Month: July 2011

CBO Scores The Senate Spectrum Bill (S.911): No Spectrum Pots of Gold — Really.

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Last week, the Congressional Budget Office (CBO) issued its “score” (how much a bill will cost or earn for the U.S. Treasury) for S.911(aka The Rockefeller/Hutchison spectrum bill). CBO estimated that all spectrum auctions proposed in the bill — incentive auctions, new federal spectrum, and generally extending the FCC’s spectrum authority — would net $24.5 billion. After expenses, including reallocating the D Block to public safety, the bill ended up netting only $6 billion for deficit reduction, disappointing supporters who had promised $10 billion in deficit reduction. More importantly than the revenue, however, the CBO explanation of the score highlighted the following for anyone who actually read more than the bottom line:

  1. We have no way to predict what an incentive auction will actually make, and have a lot of doubt this will work;
  1. We don’t believe you can get more good spectrum (the kind that fetches billions of dollars) out of the federal government;
  1. Trying to do spectrum policy right is very expensive.

For various reasons, however, CBO doesn’t come right out and say this in the same bold way I just did above. Instead, they drop little dollops of wisdom in the text, which requires a certain amount of decoding from Washington Weasel speak. Happily, I brought my Weasel Word Decoder (don’t come to Washington without one!).

CBO score decoded below . . . .

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My Ghost Town

My Ghost Town, illustration by Cheeseburger Brown

Towns die, when their time comes. The town I grew up in died right under my feet — it died while I watched. It isn’t even on the map anymore.

Once there were hundreds of towns like it: far flung on the frontier, each nestled in the shadow of an atmospheric processing tower whose rumbling works had been patiently revising the climate for centuries. In its heyday atmospheric processing employed thousands. It was the cornerstone industry of country life on this planet, the great smoking hubs at the crossroads of rude paths that linked wildernesses more hostile than anyone young today can easily imagine.

In those days we were fighting both the rocks and sand and frigid cold of the old world along with a million kinds of aggressive and voracious life from the new. Colonization isn’t for the faint of heart. In my grandfather’s time as many travelers stumbled into town just to die as to find a drink or a bed.

But eventually the sky turned blue, and one by one the processing towers were decommissioned. Including ours.
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These “Clouds” Have a Dark Lining

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Do you like dealing with your cable company or your bank? How would you like to resolve an account issue with them if they had cut off access to all your documents, email, contacts, pictures, links, and all else digital in your life?

It is important to recognize that the term “Cloud” is a pernicious misnomer. This isn’t Napster or Bit Torrent or a DHT. As both legally and technically implemented today, your vital data is not stored in the ether, owned and accessible only to you. It is simply stored on a huge corporation’s servers, accessible and controllable by them for any purpose and disclosure whatsoever, and with no protections for continued access by you. Ah, but Google are “good guys”, right? Well, any Google employee will tell you that the cult is not one of actions and good works of the form “do no evil”, but rather a self-ruling predestined “don’t BE evil.”

Anyway, we don’t have to imagine or guess what will happen. It has already has. Read the tale of Thomas Monopoly. There are bound to be many more concerning aspects of the still-experimental g+, such as this one. Indeed, my G+ invitation came through the artist and storyteller known as Cheeseburger Brown. He has now had to shut down his g+ account for fear of running afoul of Google’s anti-pseudonymity policy. Even as Google decides to make his commercial and artistic identity a social unperson, the man who illustrated the modern anticorporatist 1984 cannot risk loosing his gmail or blogger access. When I tried to comment on the corpse of his g+ identity, I am told only that “There was a problem updating your comment.” The point is not the degree to which these or comparable Facebook incidents are defensible or temporary, but rather that the Monopoly affair is not an isolated incident.

As a child I used to wonder how whole populations in history could collectively engage in self-ruination. Through the work of experimental economists such as Vernon Smith, we now know that people do indeed create market bubbles and bubbles of perception around ideas that they know to not be true, but which they’d like to get away with being temporarily true. Whether wanton violence during war or rapacious speculation in a housing bubble, people will abandon the rules they have always lived by as long as they believe that many others are now doing so as well. (I do not think we yet understand which people will abandon which beliefs under which circumstances.)

With this in mind, I have no doubt that people in this second part of the Information Age will happily give up their most important information to corporations that offer no protection for it whatsoever.

I do not think that the US government is currently inclined to help, nor the US voter inclined to demand protection for individuals. Read the tale of The United States v. Aaron Swartz. Among the principles we have collectively abandoned recently, is the dictum that power corrupts and absolute power corrupts absolutely. Hundreds of years ago, we designed our system of government with each limited-power group counterbalancing each other, and simultaneously modeled our economic philosophy the same way. But now we have radically allowed no limitation on the power, control, “speech”, access or operations of the largest corporations. We ignore the evidence of the effects of that we see today on our environment, economy, and government process. What we will soon have, then, is internationals answerable to no one, with access to everything.

PK Action Alert To Save the Future of Unlicensed Spectrum

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Despite the obvious reliance on unlicensed spectrum by Americans every day in the form of everything from wifi to baby monitors to RFID, the current mania for spectrum auction revenues combined with lobbying from companies opposed to the TV white space has put the future of unlicensed spectrum at risk. This is particularly true under the discussion draft circulated by House Republicans last week. That draft would require that before the FCC could allocate any new spectrum for unlicensed use, it would first have to have an auction that would allow companies to buy the spectrum for exclusive use. Only if everyone collectively outbid AT&T or Verizon for unlicensed would the spectrum go to unlicensed use. As Stacy Higginbotham at GigaOm notes, this would have devastating impact on the future of unlicensed and the innovation that comes out of the unlicensed bands.

As if that were not enough, the proposed bill literally allows companies to buy their way out of FCC consumer protection regulation.

We are trying to stop this before it’s too late.  Public Knowledge has created an Action Alert asking anyone who cares about protecting unlicensed, or opposed to letting companies literally buy their own rules, then help us this Friday (tomorrow) by telling your member of Congress not to sell off our digital future or let companies buy their way out of public interest obligations. Sign up for the PK mobile Action Alert and you will get a text message tomorrow letting you directly contact your member of Congress so you can tell them why this bill is a really, really bad idea.

I reprint the PK Action Alert below.

Stay tuned . . . .

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The AT&T/T-Mobile Fine Print

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Anyone who has a service contract with AT&T knows that there are two parts: the advertisement and the fine print.  The advertisement promises all kinds of wonderful things. The fine print explains how AT&T really has no legal obligation to provide them, and you have no recourse if AT&T doesn’t live up to its terms. The ad has a little asterix (*), to let me know to look for the fine print. For example, AT&T recently offered me a free 4G phone*. *DISCLAIMER: Provided I sign up for a minimum $15 data plan, 4G is available in limited areas, and other restrictions apply. They also promise I can download amazing videos*, DISCLAIMER: *provided I don’t exceed my capacity cap, in which case I will pay lots more money. Etc.

Unsurprisingly, the AT&T/T-Mobile deal comes with its own set of fine print. AT&T and its allies make all kind of promises about how the deal will encourage mobile broadband and create jobs ‘n stuff, while the actual FCC filings have all kinds of wonderfully crafted (from a legal perspective) fine print that explains all the limitations on these promises. Alas, AT&T doesn’t do nearly as good a job with the helpful* for fine print on it’s advertisements for approving A&T/T-MO as it does on its regular advertisements. I want to especially point this out to all the state governors that have supported the merger based on the advertising implying that the mighty AT&T lion is going to go all Aslan and spread broadband and jobs after it devours the sickly gazelle that is T-Mobile.   Based on the fine print, you have as much chance of seeing rural broadband deployment and job creation as the average AT&T iPhone user in San Francisco has of connecting a call and enjoying “unlimited downloads”* (*subject to bandwidth cap, phases of the Moon, and wicked packet-intercepting gremlins).

Advertising matched with FCC filing fine print below . . .

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One Word

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I’ve changed one term in my “Weapons of Math Destruction” post : “value” has been altered to read “interest” throughout the post.

The original public expressions of Metcalfe’s Law expressed the theoretical potential value of a communications network as being proportional to the number of pairwise connections — growing quadratically with the number of users). Similarly for community networks being valued by the number of subgroups under Reed’s Law — growing exponentially with the number of users.

I originally used the same terminology, but I’ve found the term “interest” to be less confusing. It’s hard to reason about what “theoretical potential value” means, but I think the best way to think about is that it is simply how “interesting” a network can be.

In fact, if you look at the capital valuation of a community company such as Facebook, you see that it has grown exponentially — in time, not in users. Also, the number of users has grown exponentially in time. Why?

  1. To have exponential growth in users, the number of users added each month must increase exponentially. The number of users each month is a direct expression of interest, which as Reed says, is in proportion to 2 to the number of users (in the previous month).
  2. I’m not quite sure how to look at market valuation.
    1. If market valuation is simply an irrational expression of exuberance, than we should see it increase each month according to interest, just like the number of users grows. That fits the data.
    2. However, investors may be assigning a rational valuation based on the expected potential revenue. That also fits the data, using a sober flat rate per user (of about $100).

This revision of “value” => “interest” lets us reason separately about user growth and monetization. For example, the current fashion for monetizing social media is based on either subscriptions, virtual goods, or advertising. Each of these are based on an amount per user, not per subgroup. Thus monetized value for these will grow exponentially in time just as the number of users grow exponentially in time, but not double-exponentially.