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Why can’t agricultural interests and web companies fund rural broadband deployment

Sections 214(e), and 254 provides that certain telecommunications companies contribute to a universal service pot from where certain eligible telecommunications carriers can recover the costs for providing services, deemed by Congress and the Federal Communications Commission as “universal.” Section 214(e) requires that only carriers designated as eligible telecommunications carriers receive funding to help deliver universal services, an, according to section 254, “evolving level of telecommunications services that the Commission shall establish periodically …. taking into account advances in telecommunications and information technologies and services.” These evolving services include access by schools and libraries; access by rural healthcare facilities. access by low income subscribers, and access to advanced services such as broadband.

The individuals that foot the bill for funding these pots are the end-users, the consumers, who may not be recipients or beneficiaries of the universal services. Not only is the State determining what services should be provided in order for a carrier to receive funding, but the State, using the carriers as licensed fee collectors, is requiring that consumers foot the bill. Broadband providers have long made the valid economic argument that servicing rural customers is a more expensive proposition due mainly to population and density and topography. By law the Commission is required to bring about an efficient, nationwide wire and radio communication service and brings this about by “regulating interstate and foreign commerce in communication by wire and radio ….” Since telecommunications carriers literally provide the channels through which commerce in communications flows, they are naturally the low hanging fruit that gets picked by the Commission.

But interstate and foreign commerce in communication by wire and radio has evolved since 1934. Commerce by wire and radio is no longer about charging a consumer for the privilege of sending and receiving voice calls no matter the content of the message. The commerce now takes the form of video, voice, texts, and graphics sent via wire and the use of various bands of spectrum. The commerce now takes the form of various content delivery entities storing data and information either for future distribution or data analysis by data mining companies or marketers. The commerce by interstate and foreign communication via wire or radio has morphed into an internet protocol eco-system that is home to internet service providers, broadband providers, content providers, and app providers. However, after eighty-two years, investors in telecommunications companies are the ones still holding the regulatory bag and shouldering the expense for getting broadband services to the underserved.

When we think of rural consumers, I wonder if we focus too much on the stereotypical family of eight living on a couple acres with a tractor riding mower in the yard. The chemicals-agricultural sector has operations in rural areas and with a $19.7 billion market cap has incentive to invest in getting broadband into its surrounding market areas. And Google and Facebook have not been shy about wanting to connect the underserved, particularly in India and on the African continent. Get the chemical-agricultural sector to pitch in and the United States could lessen the temptation to spread the costs over the entire population and allow those with the most skin in the game to bear the burden of funding access.

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In space, one can do fast lanes

A great piece in The Economist discussing increasing the deployment of #broadband infrastructure in lesser developed countries.with the use of lower flying satellites, hot air balloons, and drones. These lower cost options relative to those provided by legacy satellite firms are hoped to provide the “backbone infrastructure that connects wireless telephone companies to each other and to the backbone provider making access to high-speed broadband increasingly feasible for consumers in poor countries.

The article discusses briefly the regulatory hurdles that companies like #Facebook may face when attempting to deploy drones. In addition the article notes that transmission speeds may be higher in space where traffic travels 40% faster via dark matter versus through a piece of cable.

I wonder if the FCC would try to extend net neutrality rules in space should Facebook decide that it’s hot air balloon program could work for underserved rural areas in the United States? Probably not. It’s #netneutrality rules apply primarily to the behavior of broadband internet access providers.

According to Section 8.9(a) of the FCC’s net neutrality rules, a person engaged in the provision of broadband internet access service … shall not engage in paid prioritization. This sentence right here would get Facebook or #Google off the hook for being subject to the rule.

What’s also interesting is the definition of “paid prioritization.” Let’s say that Google or Facebook is successful in launching their “where no man has gone before” initiative to connect the globe via low flying satellites or drones. Let’s also suppose that they decide to go head-to-head with Netflix and provide over-the-top streaming content. Given their size and capital, Facebook or Google could afford to enter a “bill and keep” arrangement with broadband access providers to move their traffic to the last-mile on a priority basis without paying for prioritization. The Facebook or Google brand would give them some traction with consumers given Google’s search prowess and Facebook’s growing bankbook of connections worldwide.

Since the Federal Communications Commission​ allegedly has no intention of regulating rates and would have less incentive to deny a traffic exchange agreement that involves no compensation or advantage for a third-party affiliate, The broadband access provider could increase rates to recover the costs of its clogging network.

Now this scenario assumes that Facebook and Google’s global initiatives are a success, but should their drone and hot air balloon programs work, their will be incentives to connect the dots here at home by making these initiatives available to rural America where demand is great.

I hope they try it….. .

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Net neutrality: An example of the progressive use of statism

Kevin Carson wrote a blog post on net neutrality for the Center for a Stateless Society last month where he describes the primary and secondary purposes of the state.

According to Mr. Carson, the state’s primary purpose is the organized political means to wealth exercised by and for the benefit of a particular class of people.

The state’s secondary role is to keep the barbarians from knocking on or knocking down the gates of the elite; to be a stabilizing or ameliorative force.

In carrying out its primary role, the state confers subsidies, special tax breaks, and other privileges upon corporate and other special interests via the political system.  Executing this role can have destabilizing impacts on society’s members who are not members of its economic or political elite, so the state may implement social welfare measures to ease the pain and keep the social contract between the elite and everyone else intact.

The state’s primary actions role increase the level of statism, the primacy of the rights of government over the rights of the individual, while its secondary action, according to Mr. Carson reduces statism.

So where does Mr. Carson see net neutrality?  Mr. Carson sees net neutrality as a bit of a shell game. All net neutrality does is place a restriction on the privileges and benefits that corporations receive from the state.  In this particular case, all the FCC has done is placed operational restrictions on broadband providers such as AT&T, Comcast, and Verizon.  The FCC’s action has not increased any welfare benefits for consumers nor has it extinguished the privileges received by broadband providers.  They still have, according to Mr. Carson, state-provided access to rights-of-ways, subsidies, and other privileges associated with operating as an oligopoly.

I would go one step further and say that as a statist primary action, the FCC intended to shift benefits not from corporation to consumer, but from corporation to corporation.  There was never intended for any benefits to accrue to consumers via a reduction in statism.  The four million commenters that the FCC and net neutrality proponents brag about never comprehended that the net neutrality argument was nothing but a “bill and keep” argument from the 1990s hyped up on 21st century steroids.  Content providers like Netflix, Facebook, and Google wanted a net neutrality world built on non-payment of traffic fees to broadband operators.  Hence the argument for a “free and open” #internet.

Net neutrality?  Nothing but a shell game played by progressives.

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Google has answers and maybe we should pay for them

Posted February 10th, 2015 in Google, Internet search and tagged , , , by Alton Drew

According to this post in The Wall Street Journal, Google is upping the stakes in the market for data moving away from just providing links to providing answers to your search questions.  Critics like the European Union argues that Google is favoriting its own inventory of information and that this is a no-no because it puts other information providers at a disadvantage, particularly those deemed to be providing more relevant data.  Google, according to the Journal, is driven to move from just providing to links to providing answers in part as a result of consumers using smart phones with smaller screens seeking out facts.  In addition these consumers are speaking their searches versus typing them into a search.  Competitive information providers such as Yelp are providing apps that help consumers bypass Google’s search product.

So far U.S. are not as critical of Google’s move to providing answers versus just providing links, but the European view appears to favor a coordinated delivery of information from data generating websites through search engines to the end using data consumer.  What the Europeans appear to be saying is that Google should act akin to an electric grid independent system operator; identifying the electricity generator that can meet the consumers’ electricity needs on demand and at the best price and transmitting that electricity to the consumer. Consumers are free to bypass Google by using an app from Yelp or any other data provider or going directly to the site they desire.  Google is free to play both data provider and data broker.  There are no legal restrictions saying that Google cannot occupy both spaces.

As Andrew Keen shares in his latest book, “The Internet is Not the Answer”, Google could charge for its search services.  If the consumer values the data they are searching for, why not pay their data broker, Google, to find it for them.  This way Google has a financial incentive to submit the most relevant data sources to the consumer.

Regulators can’t force Google to charge a fee for its services but assessing a fee would address a number of concerns like putting a value on search activity including information.

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Broadband and Title II: It’s starting to feel like 1995

Federal Communications Commission chairman earlier today decided to take us back to 1995 and announced that he will issue new net neutrality rules that would bring wireline and wireless broadband providers under Title II regulation.  According to The Financial Times, investor fears were subdued when Mr. Wheeler assured the public that there would be no rate regulation on the part of the FCC.  Okay.  But that doesn’t mean that there will not be new rates implemented by broadband providers.  Mr. Wheeler in his opinion piece did not rule that possibility out.

Additional rates on the part of broadband providers wouldn’t be a bad thing either for investors, the operators, or consumers.  For investors and operators they can be assured that additional compliance costs under a new Title II regime are being recovered if operators charge additional fees.  For example, electric utilities charge different rates for different classes of ratepayer.  The typical ratepayer classes include residential, commercial, and industrial, with larger ratepayers paying a lower per unit rate because of the greater volume they consume and the decreasing marginal costs involved in generating electricity for larger consumers.  Residential consumers may pay less in total because they consume a smaller gross amounts of electricity but pay a larger per unit cost for their electricity.

Broadband providers may decide to dust off their regulatory playbooks from the period before the 1996 rewrite of the Communications Act and start charging tiered rates or even per minute rates for certain low-use packages.  Since broadband operators and content providers would be banned from entering paid prioritization agreements, what better way to manage congestion than to design packages where consumers in effect determine the speeds at which they get data based on the dollar value of the data.  It may also give wannabe broadband providers like Google and Facebook an excuse to charge for some of their services.

Yes, it’s starting to feel like 1995.