Tales of the Sausage Factory

Why Our Politics Are So Poisonous — It’s OK To Say “Thank You” and Romney Doesn’t Have a “Christie” Problem.

We spend so much time lamenting the poisonous nature of today’s politics. “Why can’t the other side even acknowledge when our side agrees with them?” We ask. “Why can’t we show simple human courtesy? Why can’t politicians set aside their partisan squabbles and do what is right for the country?” You want to know why? Look no further than the media frenzy and cynical sneering in response to Governor Chris Christie’s effort to set aside politics and do the right thing in the face of disaster.

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Tales of the Sausage Factory

If your cell tower loses power, be sure to thank CTIA and the D.C. Circuit.

As we hunker down to wait out Hurricane Sandy, some folks have noticed that if we lose power our cell phones might not provide the back up we expect. Cell towers require power, and if the back up battery is drained and local power is not yet restored then the network goes dead. We had this problem in the Katrina aftermath. The report of the FCC’s Katrina Panel recommended a requirement that carriers have power back up for towers. The FCC subsequently issued an order implementing several of the Katrina Panel recommendations, including the back up power recommendation.  Under the announced rule, carriers would need to ensure that towers had 24 hours worth of back up power. The FCC relied on its Title I ancillary authority to justify the rule — arguing that ensuring sufficient back up power to maintain communications was “reasonably ancillary” to its authority to ensure emergency communications.

Needless to say, the carriers were not thrilled with this expensive new requirement. They challenged in the D.C. Circuit. Ever happy to spank the FCC on behalf of industry, the court first issued a preliminary injunction against the rule taking effect. At oral argument, Chief Judge Sentelle and Judge Randolph, two of the more notorious FCC-bashers, ripped counsel a new one for relying on all the dopey old precedent about Title I ancillary authority. Judge Rogers noted that the FCC’s actions were justified under the court’s precedents, but Sentelle and Randolph were having none of it. Bad FCC! Extending regulatory power over carriers just because lives might depend on it and past precedent before we got here said you had authority to issue the regs!

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Tales of the Sausage Factory

I Propose A Commercial For Sprint’s Unlimited Data Plan

I recently switched from Verizon Wireless to Sprint. While Verizon definitely has the best network (sorry guys), I upgraded from a Crapberry Curve to a Samsung Galaxy S3 and wanted Actually Really Unlimited Data. Yes, I could have bought the phone at full price and kept my grandfathered “unlimited data” with Verizon Wireless. But, as readers of my very first Wetmachine post know, I try to vote with my wallet for good policy. Back in the day, I subscribed to a CLEC and DIRECTV, then switched to FIOS because FIBER IS BETTER and good policy. Besides, my wife has been a Sprint customer since forever and we save a bundle by combining into a single family plan.

Anyhoo, to get back to the point of this blog post. I am sure many of you out there have seen this heartwarming ad from Verizon Wireless called “Always There.” In it, a young lad preparing for his tuba recital looks out with disappointment to see only Mom and sisters in attendance. As young lad takes his seat, Mom launches a Verizon hot spot and young lad is thrilled to see father and grandparents attending virtually. Hurray! Shared data and Verizon’s 4G network save young lad from future abandonment issues from his workaholic father.

Unfortunately for young lad and his family, it better be a fairly short piece because Verizon’s data plans limit you to 4GB shared data per month for a Smartphone plan and up to 10 GB per month shared for a tablet/iPad. What if Mom had already used up bandwidth streaming big sister’s black belt test, for example? As this Sprint ad shows, fights over sharing scarce bandwidth are rapidly becoming America’s #1 source of family friction.

I recently encountered this actual problem in real life. My brother and his wife were delivered of a healthy baby boy last week. According to ancient Jewish tradition, we scheduled a brit milah (circumcision ceremony) for the 8th day after the boy was born. i.e., yesterday. Unfortunately, my Mom recently had back surgery, and could not make it down for the occasion. What’s a Jewish family to do? My Mom not able to attend her grandson’s brit milah? Oy! Such a shandah! And let me tell you, between the actual ceremony and all the speeches, we are not looking at some 2 minute recital here. Happily, my Sprint unlimited data contract and my Galaxy S3 provided a modern solution.

In the interest of promoting genuinely unlimited data plans (and thus biringing harmony once again to America’s families), I propose this new commercial for Sprint’s unlimited plan entitled: Data Caps Suck Foreskin.

Roll it . . . .

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Tales of the Sausage Factory

Will AT&T Try To Crash the Sprint/SoftBank Party?

Yesterday, Sprint moved to acquire a majority stake in Clearwire (CLWR) in advance of SoftBank acquiring a majority stake in Sprint. Despite some earlier speculation that SoftBank might have strategies that don’t include CLWR,  and despite disappointment from investors that Sprint won’t spend the extra bucks to acquire CLWR in its entirety, the move was pretty much expected. One of the main obstacles to Sprint in recent years has been its occasionally testy relationship with CLWR, and difficulties the two companies have had negotiating terms for Sprint’s use of CLWR’s spectrum and network.

What was odd, however, was the reaction from AT&T. Whereas the wireless world has generally been quiet, AT&T went out of its way to suggest the deal might night not be good for America. Brad Burns, an AT&T V.P., said in a statement:

“Softbank’s acquisition of Sprint and the control it gains over Clearwire will give one of Japan’s largest wireless companies control of significantly more U.S. wireless spectrum than any other company. We expect that fact and others will be fully explored in the regulatory review process. This is one more example of a very dynamic and competitive U.S. wireless marketplace, which is an important fact for U.S. regulators to recognize.”

So what’s up with that? Is AT&T simply sore because Sprint was the leading industry opponent to AT&T/T-Mo? Or, (as suggested by the last sentence), does AT&T have something more strategic in mind. And, given that Sprint is already “credited” with CLWR spectrum for spectrum screen purposes under the 2008 Order approving the current Sprint/CLWR deal, it is not clear what trouble AT&T (either directly or via proxy) could make.

I don’t think AT&T could get the deal blocked. But (as AT&T indicates) there are issues of foreign ownership that give a determined opponent with money and resources (and a grudge) a chance to make trouble. And there are some things AT&T could hope to extract that potentially make such a play worthwhile. Notably, if AT&T pushes regulators to view Sprint/CLWR’s combined 2.5 GHz spectrum as equal to AT&T’s much better spectrum,  AT&T could hold off any hard spectrum cap limit in the pending FCC spectrum aggregation proceeding or in the upcoming incentive auctions. Perhaps more significantly, AT&T could sideline Sprint — the largest industry advocate of spectrum aggregation limits  – from taking an aggressive position in these proceedings.

I explore this a bit below . . . .

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Tales of the Sausage Factory

How Antitrust Enforcement And Pro-Competitive Regulation Encourage Investment, Encourage Innovation, Enhance Spectrum Efficiency And All That Other Good Stuff Despite CW To Contrary.

In the past month, to the complete surprise of just about every analyst and industry watcher, foreign investors spent the equivalent of $25 billion to invest in competing carriers T-Mobile and to acquire control of  Sprint and ClearWire. AT&T has announced a whole bunch of network upgrades such as repurposing its 2G spectrum, clearing up the interference in the WCS band, and a seemingly endless stream of license acquisitions. While the last is perhaps not so unusual, U.S. Cellular has likewise been spending money to coble together a broader footprint using the less—than—stellar—but—better—than–nothing 700 MHz A block.

Quite a turnaround from the start of 2011, when the industry appeared on a glide-path for a duopoly. Last year, T-Mo parent Deutsche Telekom (DT) was looking for a U.S. exit, AT&T and Verizon seemed more focused on buying out competitors than on developing the spectrum they already held, cable operators were giving up whatever plans they had to enter the market, and competing carriers couldn’t find financing to build out networks or pick up licenses in the secondary market. So what happened?

The Department of Justice (DOJ) and the Federal Communications Commission (FCC) have made clear over the last two years that (a) we will have 4 national carriers, and (b) the FCC cares about ensuring enough spectrum access to keep Sprint and T-Mobile (and hopefully other competitors) viable. Contrary to all conventional wisdom, two years of FCC regulation like data roaming and special access reform, combined with antitrust enforcement around AT&T/T-Mo and Verizon/SpectrumCo, stimulates investment in the wireless industry and forces companies like AT&T and Verizon to get serious about developing the spectrum they need and ditching the spectrum they don’t need on the secondary market.

Does that blow your mind? Is that just all freaky and too much for you to handle in a neo-con policy world that worships The Gods of the Marketplace and can’t tell the difference between a “competitive market” and a “deregulated market?” If you think you can handle the wisdom, pilgrim, then see my explanation below. . . .

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Tales of the Sausage Factory

Book Review: Year Zero By Rob Reid

Every now and then, a book becomes the catalyst for a social movement. Off all the books on the same theme, the author somehow manages to bring together the threads of compelling narrative and graphic imagery that captures the growing tide of moral outrage and gives it shape and voice. Rachel Carson’s Silent Spring. Ralph Ellison’s The Invisible Man. Upton Sinclair’s the Jungle. Could Rob Reid’s Year Zero join this mighty literary pantheon, rousing the American people against the forces of copyright maximalism that keep trying to choke our freedom of expression?

 

Almost certainly not. But even if Year Zero won’t motivate you to join the U.S. Pirate Party, it will entertain you while educating you about how messed up our system of copyright law (and patent) have become, and introduce you to the stable of music labels, lawyers and lobbyists who work so hard to make it that way. Reid provides a satire in the science fiction/fantasy tradition of Gulliver’s Travels and Idiocracy that will make you laugh and wince at the same time. Those already all too familiar with the current sorry state of affairs will have the additional fun of guessing the real identities of Reid’s thinly disguised characters.

 

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Tales of the Sausage Factory

Some Common Misperceptions About Incentive Auctions, and Why They Matter.

I rarely gush enthusiastically over a Notice of Proposed Rulemaking (NPRM) from the Federal Communications Commission (FCC), but I will make an exception for the recently released Incentive Auction NPRM and associated Appendix on auction design. As Republican Commissioner Ajit Pai observed in his separate statement, it has become almost cliché to observe that this is “the most complicated set of spectrum auctions ever held by any country.” What the NPRM explains, if you are willing to plough through it, is why it is so insanely complicated.

 

Unfortunately, the complication has given rise to a number of misunderstandings about what is actually going on here. In this case, a failure to understand why this is so complicated, rather than simply knowing that it’s complicated, can result in bad policy.  The most critical misconception I have encountered to date is that the incentive auction involves wireless companies bidding for broadcast licenses, with the FCC acting as a sort of spectrum Christie’s. That is, after all, how this got sold and broadcasters and wireless companies seem to be the main players.

 

Below, I explain why this is not merely wrong, but why visualizing the auction in this way leads to policy choices that almost guarantee failure. It also bears directly on one of Commissioner Pai’s questions: why has the FCC proposed ending the auction as soon as the “victory conditions” set by Congress are met, rather than keeping the auction open as long as there appears to be the possibility of more willing bidders. . . .

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