Author: Harold

A Black Day For The Rule of Law

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The Senate has voted to give retroactive immunity to the phone companies for spying on Americans without a warrant.

As I have written elsewhere, this does violence to the Rule of Law. As usual, the defendants of this measure make the best case against it. As Senator Orin Hatch explained:

“And frankly, if we do not give retroactive immunity, there is not a general counsel of any of these companies that would [again] expose their company to the … litigation that has come since.”

Which is precisely the point. It should not be possible, let alone easy, for the Executive Branch to provide an end run to the Constitution and the law. That a majority of the Senate will retroactively concur in this law breaking — even applaud it and encourage it! — makes mock of the very notion that we are a free people in the land of the free governed by laws, not men, safe from the tyranny of Kings because their power is restrained.

As a Republic, we will recover. We have suffered such stains and indignities on the law in the past. Korematsu and the internment of Japanese Americans, the warrantless surveillance of civil rights leaders, The Espionage Act in World War I, which made it illegal to criticize the government’s military recruitment efforts. The list goes on. Then the pendulum swings back. We stand ashamed, offering compensation and apologies, shaking our heads at what people do and wondering how a previous generation could have erred so dramatically.

What is appalling here is that this is not done in the first rush of panic, pain and fear following the attacks. It is not prompted by “false intelligence.” There are no excuses for those Democrats who have ONCE AGAIN given President Bush everything he asks for, after promising us in 2006 that “the blank check is over” and that the Democratic landslide signaled a return to a government of checks and balances, accountability and oversight? And these Democratic Senators will come to us again in 2008, and expect the party faithful to once again fall in line?

I still have hopes for the House Democrats. Recently, Representatives Dingell, Markey and Stupak reminded their Senate colleagues of their duty to exercise oversight of the Executive to protect the rights of all Americans. Perhaps these champions of freedom will convince their House colleagues to stand firm in the face of White House pressure, telco PAC contributions, and the craven example of their colleagues in the Senate.

But it is a black day for the Rule of Law, and a black day for the Democratic party. Let every Democrat that has dared adopt a haughty attitude to Republicans for supporting domestic spying, torture, and the assault on our consititution hang his head in shame. Let our tongues be stilled. For our leaders have proven no better than theirs. And will not we, like the sheep we have accused them of being, quietly return them again to office?

Stay tuned . . . .

Cable Operators Shocked…Shocked I Tell You…about Verizon Marketing Practices.

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I may occasionally (O.K., more than occasionally) have some snarky things to say about the free market philosophies of my opposite numbers at places like CATO and Progress & Freedom Foundation. But what distinguishes them in my mind from industry shills and sock puppets is their ideological integrity. When they want everything deregulated, they really mean it. Not so the industry and its true sock puppets, who can spin on an ideological dime without the least regard for even the vaguest notions of consistency with their previous statements.

Case in point, this FCC complaint by the cable companies against Verizon for “retention marketing.” Mind you, these are the same folks that complain whenever the FCC even thinks about interfering with the “vibrant and competitive telecommunications market,” and who protest that enforcing the laws passed by Congress to require interoperable set top boxes and set a numeric limit on the number of subscribers they can have constitutes a “vendetta.” But, as usual, consistency is not exactly a strong point for industry. As I continually remind folks, industry does what is best for its bottom line, period. And here, it means using the big bad evil FCC to slap the telcos around.

Which brings me to the point I expound upon below. Too often, the industry gets to win by making this a fight about process and “level playing field” and confusing the issue. But what we really need to care about is what our actual policy IS. If we want to encourage competition because we prefer it to regulation of monopolies, then we damn well better make sure competition actually happens, which means subjecting the incumbents with market power (at least initially) to a very different set of regulations than the new entrants. For many years after the break up of AT&T, the FCC subjected AT&T to a set of regulations designed to keep it from using its position as the dominant long-distance carrier to prevent the new entrants like MCI and Sprint from attracting customers. The FCC did not worry if that was “fair” to AT&T to have different rules that prevented exercise of market power by a dominant firm. It said “hey, we want competition! That’s about economic policy, not about being fair.”

Mind you, I don’t expect my opposite numbers to agree. But they will at least have the virtue of consistency.

More below . . . .

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Go Writers Guild!

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Although as Writers Guild of America reminded its members, the strike is still on until the votes are counted, WGA has suspended picketing and it looks like they have a firm deal. The deal links writer compensation to advertising and other revenue derived from streaming media, an elegant solution to the problem of monetizing a product so new no one knows how it will make money and is extremely likely to be given away (you know, like broadcasting).

I don’t have much to add here by way of analysis, but I wanted to give a huge shout out to the writers and the guilds and the actors that supported them for holding out and getting a fair deal. If we are indeed a country on the verge of change (as I keep hearing), I can hope that one change will be to reverse the sad downward slide of organized labor. Unions have been one of the most positive forces in our country for economic progressivism. Perhaps a high profile win or two will remind people why it pays to join and why they should look for the union label . . . .

Stay tuned . . . .
(Former member National Treasury Employees Union)

Comcast Reacts To FCC Probe By Changing Fine Print

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Well, it appears that Comcast has learned a valuable lesson from our complaint about blocking BitTorrent and subsequent FCC investigation. Sadly, but unsurprisingly, the lesson appears to be “make our policies more explicitly outrageous.”

My thanks to Marvin Amouri at Free Press for this excellent analysis of Comcast’s new terms of service. As Marvin notes, Comcast released this puppy quietly on its website, taking advantage of the pre-existing fine print to alter terms unilaterally. (Question for Comcast, if I don’t like the new terms, can I cancel without tirggering an early termination fee?)

Marvin really says everything that needs to be said on his excellent post, so I shall limit myself with simply rolling my eyes and wondering when we will have a Congress and an FCC genuinely interested in promoting broadband adoption and competition rather than providing cover for lazy duopolists squeezing locked in customers unwilling to invest in network upgrades. Oh yeah, I forgot. According to this Administration, we already solved the broadband problem.

Stay tuned . . . .

The Economics of Telco Deregulation: Califronia Dreaming, Economic Realities, and the “Reverse Ramsey” Pricing Model

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This article in the LA Times on the impact of telco price deregulation in California is a good illustration of the complex nature of the economics of competition and deregulation, and why it’s so friggin’ important for regulators and the public to understand this stuff. In 2006, the California PUC decided that voice service faced sufficient competition to phase out price regulation. In theory, competition would lead to lower costs and increased services and would remove the invariably stultifying impacts of regulation.

The result has been an increase in the availability of services and an overall decrease in the cost of service, but not in the way that ordinary folks understand or that regulators professed to expect from deregulation. Most customers have, in fact, increased the amount they pay for telecommunications services overall. But because they buy larger bundles of services that profess to discount the price of each element in the bundle, the average cost per service is lower although the amount of money paid has gone up. That might seem a good value trade if it were driven strictly by consumer choice. But consumer choice is driven by the decision of telcos to increase the cost of stand alone services. So people not looking to bundle do so because it is “cheaper” while poor people who cannot afford the higher price for the bundle get a real price hike with no value added.

Example: Feldco the Telco raises the price of basic local voice from $10 to $20, and raises the price of additional services taken a la carte from $5 to $10, but I offer a package of basic voice and five additional services for $30 (which I tell you charging $5 for voice and $ 5 for each additional feature). Any customer that can afford to upgrade to my bundled package will do so, because the “value” of the bundle (at my new prices) is $70 and you are getting it for $30. So even though you upgraded and are paying me more, the cost of basic voice (calculated as part of the package) just dropped by $5. What a savings! of course, the customers who cannot afford the additional $10 a month for the bundle experience a real price increase of $10.

Basically, the problem of wealth inequity that we have seen in every other sector of the economy — where the highest earners have enjoyed the greatest increases — is now mirrored in California’s telecommunication service market. How did this happen? Do we care? And what does this tell us about the future of the metered internet, wireless competition, and the ever popular video competition?

Answers below . . . .

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Why I Have Decided To Endorse Obama.

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So here it is “Super Duper Tuesday.” My own local primary (MD) will not be until next week. And while endorsing a candidate is always a perilous thing for those of us that work in Washington, I have decided to give the Tales of the Sausage Factory Endorsement to Senator Barack Obama.

Why? See below . . . .

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Chutzpah, Thy Name Is Wireless Incumbent.

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So here we are in the middle of the most intensely competitive auction ever. As you can tell looking at the recent postings by fellow Wetmachiner Greg Rose this auction has dramatically pushed up the amount of money paid by bidders for licenses and has created more intense competition for a broader group of licenses than previous auctions, strongly suggesting that — as Greg and I predicted when we first started pushing anonymous bidding in March 2006 — anonymous bidding eliminates all kinds of targeting, collusion and retaliation that typically held back smaller bidders and allowed larger bidders to pick up licenses for a song. An utter smashing success (at least from the perspective of those who favor using auctions for distribution of licenses), right? Who could have a bad word to say about it?

Answer: All the people who hate anonymous bidding BECAUSE it eliminates the ability to signal, retaliate, and collude and thus makes the auction more competitive. i.e. The incumbent wireless licensees (other than Verizon, which wanted anonymous bidding to avoid being targeted).

More below . . . .

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700 MHz: Notes From The Spectrum New Hampshire Primary, C Block Not Dead Yet

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Everyone remember how Clinton was dead after Iowa? Now who remembers two weeks ago, or even last week, when analysts wrote off the 700 MHz auction as doomed due to credit crunch? But, other than D Block’s utter failure to move (and regular readers will know my opinion of why that happened), the auction has proven a success by every measure we can obtain so far. Sadly, however, the key measures are not yet in, and won’t be until after the auction is over. Which is why, despite C Block exceeding it’s reserve price, I caution folks that we are still at the equivalent of just after the New Hampshire primaries and that any speculation about the important points of the outcome remain unresolved.

Here’s what we know for sure now:

1) The current take now stands at over $14 b. This not only exceeds the $10 b that the Congressional Budget Office (CBO) estimated, it will exceed the “wildly successful” 2006 AWS auction (which grossed about 13.9 b). A, B, and C blocks have all met their reserve prices, with the most contentious fighting in certain high value markets B block.

2) Because C Block has met its reserve price, it will not be reauctioned and the open device conditions will go into effect.

So the auction is clearly a success from Kevin Martin’s perspective (again, with the exception of D Block, which is a special case). While those like Commissioner McDowell can argue that C block might have fetched more without conditions, $4.7 billion is nothing to sneeze at. And it is clear that the aggressive build out conditions did not scare bidders away from A and B block, so (assuming the FCC is serious about enforcement) we should see increased deployment of services into rural regions.

What we still don’t know is whether the new auction rules gave new entrants a real chance to win spectrum, or (as the conventional wisdom had it) will incumbents Verizon and AT&T end up capturing the lion’s share of the spectrum (albeit at higher prices, owing to the introduction of anonymous bidding). That we cannot know until after the anonymity lifts when the auction ends (which, if the FCC chooses to reauction D Block under the rules proposed for reauctioning the other blocks, might not be for several months yet). Much depends on the identity of the current C Block holder. Is it Google? Verizon? Some other deep pockets like AT&T or Echostar, or perhaps the mysterious Vavasi NexGen Inc.? And is C Block settled? If the package bidder in round 17 knocked off the previous high bidder, then the previous high bidder will need to respond fairly soon or it will start losing its eligibility (bidding chips) and no longer be able to challenge.

If it turns out the incumbents capture most of the spectrum, I will need to eat a huge plate of crow and tip my hat to Commissioner Adelstein and Publius at Obsidian Wings, both of whom fretted that only Verizon could win a huge block like C Block and that we would get more new entrants by slitting the spectrum up. OTOH, if the Great Google Prophecy comes true, I will become insufferably pleased with myself for at least a month.

But, rather than pull a Tweety Bird and start treating my own speculation in the absence of data as fact, I will simply say —

Stay tuned . . . .

Have The Senate Democrats Finally Learned?

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With the Protect America Act (aka FISA on ‘roids) set to expire at 12:01 a.m. Friday, and the Senate deadlocked on the question of immunity for telcos, the Administration once again tried to employ its favorite strategy. Rather than support any kind of extension the Bush Administration is demanding that the Senate pass telco immunity or risk a veto. The conservative chorus brays how the Democrats are outing national security at risk. And why not play chicken with a vital issue of national security? This strategy has worked for Bush time and again, with no real consequences.

Still, the script did not go quite to schedule this time. When it became clear that the President could not force through the Senate Bill he wanted and get the needed changes in the House (the House Bill does not contain immunity for telcos), the President backed down and grudgingly agreed to a 15-day extension of the existing “Protect America Act.”

The question here is whether or not the Senate Democrats have learned that the temper of the country has changed. We all care about national security. But increasingly, the American people have grown disgusted with the way this Administration plays politics with national security and whittles away at civil liberties. But many Democratic leaders remain traumatized by the 2002 elections, when voters caught up in the post-9/11 scare and the hype in preparation for the invasion of Iraq decided to overlook things like the Enron and Worldcom scandals and voted out war heroes like Max Clealand who expressed even the slightest doubt about supporting our Commander in Chief in “this time of war.” And so, despite the election of anti-war Democrats in 2006, despite the President’s abysmal approval ratings, despite the fact that the majority of Americans now consider the Iraq War an enormous mistake and want to see it ended, Senate Minority Leader Mitch McConnell and the President’s media cheer leading squad continue to use the same rhetoric as if it were still 2002, and too many Democrats still tremble.

Let us be perfectly clear. The one issue delaying this bill is the question of retroactive immunity for Bush’s telco pals. While I understand why Bush would go to the wire for his buddies, why any Democrat would voluntarily so undermine the rule of law baffles me. The one conclusion I can reach is that too many of them remain mired in the belief that if the Democrats are seen as “playing politics with national security” then they will lose in ’08.

But as Chris Dodd and some other Senate Democrats understand, and as the House Democrats understood when they passed a bill without the telco immunity provision, the universe has changed since 2002. Even if political exigencies justified such an abandonment of principle as granting telcos retroactive immunity, too many Senate Democrats have the political calculation wrong. With the Democrats chosing among candidates determined to end the war and both of whom have promised to fight telco immunity, and with Republicans poised to nominate the man who has consistently defied the Administration on torture and other issues where the Administration has played the “national security” card, the message from the people should be clear: The free ride for the Administration to savage our civil liberties is over! The panic is past, and our natural distrust of a government granted unlimited power to “protect us” has returned.

I hope that the members of the Senate, particularly the Democratic members who have supported telco immunity, will take these two weeks to learn this valuable lesson. Because if you act as if it were still 2002, and give the President everything he asks for, you may indeed succeed in setting back the clock. In 2006, the American people proved we had enough of wireless wire tapping, and that enough of us were finally willing to vote out a party that supported an assault on our civil liberties. Must we prove that lesson again in 2008, by once again voting out a party that, to praphrase Benjamin Franklin, seeks to trade liberty for security only to discover it has neither?

All the rights they promise — all the wrongs they bring
Stewards of the Judgment, suffer not this king!

Stay tuned . . . .

How To Give America Wireless Broadband For Christmas 2009 — the Lesson from 3.65 GHz Deployment.

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Granted for me it would be Chanukah not Christmas, but I think a real kick ass wireless network with oodles of competition and nifty new gadgets would make such a good present for America for Christmas 2009. And, as the reports from the field on the piece of wireless spectrum the FCC opened up last June show us, the FCC can bring it to us by opening the broadcast “white spaces”.

Sascha Meinrath, a serious partner in crime in spectrum reform, has some data from the field on deployment of equipment in the 3.65 GHz band the FCC finally opened for real in June 2007. Now, a mere 6 month later, Sascha reports on wireless ISPs (WISPs) using this band in the field to deliver broadband. As Sascha writes:

WISPs have been leading the charge and people are reporting 15km non-line-of-sight (NLOS) connectivity with 3650-3700 MHz (operating at 10W) — which is a huge boost over 802.11. Meanwhile, capacity seems to be hovering around 15 MB per 7.5 MHz (or 20MB per 10MHz) — so 100MB connections over 15km without line of sight are quite feasible using this band. All in all, that’s pretty impressive for first-generation equipment. The equipment vendor Aperto is claiming that their new equipment will get 20MB per 7MHz (so you can see the development curve is already fairly steep).

To give you a feel for the real-world implications, folks testing things out reported, “6mb/s indoor at 2 miles NLOS. The base station was a 1 sector install using diversity at approximately 50ft up on tower using 120 degree sectors” — try to get that with an 802.11 access point.

Allow me to draw a few policy implications from this. The lead time from settling the rules to actual deployment of services took six months. By contrast, we have not yet seen any significant deployment in the AWS spectrum auctioned 18 months ago. Yes, some of that was due to the delay of some government licensees in migration. But much also has to do with the nature of licensed v. unlicensed networks. Licensed networks require huge investment of time, resources, standardization of equipment, etc., etc. By contrast, unlicensed networking equipment can be built, certified and deployed effectively relatively quickly.

Policy makers should take note of this in the debate over the broadcast white spaces, aka the vacant channels on the broadcast dial. Broadcasters and some large carriers (like Sprint and T-Mobile) want to see the white spaces licensed rather than opened to unlicensed use. The current broadcast spectrum auction will not begin to bear broadband fruit until 2010 or 2011 at the earliest. And if the FCC were to decide to license the white spaces, we could expect similar lengthy delays while the FCC devised auction rules, held an auction, then waited for the winners to (hopefully) deploy something useful.

Given the continued laggard pace of our national broadband, shouldn’t the FCC learn from its success in the 3.65 GHz band? Licensed and unlicensed networks complement each other, each offering different capabilities. We have taken the first steps toward building the licensed wireless networks in the broadcast spectrum. Why not unleash unlicensed in the white spaces? If the FCC approved rules now, it would practically guarantee that devices could be certified and deployed as soon as we completed the digital transition. Indeed, given the backing of the broadcast white spaces by so many different developers, as compared to the relatively modest backing for 3.65 GHz, the probability of seeing a plethora of wireless networking devices and consumer products available to Americans by Christmas season 2009 rises to almost a certainty. By contrast, we will be lucky if the winners of the 700 MHz licenses will have broken ground on their first towers by then.

Doesn’t America deserve a kick ass wireless network for Christmas 2009? I think so. And if the FCC applies the lesson of its 3.65 GHz success to the broadcast white spaces, we can have one.

Stay tuned . . . .