Commissioner Clyburn: The FCC does not care about Minorities

Posted April 27th, 2010 in Broadband, FCC, Government Regulation and tagged , by Alton Drew

FCC commissioner Mignon Clyburn raised concerns last week about the FCC’s failure to put a mechanism in place that would have given minority firms the chance to compete for assets divested by Verizon Wireless. She believes that right now the FCC is just giving lip service to minority entrants in the wireless space.

No. Really? I’m not saying that the FCC should be giving handouts but this FCC hardly knows anything about competition and appears to be shirking its role as a regulator which should primarily be to ensure competition on a level playing field. It may be time for Clyburn to start playing odd-man out and play both sides of the political fence to make some real inroads as opposed to merely touting the liberal pie-in-the-sky rhetoric.

Does the FCC want to risk its Credibility on Appeal

Posted April 9th, 2010 in Broadband, FCC, Government Regulation and tagged , , by Alton Drew

So, we’re saying that in Brand X Internet Services, the FCC successfully argued before the U.S. Supreme Court that cable modem service is an information service because consumers primarily perceived cable modem service as a way to access the internet versus making phone calls. Now the FCC is prepared to argue that they got it wrong?

With this type of back and forth interpretation of the Communications Act, the FCC runs the risk of not only plunging an ax into its own back but into the backs of consumers its allegedly trying to protect. Sorry Free Press, but the FCC had it right the first time in its 2002 Cable Modem order. The court said it back in 2005 and said it now that cable modem service is not subject to the egregious regulations of net neutrality and that, fortunately, is still the law of the land.

The Court’s Net Neutrality Decision was the Right One

Posted April 8th, 2010 in Broadband, FCC, Government Regulation and tagged , , , , by Alton Drew

Free Press, as expected, railed against yesterday’s court decision that found the FCC has no authority to regulate Comcast’s network management practices. The decision ultimately means that consumers, especially minorities who have yet to adopt broadband, will not face the tremendous increases in rates a net neutrality policy would have assuredly brought about.

The FCC just might try to reclassify Internet services as a common carrier service. I wonder though. Has anyone bothered to ask why they didn’t take this allegedly reasonable course in the first place?

Analysis and commentary: net neutrality not dead… yet

Posted April 7th, 2010 in Broadband, FCC, Government Regulation and tagged , , by Alton Drew

The United States Court of Appeals-D.C. Circuit yesterday held that the Federal Communications Commission has no regulatory authority over the network management practices of Internet service providers. The FCC, according to the court, relied on congressional statements of policy as a basis for determining that the agency had ancillary authority over the network management practices of a broadband provider, in this case Comcast Corporation.

The court did not buy this argument. The court reasoned that regulation of Comcast’s network management practices was not ancillary to the FCC’s statutorily mandated responsibilities. In other words, ancillary authority has to be based on specifically delegated powers within the Communications Act. As an administrative agency, the FCC has authority to act only according to authority delegated to them by Congress. Congress has not delegated authority to the FCC to regulate a cable company’s network management practices.

For investors in broadband providers such as cable companies and telecommunications companies, this is a win. Net neutrality regulations would result in greater compliance costs and increased network management costs. If the costs are passed on to consumers through higher prices, the price increases may discourage adoption of broadband services offered by these companies. If cable companies are not able to pass on these costs through higher prices, the result may be an erosion in profits.

Net neutrality proponents are not expected to give up their fight. The FCC may appeal the decision to the Supreme Court. This may prove costly in terms of time, especially given the FCC’s intent to incorporate net neutrality into its national broadband plan.

The FCC may also attempt to reclassify Internet service as a Title II or common carrier service, treating Internet service providers like phone companies. The problem with this approach is that the FCC has already declared by its own rules that Internet service is not a telecommunications service but an information service. There will be high statutory and legal hurdles to climb should the FCC attempt to go 180 degrees against its own findings, which were upheld by the Supreme Court in 2002.

The other option is to get Congress to pass legislation specifically delegating to the FCC the authority to regulate an Internet service provider’s network management. I find this unlikely. Congress has always maintained a hands-off approach to the Internet and given the political climate of the country in terms of how it perceives takeovers of private industry by the federal government, Congress may not be supportive of such an action.

While it is too early to declare net neutrality as a dead policy, the court’s ruling has taken considerable sting out of its argument.

Net Neutrality: Good or Bad Policy

Posted April 3rd, 2010 in Broadband, FCC, Government Regulation and tagged , by Alton Drew

First of all, my compliments to Ms. Givens for her attempt at clarifying for the average consumer the issue of net neutrality. Ms. Givens is correct that the Federal Communications Commission wants to put into rule a number of guiding principles that will help the agency determine whether the sentinels of the internet’s onramps are treating everyone equally and fairly when regulating the traffic consumers and producers send up and down our nation’s digital thoroughfares. While I appreciate Ms. Givens’ acknowledgment that we should seek some balance in resolving the issue surrounding an open internet, it is at this fork in the road that Ms. Givens and I must, at least temporarily, part company.

The problems with her argument, ones that are shared by the more ardent proponents of net neutrality, are the generalities used to describe the problem this public policy is supposed to solve, and the tenuous linkages that are used to tie the problems of lack of access with a poor and unneeded public policy solution.

Let’s look at the concept of “policy” itself. If we are talking social policy, then we are referring to a goal that society overall finds agreeable if not noble. When determining the appropriate public policy or government action necessary to bring about this goal, we first ask ourselves whether the participants in the market for internet services, namely consumers and internet access providers need any government help to begin with. My position is no, they do not.

We can all agree that consumers should be able to access the internet because of the well documented existing and future benefits access has to offer. We can also agree that in a free market society where the private sector provides the distribution piece of the information superhighway, we should maintain a system of incentives, i.e. market-based prices, low taxes, etc., that encourages the private sector to manage, monitor, and maintain facilities. Net neutrality proponents at this point will argue the generality that Ms. Givens argues; that “everyone, regardless of wealth, power, or influence, should have the same access to the Internet.“ That generality, without going into an in-depth analytical treatment, is not economically or financially feasible.

For example, I expect to have access to medical facilities; however, depending on my particular mix of economic resources, I will only be able to afford certain levels of actual health care. Economic constraints as determined by the provider will be factored into what the facility will be able to provide me. Part of the provider’s decision to meet my particular need will be based on my ability to pay; the other part based on the expenses they have to cover to remain viable. Based on this time-honored perspective of a private sector provider, to say that everyone will have the same access is not realistic.

In short, the first question any policy maker should ask is, does the market currently allow consumers who are willing and able to pay for internet access to get that access? The answer is yes. Anyone with a phone line (which is well over 95% of the country) can get digital subscriber line service and be on the internet in a jiffy.

The second question the policy maker must ask is, how will a requirement that internet service providers make available to consumers traffic management and network information increase either the level of internet services to the consumer or reduce the consumer’s price for service? In other words, how will transparency increase consumer welfare?

This question is never answered clearly by net neutrality proponents. Instead, it is at this juncture that net neutrality proponents do a hard left turn and link net neutrality to some circular argument like, “we need net neutrality because we need transparency because we need robustness.“ Not once have net neutrality proponents made a quantitative case for either an increase in services or a decrease in consumer prices. Here also, Ms. Givens’ description of net neutrality and her support of the policy fails.

Ms. Givens never answers her question, net neutrality: bad or good public policy. I’ll answer it. It is bad policy.