Panelists Take on Intermodal Competition in FSF Conference Transcript

The edited transcript of the FSF Fifth Annual Conference panel on "The Right Regulatory Approaches to Wireless and Wireline Broadband Providers" is now available online.

Discussion in this panel touched on such subjects as the place of the U.S. in international broadband rankings, the IP transition, universal service reform, and the role of state regulators in the broadband era. 

Not to be overlooked are the insights offered by then-Commissioner Robert McDowell regarding wireless and intermodal competition:

If I think back to 10 years ago, exactly right now, I was in the throes of the debate over the unbundled network element platform, "UNE-P," as we called it. That was all about trying to bring residential voice competition to wireline services. The best and the brightest on both sides of that debate did not foresee – did not foresee – the rise of cable telephony or the rise of wireless as a substitute.

That whole concept of wireless substitution was laughed at. It was said: "The quality of wireless isn't any good. Or calls get dropped. And there's not enough build-up in residential areas, not good enough reception. People are never going to substitute – never going to substitute – wireline for wireless or have wireless as a substitute for wireline."  
Now, more than a third of all U.S. households are 30 wireless-only. That's evidenced by a lot of what's pointed out in AT&T's petition. But 10 years ago, nobody saw the rise in rise in wireless competition happening. If you're patient as a regulator, or as a member of Congress, the markets will find a work-around. 

...Consumers are telling us that wireless broadband is a substitute – not in every case, not for every market. But it is a substitute. The fastest growing segment of the broadband market is wireless, with the vast majority of consumers having a choice of at least four wireless broadband providers. And that number will increase as we see the build-out of LTE continue. If LTE continues to spike it will be game changing, as we will get broadband in the car and things like that. We don't know what's coming over the horizon. And the last thing we want is the government to preempt or nip in the bud the innovation coming over the horizon. 

In my Perspectives from FSF Scholars paper, "Convergent Market Calls for Serious Intermodal Competition Assessments," I urged the FCC to look more closely to the effects of wireless substitution and cross-platform competition. An informed regulatory policy demands no less. To be sure, the FCC has opportunity to include a more detailed assessment of intermodal competition in its next Wireless Competition Report. And it should do so.

Panel Proposes Ideas for Communications Law and Policy Reform in 2013

FSF has now released the expert panel transcript from the "Ideas for Communications Law and Policy Reform in 2013" seminar. 

The panel was moderated by FSF President Randolph May. Experts on the panel included Robert Atkinson of the Information Technology & Innovation Foundation, James Gattuso of The Heritage Foundation, David Honig of the Minority Media & Telecommunications Council, and Adam Thierer of the Mercatus Center.   

As I mentioned in an October blog post, YouTube videos of the proceedings are available through FSF's YouTube page. 

The seminar began with a conversation between FSF President Randolph May and FCC Commissioner Robert McDowell. That transcript is also available.

WCIT 2012: Observations and Lessons

With the opening of WCIT 2012 today, presumably the U.S. delegation (and interested U.S. parties) are safely ensconced in Dubai and ready for action. Readers of this space know that WCIT is the acronym for the World Conference on International Communications convened by the International Telecommunications Union, an organization with 193 member countries established under the auspices of the United Nations. 

In the past couple of weeks, much has been written about the possible perils to the Internet posed by proposals put forward by some countries. These perils include proposed changes to the Internet's prevailing mode of governance, along with forced changes to its existing technical operations and economic arrangements. And they include proposed changes that would diminish the Internet's utility as a platform for the free exchange of information. Because the potential threats are real, and because some proposals, if adopted, would fundamentally alter the character and working of the Internet, it is understandable that alarm bells have been ringing. 

Indeed, the Free State Foundation held a seminar at the National Press Club back on May 30 to address the potential adverse impacts from the WCIT 2012 conference. We were pleased to have FCC Commissioner Robert McDowell and Richard Beaird, Senior Deputy United States Coordinator for International Communications and Information Policy at the Department of State, as speakers, along with other notables. We also were pleased that C-SPAN appreciated that the seminar was important enough to be broadcast live. You can find the C-SPAN video here. And a complete transcript of the proceedings is here. 

I don't want to repeat at any length the various points made by many of my think tank colleagues and others over the past few weeks, but rather offer a few observations to highlight certain points, especially points that translate into lessons that ought to be instructive going forward. 

First, having in mind the various proposals that have raised concerns – ranging from proposals to amend the ITU international telecommunications regulations to give sanction to outright government censorship of free expression on the Net to others that would sanction new forms of economic and/or technical Internet regulation, it is important not to lose sight of this central point: What is at stake is the continued existence of the current bottoms-up, privatized, multi-stakeholder Internet governance model as opposed to one featuring top-down government controls. In this regard, recall that the proposals to be offered at the WCIT are to amend the "international telecommunications regulations" adopted in1988 when generally monopolistic telecommunications services were offered, at least in most countries around the world, under stringent regulatory controls. 

Second, FCC Commissioner Robert McDowell, who more than anyone else early on sounded alarms concerning the potential for WCIT mischief, points out, correctly, that proposals in international forums to abandon the current multi-stakeholder Internet governance model are likely to be ongoing. So, when the U.S. delegation heads home after Dubai, hopefully with a successful result, there will be no reason to celebrate any "final victories." Continued vigilance will be required.  

Third, the broad bipartisan support for the U.S. position opposing proposals inconsistent with the current privatized, multi-stakeholder model has been commendable – not only commendable, but important in strengthening the United States' bargaining position. All FCC commissioners, regardless of party, oppose changes to the ITU regulations that would sanction increased government control of the Internet. Both the House of Representatives and a Senate panel unanimously adopted resolutions expressing support for maintaining the current governance model and urging a hands-off ITU regulatory policy. 

In today's dynamic, competitive communications marketplace, this broad bipartisan support opposing WCIT-sanctioned control of Internet providers ought to translate into a shared commitment by our U.S. policymakers that, absent market failure and demonstrable consumer harm, Internet providers should not be subject to government-imposed common carrier-like regulations. This means they should not be subject to FCC net neutrality mandates that resemble legacy regulations applied to last century's common carriers a la the ITU's international telecommunications regulations. It was the Clinton Administration that forcefully articulated this deregulatory position in a White Paper as the Internet developed in the 1990s, and it deserves much credit for doing so. If the U.S. is going to lead the fight for a deregulatory Internet governance model around the world, it should make sure it leads by example here at home. 

I have no doubt that the U.S. delegation in Dubai will work hard to preserve the privatized, multi-stakeholder Internet governance model by opposing changes to the ITU telecommunications regulations that would give international sanction to top-down government control of the Internet or that would give official sanction to government censorship of free expression. 

We should commit to working equally hard here at home to do the same.

     

Ideas for Communications Law and Policy Reform for 2013

Videos are now available for Free State Foundation's October 18 lunch seminar at the National Press Club. The event focused on ideas for reforming communications law and policy in the year to come.

The event kicked off with a conversation between FCC Commissioner Robert McDowell and Free State Foundation President Randolph May. The video for that conversation can be found online here:

The event also included an expert panel discussion, the video for which can be found here:

The panel featured Information Technology and Innovation Foundation's (ITIF) Robert Atkinson, Heritage Foundation's James Gattuso, and Minority Media & Telecommunications Council's David Honig. Mercatus Center's Adam Thierer, another panel participant, has posted an outline of his main remarks at Technology Liberation Front in a blog titled "Getting Communications & Media Reform Done Right Once and For All."

Changing the FCC's Analog-Era Mindset

There is almost certainly not a marketplace in the United States today that is as dynamic and rapidly evolving as the communications and information services sector. The reason for this, of course, is that the transition from narrowband to broadband services, from analog to digital technologies, and from monopolistic to competitive market structures, has been well underway for over a decade now.

Despite the FCC's recently acquired reticence to pronounce various market segments "competitive," the evidence nevertheless is strong that the broadband, wireless, and video markets are effectively competitive. It appears the agency's newfound reticence has more to do with wanting to justify the preservation of its regulatory domain than with performing fact-driven competitive market evaluations.

And, make no mistake, the FCC's specific regulatory actions – indeed its overall regulatory posture – matters. No doubt consumers should be protected from abusive practices in the face of demonstrable market failure. But absent market failure, marketplace competition will protect consumers better than the FCC's brand of regulation, which very often is unnecessarily broad, overly anticipatory in reach, and unduly rigid in application.

Stated simply, when the FCC over-regulates and unnecessarily intervenes in the marketplace, investment and innovation are dampened, market structures and business models are frozen in place, competitive entry is discouraged – all with the effect of impeding the completion of the transition to all-IP networks for all.

This is not to say that the Commission, even in recent years, has not taken some welcome deregulatory steps, such as beginning to implement meaningful Universal Service Reform, allowing the partial expiration of the ban on exclusive contracts for satellite programming between any cable operator and any cable-affiliated programming vendor in areas served by a cable operator, or forbearing from enforcing the prohibition on mergers between cable operators and competitive local exchange carriers.

When the Commission has taken such market-oriented actions, I have been happy to applaud them and give the agency, and Chairman Genachowski, due credit. But the reality is that they have been the exception and not the norm.

The norm has been too much regulation in an era of ever increasing competition. The adoption of new Internet regulation in the form of net neutrality mandates is but one example, albeit an important one. Another example is the deleterious practice of routinely engaging in "regulation-by-condition" in the context of reviewing proposed mergers.

To some (lesser) extent, and at some (slower) pace, the digital revolution likely will continue to bring more competition, more consumer choice, and more innovative products at lower prices, even in the face of Commission over-regulation. But surely the extent and the pace of the revolution matters. More investment and innovation, more competition and consumer choice – all more quickly – is better for consumers and for the country.

Here's the crux of the matter. The FCC largely still operates as if it is in the grip of an analog-era regulatory mindset in which the default presumption is the existence of static, monopolistic markets. This analog-era mindset has an air of unreality about it.

Regardless of who wins the coming election, this mindset should change in 2013. A digital-era mindset would find ways to account for a presumption of dynamic, competitive markets. (No reason why it can't change in the last months of 2012, of course.)

To that end, I hope you'll be able to join us for this Thursday's (October 18) Free State Foundation luncheon event at the National Press Club that begins at 11:45 AM. The program is entitled, "Ideas for Communications Law and Policy Reform in 2013." FCC Commissioner Robert McDowell and I will lead off the session with what I'm sure will be a lively, thought-provoking conversation. This will be followed by a free-wheeling panel discussion by four of the nation's leading experts on communications law and policy. Details concerning the program and a registration link are in the sidebar to the right, and you must register to attend because space is limited.

At the forum, we'll discuss both process and substance reforms. Regarding the latter, we will address topics such as reforming the forbearance relief process and the way the agency performs competitive assessments, reforming the transaction review process, revising spectrum policy to relieve the spectrum crunch, completing USF reform, and more. Of course, with a growing sense that the Communications Act needs to be substantially revised, we'll discuss policy reforms that can only be accomplished by Congress.

Please tweet your ideas at: fsfOct18ideasforum. And keep the discussion going on Twitter during and after the event.

Finally, I'll have more to say about this in the near future, but you will be the first to know! The Free State Foundation's latest book, "Communications Law and Policy in the Digital Age: The Next Five Years," will be in print and available in a week. In the book, some of the nation’s most eminent scholars explain why communications law and policy should be changed in response to the profound marketplace transitions taking place. And, as importantly, the contributors explain how law and policy should be changed. In addition to myself, the contributors, all recognized experts on the subjects they address, are: Representative Marsha Blackburn, Michelle Connolly, Seth Cooper, Ellen Goodman, Daniel Lyons, Bruce Owen, James Speta, and Christopher Yoo.

While the book is available on Amazon, Barnes & Noble, and at other outlets, Carolina Academic Press, the book's esteemed publisher, is now offering a 20% discount for orders using the special discount code on this CAP promotional flyer.       

Internet Freedom, At Home and Abroad

As regular readers of this space know, since its founding in 2006, the Free State Foundation has played a leading role advocating for an Internet environment here in the United States free from government control and regulation. Thus, we have opposed imposition of "net neutrality" mandates by the FCC and other forms of government regulation that have the effect of restricting the freedom of Internet service providers to respond to the needs of consumers and the demands of a constantly evolving Internet ecosystem.

While most of our focus has been on U.S. domestic policies, the Internet, of course, is an interconnected "network of networks" that spans the globe. The Mona Lisa in the Louvre is just a click away. And you can easily have a video conversation via Skype with your third cousin halfway around the world, or with political dissidents fighting for freedom, and perhaps their lives, in a faraway repressive regime. No one today needs any more examples of the international nature of the Internet. You can quickly come up with hundreds on your own.

But there are challenges looming from abroad that could impact the functioning of the Internet as we know it today, including the communication of the free flow of ideas that generally prevails across the Net. Most immediately, proposals may be put forward by several countries at the World Conference on International Communications (WCIT) 2012, to be held this December in Dubai. These proposals, if adopted, would fundamentally alter the existing privatized, multi-stakeholder governance model that characterizes the Internet and under which the Net has flourished.

The WCIT conference will be convened by the International Telecommunications Union (ITU), which itself is an organization operated under the auspices of the United Nations. This December's WCIT conference will be considering changes to international telecommunications regulations that were adopted by the ITU in 1988 - well before the development of the Internet as we know it today.

The 1988 ITU regulations represented a liberalization in some respects of prior international regulations. But they nevertheless generally treated telecommunications services, consistent with the then-prevailing generally monopolistic telecom environment, as subject to government regulation or outright government control. Fortunately, as the Internet grew in the 1990s, it did so outside of this framework of international inter-government control. Instead, the modern Internet has been "governed" by a "bottoms up" multi-stakeholder approach under which interested parties from various industry sectors, public interest groups, engineering societies, and the like collaborate in various private forums and associations to adopt the technical standards and other policies that keep the Internet functioning well.

The Clinton Administration deserves credit for playing a central role in implementing this multi-stakeholder privatization model that became the existing Internet governance model. Its "Framework for Global Electronic Commerce," issued in 1997, declared: 

"Though government played a role in financing the initial development of the Internet, its expansion has been driven primarily by the private sector. For electronic commerce to flourish, the private sector must continue to lead. Innovation, expanded services, broader participation, and lower prices will arise in a market-driven arena, not in an environment that operates as a regulated industry. Accordingly, governments should encourage industry self-regulation wherever appropriate and support the efforts of private sector organizations to develop mechanisms to facilitate the successful operation of the Internet."

This self-regulatory, multi-stakeholder model has worked - marvelously.

Internet statistics are dizzying, of course, and one could go on and on. Just this much here: There are now 2.2 billion Internet users across the globe, an increase of over 500% over the past decade. At the end of March 2012, there were 900 million Facebook users, over 80% of whom are outside of the U.S. and Canada.

But now there are some countries around the world, especially less developed ones, which are likely to try to use the upcoming WCIT conference to adopt new regulations that would give the ITU and their governments control over elements of the Internet. This control might include regulation of rates, supervision of the assignment of Internet domain names, and even adoption of policies concerning the types of speech that would be deemed "acceptable" on the Net.

FCC Commissioner Robert McDowell has performed a service in sounding early warnings about the threats that may arise at the WCIT conference. Here is his op-ed, "The U.N. Threat to Internet Freedom," published on February 21 in the Wall Street Journal. His piece, which discusses the issues in more detail, should be widely read.

And you'll be able to hear Commissioner McDowell discuss the challenges to Internet freedom posed by the WCIT conference at the Free State Foundation's lunch seminar next Wednesday, May 30, at the National Press Club. As you can see from the sidebar at the right, we have an outstanding lineup of speakers, including the State Department's international communications expert, Richard Beaird.

Sure, the Internet is not a panacea for solving all the world's problems. And I understand that, depending on circumstances, the Net may even make it easier for those who wish to cause trouble or commit crimes to do so. But there is no doubt that, overall, the continued development of the Internet, and the continued increase in the number of people who are "online," connected with people around the corner and around the world, contributes positively to the promotion of human freedom and prosperity.

That's why it is important the Internet not be given over to inter-governmental supervision or control through action at the International Telecommunications Union, or through the actions of any other international body.

If you wish to join us at FSF's May 30 seminar addressing these issues, you must RSVP to Kathee Baker at kbaker@freestatefoundation.org