USTR Report: Foreign Nations Should Step Up Efforts to Curb Online Copyright Piracy

On April 26, the Office of the U.S. Trade Representative (USTR) released its 2023 Special 301 Report on intellectual property (IP) enforcement and protection by our nation's trading partners. The Section 301 Report provides an overview of various initiatives by the Administration to promote stronger protections for Americans' IP overseas, tracks recent trends in other nations regarding IP, and offers succinct status reports on IP protections and enforcement – or lack thereof – in individual countries. 

One area of attention in the Section 301 Report is online piracy. According to the report, in 2022 and early 2023, "countries such as Argentina, Bulgaria, Canada, Chile, China, Columbia, the Dominican Republic, India, Mexico, the Netherlands, Pakistan, Romania, Russia, Switzerland, Thailand, Ukraine, and Vietnam had high levels of online piracy and lacked effective enforcement." In particular, the report identified high incidence of music piracy by the use of "stream-ripping" software to create unlawful copies of songs in Canada, India, Korea (the report never specified North or South), Mexico, Russia, Switzerland, Ukraine, and the United Arab Emirates. 

Additionally, the Section 301 report called attention to the use of illicit streaming devices (ISDs) to facilitate unauthorized streaming of copyrighted video content offered by illicit Internet Protocol television (IPTV) services. As the report observed: "Today, there are many illegal IPTV services worldwide, many of which are subscription-based, for-profit services with vast and complex technical infrastructures." Significant levels of piracy via ISDs and illicit IPTV apps reportedly takes place in Argentina, Brazil, Canada, Chile, China, Guatemala, Hong Kong, India, Indonesia, Iraq, Jordan, Mexico, Morocco, Singapore, Switzerland, Taiwan, Thailand, Tunisia, and Vietnam. And report rightly observes that online piratical activities inflict substantial economic harm on American creators of copyrighted works and undermine the competitive viability of legitimate online platforms for distributing creative content. 

 

The Section 301 report ought to be a reminder of the need for the U.S. to keep up pressure on foreign nations that do not take IP protection and enforcement seriously and turn a blind eye to online copyright piracy and other forms of IP theft and counterfeiting. In our book, Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform(Carolina Academic Press, 2020), Free State Foundation President Randolph May and I provide a brief history of early U.S. efforts to secure copyright protections for Americans' creative works in foreign countries. Our book also addresses the need for domestic criminal copyright enforcement against large-scale commercial piracy operations as well as the need for strong copyright protections in free trade agreements.  

House Committee Passes Reforms for Broadband Infrastructure Siting on Federal Property

At its May 24 markup hearing, the House Energy and Commerce Committee passed, with unanimous votes, five bills intended to streamline permit processing for constructing infrastructure for broadband use on federal land and property: 

The Standard Fees to Expedite Evaluation and Streamlining Act (Standard FEES Act), if passed by Congress, would direct the General Services Administration (GSA) to establish a common fee schedule for applications to build communications sites on federal property. The Act would require each executive agency to adopt regulations that align with the common fee schedule. 

 

The Expediting Federal Broadband Deployment Reviews Act would authorize the NTIA to establish an interagency "strike force" to ensure that each Federal land management agency "prioritizes the review of requests for communications use authorizations." The strike force would conduct periodic calls among those agencies and monitor their progress. And within 270 days after the Act becomes law, the NTIA would be required to submit to Congress a report on "the effectiveness of the strike force in ensuring that Federal land management agencies prioritize reviews of requests for communications use authorizations. 

The Federal Broadband Deployment Tracking Act would require the NTIA to submit to Congress a plan for the agency to track requests for communications use authorizations on federal property and provide transparency to applications regarding the status of their applications.

 

The Deploying Infrastructure with Greater Internet Transactions and Legacy Applications (DIGITAL Applications Act) would require the Interior and Agriculture Departments to set up online portals to accept, process, and dispose of common form applications to deploy communications facilities on federal property. 

 

The Facilitating DIGITAL Applications Act would require the NTIA to provide Congress with reports on whether the Interior and Agriculture Departments have, in fact, established online portals for accepting form applications.  

 

Taken together, these bills have the potential to streamline application processes for construction of broadband facilities and to improve broadband coverage across America. Although many reforms to broadband infrastructure siting processes have focused on state and local regulatory barriers to building and significantly upgrading facilities, the foregoing reform bills passed by the House Energy and Commerce Committee direct efforts to deployments on federal property. This is a needed area of attention. And reforms targeting infrastructure siting on federal property do not present the structural federalism and local control issues that frequently are posed by federal preemption of state laws. The House Energy and Commerce Committee deserves credit for addressing communications infrastructure siting on federal property, and the House of Representatives should now do its part to advance these bills. 

Memorial Day 2023

This is my seventeenth consecutive Memorial Day message. You can find the previous sixteen at the end of this message.

On this Memorial Day, and on each one, we remember and honor all those servicemen and women who paid the ultimate price in America's wars. And we remember and honor their families too.

One way we can honor them is by using the occasion of Memorial Day to recommit ourselves to the ideals for which those who fought sacrificed. These ideals are embodied in our Constitution: To “establish Justice” and “to secure the Blessings of Liberty to ourselves and our Posterity.”

If we don't continually recommit, and there is an erosion of the uniquely American spirit, they shall have died in vain.

From the Republic's beginning, there always have been important philosophical and political divisions between factions, interest groups, and political parties. This is to be expected in a healthy democracy. Indeed, the absence of such divisions – and especially the absence of the ability to debate these differences freely in the public square – are truly signs of an unhealthy democracy.

So, divisions within the American body politic regarding major social and economic issues are by no means new. But in the many ways with which we are all familiar, today's divisions appear deeper and the manifestations of them more uncivil, in some ways even more threatening. There are many reasons for this but, to my mind, the still-metastasizing Cancel Culture plays a significant contributing role.

The curtailment of free speech, and silencing of so many people, whether by government compulsion or private sector actions, or at times the sub rosa entwinement of the two, have the effect of shrinking the public space in which matters of legitimate public concern ought to be debated. This silencing only serves to deepen our political and philosophical divisions, especially considering the perceived leftward bias exhibited by dominant Big Tech social media platforms, and at times the mainstream media, exercising their "cancellation" discretion.

For more than two years now, I've been exploring the Cancel Culture, its deleterious impact and ramifications, and various potential means of combatting it, in a series of now nineteen essays, all under the "Thinking Clearly About Speaking Freely" mantle. You can find them all here.

In considering solutions to combat the Cancel Culture, I've explained that many of the proffered "cures," such as giving government more power to combat so-called "misinformation," are much worse than the disease. So, I've often returned to what Madison would call republican virtue, that is a reinvigoration of our Constitutional Culture. For instance, in Part 17, "Combatting Cancel Culture with a Reinvigorated Constitutional Culture," I said this:

"Regardless of whether the First Amendment jurisprudence requires allowing particular speech under a particular set of facts, a greater appreciation of the value of robust debate that impelled the Founders to include the Free Speech Clause in the Constitution should serve to induce greater tolerance for diversity of thought and speech than currently exists."

I know. Easy to say, but hard to achieve in times of bitter divisions.

But no matter how deep the philosophical and political divisions, on this Memorial Day, among men and women of good faith, there should be no disagreement at all about remembering and honoring the fallen who fought and died for our country. While the words were spoken to a particular audience on a particular piece of hallowed ground at a particular moment in time, no one could have expressed what ought to be the true meaning of each Memorial Day more eloquently, or more universally, than President Lincoln did at Gettysburg:

"It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion…."

The cause then, and always, is – by remembering and honoring – to sustain an America that embodies the ideals expressed in the Declaration of Independence and the Constitution.

With that in mind, I wish you and your family the best for a safe, healthy, happy, and meaningful Memorial Day!

PS – My past Memorial Day messages are here: 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, 2007.

 

The Auction Clock Is Ticking - Update

 In a May 24 blog post, "The Auction Clock Is Ticking," I urged Congress to extend the now-expired FCC authority to conduct spectrum auctions in a timely fashion. I said its failure to do so "threatens substantial adverse consequences." I pointed out that, on May 23, in a letter to congressional leadership on communications policy matters, a bipartisan group of 16 former FCC Commissioners, including 6 former permanent FCC Chairmen and two former interim Chairs, urged Congress to restore the FCC’s auction authority, stating that: "On other significant communications policy issues, these former FCC leaders do not always agree. On extending the FCC's auction authority, there is unanimity."

 

Talk about bipartisanship! Yesterday, when the House Commerce Committee adopted, on a 50 – 0 vote, a measure to reinstate the FCC's auction authority through September 2026, the House Commerce Committee members showed the same unanimity that was displayed in the letter from a bipartisan group of 16 former FCC Commissioners.

 

As readers of this space know, I've never been one to tout unanimity, bipartisan or otherwise, just for unanimity's sake, when matters of principle are at stake. But you don't need a Ph.D. degree in political science to appreciate that the display of bipartisan unanimity by House Commerce Committee members and by a large number of former FCC Commissioners, all urging prompt extension of the agency's auction authority, ought to carry substantial weight.

Relatedly, just one example of the deleterious effects of the expiration of the Commission's auction authority is the agency's claimed inability to issue the licenses T-Mobile won in the 2.5 GHz spectrum auction – and for which it paid $304 million. Back on March 23, four former FCC General Counsels explained in a letter to the Commission why, in their view, despite the expiration of the Commission's auction authority, the agency possesses the authority to issue licenses won at an auction conducted when the Commission possessed such authority. They conclude that the Commission’s authority to grant licenses awarded by auction is distinct from the agency's authority to conduct auctions. This too was a bipartisan group of former senior agency officials.

In the meantime, T-Mobile has asked the FCC to grant its request for Special Temporary Authority (STA) to use spectrum in the 2.5 GHz for 180 days.

As I have emphasized many times now, there are adverse consequences to a lapse in the FCC's auction authority, especially as the weeks go by without a renewal. As I said yesterday, "it's past time for Congress to act." Still is.

The Auction Clock Is Ticking

As the purported June 1 deadline approaches, we're all watching the negotiations over the debt ceiling extension to see whether Congress acts in time to avoid a default on the nation's debt. (I understand there are differences of opinion regarding what actually constitutes a "default" and how long one can be avoided. Nevertheless, both President Biden, Speaker McCarthy, and all other politicos agree they want to avoid one.)

While the consequences may not be as grave (at least for now) as a debt default, Congress's failure to renew the now-expired FCC authority to conduct spectrum auctions in a timely fashion threatens substantial adverse consequences. Among these are near-term potential sizable economic losses and a loss of recognized leadership among other nations in spectrum affairs, including the deployment of 5G networks and beyond, that ultimately impact U. S. consumers.

On May 23, a bipartisan group of 16 former FCC Commissioners, including 6 former permanent FCC Chairmen and two former interim Chairs, urged Congress to restore the FCC’s auction authority. On other significant communications policy issues, these former FCC leaders do not always agree. On extending the FCC's auction authority, there is unanimity.

Here is an excerpt from their letter.

"Failure to renew the FCC’s spectrum auction authority augurs troubling consequences. With greenfield spectrum difficult to identify, spectrum auction authority is a critical building block in the complex and time-consuming process to reallocate spectrum to new uses. Auction proceeds can fund government agencies to relocate bands with upgraded systems, helping to maintain U.S. global leadership in the wireless ecosystem. Delay in renewing auction authority risks ceding a global competitive advantage to other countries, particularly China, which has been aggressively making spectrum available for 5G and investing in next-generation wireless technologies to capture global markets. This all at a time when our national security and global economic leadership are increasingly at risk from hostile nations."

That should be enough said. It's past time for Congress to act.

In Early 2023, Fixed Wireless Access Services Are Still Going Strong

On April 24 and 25, T-Mobile and Verizon Wireless released their respective first quarter results for 2023. Once again, both nationwide mobile providers reportedly had strong net subscriber additions to their fixed wireless access (FWA) broadband services.  

T-Mobile reportedly added 523,000 net subscribers to its FWA services. According to a May 17 article in FierceWireless,T-Mobile "has a goal to grow its existing 3.2 million FWA customers to around 7 million to 8 million FWA customers by the end of 2025" and that "it is looking at various options that may allow it to grow beyond that 7 million or 8 million figure."

 

An April 25 article in FierceWireless by Sue Marek states that Verizon "reported 393,000 FWA net adds in the quarter, bringing its total FWA subscriber base to 1.9 million. Of those 393,000 FWA net adds, 137,000 came from the company's Business group." Additionally, an April 25 article in FierceWireless by Diana Goovaerts notes that Verizon "stands to gain 100MHz of additional C-Band spectrum later this year which it plans to deploy in urban areas to benefit FWA and wireless customers who are currently being served with 60MHz of C-Band."

 

With increased access to C-band spectrum, continued expansion of 5G network coverage, and growth of fiber for backhaul support, FWA is likely to be an attractive option for more Americans by the end of the year. And, as observed in a November 1, 2022 blog post, FWA is a particularly attractive option for those residing in areas with geographical terrain that are difficult-to-reach as well as in areas with lower population densities. These benefits of FWA are the subject of my April 2022 Perspectives from FSF Scholars, "Fixed Wireless Access is Boosting Rural Broadband and Consumer Choice." 

 

However, a replenished spectrum pipeline is a necessary condition for realizing the full potential of FWA and for maximizing the competitiveness of the broadband services marketplace. My blog post from March 9 of this year called attention to the lapsing of the FCC's authority to conduct spectrum license auctions. And the Free State Foundation's April 17 public comments to the NTIA urged the timely adoption and implementation of a National Spectrum Strategy that will boost the supply of spectrum for commercial and other private uses, particularly for licensed commercial use. Congress should promptly act to restore the FCC's spectrum auction authority, and the NTIA should act timely in adopting the implementation plan for the long-awaited National Spectrum Strategy.  

Tennessee Is State Number Eight to Pass a Privacy Law

On May 11, 2023, Governor Bill Lee signed the Tennessee Information Protection Act ("TIPA"). The Volunteer State is the third to adopt a comprehensive data privacy statute in 2023 (after Indiana and Iowa) and the eighth overall (joining the Golden State's California Consumer Privacy Act and California Privacy Rights Act and similar-yet-unique laws passed in Virginia, Colorado, Connecticut, and Utah).

As I cautioned in a March 2021 Perspectives from FSF Scholars, multiple, inconsistent state laws inevitably will lead to "[c]ounterproductive consumer confusion, along with unreasonably burdensome and unjustifiably costly compliance obligations." At that time, just two states – California and Virginia – had enacted legislation. Today, with that total rapidly approaching double digits, such concerns exponentially are greater.

Consumer rights established by the TIPA include the right to know that a covered entity is processing personal information; to access, correct, delete, and obtain a copy of that data; and to opt out of the sale of personal information. In addition, a covered entity must disclose, upon request, categorical information regarding personal information that was sold, and obtain a consumer's consent before processing "sensitive data."

Covered entities ("controllers") that share personal information with third parties ("processors") must include certain provisions in their contracts to protect these consumer privacy rights. Controllers also must conduct data protection assessments under certain circumstances (for example, if they engage in targeted advertising, process "sensitive data," or sell personal information).

The TIPA does not create a private right of action. The Attorney General is responsible for enforcing its provisions. Covered entities have 60 days to cure an alleged violation.

Perhaps most notably, the TIPA requires that covered entities "create, maintain, and comply with a written privacy program that reasonably conforms to the National Institute of Standards and Technology (NIST) privacy framework entitled 'A Tool for Improving Privacy through Enterprise Risk Management Version 1.0.'"

The TIPA becomes effective on July 1, 2024.

Solid Reasons to Keep Limits on Government-Owned Broadband Networks

As reported in a May 3 FierceTelecom article, the Governor of Colorado signed a law that eliminated voter approval for local governments to enter the broadband Internet services market and compete against private providers. Apparently, the Colorado legislature was at least partly motivated to make it easier for local governments to obtain grant money through the Broadband, Equity, Access, and Deployment (BEAD) Program to create startup government-owned broadband networks.

But about 15 states have laws that restrict or limit the ability of their local governments to become broadband ISPs. And there are many good reasons for restricting government-owned broadband networks – whether through outright prohibitions, limits on the use of public funds to support such networks, or local referenda requirements. 

 

For starters, operating commercial broadband Internet networks or other commercial business enterprises is outside the traditional scope of government functions, such as police, fire, sanitation, and road maintenance. As a matter of good governance and accountability, it is entirely reasonable for a state to insist that their local government stick to basic functions or that local residents to vote to affirmatively authorize their local governments in engage in non-traditional commercial functions. 

 

A related reason why laws that restrict or limit government-owned networks are reasonable is that local government ownership and operation of broadband networks poses an inherent conflict of interest. In essence, local governments become participants in the markets over which they have regulatory power. There is a real risk that local governments might give preferences to its network over private competitors, including through local permitting processes and fee assessments.

 

Another reason for laws that restrict or limit government-owned networks is they can pose a significant financial risk to local governments and to their residents. The broadband Internet access services market is competitive, with pressure coming from satellite, mobile wireless, fixed wireless, cable, and fiber providers. Running a broadband network requires not only high startup costs but significant ongoing operational expenses. Thus, even a new entrant government-owned network seeded by federal government grants could fast hit financial trouble once it is up and running. Not every market entrant succeeds, and many have lost money and ultimately failed. When a private broadband network provider fails, its owners stand to lose on their investments. But when a government-owned network fails, the local government can incur significant losses, and the public treasury as well as local taxpayers are likely to be tapped to make up for those losses – in the form of reduced services, higher taxes, or both. 

 

The Free State Foundation does not categorically oppose government-owned networks, as there may be unique situations where geographic and demographic challenges make the business case for private market entry all but non-existent. But the federal government is constitutionally obligated to respect states' sovereign control over their local governments, and it cannot usurp that authority via federal preemption. Moreover, government grants should not be spent to fund government network-owned overbuilds in areas that already are served by private providers. 

 

As noted in my May 2022 Perspectives from FSF Scholars, "NTIA's Broadband Subsidies Must Respect State Law Limits on Government-Owned Networks," the agency's Notice of Financial Opportunities (NOFO) does not require states to eliminate any existing legal restrictions on government-owned networks in order for those states to participate in the program. As explained in that Perspectives, the agency's implementation of the BEAD Program "should respect states' decisions about government-owned networks and emphasize that subgrants should ultimately go to the best providers available to connect unserved Americans."

FCC Releases Broadband Funding Map

As required by the Infrastructure Investment and Jobs Act, yesterday the FCC released the Broadband Funding Map, a companion to the National Broadband Map intended to "to provide a locations overview of the overall geographic footprint of each broadband infrastructure deployment project funded by the Federal Government."

However, and as I highlighted in "Wasteful Duplication by Design: A Case Study on Overlapping Federal Broadband Subsidies," a recent Perspectives from FSF Scholars, the Broadband Funding Map's ability to prevent overbuilding and redundant funding is curtailed significantly by conflicting eligibility requirements across subsidy programs – including inconsistent minimum speed thresholds and exclusionary lists of approved distribution technologies – that open the door to duplication.

For the record, the Broadband Funding Map describes the neighborhood in the foothills west of Denver that was the focus of my case study as "Not Funded." Given that many federal funding sources, including the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program, have not yet begun doling out dollars, this perhaps is not surprising.

I intend to revisit the Broadband Funding Map periodically as more funding decisions are made. Stay tuned.

Report: More Licensed Commercial Spectrum Needed to Avoid Looming Deficit

On April 17, CTIA publicly released a report by the Brattle Group, "How Much Licensed Spectrum is Needed to Meet Future Demands for Network Capacity?" This interesting report, which is worth reading in full, presents a scenario regarding macro cellular wireless networks that Congress and federal agencies ought to take very seriously:

We find that if no new spectrum bands are allocated for terrestrial mobile use in the next 5 years, then the U.S. is expected to have a capacity deficit of roughly 10 exabytes per month and a spectrum deficit of roughly 400 megahertz. In ten years, without new mobile spectrum, the capacity deficit will increase to almost 17 exabytes per month and the spectrum deficit will more than triple to approximately 1,400 megahertz.

The Brattle Group's report includes a brief overview analysis of why, in their view, possible technical solutions to reduce or avoid such a spectrum deficit, including Wi-Fi offloading, increased spectral efficiency, and construction of more physical facilities such as towers and small cells will be inadequate means to accommodate growing mobile data traffic demand. Indeed, the report includes the Brattle Group's projection that mobile data traffic in North America will increase from 5,846 petabytes (PB) per month in 2022 to 33,918 PB per month in 2032. 

 

The report's prescription for more commercial licensed spectrum availability is spot on. On the same day of the report's release, the Free State Foundation filed public comments with the NTIA for its Development of a National Spectrum Strategy proceeding. Those comments called attention to the empty spectrum pipeline and called for the repurposing of at least 1,500 MHz of mid-band spectrum for licensed commercial use. 

Cable Mobile Wireless MVNOs Off to Strong Start in 2023

Comcast's Xfinity Mobile and Charter's Spectrum Mobile released their latest quarterly number for subscriber additions, both of which are summed up nicely in a May 1 FierceWireless article by Linda Hardesty:

Comcast added 355,000 net wireless lines in its first quarter 2023. During the same quarter, Charter added a whopping 686,000 Spectrum Mobile lines — an indication that its 12-month Spectrum One bundled promotion is paying off in garnering new subscribers.

Comcast now counts 5.7 million lines for its mobile virtual network operator (MVNO) service, while Charter counts 6 million total lines.

A May 10 FierceWireless article by the same author also calls attention to Spectrum Mobile’s sharing of Wi-Fi networks with Xfinity mobile as well as other Wi-Fi network partners. It is reported that about 85% of Spectrum Mobile’s data traffic is carried on Wi-Fi and the remainder is carried on Verizon Wireless’s cellular network pursuant to an MVNO agreement. And Spectrum Mobile is now beginning to put some of Charter’s CBRS (3.5 GHz) spectrum into use in order to reduce further its dependency on third party-cellular networks.

Although cable wireless MVNO subscribership is still small compared to that of mobile cellular wireless providers such as AT&T, T-Mobile, Verizon, C-Spire, and US Cellular, cable wireless MVNOs offer consumers a strong facilities-based competitive choice for mobile wireless broadband services. The continued growth of cable MVNOs also is a testament to private innovation and investment as well as the importance of making more spectrum available for commercial uses, both on a licensed and on an unlicensed basis. 

 

The competitive state of the broadband marketplace is the subject of my Perspectives from FSF Scholars from January of this year: "The 2022 Communications Marketplace Report: Timely FCC Action Could Accelerate Next-Gen Broadband Deployment."

FCC Set to Vote on Future Spectrum Use in the 12.2 GHz and 12.7 GHz Bands

At its May 18 public hearing, the FCC will be voting on a Report and Order and Further Notice of Proposed Rulemaking regarding use of spectrum in the 12.-12-7 GHz (12.2 GHz) band. The draft Report and Order, if approved by the Commission, would not authorize high-powered terrestrial mobile broadband services to operate in the 12.2 GHz band. The Report and Order cites apparent concerns about significant risk of harmful interference with existing and emergent services that use the 12.2 GHz band, including satellite services, as the basis for that policy conclusion. However, the Report and Order would continue investigation into the potential for terrestrial fixed use or unlicensed use in the 12.2 GHz band.  

The 12.2 GHz item now teed up for the Commission's May 18 public meeting also includes a Notice of Proposed Rulemaking and Order regarding expanded use of the 12.7-13.25 GHz (12.7 GHz) band for mobile broadband or other use. In its draft NPRM and Order, the Commission states:

[W]e propose to repurpose some or all of the 550 megahertz of mid-band spectrum for mobile broadband or other expanded use. The record demonstrates substantial support for repurposing these mid-band frequencies for next-generation wireless technologies including 5G, 5G Advanced, and 6G services that will depend on extremely high data rates, and the reliability, low latency, and capacity that the 12.7 GHz band spectrum can provide.

Without expressing any view on the merits of the Commission's determinations about potential significant harmful signal interference in the 12.2 GHz band or on any specific proposals for future use in the 12.7 GHz band, the Commission's forthcoming vote on the 12.2 GHz and 12.7 GHz bands is important because it is a step toward maximizing use of those valuable mid-band spectrum resources. The NPRM and Order on the 12.7 GHz rightly recognizes the significance of mid-band spectrum for the future of commercial wireless services in the U.S. And with the 12.2 GHz/12.7 GHz item scheduled for a vote on May 18, Commission appears to making a good faith effort to fulfill its public trust to promote valuable use of spectrum. 

Sixth Circuit Denies Nondelegation Challenges to USF Regime

On May 4, the U.S. Court of Appeals for the Sixth Circuit rejected nondelegation and private nondelegation challenges to Section 254 of the Communications Act. In Consumers' Research v. FCC, a three-judge panel for the Sixth Circuit held unanimously that the statutory framework regarding universal service that Congress provided the FCC in Section 254 "contains an intelligible principle because it offers nuanced guidance and delimited discretion to the FCC." Additionally, the court held that "[b]ecause of the [Universal Service Administrative Company's] subordination to the FCC and its assistance with fact gathering and ministerial support, there is no private non-delegation doctrine violation."

A similar legal defeat regarding nondelegation challenges to the administrative mechanism for funding universal service took place in the Fifth Circuit on March 24 of this year. Apparently, the decision in the Fifth Circuit is the subject of a pending petition for en banc review by the entire Fifth Circuit. Another case raising nondelegation challenges to Section 254 is still pending in the Eleventh Circuit. 

Seven States and Counting: Indiana Passes Privacy Law

Activity at the state level continues to complicate further the overall privacy landscape. On May 1st, Indiana Governor Eric Holcomb signed into law Senate Bill 5 (S.B. 5), the Indiana Consumer Data Privacy Act (ICDPA). Indiana is the second state to pass a comprehensive data privacy law in 2023 (Iowa was the first, as I noted in a recent post to the Free State Foundation blog) and the seventh overall (after California, not once but twice, Virginia, Colorado, Connecticut, Utah, and the aforementioned Iowa).

Meanwhile, Montana and Tennessee could follow quickly: bills in both states have made it to their respective governor's desks.

Uniquely, and apparently to provide an opportunity to learn how similar (but by no means identical) statutes in other states fare, the ICDPA will not go into effect until July 1, 2026. (Currently, only the laws enacted in California and Virginia are in force. The big day in Colorado and Connecticut is July 1st of this year, in Utah it is December 31st, and in Iowa it is January 1, 2025.)

Based largely (though, again, not entirely) on the Virginia Consumer Data Protection Act, the ICDPA creates several consumer rights: to know, to access, to correct, to delete, and to port data, as well as the ability to opt out of its processing/sale.

And it requires businesses, among other things, to provide a privacy notice and other disclosures, to obtain affirmative consent before processing "sensitive personal data," to conduct data protection impact assessments, and to enter binding contracts with third-party data processors to ensure that they, too, respect consumer privacy rights.

The ICDPA will be enforced exclusively by the Indiana attorney general. (It does not establish a private right of action.) In addition, it provides businesses with a 30-day cure period.

At the federal level, the House Committee on Energy & Commerce's Innovation, Data, and Commerce Subcommittee held a hearing on April 27th titled "Addressing America's Data Privacy Shortfalls: How a National Standard Fills Gaps to Protect Americans' Personal Information." It was the sixth Committee hearing on the topic of privacy thus far this legislative session.

In a joint statement, Committee Chair Cathy McMorris Rodgers (R – WA) and Subcommittee Chair Gus Bilirakis (R – FL) wrote that "[t]he Energy and Commerce Committee is building momentum this Congress towards enacting comprehensive national privacy and data security legislation."

Fittingly, in his opening statement, Subcommittee Chair Bilirakis acknowledged that the data privacy picture "only gets more complicated as fifty different states move towards their own data privacy laws, meaning an increasingly complicated and confusing landscape for consumers and for business."

Preemption Bill on Government-Owned Networks Rests on Shaky Legal Ground

On April 19, Sen. Cory Booker introduced in the U.S. Senate a bill called the Community Broadband Act of 2023 – S.1197. A House version of the Act – H.R. 2552 – previously was introduced in the 118th Congress, and was on the agenda for an April 19 hearing held by the House Communications & Technology Subcommittee. The legislation, if passed by Congress, would amend Section 706 of the Telecommunications Act of 1996 to prohibit state laws, regulations or other legal requirements that would prohibit state or local governments from entering into the broadband Internet access services market as a competitor against private market providers. 

A serious objection to government-owned broadband networks is the danger of local governments using their powers to favor their own networks above competing private market providers, including through permitting processes and setting fees. The Community Broadband Act appears to perceive this objection, but includes a provision that prohibits a local government from applying its laws and rules in a way that discriminates in favor of itself or of any provider that it owns. 

However, even if that provision alleviates that serious objection to government-owned broadband networks, there is another serious objection, based on the U.S. Constitution. While it almost certainly is permissible for Congress to forbid state and local governments from discriminating in favor of government-owned networks and against private networks, the Community Broadband Act isn't merely a bill that would regulate interstate commerce. Indeed, the bill necessarily would impermissibly regulate states as states. Decisions about whether or not to enter the broadband market as a provider as well as decisions about where and under what conditions to provide service necessarily are decisions about state governance, and structural federalism principles forbid Congress from interfering with those decisions. 

A February 2014 Perspectives from FSF Scholars, "FCC Preemption of State Bans on Municipal Broadband Networks is Most Likely Unlawful," and the Free State Foundation's August 2014 public comments filed with the FCC in its government-owned networks preemption proceeding make the case for why federal agency preemption of state law limits on government-owned network operations fails as a matter of constitutional law. Ultimately, the U.S. Court of Appeals for the Sixth Circuit vacated the Commission's preemption order in Tennessee v. FCC (2016). The same constitutional principles underlying that decision's interpretation of Section 706 also prohibit Congress from expressly preempting state law limits on whether, where, and under what conditions their local governments may enter into the broadband Internet access services business. 

Aside from government favoritism and structural constitutional issues, there are other serious policy objections to government-owned networks. But here it is enough to say that constitutional problems with federal preemption of state laws limiting market entry by government-owned broadband networks cannot be cured by non-discrimination provisions. Congress should not pass the Community Broadband Act of 2023. 

Supreme Court Puts the Chevron Doctrine on a Death Watch

Yesterday, May 1, the Supreme Court, granting certiorari in Loper Bright Enterprises v. Raimondo, decided to consider overruling the decision that established the Chevron deference doctrine. In essence, Chevron requires that federal courts defer to reasonable interpretations of ambiguous federal laws. In reaction, Free State Foundation President Randolph May issued the following statement:

 

"For over a decade, I have suggested that the Chevron doctrine is in tension with fundamental separation of powers principles. Now, the Supreme Court has agreed to consider overruling Chevron “or at least clarify” that agency interpretations are not entitled to deference in some instances of “statutory silence." With a Court majority that is more attuned – and devoted to – foundational separation of powers principles, the Supreme Court's coming reconsideration of Chevron is welcome.

 

I do not mean to suggest that overruling Chevron should be considered a slam dunk, or that doing so will be without consequences for both Congress and the administrative state. While in theory, and occasionally in practice, the Chevron deference doctrine operated to affirm 'deregulatory' as well as 'regulatory' interpretations of the agency authority, in the real world of the administrative state, overall, more often than not, the doctrine led to judicial affirmance of agency decisions that expanded the boundaries of an agency's authority.

 

So, if Chevron is overturned or even narrowed meaningfully, one consequence is likely to be curbing the power of the administrative state. The other is that it may force Congress to take more responsibility for writing laws that more specifically delimit agency actions – that is, to write less ambiguous laws. Because Members of Congress, as elected representatives of the people, are directly accountable to the people in a way that unelected administrative agency officials are not, this increased political accountability comports with separation of power principles. [NOTE: The Supreme Court has already taken an important step in this direction with the adoption of the Major Questions Doctrine in West Virginia v. EPA (2022).]

 

Under our Constitution, in our tripartite system of separated powers, there will always be tensions among the three branches – Congress, the Executive, and the Judiciary – and legitimate questions regarding the extent of their respective powers. But as Chief Justice John Marshall proclaimed in the landmark case of Marbury v. Madison (1803): "It is emphatically the duty of the Judicial Department to say what the law is."

 

In a law review article published this year, NFIB v. OSHA: A Unified Separation of Powers Doctrine and Chevron's No Show, I concluded (with co-author Andrew Magloughlin) that Chevron "is on the verge of falling from grace in one way or the other." I suspect that the Supreme Court will overturn, or at least substantially curtail, the Chevron deference doctrine, and that when it does, Chief Justice Marshall's admonition, now over two centuries old, will play a prominent role in further reviving fundamental separation of powers principles."

 

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Mr. May is a past Chair of the American Bar Association’s Section of Administrative Law and Regulatory Practice. He is a Fellow of the National Academy of Public Administration. Mr. May also has served as a Public Member of the Administrative Conference of the United States and currently is a Senior Fellow at ACUS. He has served as Associate General Counsel of the Federal Communications Commission. 

 

For decades, he has published extensively on administrative law, including the Chevron doctrine and the Major Questions doctrine. For background pertinent to the Chevron doctrine, see these law review articles:

 

Randolph J. May, NFIB. OSHA: A Unified Separation of Powers Doctrine and Chevron's No Show, South Carolina Law Review, Vol. 74, No. 2 (2022) (with Andrew K. Magloughlin)

 

Randolph J. May, Defining Deference Down, Again: Independent Agencies, Chevron Deference, and Fox, Vol. 58, No. 2 (2006)

 

Randolph J. May, Defining Deference Down: Independent Agencies and Chevron Deference, Vol. 58, No. 2 (2006)