Tales of the Sausage Factory

What You Need To Know To Understand The FCC National Broadband Report.

The FCC is required by Congress to do lots of reports. Of these, the one that gets the most attention is the annual Report on broadband deployment under Section 706 of the 1996 Telecommunications Act (47 C.F.R. 1302). Sure enough, with the latest report announced as up for a vote at the FCC’s January open meeting, we can see the usual suspects gathering to complain that the FCC has “rigged the game” or “moved the goal post” or whatever sports metaphor comes to mind to accuse the FCC of diddling the numbers for the express purpose of coming up with a negative finding, i.e. That “advanced telecommunications capability” (generally defined as wicked fast broadband) is not being deployed in a timely fashion to all Americans.

 

As usual, to really understand what the FCC is doing, and whether or not they are actually doing the job Congress directed, it helps to have some background on the now 20 year old story of “Section 706,” and what the heck this report is supposed to do, and why we are here. At a minimum, it helps to read the bloody statute before accusing the FCC of a put up job.

 

The short version of this is that, because between 1998 and 2008 the FCC left the definition of “broadband” untouched at 200 kbps, Congress directed the FCC in the Broadband Data Improvement Act of 2008 (BDIA) (signed by President Bush, btw) to actually do some work, raise the numbers to reflect changing needs, and take into account international comparisons so as to keep us competitive with the world and stuff. This is why, contrary to what some folks seem to think, it is much more relevant that the EU has set a goal of 100% subscription of 30 mbps down or better by 2020 than what is the minimum speed to get Netflix.

 

Also, the idea that the FCC needs a negative finding to regulate broadband flies in the face of reality. Under the Verizon v. FCC decision finding that Section 706 is an independent source of FCC authority to regulate broadband, the FCC gets to regulate under Section 706(a) (general duty to encourage broadband deployment) without making a negative finding under Section 706(b) (requirement to do annual report on whether broadband is being deployed to all Americans in a “reasonable and timely manner”).

 

So why does the FCC do this report every year if they already have regulatory authority over broadband. Because Congress told them to do a real report every year. This is what I mean about reading the actual statute first before making ridiculous claims about FCC motivation. Happily, for those who don’t have several years of law school and are ld enough to have actually lived through this professionally, you have this delightful blog to give you the Thug Notes version.

 

 

More below . . . .

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Tales of the Sausage Factory

Net Neutrality: Tomorrow Is The Judgement Day (Well, Oral Argument).

So here we are. One day more until oral argument on the FCC’s February 2015 decision to reclassify broadband as a Title II telecom service and impose real net neutrality rules. We definitely heard the people sing — 4 million of them sang the songs of very angry broadband subscribers to get us where we are today. But will we see a new beginning? Or will it be every cable company that will be king? Will Judges Tatel and Srinivasen and Senior Judge Williams nip net neutrality in the bud? Or will we finally meet again in freedom in the valley of the Lord?

 

You can read my blog post on the Public Knowledge blog for a summary of the last 15 years of classification/declasification fights, rulemakings, and other high drama. You can read my colleague Kate Forscey’s excellent discussion of the legal issues in this blog post here. This blog post is for all the geeky Tales of the Sausage Factory type factoids you need to know to really enjoy this upcoming round of legal fun and games and impress your friends with your mastery of such details. Thing like, so how do you get in to the court to watch? What opinions have the judges on the panel written that give us a clue? What fun little things to watch for during argument to try to read the tea leaves? I answer these and other fun questions below . . .

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Tales of the Sausage Factory

My Insanely Long Field Guide To the LTEU Dust-Up Part II: A Storm of Spectrum Swords.

 

The Vorlons have a saying: “Understanding is a 3-edged sword.” In this case, the three edges are the Wi-Fi dependent, the LTE dependent, and the Federal Communications Commission (FCC).

 

Last time on Spectrum Game of Thrones (hereinafter “SGoT”) I spent 6500 words discussing the first two edges of the sword. The Wi-Fi dependent side has strong reason to suspect the LTE-U crowd of either reckless indifference or actual malice toward deployment of Wi-Fi based streaming services in the newly refurbished U-NII-1 band up in 5 GHz. Even if the Wi-Fi Dependents could trust the motives of the LTE-U crowd, what happens if everyone is wrong about the ability of the two technologies to co-exist? Under the current structure, the Wi-Fi dependents would be screwed, and they could do nothing about it. So the rational Wi-Fi Dependent must fight tooth and nail against deployment of LTE-U.

 

It doesn’t help that the Wi-Fi Dependents know that this is an utterly impractical solution for the long term. Unless there is a way to answer the two questions central to the survival of Wi-Fi streaming in U-NII-1 in the face of LTE-U (what happens if something goes wrong, what happens if somebody deliberately does something bad post-deployment), rational Wi-Fi dependents have no choice but to fight deployment.

 

The LTE-U crowd, for its part, has good reason to want to deploy LTE-U and has a legitimate gripe that Wi-Fi Dependents cannot keep saying no without defining the conditions for yes. If we admit the possibility that we can deploy LTE-U consistent with reasonable use of Wi-Fi (which everyone does), then there has to be some way to actually deploy it. And while I savor the fine irony of seeing licensees in the same position I have been in countless times, it is still crappy policy. Also, unlike me and other would-be new entrants, the wireless guys and Qualcomm have enough political muscle to make the current stalemate untenable. Eventually, they will get to deploy something.

 

Which brings us to the third edge of the Vorlon sword of understanding – the FCC. As I shall explain below, government actually is the solution here. Not by imposing a standard or a rule, but by providing both sides with a process for resolving the problem. As a happy side effect, this will also help resolve the general class of problems that keeps coming up on how to manage more and more intense use of the airwaves. Just like we all learned in high school math, and most of us forgot about 30 seconds after the exam, you solve an intractable problem by trying to break it up and simplify it into solvable problems.

 

The only problem is, and I know most people are not going to believe me, the FCC actually hates asserting and clarifying its authority. Yes. Really. Which gives rise to the question of whether the FCC actually has the willingness to do what needs to be done and create a general solution, or if they will continue to try to do the minimum possible, what I call the “Snow Goons Are Bad News” approach immortalized in this classic Calvin and Hobbes strip.

 

So, as we get to SGoT 2: Storm of Spectrum Swords, we come to another dramatic turning point. Will the Wi-Fi Dependents and the LTE-U Dependents see the wisdom of allowing the FCC assert authority over the land of Spectrumos? Can the FCC be persuaded to fulfill its destiny and its duty? And will the anti-Regulatory Zombies from beyond the Wall crash the party and devour both Wi-Fi and LTE-U because of their hatred of the FCC?

 

More below . . .

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Tales of the Sausage Factory

My Insanely Long Field Guide To The LTE-U Dust Up. Part I: Spectrum Game of Thrones.

I keep reading about the LTE-U/LAA dust up and deciding that, as I predicted back in January, this has become the epic Spectrum Game of Thrones. Which means it’s time for an epically long series of Insanely Long Blog Posts.

 

For those just tuning in, I can sum up this issue as follows: should we worry that wireless carriers are looking to deploy a protocol developed for the 4G licensed world (LTE, or Long-Term Evolution) over unlicensed spectrum (called “LTE-U” for LTE over unlicensed or “Licensed Assisted Access,” for reasons I explain later) will “kill” Wi-Fi — for various values of the word “kill.” You can read some stuff on this from my Public Knowledge colleagues here and here.

 

Let me give you the headline version:

 

  • Can you build a version of LTE-U that plays nicely with Wi-Fi? Yes!
  • Can you build a version of LTE-U that looks like it should play nicely but when you deploy it over hundreds of millions of devices it would stomp all over Wi-Fi and crush it flat totally by accident? Absolutely!
  • Can you make and deploy a version of LTE-U where it plays nicely unless the mobile carrier decides it doesn’t like competition from Wi-Fi first providers of rival mobile video and voice services? You bet your sweet patootie!

 

A lot of the argument you see in the press and from the LTE-U supporters has to do with whether the LTE-U Forum (more on them later) have the best interests of wireless users at heart, have gone to great lengths to make sure LTE-U will play nice with Wi-Fi, have released their specs on the LTE-U Forum website, etc. etc. But none of this addresses the points above. What happens if you put this out there and stuff goes bad, either by accident or intentionally.

 

To understand the thinking here, imagine Qualcomm and the rest of the LTE-U Forum are Iran building a nuclear reactor for peaceful purposes. Google and the Cable industry (and us public interest types, for all that anyone notices) are Israel and the Sunni Arab states like Saudi Arabia and Egypt. Iran/LTE-U forum maintains they are building their nuclear programs for peaceful purposes. GOOG/Cable asks how they can be certain, given that the same technology might (a) screw things up accidentally; and, (b) give the carriers the capability to screw things up intentionally, if they ever start to feel the competitive heat. Qualcomm, LTE-U Forum, et al. are shocked, hurt and offended that anyone could even suspect such a thing, despite everything Qualcomm has done in the last 3 years to turn LTE-U into a “Wi-Fi killer”, and despite some of the biggest global carriers telling 3GPP to shut out non-carriers from first generation of LTE over unlicensed. According to Qualcomm, the only reason anyone would question the peaceful intentions of LTE-U Forum is for anticompetitive reasons.

 

But here’s the complicated thing. As I’ll explain below, it’s not like LTE on unlicensed is intrinsically bad. There are lots of really good pro-competitive reasons for carriers to start using LTE on unlicensed. Heck, it may ultimately turn out that a stand alone version of LTE on unlicensed is as useful (or even more useful) than Wi-Fi is today. Who knows? That’s the beauty of the unlicensed band — innovation without permission and all that good stuff.

 

This puts the Federal Communications Commission (FCC) in a rather awkward position. On the one hand, the FCC recognizes the real problem of LTE-U, accidentally or intentionally, messing up Wi-Fi. Additionally, while Wi-Fi is in the unlicensed band and must therefore accept whatever interference comes its way, is only ONE of many, many protocols, etc., you don’t let companies with the obvious incentive to screw up Wi-Fi develop and deploy a potential Wi-Fi killer with no safeguards. But since the success of the unlicensed space comes from its flexibility and easy deployment, how do you not ultimately approve some version of LTE-U/LAA? Are we going to lock in Wi-Fi as the protocol for unlicensed the way LTE is the protocol for mobile wireless? That could be just as awful for the future of innovation as letting LTE-U/LAA trash the place.

 

To make sure all you Tales of the Sausage Factory Readers know what’s going on, I bring you yet another in my occasional “Insanely Long Field Guide” series. Below, I cover everything from a brief refresher on what the heck is “unlicensed spectrum” v. “licensed spectrum,” the history of what’s going on here, and why I focus on Qualcomm rather than the wireless carriers as the chief bad guys here. However, as this is too long even for me, I will need to break this up into two insanely long pieces. In Part 2, I’ll explain about the FCC, why it got involved, why this is so complicated from the FCC’s perspective, and what the FCC can do about it.

 

But first, our insanely long background briefer below . . . .

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Tales of the Sausage Factory

Phone Industry To The Poor: “No Privacy For You!”

Back in June, the FCC released a major Order on the Lifeline program. Lifeline, for those not familiar with it by that name, is the federal program started in the Reagan era to make sure poor people could have basic phone service by providing them with a federal subsidy. Congress enshrined Lifeline (along with subsidy programs for rural areas) in 1996 as Section 254 of the Communications Act. While most of the item dealt with a proposal to expand Lifeline to broadband, a portion of the Order dealt with the traditional FCC Lifeline program.

As a result, the wireless industry trade association, CTIA, has asked the FCC to declare that poor people applying for Lifeline have no enforceable privacy protections when they provide things like their social security number, home address, full name, date of birth, and anything else an identity thief would need to make your life miserable. Meanwhile, US Telecom Association, the trade association for landline carriers, has actually sued the FCC for the right to behave utterly irresponsibly with any information poor people turn over about themselves — including the right to sell that information to 3rd parties.

 

Not that the wireless carriers would ever want to do anything like that, of course! As CTIA, USTA, and all their members constantly assure us, protecting customer privacy is a number one priority. Unless, of course, they’re running some secret experiments on tracking without notifying customers that accidentally expose customer information to third parties. Oh, and it might take longer than promised to actually let you opt out once you discover it. And in our lawsuit against the FCC’s Net Neutrality rules, they explicitly cite the inability to use customer information for marketing, the inability to sell this information to third parties, and the requirement to protect this information generally as one of the biggest burdens of classifying broadband as Title II. But other than that, there is no reason to think that CTIA’s members or USTA’s members would fail to respect and protect your privacy.

 

So how did the Lifeline Reform Order which most people assumed was all about expanding Lifeline to broadband became the vehicle for the phone industry to tell poor people they have no privacy protections when they apply for a federal aid program? I explain below . . .

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Tales of the Sausage Factory

DISH DE Debacle Part 3: What Happens Now?

In Part 1, I explained at considerable length what happened with the whole DISH DE Debacle and Why DISH owes the FCC $3.3 billion despite not having actually violated any rules. In Part 2, I explained how the FCC came to the conclusions it came to in the Order denying SNR and Northstar their DE credits but granting them their licenses.

 

Here, I will explain why (as readers have no doubt noticed) I have sympathy for DISH and why I would have done things differently – although I can’t say Wheeler was wrong. Heck, as I’ve noted many times before, I have the luxury of being neither a Commissioner nor a party with skin in the game. So take my Monday morning quarterbacking for what it’s worth.

 

More below . . .

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Tales of the Sausage Factory

New D.C. Circuit Decision Knocks Fairly Large Hole In Anti-Net Neutrality Case.

Every now and then, the D.C. Circuit throws you an interesting little curve ball. This opinion issued last week would appear to knock a serious hole in the argument made by the cable and telcos against the FCC’s reclassification of broadband as a Title II telecom service.

 

The case, Home Care Association of America v. Weil (HCAA) addresses the legal question that takes up about a quarter of the main brief for petitioners: does the Brand X decision that the Telecom Act was “ambiguous” mean that the FCC gets deference under the Chevron Doctrine when it reexamines the question in 2015 and comes out the other way? Or can Petitioners argue that the statute is not ambiguous and explicitly precludes the interpretation the FCC now gives it? Under HCAA, the D.C. Circuit appears to find that once the Supreme Court decides a statute is ambiguous, that settles the question. If the statute was ambiguous for an interpretation in one direction, it is still ambiguous — and thus subject to Chevron deference — when the agency reverses course. Nor does the agency have a higher burden when it reverses course then it did when it first made the decision.

 

Good lawyers can always distinguish cases, of course — as can a conservative panel of the D.C. Cir. that wants to find a particular result. Furthermore, Petitioners have lots of other arguments to make that are not impacted by the HCAA decision. Nevertheless, it seems clear this case is good news for the FCC (and those of us who support the FCC), and Petitioners will no doubt need to spend a good portion of their reply brief explaining why HCAA doesn’t dictate the result here.

 

I explain in more detail below . . . .

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Tales of the Sausage Factory

So What’s This “Designated Entity” Thing, and Why Does DISH Owe The FCC $3 bn When They Didn’t Break The Rules?

Generally, I loath the cliche “be careful what you wish for.” But I can think of no better way to describe the vast consternation in the spectrum world over the licenses won by SNR and Northstar in the AWS-3 Auction. If you don’t recognize the names off-hand, that’s because most of the time people just refer to them as the “DISH Designated Entities” or the “DISH DEs.” As detailed in many articles and petitions to deny SNR and Northstar their DE credits (totaling $3.3 billion), most people regard SNR and Northstar as “sham” or “fake” DEs, owned and controlled by DISH.

But here’s the funny thing. As far as anyone can tell from the filings, DISH, SNR and Northstar followed the precise letter of the law. And, what’s even more surprising, if you look at the results, this was the most successful auction ever for DEs. Both SNR and Northstar are minority owned (as defined by the FCC’s rules). All the “loopholes” DISH used with regard to ownership interest and bidding coordination were designed to make it easier for DE’s to get capital, win licenses, and benefit from partnering with a larger telecommunications company — which SNR and Northstar certainly did.

As a result, as noted by my usual frenemies at Phoenix Center, as measured by every traditional metric, the AWS-3 auction was the single most successful auction in awarding licenses not merely to small businesses, but to minority owned firms specifically. By every past criteria ever used, the AWS-3 auction results ought to be celebrated as a ginormous success for the DE program. Every aspect worked exactly as intended, and the result was exactly what people claimed to want. Indeed, as noted by Phoenix Center, even the $3.3 bn in bidding credits was in line with other spectrum auctions as a percentage of revenue.

Except, in classic “be careful what you wish for” fashion, when you scaled these results up to their logical outcome, no one was really happy with the result (except for DISH). Which has now prompted FCC Chairman Tom Wheeler to circulate an order denying SNR and Northstar their designated entity credits. As a result, SNR and Northstar (meaning their financial backer DISH) must cough up $3.3 bn within 30 days of issuance of the Order or — unless granted a stay or extension — the licenses will revert back to the FCC. Oh yes, and the FCC might need to deduct an additional $10 bn from the auction revenue. And there might be default charges (the FCC charges a penalty for defaulting on payments so people don’t bid and hope they find the money later). Or it might get more complicated, since there has never been a clawback of this magnitude before.

 

In Part 1, I will explain what exactly happened, why DISH did not violate the rules as written and why SNR and Northstar are technically “minority owned.” Along the way, we will consider some delightful ironies about the whole business.

In Part 2, I’ll tackle why the FCC decided that it could yank the DE discount anyway, and try to figure out what happens next.

More below . . . .

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Tales of the Sausage Factory

What the Heck Is The “Duplex Gap” And Why Has It Blown Up The July FCC Meeting?

Difficult as it is to believe, there are times in policy when issues do not break down simply by partisan interest or into neat categories like incumbents v. competitors or broadcasters v. wireless carriers. Sometimes — and I know people are not gonna believe me on this – issues break down on pure substance and require lots of really hard choices. Of course, because these issues are highly technical and complicated, most people like to ignore them. But these kinds of issues are also usually the hardest and most intractable for people who actually care about what the world looks like and how this policy decisions will actually work in reality.

 

So it is with the question of whether to put broadcasters in the duplex gap as part of the repacking plan in the incentive auction. Did your eyes glaze over yet? Heck, for most people, it’s gonna take a paragraph or two of explanation just to understand what that sentence means. But even if you don’t know what it means, you can understand enough for this basic summary:

 

  1. Just about every stakeholder in the auction — wireless carriers, broadcasters, wireless microphone users, tech company supporters of using unlicensed spectrum in the broadcast bands, public interest groups — all told the FCC not to put broadcasters in the duplex gap.

 

  1. Nevertheless, the Auction Team proposed putting broadcasters in the duplex gap, based on a set of simulation that suggested that the FCC would only get back 50-60 MHz of spectrum to auction if they protected the duplex gap. The Chairman circulated a draft order adopting the Auction Team’s proposal.

 

  1. Everybody freaked out. The Chairman found he did not have 3 votes, or possibly not even 2 votes, to adopt his proposal on duplex gap. The freak out is so intense and so bad that the FCC actually waived the Sunshine Period for this itemso that interested parties can continue to talk to FCC staff and commissioners until the night before the meeting. The FCC also released additional data showing the impact would be limited to a relatively small number of cities.

 

  1. That helped some, but not enough. Despite progress on negotiations, the FCC clearly did not have time to get to the right solution in the 5 days between the release of the new data and the actual vote. Also, a bunch of people were pissed that the Auction Team hadn’t released the data sooner, and hadn’t provided more explanation of the underlying model and the assumptions behind it. On Tuesday, the Republican Chairs of the House Energy & Commerce Committee & the Telecom Subcommittee wrote Wheeler a letter chastising him for having a bad process and calling on Wheeler to pull the item from the agenda entirely. On Wed., the day before the vote, Wheeler wrote back defending the process but agreeing to pull the item (and the associated item on whether or not to change the spectrum reserve) until the August Meeting three weeks from now.

 

In Policyland, this passes for high drama. It is, to say the least, highly unusual. Enough so that even folks who find technical issues like this complicated and boring to the point of insanity are asking: “what the heck just happened there? Who lost and who won?” The equally complicated answer: “no one lost or won, we’ve got a serious debate about a technical problem which has consequences no matter how you resolve it” is not nearly as satisfying as “the carriers” or “the tech companies” or whatever.

 

I explain and unpack all of this below, as well as consider possible impacts and ways to resolve this. But again, I want to stress this is a super hard problem. This is about competing goals and the difficulty of predicting the future with any certainty. It’s also about trust and stuff, which is hard to come by in Washington even at the best of times. This is not subject to simplistic plotlines like “Oh, the Auction Team are out of control” or “The broadcasters and unlicensed supporters are just being stubborn.” (Wait, the NAB and the unlicensed guys and the wireless microphone guys are on the same side? And they agree with Verizon? WTF?) This stuff is hard.

 

More below . . .

 

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Tales of the Sausage Factory

The First Net Neutrality Complaint Under The 2015 Rules Is Likely To Lose, And That’s A Good Thing.

As reported by Brian Fung at Washpo and others, a company called Commercial Network Services (CNS) has filed the first network neutrality complaint under the FCC’s new rules — which went into effect June 12 after the D.C. Circuit denied a stay request. You can read the complaint here. While I probably should not prejudge things, I expect the FCC to deny the complaint for the excellent reason that — accepting all the facts alleged as true — Time Warner Cable did absolutely nothing wrong.

 

I elaborate on what CNS gets wrong, why this differs from other high-profile disputes like Cogent and Level 3, and why such an illustration is good for the FCC’s rules as a whole, below . . .

 

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