Welcome To The 2015 Spectrum Season!

Happy New Year faithful readers! Following in the footsteps of Congress, The Daily Show, and just about everyone else here in D.C., I’ve been on hiatus for the last month or so getting rested and rejuvenated for the exciting new year of 2015. In particular, I am extremely excited about this year’s roll out of the “Spectrum Wars” series.  To make life easier for everyone (and more entertaining for myself), I will provide some summaries of the major regulatory issues currently on the table — including what TV series they resemble. As this is primarily intended for people trying to catch up on existing proceedings, I’m not going to speculate on new things that might happen.

Enjoy below . . . .

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The Last Time The FCC Classified A Service As Title II Was 2007. Here’s How It Worked.

Predictably, as we get closer to actually adopting Title II for broadband, we see much scrambling about by folks who never seriously considered the question of how Title II would actually work because no one in the press or the opposition ever really thought it could get that far. Opponents of Title II, needless to say, describe a blasted bureaucratic Hellscape smothering broadband service with (to quote the latest missive from a bunch of House and Senate Republicans) “1000 active rules that are based on Title II, and 700 pages of the C.F.R.”

 

After 6 solid years of Republicans opting for the partisan politics of obstruction rather than engaging on substance, such ridiculous claims hardly come as a surprise. It’s also a rather silly argument given that the bulk of those rules address things that would not apply to broadband and that everyone — even Republicans — actually like: making sure  9-1-1 works reliably, fixing rural call completion problems, keeping track of phone reliability and phone outages during natural disasters, protecting the privacy of our phone calls and requiring providers to report data breaches, etc.

 

Still, even without deliberate efforts to muck things up and exaggerate things, I recognize that this whole “Title II” thing doesn’t happen every day and lots of folks have questions about what the heck does this all mean. As I (and others) have noted in the past, classification doesn’t have to be a big deal. To illustrate this, I will go back to the last time the FCC classified a service — automatic voice roaming in the wireless world — as a Title II service. As we will see, this took remarkably little effort. The FCC explicitly rejected the requirement to do rate regulation or a requirement to file tariffs with the prices and did not need to engage in any extensive forbearance. They just said “nah, we’re not gonna do that.” The final adopted rules are less than a page and a half.

 

I will also note that despite classifying automatic voice roaming as a Title II service in 2007 (and classifying mobile wireless phone service as a Title II service in 1993), the wireless industry seems to be doing OK, with more than 300 million subscribers and (as CTIA never tires of telling us) several gagillion dollars worth of capital investment.

 

The automatic voice roaming decision also provides a nice comparison with a similar service classified under NOT TITLE II some years later. In 2011, the FCC issued an Order adopting data roaming rules, but couldn’t bring itself to go the Title II route. The result was an insanely complicated “commercial reasonableness” standard which requires wireless carriers to negotiate under a bunch of vague guidelines that still allow carriers to avoid coming to an actual deal. As the D.C. Circuit pointed out in affirming this approach, the FCC needed to leave enough room for carriers to discriminate against each other to avoid triggering the “common carrier prohibition.” Recently, T-Mobile (which opposes using Title II) filed a Petition on data roaming with the FCC alleging that the existing “commercially reasonable” standard is utterly useless unless the FCC adopts a bunch of “benchmarks” and presumptions to put some teeth into the standard. Without getting into the merits of the data roaming petition (which my employer Public Knowledge supports), it is interesting to compare how the Title II automatic voice roaming worked out v. the Title III/Title I data roaming rules.

 

I do not claim that reclassifying broadband as a Title II service (which, as I have noted before, was tariffed back in the day it was Title II) is exactly comparable. Rather, I offer this as an example of the principle of the Black Swan. Just as the appearance of a single black swan falsifies the statement “all swans are white,” the hysterical ravings of the anti-net neutrality crowd that classifying something as Title II would require the FCC to impose price controls, tariffs, and the occasional human sacrifice to avert structural separation is falsified by demonstrating that the FCC has, in the past, classified services as Title II and did not impose any of these things. In fact, the Title II solution worked out much better than the NOT TITLE II alternative.

 

More detail below . . . .

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Those Who Love Uber Should Also Love Unlicensed Spectrum. The Paradox of “Regulatory Property.”

I’ve decided that we should have a business with a limited number of licenses to conduct the business. All the people who got their licenses for free previously will, of course, be allowed to keep them. But now they can sell them as well. When we (very rarely) make more licenses available, we will sell them at public auction because, as we all know, auctions put the scarce resource in the hands of those who will use it for its highest, best use.” Letting people simply have free access would lead to wastefulness, inefficiency and devalue the resource.

Besides, by limiting the number of licenses and auctioning them off, we the government can make a lot of money without raising taxes. True, you can argue that by artificially limiting the number of licenses to make them valuable we are essentially creating a tax on the ability to do the business — we just collect it all up front. But we don’t like that argument so we will ignore it because “auctions put the resource to its highest best use” and if it is valuable, people ought to pay for it.

No, I’m not talking about spectrum. I’m talking about taxi cabs. State and local governments license taxi cabs. This creates an artificial scarcity. As a result, as anyone who owns a Taxi medallion will tell you, they are extremely valuable. And, as one might expect, the taxi cabs that benefit from this scarcity (and the states and localities that benefit from this scarcity) are less than happy at the thought of a new competitor, like Uber or Lyft, offering a competing service. It is a windfall to these guys to allow them to offer for free what we need to acquire — either at auction or in the secondary market — for money. If they want to compete, say the taxi cabs who have medallions, let the new entrants get medallions like us. When they become available.

OK, I was talking about taxi cabs, but y’all see where this is going right?

More below . . .

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Two Years Later, The Supreme Court Still Doesn’t Want To Review Red Lion v. FCC.

Almost exactly two years ago, I wrote a blog post called “The Supreme Court Does Not Want To Revisit Constitutionality of Broadcast or Cable Regulation. Get OVer It and Get On With Your Lives.” I bring this up because yesterday the Supreme Court rejected without comment what some commentators saw as the most likely vehicle for such a challenge, Minority Television Project v. FCC.

 

Not only did Minority Television Project provide the opportunity to overrule Red Lion and abolish all those pesky ownership limits and public interest obligations, it framed this as an opportunity to further expand Citizens United. How could the majority possibly resist, especially given the groupthink that the Supreme Court is simply lusting to overturn Red Lion and totally deregulate the broadcast industry at the first opportunity? And yet, somehow, they resisted. The FCC’s authority to impose broadcast ownership limits (and other spectrum ownership limits for that matter) remains not only intact, but subject to the lenient “rational basis” standard of scrutiny.

 

Nevertheless the groupthink that Red Lion and Turner Broadcasting are either already dead, or very sick and going to die, remains impenetrable. It has become the classic case of the self-fulfilling prophecy. except for stuff around the edges like the non-commercial set aside at issue in this case. To borrow from Stephen Colbert, the argument that Supreme Court has overruled Red Lion (and Turner Broadcasting) and therefore we should all ignore it doesn’t need facts; it has become “factesque.”

 

I unpack this below for those who don’t live and breathe this stuff.

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My Handy Guide To The May 15 FCC Meeting: What The Heck Is An Open FCC Mtg And How Does It Work?

Even before Chairman Tom Wheeler proposed to issue a Notice of Proposed Rulemaking (NPRM) on possible new net neutrality rules to replace the ones vacated by the D.C. Cir. the May 15 Open Meeting of the Federal Communications Commission (FCC) promised to be one of the more important meetings in recent memory.  As a result, it has become one of the more contentious in recent memory as well.

 

In addition to the net neutrality NPRM, we have an Order deciding key issues for the upcoming incentive auction (aka the 600 MHz auction, aka that really complicated thing where we pay broadcasters to get off spectrum they got for free by simultaneously selling it to wireless companies for mobile broadband). This mega item has two fairly important side pieces from my perspective: the future of unlicensed use in the TV broadcast bands (aka the TV white spaces (TVWS) aka “super wifi” aka “engineers will never be allowed to name anything ever again”) and possible limits on how much spectrum any one company can acquire (aka the “no piggies rule” aka spectrum aggregation policies aka “lawyers are not allowed to name anything ever again either”). The TVWS item has its own satellite proceeding about wireless microphones and coexistence between wireless mics and unlicensed use in an ever shrinking broadcast band.

 

So for those of you first timers, and those of you who have gone so long without a contentious FCC meeting you’ve forgotten how it’s done, I’ve prepared this helpful guide on “what is an open FCC meeting and how does it work.”

 

Mechanics of the meeting below . . .

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New Alliance of Orgs To Promote WiFi As Totally Awesome.

To calm myself from the news of the proposed acquisition of Time Warner Cable by Comcast, I will return to my happy place — spectrum policy. Specifically, stuff that promotes unlicensed spectrum as totally awesome. (Sorry, I just saw the Lego Movie so now everything is awesome!)

Lost in the big news of the Comcast/TWC acquisition last week was the announcement of the launch of WiFi Forward. WiFi Forward brings a bunch of companies and organizations that use WiFi heavily — cable companies, tech companies, the American Library Association, Best Buy, and others (you can find the list here).  You can also watch this 3 minute news video by the Wall St. Journal which talks about the coalition (and the notable absence of Verizon and AT&T, despite the fact that they use WiFi fairly heavily).

Although the group is called “WiFi Forward,” it is about promoting unlicensed spectrum generally and not just WiFi or TV white spaces. However, try saying “unlicensed spectrum” to a random person and you get a blank look, whereas everyone knows about WiFi as the home of the Great Intelligence. OK, not the most positive example.

 

Totally Awesome Resources!

Of immediate relevance to advocates for more unlicensed spectrum is the Resource Page.  In particular, I recommend the report by Dr. Raul Katz on the contribution of unlicensed spectrum to the overall economy. For those unwilling to read the full report, a look at the Executive Summary or just this infographic gives the big headline — unlicensed spectrum (all of it, not just WiFi) provided $222 billion in economic value to the U.S. economy in 2013. That includes about $36 billion saved by consumers from having WiFi in their homes (and thus avoiding data overages and having access to cool stuff).

 

That’s a fairly big number. One worth keeping in mind when you see rather foolish statements about how the value of unlicensed spectrum is inherently limited. While George Ford (author of the piece) acknowledges that “both licensed and unlicensed spectrum have significant value to consumers,” the statement that “the value of spectrum commons is limited because of the poor incentives that go along with them” appears refuted by actual facts. (Part of the problem, of course, is that unlicensed spectrum is no more a “commons” than it is “property.” But explaining this unfortunate failure of metaphor and the intellectual traps that have resulted requires a much longer piece.)

 

Anyway, it would be a shame for WiFi Forward to get lost in the other news from last week.

 

Stay tuned . . .

Globalstar’s Stellar Chutzpah: Trying To Hold Up New Free WiFi To Leverage “Licensed WiFi.”

 

A very few of us have paid much attention to something called the “Globalstar Petition.” Briefly, Globalstar would like a couple of billion dollars in free spectrum favors from the FCC to offer what it calls a “Terrestrial Low-Power Service” (TLPS) on its satellite frequencies. As Globalstar has the great good fortune to have frequencies right next to the 2.4 GHz band most popular for WiFi, Globalstar hopes to leverage existing WiFi equipment and offer a “paid, carrier grade” WiFi-like service.

 

Recently, Globalstar attracted my negative attention by trying to leverage a fairly important FCC proceeding to expand unlicensed spectrum use above 5 GHz. Globalstar has raised bogus interference issues in the 5 GHz proceeding, and rather unsubtly suggested to the FCC that it could solve the WiFi “traffic jam” by granting Globalstar’s Petition for spectrum goodies so we could have a pay for WiFi service instead of having more of that pesky free WiFi (you can find Globalstar’s extremely unsubtle quotes here on page 3 and here on page 2.

 

So it seems an opportune moment to explain:

 

  1. What’s going on with the Globalstar Petition;

 

  1. What’s going on with the UNII-1 Band in the 5 GHz proceeding;

 

  1. How Globalstar are being utterly unsubtle in their efforts to hold the 5 GHz proceeding to try to leverage their ask in their Petition; and,

 

  1. How Globalstar’s jerkwad-ittude in the UNII-1 proceeding raises serious concerns about Globalstar’s willingness to play nice with the 2.4 GHz band, which could undermine the entire “WiFi economy.”

 

More on Globalstar’s truly stellar chutzpah, and why the FCC may want to rethink granting the Globalstar Petition, below . . . .

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Cell Phones On A Plane Do Not Deserve The Same Freak Out As Snakes On A Plane

So it appears people like the idea of using their tablets on planes, but not using cell phones on planes.Or, to paraphrase Samuel L. Jackson, a lot of people do not want mother——ing cellphones on these mother—–ing planes.

 

Whatever the merits of this position, however, we should not ask the FCC to use interference rules for what is plainly a social policy. To the contrary, as the Washington Post Editorial Board rightly points out, the FCC ought to have rules that acknowledge reality. Bluntly, do we really want agencies to lie to us about technology rather than simply own the social policy?

 

For those freaking out over the possibility of adding “Loud Cell Phone Talker” to the airline bestiary along with “Crying Baby Beast,” “Barfy Neighbor” and “Snoring Person That Drops The Seat In My Lap,” I discuss a few things to give you hope before you start shooting out windows to pull cell phones out of planes.

 

More below . . . .

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Verizon Brings FIOS to Fire Island

As regular readers know, Verizon and I have had considerable differences about Verizon’s plan to replace the copper phone network on Fire Island destroyed by Superstorm Sandy. Today, Verizon acknowledged that customers do not find Voice Link an adequate substitute for traditional copper-based phone and DSL. Verizon will deploy FIOS to Fire island by next Memorial Day, offering voice and broadband (but not TV — everyone on Fire Island already has satellite and offering cable programming would seriously drive up the cost). Verizon will continue to offer Voice Link as a less expansive alternative for those who want it.

I’m pleased that Verizon has stepped up and recognized that customers just did not regard Voice Link as a substitute service for a traditional copper line — no matter how much Verizon at first tried to tell them otherwise. I’m also pleased because this is exactly what I asked Verizon to do back in May — replace copper with FIOS and offer Voice Link as a cheaper alternative to those who don’t want to upgrade to fiber. Which leads to the first important lesson from this:  Always Listen To Harold — it will make your life ever so much easier and save us all so much needless wasted time and effort.

In the category of lessons that might actually stick, however, I will note once again how critically important having a state commission providing oversight and the Federal Communications Commission (FCC) providing oversight proved to be. Without these important public forums to provide a focus for these complaints, and without the threat of regulatory backlash, no one would have any reason to believe that customers were unhappy and Verizon could have simply forced them to take whatever it wanted to provide. Instead, people stood up for themselves and forced Verizon to respond.

As we finish the series finale of the summer sitcom That Darned Voice Link, I reflect below on how we all learn some very important lessons . . .

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Quick on Verizon/Vodafone — $130 Billion is “Pro Forma,” But Shows Us Why VoiceLink Matters (And Why Wall St. Sucks).

The financial world is buzzing today with news that Verizon may buy out Vodafone’s 45% stake in VZ Wireless for $130 billion. Despite the fact that VZ’s entire company (both wireline and its 55% share of VZ Wireless) is valued at $133 billion, investors still rewarded this speculation by driving up Verizon stock 7%.

 

So a few quick things here. First, since this blog focuses on FCC stuff, the logical question is: “does the FCC have to approve the transaction.” The answer is: “yes, but it is an automatic approval so it should not generate any regulatory excitement — although some folks may try to leverage this.”

 

Verizon already controls all the decisionmaking power of VZ Wireless. They have “de facto” control. Basically, Vodafone just put in money and takes out profit, without having any real say in how VZ manages its operations. Because the law requires the FCC to keep track of who the licensee is, and approve any change in who the licensee is, Verizon technically needs FCC approval. However, because the transfer of ownership (while significant) does not actually change anything relevant from an FCC regulatory perspective, the FCC has rules that say “we will treat this a pro forma (Latin for ‘change in form’ but not a change in fact) filing and automatically approve it at the Bureau level.” So think of it as more like a change of address notification than as a full on application.

 

This happened in the Sprint/CLWR/Softbank transaction, when Sprint bought out Eagle Creek’s shares in CLWR. Anyone interested in seeing how this played out over there can see read the Public Notice granting the pro forma application here, and the Commission Order approving pro forma treatment of the Eagle Creek transaction here (starts at Par. 138).

 

What’s more interesting is what this transaction (and Wall St.’s reaction) tell us about Verizon, it’s long term plans, and how moronic Wall St. is in terms of allocating capital in line with public policy priorities. How can 45% of VZ wireless be worth almost as much than Verizon’s 55% share and Verizon’s landline business combined? Oddly, VoiceLink is part of the answer to that.

 

I elaborate below . . . .

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