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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I Testify at Tomorrow’s Incentive Auction Hearing on Connection between Wireless Auctions and Larry Bird.

I am testifying at this hearing tomorrow at the House Energy and Commerce Subcommittee on Communications and Technology: “So, How’s that Incentive Auction Thing Going?”  You can read a copy of my testimony here. I can guarantee I am the only one to bring up the 1985-86 World Champion Boston Celtics, or ask the question: “What if The Chairmen and the Ranking Members of the committee and subcommittee were real estate developers?”

To elaborate a bit more, my testimony hits the following points:

1. We actually can still design an auction where we (a) get more low-band spectrum licenses for wireless broadband; (b) boost competition by making sure some of those licenses go to someone other than AT&T or Verizon; (c) pay for FirstNet all while (d) actually improving the current availability of unlicensed TV white space (TVWS) aka “super-WiFi” by opening up more TV white space in the urban markets. Oh yeah, and we’ll still have free over-the-air television for them what wants it.

Sounds too good to be true? Weird as it seems, we can for once have some serious wins on all fronts, giving something to everyone and overall improving public policy. We just have to be smart, patient, and work our way through this very complicated puzzle in a transparent process that emphasizes evidence rather than rhetoric.

Yes, you knew there would be a catch, didn’t you.

For those not up to reading my testimony, here is the brief summary of how we get to — if not the Promised Land, at least the ‘pretty decent place to be’ Land.

Step one: Please stop bashing FCC staff for trying to do their jobs.  Srsly. This is not helpful, particularly since your next question is: “why don’t we have more public notices on stuff.”

Step two: Stop refighting the “yes unlicensed” v. “no unlicensed” battle and accept that fact that the statute says “yes unlicensed.” We can find good ways to get enough open spectrum out there to create a national band for unlicensed use that will have significant value for urban and rural broadband (as well as other uses, like machine-to-machine). The FCC should have a workshop and Public Notice on this issue to get the ball rolling.

Step three: We need a “No Piggies Rule” to keep Verizon and AT&T from snarfing all the good spectrum licenses like the did back in’08. Yes, this is legal under the statute. And, while auction revenue is not supposed to be the focus of all this, a “No Piggies Rule” will likely increase auction revenue.

Should be a fun hearing. Remember, you can find livestreaming link on the Committee’s Hearing Page right before things start at 10:30 a.m. July 23.

Stay tuned . . . .

Update: You can see a copy of my opening statement here.

Voice Link Sitcom Now Playing The Borscht Belt — Shows Why We Need STATE Jurisidiction Not Just FCC.

New York is extremely lucky that it has not joined the Chump Parade and totally deregulated its telecom sector, although apparently it has such a proposal on the table. I say this because New York now faces one of those quintessential local problems that is much, much better handled at the state level than on the federal level.

It involves Verizon’s Voice Link product.  As regular readers know, That Darn Voice Link is the summer replacement series for Game of Sprint —  the Sprint/Softbank/DISH/CLWR drama which is now winding down.The plot for That Darn Voice Link is fairly straightforward. Scrappy little Voice Link, the daughter of the highly successful Verizon Wireless family, must get along with curmudgeonly old Uncle Copper while learning the family business and replacing Uncle Copper as the landline substitute. Will Voice Link provide a valuable alternative service? Or is Voice Link not yet ready for her big debut? Hijinks ensue!

In this week’s episode, Voice Link may have been selling herself a little too aggressively to some problem customers up in the Catskills. The State Attorney General thinks Voice Link crossed the line, but Voice Link insists she was just being helpful.

So is Voice Link going to get in trouble? Will the Federal Communications Commission get involved? Will this hurt Voice Link’s big debut on Fire Island?

Probably not. But it does underscore the very real question of what does it mean for Verizon to offer Voice Link as an alternative service while still genuinely offering copper, and stresses the importance of state jurisdiction — because there is no way the FCC can handle this sort of one-off local practice thing effectively.

 

More below . . .

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