I must thank Lauren Weinstien for the utterly marvelous creation below. I urge all right thinking Americans to spread this news far and wide.

As reported by Christopher Mitchel from the Institute for Local Self-Reliance, Qwest has scored quite the little victory in its efforts to keep itself the world safe from real competition socialism. A state Senator and a state Rep introduced a bill that would have made it easier to for local governments to build municipal networks. Right now, it takes a local referendum vote with 65% to authorize a locality to build a network that offers commercial telephone service (and therefore any “triple play” broadband access service — or so they read it in MN). A State Senator and State Rep offered a bill to reduce the threshold on the referendum to a simply majority. By the time the relevant jurisdictional committee was finished, the revised bill included one of the favorite incumbent roadblocks to localities: a mandatory “feasibility study” designed to be so onerous and expensive to conduct that few local governments will want to even try.

Meanwhile, the good folks of Duluth are so desperate for real broadband that they made this joke video to get citizens to show support for bringing Google Gigabit Fiber project to town.

Question for the good Senators and Representatives of Minnesota: when you've got folks clamoring for real broadband, do you really want to be “protecting” your underperforming incumbent? By “clarifying” that your referendum law applies to any indirect provision of telecom service, and imposing a five year plan on municipalities, you are making it very hard for your local governments to — in the words of Duluth's mock Public Service Announcement — “suck up even harder” than the competition. While I am hardly privy to Google's secrets and innermost workings, I am willing to bet real money that when they weigh where to set up their pilot project, they will consider any possible legal landmines. Would you want to set up shop in a city where Qwest or some other provider might sue to block your use of city assets under the amended state law? Even if Google were to ultimately prevail, it would tie up the deployment in litigation. Who wants that, when the number of communities begging for Google to come and work its fiber magic keeps growing?

Mind you, there's a good argument that even this version of the bill is better than the current law. Dropping the referendum requirement from 65% to a simple majority will do a lot of good even with the feasibility study requirement. But should that really be the choice? Don't the people of MN deserve the better bill, without throwing (yet another) bone to Qwest to reward its failure to provide what people want and need?

So folks in Duluth, and other communities in MN trying to get Google Fiber, you might want to ask Qwest's buddies in the legislature to cut y'all some slack and pass the original bill without the study requirement. that would send a signal that MN is serious about bringing broadband to its citizens and would welcome the sort of public/private partnership that Google appears to be offering. Or perhaps the MN legislature is just rooting for the people of Topeka “Google,” KS instead of the folks in Duluth.

Stay tuned . . . .

Last week, I predicted the FCC would opt to auction the AWs-2/AWS-3 spectrum rather than adopt the M2Z proposal. Yesterday, the FCC issued it's teaser for recommendations to improve broadband adoption. One of these was “[c]onsider use of spectrum for a free or very low cost wireless broadband service.”

That, of course, was M2Z's chief selling point. They would provide a free tier for for everyone supported by adds and by the higher-speed, ad free pay tier. So do I want to revise my prediction on whether the FCC will adopt the M2Z or T-Mobile asymmetric auction proposal?

Not at this point. Sure, this tea leaf looks much more favorable to M2Z than it does to T-Mobile. But I note two things. First, the language says “consider” rather than simply “use.” The question of whether to require free service of some kind as a public interest obligation was teed up in the pending AWS-2/AWS-3 proceeding. If they were going to go with M2Z, they wouldn't say “consider,” they'd say “use spectrum . . . .” Second, there are a number of other ways to use spectrum for free or low cost wireless. These range from expanding the use of unlicensed spectrum to facilitate creation of community wireless networks to mandating “wireless lifeline”-type programs that would require all carriers to offer cheap or free access on a needs basis. It also remains to be seen whether the FCC will actually do anything other than “consider” such an approach, or whether revenue concerns and incumbent resistance will ultimately carry the day.

So while I'm pleased to see the FCC looking at spectrum from a public interest/public welfare perspective, I'm not changing my bet on how the FCC resolves the AWS-2/AWS-3 band fight. The real questions are (a) timetable, and (b) spectrum caps, yes/no? (and no, I haven't forgotten about Fred Campbell's standing invite/challenge for me to justify spectrum caps generally, just haven't gotten time yet). The FCC could conceivably issue an Order with service rules and schedule an auction date. Or it could put out a final set of rules for further notice. My personal bet is thy will move quickly — both to show they are taking action and because OMB would really like to book that revenue. But we'll have to see.

Heck, I could be entirely wrong in my prediction and they could go with M2Z, or some variant thereof. Stranger things have been known to occur.

Stay tuned . . . .

Time for another little instructional video, aka “5 Minutes With Harold Feld.” Here, I talk about the US Trade Representative's “Special 301” Process. This is where the US Trade Representative (USTR) makes a “naughty list” for countries which, in the words of the statute: “deny adequate and effective protection of intellectual property rights” or “deny fair and equitable market access to United States persons that rely upon intellectual property protection.” (You can find last year's list here.)

But while Congress intended this to be about protecting U.S. interests from wholesale piracy — you know, the warehouses with the industrial copying machines that crank out 10,000 counterfeit DVDs and hour and such what — the usual suspects have hijacked this to ratchet up intellectual property law in other countries. That includes trying to outlaw in other countries things that are not only legal here, but critical to our electronics industry and online services (not to mention free speech and civic expression). For example, because “space shifting” is a perfectly legal fair use, SlingMedia can sell a product that lets me watch shows I pay for through my broadband connection. Because we don't hold “providers of interactive services” liable for copyright infringement if they follow the Digital Millennium Copyright Act notice and takedown provisions, Youtube can have an open video service that's easy to use and easy for people to upload content.

Eliminate these provisions and we don't just lose access to foreign markets for these goods and services. We potentially expose U.S.-based providers to foreign liability. Needless to say, Hollywood and the music industry are deeply concerned about how mucking around with other countries and pressuring them to change copyright law hurts other businesses — let alone the impact on civil liberties. But while it is not the job of these industries, and their associated trade organizations, to care about others, it is the job of the USTR to care about all U.S. goods and services, not just the entertainment industry.

You can read more about this issue from my Public Knowledge colleague Rashmi Rangnath here, including her exciting day testifying before USTR staff here. Rashmi is too polite to say as bluntly as I will that USTR staff give every sign of having been so thoroughly indoctrinated by the entertainment industry that they don't even remember what their actual job is anymore. So we will need to whack them up the side of the head with a pretty big Clue Hammer a few times to get this process heading back in the right direction.



Stay tuned . . . .

I've been rather pressed for time, hence have not had much chance to blog on the FCC's recent spectrum policy announcements for D-Block and the broadcast migration offer. Combine these two speeches with Genachowski's recent statement in an interview that the NBP will finance the $25 billion via existing programs and it is clear that the FCC will adopt the T-Mobile's “asymmetric auction” proposal for the AWS-2 and AWS-3 band, leaving M2Z high and dry. The only question is whether or not there will be spectrum caps to keep AT&T and Verizon from snarfing the good stuff, but do not expect the NBP to touch something as “controversial” as spectrum caps even by veiled implication the way the DoJ did in its comments.

Mind, this is another example of the “spectrum auctions are the crack cocaine of public policy” problem. The thirst for revenue pushes all other considerations out the window. I'm not convinced the T-Mobile approach is wrong (especially if subject to spectrum caps), and I think the D-Block finesse was extremely clever. But when revenue sits in the driver's seat, policy invariably takes a wrong turn somewhere along the road. But it is difficult to imagine how Genachowski could resist a $15 bn secret cash cow to fend off accusations that Democrats are once again writing checks against our children's future blah blah blah.

I unpack all this below. . . . [Read More!]

Back in October, Richard Bennett wrote a paper on why he thought network neutrality was particularly inappropriate — indeed, dangerous to the future evolution of — mobile internet access. On Tuesday March 2, his employer, The Information Technology & Innovation Foundation will be hosting an event to discuss the paper, mobile internet access and policy. He's asked me to join Barbara Esbin from Progress and Freedom Foundation and Morgan Reed from the Association for Competitive Technology on a panel to discuss the issues. Should be fun.

Click here for the event announcement, which contains an RSVP link.

Stay tuned . . . .

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 . . . [Read More!]

Unsurprisingly, the telecom world is all abuzz over the news that Google will build a bunch of Gigabit test-beds. I am perfectly happy to see Google want to drop big bucks into fiber test beds. I expect this will have impact on the broadband market in lots of ways, and Google will learn a lot of cool things that will help it make lots of money at its core business — organizing information and selling that service in lots of different ways to people who value it for different reasons. But Google no more wants to be a wireline network operator than it wanted to be a wireless network operator back when it was willing to bid on C Block in the 700 MHz Auction.

So what does Google want? As I noted then: “Google does not want to be a network operator, but it wants to be a network architect.” Oh, it may end up running networks. Google has a history of stepping up to do things that further its core business when no one else wants to step up, as witnessed most recently by their submitting a bid to serve as the database manager for the broadcast white spaces devices. But what it actually wants to do is modify the behavior of the platforms on which it rides to better suit its needs. Happily, since those needs coincide with my needs, I don't mind a bit.

How does that play out here, and why do I compare Google to a protozoa? See below . . . . [Read More!]

If I had a dime for every article I have seen since AOL went to flat rate back in 1996 that foretold the coming end of flat rate internet access plans and the inevitability of metered pricing, I'd have so much money I could actually afford what wireline providers dream of providing as a monthly fee. Despite the “inevitability” of metered pricing for nearly 15 years, it hasn't happened and I don't expect it any time soon. Why? Because not only is it wildly unpopular with the customers (it is one of the few things powerful enough to overcome the switching cost for anyone with a choice), but the economics of it do not make a heck of a lot of sense. Heck, Comcast (the largest residential broadband provider) announced in its earnings call on 4Q 09 that it is reducing its capital expenditure on network capacity for 2010 because it has nearly completed necessary upgrades for DOCSIS 3.0, which gives it all the capacity it needs for the foreseeable future. “We don't need to invest anymore in our network because we have all the capacity we need” is a might inconsistent with “we need to switch to metered pricing so we can afford to expand our network capacity and create incentives against 'bandwidth hogs' and other mythical beasts.”

I can forgive wireline providers for indulging in metered pricing fantasies, while admiting them for perpetuating the useful myth og limited capacity to ward off regulation. But when this article on the purported inevitability of metering wireless plans. This strikes me as “Keep The Government Out of My Medicare” lunacy.

As the article itself concedes without saying directly, wireless broadband plans are already metered. Blow past your monthly usage cap and you will pay per-minute charges. For those not old enough to remember, this was the old AOL metered pricing model. You got ten hours for free, then got charged on a per-minute basis. They abandoned it because customers hated it and moved to flat rate price plans. So what wireless providers apparently mean by “metered” is “find a away to reduce the usage cap further by pretending to call it something else.” I expect this will not catch on any better than the efforts to change pricing structure on the wireline side, and for the same reason. The economics don't make sense.

Which brings us to the next lesson on network economics. The cost structure of building and maintaining the network is marked by high fixed cost and low marginal cost. That is to say, the vast majority of cost comes from building the network itself, regardless of how many customers use it. Once the network is built, the actual marginal cost of each customer is fairly low. Even an intense user does not “consume” very much of the network resources (the supposed “bandwidth hog” is a problem only because network capacity is ridiculously oversold). The argument that the majority of subscribers subsidizes the few “bandwidth hogs” is simply rubbish. The question is simply how obscenely high a rate of return can the network operator squeeze out of each customer.

Back in the old days, we used to require providers to prove cost. Sure we had metered pricing, but that was so that the very profitable areas could subsidize the high cost areas. Nowadays, we rely on “the market” to regulate cost, with the result that profit per customer for the major providers continues to rise. I'm cynical enough to wonder if that's why we see this endless parade of speeches by network operators and articles by their sycophants about the “inevitability” of metered pricing — so we will thank our lucky stars that when we are outrageously ripped off that it is at the “bargain” of overpriced flat rates.

Stay tuned . . .

I have a fondness for the 3.65 GHz band for a number of reasons. In the first place, I was heavily involved in the the fight over the rules. For another, it seems to be filing an important niche in the wireless broadband ecosystem. So I was pleased when the FCC's Wireless Bureau resisted the invitation to get involved in interference disputes in the band. OTOH, it also highlights the value of having a referee with jurisdiction in case something does go wrong.

I know I'm getting to this late, as the decision came out at the end of December, but it's been a busy time. More below . . . [Read More!]