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Entrepreneurs in the U-NII space get some relief from the FCC

The Federal Communications Commission took action today that hopefully provides further incentive for investment in the creation and deployment of U-NII wireless devices that operate in the 555 megahertz portion of spectrum in the 5 gigahertz band.  Specifically, U-NII devices are unlicensed intentional radiators that use wide band modulation techniques to provide a wide array of high data rate mobile and fixed communications for individuals, businesses, and institutions.

Since setting aside this portion of spectrum for unlicensed use in 1997, the FCC believed that enough time had passed where it could modify Part 15 of its rules regarding use of devices in this portion of spectrum.

U-NII refers to the Unlicensed National Information Infrastructure which is designated to provide high-speed, short range wireless networking communication at a low cost.  U-NII consist of three frequency bands of 100 megahertz each in the five gigahertz band; the 5.15-5.25 Ghz (U-NII-1, indoor use only); 5.25-5.35 Ghz (U-NII-2A); and the 5.725-5.825 Ghz band(U-NII-3).

The primary concern that Part 15 of FCC rules was designed to address is interference by U-NII devices with licensed devices or operators that also occupy the five gigahertz band.  With the rule modification, the FCC intends to make use of the 100 megahertz in the 5.15-5.25 Ghz range more beneficial to operators and device makers by removing the indoor use restriction and boosting permissible power used for these devices.

Unlicensed devices operate at very low power over short distances and employ various techniques in order to reduce interference to others as well as themselves.  The unlicensed operator must accept whatever interference it receives while correcting whatever interference it causes.

Innovators impacted by the FCC’s decision include those that provide WiFi hot-spots, wireless home local area networks, wireless Internet service providers in rural areas, and facilities that provide offloading of wireless traffic from commercial wireless service providers.

Ac cording to the FCC, unlicensed spectrum contributed $222 billion in value to the U.S. economy in 2013 and approximately $6.7 billion to gross domestic product.

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My comment in the FCC’s net neutrality docket

I just filed the following comments with the Federal Communications Commission regarding its public notice about new net neutrality rules:

On 2014, the United States Court of Appeals-District of Columbia Circuit held that under Section 706 of the Telecommunications Act of 1996, the Federal Communications Commission has “affirmative authority to enact measures encouraging the deployment of broadband infrastructure. “  The court also held that the FCC “reasonably interpreted section 706 to empower it to promulgate rules governing broadband providers’ treatment of Internet traffic, and its justification for the specific rules at issue here-that they will preserve and facilitate the ‘virtuous circle’ of innovation that has driven the explosive growth of the Internet-is reasonable and supported by substantial evidence.” 

While the FCC’s has general authority to regulate broadband providers, it cannot impose rules that go beyond what is authorized in the Telecommunications Act.  The FCC is prohibited from treating broadband providers as common carriers, according to the court’s holding. 

The question is, should the FCC impose rules that compel broadband providers to treat traffic the same, no matter the source.  Given the role that the Internet in general and broadband providers in particular play in the knowledge markets, the answer is no.  When we cut through all the discussions regarding apps, edge providers, content providers, blogs, websites, backbone providers, etc., what we have is an issue of commerce, producers of product, and consumers of product. 

Resources used to transport this product, knowledge, like all resources are finite and the FCC should exercise the regulatory humility necessary to allow consumers to determine what types and forms of knowledge are in greatest demand and allow broadband access providers and content and edge providers to establish the strategic partnerships, interconnection agreements, and facilities necessary for getting knowledge to consumers at the speed and capacity agreed upon as the most appropriate given consumer need, willingness, and ability to pay.

As presently written, section 706 of the Telecommunications Act gives the FCC plenty of latitude to to focus on creating an oversight framework that would encourage continued investment in broadband deployment.   Section 706(a) reads as follows:

 “The Commission and each State commission with regulatory jurisdiction over telecommunications services shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans (including, and in particular, elementary and secondary schools and classrooms) by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.”

The FCC’s focus, given its authority to promote deployment of broadband, should be on removing barriers to investment.  Onerous, old school, silo-based Title II regulation would create uncertainty in the investment community.  Will the FCC delay approval of new devices?  Will the FCC weigh in on the pricing of wireless data services?  Will the FCC, state, and local authorities channel tax dollars to support municipal broadband to the point where estimated returns on private investment are driven toward negative?  These are just a few of the questions entrepreneurs, access providers, and investors will ask themselves if the FCC pursues a regulatory framework that assumes it knows what innovations will be introduced in the future; a framework that assumes a “one size fits all” approach to the broadband industry.

Rather the rules pursuant to the language in Section 706 should lay out how deployment of broadband infrastructure will be measured and determine the level of capital inflows to the markets.  Edge and content providers should be able to interconnect to the open architecture of the Internet in ways that best promote their business models.  Interconnection agreements should be entered into with utmost autonomy between edge or content providers and broadband access providers.  Rules should not discourage strategic partnerships between upstart edge providers and broadband access providers.

Net neutrality advocates will argue that non-discrimination and non-blocking rules are necessary to codify open Internet principles.  I beg to differ.  Unless transparency, non-discrimination, and non-blocking rules can be shown to have a direct and substantial impact on the removal of barriers to broadband infrastructure investment, then there is no need for such rules.  I have a hard time seeing such a case being made and for the past four years proponents of net neutrality have not even attempted a substantive treatment of the impact of net neutrality rules on investment or job creation in the Internet eco-system.

The FCC should take the opportunity to not only encourage more broadband development by the private sector but to focus on creating a true political economy paradigm that encourages private sector investment unimpeded by ex-ante scrutiny of every network management decision made by broadband access providers.

Why should the other 10,000 filers have all the fun.

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On the lighter side of technology …

Posted March 25th, 2014 in Facebook, Google and tagged , , by Alton Drew

One sunny but cool spring day in the year 2044, a bunch of young people walk up to an old man sitting on a bench feeding pigeons. They recognize the man as Professor Alton Drew, a crusty old political economist and lawyer known for his pithy political remarks, dry wit, and an insatiable obsession with the female form.

“Professor Drew. Why don’t you ever wear the #Facebook virtual reality headsets and the new #Google glasses, and #Apple wearable phones? Shouldn’t you keep up with the times and the people?”

With a wry smile inherited from his father, the Original Alton Drew, the old professor says, “A good puppet master never runs with the masses ….”

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The Internet’s growth is reason for regulatory humility

Seeing Mark Zuckerberg in a suit and tie is still something I have to get used to, but it’s a small price a billionaire has to pay in order to bend the President’s ear on issues of privacy and surveillance by the National Security Agency.  Mr. Zuckerberg’s recent visit, along with other Internet company heads, with Mr. Obama is an example of the impact this still growing industry has on the structure of the nation’s economy and its public policy toward the information superhighway.

And the Internet is definitely growing, contributing to the nation’s economy at a greater rate than other traditional industries.  According to the U.S. Bureau of Economic Analysis, information-communications-technology producing industries saw an increase of 7.2% in their contribution to gross national product in 2012.  This rate of change reflected a significant increase from the 2011 increase of 4.7% in 2011.  Approximately 5.9% of GDP in 2012 is credited to the ICT industry.  Of the 2.8% increase in GDP in 2012, .41 percentage points was attributed to ICT.

Between 2006 and 2011, the broadband industry has invested $73 billion in broadband infrastructure deployment and AT&T in 2012 committed to $14 billion a year in broadband investment for three years, while Verizon has reported an average of $16 billion over the last three years.

According to a 2011 study by McKinsey & Company, the U.S. is the largest player in the Internet space accounting for 30% of global Internet revenues and 40% of net income.  Citing a study conducted by comScore, The Huffington Post reported that in 2011, Americans spent $256 billion on retail and travel related online purchases.

Last week, Federal Trade Commission chairman Maureen Ohlhausen made the argument for abandoning the silo approach to regulation, an approach that calls for regulators to guess how the future of technology will play out.  The Internet has been dodging the regulatory bullet but network neutrality advocates seem to have the entire Internet eco-system in their cross hairs for additional regulation.  Given the amount of investment that has been made in the Internet eco-system by broadband providers, can a case for more regulation using a regulatory scheme that may slow down innovation be made by the FCC?

Even pursuant to section 706 of the Telecommunications Act, where the Congress has called on the FCC to promote the deployment of advanced services an argument should not be made for heavy handed regulation.  If anything, where section 706 is concerned, deployment without codification of net neutrality principles has been delivering those advanced services because industry has been listening to the consumer.

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FCC v FTC: Each regulator should focus on what they do best

Last Friday, Federal Trade Commission chairman Edith Ramirez appeared on C-SPAN to discuss telecommunications policy.  It was good seeing Lynn Stanton, one of my colleagues from my Telecommunications Reports days, conducting the interview along with C-SPAN’s Peter Slen.

Most of the conversation with Chairman Ramirez centered on Internet privacy issues.  Chairman Ramirez reminded viewers about the tremendous amounts of information being collected from devices such as laptops, tablets, and smartphones.  Not only is there the potential for information to be used in ways the consumer does not anticipate, said Chairman Ramirez, but there is equal concern about how that information is being protected by the entities that collect it.

The FTC would like to see increased emphasis on transparency.  Specifically, the FTC would like to encourage entities to think about the implications of their data collection practices.  Companies need to do a better job communicating to consumers about how their information is used, while consumers need to be made aware about the extent to which information is collected.

What stood out to me in particular was Chairman Ramirez’s discussion on the treatment of telecommunications common carriers.  While the FTC exercises jurisdiction over a number of industries in cases of consumer fraud or deception, the Federal Communications Commission has jurisdiction over common carriers in cases of fraud or deception.

The FTC has been in the consumer protection game since September 1914.  They take a case-by-case, adjudicatory approach to consumer protection.  They have racked up a lot of experience on issues of privacy and seem pretty determined to extend their jurisdiction into the entire Internet eco-system.

Meeting them in the eco-system will be the FCC which seems prepared to expand its sec.706 authority to regulate broadband access to edge providers, app providers, and content providers.  Who should win out?  I think that the regulatory scheme that provides the most efficiency and certainty should be the framework of choice and that framework appears to be the FTC’s.

Sec. 706 calls for the FCC to promote the deployment of advanced services.  The FCC should pursue policy that gets more spectrum into the hands of wireless carriers and producers of devices.  The FCC should concentrate on encouraging pole attachment and other uniform rights-of-way practices.  The FCC should continue focusing on power emission and spectrum interference issues.  The FCC should also focus on interconnection issues such as those that have arisen from Netflix’s agreement with Comcast to ensure the capacity needs of end-users of Netflix’s video services.

Net neutrality or open Internet as defined by advocacy groups is about consumer protection and if the consumer perceives or argues that his business relationship in terms of website access is being violated by his Internet access provider, then those claims should be quickly disposed of by the FTC or in court.

It’s time for the FCC to focus on what it does best.