Tales of the Sausage Factory

Senator Pryror Angry At Right Problem, But Picks Wrong Solution.

UPDATE: On reflection, I’ve decided to modify the tone of this considerably. After all, when someone basically agrees with you (the incumbents have too much market power), slapping them around for relying on the press is a pretty stupid and counterproductive move. Besides, my real frustration is with the press for offering up speculation as if it were fact, not Pryor for reading the press and getting upset about the supposed failure of the auction to produce a new competitor. So with apologies to Pryor for needless snark the first time around, here we go again.

Senator Mark Pryor (D-Ark) is upset with reports that AT&T or Verizon probably won C Block. More specifically, he is angry that we don’t have more wireless competition. That’s good. But he accusses Kevin Martin of fixing the 700 MHz auction to benefit the telcos. That’s where he goes wrong, in my opinion. As I’ve said before, I don’t think Martin rigged this for the telcos, especially in light of Verizon’s persistent efforts to get the C Block conditions “clarified” away and Martin’s telling them to go take a hike. Further, adoption of the anonymous bidding rules means that we don’t know yet who won the licenses. We may very well be surprised when we see the results.

But if it turns out that, as predicted, the incumbents did win the lion’s share of the licenses, that doesn’t make the outcome Martin’s fault. Rather, Senator Pryor should direct his anger where it belongs — at the statutory requirement for the FCC to auction licenses for use of the public airwaves. As I explain below, and as many of us explained before the auction, incumbents enjoy real advantages even under the best of conditions because they don’t have additional costs new entrants have — like building the network from scratch or pulling customers away from a service they already use. To make matters worse, Senator Pryor’s Republican colleagues are constantly haranguing the FCC to “not pick winners” and objecting to any kind of mechanism that could neutralize these incumbent advantages.

We can’t have it both ways, and Congress makes the call. Either Congress eliminates auctions, or allows the FCC to exclude incumbents from the auction, or gives up on auctions as a way of generating competition and goes back to regulating market power directly. But blaming Kevin Martin and the FCC for the fact that incumbents keep winning auctions makes as much sense as blaming Bud Selig for the fact that the Yankees and the Red Sox always make the playoffs and the Nationals haven’t gotten to the World Series.

More below . . . .

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Tales of the Sausage Factory

How is the OECD Different From the FCC? OECD Takes Its Number Seriously.

I must laugh at the recent back and forth on the recent national broadband rankings by the Organization for Economic Cooperation and Development (OECD). Back in December, OECD released its latest set of statistics for broadband penetration for its 30 member states. While the U.S. had the greatest number of broadband subscribers (defined as speed in excess of 256 KBPS one way), we still ranked 14th overall on number of subscribers as a percentage of population (the traditional way of measuring phone penetration).

What these figures do or do not mean I leave to others to debate. OTOH, if we had this kind of crappy penetration in plain old telephone (POTS) or power, we’d be a developing country. OTOH, broadband deployment is still relatively new and the other countries that have pulled ahead of us all have different circumstances that arguably distinguish it from us. No, my point here is merely to highlight the amusing battle of words between the OECD and a consulting firm called Market Clarity. Market Clarity recently issued a report challenging the validity OECD stats.

So far pretty ho hum. Then the fun begins with this OECD Response. It appears that, unlike our FCC, which can run silent for years about possible funny business in its numbers (until prodded by a change in Congress, it decides to ask for advice on how to suck less), the OECD takes its reporting rather seriously. As a consequence, they wasted no time in explaining to Market Clarity, with all the snark that serious researchers reserve for telling hired guns they are ignorant wankers, that Market Clarity didn’t know what the heck it was talking about.

Not to be outdone, Market Clarity quickly issued its own delightfully snarky response to the OECD response.

I have no idea where this ends up, as it rapidly devolves into a series of exchanges like: “While we welcome serious interest and robust public debate, you couldn’t regress your way out of a paper bag!” “Oh yeah, well for an organization with the 30 most powerfull economies as members, you’d think they’d hire some folks who can do basic math!” All I can say is that the Aussies seem to be having more fun with their public policy. And at that I wish our FCC took as much professional pride in their work product as the OECD.

Of course, the FCC would have to do work to be proud of rather than outcome-driven “research” first. But maybe someday . . .

Stay tuned . . . .

Posted in Series of Tubes, Tales of the Sausage Factory | Also tagged , , | 3 Comments (Comments closed)

Tales of the Sausage Factory

Talking Dirty for the Public Interest

On December 20, the Second Circuit heard oral argument on an appeal from FCC indencency decisions involving some naughty words spoken live in prime time during the Fox Billboard Music Awards. Some analysis and cynical snark below.

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Tales of the Sausage Factory

Not Only Will the Lion Lie Down With the Lamb, He Will Make Big Bucks Opening a Feed Store (While Still Running a Butcher Shop on the Side)

Y’all remember how AT&T (under its old name SBC) launched over a hundred lobbyists into the Texas legislature to kill muni broadband in TX? How it tried to kill muni broadband in Indiana? Not just once, but twice?

Guess what? AT&T has now cut a deal to build a muni wifi system in Springfield, Il. The article quotes an AT&T spokescritter as saying that AT&T expects to close many more such deals, and will seek them out where it makes economic sense.

Whoa! What happened to all of that rhetoric about the brave incumbent telco capitalist captain of industry going eyeball to eyeball with the evil Socialist menace of a publically financed internet? Answer: increasingly, the incumbents have realized this is a losing issue for them and have decided to figure out how to make money out of it.

While I take this as the latest and most potent sign that the move to outright kill muni broadband has run out of steam, I think a note of caution is advisable as well. Some victory snark and reflections on the future challenges for both muni broadband and other forms of community-based broadband below.

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