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FCC: The GOP platform gets it

The Republican Party included in its platform its vision for the relationship between the communications industry and government. It’s a good start. First, check out the platform:

“The most vibrant sector of the American economy, indeed, one-sixth of it, is regulated by the federal government on precedents from the nineteenth century. Today’s technology and telecommunications industries are overseen by the Federal Communications Commission, established in 1934 and given the jurisdiction over telecommunications formerly assigned to the Interstate Commerce Commission, which had been created in 1887 to regulate the railroads.

This is not a good fit. Indeed, the development of telecommunications advances so rapidly that even the Telecom Act of 1996 is woefully out of date. An industry that invested $66 billion in 2011 alone needs, and deserves, a more modern relationship with the federal government for the benefit of consumers here and worldwide.

The current Administration has been frozen in the past. It has conducted no auction of spectrum, has offered no incentives for investment, and, through the FCC’s net neutrality rule, is trying to micromanage telecom as if it were a railroad network. It inherited from the previous Republican Administration 95 percent coverage of the nation with broadband. It will leave office with no progress toward the goal of universal coverage – after spending $7.2 billion more.

That hurts rural America, where farmers, ranchers, and small business manufacturers need connectivity to expand their customer base and operate in real time with the world’s producers. We encourage public-private partnerships to provide predictable support for connecting rural areas so that every American can fully participate in the global economy.

We call for an inventory of federal agency spectrum to determine the surplus that could be auctioned for the taxpayers’ benefit. With special recognition of the role university technology centers are playing in attracting private investment to the field, we will replace the administration’s Luddite approach to technological progress with a regulatory partnership that will keep this country the world leader in technology and telecommunications.”

Should the GOP take the Congress, I would recommend legislating away the FCC’s net neutrality rules. Those rules strike at the very core of a carriers freedom to manage its networks in the most efficient manner, in the way that carrier sees fit according to its business judgment.

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Democrats Need to Focus on Commerce

Posted July 9th, 2012 in AT&T, SpectrumCo, Verizon, antitrust, spectrum and tagged , , by Alton Drew

So let me get this straight. The Democratic Party wants telecommunications companies to build out infrastructure where there is no business case to do so. This appears to be the position of a bunch of congressional Democrats as I read it in an article posted today in The Hillicon Valley. The Democrats are arguing that Verizon’s deal to buy spectrum from SpectrumCo and cross sell cable services provided by SpectrumCo’s partners (Comcast, Time Warner, & Bright House Networks) somehow constitutes anticompetitive behavior.

I’m all for broadband adoption, but it should be driven primarily by the market. Verizon’s deal is driven by its need to get spectrum quickly, both for short term and long term reasons. With left leaning advocacy groups trying to make a bogus antitrust case against Verizon, there may be no free market alternatives left for wireless carriers to acquire spectrum.

In addition, there has been no demonstration how this deal would curtail competition. Cross selling occurs in the communications and other industries. How does Verizon selling Comcast services stop AT&T from selling DirecTV or long distance telephone services? Is Verizon going to stop deploying facilities where consumers need them because they are selling The Vampire Diaries on Time Warner? Give us a break.

Before any congressman considers any action against any industry, they should first ask themselves, how does my reaction promote commerce? If it doesn’t, then they should back off.

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No, New York Times. Declaring broadband to be a telecommunications service won’t fix wireless market.

The New York Times Editorial Board recently posted an opinion piece that concluded that a fix to the wireless market should include a declaration by the Federal Communications Commission that broadband access services are telecommunications services.

The Times should know better.

Unless the Times enjoys seeing flare ups between the legislative branch and the administrative branch, or would like to see the judiciary repeat again and again that the FCC should not go around trying to circumvent the Congress, then advising the FCC to take this route is a waste of time.

Congress has reiterated its intent that the FCC and federal law keep as light a touch as possible on the Internet. Congress would have to change law in order to bring broadband further into the clutches of the FCC.

What’s more disturbing is that the Times believes that a competitive wireless market would result from declaring broadband a telecommunications service. Following that logic, that would mean making wireless a more regulated service as well.

If the Times believes that consumer welfare is best enhanced by a robust, competitive wireless market, that’s fine. You will nary find disagreement with that position. At this point, however, the issue isn’t competition. The issue is quality of service.

Spectrum is limited. Increasing quality of service, particularly in the face of increasing demand for mobile data services, requires an expansion of scale on the part of existing carriers. This expansion of scale helps ensure against dropped calls, poor voice quality, and maintenance of data transfer speeds.

Opening up another jurisdictional battle over declaring broadband to be a telecommunications service won’t make the wireless market more competitive.

Good to see Jim DeMint moving up in telecom influence

The Hillicon Valley today reported that U.S. Senator John Ensign, Republican of Nevada, is retiring from the Senate. Mr. Ensign serves on the House sub-committee on communications. Next in line for ranking member is U.S. Senator Jim DeMint, Republican of South Carolina.

I think this is exciting, particularly for those of us who want to see government subscribing to its proper role. You see, Mr. DeMint is a proponent of the market failure approach to government intervention. Unless an agency can show market failure, it should not be implementing onerous rules on industry.

Mr. DeMint’s school of thought is in no way radical. Any public administration student will tell you that is the classic basis for market intervention. Mr. DeMint would prefer the Federal Communications Commission take a more Federal Trade Commission-type approach to regulation, one that is more case-by-case.

An FTC approach presumes there is competition. Is there competition in the broadband market? Telecommunications in general?

Udall’s reclassification path strewn with desert and canyons

Senator Tom Udall, Democrat from New Mexico, described reclassification of broadband access services as one clear path to ensuring an open Internet. Maybe the esteemed senator has been inspired by the sunny skies, and mild, semiarid climate of his great state to give such a ringing endorsement of reclassification.

I, on the other hand, see reclassification as a dusty trail upon which industry would have to navigate through the high plateaus, mesas, mountain ranges, and canyons that New Mexico is also known for. Reclassification, like any additional regulation, invites that great regulatory mountain lion, uncertainty, into the environment.

For example, how broadband access service is viewed in terms of its use has been determined by the consumer. Consumers don’t look at broadband as telecommunications.  Telecommunications is for making telephone calls; two-way conversation. Consumers view Internet access as a way to get information electronically and don’t expect a conversation when getting that data.

Treating broadband access like telephone service introduces rate regulation on both the federal and state level. Decisions will have to be made on whether a broadband access pipe should receive price cap treatment or rate of return treatment. Broadband access lines will now be subject to subscriber line charges, the payment for the privilege of accessing long distance services.

On the federal and state levels, the issue of interstate and intrastate compensation will have to be addressed. How will carriers bill each other for Internet traffic received and handed off to end users? Will the states simply let this new funding stream for their universal service programs slip through their fingers?

On the local level, municipal governments may now view broadband access lines as fair game for the application gross receipt tax . Other utility charges may apply as well. If we believe that local and state governments will not find an excuse to apply additional taxes, especially as their budgets are subjected to fewer revenues, think again.

No, Senator Udall.  Reclassification is not a clear path.  If anything, it’s a drive along a mountain road where one wrong turn can send you into a canyon.