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How Does This Enforcement Action Further Commerce

Posted July 31st, 2012 in FCC, Government Regulation and tagged , , by Alton Drew

The Federal Communications Commission was able to squeeze $1.25 million out of Verizon Wireless today. Verizon entered a settlement with the FCC where the agency promised to terminate an investigation into whether Verizon violated terms and conditions of its holding of C-block spectrum. Verizon promised as part of its license agreement that it would allow third-party applications and devices to be used on its C-block network.

Verizon asked a third-party application store to block access to eleven tethering applications that customers might use to connect devices to Verizon’s C-block network without having to pay the carrier an additional monthly fee.

The $1.25 million penalty won’t hurt Verizon’s bottom line. The company has made a decision that it is not worth a fight about whether this rule was not applied appropriately. It does raise a red flag about the FCC’s willingness to have public hearings on these matters. What would have happened if another firm, much smaller than Verizon, were faced with these allegations?

Fighting it out in a hearing where evidence could help determine if there was a violation would have brought some certainty to a finding. It would have been nice to know if there were legitimate concerns about compliance and network management costs directly resulting from allowing access by third-party apps salesmen.

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Broadband Companies Should Be Allowed to Recover for Their Double Mandate

I look at broadband companies as having a double mandate. First, they have to provide a service to their broadband customers, within the constraint of a competitive market. Second, they have to maintain the very communications and information structure the Federal Communications Commission is required to ensure pursuant to the Communications Act.

The government is not going to build it, nor should we expect it to. The FCC has created a mechanism that reimburses broadband companies for the high costs of deploying to and serving rural and other high-cost consumers. Although the FCC is responsible for ensuring universal access by every American household to a nationwide communications network, it is still left up to the market to distribute those services via the price mechanism.

Recent comments in FCC Docket No. 12-69 would try to persuade the FCC that the agency should somehow influence how broadband providers price their broadband access services. Such requested influence would be a violation of the principles of free markets and capitalism that this nation has adopted for centuries.

In addition, reinvestment in the networks the FCC expects to be deployed and maintained requires a sufficient revenue stream to do so. Commenters have always expressed issues with the size of AT&T and Verizon, yet offer no reasonable or feasible alternatives to how a large number of current customers are to be served. Conducting a séance to conjure the ghost of Harold Green seems to be the ultimate goal of commenters who question the market size of the industry’s two largest players.

Until commenters can introduce an economic model that surpasses our current free market apparatus for determining price and output for broadband services, the FCC can best serve the consuming public by politely discounting their arguments.

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Chairman Genachowski. It’s Your Turn to Tweet

Posted July 25th, 2012 in FCC, Government Regulation, Twitter and tagged , , by Alton Drew

Today Federal Communications Commission member Jessica Rosenworcel joined the Twitter ranks, launching her Twitter account much to my delight. I was so elated I even sent a quick hello to welcome her to the platform. Twitter can provide a public servant a quick way to get their messages out to the public. Just ask Mayor Corey Booker of Newark about how effective Twitter is.

While I don’t expect Ms. Rosenworcel to go digging snow on the streets of Washington or running into burning houses to save kittens, I look forward to what I call political heroism as she provides us with a little more transparency and insight on policymaking at the FCC.

Now it’s time to get the rest of the commissioners on board. Maybe they will follow their leader, Chairman Genachowski once he gets a Twitter handle. If he’s scratching his head about an appropriate name for his account, I came up with a couple.

Mr. Genachowski could try TheOriginalGFCC or TheGmanFCC. Something funky and outside the box would make interacting with the commish pretty cool. You can have fun with it, Mr. Genachowski. The public will also appreciate a tweet every now and then explaining what the FCC is all about and how specific initiatives are impacting them.

Anyway, see you in the Twittersphere…

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FTC Cramming Down Hard on Cramming

Posted July 24th, 2012 in cramming and tagged , , , , , by Alton Drew

The Federal Trade Commission yesterday issued comments to the Federal Communications Commission on the issue of cramming on wireless services. Cramming refers to charges on a wireless service customer accounts that come from a party other than the carrier itself.

According to the FTC, in 2011, the agency received approximately 1800 complaints about cramming. The FTC would like to see legally mandated measures that would allow consumers to block charges from up on their accounts and inform consumers on how to block these charges.

Cramming has historically been a problem with wireline services and it appears it is becoming an increasing problem with wireline.

A legal mandate would of course add to a carrier’s cost of providing service. A mandate, as opposed to industry-preferred voluntary monitoring, may have a negative impact on relationships between wireless carriers and third-party vendors. Otherwise, I don’t see a negative impact on the quality of service carriers would provide if they also had to abide by additional consumer protection requirements.

After reviewing AT&T, Verizon, and Sprint’s 8-Ks, 10-Qs, and 10-Ks, I couldn’t conclude that the carriers were concerned about any specific cost increases that would result from this proposal being implemented.

Far be it from me to like regulation, but the only positive I see is that consumers may feel a little more comfortable adopting mobile broadband if wireless carriers allowed consumers to block third-party charges.

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Light Squared Gets Commissioner Pai Up to Light Speed

Posted July 24th, 2012 in FCC, Government Regulation, spectrum and tagged , , , by Alton Drew

LightSquared regulatory staff met with Federal Communications Commission member Ajit Pai on July 19, 2012 to get the newest commissioner up to speed on the benefits of deploying the company’s 4G LTE network.

The company argued that its wholesale business model would provide benefits to the competitive market for wireless services. Deployment of the network would also mean, according to LightSquared, the development of innovative wireless applications.

LightSquared’s plans to be the Whole Foods of the wireless industry were put on hold partly due to concerns that its network would interfere with global positioning systems.