Tales of the Sausage Factory

An insider’s view of the media hegemony

Will The DC Circuit Pull The Plug On Program Access?

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Next week, the D.C. Circuit will hear oral argument on the FCC’s 2007 decision to extended the program access rules another five years. What surprises me is how few people seem to have considered the possibility that the D.C. Circuit will reverse this decision and vacate the rule, as they did last month with the 30% cable horizontal ownership limit.

Part of that is the way people tend to make analysis based on conventional wisdom. “Everyone knows” that without the program access rules, competitive providers would be toast because the largest cable incumbents can control programming, just as “everyone knows” that we don’t need a 30% cable ownership limit because the MVPD market is so wildly competitive that the largest cable incumbents can not possibly influence cable programming. As Comcast and Cablevision pointed out to the DC Circuit, however, the conventional wisdom in this regard is not entirely consistent. If, as the court found last month as a matter of law, the MVPD market is wildly competitive and consumers switch willy-nilly from one to the other rendering it impossible for a cable provider to block a rival programming network from emerging, how on Earth can cable programmers below the 30% limit exercise foreclosure?

There are, of course, sound answers to that in both law and economics, although the biggest single deciding factor is likely to be the absence from the panel of Douglas Ginsburg, a man who believes membership in the Federalist Society substitutes for an actual understanding of economics and has published an academic article yearning for the “good old days” when the courts made economic regulation unconstitutional and concluding that courts should not defer to agency efforts to create “synthetic competition.” (An offense in the eyes of the Gods of the Marketplace.) I believe the panel is Sentelle, Griffith and Kavanaugh, which is not exactly good news for the program access rules but isn’t death on wheels like Ginsburg (or Williams or Edwards). Sentelle and Griffith, who were both on the imaginary competition outweighs real competition decision back in June overturning the FCC’s decision not to grant Verizon a forbearance petition, and Kavanaugh, who was on the cable ownership panel and therefore presumably agrees that switching costs aren’t real and cable operators are in such fear of youtube clips they would never make programming decisions based on affiliation. On the flip side, Kavanaugh actually wrote the somewhat more deferential special access opinion from July. Unfortunately for those who rely on program access, none of the judges who affirmed the Inside Wiring Order are on this panel.

Of course, there is something to be said for actual law and analysis of the underlying FCC Order, even in the D.C. Circuit. So below, I shall provide a brief outline of the program access rules, how we end up in court, the likely arguments, and what happens if the D.C. Cir. overturns the rules (which even I give a low probability to, but do not discount — especially given the panel) — including why that might actually be the best thing to happen to cable regulation in the long run.

More below . . .

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Benchmarks and the Broadband Ecology.

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As folks in broadband policy land know, thanks to the American Recovery and Reinvestment Act (ARRA), the FCC needs to present a National Broadband Plan to Congress by February 2010. The FCC has been holdng a bunch of workshops on various aspects of the plan as part of the inputs. I spoke last week at the Benchmarks Workshop. As I remarked to the sparse crowd, you can tell this is the deep uber-wonk stuff that only a handful of us find terribly interesting and vitally important while the rest of the world zones out and watches videos in their minds. For the short version, I include my latest “Five Minutes With Harold Feld.” Those more interested can watch the entire panel or read my written statement here. My more snarky comments (including my assessment of the panel) below.

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Will Genachowski Help Obama Find A Heart, Brain and Courage To Face Glenn Beck and His Army of Flying Monkeys Flinging Poo?

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There are several rather astounding things about the current campaign of Glenn Beck against various Administration appointees. Most astounding, however, has been the Obama Administration reaction to date: quick capitulation in the face of relatively small pressure. Indeed, one of the reasons there was so little initial defense of Van Jones in progressive circles was because most of us were unaware of the attack until the Van Jone’s “resignation.” As compared to previous campaigns in the Clinton years or Bush years to oust various officials, pressure to fire Van Jones had not even approached noticeable, let alone “scary.” Indeed, I am sufficiently cynical wrt the DLC/Rahm Emmanuel faction of the Ds that I cannot help but wonder if the Beck-led anti-Jones campaign was merely a convenient excuse for pushing out a smart and effective progressive.

But whatever the reason, the Van Jones firing proved a major strategic blunder. It infuriated the Netroots and younger civil rights constituencies, who felt betrayed, and it emboldened Beck and his following to seek new “kills.” It also demonstrated the truth of Feld’s Rule of Political Power: “Your political power is directly related to your perceived ability to cause pain.” Within a week, Beck was claiming another kill in the form of Yosi Seargant at National Endowment for the Arts, prompting talk of an unstoppable McCarthy-esque crusade (or campaign of freedom, depending on your political perspective).

Among the latest targets of Beck and his followers is Mark Lloyd. I’ve known Mark for some years and consider him friend, so I am hardly the most impartial of defenders here. Besides, my Public Knowledge colleague Art Brodsky and others have written strong personal defenses of Mark and debunked the charges against him as well or better than I could. Nor is my purpose here merely to fulfill my Biblical obligation not to suffer “a tale bearer among thy people, nor stand by the blood of thy neighbor” (Lev. 19:16) by re-iterating the defense of Mark Lloyd.

Rather, I note this is a splendid opportunity for Genachowski to save Obama’s tuchus by showing that you do much better standing up for your own people than caving (one of the few lessons Obama could stand to learn from Bush). Whether the Van Jones “resignation” came from heartless political infighting from the DLC faction, brainless failure to consider the natural consequences, or simply lack of political courage, Genachowski has the opportunity to give the Administration a heart and a brain and — what it appears to need most these days — courage. Because, as the far too lengthy an wonky analysis below shows, this ain’t the 1990s anymore, and the best overall political strategy is to take a page from the Bush Administration and stand firmly with the base by telling these guys to bugger off.

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Comcast Channel Shifts — Looking for info.

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I’m getting email about Comcast migrating MSNBC and CNN out of its expanded tier to a higher priced tier while keeping Fox News on expanded tier in a number of markets. If this is actually going on, I’m mightily curious.

Such shifts do not happen casually. They are generally the product of fairly intense negotiations among cable operators and programmers. They also require advance notice to viewers. This makes me extremely reluctant to impute a political motive here. If NBC and Time Warner (the owners of MSNBC and CNN respectively) were being screwed against their will over a political agenda, I would have expected to hear it in DC. What mainstream coverage there is of this suggests it is part of Comcast’s general digital upgrade. So we should expect to see all remaining channels migrated off to the higher priced tier eventually. While that will constitute a significant rate increase, it will put everyone back on equal footing. Besides, as the DC Circuit instructed us all last month, cable operators have no market power and cannot influence the programming market, whatever your personal experience to the contrary may be.

So if anyone has more info on this and would like to either comment below or talk to me, I’d love to hear about it.

I suppose I should add that unless Comcast failed to give proper notice to subscribers before changing their channel line up, their is nothing the FCC can do about it, so don’t bother complaining.

Stay tuned . . .

Robert Reich Makes Best Public Option Video I've Seen To Date.

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I’ve been a Robert Reich fan for some time, and was terribly disappointed that he did not end up in the Obama Administration. Here, he gives the best 3 minutes on what the public plan is and how to get it passed I’ve yet seen.

Of course, in pointing out that good policy doesn’t just happen and that it needs work, he is singing from a hymn book I’ve been using myself for some time now.

Stay tuned . . . .

Whether Obama Will Fight For Public Option Is Irrelevant. The Question Is, Will We?

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Chris Bowers, as usual, hits it dead on in this piece on OpenLeft. While we may despair of the Democrats lack of spine, the question is whether we are willing to stand up and fight for our principles.

Opponents of the public option are willing to make angry calls, attend rallies, spend money like water to make their point. Why shouldn’t a rational member of Congress assume that they carry the majority if we cannot muster a tenth of the enthusiasm to fight for our principles?

Donna Edwards (D-MD) spoke at America’s Future Now in June. As the audience pressed their demands she responded “Look, I’ve been to a whole bunch of Progressive retreats. I know what the demands are. The question is whether any of you will actually make calls to members of Congress to try to make this happen.”

And now we find that the Obama Administration has taken the silence of the Progressive movement as a willingness to compromise. Why are we surprised? But the question is not whether Obama is a good or bad person, a traitor, a realist, a disappointment, or anything having to do with Obama. The question is, what are we going to do. As the Bible tells us:

It is not in Heaven, that you shall say: “Who shall ascend into Heaven and bring down the Word to us that we may hear it and obey.” Nor is it over the sea, that you shall say: “Who shall go over the sea and bring back the Word that we may hear it and obey.” For the Word is near to you, it is in your mouth and in your heart for YOU TO DO. (Deut. 30:12-14 )

As always, we must rely upon ourselves, not some imagined political party. How can we be betrayed if we will not even get up off our ass to fight?

Stay tuned . . . .

Canada Continues To Play With Itself For My Amusement — CRTC Allows New Tarrif for Metered/Capacity Limited Wholesale Services.

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Back in December, I was very excited by the decision of the Canadian Radio-Telecommunications Commission (CRTC) to permit Bell Canada to throttle traffic for its wholesale customers. This represented the first OECD country taking a major step away from mandatory unbundling since the FCC deregulated our telcos in 2005. As a lover of empirical data, the thought of another country playing games with its critical infrastructure to test market absolutism struck me as a welcome relief from the U.S. always playing the guinea pig on free market absolutism.

And now, CRTC has gone further. In this Order, the CRTC approves an interim tariff for usage based billing (UBB) or, as we would call it here, metered billing with a capacity cap. I’m not sure if, reading this, it merely permits Bell Canada to offer a wholesale metered plan or if it allows Bell Canada to drop their unmetered plans and offer only metered plans. If the later, CRTC has pretty much delegated the entire industry structure over to Bell Canada. But even if this is just an option, it lets Bell Canada set the business model for how ISPs can do metered billing. So again, Bell Canada is going to have pretty tremendous influence on how the business model for DSL delivery evolves going forward.

Bell Canada had also asked for a fairly steep charge against an ISP if the ISP could not identify the specific customer using capacity, since that would evade the capacity cap. Happily for independent ISPs in Canada, the CRTC decided to hold off on that one for a bit.

As always, I shall be very interested to see what happens as a result. It’s always rare to see a similarly situated country willing to become a laboratory for experiments with its critical infrastructure. I look forward to seeing multi-year data on what happens to their broadband penetration, pricing, and overall use as a consequence.

Stay tuned . . . .

So What's Up With That FCC Investigating Apple and AT&T Blocking Google Voice — Oh Wait, They Aren't . . .

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So while I was gone, Apple and/or AT&T turned down Google’s effort to get a Google Voice Application certified for the iPhone, so the FCC launched an investigation into the matter.

Except they didn’t. Not exactly. Which is extremely important on the delicate question of FCC authority. Actually, the FCC invited three companies involved in a very high-level spat on an issue pending before the FCC in two proceedings to provide them with useful information on how the market actually works.

I know, I know, this is all boring legal stuff that folks who care just about outcomes hate with a passion — or think is just cheap legal handwaving. But these things matter, both as a matter of law and and as a matter of policy. The fact is that the FCC is very carefully not exercising authority over anyone. The companies don’t even need to respond. However, if they fail to respond, they invite the FCC (and the rest of us) to assume the worst. Because allowing industry folks to foreclose needed agency action by simply refusing to provide necessary information is a crappy outcome we’ve lived with for the last 8 years (longer, really). Far smarter to invite industry folks to respond to questions, but decide that at some point you need to move with the information you have. Heck, if the FCC pulls that trick only once, I bet we’ll see lots more folks with relevant information willing to come forward.

So while I expect lots of folks to yammer about FCC authority on August 21 when the answers are due, they’ll be barking up the wrong tree. Won’t stop ’em, of course. But for those who would like a sense of what is actually going on from a legal/regulatory authority angle —

More below . . . . .

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D Block Drama Erupts! NENA Breaks Ranks! Wireless Carriers At War! Oh, the Humanity!

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Yes, for policy wonks in the summer, this is high drama. Once upon a time, before the 700 MHz auction, we used to have two very clear groups of stakeholders in spectrum policy land. We had public safety on one side and commercial wireless carriers on the other. (We also had us public interest folks, but no one — especially in the Wireless Bureau — gave a crap about us.) While these two groups might disagree internally, they solidified into utterly united and utterly opposing camps when confronting each other — regarding the battle for spectrum as a zero sum game with each side trying to wrestle every last MHz out of the other one.

But the 700 MHz changed all that. It cemented the spectrum advantage of AT&T and Verizon over all other carriers, breaking the commercial world into “AT&T and Verizon” and “carriers who need backhaul, roaming agreements, and special access — all of which they buy from AT&T and Verizon.” And it fractured consensus in the public safety community by creating the enormous loose end known as the “D Block.” As readers may recall (and if they don’t, you can check out my extensive coverage of the 700 MHz auction) the D Block was the private part of a public/private partnership where a private entity would bid and then build out the network, then enter into a sharing agreement with the public safety block. Sadly, for various reasons I will not rehash here, this didn’t work out.

And now, just when it looked like public safety was lining up behind AT&T and Verizon to lobby Congress to reallocate the D Block entirely to public safety, all Hell breaks loose. The “not Verizon and AT&T” wireless carriers have introduced a counter proposal to take back the 12 MHz on the public safety side of the partnership and auction the whole 22 MHz for commercial use as one, unpaired block. And they have received the backing, sort of, of the National Emergency Number Association (NENA).

What drama to greet the arrival of Chairman Genachowski and the finally fleshed out full FCC! Commercial wireless carriers at war! Public safety in disarray! Spectrum brother against spectrum brother in the ultimate spectrum policy smackdown!

I analyze the possible deals, the potential winners and losers, and my guesses on odds for success below . . . .

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