Tales of the Sausage Factory

D.C. Circuit Affirms Inside Wiring In Fairly Broad Opinion. Terrestrial Loophole Next? And What About Time Warner's TV Anywhere?

While folks in the suburbs sometimes forget this, a lot of people live in what we call “multiple dwelling units” (MDUs) — which is a fancy way to say things like apartment buildings and condos. One of the problems for people trying to switch from one provider to another for cable (for example, from Comcast to RCN) is that a cable operator may already have an exclusive deal with the landlord to provide cable services to everyone in the building. Competitors asked the FCC to ban such practices. In 2003, under Michael Powell, the FCC refused to ban such exclusive deals because “regulation is always bad, mmmmkayyy.” In 2007, as part of Kevin Martin’s attack on cable market power evil vendetta against the helpless cable industry, the FCC reversed this determination and found that under Section 628(b) of the Communications Act (47 U.S.C. 548) it needed to prohibit cable operators from entering into or enforcing such exclusive deals because Verizon can’t sell FIOS w/out being able to offer triple play. Predictably, this was widely denounced by the cable companies and their cheerleaders as not merely unwarranted, but a violation of law and certain to be overturned on appeal.

Turns out, not so much. In fact, in a rather broadly worded opinion, the D.C. Circuit affirmed the 2007 Order. Indeed, the language affirming the decision opens the door to the FCC tackling other cable issues, such as the terrestrial loophole (which Verizon wasted no time in pointing out to the FCC). Mind you, it remains unclear at this point whether the new FCC will have any interest in cable market power or not.

Still, there are a number of important aspects about this case, especially its implications for the FCC to regulate Time Warner’s TV Anywhere strategy, aka “how cable operators plan to preserve their existing business model and fight off Netflix.” I discuss this in more detail below . . . .

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Tales of the Sausage Factory

The McCain Tech Policy Part II: Why McCain Can’t Fix The “Mercedes Divide?”

O.K., jokes aside about the lameness and lateness of McCain’s tech policy and associated privacy policy. How does this all really stack up as a substantive plan?

Two quotes from former FCC Chair and McCain tech adviser Michael Powell nicely illustrate the fundamental thrust of the plan. Not so coincidentally, both come from Powell’s first press conference as Chair of the FCC.

Quote 1.

“I don’t believe deregulation is like the dessert that you serve after people have fed on their vegetables, like a reward for competition,” Powell said. “I believe deregulation is instead a critical ingredient to facilitating competition, not something to be handed out after there is a substantial number of players and competitors in the market.”

Quote 2:

“I think the term [digital divide] sometimes is dangerous in the sense that it suggests that the minute a new and innovative technology is introduced in the market, there is a divide unless it is equitably distributed among every part of the society, and that is just an unreal understanding of an American capitalistic system. I think there is a Mercedes divide. I would like to have one, but I can’t afford one. I’m not meaning to be completely flip about this. I think it’s an important social issue, but it shouldn’t be used to justify the notion of, essentially, the socialization of deployment of the infrastructure.”

Once you accept the “Mercedes Divide” frame, you have run out of tools to deal with the issues because, by definition, whatever the market provides is what result you should get. McCain, obviously, does not wish to accept this rather obvious consequence, and therefore falls back on the usual platitudes and reliance on the gods of the marketplace, the competition fairy, and the delightful myth that — Adam Smith to the contrary — getting a collection of companies with similar interests together to regulate themselves will somehow work.

Surprisingly, as David Isenberg noted on his blog, what is amazing is that the plan leaves out the few bright stars of Michael Powell’s tenure at the FCC — notably Powell’s commitment to spectrum reform. While I certainly opposed Powell’s efforts to make spectrum licenses a species of property I enthusiastically applauded his equal willingness to engage seriously on opening more spectrum for non-exclusive unlicensed use (you can see a very old primer of mine from the dawn of the spectrum reform debates here). Perhaps spectrum reform proved too complicated or controversial an issue for McCain to address, even buried at the bottom of a tech policy.

But having ruled out open spectrum, McCain has left himself very few tools to actually provide all the benefits he promises. Rather like the current administration, which will tell you that Bush achieved his 2004 promise of universal broadband by 2007 so shut the heck up about those stupid international rankings, McCain’s tech platform will work swimmingly for true believers unconcerned with the impact on actual reality. Below, I draw out the substantive problems with the McCain tech & privacy plans in greater detail, and explain why the Obama plan actually looks like it would make real improvements in people’s lives because Obama recognizes that there is a real difference between “the government needs to build roads rather than wait for car companies to build them” and mandating that “everyone must have a Mercedes.”

More below . . . .

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Tales of the Sausage Factory

McCain Tech Policy — A First Reaction

When you show up as the butt of a joke on the Colbert Report, you should know you’re in trouble. And when, by merry coincidence, Stephen Colbert does a piece on your self-professed computer illiteracy the night before you release your long awaited technology policy, you are in real trouble. Especially after your campaign gets repeatedly nailed in debates in tech policy fora (such as my employer’s Innovation ’08) for not even having a tech policy, when Barak Obama had a fully developed tech policy and functioning advisory team way back in the beginning of the primary, and after former FCC Chairman and campaign surrogate Michael Powell goes into virtual seclusion for a month to develop your tech plan, you know it had better be Goddamn Frickin’ Awesome. Even if you have already signaled it is going to be an extension of the same “the market solves all our problems and even thinking about regulation angers the terrible market gods, scares away the happy competition fairies, and brings a plague of liberal command and control locust ‘oer the land” nonsense that marked Powell’s FCC tenure and has plunged our telecommunications sector — nay, our entire economy — into the crapper, it should at least be a well written and engaging song of praise to the gods of the market place.

No such luck. It reads like some crotchety technophobe knocked over the bumper sticker rack at an Ayn Rand Reading Revival and tried to rearrange them so it made a policy. Half of it isn’t even particularly tech specific. For example, I don’t find it a coincidence that the first six bullet points are just variations on McCain’s standard “I hate taxes” theme. They could have easily have applied to his agriculture policy, if you substituted “no new taxes on wireless services” for “no new taxes on sorghum.” Nor am I aware of a serious mass movement to tax wireless services (or sorghum).

As for the rest, well, see below. . . .

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Tales of the Sausage Factory

'Scuse Me Whilst I Pause to Savor the Irony — Wall St. J Writer Blames Kevin Martin For Slow Broadband

So Wall St. Journal Technology Review Walt Mossberg blames Kevin Martin for our ridiculous slow broadband speed.

Here’s the dialog:

Mossberg: “You are the head of the FCC. How have you allowed this to happen? I AM DEAD SERIOUS. HOW HAVE YOU ALLOWED THIS TO HAPPEN?

Martin: “I am not sure I am solely responsible. I am also not sure the charts capture the whole story. I think you do have to put in the context some of the demographics of the United States and some of the countries we are competing against.

Mossberg: Does that explain why we pay $12.50 per megabit in the United States as opposed to $3.09 in Japan and $3.70 in France? Why are we paying four times as much?

Martin: Yes it does. Because it costs a lot more to build out in more rural areas and people who live further apart… We have a history of averaging some of the cost to make it affordable for people in Montana.

I find this ironic on two levels. First, I have a memory that goes back far enough to remember the Wall St. Journal editorials absolutely crucifying Kevin Martin when, as a Commissioner, he tried to stop Michael Powell’s full-bore deregulation of broadband and the local telephone loop because only a completely laissez faire non-regulatoy approach could get industry to invest and do its job. Ditto the editorials on why C Block open device conditions because any sort of government mandate is bad bad bad BAD and can never, ever, ever be good.

Yes, I know that the Wall St. J. prides itself on having an ironclad fire wall between the reporting function and that editorial function. So I am not saying that Mossberg is being inconsistent or hypocritical in any way. But it is still ironic that reporters dismayed at the current state of affairs blame Kevin Martin for failure to act, while the folks on the Editorial Page routinely pillory Martin for even thinking the word “regulation” without puting a “de” in front.

Second, it’s ironic because, while I will be the first to say that Martin has not done nearly enough for my money (let’s start with not adopting mandatory wholesale as we at PISC recommended for half the auctioned 700 MHz spectrum last year, and the painfully slow pace of Universal Service Fund Reform), he has done more to foster the development of better broadband at faster speeds than any other member of the Bush Administration. Unlike, say, former NTIA Administrator John Kneuer, who explained last year how everything in American broadband was just ducky and we just need to stay the course, Martin has acknowledged that we need to do better and have higher expectations (although, again, not going nearly far enough IMO). This includes not merely making a show of reforming the FCC’s impossibly lame broadband study and report, but actually making some substantive improvements.

Mind you, I’m not defending Kevin Martin’s record on broadband here. And I will readily acknowledge that he’s been a good soldier for the Bush Administration on a number of key issues (I do not hold my breath to learn if AT&T and Verizon broke the law when they cooperated with NSA on domestic spying). But I cannot let the double irony of a Wall St. J. columnist blaming Kevin Martin for our wretched national broadband situation go unpassed, when the Wall St. J. editorial board has been in the vangaurd of pillorying Kevn Martin any time he actually tries to do something.

Again, I know Wall St. J. takes great pride in keeping its editorial board and reporting functions separate, but it’s still delightful. At least, for those of us in the progressive movement who have always been utterly consistent in blaming Kevin Martin and the rest of the Bush Administration for not nearly going far enough. That’s why next week at National Conference on Media Reform, the Martin-bashing won’t be ironic. It will be heartfelt, sincere, consistent, and deeply passionate Martin bashing. Well, actually it will be ironic then, too; but for entirely different reasons I will post about next week.

But for the Wall St. J. and its fellow worshipers of the Gods of the Marketplace, I can only smile and say “what, you don’t like the world the Gods of the Marketplace have made? Then I guess you better pray harder — or perhaps consider a different faith.”

Stay tuned . . . .

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Tales of the Sausage Factory

I Debate The Would-Be Vulcans

So Marvin and I had our debate with Ken Ferree and Lawrence Spiwak. On the whole, I thought we mixed it up pretty thoroughly and civilly — although you can all judge for yourselves by watching the archive here (free registration required).

The issues won’t surprise anyone, but I want to address one meta-issue on framing. Perhaps not surprisingly, the anti-NN folks repeatedly seek to claim the mantle of reason, relegating us pro-NN types with our emotional commitment to romantic ideas like democracy and free speech to the status of irrational and unreasonable fanatics.

Ah, de ja vu all over again. I can remember when I heard similar sentiments from Ken Ferree and his former boss Michael Powell during the fights over media ownership reform in 2002-04. Of course, these were the same “logical,” “rational,” purportedly proof driven folks who developed the “diversity index” which weighted the Dutches County Community Television station as having the same media power as the New York Times, and inspired the Third Circuit to observe that believing this “scientific” approach reflected reality “would require us to take leave of our senses.” But, undeterred by the fact that the Third Circuit considered his previous efforts at “scientific reality building” to be either a bad joke or an excellent parody, Ken is quite prepared to rely exclusively on the view from “Ferree Land” and denigrate the rest of as emotional hysterics who listen to voices from the past.

My beef with Lawrence Spiwak is rather different. Unlike Ferree, Spiwak is actually living in the real world. My complaint is not that he lives in fantasy land or ignores evidence. My complaint is that he wishes to define the terms of the debate in a rather narrow way — i.e., only economic analysis and only University of Chicago-type analysis at that. All else is mere “rhetoric” and “emotion,” and only a proper grounding in rational analysis (aka economic analysis by economists of the Chicago School) can properly frame things. (I should point out the Spiwak’s colleague from Phoenix Center, George Ford, took a similar line at the Federal Trade Commission broadband competition hearing last year, chastising Tim Wu and myself for meddling in economic matters in which we were not competent to express an opinion.)

As one might expect, I find the attempts of the would-be Vulcans to define the terms of the debate unpersuasive. To see me do unto them as Kirk did unto the M5, Landru, and the other would be uber-rational computers, see below . . .

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Tales of the Sausage Factory

The Media Ownership Endgame: Martin's Opening Gambit on Newspaper-TV Cross Ownership

As I’ve said before, Kevin Martin plays a mean game of hardball — but an honest one. And while I’m happy to have him on the right side in limiting cable market power, it makes fighting on the media ownership side an utter bitch and a half. Like Belichik prepping the Patriots, Martin has carefully studied the mistakes of Michael Powell, studied the strategies of the media reform movement, carefully considered his own strengths and weaknesses, and set up his game plan with a determination to win.

This tends to make some of my friends and colleagues in the movement hate Martin personally, or get bogged down in the distractions and the moves Martin throws. But that’s as stupid as letting yourself get distracted by trash talk. To win this fight, we need to keep our eye on the game, stay nimble, have our own special teams prepped, and remember we’re in this to win in the long haul.

With this in mind, we turn to the opening moves in Broadcast Media Ownership Endgame. Martin already has one key advantage in that because he is the Chairman, he can set the agenda. He controls the timing and can float trial balloons, decide when to hold new hearings or release new studies, and finally declare when he wants a vote. Martin demonstrated his skill in this over the last month, gradually building to the end game, alternating period when nothing seemed to be happening with sudden frenzied activity. Each such move requires us to mobilize resources and exhaust ourselves, and forces us to make process demands for more time and reasonable opportunities for comment. Martin can then chose to acede to our requests in a limited way, letting a deadline slip a few weeks or postponing something by a month. This makes it look like Martin is being reasonable and accommodating, and casts us in the role of partisan foot draggers. Worse, it makes it increasingly difficult to mobilize our troops, because how many times do we have to fight and win these minor skirmishes over procedural issues and timing? People get tired of the issue, or think we already won when what we achieved was merely a temporary respite. Then, like a matador administering the coup de grace on the exhausted bull, Martin plunges his point directly into the heart. (‘Scuse me a minute, I need to check to see if my ears and tail are still attached.)

But Martin has now clearly committed to the final moves of the end game with a PR blitz/charm offensive similar in many ways to his approach in the 700 MHZ proceeding. And, as with the C Block “open access” condition, I do not expect Martin to make signifcant changes to his proposal now that he has put himself out in front and committed to a public position. Martin the Matador has dropped the cloak and gone for the sword. The question is whether the media reform bull is as exhausted or confused as Martin thinks, or if we still have sufficient wits and stamina to give him a surprise.

More below . . .

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Tales of the Sausage Factory

Big Win For Community Wireless At FCC

The FCC released its long awaited decision resolving Continental Airline’s complaint that Massport cannot order it to shut down its free wifi access for Continental customers.

While supremely important for its ultimate holding, the case contains many positive and useful determinations for unlicensed generally. It also contains two outstanding concurring statementsfrom the Democratic Commissioners. You can see Copps’ concurence here, and Adelstein’s here.

That’s also very good news. Almost a year ago, I worried that, with the departure of Michael Powell and Ed Thomas from the FCC, and the departure of Michael Gallagher from NTIA no one would champion the cause of unlicensed spectrum. But as Copps and Adelstein have shown, both in this decision and in their actions in last month’s item on the broadcast white spaces, Copps and Adelstein ‘get it’ on unlicensed spectrum and why it is so important.

Further analysis below . . .

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Tales of the Sausage Factory

Update: I may owe Powell an apology

As I said last night, the refusal to look at new evidence is what makes the difference between religious conviction and mere operating bias. More recent stories now quote the only FCC source to go on the record (as opposed to unnamed sources) as saying the suppression of the report was ordered by “a senior official,” rather than definitively going up to Powell. Powell denies he ever saw the report or ordered it destroyed.

All the more reason for Martin to conduct an investigation and get this matter resolved. Because I’ve read the study and run it past an economist and, as far as he and I can determine, it is sound methodologically and valuable in the debate on ownership. It should have been published when it came out. If there is a “senior official” at the FCC who ordered it destroyed who is still there, that “senior official” needs to get removed from the process.

So I will start with an apology to Powell for rushing to judgment. It is entirely possible that some “senior official,” entirely unknown to Michael Powell, killed the report to avoid giving Powell news he thought Powell would not want to see. I will add that I wish I lived in a world where my first thought was not “that is just so typical of this administration.” And no, it’s not Powell’s fault that after admant denials that the administration was spying on Americans, it turned out they were, and after adamant denials that the administration did not keep prisoners in secret prisons in Europe, we did, etc. But Powell deserves to have his chance to reply and deserves an investigation at the FCC to resolve the matter once and for all.

Stay tuned.

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Tales of the Sausage Factory

FCC Spikes Report Undermining Deregulation

Author’s note. I have significantly reedited this story in light of the fact that Michael Powell denies seeing the report or ordering it purged and that the only source on record states only that the order came from “a senior FCC official.” It is entirely possible that Powell never saw the study, and that someone much lower down the chain took action on his or her own. But this is why we need a thorough investigation.

“Unfortunately, many have turned this critically important policy debate into a political one, substituting personal ideology and opinion for the facts. If we are to craft responsible media policy for the 21st century, everyone involved in this debate must set aside the rhetoric, put the public interest before political interest and focus on ‘just the facts.’”

So wrote Michael Powell in an Op Ed in USA Today in January 2003. Powell was talking about the FCC proceeding to review its media ownership rules. He believed the facts would prove that deregulating the mass media would not harm local news. If anything, I expect Powell believed it would improve it. Doesn’t deregulation make everything better?

But according to this story by the Associated Press, The FCC conducted a study on the impact of deregulation of the media on local news, only to suppress it when it proved deregulation significantly hurts local news.

I do not believe Kevin Martin knew this report even existed before Senator Barbra Boxer (D-CA) sprung it on him yesterday. But I do think Martin has an obligation to investigate and make the results of the investigation known. If the FCC did suppress the report, then it needs to take steps to ensure that such things will not happen again. Because, while Powell was wrong about the impact of deregulation, he was right about one thing: “Only the facts will enable us to craft broadcast-ownership restrictions that ensure a diverse and vibrant media marketplace for the 21st century.”

A bit of back story below.

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Tales of the Sausage Factory

And Suddenly, the Universe Changed

Well, it’s been busy in the Senate today. While all the Senators were locked down by police on a mistaken report of gunfire, they took the time to confirm Robert McDowell for the FCC. For the first time since Michael Powell left in March 2005, the FCC is now back to 3 Republicans and 2 Democrats.

Over the last year, several controversial items have accumulated that the 2-2 Commission could not agree upon. For example, the long-awaited proceeding on media ownership rules, wherein the FCC will again try to relax or eliminate most ownership limits.

Critically, McDowell’s appointment strengthens Martin’s hand to approve the Comcast/Time Warner/Adelphia merger without significant conditions (whereas just yesterday I was hoping Martin would have to persuade the Democrats to agree to an order). The critical question — does Martin want to approve the merger without conditions? As I have written before, Martin has shown himself willing to stand up to the cable industry in the name of competition. For example, Martin co-authored an Op Ed with Senator McCain supporting imposing a la carte on cable.

So, what will Kevin Martin do? He has a free hand for the first time in his history as Chairman. Once again, I urge you all to help Martin make the right decision by following this link to file a comment urging the FCC to deny the Adelphia Transaction, or impose significant conditions.

As for the rest of the media ownership rules, the AT&T/BellSouth merger, and everything else in the media & telecom world

Stay tuned . . . .

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