Tales of the Sausage Factory

The Comedy of Comcast v. FCC Part I — What Did The Court Actually Do?

It’s been rather busy the last few weeks. Between my unfairly holding Sprint responsible for its own screw ups, shamelessly cheering on the documentation of our national broadband drought by Our Great Google Overlords, and generally crushing all who dare oppose me, it’s been hard to find time to blog about stuff. So naturally, while I was away for the last day of Passover, the DC Circuit issued its long awaited decision in the Comcast/BitTorrent case, Comcast v. FCC.

Needless to say, the opinion was greeted with the total hysteria that has become the hallmark of the network neutrality debate — with terms like “Nuclear Option,” “World War III,” and “spanking.” Opponents of FCC jurisdiction rejoiced, supporters of network neutrality lamented, and a few shrewd observers noted that the actual outcomes could prove far worse for Comcast and the incumbents than if Comcast had lost (as I noted after oral argument last January).

My co-counsel, Marvin Ammori, has written up his retrospective here. Understandably, he’s rather bummed. Despite this whole thing being my idea in the first place, however, I’m actually rather pleased and amused with how this whole thing is turning out. Sure, I would much rather have won. But as the history of the last 2+ years of this unfolds, the tale of how Comcast managed to bluff, badger, and bungle itself into a position where it has not only guaranteed harsher condition on its merger with NBC-Universal, but revived the possibility of classifying broadband access as a Title II telecom service for the first time in 10 years, is the stuff of high farce. And while I wish I could claim credit for this outcome, the real “heroes” here are Brian Roberts (head of Comcast) followed closely by AT&T, NCTA and the Republican party.

To try to keep this manageable, I’ll divide this into two posts. Below, I will try to set forth what the court actually said and the immediate legal implications, without worrying too much about the overall policy. While I can hardly claim to be an impartial observer, I’ll do my best to identify my editorial comments as such and note where reasonable minds can differ. In Part II, I shall shamelessly indulge myself with my own eyewitness to history and why I think the Comedy of Comcast v. FCC deserves its special place in the realm of farce — although we have by no means reached a certain conclusion.

More below . . .

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Tales of the Sausage Factory

Incumbents Bring Tea Party Tactics To Title II Reclasification Fight.

I have never accused the incumbents of being overly subtle, especially when they feel threatened. But this new 14-page letter from the major cable and telco trade associations — as well as from the three biggest ILECs and Time Warner Cable (Comast shows unusual, perhaps merger inspired, diplomacy by sitting this one out) — hits a new low on the “Lack ‘O Subtlety Meter.” Given that the only one actively pushing reclassification these days has been yr hmbl obdn’t blogger, I should take this as a tribute to my personal skill. But it seems more likely an extension of the “shock and awe” tactics used by the incumbents to try to derail NN from the beginning.

Of course, this goes well beyond network neutrality. As AT&T’s previous lengthy exercises trying to justify Universal Service Fund reform under Title I (as well as AT&T’s less-than-direct acknowledgment that eliminating the phone network in favor of an IP-based network would eliminate interconnection requirements and complicate public safety access) attest, the question of FCC authority over broadband and what it can or can’t do under Title I impacts every area of the National Broadband Plan agenda.

Most of the argument in the letter is pretty standard, boiling down to “the universe is great under Title I dereg, don’t mess it up,” “Title II will impose horrible regulation, kill investment, destroy jobs, strangle puppies, etc.” with an additional “the FCC has no basis to change classification because nothing important has changed since the FCC reclassified last time.” Two things, however, require attention. Sadly, they mark the introduction by major players into the realm of “Tea Party” tactics similar to the Death Panels and mud slinging that have infected the health care debate and the financial reform debate.

More below . . .

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Tales of the Sausage Factory

Will The DC Circuit Pull The Plug On Program Access?

Next week, the D.C. Circuit will hear oral argument on the FCC’s 2007 decision to extended the program access rules another five years. What surprises me is how few people seem to have considered the possibility that the D.C. Circuit will reverse this decision and vacate the rule, as they did last month with the 30% cable horizontal ownership limit.

Part of that is the way people tend to make analysis based on conventional wisdom. “Everyone knows” that without the program access rules, competitive providers would be toast because the largest cable incumbents can control programming, just as “everyone knows” that we don’t need a 30% cable ownership limit because the MVPD market is so wildly competitive that the largest cable incumbents can not possibly influence cable programming. As Comcast and Cablevision pointed out to the DC Circuit, however, the conventional wisdom in this regard is not entirely consistent. If, as the court found last month as a matter of law, the MVPD market is wildly competitive and consumers switch willy-nilly from one to the other rendering it impossible for a cable provider to block a rival programming network from emerging, how on Earth can cable programmers below the 30% limit exercise foreclosure?

There are, of course, sound answers to that in both law and economics, although the biggest single deciding factor is likely to be the absence from the panel of Douglas Ginsburg, a man who believes membership in the Federalist Society substitutes for an actual understanding of economics and has published an academic article yearning for the “good old days” when the courts made economic regulation unconstitutional and concluding that courts should not defer to agency efforts to create “synthetic competition.” (An offense in the eyes of the Gods of the Marketplace.) I believe the panel is Sentelle, Griffith and Kavanaugh, which is not exactly good news for the program access rules but isn’t death on wheels like Ginsburg (or Williams or Edwards). Sentelle and Griffith, who were both on the imaginary competition outweighs real competition decision back in June overturning the FCC’s decision not to grant Verizon a forbearance petition, and Kavanaugh, who was on the cable ownership panel and therefore presumably agrees that switching costs aren’t real and cable operators are in such fear of youtube clips they would never make programming decisions based on affiliation. On the flip side, Kavanaugh actually wrote the somewhat more deferential special access opinion from July. Unfortunately for those who rely on program access, none of the judges who affirmed the Inside Wiring Order are on this panel.

Of course, there is something to be said for actual law and analysis of the underlying FCC Order, even in the D.C. Circuit. So below, I shall provide a brief outline of the program access rules, how we end up in court, the likely arguments, and what happens if the D.C. Cir. overturns the rules (which even I give a low probability to, but do not discount — especially given the panel) — including why that might actually be the best thing to happen to cable regulation in the long run.

More below . . .

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Tales of the Sausage Factory

Support Low Power Radio: Call Your Representative Today!

Low Power FM is a non-commercial service authorized by the FCC in 2000. the National Association of Broadcasters and, to its eternal shame, National Public Radio lobbied Congress immediately thereafter to kill this potential competitor. While not successful in killing the service, the incumbents did manage to get the “Radio Broadcasting Preservation Act of 2000” passed, which severely limited the number of available LPFM licenses. You can get some more background and links at this old blog post of mine.

Today, July 19, 2009, the Prometheus Radio Project is asking everyone who cares about encouraging local, non-commercial radio — as well as anyone who cares about greater opportunities for folks to use the electronic media, to take part in a day of action. Please call your Representative and ask him or her to support the Local Community Radio Act of 2009, which would repeal the RBPA and restore the original rules to LPFM. This would create hundreds of new opportunities for local communities to once again enjoy locally-produced non-commercial radio programming. giving a very different perspective on life, news, art, and entertainment.

Details here.

Stay tuned . . . .

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Tales of the Sausage Factory

DOJ May Investigate Telco Market Power: The Dawn of a New Paradigm For Antitrust?

Although the Department of Justice Antitrust Division (DOJ) has not confirmed it, the Wall St. Journal reported that DOJ is internally considering whether or not companies “such as AT&T and Verizon” have abused their market power. Most traditional antitrust lawyers I’ve seen quoted don’t think it likely the telcos have market power — especially given the hostility that courts have recently shown to antitrust. Indeed, in a world where even potential competition is supposed to be part of the market analysis, how can a modest 60% of the wireless market shared by the two companies, with no evidence of price fixing or coordinated behavior, support any sort of antitrust action?

Welcome to the more grown up and sophisticated view of market power in the more complex real world. After more than 25 years, U.S. antitrust authorities may be ready to reexamine the underlying limitations of antitrust in light of a new generation of economic scholarship on the subject of market power and the exercise thereof.

So are we at the dawn of a new age of antitrust, one that recognizes such modern economic phenomena as network effects, the power to constrain choice through non-disclosure agreements that create information asymetry, and the power of vertical integration to eliminate traditional geographic and product market distinctions? Will Christine Varney and John Lebowitz do to the the U of C worshipers of the gods of the marketplace as Copernicus and Galileo did to Ptolmey and his fanatics who preferred to reject the evidence of their eyes in favor of ever more complex theories of deferents and epicycles? Or will the judicial activists of the D.C. Circuit and the political might of the incumbents once again force regulatory agencies to abjure, curse and detest such heresies?

E pur si muove below . . . .

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Tales of the Sausage Factory

It's time for the NOFA Awards!

No, not the actual giving out of money, silly. My snarky commentary on yesterday’s unveiling of Broadband.gov.

I’ll preface by saying I absolutely still love and respect the folks I know on the inside who struggled with this stuff for months. I know how hard it is to actually implement this stuff, especially with this kind of ridiculous schedule and no one appreciating what it takes to coordinate among this many agencies and how utterly devestated the federal workforce was following 8 years of the Bushies refusing to invest in information technology, outsourcing everything to contractor cronies, and elevating political loyalty over actual talent.

Nor do I have much patience with those who are all “they sold us out blah blah blah . . .” Engineers don’t whine about how unfair it is that trees bloom in the spring and screw up line of sight with their leaves. You deal with it. Same in politics. You want good policy? Then you roll up your sleeves and get ready to fight for it rather than whining like little babies about how Obama the Deliverer failed to smite our enemies for us or persuade incumbents to put the public interest over their corporate interests and magically made all the problems of getting human beings to cooperate with each other go away. Because unless you’re willing to make some actual phone calls to members of Congress like Dittoheads do when Rush gives them the word, then I don’t want to hear it.

And the fact that there are some real issues does not negate all the good this NOFA will do. Anyone who claims that getting a less than perfect result means we pissed this away and it’s just as bad as Bush and blah blah does not know what they are talking about. I’d rather have this than more hymn singing from the worshipers of the gods of the marketplace. The fact that this turns out to be incremental rather transformative, a stepping stone rather than the whole edifice, doesn’t make it crap.

And finally, I promise to do real deep policy analysis soon.

But my selfish indulgence in unfair snarkiness below . . . .

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Tales of the Sausage Factory

Understanding What The Broadband Stimulus Does, and What It Doesn't Try To do.

Not unsurprisingly, we have considerable debate on the merits of the broadband stimulus package, even leaving aside the network neutrality provisions. They range from this NYT article suggesting that building out in rural is a waste and won’t create jobs to Yochai Benkler’s more optimistic piece to my own previous enthusiastic support (here and here). Along the way, we find plenty of folks with a “yes, but –” because it does not address urban builds or competition or network neutrality or other issues in a way they consider satisfactory, and this weakness, from their perspective, makes the whole bill a worthless boondoggle and a multi-billion gift to the incumbents to boot.

I find the claims of those pushing tax credits or opposing the network neutrality conditions that grants will not create any jobs or result in any new broadband uptake, and that conditions on grants will prevent anyone from building these systems, simply not credible. I can only conclude those pushing this line either don’t get outside Washington DC and New York City much or have their own agendas. Otherwise, they should check out my friend Wally Bowen at MAIN and how he and projects like him are creating jobs for network operators and bringing economic opportunity for their communities. But even setting aside such extremes, it should come as no surprise that we see a variety of opinions on what the broadband stimulus does or should do because:

1) We have a set of complex problems;

2) Everyone has a different perspective on the nature of the problem(s).

This makes assessing the cost/benefit difficult, and makes getting the prospect of any consensus of opinion phenomenally unlikely. What constitutes proof for me that this bill (even after the Senate changes) looks to do a lot of good and is therefore worth the cost won’t persuade others who disagree with me on the fundamental nature of what we need to fix.

In the hope of persuading folks, however, I lay out my arguments below on why I think the broadband stimulus is well designed to handle one piece of the very difficult puzzle of deploying a ubiquitous nationwide broadband system that all citizens will use so they can partake of the rich opportunity for civic engagement, economic development, educational opportunities, and new services such as telemedicine (even if they don’t realize they need this yet). Along the way, the stimulus bill gives another nudge (but hardly solves) the question of how to keep the internet open to innovation and “as diverse as human thought.”

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Tales of the Sausage Factory

Very Good News On Broadband Stimulus — I Get My Herring!

After Blair Levin’s warning to the world (and the financial markets in particular) that the stimulus package will not try to solve the broadband problems in this country and that people needed to stop dreaming in the tens or even hundreds of billions for broadband, no one should be surprised at today’s announcement that the Administration/House proposal budgets $6 Billion for broadband primarily in the form of grants. (Obey press release on full package here.)

Thank God!

More below . . . .

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Econoklastic

Same Old, Same Old: How T-Mobile and the Rural Telecommunications Group Propose to Wreck the AWS-3 Auction.

M2Z Networks recently filed a study I prepared for them in the AWS-3 service rules proceeding (07-195) before the FCC.

In this study I identified how a coordinated effort between T-Mobile and the Rural Telecommunications Group threatened to wreck the AWS-3 auction by writing rules excluding technology proposed by key potential new entrants, including M2Z Networks, and adopting disastrous combinatorial bidding rules like those which provided a nearly half-billion dollar windfall for Verizon in the 700 MHz Band auction.

In brief, T-Mobile has proposed a “bandwidth maximization plan,” first mooted in this filing and elaborated here. The T-Mobile plan would split the J Block in half, giving 5 MHz for uplink and joining the other 5 MHz of J Block with 20 MHz of AWS-3 spectrum for downlink. This would force abandonment of the Time Division Duplex (TDD) technology envisioned by the FNPRM in favor of Frequency Division Duplex (FDD) technology favored by T-Mobile.

That might seem innocuous enough at first glance, but it eliminates consideration of a technology which is both more efficient and more robust than T-Mobile’s FDD alternative, and it is never a good idea to throttle new technologies at the bidding of vested incumbents. However, it is more pernicious still in that it aims at excluding the TDD technology on which Sprint, Intel, Arraycom, and M2Z proposed to build a nationwide network, effectively erecting entry barriers to major competitors to T-Mobile.

The irony is that T-Mobile proposes to kill TDD technology in AWS-3 on the pretext of preventing interference between AWS-3 and AWS-1 spectrum (T-Mobile was a major acquirer of AWS-1 spectrum). However, the FCC’s Office of Engineering and Technology conducted extensive testing and found that such interference presented no significant problem. T-Mobile’s justification for the technologically-discriminatory erection of this entry barrier is, thus, a lie.

But it gets worse.

More below…

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Tales of the Sausage Factory

Changes for Media Access Project, And For Me Personally.

As everyone not living under a rock has heard, the spirit of change is now sweeping through Washington like a broom enchanted by a lazy animated mouse. Who are we at Media Access Project to resist change? Heck, we bloody well lead change, we make change. We are change agents. We — well, you get the idea.

So what changes will happen at MAP?

1) After 10 years, I will leave Media Access Project, effective January 31, 2009.

2) After more than 30 years as President and CEO, Andrew Jay Schwartzman will become Legal and Policy Director. Andy will handle policy, and MAP will hire a new CEO to handle administrative and fundraising duties.

3) Associate Director Parul Desai will have an enhanced role in the organization going forward.

Why? Because, bluntly, we need to prepare for a very different world. Make no mistake, the telecom policy world still needs MAP — perhaps now more than ever. As I repeatedly stress, anyone who thinks that we can just elect the right people and go home needs to think again. The new Administration, despite what I believe is a very real and strong ideological affinity for our issues and a reasonable skepticism for the blandishments of incumbents, will need a powerful progressive movement to keep it moving in the right direction. MAP will continue to sit at the tip of the spear on media and telecom reform, pushing against media gatekeepers and fighting for an electronic media that lives up to its potential for Free Speech and innovation.

But we can’t do that by staying the way we’ve always stayed. We need to take a deep look at ourselves and ask some hard questions about how we avoid the trap of fighting battles that no longer matter, in ways that no longer work. We have spent the last 8 years in opposition, fighting to hold back some really wretched policies and swimming uphill to create new opportunities for independent voices. Whatever the Obama Administration brings, I gaurantee it will not be anything like the Bush or Clinton years.

Which is why I have decided to move on, or at least give up my job at MAP. I still love this field, and strongly believe in the Progressive movement (including my belief that it is a movement and not a mob). But the time has come for me to move on to something else, although I have no idea what that something else will be (anyone with any thoughts on the subject, don’t hesitate to write). I have a book contract with Ig Publishing for a book on building the modern progressive movement and developing an alternative to the Gods of the Marketplace (I like to think of it as what Naiomi Klein forgot to write about in The Shock Doctrine, the part where people figure out how to get a better system in place). that, of course, will not pay the bills (especially as it will not actually get published until the fall of 2010), so I expect to do some consulting for awhile until I figure out what else to do. I’ll add that if anyone can figure out a way to make this bloging stuff pay, I would love to know it.

In answer to the inevitable question — yes, I’d love to work for the Obama Administration or do something worthwhile on the Hill. And like every other Democratic policy wonk, I’ve filled out the form at change.gov, so they will know where to find me if they decide they can use me.

But even without a job waiting for me, and despite my general satisfaction with my job at MAP, I feel the time has come for me to move on. Cliche as it sounds, I need a change and I cannot think of a better time for one (other than this pesky recession), given how the policy wonk world is undergoing one of its rare ferment moments when the possibility of sweeping away the established order of things seems breathtakingly real if we have the courage to sieze it and dare to do something utterly different.

I may regret it. But I think not. I like to think I’ve done a lot of good doing what I’ve been doing for the last ten years. I also like to think I’ll find other ways to do good and interesting things as well. This feels right, and I would be false to myself if I refused to take the risk.

Stay tuned . . .

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