Dr. Rose Proves It Was Spectrum Co. In The Kitchen With the Candlestick . . .

My good friend Dr. Gregory Rose has released two studies on last summer’s AWS Auction. I just bloged about them at length over at the Public Knowledge policy blog. So rather than repeat myself, I will merely say:

I argued after the AWS auction that cable companies and wireless incumbents had used the auction to kill DBS as a competitor. Rose proves that in his first report,
How Incumbents Blocked New Entrants In The AWS-1 Auction: Lessons For The Future.

Rose’s second report, Tacit Collusion In The AWS Auction: The Signalling Problem, looks at the use of bids to communicate. Again, as I’ve argued before, only by adopting anonymous bidding rules can the FCC stop bidders from suing the auction process to signal each other.

For the rest of my commentary, check out my PK blog.

Stay tuned . . . .

My Impossibly Long Field Guide for the 700 MHz Auction (It's Really Important, Even If You Haven't Heard About It Much In The Main Stream Media)

Few events in the wireless world matter so much, yet get so little coverage, as the upcomming 700 MHz wireless auction. Why? Because they’re hard, and the mainstream media (MSM to us “bloggers”) are afraid you will get all confuzzled and bored. Besides, isn’t non-stop coverage of Anna Nichole Smith more satisfying? (Hint: She’s still dead.)

Small wonder that even if you are in the minority of folks who have heard about the “digital television transition” and the “return of the analog spectrum,” you have not heard about the huge policy fights over how to auction off the single most important block of spectrum for the foreseeable future. Which is, of course, how the big carriers like it.

You can find a pretty good 12-page summary prepared by some investment analysts over here. But, being the highly-opinionated public advocate and believer in democracy that I am, I also provide a hopefully helpful guide for de-mystifying the swirl of players and activity attracted to the distribution of this multi-billion dollar block of spectrum licenses. Issues include network neutrality, open access, wireless competition, the future of broadband competition, and a whole lot of public safety stuff. It includes a cast of thousands from Frontline to Cyren Call to the Ad Hoc Public Interest Spectrum Coalition (I thought up the name myself! O.K., I was in a rush . . . .) and an army of incumbents that like the universe just the way it is, thank you and do not look kindly on those of us trying to shake things up.

I warn you, this is extremely long (13 pages, I probably should have broken it up into more than one post), and complicated, and all that stuff that mainstream media figures your pretty lil’ heads can’t handle without getting all confuzzled. So, if ye be readers of courage, willing to risk getting all confuzzled and thinking about how our wireless and broadband future will unflold for the next 10-15 years, read on! Or you can go back to Google News and plug in “Anna Nichole Smith” (yup, still dead).

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My Academic Article on Unlicensed Spectrum Gets Published

Every now and then, I take a break from the delightful and snarky world of blogging to dash off the odd researched piece for an academic journal. This is always an annoying and painstaking process, because academic journals want footnotes not just the occassional link. They also dislike articles that use terms like “incumbent whankers.”

Still, the effort (when I can find the time for it) is usually worth it — at least from my perspective. You can judge for yourself by following the link to the Commlaw Conspectus website and downloading From Third Class Citizen to First Among Equals: Rethinking the Place of Unlicensed Spectrum in the FCC Hierarchy.

For those unsure if its worth slogging through 39 pages of lawyer writing, here’s a summary. The FCC has a basic hierarchy of licensed spectrum, licensed by rule (family radio service and a few other things), and unlicensed spectrum. From a wireless perspective, the FCC exists for licensed spectrum, has a few oddball things licensed by rule, and has a few slivers of space open for unlicensed spectrum. Unlicensed spectrum is the “third class citizen,” required to shut off if it causes the least interference to licensed services while accepting any interference that comes its way. When the FCC allocates spectrum rights, it does everything possible for licensed services while looking with askance at the free-wheeling unlicensed poor relation. As a result, licensed services get choice spectrum and unlicensed services get the leavings — and that on sufferance.

In my article, I argue that the First Amendment calls for standing this on its head. Licensing of spectrum came about because old technology couldn’t handle everyone using this all at once we call this the “scarcity rationale,” because the need to license spectrum to avoid interference made licenses ‘scarce’). But because the FCC must give the approval for any new technologies, the technology to eliminate scarcity (and thus eliminate the need for exclusive licensing) will never come about. This circular reasoning offends the First Amendment. Accordingly, when the FCC considers whether to permit unlicensed uses, it should need to justify its decisions under a higher Constitutional standard than it does in other licensing cases (“intermediate scrutiny” rather than “rational basis” for all you legal types out there).

Besides, I argue, it’s also better policy.

While I hardly expect the FCC and the federal courts to read my piece and exclaim: “At last! What perfect wisdom! What fools we have been!” I do hope this helps advance the debate some. As with everyone else who publishes in a field where the debate has simmered for a few years, I argue for a “third way” between licensing and commons. Rather than eliminating exclusive licensing altogether, or proposing we split the spectrum down the middle, I propose allowing a gradual evolution in technology and until exclusive licensing will gradually wither away, with perhaps a handful of truly sensitive services still licensed exclusively.

Of course, if that happened, your cell phone bill would drop like a rock, ubiquitous wireless broadband would become too cheap to meter, and television and radio conglomerates would lose their precious monopolies on the airwaves. So don’t hold your breath.

Stay tuned . . .

Tim Wu Writes Incredibly Important Paper on Wireless Networks

Tim Wu, a brilliant scholar who combines an understanding of law, technology and economics to his writing, has written an incredibly important paper on wireless networks for the New America Wireless Future Program. You can download it here.

But Tim has done more than write a brilliant paper about why we need network attachment rules and network neutrality rules for wireless networks. He has — by accident or design — put his finger on the critical issue of public policy of our time. Do we regulate to increase public welfare, or do we only regulate to cure “market failure”?

What the paper is about, why it’s important, and what the opposition to it tells about the state of public policy these days, below….

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Boston City Council “Wicked OTAHD-ed”

According to this article, the City of Boston is considering banning or otherwise regulating the placement of DBS receiver dishes. The article reports that in a number of places these have become real eye sores, especially where a tenant moves out and just leaves the dish. Also, DBS comapnies are increasingly puting dishes in windows rather than all the way on roofs, and are generally not that concerned with keeping the neighborhood looking pretty.

Nevertheless, after the trouncing the FCC gave Massport last month over OTARD, this is pretty silly. Or, as those of us from Boston might say “wicked OTAHDed.”

Now there are ways the City can try to deal with the esthetic problems. For example, it could mandate that landlords permit use of rooftops for DBS providers (one big problem is often that landlords sign exclusive deals with incumbent cable operators, so only tennants with a southern exposure window can subscribe). Or Boston might require that any tenant that terminates DBS service remove the dish or who moves must remove the receiver dish. The city could probably require that if a DBS or other provider comes to install a dish and finds a “dead dish” connected to the residence, the DBS provider must remove it (I’m a little leary of this one because it imposes additional costs on the DBS provider and therefore may be preempted by federal law).

These are just ideas off the top of my head, so they may not be plausible. If the City of Boston wants some help, I recommend the Boston University Law School Legislative Drafting Clinic (of which I am an alum). But I hope they resist the urge to just pass something stupid that a federal judge will smack down in five minutes. That never helps anyone, and is especially irritating when taking a bit of time and effort to get it right can save everyone some grief down the road.

Stay tuned . . . .

GAO Report: Believing in Competition Doesn’t Make It Happen

Sometimes I think that the D.C. Circuit and the Republicans running the various Commerce Committees are the Arch Priests of Kiplings Gods of the Market, and it has brow-beaten the poor FCC through repeated reversals accompanied by tongue lashings into embracing this nonsense. The chief tenant of the Gods of the Market Place is that by deregulating the industry, competition emerges and consumers enjoy all the happiness that comes from a competitive environment. If this fails to happen as expected, adherents of the Gods of the Market practice a discipline called “Denial of Reality.” Practitioners of Denial of Reality believe that if you sufficiently discredit people who tell you about actual reality, and keep repeating that the reality you want actually exists, then Actual Reality will eventually by browbeaten into conforming to the reality promised by the Gods of the Market Place. And the FCC, like a good little penitent, keeps trying to produce reports that give the D.C. Circuit and the Republicans in Congress the world they want to see rather than actual reality.

Sadly, as GAO studies keep demonstrating, wishing for competition doesn’t make it so. This latest GAO Report on the lack of competition for business customers in major urban areas (and nicely explained in this piece here) is but the latest in a series of real world reports demonstrating that you can only ignore reality for so long before it bites you in the tender places. Sadly, however, it chomps down hard on the just and the unjust alike.

My analysis below . . .

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Latest AT&T/BS Merger Twist, and Why Bill Kennard Case is Different from Robert McDowell’s

In the latest chapter of the FCC’s most gripping “telecomnovella” Death Star Reborn: The AT&T/BellSouth Merger, FCC Chairman Kevin Martin has set in motion the process to get 3rd Republican Commissioner Robert McDowell “unrecused”. The FCC has been deadlocked 2-2 because Commissioner McDowell used to represent CompTel, one of the groups opposing the merger, creating a conflict of interest. (You can see my previous coverage explaining all this here.)

McDowell, while not champing at the bit to be unrecused, has announced he’s ready to serve if the FCC’s General Counsel tells him he has to vote to break the deadlock. So it becomes possible to get this done before the new Congress takes over. Although why this should be such a big deal is beyond me, since it’s not like Congress can directly interfere with FCC merger review, and the indirect threats for payback are already on the table.

Martin, conscious of the controversial nature of the move, wrote a letter to the Chairs and ranking members of the Senate and House Commerce Committees explaining the need for such extraordinary action. In doing so, Martin observed that the FCC General Counsel had previously authorized former FCC Chairman William E. Kennard to break a 2-2 deadlock despite Kennard’s previous recusal.

Now some months back, when folks first started wondering about the “McDowell Option,” I opined that while the FCC General Counsel could force McDowell to vote, such a move would be “extraordinary” and “To the best of my knowledge, it has never happened.” So what’s all this about Kennard then?

Art Brodsky does an excellent job explaining why the Kennard situation was radically different. But, my honor being involved and all, I decided to dig a bit deeper. As explained below, the facts on the Kennard case were so bizzare and different (starting with the fact that Kennard had not been legally required to recuse himself in the first place but had done so, in his own words “out of an abundance of caution”), that I still think my original statement stands and that, if the FCC unrecuses McDowell, and requires him to vote, it’s really breaking new ground.

More detail than you could possibly want (including a timeline and relevant quotes from Kennard’s public statement in 2000 on unrecusing himself) below….

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Appears that Rose and Lloyd (and me) were right . . .

A month or so back, I reported that Greg Rose and Mark Lloyd had written a study for the Center for American Progress concluding that incumbent wireless providers used spectrum auctions to block the mergence of new competitors. Then came the AWS auction, with its legion of bidders. “A ha!” Declared the Wall St. Journal and others in the anti-net neutrality, anti-regulatory, pro-spectrum property camp. “Look at how the market-based policies create competition! No need for regulation here!”

Turns out, not so much . . . . Either for new spectrum entrants or for broadband competition.

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Handicaping This Week’s Big Spectrum Auction

And what a long strange trip its been to get here! In 2004, Congress passed the Commercial Spectrum Enhancement Act (CSEA), which required government users to vacate some choice spectrum so the FCC can auction it. You can see the FCC’s official page for this auction here. You can see my recent general musings on this auction on the Public Knowledge policy blog here.

But none of this tells the whole story. After two controversial rulemakings, a pending legal challenge, and the appearance of a host of new bidders, FCC Auction 66: AWS-1 is ready to start this week on August 9. A look at the list of who has come to play signals an auction of unparalleled visciousness, determination, and probable manipulation by sophisticated bidders because the FCC wussed out and did not adopt anonymous bidding.

For those interested in my handicaping what a report from the Center for American Progress describes as a corrupt means by which incumbents keep out competitors and what I have called “a really wonky version of Worlds of Warcraft,” read on!

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But Do Spectrum Auctions *Really* Suck? According to Center for American Progress Report, You bet!

In all the hustle and bustle, it rather blew by that my friends Dr. Gregory Rose and Mark Lloyd have written this analysis of ten years of FCC spectrum auction data.

Summary — FCC auctions turn out to be great ways for incumbents to exclude new entrants and to bilk the government. They do not yield the promised efficiencies of distribution or even maximize revenue to the government. There are ways to improve the process, but the FCC open ascending auction systems just about ensures that a collection of incumbents can keep out any genuinely disruptive competitors and collude to minimize revenue to the government and maintain the status quo.

 

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