being made by NASA and Department of Commerce agencies NTIA and the National Oceanic and Atmospheric Administration (NOAA) about future interference with a single weather sensor. 

First, the claims by the Commerce Department agencies didn't timely persuade other agencies that were part of the 5-year interagency spectrum planning process. According to a March 8 letter to the Commerce Secretary and NASA Administrator by Chairman Ajit Pai: "For over two years, the studies produced by NOAA were never endorsed by either the FCC or NTIA due to outstanding technical concerns" and "[t]he interagency consensus was that these studies failed to demonstrate a need to tighten the international limits." Agencies may validly seek to influence policy based on alleged signal interference during the process but shouldn't do so after, when the FCC has already auctioned the spectrum. 

Second, Chairman Pai's March 8 letter pointed out: 
In order to settle the U.S. position, the FCC thus invoked the reconciliation process in light of our upcoming auction of the 24 GHz band—a critical band for the development of 5G services in the United States. Under that process, as you know, the Department of State becomes the arbiter—'breaks the tie' if you will—and determines the U.S. Government position. That is what happened here. The Department of State agreed with the FCC's approach, and that reconciled position is in fact documented. 
The State Department agreed with the FCC's approach, and that reconciled position is in fact documented." As the U.S. strives for a leadership role in 5G, a confused spectrum policy could undermine U.S. leadership in international venues, such as the International Telecommunications Union (ITU). The U.S. government's position ought to be communicated with one voice overseas.

Third, NASA and NOAA want ad hoc changes to out-of-band emission standards for the 24 GHz band. In other words, the dispute doesn't involve alleged interference according to existing standards. In fact, the rules established for the 24 GHz band are consistent with longstanding FCC standards limiting out-of-band emissions to protect passive services from high powered fixed services. Goalpost shifting is almost always suspect. And changes to the out-of-band emission standards would significantly reduce commercial service providers' ability to offer 5G, undermining the basis for their purchase of spectrum licenses. 

Fourth, when NASA and NOAA initially raised their last-minute objections to the planned use of the 24 GHz band, those objections involved a weather sensor, known as "the Conical Microwave Imager Sounder" that was neverdeployed. Rather, those agencies expressed concerns that out-of-band emissions from 5G operations would harm a weather sensor that was cancelled in 2006. 

Fifth, although Commerce Department agencies later raised still more last-minute objections, they appear unsubstantiated. For instance, the newer objections involve one of the weather sensors on a single satellite that reportedly is acknowledged to be much less susceptible to interference than the cancelled weather sensor. And in an April 29 letter to the Chairwoman of the House Committee on Science, Space, and Technology, Chairman Pai reiterated the Commission has never been presented with "a validated study" indicating operations consistent with existing out-of-band admissions standards would adversely affect existing use in the 24 GHz band, including weather forecasting. 

Technical engineering expertise isn't necessary to spot the credibility problems with these last-minute claims by Commerce Department agencies. They have offered too little, too late to justify pulling the rug out from under the interagency spectrum process.

Commercial providers made good faith pledges of $2 billion in spectrum license bids, and the federal government owes a pledge of good faith in sticking to its rules. U.S. policymakers should stay the course on the 24 GHz band and help ensure American competitiveness in the global race to 5G. 

Monday, June 10, 2019

Broadband Investment Increased in 2018

In a blog by Patrick Brogan, USTelecom has released its latest report in its ongoing series on broadband investment. Here's the lead: 

U.S. broadband provider capital investment increased by approximately $3 billion in 2018, continuing the positive momentum shift that began in 2017 when the FCC initially signaled its intention to restore a forward-looking regulatory framework for broadband.  According to a preliminary analysis of 2018 company data, USTelecom estimates that U.S. broadband providers invested approximately $75 billion in 2018, up from $72 billion the prior year.

This is good news for the American economy and for American consumers because it is robust investment by major broadband providers that enables the continuing increase in speeds and bandwidth that enable new services and applications.

While the amount of investment by Internet service providers is affected by various factors in any given year, it is noteworthy that the amount of investment by major broadband providers has increased each year since the FCC eliminated public utility-style regulation of ISPs.

There is more data and analysis in the blog. 

Wednesday, June 05, 2019

FCC Gives the First Amendment Its Due in Cable Leased Access Proposal

On June 6, the FCC will vote on a proposed order and rulemaking to modify its analog-era leased access rules, including its dispute procedures and rate formula. To its credit, the Commission factors First Amendment free speech protections into its proposed modifications of its leased access rules. Indeed, the Commission expressly recognizes that leased access requirements, which restrict the editorial and speech rights of cable providers, are constitutionally on shaky ground. This is an important point that Free State Foundation scholars have been making for several years. 

As I wrote in "FCC Over-Regulation of Video Services Undermines Free Speech, a 2012 Perspectives from FSF Scholars paper:
The Supreme Court's First Amendment jurisprudence holds that content-based restrictions are presumptively unconstitutional and that government is generally prohibited from telling speakers what they must say. But many of the FCC's regulations applicable to video service providers include access or forced sharing mandates. Some agency restrictions are even based on speech content. These continuing legacy regulations governing video services infringe upon the editorial choices of MVPDs. Court precedents recognize that MVPDs are entitled to First Amendment protection. The logic of the Court's relevant First Amendment decisions therefore renders significant aspects of current federal regulation of MVPDs' free speech constitutionally suspect. The FCC's leased access regulations [] pose First Amendment problems. Under the statute, MVPDs lose "editorial control over any video programming" on the leased channel capacity. Rate controls constitute another facet of leased access regulations, which are another variety of forced access regulation. MVPDs are subject to FCC-set maximum amounts that independent video programmers can be charged for leasing channel capacity.  
Previously, legacy cable regulations, including leased access rules, were upheld under the intermediate scrutiny standard because of perceived cable video programming distribution bottlenecks in the early 1990s. Under intermediate scrutiny, speech of cable operators may be restricted so long as the regulation furthers an important government interest by means substantially related to further that interest. 

But by the time of my May 2011 blog post on ending legacy cable regulation we already were long past the days when cable operators possessed a 91% or more nationwide market share. And we already were long past the days when consumers' only option for subscription video services was a single local cable provider. Data from the Commission's Communications Marketplace Report (2018) reflect a video services ecosystem featuring competitive cable, direct broadcast satellite (DBS), and online platforms for video programmers to distribute content to consumers. As I summed things up in a February 2019 Perspectives paper:
For video services, the report found that at the end of 2017 all or nearly all U.S. consumers have access to three competing multi-channel video programming distributors (MVPDs). Some consumers had access to four. Furthermore, MVPDs lost subscribers to competing broadcast TV and – especially – to online video distributor (OVD) services. Whereas MVPDs lost 3.6 million video subscribers in 2017, a drop to 94 million, 16.6 million TV households (13.9%) relied exclusively on over-the-air (OTA) TV broadcast signals, up from 15.7 million TV households (13.2%) in 2017. Top three OVDs Amazon Prime, Netflix, and Hulu exceeded 125 million subscriptions in 2017, up from about 103 million in 2016. And "Virtual MVPDs" such as SlingTV and DIRECTV NOW climbed from 2.2 million subscribers to 4.8 million. 
In a June 2018 blog post titled "Improving the FCC's Cable Leased Access Proposal," I again pointed out that the old rationale for leased access rules no longer holds up. Therein I wrote that "the Commission should expressly identify the First Amendment problem posed by the leased access requirements in today’s competitive video market." Furthermore, I wrote: "If the Commission believes it is powerless to eliminate completely the leased access requirements, it should ameliorate the First Amendment problem," perhaps by predicating enforcement of its leased access rules on findings of market power.

Commendably, the Commission's proposed order and rulemaking states: "We agree that dramatic changes in technology and the marketplace for the distribution of programming cast substantial doubt on the constitutional foundation for our leased access rules." It goes on to say: 
[W]e now find that the First Amendment concerns raised by commenters provide additional reason to interpret the statutory obligations of Section 612 in a manner that reduces burdens on the speech of cable operators. We do so here by, among other things, eliminating the Commission rule requiring that cable operators make leased access available on a part-time basis.
The Commission's proposed order would vacate faulty 2008 rules that were never implemented and modify pre-2008 procedural requirements. And its proposed rulemaking would modify its leased access rate formula. Also, the Commission again asks if leased access requirements continue to withstand First Amendment scrutiny, and what discretion the Commission has to reduce the burdens on speech posed by those rules. By this admirable approach, the FCC rightly gives due respect to the First Amendment free speech interests that are burdened by leased access rules. 

Monday, June 03, 2019

More Momentum for New T-Mobile Following Hawaii Commission's Approval

It's been reported that Hawaii state regulators approved the proposed T-Mobile/Sprint merger. As it now stands, the proposed merger has received approval from 18 of the 19 purportedly required state public utility commissions (PUC). That leaves only California's PUC. To repeat what I wrote in a February blog post, California's PUC should promptly complete its review of the T-Mobile/Sprint merger.

Randolph May and I have described the potential 5G benefits of the pending deal in the Free State Foundation's initial public comments and other publications, including our Perspectives from FSF Scholars paper, "T-Mobile/Sprint Merger Offers Public Interest Benefits: Likely Presents a Fast Track to 5G." In that paper, we explained that the merger, if approved, would enable accelerate deployment of a nationwide 5G network. New T-Mobile would strongly challenge mobile wireless market leaders AT&T and Verizon, providing consumers and enterprises faster mobile broadband speeds, increased network data capacity, and lower per-megabit prices. 

Moreover, Sprint faces serious financial challenges. Absent the proposed merger, Sprint faces potentially significant future financial and competitive decline as a standalone provider. (See this blog post and FSF's reply comments for more on this point.)

Now that FCC approval of the proposed T-Mobile/Sprint merger (with conditions) has been signaled by Chairman Ajit Pai and two other commissioners, the U.S. Department of Justice ought to provide its approval, and soon. As FSF President May was quoted in TR Daily on May 19:
[W]ith the new commitments that T-Mobile/Sprint have now offered, the case for concluding there are public benefits from the merger has become even stronger. There is an imperative that the U.S. lead the world in the race to deploy 5G networks, the super-fast next-generation of wireless networks. And there is also an imperative that high-speed broadband be accessible more ubiquitously to rural Americans. The new T-Mobile-Sprint conditions should help the U.S. achieve both of those imperatives… I hope the FCC and the Department of Justice will move forward now with dispatch in completing their merger reviews.