Tag: fcc

700 MHz Auction: D Block Panic, Damping Expectations, And My Final Thoughts Before the Opening Bell.

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After so much pre-game hype, it’s hard to believe we have actually gotten down to the 700 MHz Auction week. The fun and games will start January 24, although we won’t know (much) about the auction until it is all over sometime in late February or early March.

Not surprisingly, the news that Frontline Wireless , the company that did so much to shape the rulemaking around the “D Block” public/private partnership, went belly up before the auction even started has triggered a round of hand-wringing about the fate of D Block and finger-wagging by those who always thought it was a bad idea to impose any kind of conditions on licenses. As a result, we see a slew of stories questioning whether anyone will bid for D Block (or, at least, meet it’s $1.3 billion reserve price), with some spillover questioning about the future of the auction itself.

While I agree with GigaOm that wireless auctions aren’t for wimps, I do think the panic over Frontline’s failure to scrounge up capital to make the necessary up front payment (the “ante” required to buy “bidding credits” to participate in the auction) is exaggerated. Nor am I as pessimistic that the auction will produce some groundbreaking changes as others, although it could well happen that we get through this auction with no new “disruptive third-pipe providers.” I think we will certainly see the auction hit the $10 billion Congress estimated (and the FCC set as aggreagte reserve price), and we will see C Block meet its $4.6 billion reserve price.

On the other hand, if things start to go poorly in the auction, we may see some panic moves by the FCC, particularly with regard to D Block. The possibility that the FCC may retroactively drop the reserve price on D Block (possibly without holding a reauction) may introduce strategic behavior into the auction. Of course, since no one (including the FCC) can actually talk about this possibility makes the speculation even more insubstantial than usual. Still, since the possibility does exist, and because I think such a course would create real problems with the auction, I briefly discuss it below.

Analysis below . . . .

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Cleland's “Common Sense.”

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“You keep saying that word. I don’t think it means what you think it means.”
–Inigo Montoya, The Princess Bride

I suppose it’s just overkill for me to pounce on Cleland’s over-the-top (even for him) blog post purporting to make the “common sense case” against our complaint against Comcast and Petition for Declaratory Ruling. After all, Dave Isenberg and others have already taken this on. But (a) it helps to restate the facts and focus on the issues, and (b) it gives me a chance to quote Angels by Within Temptation, and I ABSOLUTELY LOVE THAT SONG (In fact, if y’all haven’t done so, scurry to your favorite place to buy music online and download this and their other stuff. I’ll wait . . . .)

Cleland’s claims can be divided into two: whether Comcast’s behavior was “reasonable network management” and whether the FCC Policy statement is enforceable. I shall address each (and get to the music quote) below . . . .

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Time Warner May Pilot Metered Pricing With Easy Consumer Monitoring Tools. Good for now, but bad for ecommerce in the long run.

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As reported by Broadband Reports and now confirmed elsewhere, a Time Warner internal memo indicates Time Warner will pilot a program where it has an explicit bandwidth cap, and users that exceed the cap will pay additional explicit fees — rather like what happens now with your standard cell phone package where you buy a bundle of minutes and then pay for any overages. The pilot will include a website to allow customers to track their usage, moderate their behavior, or buy additional capacity if they wish.

I agree with Dave Isenberg that this is the best way for Time Warner to handle its network capacity constraints and address the supposed 5% of users gobbling 50% of the bandwidth. We can expect some heavy users to move to other networks without caps, but also expect that users that use much less capacity and frustrated by congestion caused by heavy use by others to prefer plans like Time Warner’s because it should produce a less congested pipe overall.

I would be remiss if I failed to note that I was just musing about this the other day, giving me a chance to do another Stephen Colbert I CALLED IT!!! dance.

O.K., shameless gloating over. Analysis below . . . .

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Follow Up On MI PEG Lawsuit

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So the judge heard the motion for a restraining order by Dearborn and Meridian to keep Comcast from migrating PEG channels to digital. The court issued the restraining order, finding that the towns were more likely than not to prevail on several of their issues, that Comcast would suffer no harm from the delay, but that the cities would potentially suffer irreparable harm if Comcast migrated the PEG channels to where most citizens couldn’t see them. (You can find the opinion, the pleadings, and other useful information here.)

On the question of the definition of “basic tier” I raised in yesterday’s post, the court found:

1) Nothing requires a cable operator to offer the basic package as all digital or all analog, so it is more likely than not that Comcast can migrate PEG to digital while keeping broadcast channels analog.

2) However, cable operators must offer the basic tier on equal terms. Requiring rental of additional equipment to get part of the basic tier therefore is more likely than not a violation of law.

A preliminary restraining order is not a final judgment. The court must make a determination on what arguments are “likely to prevail.” But the court may rule otherwise once the questions are fully briefed and argued. Hence, the “more likely than not” language.

But the courts findings produce some oddball results. By implication, at least so far, the court accepts that the obligation to offer a “basic tier” persists even after the FCC finds “effective competition.” But despite what I would think is fairly straightforward legislative language and strong legislative language, the court thinks it more likely than not that cable operators can treat the elements of the basic package in a different way from each other.

I expect fights over the basic package and the meaning of Section 623(b)(8) to become much more common, as cable operators try to migrate more popular programming to digital and look to stop carrying analog after the digital transition. For me, the real question is: “Will the FCC weigh in?” If so, when, and how? Under NCTA v. Brand X (yes, that Brand X), the FCC can weigh in at any time, since a decision by a court deciding the issue does not alter the deference due to the agency. So there’s no rush for the FCC to assert jurisdiction on its own. Cable operators are rather unlikely to rush in and ask the FCC to start a rulemaking to preempt the states on this issue. So will someone else go to the FCC and ask them to resolve the issue? PEG supporters or local governments would be a logical choice, but they don’t exactly have warm fuzzy feelings about this FCC Chairman given his willingness to preempt local franchise authorities to the detriment of PEG and local consumer protection. Especially given the outcome in Michigan (which buys time) and the possibility of Congressional help, I expect the PEG folks to wait and see what the new FCC looks like before going to the FCC.

Broadcasters might also look to get the FCC involved early, rather than wait for a situation to develop. But that seems unlikely. Still, if folks at PBS or folks representing the independent affiliates get spooked, or if problems develop in the field, we may see the broadcasters come in.

Finally, the FCC itself could wake up and notice the issue. But that also strikes me as unlikely.

Stay tuned . . . .

Martin Gets the Ball Rolling On “Blocking” Investigation: What Does It Mean And What Happens Next?

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As always, I am impressed with the ability of so many people to hate whatever Kevin Martin does, and for so many different reasons! At CES, Martin announced that the FCC would investigate allegations of blocking content and determine whether they violated the FCC’s four broadband principles. Comcast pledged to cooperate in any investigation (although, unsurprisingly, Comcast representatives — along with supposed object of Martin’s affection AT&T and other big telcos and cablecos — said at CES they would restructure or eliminate FCC altogether).

As I said in my PK blog post, while details remain unclear, I am “cautiously optimistic” that this will be a good thing. But it did not take long for the folks in the “Martin is a bastard 24/7 crwd” to express themselves. DSL reports doubted this would go anywhere, while the “why ya gotta hate on cable” crowd at Techdirt opined that Martin would never investigate if it were a telco rather than a cable co.

So we flash forward to yesterday, when new developments began to percolate out of the FCC. Of significance:

1) The FCC issued a public notice asking for comment on our Petition for Declaratory Ruling that Comcast’s “network management practice” of messing with BitTorrent uploads violated the FCC’s “Broadband Policy Statement,” which includes a principle that network operators may not block or degrade content or applications. In a separate public notice (but as part of the same proceeding), the FCC also seeks comment on the Vuze Petition for Rulemaking on how broadband access providers handle and shape IP traffic generally. (Copy of Vuze Petition here, copy of our Petition here).

2) Separately, the FCC issued a separate public notice seeking comment on a Petition filed by Public Knowledge and the usual suspects asking the FCC to declare that wireless carriers cannot deny short codes or block text messaging. This goes after Verizon’s high profile “oopsie” of denying a request by NARAL for a short code. Although, as we pointed out in the Petition, the more likely and pernicious problem is with plain old anticompetitive blocking, such as denying a short code to VOIP provider Rebtel.com and denying applications to major banks offering competing services.

3) Comcast confirmed that the FCC has lanched a formal inquiry into whether it violated the FCC’s broadband policy statement. Comcast reiterated that it will fully cooperate with the FCC, and expects any investigation to show that Comcast did not block content and has engaged in legitimate network management practices.

Not bad for a commitment made a week ago. But what does it mean and where will it go from here? Analysis below . . . .

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700 MHz, Part I: How Do the Bidders Compare to AWS-1?

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This is the first installment of a three-part essay on the upcoming 700 MHz auction which the FCC will be starting in January 2008. Part I looks at the aggregate data on potential bidders and compares them to bidders in the AWS-1 auction. Part II examines the new entrants and major actors in detail. Part III analyzes potential bidding strategy on the part of the most important actors in the auction.

It is difficult to understand why so much is being made of incomplete applications and the postponement of the final application and upfront payment deadline to January 4, 2008 for the FCC’s 700 MHz auction. This is FCC business as usual as far as auctions are concerned. Auction 44, the Lower 700 MHz auction, was postponed from June 2002 to January 2003, and of 153 original applicants only 125 qualified with upfront payments. The second Lower 700 MHz auction, Auction 49, was postponed to May 2003, and 56 of 60 applicants qualified. The AWS-1 auction, Auction 66, was postponed from June to August 2006 and had 171 incomplete applications (and 81 completed) as of July 2006; ultimately 168 bidders quaified and made upfront payments.

Looking at the applicant pool, the potential 700 MHz bidders differ somewhat from the AWS-1 bidders in the aggregate:

more below…

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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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Nothing Like Biting Industry On The Ass To Get Republicans Hot For Process

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OK, color me cynical, but I find this recent bipartisan interest in the fairness of FCC processes a source of some considerable eye rolling on my part. Not because the issue isn’t timely, important, etc., etc. But because it wasn’t until the cable industry started bleating their little heads off that this amazing bipartisan consensus suddenly emerged.

For some background here, I wrote my first major paper on how badly the FCC processes suck rocks back in 2003. I and my employer, Media Access Project, have complained about the crappy way the FCC behaves going back to when the Democrats ran the show and the Media Bureau routinely issued “letter opinions” and developed “street law” that eventually became binding agency precedent. The whole business of how stations could circumvent the ownership limits by engaging in local marketing agreements (LMAs) and joint sales agreements (JSAs) which sold everything but the actual license was bitterly fought by MAP and goes back to the Bush I administration. And yes, I fully agree with the recent GAO Report about how FCC processes favor industry over the public because the long-standing relationships between FCC staff (including career staff well below the Commissioner level) and industry become back channels for critical information and influence.

But it sticks in my craw no end to see Republicans come alive to this issue for the first time because it bit the cable industry on the rear end instead of sticking it to the public interest community.

Nor am I overly thrilled with my friends and colleagues in the movement who seem to believe that Martin invented this mess. Certainly Martin has used every procedural device and negotiating tactic available to him. He is, as I have observed on more than one occasion, a hard-ball player. And his hrdball negotiating tactics — a huge list of agenda items, last minute negotiations, everything Adelstein complained about in his concurrence at te last meeting — have clearly generated ill-will and suspicion among his fellow Commissioners.

But when I think about all the crap that Powell pulled as Chairman with nary an eyebrow raised and compare it to the conduct of this FCC, I could just weep. Martin met with us in the Public Interest Spectrum Coalition (PISC) on multiple occasions when Senate Democrats wouldn’t even invite us to testify. And I still remember back in 2003 during the Comcast acquisition of AT&T Broadband that it was Martin who insisted that Powell issue a written denial of our motion to get access to certain agreements so that we would have a basis for appeal.

So while I normally am in full agreement with my friends at Free Press, I must vehemently dissent from their apparent insistence that Martin has debased the FCC’s processes to new depths. Martin’s FCC is such an improvement over the pro-industry/anti-public interest/don’t bother us because we pre-decided it cesspit that was the Powell FCC that these allegations can arise only because Free Press did not exist when Powell was running the first dereg show. As George Will noted, Michael Powell met a total of twice with public interest groups (once with my boss, Andy Schwartzman, and once with Consumers Union’s Gene Kimmelman) and conducted exactly one public hearing outside of DC before issuing his ownership order — in far off Richmond Virginia.

And as for the recent Tribune merger — please! I certainly disagreed with the result, but Martin has nothing on Powell’s former Media Bureau Chief Ken Ferree. Ferree twisted FCC law and process like a pretzel to give Tribune a waiver extension it didn’t deserve. This is the same Ken Ferree, btw, who informed the public interest community that the FCC would hold no public hearings on media ownership because the FCC didn’t need “foot stomping” to make a decision. Indeed, the list of the sins of Ken Ferree — whose arrogant disregard for process remains unsurpassed in the annals of the FCC — could fill several more pages of blog postings.

And while all this crap was going on, we had nary a peep from the Republicans in Congress. But as soon as Martin made it clear he intended to actually enforce the existing law against the cable industry, SUDDENLY Congressional Republicans woke up to due process issues and beagn to fret about “abuses of power” and Martin being “out of control.”

I can forgive my colleagues in the movement who weren’t around the first time. And I understand the Congressional Democrats, who were either out of power when Powell was running the show or simply not yet arrived on the scene. Certainly Markey and other Congressional Democrats were equally loud in their complaints about process when Powell sprang a spanking new “diversity index” on the public with no warning as they have been n recent weeks against Martin — but being in the minority their protests amounted to little. But when I hear Republicans like Barton and Upton, who positively applauded sticking it to the public time and again, rush to the defense of the poor beleaguered cable industry on process grounds, I have to say something. Even for the self-serving cynicism and hypocrisy that passes for principles in the Republican party these days, this is just too much.

I certainly hope the concerns of Mr. Boehner, Mr. Sunnunnu, and the other Republicans that have suddenly become obsessed with process persist after their master in the cable industry get what they want.

Stay tuned . . . .