Blog - Page 7

Chairman Julius Genachowski of the Federal Communications Commission spoke of the need to reduce subsidies for traditional wireline telephone service last week, as well as a perceived need for his agency to use the savings to subsidize broadband services (see the press release and the text of the speech).
Genachowski is absolutely correct about the need for reforming universal service and intercarrier compensation. Unfortunately, his determination to reform telephone subsidies is not for the purpose of generating consumer savings, but about redirecting resources currently at his disposal for the purpose of gaining some measure of control over unregulated broadband networks. Though cleverly disguised, this is actually a third major attempt to (slowly) impose public utility regulation on broadband service providers.

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You gotta love this guy. Or do you? Referring to the Department of Justice’s challenge to the AT&T + T-Mobile USA merger, Sprint CEO Dan Hesse (mug shot to the right} claims, I don’t believe that what the DOJ said in any way, not even a little bit, should be viewed as we want to keep four [major telecom carriers] …. My view is [the DOJ] would look at other consolidation very differently. What is he saying? According to another report, Hesse believes, [Y]ou could make a very, very strong argument, I believe, that if you have two value players that, let’s say, got together, that gave them more scale and a better cost structure to compete with the twin Read More ›

Congressman Lee Terry (R-NE) and Congressman Mike Ross (D-AR) are encouraging their colleages to co-sign a letter urging Federal Communications Commission Chairman Julius Genachowski to reinvent the Universal Service Fund that subsidizes telephone service in rural areas served by small telecommunications common carriers. The USF is an inefficient subsidy mechanism that may no longer be necessary. The Government Accountability Office made a similar observation in a 2008 report to Congress. While considering legislation codifying universal service, the Senate Committee on Commerce, Science, and Transportation anticipated that competition and new technologies would reduce or eliminate the need for universal service support mechanisms. However, rather than decreasing, the cost of the high-cost program has grown substantially to $4.3 billion in 2007, increasing Read More ›

Does Google present Google products at the top of search result lists? That was the question Senator Mike Lee (R-UT) asked at a congressional hearing this week. Senator Al Franken (D-MN) complained that Schmidt’s response was “fuzzy.” See, e.g., this. If the Google algorithm does favor Google products, is the implication that consumers are so stupid that they will not compare search results, but rather home in on the top search result? That’s absurd. Most consumers use the Internet in search or value, looking for the best products at the most reasonable prices. Consumers who want to save money are accustomed to hunting and searching. Google makes it easier than ever to hunt for bargains. Consumers can access the offerings Read More ›

Title VI of the so-called American Recovery and Reinvestment Act of 2009 directed the Federal Communications Commission to submit a report to Congress containing a “national broadband plan.” Among other things, the statute specified that the plan should ensure that “all people of the United States have access to broadband capability.” It should also include a “detailed strategy for achieving affordability of such service and maximum utilization of broadband infrastructure and service by the public,” the statute said.
This process provided regulatory enthusiasts like Public Knowledge, Media Access Project, New America Foundation and U.S. PIRG an opportunity to advocate for government control of the broadband economy. In joint comments filed with the FCC, the groups called for the national broadband plan

to recognize that certain fundamental principles are too important to leave to the marketplace. * * * * a vibrant broadband network, placed at the center of our economy and our ability to communicate with one another, must follow in the footsteps of the Communications Act of 1934. This begins not with a discussion of competition, but a broad statement of the rights of all Americans to provide “all people of the United States” without discrimination access to “adequate facilities at reasonable charges.”

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Blocking the merger between AT&T + T-Mobile is apropos of this administration’s strategy for creating jobs, according to James M. Cole, the deputy attorney general.

The view that this administration has is that through innovation and through competition, we create jobs. Mergers usually reduce jobs through the elimination of redundancies, so we see this as a move that will help protect jobs in the economy, not a move that is going in any way to reduce them.

Remarkably, someone forgot to include that in the complaint filed by the Department of Justice in the District Court for D.C. The complaint itself does not allege that the merger will cost jobs, nor does it suggest that blocking the merger would create or save jobs. As a technical matter, antitrust is not concerned with job protection, although many seek to exploit it for that and other purposes. More on why that is a bad idea in a minute.
Instead, the complaint is focused specifically on the possibility that the combined company may not longer offer T-Mobile’s lower-priced data and voice plans to new customers or current customers who upgrade their service.
Yet, the complaint concedes that from a consumer’s perspective, local areas may be considered relevant geographic markets for mobile wireless telecommunications services. On the other hand, enterprise and government customers require services that are national in scope, according to the complaint.

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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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