The Pennsylvania Public Utility Commission (PUC) last week voted 5-0 to reduce intrastate access charges for long distance carriers by an estimated $50 million. This is significant because continued subsidies for dial tone diverts private investment needed for broadband. Pennsylvania historically has been at the forefront in promoting competition in telecommunications and reforming rates to advance broadband. Today, virtually every telecom carrier in the state is providing broadband. But broadband facilities will be constantly challenged to deliver more data at faster speeds. Broadband providers will need to spend $350 billion in the next few years to make 100 megabits-per-second broadband service available to all Americans, according to the Federal Communications Commission. Hidden …
No surprise here: the Federal Trade Commission is investigating Google. The company is wildly successful. There is anxiety both amongst its competitors and also Web sites who aim to be top destinations. For example, Kayak.com seems to be worried that in exchange for a fee Google will deliver search results that give competitive travel vendors precedence over Kayak. “We believe there’s a very compelling case that Google is abusing its dominant position in search to stifle competition and to extend its control over how information and commerce flows over the Internet,” says Robert Birge, Kayak’s chief marketing officer. Birge offers an example. Say you want to go to Tahiti. “I think what would happen if you search for hotels from Tahiti, you’re going …
There are 9.2 million households unserved by broadband today, according to the Federal Communications Commission. Accordingly, the commission has erroneously concluded that broadband is “not being deployed in a reasonable and timely fashion to all Americans.” If the commission finds that broadband is not being deployed to all Americans in a reasonable and timely fashion, then Sec. 706 of the Telecommunications Act of 1996 provides that the FCC “shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure and investment and by promoting competition in the telecommunications market.” The Sec. 706 provision was touted at the time as evidence that the 1996 law was in fact deregulatory, despite the law’s size and …
China is creating a State Internet Commission. The actual title is “State Internet Information Office.” The department, known as the State Internet Information Office, will direct, coordinate and supervise online content management and handle administrative approval of businesses related to online news reporting, it said. The office will work to implement the policies of Internet communication and promote legal system construction in this field, it said. It will direct the development of online gaming, online video and audio businesses and online publication industries, it said. The office will be engaged in promoting construction of major news websites and managing government online publicity work. It is assigned the duties to investigate and punish websites violating laws …
Legislators in Wisconsin got set this week to deliberate telecom reform. Next week two committees will conduct hearings on Assembly Bill 14 and Senate Bill 13, which would Exempt Voice over Internet Protocol (VoIP) and data services from state utility regulation, Repeal price regulation, and Require large incumbent local exchange carriers (ILECs) to reduce intrastate switched access rates to mirror their interstate rates within five years. Small ILECs — who charge the highest rates — would be exempted for four years, after which PSC authority to order rate reductions would be restored. Meanwhile, for some reason, new entrants would be required to charge identical rates for both intrastate and interstate access beginning immediately. Telecom providers would be allowed …
The Florida State Senate approved House Bill 1231 by a vote of 39-0 this week, following a vote of 110-4 in the House of Representatives. Among other things, the bill would Remove the Florida Public Service Commission’s oversight of both local telecommunications services — including service quality and price regulation — and also intrastate interexchange services. Remove the PSC’s authority to provide certain consumer education materials and to adopt rules concerning certain billing practices. Promote the adoption of broadband services without the need for government subsidies. A full analysis by legislative staff is available here. The bill is now awaiting approval by Gov. Rick Scott. If legacy telephone regulation is not reformed, the mostly private …
Over at Technology Liberation Front, several colleagues and I recently “debated” the proposed merger between AT&T and T-Mobile from a free market perspective. For a skeptical take on the merger, see the item by Milton Mueller. The rest of us are more optimistic. The AT&T – T-Mobile Merger: Beyond the Arithmetic, by Larry Downes (Apr. 18, 2011) Why I fear the AT&T-T-Mobile merger, by Milton Mueller (Apr. 18, 2011) Open minded on the AT&T/T-Mobile merger, by Hance Haney (Apr. 19, 2011) Information Control, Market Concentration, and the AT&T/T-Mobile Deal, by Ryan Radia (Apr. 20, 2011) For The Last Time: The Bell System Monopoly Is Not Being Rebuilt, by Steven Titch (Apr. 22, 2011) Also see these prior essays: AT&T/T-Mobile highlights artificial …
Remember how network neutrality regulation was supposed to be for the limited purpose of preventing broadband providers (aka Internet Service Providers) from blocking or degrading access to unaffiliated web sites? Those of us who feared a “slippery slope” have been attacked as cynical, idiotic and hysterical. So now along comes Netflix. NN regulation won’t help Netflix, according to CEO Reed Hastings. The firm is not worried about being blocked or degraded. It’s worried about being charged for the huge volume of video traffic it hopes to deliver over the Internet in place of the DVDs it now sends through the mail. Netflix wants free access to the customers of the broadband providers. We don’t think ISPs should be able to use their exclusive control of …
The Wall Street Journal quotes two high-ranking former officials from the Federal Communications Commission who are skeptical of the AT&T/T-Mobile merger. AT&T is citing the need for more spectrum in urban areas to keep up with the increasing amount of wireless data traffic. As the article points out, data traffic is up 8,000% on AT&T’s wireless network over the past 4 years. Meanwhile, T-Mobile’s network uses the same technology as AT&T’s, and T-Mobile’s spectrum is underutilized. A former chief technology officer at the FCC shares his thoughts on the best way to fix the shortage. The correct way to do it is to change policy and release a huge amount of spectrum. Spectrum is in short supply where you want it and plentiful where it’s …
Wired telecommunications carriers are one of 10 doomed industries, according to Toon Van Beeck at IBISWorld. Of the 10 chosen industries that are dying, Wired Telecommunication Carriers is by far the largest, at $154.0 billion in turnover. While this number may sound sizeable, it’s considerably smaller than the $341.8 billion at the end of 2000. Since then, this industry has declined in every year, and it is now close to 55% smaller than it was at its peak; with an additional decline of 37.1% expected in the next six years. While major players like AT&T and Verizon continue to dominate the industry, they are generating lower returns each year as consumers switch to VoIP and wireless products. That’s a far more significant decline than for newspaper publishing. …
It’s no secret that hackers can penetrate networks which deliver essential products and services. At the Los Angeles Times, Ken Dilanian writes: The U.S. is vulnerable to a cyber attack, with its electrical grids, pipelines, chemical plants and other infrastructure designed without security in mind. Some say not enough is being done to protect the country. * * * * The basic roadblocks are that the government lacks the authority to force industry to secure its networks and industry doesn’t have the incentive to do so on its own. Not so fast. Government itself played an important role in the design of the networks. Traditionally, most of them were and/or still are subject to pervasive government regulation designed to provide all consumers with comparable products and …
According to this report, The liberal group Media Matters has quietly transformed itself in preparation for what its founder, David Brock, described in an interview as an all-out campaign of “guerrilla warfare and sabotage” aimed at the Fox News Channel….Media Matters, Brock said, is assembling opposition research files not only on Fox’s top executives but on a series of midlevel officials. It has hired an activist who has led a successful campaign to press advertisers to avoid Glenn Beck’s show. If their opponents are spreading false or misleading arguments, couldn’t “progressives” disprove those arguments? If progressives have a sound case to make, why would these thuggish tactics be …
Sprint’s CEO, Dan Hesse, worries that “too much power” would be in the hands of AT&T and Verizon Wireless if AT&T acquires T-Mobile USA. Sprint has been losing customers and revenues ever since its own problematic merger with Nextel in 2005. The carrier lost about $3.5 billion last year alone. Although Sprint’s troubles would not be solved if regulators block a merger between AT&T and T-Mobile, Hesse’s words suggest the possibility that Sprint may nevertheless urge policy makers to block the deal. This is not sour grapes; it is a shrewd abuse of the regulatory process, which provides a golden opportunity for struggling competitors and others who are well-connected politically to practice legal extortion. For example, AT&T could be forced by …
In Tennessee, legislation to eliminate the hidden subsidies in intrastate access charges applied to long-distance calls which originate and terminate within the state has passed the Senate Commerce Committee and the House Sub-Commerce Committee. The votes in the two panels were overwhelming: 8-1 and 12-1. It has taken real leadership by the bills’ sponsors — Sen. Mark Norris and Rep. Gerald McCormick — and others to write and pass legislation dealing with this matter over committed opposition. As amended, SB 0598 would prohibit telecommunications providers from charging intrastate access charges that exceed interstate access charges. The amendment includes a 5-year transition, beginning in April 2012. The House bill is HB 0574. As I’ve blogged about here and …
Talk about gutsy. AT&T is set to buy T-Mobile for $39 billion. AT&T is a giant corporation. When AT&T acquires T-Mobile, the number of national wireless providers will go from 4 to 3. And struggling no. 3 (Sprint) may not have anyone with which to partner. Is this a disaster? Can government protect the little guy? T-Mobile is dead in the water. It has run out of gas. It can’t make money. T-Mobile and AT&T are a natural fit because their networks rely on similar technology. Not true for Verizon Wireless and Sprint. If the government blocks this merger it will force an economically inefficient (and ultimately unsustainable) outcome. Politicians cannot alter the laws of economics. This merger is likely a good thing for the economy and for consumers. T-Mobile was …
Tennessee’s House Commerce Committee heard testimony this week on reforming intrastate access charges that long-distance providers pay to local tlecommunications carriers to originate and terminate calls between local calling areas within the state. Access charges traditionally have been set far above cost to generate subsidies to maintain ubiquitous and affordable local service. In the Telecommunications Act of 1996, Congress directed the FCC and the states to pull the hidden or implicit subsidies out of access charges, because they are unsustainable in a competitive market. The FCC reduced interstate access charges, and exhorted the states to reduce intrastate access fees. A brief paper that George Gilder and I prepared notes that in Tennessee today, for example, a long-distance …
Intellectual Property subcommittee Chairman Bob Goodlatte, R-VA (pictured), said he is considering legislation to tweak antirust law to address net neutrality concerns, according to the Hill. That’s apparently because Rep. Henry Waxman (D-CA) reports that, According to DoJ, favoring websites that pay high fees and degrading websites that don’t is perfectly legal under the antitrust laws as long as the phone or cable company isn’t in direct competition with the websites being degraded. Goodlatte and Waxman seem to be talking about a vast expansion of the antitrust laws, which are presently concerned with anticompetitive behavior. As a definitional matter, if two rivals are not in competition with one another, then neither can behave anticompetitively toward the other. …
On Friday Scott Cleland predicted that online advertising is an investment bubble which will eventually burst as a result of latent consumer privacy concerns. Expect privacy concerns to be the eventual catalyst that ultimately bursts the Internet investment Bubble 2.0. It is rare when there is a profound disconnect and suspension of reality between industry behavior/investment expectations and customer wants, needs and expectations, but that is precisely what is at work in Bubble 2.0. In the Wall Street Journal, Scott Thurm reported that venture firms have invested $4.7 billion since 2007 in 356 online ad firms. The investment climate is “frothy” according to one of Thurm’s sources. And there’s an arms race among the start-ups for math specialists, he reports. …
Among other things, George Gilder tells Forbes reporter Chris Barth that the text-based Internet with which we are familiar is evolving into a video-based internet, and the change will be transformative. “When voice came around as the dominant form of communication, it required a complete transformation. You couldn’t just upgrade the telegraph, you had to create a telephone system. The Internet, when you look at it, is another telegraph,” he explained. “Now we’re moving to interactive video. And video teleconferencing cannot be accommodated without a new, upgraded Internet, with new patches and tunnels and layers of Internet …
Yesterday the Tennessee Regulatory Authority (the state’s public utility commission) heard testimony about reforming intrastate access charges (i.e, the rates long-distance carriers pay to local telephone companies when calls are handed off between long-distance and local telecom providers). The rates have been set very high, historically, to generate significant subsidies for making local service affordable and ubiquitous. In my own remarks, I pointed out that the hidden subsidies embedded in intrastate access charges are a tax on consumers. Defenders of the status quo like to avoid that word, but a tax is a tax. Although fully justifiable when established in 1984 upon the breakup of Ma Bell, the hidden subsidies are simply inappropriate in today’s dynamic, competitive …