Blog - Page 6

Further uncertainty for universal service and intercarrier compensation reform

The National Telecommunications Cooperative Association (NTCA) began the process of litigating the Federal Communications Commission’s recent Connect America Fund Order on in the U.S. Court of Appeals for the Fourth Circuit Friday. NTCA, which represents over 570 “locally owned and controlled telecommunications cooperatives and commercial companies throughout rural and small-town America,” notes, among other things, that “[p]rovisions [of the Order] mandating an ultimate price of zero for all switched access and reciprocal compensation services, imposing retroactive and dynamically changing caps on USF-supported costs and blurring the lines between regulated and nonregulated operations are inconsistent with law.” What this particular dispute is ultimately about is not whether NTCA’s members are entitled to recover their reasonable costs as a matter of law Read More ›

Creative destruction in online advertising

An item in the Wall Street Journal by Emily Steel notes how software application developers could radically alter the online advertising business that has allowed firms like Google and Facebook to prosper. Consumers are downloading independently-produced apps which allow them to customize their Facebook page or optimize their Google search results. In the process, these consumers begin to see ads that do not originate from Facebook or Google. On Facebook, for instance, big splashy ads appear along the border and in the middle of the pages, pushing content–and the advertising actually sold by Facebook– further down the page. The applications can similarly interfere with search results, placing new sets of ads above the ones bought, say, by Google advertisers. This Read More ›

FCC strikes out on AT&T + T-Mobile opportunity

AT&T and T-Mobile withdrew their merger application from the Federal Communications Commission Nov. 29 after it became clear that rigid ideologues at the FCC with no idea how to promote economic growth were determined to create as much trouble as possible. The companies will continue to battle the U.S. Department of Justice on behalf of their deal. They can contend with the FCC later, perhaps after the next election. The conflict with DOJ will take place in a court of law, where usually there is scrupulous regard for facts, law and procedure. By comparison, the FCC is a playground for politicians, bureaucrats and lobbyists that tends to do whatever it wants. In an unusual move, the agency released an analysis Read More ›

What is the FCC’s jurisdiction to subsidize broadband?

The Federal Communications Commission issued its Connect America Fund Order to ensure ubiquitous broadband Internet access services on Friday.
When Congress debated the Telecommunications Act of 1996, the section concerning Universal Service (Section 254) was somewhat controversial. Broadly speaking, there seemed to be considerable support in the House of Representatives for limiting Universal Service, and there were some influential senators who wanted to expand it (the House is somewhat more representative of urban areas that contribute subsidies, and the Senate is somewhat more representative of rural areas that receive subsidies). The result was a compromise in which Universal Service is defined (in Sec. 254(c)(1)) as “an evolving level of telecommunications services that the Commission shall establish periodically … taking into account advances in telecommunications and information technologies and services.” Notice how information services are missing in the first half of that sentence. Although the FCC is allowed to take notice of information services, Universal Service has to support telecommunications services only.
This is relevant because the FCC subsequently ruled that broadband Internet access is an information, not a telecommunications service (Order at paragraph 71). The commission also subsequently ruled that a service has to be one or the other, and that it cannot be both (“hybrid services are information services, and are not telecommunications services,” ruled the FCC in a 1998 Report to Congress at paragraph #57).

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Stop Online Piracy Act scrutinized

Testifying today before the Judiciary Committee of the House of Representatives, Google’s copyright counsel, Katherine Oyama, made a number of useful observations about the proposed Stop Online Piracy Act (H.R. 3261). For example, she claimed that the bill could require U.S. Internet and technology companies to monitor Web sites and social media for infringing content. It would make no sense to make companies like AOL, eBay, Facebook, Google, LinkedIn, Mozilla, Twitter, Yahoo! and Zynga responsible for the content that their customers link to or post on the Web. On the other hand, it would also not make sense for these companies to remain free to ignore obvious copyright infringement. Say the owner of a copyright notifies these companies about infringing Read More ›

GPS tracking devices do not have power to rewrite Fourth Amendment

Futurists have been predicting for years that there will be diminished privacy in the future, and we will just have to adapt. In 1999, for example, Sun Mcrosystems CEO Scott McNealy posited that we have “zero privacy.” Now, Wall Street Journal columnist Gordon Crovitz is suggesting that technology has the “power to rewrite constitutional protections.” He is referring to GPS tracking devices, of all things.
The Supreme Court is considering whether it was unreasonable for police to hide a GPS tracing device on a vehicle belonging to a suspected drug dealer. The Bill of Rights protects each of us against unreasonable searches and seizures. According to the Fourth Amendment,

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

In the case before the Supreme Court, U.S. v. Antoine Jones, the requirement to obtain a warrant was not problematic. In fact, the police established probable cause to suspect Jones of a crime and obtained a warrant. The problem is, the police violated the terms of the warrant, which had expired and which was never valid in the jurisdiction where the tracking occurred. Therefore, first and foremost, this is a case about police misconduct.

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Senate to vote on net neutrality

Tomorrow the United States Senate will vote on S.J.Res. 6, a joint resolution disapproving the rule submitted by the Federal Communications Commission with respect to regulating the Internet and broadband industry practices. An identical resolution (H.J.Res. 37) has already passed the House of Representatives by a vote of 240-179. Today Sen. Marco Rubio (R-FL) explained why Congress should protect the Internet from unnecessary government regulation — because regulation inhibits investment and innovation. If the Senate adopts the resolution, the President will use his veto to block the will of the people as expressed through their Congressional representatives, according to reports.

Stop Online Piracy Act is a good starting point

Is the proposed Stop Online Piracy Act, H.R. 3261 (SOPA) a “massive piece of job-killing Internet regulation,” as our friends at the Electronic Frontier Foundation claim? According to the sponsor of the proposal, House Judiciary Chairman Lamar Smith (R-TX), there is an urgent need to protect American innovators from foreign theft via the Internet. Rogue websites that steal and sell American innovations have operated with impunity. The online thieves who run these foreign websites are out of the reach of U.S. law enforcement agencies and profit from selling pirated goods without any legal consequences. According to estimates, IP theft costs the U.S. economy more than $100 billion annually and results in the loss of thousands of American jobs. The Stop Read More ›

Will Ga. PSC protect consumers or corporations?

At next week’s administrative session, the Georgia Public Service Commission will consider a proposed order from the Public Interest Advocacy Staff concerning the applications of three small telecom service providers for subsidies from Georgia’s Universal Access Fund. The companies are: Chickamauga Telephone Corp., Public Service Telephone Co. and Ringgold Telephone Co.
According to Kristi E. Swartz, writing in the Atlanta Journal-Constitution in August,

The Public Service Commission held two days of hearings this week on three requests of more than $1 million each. Opponents took particular aim at executive and owner compensation.
Ringgold Telephone, which serves northeast Georgia, paid five executives more than $950,000, according to testimony and documents filed with the PSC. Public Service Telephone, which operates in Middle Georgia, doled out $2 million in dividends to its three private owners, according to testimony and documents filed with the PSC.

We are talking about government-mandated subsidies, which force urban and suburban telecom consumers in Georgia, without regard to individual economic circumstances, to pay inflated prices for wireline telephone service for the purpose of subsidizing telephone service in rural communities. Will rural consumers really be cut off from the rest of the World without these subsidies, or do the subsidies mainly benefit richly compensated executives and owners of legally-privileged telecom service providers? It is hard to tell. “Because the rural companies are private,” notes Swartz, “much of their financial information is undisclosed.”

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States must reform rates for intrastate switched access

Federal Communications Commission Chairman Julius Genachowski’s criticism of intercarrier compensation in extensive remarks on telephone subsidies last week is a reminder for many states of the need to reform intrastate switched access rates.
Although Congress mandated the elimination of implicit subsidies embedded in the rates for both interstate and intrastate telecommunications services in the Telecommunications Act of 1996, it did not set a deadline. The FCC has substantially reduced interstate switched access rates in recent years, but a considerable amount of hidden subsidies remain in intrastate switched access fees.
In Florida, for example, one telecom service provider charges 5.64 cents per conversation minute for intrastate long distance versus only 1.65 cents for interstate long distance. The difference represents a hidden subsidy component that operates as a form of tax that only residents of Florida pay, since the lower interstate fees apply to calls which cross state lines.

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