Virtual Video Programming Services Continue to Gain Ground

In "Pixel by Pixel, Video Streaming's Ascension Comes Into Focus," a September 2021 Perspectives from FSF Scholars, I reported that the growth of Internet-based alternatives to traditional, facilities-based multichannel video programming distributors (MVPDs) may be slowing. More recent data, however, indicates that the opposite is true: virtual MVPD (vMVPD) subscriber totals have nearly doubled over the past year. Over the same period, the number of traditional MVPD customers has continued its downward trend.

There is no question that consumers are turning away from legacy video programming offerings and toward the many streaming options available – and that, consequently, both Congress and the FCC need do more to remove outdated regulations that exclusively target facilities-based providers (that is, cable operators, Direct Broadcast Satellite operators, and telco TV providers).

For more on this point, please see "Streaming Continues to Redefine the Video Landscape: It's Past Time to Eliminate Legacy Regulations," a Perspectives I wrote for the Free State Foundation in July 2021.

An evidentiary open question, though, has been to what extent viewers still crave the classic big bundle provided by facilities-based MVPDs: live channels + video on demand + an electronic programming guide + digital video recording capabilities.

The sheer number of subscribers to primarily library-based services like Netflix (214 million), Amazon Prime (over 200 million), Disney+ (118 million), and Hulu (43 million) suggests that preferences are trending away from these types of offerings toward a self-curated collection of more targeted options.

This hypothesis is bolstered by two data points.

One, the number of consumers who obtain service from traditional MVPDs continues to decline. According to the Leichtman Research Group, total subscribers to the top seven cable operators decreased by more than five percent, from 44.3 million to 41.9 million, between Q3 2020 and Q3 2021. Notably, Hulu, number four on the list of top streaming services, now has more subscribers than the top seven cable operators combined.

Two, 49 percent of broadband households subscribe to four or more streaming services.

According to Parks Associates, however, the number of broadband households subscribing to vMPVDs – which replicate the traditional product offered by facilities-based providers but deliver content over a user-provided broadband connection to a consumer-owned streaming device or smart TV – is now "nearly double" what it was just one year ago: 19 percent.

The impressive success enjoyed by vMVPDs – a large category of providers that includes Hulu + Live TV, YouTube TV, Sling TV, Philo, AT&T TV NOW, and fuboTV – reinforces the oft-made case for additional deregulatory action by Congress and the FCC.

PRESS RELEASE: D.C. Circuit's Decision in FCC's 6GHz Proceeding Has Broad Implications

With regard to the D.C. Circuit’s December 28 decision in AT&T Services, Inc. v. FCC, the following statement may be attributed to Free State Foundation President Randolph May:

“The court’s decision largely affirming the FCC’s allocation of the 6 GHz band frequencies for unlicensed use is important for enabling higher speed WiFi and other wireless broadband applications. But aside from the specific result, the court’s decision is also important because of the way the court broadly viewed the exercise of the Commission’s core spectrum management responsibilities.

Significantly, the court emphasized that in carrying out its duty to prevent ‘harmful interference,’ the agency is not required to reduce the risk of harmful interference to zero. This is always important to have in mind, but especially so now, because in several recent instances, such as the Ligado proceeding, executive branch agencies have objected to carefully considered FCC decisions on the basis of an incorrect understanding of the FCC’s ‘harmful interference’ standard. And the court’s decision is also significant in emphasizing the considerable degree of deference to be accorded to the FCC regarding technical spectrum management matters.”

6 GHz Order on Unlicensed Spectrum Upheld by D.C. Circuit

Today, in AT&T Services, Inc. v. FCC, the D.C. Circuit largely upheld the FCC's order that opened the 6 GHz band for use by unlicensed devices. The 6 GHz Order (2020) cleared 1200 MHz of spectrum for unlicensed use, which quadrupled the total amount of spectrum available for unlicensed devices, most notably Wi-Fi routers and Internet of Things (IoT) devices that use Wi-Fi.

The D.C. Circuit's decision greenlights the next generation of unlicensed devices, dubbed "Wi-Fi 6E." Consumers likely experience faster speeds and lower network congestion with Wi-Fi 6E, which makes use of the 6 GHz band's higher capacity than 2.4 GHz and 5 GHz bands that previously were allocated for unlicensed use. Consumers also are likely to be able to connect more devices to home Wi-Fi routers due to the increased capacity. Free State Foundation Senior Fellow Andrew Long discussed the benefits of and need for Wi-Fi 6E prior to release of the 6 GHz Order.

Licensees operating in the 6 GHz band challenged the 6 GHz Order under the Communications Act and Administrative Procedures Act (APA), arguing that the order would cause harmful interference with their licensed operations despite the order's mitigating measures. The court dismissed all but one of these challenges because the FCC adequately explained its reasoning, the Commission met its obligations under the APA, or the challenges relied on a "zero interference" standard that the agency never adopted. However, the court did remand one aspect of the 6 GHz Order to the Commission, based on its conclusion that the agency failed to address arguments made by the National Association of Broadcasters regarding interference with mobile operators. Because the court remanded the 6 GHz Order in response to this challenge, and did not vacate it, the order remains in effect and the Commission will have opportunity to address the issue on remand.

Throughout the opinion, the court remarked that the FCC's decisionmaking for preventing signal interference in the 6 GHz Order "requires a high level of technical expertise meriting deference to the Commission’s informed discretion." And the court also remarked that the FCC's interference mitigations aim to make the risk of harmful interference "insignificant," not "zero." Court challenges to FCC spectrum allocations do not prevail solely by showing potential interference, as long as the Commission adequately explains why it believes the risk of interference is low—a technical judgment that the court will not second-guess.

Maryland Plunges to a New Low: It Ranks 46th in the State Business Tax Climate Index

The Tax Foundation just released its 2022 State Business Tax Climate Index—and, unfortunately, Maryland continues its downward slide. It now ranks 46^th overall among the states and the District of Columbia due to bottom-half ratings in each of the measured subcategories. This is Maryland's lowest ranking since at least 2014 and possibly marks its all-time low. It should be a clarion call of the need for tax reform in the state.

States compete with other states for businesses, residents, investment, jobs, and revenues by implementing business-friendly tax policies, and Maryland's rank as 46^th shows serious room for improvement. As the Tax Foundation explains, a business-friendly tax environment does not mean tax-free anarchy. It means structuring major taxes with "low rates and broad bases." The broader the "base," meaning the total amount of economic activity subject to a specific tax, the lower the rate a state needs to impose to achieve its revenue target.

The Tax Foundation's State Business Tax Climate Index assesses a state's overall performance based on five major areas of taxation that affect business: corporate tax, individual income tax, sales tax, property tax, and unemployment insurance tax. Some states do not assess all of these taxes, but that fact does not guarantee strong performance on the Index. Utah and Indiana, both of which rank in the top 10, impose all of the major taxes as Maryland does, but they avoid "complex, nonneutral taxes with comparatively high rates" that detract from Maryland's economy.

Maryland could improve in virtually every area, because its 46^th overall rank reflects its bottom-half performance in every category:

• Unemployment insurance tax (46^th)
• Individual income tax (45^th)
• Property tax (43^st)
• Corporate tax (33rd)
• Sales tax (26^th)

Over the years, Maryland has been a consistent bottom-tier performer with unemployment insurance taxes, because it does not have "rate structures with lower minimum and maximum rates and a wage base at the federal level," which cause uneven burdens on employers. Maryland has the highest minimum unemployment insurance tax rate in the country at 2.2% and one of the highest maximum rates at 13%. It also relies on a wage base above the federal level. These factors lead to non-neutrality in the unemployment tax by assessing more tax on struggling businesses and industries with endemic turnover, like retail. It makes little sense to burden struggling businesses with high unemployment taxes when doing so risks more unemployment.

Maryland also has a high progressive individual income tax that places it in the bottom 10% of states in this category. This is a problem for Maryland's business climate because "a significant number of businesses, including sole proprietorships, partnerships, and S corporations, report their income through the individual income tax code." Progressive taxes disincentivize labor over leisure for high income earners, which means Maryland's tax code encourages wealthy individuals to spend money on activities like travel and entertainment instead of hiring workers and investing in Maryland's economic growth. This disincentive is especially concerning at the state level, where individuals can "vote with their feet" by relocating to lower tax jurisdictions. Maryland's income tax also ranks poorly because it is not indexed to inflation, includes a marriage penalty, and double-taxes capital gains and dividends. Maryland could improve its business environment by eliminating or reducing the extent of these problems.

Maryland's property tax regime falls in the bottom-10. Property taxes are not just taxes on ownership of real property—they also include any tax assessed to tangible or intangible property, such as business inventory taxes, real estate transfer taxes, estate taxes, and inheritance taxes. Maryland's poor performance on the Business Tax Climate Index is largely attributable to its property taxes that distort business decisions. For example, Maryland taxes business inventories, a tax that has the effect of discriminating against retailers and forcing businesses to factor tax minimization into sales and procurement strategies. Maryland also taxes real estate transfers, which increases compliance costs and distorts decisions when businesses or individuals seek to transfer non-liquid assets, including small business and family-owned property. Maryland is also the only state in the country to levy both an estate tax and an inheritance tax, often causing double-taxation of inherited property. These taxes cause businesses and individuals in Maryland to make decisions about property based on tax strategy rather than economics, so they should be eliminated.

Maryland's corporate tax ranking is not quite as abysmal as it is in the previous three categories but it still needs work. High corporate tax rates with progressive bracketing discourage businesses, especially when nearby states have lower taxes. In Maryland, corporations pay an 8.25% tax rate on business profits. Imposing a single rate is positive. But 8.25% is a relatively high rate compared to other states, so businesses may be deterred from locating in Maryland, especially when nearby Virginia has a lower 6% rate. Additionally, Maryland does not conform with federal policy for deducting depletion, which adds complexity for businesses that deal with natural resources. Maryland should reduce its corporate rate and conform with federal depletion policy to attract business.

Maryland's sales tax regime earned the state's best subcategory ranking, but this ranking was still relegated to the bottom-half thanks to "including too many business inputs, excluding too many consumer goods and services, and imposing excessive rates of excise taxation." For example, Maryland's 6% sales tax rate could be reduced if it didn't provide a wide variety of sometimes seemingly arbitrary exemptions for various goods and services. Meanwhile, Maryland taxes business production inputs like leases, information services, and office equipment. Businesses likely pass taxes imposed on these items to end users of finished products, on whom the sales tax might apply again. Maryland could improve its ranking by eliminating exemptions for consumer goods and services while exempting inputs—creating a broader base that allows for overall lower sales tax rates.

The harmful effect of Maryland's 46^th place overall ranking becomes clear when you consider the more competitive rankings of adjacent states. All of the states bordering Maryland have better Business Climate Index rankings, except for the District of Columbia. These states include Delaware, Pennsylvania, Virginia, and West Virginia. Delaware's 16^th place ranking is the best, and this might help explain why Delaware has the highest population growth rate among Maryland and its neighboring states. Virginia ranks 25^th on the Index and also has a higher population growth rate than Maryland. While Maryland has faster population growth than Pennsylvania (29^th) and West Virginia (21^st), the potential for these states to outcompete Maryland for business and residents solely because of Maryland's unduly high tax rates and overly burdensome tax policies should alarm lawmakers.

The 46^th place ranking on the State Business Tax Climate Index should be a wakeup call to Maryland's government officials and its citizens. This bottom-dwelling ranking suggests that Maryland's tax code pushes investment, job growth, and revenue, as well as jobs and potential new residents to other states. And because Maryland's ranking has continually declined over the last decade, it appears other states are taking the benefits of tax reform more seriously.

Adoption by the legislature of the tax reforms suggested above, and others discussed in the Index, would stop Maryland from losing further ground to other states, including its neighbors, and would help spur more economic growth that would benefit all of Maryland's residents.

Commenters Address Transition from Emergency Broadband Benefit to Affordable Connectivity Program

The recently passed Infrastructure Investment and Jobs Act (IIJA) appropriated $65 billion to broadband-related initiatives. While the $42.5 billion targeting the construction of network infrastructure has received much of the attention, another significant component of the IIJA is the $14.2 billion to be used by the FCC to modify and extend the Emergency Broadband Benefit Program (EBBP), a consumer subsidy created in December 2020 by the $900 billion COVID-19 relief and government funding bill. (For more information on the nearly $7 billion in broadband funding contained therein, please see this post to the Free State Foundation's blog.)

Interested parties recently submitted comments on how the Commission can assure a smooth transition, for both consumers and service providers, from the EBBP to the IIJA's Affordable Connectivity Program. That valuable and informed input can only benefit consumers and warrants careful consideration and action by the FCC.

As I described in "The Emergency Broadband Benefit: A Possible Model for Future Lifeline Funding," a February 2021 Perspectives from FSF Scholars, at the end of last year Congress allocated $3.2 billion to a short-term, pandemic-specific subsidy program to be administered by the FCC. Low-income Americans, as well as those experiencing financial hardship due to the ongoing public health crisis, were able to receive (1) a recurring $50 monthly discount on high-speed Internet access service, and (2) a one-time connected-device subsidy up to $100.

The EBBP, by design, was limited in duration: Congress made clear that it would conclude at the earlier of the end of the pandemic (plus six months) or when the money ran out.

The $1.2 trillion IIJA appropriated an additional $14.2 billion to extend those broadband service and device discounts. While the program established by the IIJA in many ways builds upon the EBBP, as initially defined by Congress and subsequently implemented by the FCC, it also made some changes, in particular to eligibility requirements and the amount of the standard monthly service discount. And it gave the program a new name to reflect its longer-term nature: the Affordable Connectivity Program (ACP).

On November 18, 2021, the Wireline Competition Bureau issued a Public Notice soliciting input from interested parties on how best to implement the ACP. A wide range of entities – including broadband providers (such as AT&T Services, Inc., T-MOBILE USA, INC., and Verizon Communications Inc.) and industry trade associations (among others, USTelecom – The Broadband Association, NCTA – The Internet & Television Association, and CTIA – The Wireless Association®) – submitted comments by the December 8, 2021, deadline.

Interested parties raised a host of issues, some "big picture," others highly detailed and specific. Below I discuss a few of the topics that seem to have garnered the most attention.

First and foremost, commenters emphasized the importance of policies and procedures that provide for a smooth and orderly transition, for both consumers and providers, from the EBBP to the ACP. Pursuant to the operative text of the IIJA, the EBBP will end, and the ACP will begin, on December 31, 2021. However, a final order will not issue from the FCC until the middle of January 2022.

Broadband providers urged the FCC to afford them reasonably sufficient flexibility as they strive to comply with rules not yet written – and adequate time to make necessary changes once those rules are finalized. For example, multiple broadband providers argued that, in the interim, they should be permitted to continue to determine eligibility according to the existing EBBP rules.

In addition, and as mentioned above, Congress modified the amount of the standard monthly discount. Whereas the EBBP made available $50, the ACP reduced that to $30. From the consumer perspective, commenters highlighted the need to provide meaningful notice of this change so that recipients are not caught off guard financially.

Providers, meanwhile, identified numerous time-consuming to-dos necessitated by this change, including billing-system modifications, website and other marketing material revisions, and customer service representative training. Again, commenters asserted that these steps demand adequate time to complete.

Another change wrought by the IIJA: participating broadband providers "shall allow an eligible household to apply the affordable connectivity benefit to any internet service offering of the participating provider, at the same terms available to households that are not eligible households" (emphasis added).

Commenting broadband service providers raised operational concerns and uncertainties triggered by this vague and overly broad language. As one example, they urged the FCC to clarify that "any internet service offering" does not include grandfathered packages – that is, those no longer actively marketed to existing or potential new customers.

In the interest of effective and efficient administration, these and other concerns identified by commenting parties deserve close consideration and a robust response from the FCC.

The deadline for reply comments is December 28, 2021.

Maryland's Unlawful Compulsory License for eBooks Should Have a Short Shelf Life

Copyright protections secured by federal law preempt state laws that interfere with them. Yet the Maryland legislature apparently ignored or didn't realize that when it enacted Maryland House Bill (HB) 518 in May of this year. The law, if it goes into effect in 2022, would grant Maryland public libraries a state-level compulsory license to access eBooks, audiobooks, and other digital literary works belonging to copyright owners at state-regulated rates. But a lawsuit filed in U.S. District Court on December 9 almost certainly means that the state's law will have a short shelf life. 

Maryland HB 518 seeks to give Maryland public libraries a special right of forced access to privately-owned digital literary works on supposed "reasonable terms." But under the U.S. Constitution's Copyright Clause and Section 106 of the federal Copyright Act, copyright owners possess exclusive rights to decide who can reproduce, distribute, display, and publicly perform their works and under what conditions. Indeed, the Copyright Act is the exclusive source of law governing the exclusive rights of copyright owners. As a result, Maryland HB 518 is expressly preempted by federal law – and it's not a close call. 

Federal copyright protections for literary works were foremost in the minds of the Founding Fathers when they drafted and ratified the Constitution of 1787. Free State Foundation President Randolph May and I wrote about this extensively in our book The Constitutional Foundations of Intellectual Property: A Natural Rights Perspective (Carolina Academic Press, 2015). The Constitution's Article I, Section 8 Copyrights Clause granted Congress the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." And as James Madison observed in Federalist No. 43, the Constitution gave Congress that authority because "[t]he States cannot separately make effectual provisions for either of the cases, and most of them have anticipated the decision of this point, by laws passed at the instance of Congress."

The Copyright Act's exclusive jurisdiction over the exclusive rights of copyright owners is stated –  in unmistakably broad terms – in Section 301(a)'s preemption provision: 

On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.

In our most recent book, Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform (Carolina Academic Press, 2020), FSF President May and I strongly urged Congress to reject any future imposition of compulsory licensing and rate regulation on copyrighted works because such onerous restrictions are antithetical to the property rights and free market foundations of American copyright law and policy. Similarly, Maryland and other states should refrain from trying to impose compulsory licenses and rate controls on copyrighted works. 

In view of the strong legal claims raised against Maryland HB 518 in the pending case of Association of American Publishers, Inc. v. Frosh, it is most likely that the law will never go into effect. Other states should learn from HB 518's bad example and not seek to repeat it. 

Copyright Claims Board Set to Open in 2022

A December 3 guest blog post at Copyhype by U.S. Register of Copyrights Shira Perlmutter provides an update of the Copyright Office's continuing progress in establishing a voluntary venue for resolving copyright claims involving claims for $30,000.00 or less. The new Copyright Claims Board (CCB) will start in the spring of 2022.  

Hiring a copyright attorney and footing the legal expenses of pursuing infringement claims in federal court is beyond the financial and other means of many individuals and smaller businesses that own copyrights. The CCB offers a potential way for those copyright owners and for alleged infringers to have their dispute settled in less time and for less cost. Free State Foundation Randolph May and I recommended the establishment of a voluntary small claims tribunal like the CCB in chapter eight of our most recent book, Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform.

Tilson Report Shows Lack of State Readiness for Biden's Broadband Programs

Tilson's new report, State Broadband Program Analysis, should set off alarms. According to the report, most state and territorial governments lack readiness for administering billions in broadband funds from President Biden's Infrastructure Bill and American Recovery Act. Only 25 of the 54 states and territories Tilson surveyed can administer broadband grants right now. And 30% of enacted broadband grant laws in states and territories are biased against wireless technologies that could help close the digital divide.

This lack of readiness is a problem because states can already apply for American Recovery Act funds, and the Infrastructure Bill requires the Department of Commerce to launch its grant program by mid-May of 2022. It takes time for states and territories to establish processes, assemble staff, and dedicate resources for administering broadband grants. The biggest time hurdle is often passing legislation, or at minimum, some sort of executive or agency order. There is no guarantee states and territories will be ready to go when the Infrastructure Bill's program launches, which risks delay, added cost, and reduced effectiveness for closing the digital divide.

Tilson grouped the 54 states and territories into four categories based on their readiness for administering broadband grants:

• 6 have no capabilities for administering broadband grants
• 9 have merely proposed legislation for administering broadband grants
• 18 have passed legislation but have not begun administering broadband grants.
• 25 are actively administering or have administered broadband grants of some sort.

Notably, while it appears that 43 state and territorial governments have at least passed legislation, the legislation Tilson counted includes laws for any past broadband grant program, including legacy state and federal programs and inactive programs. This means that some of the states and territories with laws on the books or even active grant programs could need to amend their laws or issue new orders to participate in Biden-era programs.

Additionally, Tilson estimates that 30% of states and territories with existing laws for broadband grants are biased against funding wireless technologies. This lack of tech-neutrality could lead to waste because low-cost solutions like fixed wireless will be excluded from competing for funds in unserved areas.

In sum, Tilson's report suggests that a lack of state capacity for administering broadband grants seriously risks needless delay and added costs to President Biden's broadband programs. Added costs and delay will reduce the effectiveness of funds Congress appropriated for closing the digital divide, possibly increasing the perceived need for future programs of similar size and scope.

And these added costs and delay highlight the risks inherent in Congress's decision to involve multiple layers of government in disbursing broadband funds. For example, the Infrastructure Bill requires NTIA to evaluate applications from state and territorial governments, which if approved, will then establish their own grant programs that review applications from broadband providers. There is another layer of complexity too—NTIA will administer the Infrastructure Bill funds while the Department of Treasury will administer the American Rescue Act funds. A simpler model—like having the FCC or NTIA administer grant programs to which broadband providers apply directly—could have reduced the risks that Tilson's report highlights.

FCC's "Unified Jurisdiction" over Commercial Spectrum Supports its 5.9 GHz Order

In January 2022, the D.C. Circuit will hear arguments in a case challenging the FCC's 2020 decision to repurpose spectrum in the 5.9 GHz band for flexible unlicensed wireless use, including Wi-Fi. The court ought to uphold the 5.9 GHz Band Order. Despite strong opposition to the order by the U.S. Department of Transportation (DoT) and by private litigants, the Commission's decision to repurpose 45 megahertz for unlicensed Wi-Fi was based solidly on the agency's delegated authority over commercial spectrum allocations. It's also good policy. The FCC's order will help realize the full economic and social benefits of next-generation Wi-Fi 6 technology. 

In Intelligent Transportation Society of America v. FCC, one of the questions the D.C. Circuit will address is whether the Commission's 2020 decision failed to comply Section 5206(f) of the 1998 Transportation Equity Act for the 21st Century (TEA). According to a court brief that was filed by private litigants on November 19, the Commission didn't consult sufficiently with the DoT regarding spectrum needs for the operation of intelligent transportation systems in the 5.9 GHz band. However, TEA Section 5206(f) was directed toward an FCC rulemaking that was to be completed before January 1, 2000. And the Commission did that. Nothing in the TEA alters the Commission's jurisdiction over commercial spectrum or its authority to issue the 5.9 GHz Order. 

In U.S. v. Southwest Cable Company (1968), the Supreme Court described Congress's establishment of the FCC "to serve as the single Government agency with unified jurisdiction and regulatory power over all forms of electrical communications, whether by telephone, telegraph, cable, or radio." The Commission's power to "prescribe the nature of the service to be rendered by each class of licensed stations," "assign bands of frequencies to the various classes of stations," and make rules and regulations necessary to carry out such purposes is contained in Sections 303(b), -(c), and –(g) of the Communications Act. Also, Section 303(r) authorizes the Commission to "generally encourage the larger and more effective use of radio in the public interest." 

The FCC exercised this considerable authority over spectrum when it reallocated the lower 45 megahertz of the 5.850-5.925 GHz band for unlicensed use and reassigned the upper 30 megahertz of the band for vehicle communications. Public policy reasons for supporting that reallocation were offered by Free State Foundation President Randolph May and Senior Fellow Andrew Long in public comments filed in the 5.9 GHz band proceeding in March 2020. 

 

Both before and after the Commission approved its 5.9 GHz Band Order, the DoT publicly opposed the reallocation of spectrum for unlicensed Wi-Fi use. DoT claimed future Wi-Fi use in the lower part of the band causing potential out-of-band interference with transportation-related communications. But the FCC's order included measures to prevent such potential interference. The Commission has recognized expertise in spectrum engineering matters and in adjudicating disputes over alleged signal interference claims.

 

Regrettably, the DoT's attempts to stall or undo the Commission's implementation of commercial spectrum policy fits a disturbing pattern. Over the last few years, executive branch agencies – such as the Department of Commerce, the Department of Defense, and the Federal Aviation Administration (which is housed within the DoT) – have tried to undermine the FCC's decisions regarding commercial spectrum allocations intended to advance 5G and Wi-Fi 6 networks. And although the DoT never denied the Commission's authority over commercial spectrum reallocation decisions, private litigants have continued the fight over the 5.9 GHz band.

A decision by the D.C. Circuit to uphold the 5.9 GHz Order would constitute a small but helpful step toward vindicating the FCC's "unified jurisdiction and regulatory power" over commercial spectrum from interference by other federal agencies. 

New Study Quantifies Huge Potential Losses Absent Revised Pole-Attachment Policies

An economic analysis commissioned by Connect the Future assigns a hefty price tag to the potential delays that utility pole disputes could cause in the deployment of broadband infrastructure.

"Advancing Pole Attachment Policies To Accelerate National Broadband Buildout," by Professor Edward J. Lopez and Patricia D. Kravtin, asserts that "broadband deployment is being inhibited or outright stopped due to the lack of effective pole policy to address problematic behavior of certain utility pole owners affecting broadband provider access to utility poles."

According to their analysis, this "hold up problem" could lead to substantial economic losses: between $491 million and $1.86 billion for each month of delay that results.

As I highlighted in a February 2021 post to the Free State Foundation's blog, Charter Communications, Inc. (Charter) has announced plans to invest $5 billion, including $1.2 billion in subsidies won via the FCC's Rural Digital Opportunity Fund auction, to connect over a million locations currently without access to broadband.

That initiative, however, hinges upon reasonable and timely access to utility poles. And in a post last week to the FSF Blog, I drew attention to two FCC filings in which Charter described several ongoing disputes that underscore the need for the relief sought by NCTA – The Internet & Television Association (NCTA) in a July 2020 Petition for Expedited Declaratory Ruling: (1) greater clarity regarding the proper allocation of pole replacement costs between attachers and owners, and (2) use of the Commission's Accelerated Docket to resolve pole-related impasses promptly.

Consistent with the NCTA petition, the study's authors conclude that "policymakers need to facilitate the streamlining of equitable access and cost-sharing arrangements between broadband attachers and pole owners" in order to realize the full economic potential of ubiquitous broadband coverage.

Article Forecasts Unlicensed Wi-Fi 6's Partnership with 5G Wireless

Amidst the fast rollout of 5G networks, it is all too easy to overlook the growth of Wi-Fi 6 and its role in supporting next-generation broadband network services. On December 1, Deloitte published an article titled "Wi-Fi 6: Unsung, underexposed—and indispensable to the future of enterprise connectivity." The Deloitte article offers the important insight that "5G may get the lion's share of the publicity, but Wi-Fi 6 devices are quietly outselling 5G devices by a large margin and will likely continue to do so for the next few years at least." Additionally: "Deloitte Global predicts that more Wi-Fi 6 devices will ship in 2022 than 5G devices, to the tune of at least 2.5 billion Wi-Fi 6 devices versus roughly 1.5 billion 5G devices." The article goes on to explain that "Wi-Fi 6 and 5G are designed to work together smoothly, and the wireless industry appears headed toward a future in which devices can roam securely and seamlessly between all types of wireless networks." As the article shows, Wi-Fi 6 will play a crucial role in the future of wireless services. 

Free State Foundation Senior Fellow Andrew Long provided an overview of the potential functional and economic benefits of next-gen Wi-Fi in his February 2020 Perspectives from FSF Scholars, "Wi-Fi 6E Can Modernize Unlicensed Wireless." The FCC's 2020 orders to repurpose spectrum in the 5.9 GHz and 6 GHz bands for unlicensed flexible use -- including Wi-Fi -- will help realize those benefits.

Ericsson Projects 5G Dominance of Mobile Services in 2027

On November 30, the newest edition of the Ericsson Mobility Report was released. The report takes a global and regional outlook, so no United States-specific forecasts or data points are offered. But the report does detail an ongoing dramatic increase in 5G services in technologies that will take place in North America:

In North America, 5G commercialization is moving at a rapid pace. Service providers have launched commercial 5G services, focusing on mobile broadband and fixed wireless access (FWA). The addition of C-band spectrum will secure consistent 5G user experiences. FWA will play a key role in closing the digital divide where the pandemic has exposed large gaps for education, remote working and small businesses. By 2027, more than 410 million 5G subscriptions are anticipated in the region, accounting for 90 percent of mobile subscriptions. 

According to Ericsson's forecast for 2027, 5G subscriptions in North America will be higher than any other region. Currently, North America is second in 5G subscriptions to North East Asia. And 20% of current mobile subscriptions in North America are 5G. Apparently, stronger than expected demand is due in part to decreasing prices for 5G devices. Additionally:

The average monthly mobile data usage in North America is expected to reach 52GB per smartphone in 2027. A smartphone-savvy consumer base and video-rich applications, in combination with large data plans, will drive traffic growth. While there may be strong growth in traffic per smartphone in the near term, the adoption of immersive consumer services using AR/VR is expected to lead to even higher growth in the long term. 

For more, including interesting projections for deployments of commercial 5G-native voice (VoNR) services and other 5G technologies, check out the Ericsson Mobility Report. 

Twitter's New Media Policy Risks More Speech Suppression

It's day three of Mr. Parag Agrawal's term as CEO of Twitter, following Jack Dorsey's surprise resignation on Monday, and we're already seeing that the leadership change could mean facilitating the arbitrary removal of user speech. Today, Twitter has now banned "media of private individuals without the permission of the person(s) depicted" in its private information policy, but will make exceptions to the ban when Twitter determines exceptions are in the "public interest."

The sweeping "public interest" discretion Twitter reserves for itself in its new policy could aggravate Twitter's selective enforcement in content moderation. Under the policy, users appearing in photographs or videos to which they did not consent to can report these photographs or videos to Twitter for removal. The policy does not apply to public figures, and critically, it also doesn't apply to "individuals when media and accompanying Tweet text are shared in the public interest or add value to public discourse." Twitter only gives two hints at what might constitute the "public interest" or added "value in public discourse"—media involving crisis situations (like violence) or media "being covered by mainstream/traditional media (newspapers, TV channels, online news sites)." The policy appears to apply even to videos and images of individuals in public spaces.

(Logo of Twitter, Inc.)

Much could go wrong here. The policy change is effectively a "two-party consent" rule for media shared on Twitter, and it could be abused to erase useful information. Empowering Twitter employees to determine the "public interest" and "value" added to public discourse by videos and images heightens the risk of injecting political bias, wrong-headed notions of "misinformation," and other value-laden influences creeping into enforcement decisions.

To reduce these influences that limit speech online, Twitter should take a minimalist approach to enforcing this policy that sticks to newsworthiness. If media content reviewed under this policy displays any information that could be relevant to the public discourse, Twitter should err on the side of not removing the media. Content that lacks any such information could be considered harassment and removed for the harm-reduction purposes that Twitter espouses. This approach would be similar to the "newsworthiness" test used by some courts for privacy torts. In other words, Twitter would ask whether the media content contains any information relevant to an issue in the public discourse, not whether the distribution of that media would benefit some indeterminate "public interest," which, to be sure, is in the eye of the beholder.

Twitter may be within its First Amendment rights in adopting the new policy. But if Twitter begins deciding, for example, that media that discredits a person, narrative, or movement favored by Twitter doesn't comply with its selective notions of what constitutes the "public interest," @Jack's departure would mark more arbitrary suppression of online speech.

Charter to Commission: Pole Disputes Threaten Timely Deployment of Broadband Infrastructure

In two recent FCC filings, Charter Communications, Inc. (Charter) offered further evidence that efforts to connect rural Americans to broadband hinge upon agency action ensuring access to utility poles "on reasonable timelines, terms and conditions." Specifically, the grant, whether through declaratory ruling or notice-and comment rulemaking, of the forms of relief requested by NCTA – The Internet & Television Association (NCTA) in a Petition for Expedited Declaratory Ruling submitted in July 2020 and denied by the Wireline Competition Bureau in January of this year.

As I highlighted in "Charter Announces Ambitious Project to Deploy Broadband to Over One Million Unserved Locations," a February 2021 post to the FSF Blog, Charter is investing $5 billion, including $1.2 billion in subsidies secured via winning bids in the Rural Digital Opportunity Fund (RDOF) reverse auction, to expand its network in 24 states. This will enable it to offer high-speed Internet access – specifically, service that meets or exceeds the FCC's current 25 megabits per second (Mbps) downstream and 3 Mbps upstream definition of "broadband" – to more than one million locations at present unserved.

When it unveiled its plans, Charter cautioned that "pole applications, pole replacement rules and their affiliated issue resolution processes are all factors that can have a significant impact on the length of time it takes to build into these rural areas."

And in conversations last week with representatives of the Wireline Competition Bureau and legal advisors to Chairwoman Jessica Rosenworcel and Commissioner Geoffrey Starks, Charter presented specific evidence of issues relating to the processing of pole applications that threaten its ability not just to connect rural Americans, but to meet deadlines associated with RDOF subsidies.

Maureen O'Connell, Charter Vice President, Regulatory Affairs, detailed one impasse, involving the Warren Rural Electric Cooperative Corporation (WRECC) in rural Kentucky, that jeopardizes its plans to provide broadband to over six thousand unserved locations:

At the permit processing rate currently proposed by WRECC, it would take 14 years to complete the permitting process for attachments to poles to reach these locations – about seven times longer than planned and double the maximum allowed to deploy these federal taxpayer dollars under RDOF. That means a child in kindergarten now will have graduated from high school before the permitting phase is complete.

Charter also identified pole-related disputes in California, Hawaii, and South Carolina and "expressed concern that some pole owners have competitive incentives to delay broadband deployment by attaching entities because they are themselves affiliated with broadband providers who are putative competitors to the attaching entities, including (in the case of WRECC) affiliates or business partners receiving RDOF support."

In July 2020, NCTA filed with the FCC a Petition for Expedited Declaratory Ruling (NCTA Petition) seeking relief in rural areas including: (1) various clarifications regarding the appropriate allocation of pole replacement costs between attachers and owners, and (2) timely resolution of pole-related disputes via the Commission's Accelerated Docket.

Free State Foundation President Randolph May and Director of Policies Studies and Senior Fellow Seth Cooper filed Comments in support of the NCTA Petition.

In a January 2021 Declaratory Ruling, the Wireline Competition Bureau did clarify that "utilities may not require requesting attachers to pay the entire cost of pole replacements that are not necessitated solely by the new attacher and, thus, may not avoid responsibility for pole replacement costs by postponing replacements until new attachment requests are submitted."

As a general matter, however, the Wireline Competition Bureau denied the NCTA Petition, concluding that "it is more appropriate to address questions concerning the allocation of pole replacement costs within the context of a rulemaking, which provides the Commission with greater flexibility to tailor regulatory solutions."

The picture painted by Charter underscores how important it is for the FCC to provide additional clarity and guidance with respect to the respective rights and responsibilities of pole owners and attachers.

In that regard, I point out that, in a statement to Telecompetitor, a self-described "puzzled" WRECC disputed Charter's allegations and expressed "hope than we can come to an agreement soon." Thus, it would seem that the parties involved are not on the same page. Prompt intervention by the FCC holds the potential to accelerate the deployment of network infrastructure.

In other words, the policy goal of rapid rural broadband expansion compels precisely the relief requested in the NCTA Petition: "expedited consideration under the Accelerated Docket."

As noted above, the Wireline Competition Bureau denied NCTA's request for declaratory relief because it believed that a rulemaking of general applicability would be the more appropriate vehicle. It is time to begin that process.

Thanksgiving Day 2021

As regular readers of this space know, each Memorial Day and Independence Day I pen a special holiday message. And I've done so periodically on Thanksgiving too. So, here’s hoping you find this one thought-provoking.

To me, Independence Day, Memorial Day, and Thanksgiving are uniquely American holidays, bound together in uniquely American ways. By this I don't mean to say that other nations don't celebrate holidays that perhaps have the same names. And I don't mean to say that those nation's holidays don't commemorate aspects of their own histories and traditions that, in some respects, may be like our own.

What I do mean to say is that we celebrate Independence Day, Memorial Day, and Thanksgiving – and understand, or should understand, what they signify as national holidays – in our uniquely American context.

It is not necessary to accept, literally, the grade-school version of the first Thanksgiving in 1621 – which took place within a year of the Mayflower's landing at Plymouth Rock – to draw inspiration from the story of the Pilgrims' pause to give thanks. Regardless of the exact circumstances – and it now appears that the term "Thanksgiving" was not used at that meal – their prospects in their new American home remained highly uncertain.

Last year I wrote about the 400^th anniversary of the Mayflower Compact, and I won't repeat all of that here. The key point is that the Compact, a declaration of self-government entered into by mutual consent, is an often-overlooked foundational American document. Those Pilgrims signing agreed to join together to form a "civil body politic" subject to "just and equal" laws. Not merely any laws.

In much the same way you don't have to accept, literally, the grade-school origin story of Thanksgiving to draw inspiration from the holiday today, you don't need to ignore the ugly history of slavery and Jim Crow in America to draw inspiration from the true meaning of the words of the Declaration of Independence. The Declaration's proclamation that "all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness," might not mean as much absent the Mayflower Compact's covenant, a century and half earlier, to establish a civil society subject to "just and equal laws." In other words, a line can be drawn from a proper understanding of the Mayflower Compact to a proper understanding of the Declaration of Independence, a thread in the establishment of the rule of law in America that ought to bind us together.

In the same way that the men who drafted the Mayflower Compact and the Declaration of Independence were not without their flaws, our leaders who have sent men and women to fight America's wars are not without theirs. Thus, some of America's wars may be viewed as more justified, or just, than others. But we celebrate Memorial Day not to honor our wars but to honor Americans who paid the ultimate price in answering their country's call.

Here then is the sense that I consider Thanksgiving, Independence Day, and Memorial Day together. The Founders possessed sufficient wisdom to bequeath a Constitution that framed a government that enables us to engage in the continuing project of forming "a more perfect Union.” Without the sacrifices of those we honor on Memorial Day, or the wisdom of those who drafted the Declaration in 1776 or the Mayflower Compact in 1620, the American experiment in self-government, under the rule of law, would not exist as we know it.

To my mind, it doesn't bode well for our country's future when so many today relish invoking the stains in our history as a reason to ignore, or even obliterate, all the good from which we can and should rightly draw inspiration. It bodes ill when so many relish silencing – "cancelling" in today's lingo – fellow Americans for uttering thoughts which with they disagree or consider out of fashion. This is not principally a matter of whether the First Amendment protects the right of individuals or private entities to engage in such silencing – it mostly does – but rather a matter of whether doing so comports with the constitutional culture that the free speech clause of the First Amendment is intended to nurture.

On this Thanksgiving, aside from enjoying a traditional Thanksgiving dinner with all the fixings, I'm going to draw inspiration from what I consider to be the uniquely American links between Thanksgiving, Independence Day, and Memorial Day. I remain unabashed in my belief that America is a unique nation, blessed with a unique form of government, one preserved by those who have paid the ultimate sacrifice in blood in defending our freedoms.

Any inspiration that may be drawn from these three uniquely American national holidays ought to be in the service of a renewed commitment to engage, as informed citizens, in the preservation of the rule of law.

With that in mind, as always, I wish you a Happy Thanksgiving, and one that is inspiring too!

With best wishes,