Tales of the Sausage Factory

An insider’s view of the media hegemony

Why Teens Are Smarter Than Regulators — The Difference between Ubiquity and Substitutibility

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Greetings gentle reader! Welcome to another chapter in my occasional series “What All Policy Wonks Need to Understand About Economics So They Can Spot The Industry Baloney” aka “The Econ 101 Gut Check.”

In today’s lesson, we look at two concepts often confused with one another. UBIQUITY, which means how widely available something is; and SUBSTITUTIBALITY, which means whether people regard one thing as a substitute for their first choice. Most arguments for deregulation of the media and the internet rest on confusing these related but very different concepts. For example, the argument that the availability of video clips on YouTube or other types of content creation confuses ubiquity and substitubality, as does the argument that cellphones compete with DSL and cable for broadband access.

But according to this USA Today article (reporting on this study by the PEW Internet and American life project), teenagers who actually use this stuff on a regular basis understand the differences perfectly. And if regulators, policy types, or even just folks who care about getting it right for its own sake want to get our national media and broadband polices right, then we better learn from these teenagers and get the difference between ubiquity and substitutibility straight.

Class begins below . . . .

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A Plug For My Friends At WIMN

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The awe-inspiring thing about the progressive reform movement is how many small organizations of dedicated people are making a major difference in the word.

Below, I reproduce a recent end of year letter from WIMN — Women In Media And News. These women run a small and incredibly effective shop. If you want to support organizations that are making a difference, these are good people who can really use the money.

Stay tuned . . . .

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Reform Week At the FCC — And Why Letting In The Public Is Better

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(Sadly, the original version of this got lost in the disk failure we had Tuesday. So this is a somewhat shorter reconstruction.)

With both Republicans and Democrats interested in reforming the FCC for their own reasons, it seems a perfect time to crank out a new white paper on reforming the FCC. As you can see from the press release, Common Cause and my employer Media Access Project have released a new white paper called Puting the Public Back In Public Interest: Painless Reforms to Improve the FCC, authored by yr hmbl obdn’t, fellow Wetmachiner Gregory Rose, and Common Cause’s Jon Bartholomew. Astute readers with good memories will recognize many of the recommendations from previous posts and writings of mine, including this from this speech I gave back in 2003. Most of these issues have festered for years, for all that they have gained recent notoriety.

In the same vein, I draw attention to Matthew Lasar’s piece, 5 Ways to Improve FCC.GOV, on his generally excellent FCC Blog Lasar’s FCC Letter. Lasar’s suggestions are good, and many of them are echoed in our white paper (although derived independently, great minds think alike and all that).

Coincidentally, a different piece by Matt, “Faux Celebrity Comments At the FCC,” triggered a serious question by Adam Thierer at the Progress and Freedom Foundation blog. Given that we have situations in which a single organization such as Parent’s Television Council is able to generate thousands of identical comments from its members, and that others are using fake names, and that there are even allegations that NAB submitted false comments fake brief text comments opposing the Xm-Sirius merger, or used deceptive means to get people to send in such comments, is there any real value in making it easier for the public to file brief comments? Doesn’t that just create opportunities for confusion and abuse, warping the regulatory process and shifting power away from the real public to the manipulators and unscrupulous?

Matt gave his answer here, in which he makes reference to what I call the “Alice’s Restaurant” rule of public comments: If one commentor says ‘my media sucks because of consolidation,’ that’s an outlier and you ignore it. If two people file, ‘my media sucks because of consolidation,’ then it’s just tree huggin’ liberals and you ignore it. But if two million people file such comments, that’s data—because we’ve demonstrated enough people care to at least make a minimal effort to express their feelings.

To amplify a bit, I would certainly like to see anyone who submits fake comments designed to persuade the FCC that people support a particular position when they don’t, either by forging their names and email addresses or obtaining these through deceptive means, should be subject to criminal penalties under 18 USC 1001. But I do not dismiss the ability of an organization to get its members to file a boatload of identical comments or complaints through a comment engine. This is the modern equivalent of the petition drive. In a previous generation, the determined citizen might spend a day in a mall parking lot or knocking door to door to get signatures on a petition in support of some candidate or in opposition to some law. Signing something in a parking lot to “send a message about global warming” or “show Washington you hate big government” takes about as much time and understanding as filling out the info in a standard “comment engine,” and tells us the same thing — a broad base of citizens cares at least enough to take a minute to send a message rather than just ignore it.

Policymakers have long experience with petitions and petition drives. They understand the difference between a petition with 10,000 names, 100 individual letters that talk about real life experiences, and the 5 people who take the trouble to actually call or make a visit to discuss their case. Each of these forms of contact provides a type of information, and decisionmakers weight it accordingly — or should.

In addition, as I went on at length after the media ownership vote, the entire regulatory process gains validity when the public perceives it has a meaningful way of communicating with regulators and can monitor the process. Taking brief text public comments in a a simple and straightforward fashion, and allowing the public to follow who files and how many people file, is an important aspect of this.

Finally, it reconfirms for those that have filed that they are not alone (or, perhaps, that they are), helping interested members of the public to organize and engage in discussion with each other. It provides a focal point for concerned citizens to act as citizens and make themselves heard in a way that goes beyond the mere ritual of voting. Even if public comments had no other value, it would be worth it for this benefit alone.

Which is why, I suppose, I’ve been such a fan of FCC reform for so many years. It’s not just about getting better data and creating a process that everyone perceives as more open and fair. These are important. But it is also about something more vital. Ensuring that in our modern administrative state, when so much of our government in a democratic society seems beyond our control, any means by which we maintain the vital link between the government and the governed is to be cherished and nurtured. It reminds us that we are free people in the land of the free, with both the right ad the responsibility to participate in the government decisions that matter to us. We are not spectators in our own lives, nor helplessly awaiting the decisions of others. We are citizens, from whose consent all sovereignty arises, and without whose consent sovereignty is tyranny. When we speak, the FCC (and the rest of the federal government) owes it to us to listen.

Stay tuned . . . . .

700 MHz Auction Pre-Game: Just A Bit More Unseemly (and perhaps untimely) Gloating . . . .

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So last summer, as we debated the rules for the upcoming 700 MHz Auction, one of the big questions we at PISC repeatedly kept getting asked was “so who is really going to show up to bid?” Especially on controversial issues like open access (and even its wussier cousin, device open access), block size (have big blocks and combinatorial bidding, or maximize smaller blocks), and anonymous bidding, the incumbents all kept repeating over and over again how any deviation from previous rules would keep people from bidding and the auction would be a failure and everyone would hate us forever. Commissioner McDowell reiterated these criticisms (at least with regard to the open device conditions on C Block) in his dissenting statement:

Curiously, however, in an effort to favor a specific business plan, the majority has fashioned a highly-tailored garment that may fit no one. It’s not what Silicon Valley wants; it’s not what smaller players have told me they want; and it’s not what rural companies want. To date, the Commission has received no assurances that any company is actually interested in bidding on the encumbered spectrum. Not one.

Because, of course, everyone knew Google wasn’t going to bid, the DBS companies weren’t going to be real players, and if anyone new was planning to show up, there was no sign of it. Even those most eager to see new competitors emerge (and who ultimately supported the PISC proposals) had their doubts and looked for as much reassurance as possible before taking a leap of faith that we were right.

Well, the FCC just released the list of applicants to bid in the upcoming 700 MHz auction. A total of 266 potential bidders filed (the bulk of the forms are “incomplete” due to procedural defects that will be corrected, but this is pretty standard). That’s more than the 252 potential applicants that showed up at this stage for the “wildly competitive” and “highly successful” AWS auction in August ’06. The list includes Google, Frontline, Echostar, and — as I kept insisting — a number of companies that could not possibly be predicted as bidders until bidding rules were actually determined and potential bidders got to assess whether they had a chance or not.

Towerstream is an excellent example of this last type of bidder. No one could possibly predict that they would show up, and many folks still can’t believe it. But Towerstream CEO Jeff Thompson cites the FCC “embracing the open access model supported by Google” as making the spectrum a “natural fit” for his entreprenurial wireless broadband company, and credits the FCC for making the auction amenable to new bidders. Nor is Thompson alone. A host of newcommers apears to have found the rules attractive enough to make it worthwhile to ante up for a chance to play.

We must still see what happens, of course. I can recall all the pre-game prediction for the AWS auction, where the most valuable licenses ended up in the hands of the usual suspects. In many ways, this is working out like my waiting to see if the Patriots complete a perfect season or if the Red Sox would win the World Series. There is lots of room still for things to go badly. But I can’t help but feel a happy, warm contented glow (and breathe a quiet sigh of relief) that I don’t have to answer the age old question “what if we throw a party and no one shows up?”

Stay tuned . . . .

Responding to Kevin Martin and Other Reflections On Yesterday's FCC Broadcast Ownership Vote

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(As you may have seen from John’s post, we lost several days worth of material yesterday and couldn’t get this posted promptly. So forgive me for posting what is literally yesterday’s news. And hopefully I will be able to get back or reconstruct the other posts.)

So the day has come. Martin has crossed the ownership Rubicon, and we now move on to the campaign to force Congress to over-rule the FCC vote while simultaneously fighting in the courts. (And if you want to see us stay in the fight and have a chance of winning, I highly recommend making a tax deductible contribution to my employer (and lead counsel for the case) Media Access Project).

First, a hearty congratulations to the Commissioners, and Kevin Martin in particular, for starting only an hour late from the announced time! This is quite the improvement from the last meeting. Who says FCC reform doesn’t work? Second, if it is going to take 2 hours for everyone to read their statements, please let us know so we can use the bathroom first. Third, if the FCC is going to make a habit of this, I recommend putting in a concession stand so we can buy snacks during the intermission.

That out of the way, a few more serious reflections below….

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The Consistency of Kevin Martin and the Faith Based FCC

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So many people are mad at Kevin Martin these days, but for so many different things. He is either a “tool of industry” or “interfering with the market,” depending on whom you ask. And no one seems more confused about this than the ranking member of the House Commerce Committee, Joe Barton (R-Tx).
Mr. Barton understands all bout de-regulating. That’s what good Republicans do, after all. But he cannot understand why Mr. Martin is making such trouble for the “highly competitive” cable industry. As reported in this article:

“It’s been said that consistency is the hobgoblin of little minds,” said Rep. Joe Barton, R-Texas, the committee’s senior Republican. “If that’s the case, we could use a few hobgoblins at the FCC.”

Barton complained that Martin plans to ease the cross-ownership ban while doing little on other media ownership restrictions and is attempting to limit the number of subscribers one cable system can reach.

“It baffles me how the same FCC can appropriately eliminate regulations for some segments of industry because of increased competition, and at the very same time refuse to deregulate or even impose more regulation on segments of industry that are creating that very competition,” he said.

Democrats, of course, accept that Mr. Martin as a Republican should be a tool of industry. To the extent they wonder about any apparent inconsistencies, they attribute it to Martin being a shill for the telcos. This, of course, does not explain why Martin denied Verizon’s request for deregulation in six major cities or why Martin told Verizon to bugger off on modifying C Block. But if he isn’t an industry tool, why did he ram through the sale of Tribune and waive FCC regs so that Tribune could appeal in the DC Circuit and try to get the entire newspaper/broadcast cross-ownership ban repealed?

While armchair psychology and analysis based on shreds of available information is always a perilous past-time, I will argue below that Kevin Martin is actually extremely consistent in his decisions and his management style. I say this neither as a criticism or as praise. But pivotal to understanding the actions of the FCC and therefore to exercising my stock in trade of effective advocacy is trying to make some guess on what actually drives the current FCC Chairman in making decisions. Feld’s Second Law of Public Policy states: “Public policy is made by human beings.” (OK, I know Clausewitz said it first about war, but the principle still holds.) So understanding the human beings making policy is a critical step in influencing policy — even if we understand them poorly.

Besides, it’s fun.

Guesses below . . .

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I Can't Take Credit For It, But I Did Think of It First….

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Every now and then, my hobbies and my professional life intersect. Indeed, my involvement in this blog comes from the chance meeting of myself and John Sundman at a science fiction convention in Boston called Arisia some years back. He was on a panel right before me, so I saw him in action and he stuck around and saw me. Curiously we both had the same reaction “Hey, that guy is the only one on the panel who makes sense or seems to know what he’s talking about. I should talk to him after the panel.”

So I was thrilled and delighted beyond measure to see that The Harry Potter Alliance, an organization that tries to organize Harry Potter fans for social/political causes, has joined with StopBigMedia.com to create the “Rock Against Voldemedia” campaign at PotterWatch. (We will also savor the irony that Kevin Martin looks amazingly like Harry Potter, but without the scar.)

No shocker that, as I have remarked on occasion, I am a huge Potter fan. So I wish I could pretend I had something to do with fortuitous and felicitous combination of my interests. Alas, however, I can’t. All the credit goes to the folks at Free Press and the Harry Potter Alliance.

I can, however, take credit for having made the connection between the media ownership fight and Harry Potter when Harry Potter And The Order of the Phoenix came out in 2003 and the media ownership issue was hot. I even wrote an op ed on the subject (which, alas, never saw print). But I did include it in a footnote in an article I wrote with Cheryl Leanza (footnote 37 for them what cares, although I recommend reading the entire article).

So while I can’t take credit for any activism, I can follow in the footsteps of our Glorious Leader, Stephen Colbert, and give a great big I CALLED IT!!!!

Lets hope my prognostications for the 700 MHz auction come off as well.

Stay tuned . . . .

700 MHz PreGame Show: Reading the Tea Leaves on Verizon and AT&T's Last Moves

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Well the short forms are in, and a surprising number of companies are keeping mum about whether they even filed or not. But a few more interesting tidbits have turned up — notably that Echostar will come to the ball without its dance partner from the AWS auction, fellow satellite TV provider DIRECTV. And Clearwire, an anticipated participant, will sit this one out.

But of course, all eyes turn to the expected big boys of the auction, the largest incumbents, the returning champions, those winners of wireless, the masters of mobility, AT&T and Verizon! These are the guys to beat, the multi-billion wireless guerrillas that should be unstoppable and able to dictate to the market whatever they want. With the cable guys eliminated, they should be on easy street. But with Google making its play, and Frontline getting a 25% “designated entity” discount if it bids on D Block, even the mighty incumbents need to tread warily and brace for battle, lest they end up playing the French to Google’s Henry V at the spectrum equivalent of Agincourt.

With the necessary paperwork in to the FCC on December 3 triggering the anti-collusion rules and ending the last chance to say or do anything related to the auction, every last minute twitch and adjustment of the incumbent will be under intense scrutiny. Professional prognosticators, armchair analysts, and even random bloggers like yr hmbl obdn’t will try to read the tea leaves and predict the outcome of the upcomming spectrum steel cage smackdown.

So with this in mind, it is interesting to note the unusual a last minute wireless asset swap between AT&T and Verizon. Traditionally, wireless carriers have avoided these sort of mutually beneficial deals, preferring to duke it out directly with rivals. But AT&T Wireless and Verizon Wireless are now fully assimilated into the ILEC Borg Collective. Is this last minute swap a sign that the major wireless players will act more like wireline incumbents and work to defend their common interests — such as resisting the intrusion of newcomers Google and Frontline? Or is it merely that there are so few players to whom the companies can divest these assets (in both cases, the swaps are for licenses the FCC ordered divested as conditions on acquisitions) profitably before the Dec 3 short form deadline that this trade was inevitable?

And what should we make of Verizon’s announcement it will embrace Google’s “android” open platform for wireless? Is it just another move by Verizon to adjust to the T. Googlii lifestyle needs and turn a challenge to its business model into an opportunity to make huge profits? Or is this a final effort by Verizon to ward off my Apocalyptic Google Prophecy by persuading Google it doesn’t need to win licenses to get what it wants?

Finally, there is Verizon’s Petition for Reconsideration asking the FCC to reverse its decision to allow Frontline to keep its “Designated Entity” bidding credit while still doing 100% wholesale, but only for D Block. Is this just yet-another-round of the non-stop sniping between Frontline and Verizon? A signal that Verizon is interested in D Block? Or even a possible feint to disguise it’s intention to go for C Block and leave D Block to others?

More below . . . .

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Is Nancy Pelosi Possessed By A Demon Trying To Sabotage The Democratic Party? Or Is The “SAFE Act” A Big Yawn?

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That’s the question I’m trying to figure out today.

It all has do with the passage last night of yet another bill written by luddites who see Internet access as the work of Satan and don’t care if they are screwing up the lives of actual women and children who depend on cheap access for their education, health care and livelihoods. While such things were a routine election year stunt under the Republicans, it is somewhat shocking to see Democratic House Speaker Nancy Pelosi (D-CA) pull something like this. As the Dems used a special parlimentary manuever reserved for “noncontroversial” bills to bring a fresh bill to the floor without any consideration by relevant committees or debates, (let us savor the irony of this happening the same day as the House Commerce Committee hearing labeling Martin’s FCC processes as “broken” for pushing items through in the dead of night without allowing debate or time for consideration) it is clear Pelosi and the House Democratic Leadership view this as something positive and important.

As I discuss below, however, according to the report by Declan McCaluagh, the bill is a potential disaster of epic proportions for poor women and children, minority inner city neighborhoods, and rural areas — all of whom benefit from the growing availability of community-based wifi and municipal wifi projects. And, as a political matter, it will create serious headaches for the Democrats among tech voters, younger voters who actually understand and rely on these servcies, and civil libertarians. Because just as these voters were finally starting to shake the long-standing stereotype of the Dems as the “Nanny State” party and regard the Republicans as the party that is generally anti-tech, anti-civil liberties, and far too obsessed about sex for its own good, in steps Ms. Pelosi and the rest of the Democratic leadership to alienate these guys in time for the ’08 election.

So is Pelosi possessed by a demon out to destroy the Democratic Party’s chances in ’08? Or — as equally Libertarian but usually more careful George Ou suggests — has famed Libertarian and generally anti-Democratic Party reporter (of “Al Gore Claims He Invented the Internet” fame, and, more recently, “Net Neutrality Is Dead and Buried — Thank God”) once again let his prejudices run away with him ad get in the way of accurate reporting? Although frankly, even if Ou is right, I think Pelosi and the Democratic leadership that rushed this through last night have done themselves no favors and — as is so often in the case with bills writen by a cobination of sincere ignoramaces with deep feelings and no sense with cynical political grandstanders — the proposed SAFE Act doesn’t actually do much to solve the real problem of trafficking in child pornography.

More below . . . .

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