The FCC’s dramatic 2015 pivot on Internet regulation sought to envelope advanced broadband networks in the shroud of telephone company rules rolled out in the Mann Elkins Act of 1910. These historic common carriage “Title II” regulations – originally the province of the Interstate Commerce Commission, long ago antiquated and finally abolished in 1995 — were cited as exemplars by the Commission in last year’s Open Internet Order. Continue reading
Wheeler: Net May Be at Regulatory Inflection Point
Asks Whether ‘Terminating Monopolies’ Hold Key To Letting Startups Scale Up
By John Eggerton
FCC chairman Tom Wheeler has at least raised the possibility that the Internet economy is at an “inflection point” at which the government needs to step in to insure the continuing ability of innovative startups to scale up at the pace of high-speed broadband. Continue reading
Thomas Hazlett was interviewed by Virginia Business Magazine in an article by Richard Foster analyzing the Netflix/Comcast deal and the ramifications for the so called “open internet.” Critics have said the the deal will lead to an end to the era of open internet and will lead to higher costs for consumers as well as discrimination between websites. Dr. Hazlett argues that the change will be much less dramatic because the notion of an open internet is a mischaracterization of how the internet has always operated. In fact, this discrimination between different types of network traffic is beneficial to consumers, who value speed in services such as voice-over-internet more highly than in email.
The full article can be read here.
The Daily Beast’s Nick Gillespie wrote an article entitled “The FCC Must Ignore the Silly ‘Net Neutrality’ Advocates.” In it, Gillespie explains why the dire consequences predicted by net neutrality proponents are exaggerations. The article contains several quotes from Dr. Hazlett’s papers and interviews, both about the FCC’s ability to regulate generally and the fallacy of net neutrality regulation in specific.
The article can be read here.
The IEP conference from April 25th, Spectrum After Incentive Auctions, was covered in TR Daily by Paul Kirby. The entire text of the article appears below:
EXPERTS DEBATE WAYS TO IMPROVE GOVERNMENT SPECTRUM MANAGEMENT
TRDaily – April 25, 2014
Experts today debated ways the federal government could improve its management of spectrum, including providing more property rights over frequencies, imposing spectrum fees on government agencies, and allowing a new agency or independent entity to oversee the process.
The ideas were aired at a morning event sponsored by the Information Economy Project, which is currently a joint initiative of the George Mason University School of Law and Clemson University.
Blair Levin, a communications and society fellow at the Aspen Institute who led the FCC initiative that drafted the 2010 national broadband plan (NBP), spoke in favor of putting an agency similar to the General Services Administration in charge of all federal spectrum and imposing fees on agencies for their use. Over time, the amount of spectrum agencies use would be reduced, he said.
Mr. Levin discussed issues touched on in a white paper released recently by the House communications and technology subcommittee (TRDaily, April 1).
For example, he said, proposals to allow federal agencies to share revenues from auctions of spectrum they give up – similar to an incentive auction for those agencies – is not “a bad idea,” but he questioned whether it would succeed because agencies would know that Congress could rescind the benefit in the future. He also suggested that “sticks work far better than carrots” when it comes to federal agencies.
He said he opposed making auction revenues an explicit consideration in FCC auction design, saying it is “really bad policy.” He said such a policy would provide the FCC an incentive to “maximize scarcity value” in order “to maximize revenue.” He also said that “such a rule is an invitation to litigation,” which would delay auctions.
Richard Bennett, a visiting fellow at the American Enterprise Institute, proposed the creation of a Federal Spectrum Service, which would be an independent corporation like the U.S. Postal Service that would hold the licenses for federal spectrum. Under his proposal, federal agencies would be required to reduce their spectrum footprint within five years, while allowing agencies to expand “their mission” through newer technology. The spectrum given up could be used “for more productive uses,” Mr. Bennett said.
Michael Marcus, a consultant and former FCC official, complained that the Commission takes too long to make decisions in complicated proceedings. He said the FCC and the National Telecommunications and Information Administration should establish new technical advisory committees, and he said the Commission should create a new board to work on spectrum issues that are not controversial.
Tom Hazlett, the director of the Information Economy Project who is joining Clemson as an economics professor, said that the FCC should rely on a liberal licensing model for spectrum, which he said “can accommodate great change in the marketplace,” rather than making command-and-control decisions about whether particular bands should be licensed or unlicensed.
Harold Furchtgott-Roth, a senior fellow at the Hudson Institute and a former FCC Commissioner, suggested that wireless carriers may be hesitant to bid on AWS (advanced wireless services)-3 spectrum in the 1755-1780 megahertz and 1695-1710 MHz bands because of “rather vague and undefined concepts” on how they will coexist with federal government incumbents. A key question is how interference problems will be addressed, he said, adding, “I think the answer is no one knows.”
“I think private companies will bid, but I don’t think they’re going to bid an awful lot for that,” he added.
In the incentive auction, he said that carriers would be unwilling to invest too much unless the FCC reaches coordination agreements with Mexico and Canada – accords that he said should be agreed to before the sale.
Robert Kaminski, an analyst at Capital Alpha Partners, reviewed spectrum that the FCC has made available since release of its NBP and suggested that it will likely fall short of the goal of making an additional 300 MHz of licensed spectrum available by next year. He said the amount of licensed spectrum will likely only total between 145 MHz and 197 MHz, “under more optimistic scenarios.” Regarding the incentive auction, he predicted that the Commission would only be able to repurpose spectrum in the “low double digits” rather than the Commission’s original goal of 120 MHz.
However, Mr. Kaminski noted that unlicensed spectrum in the 5 gigahertz band and shared frequencies in the 3.5 GHz band would easily get the FCC past the 300 MHz band total.
But Tom Hazlett noted that in the NBP, the FCC detailed 300 MHz of licensed spectrum. As a result, he said, including unlicensed frequencies “is not apples to apples.”
Mr. Kaminski also said that beyond the planned AWS-3 and incentive auctions, there “is no real clear line of sight to more auctions.”- Paul Kirby, firstname.lastname@example.org
Reprinted with permission of TRDaily
IEP Scholar Brent Skorup penned an op-ed on the net neutrality debate. In it, he examines the origins of net neutrality, specifically the first violator of the FCC’s net neutrality rules. The FCC forced a small wireless carrier to abandon their two tier pricing scheme that was offered to their customers as a means to offer a more basic service for those who couldn’t pay the high price required for a 4G LTE plan. Skorup examines how the FCC’s rigid net neutrality plan penalized a small wireless carrier for its efforts to meet the demands of all their customers.
The full op-ed can be read at Real Clear Markets.
Econ Focus, the economics magazine of the Federal Reserve Bank of Richmond, wrote an article on the state of the FCC’s spectrum auction process. In it, Thomas Hazlett is quoted detailing the difficulties the FCC has encountered in facilitating the auction due to the rigid nature of spectrum rights under the current system. He concludes that the FCC has taken some positive steps in creating flexible-use licenses, but further steps must be taken.
The article can be found here.
Research by IEP scholars Thomas Hazlett, Roberto Munoz and Diego Avanzini is now central to the debate over spectrum allocation in Thailand. A dissenting regulator, objecting to delays in the auction of 3G licenses, has used this research to estimate social losses from lack of spectrum availability. Incredibly, she is now being sued for libel by her agency.
IEP held a successful conference on the state of broadcast television called “Daddy, What’s a Broadcast Television Network?” The keynote address was given by Preston Padden, former FOX and ABC executive, and current executive director of the Expanding Opportunities for Broadcasters Coalition. The speech was covered by several media sources, including Multichannel News, TV News Check, and TR Daily (subscription required).
News coverage has focused on Mr. Padden’s push for broadcasters to sell their unused spectrum at auction rather than leasing their spectrum to wireless carriers under a long term annuity agreement. Mr Padden argued that leasing spectrum is risky and highly speculative compared to the lump sum payout that could be received at auction.
The conference also included panel on Retrans, Must-Carry, and Broadcast Video in the Internet Age with Mark Fratrik of BIA Kelsey, Matthew Spitzer of Northwestern University Law School, and Thomas Nachbar of the University of Virginia School of Law. James Grimmelmann of the University of Maryland and Steve Effros of Effros Communications paneled a discussion on Aero TV.
A full video of the conference can be found here.
IEP’s Brent Skorup recently had an op-ed piece published by the leading political newspaper The Hill. In the op-ed, entitled “The Spectrum Crisis is Upon Us,” Skorup identifies the excessive allocation of spectrum to federal government agencies, where such spectrum has been not used efficiently, as contributing to the current “spectrum crunch.” Skorup posits a few strategies for reallocating the misused spectrum to the private market. Skorup advocates for the current legislative efforts to “BRAC the spectrum,” a phrase referencing the Base Realignment and Closure Program that successfully closed underused hundreds of military bases. Additionally, Skorup suggests that creating a GSA-like agency to facilitate more efficient government use of spectrum could also serve as a viable method of freeing more spectrum for private use.