Democracy and Technology Blog

Sprint Nextel Corp. is a troubled company, and that is unfortunate. Government cannot save Sprint, only subsidize it. That could harm our economy. Government can only subsidize the weak at the expense of the strong.
Sprint posted another dismal earnings report late last week. The company had a net loss of $847 million in the second quarter, for a total of $1.2 billion in net losses so far this year. Sprint also lost $3.5 billion in 2010, $2.4 billion in 2009, $2.8 billion in 2008 and it recognized net losses of $29.4 billion in 2007.
What is Sprint’s comeback plan? Not surprisingly, the company is quietly seeking a stealth bailout from the Federal Communications Commission.

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Counterfeiting and piracy are frequently presented as relatively minor costs of doing business for a small number of otherwise highly profitable industries, such as high-end designer labels, motion picture studios and record labels or pharmaceutical and software giants. Rarely are they acknowledged as a threat to the nation’s economy.
In fact, counterfeiting and piracy are far more pervasive than they once were, having evolved into a “sophisticated global business involving the mass production and sale of a vast array of fake goods,” according to the U.S. Trade Representative’s annual review of the global state of intellectual property rights, protection and enforcement (“2011 Special 301 Report“).
The fake goods deprive U.S. intellectual property rights holders of billions of dollars per year, many believe. Since the income they would have earned will never be taxed, nor can it be used for investments in new capacity and to expand employment, their economic losses affect all of us.

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H.R. 1981, the “Protecting Children from Internet Pornographers Act of 2011” was the subject of a hearing today in the Subcommittee on Crime, Terrorism and Homeland Security of the House of Representatives. The bill would require Internet Service Providers to retain customer logs which could be used to reconstruct the Internet activity all subscribers, not just those who are suspected of engaging in criminal conduct. Under current law, ISPs may be required to preserve records for 90 days at the request of law enforcement in connection with a particular investigation, plus a 90-day extension if the request is renewed. H.R. 1981 would require ISPs to retain everything for 18 months. H.R. 1981 is unfortunately not a good example of transparency Read More ›

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.

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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 Read More ›

Steve Jobs, who grew up in Cupertino, CA, has blessed his home town with a proposed new campus for Apple that is spectacular in its vision, as well as in its optimism about the company’s future. In a matter-of-fact presentation to the Cupertino City Council Jobs presented plans that were received with stolid approval, but that justified celebratory balloons and a town band. That’s because the new scheme is a design breakthrough. The new headquarters Jobs wants to build will transform land that once was apricot orchards and is now a sprawl of undistinguished high tech office buildings into a spectacular single building that will house up to 13,000 people in a kind of donut shape of glass, steel and Read More ›

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 complexity, and the Read More ›

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 and regulations. It will oversee Read More ›

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 — although not required — to file tariffs, which would take effect immediately.
• Programs supported by the state’s universal service fund would be limited to essential telecom services.
• ILECs would be allowed to provide basic voice service through an affiliate or through the use of any available technology or mode until April 30, 2013, after which none of the bill’s basic voice service requirements would apply.

The Milwaukee Journal Sentinel cites one critic, who complains

The legislation would strip away 50 years of consumer protection for landline telephone subscribers, said Barry Orton, a University of Wisconsin-Madison telecommunications professor.

Much has changed in telecom in the past 50 years. Fifty years ago, phone service was provided by monopolies in possession of exclusive franchises issued by government. Congress authorized competition beginning in 1996. Today, nearly all consumers have a choice of providers, and a cable company, Comcast, is the nation’s third largest phone services provider.

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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 investment that will be needed to provide every household with an Internet connection of at least 100 megabits per second – a goal of the National Broadband Plan – could be at risk. Continued regulation jeopardizes competition by creating artificial competitive advantages and disadvantages for providers.
Nearly all consumers can choose between competing providers of voice services. Many Americans, regardless of age and income, are opting to discontinue landline phone service and rely instead on their mobile phone or voice service provided by their cable company.

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