Telecommunications

Japan has 7.2 million all-fiber broadband subscribers who pay $34 per month and incumbent providers NTT East and NTT West have only a 66% market share. According to Takashi Ebihara, a Senior Director in the Corporate Strategy Department at Japan’s NTT East Corp. and currently a Visiting Fellow at the Center for Strategic and International Studies here in Washington, Japan has the “fastest and least expensive” broadband in the world and non-incumbent CLECs have a “reasonable” market share. Ebihara was speaking at the Information Technology and Innovation Foundation, and his presentation can be found here. Ebihara said government strategy played a significant role. Local loop unbundling and line sharing led to fierce competition in DSL, which forced the incumbents to Read More ›

This week in the Tech Policy Weekly podcast, Jerry Brito, Drew Clark, Tim Lee and I discuss patent reform, FreeConference’s antitrust suit against AT&T and e-voting. On patent reform, I observed that the momentum for fundamental reform reminds me in some ways of the eagerness for telecom reform in the mid 1990s. The Telecommunications Act of 1996 created many problems, demonstrating the inevitability of unintended consequences. Meanwhile, the Supreme Court has stepped up to the plate and has a chance to recalibrate the patent system without major reform. I’d like to see what the Supreme Court does, and hope Congress takes it’s time. A long time. I’m not sure what to make of FreeConference v. AT&T. As Tim Lee points Read More ›

Policy makers should recognize information technology as the centerpiece of economic policy and develop their plans accordingly, concludes the Digital Prosperity study published this week by the Information Technology and Innovation Foundation.
“In the new global economy information and communications technology (IT) is the major driver, not just of improved quality of life, but also of economic growth,” writes Foundation president, Dr. Robert D. Atkinson, author of the study.
Atkinson is a widely respected economist who formerly served as project director of the Congressional Office of Technology Assessment, and is the former director of the Progressive Policy Institute’s Technology and New Economy Project of the centrist Democratic Leadership Council.
Based on reviews of other studies, and Atkinson’s own research, the report maintains, “IT was responsible for two-thirds of total factor growth in productivity between 1995 and 2002 and virtually all of the growth in labor productivity” in the United States.

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Patients, adept at using the internet to schedule travel, conduct business, and access information with the click of a mouse, are now driving changes in the way state and federal policymakers address health care reform.
“Health IT” is the new buzzword for health care, and information technology proposals for healthcare reform are sprouting like daffodils in April!

Tennessee Gov. Phil Bredesen
So far this year, the National Governor’s Association has announced the creation of the State Alliance for E-Health, co-chaired by Tennessee Gov. Phil Bredesen and Vermont Gov. Jim Douglas. Their purpose is to bring together office holders and policy experts to, “address state-level health information technology (HIT) issues and challenges to enabling appropriate, interoperable, electronic health information exchange (HIE)”.
As quoted in the National Journal’s coverage of the event, Gov. Bredesen explained, “…the states can move much more quickly….I don’t trust the federal government to actually do anything on my watch.”

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Fred Fielding, the new White House counsel, was also Ronald Reagan’s counsel and comes from Wiley, Rein & Fielding. The Washington Wire notes that the law firm “is well-known for its telecom practice, which is led by FCC Chairman for Life Dick Wiley. One of his many protégés, current FCC Chairman Kevin Martin, has stocked the independent agency with former Wiley Rein lawyers and the two men remain close.” Fielding will probably spend much of his time answering subpoenas from Henry Waxman, but I would bet he’s more tuned into the telecom market than was Harriet Miers. Could this move marginally heighten the White House’s interest in telecom and technology, which to this point has been less than intense? -Bret Read More ›

The FCC finally approved a long-overdue reform of anticompetitive video franchise rules by a vote of 3-2 after nearly a year of study. An Order will be issued sometime within six months. Grasping local officials won’t be able to drag out negotiations over franchise agreements with video service providers until the exhausted applicants capitulate to legal blackmail, a process which sometimes takes a year or two. Now, the negotiations will have to be completed within 90 days.
The deregulatory milestone is a victory for consumers, who will benefit from more rapid investment in competitive video offerings by AT&T and Verizon. It will also further reduce the possibility that broader telecom reform legislation will move through the next Congress, meaning fewer options to enact net neutrality regulation or pump up the current unsustainable universal service regime (which could lead to taxation of Internet traffic).

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Hance, thanks for your legal analysis of the FCC merger vote. You’re absolutely right. I don’t see any reason why McDowell should not vote. In fact, I think you make clear that, for reasons of both law and propriety, he has to vote. The conflict-of-interest rules presumably are in place to prevent government officials from favoring friends or punishing enemies. But if McDowell chose not to vote in this case — pretending to cite the conflict rules — he would be doing just that: favoring friends and punishing old enemies. As you’ve shown, it probably is not within the letter of the law. But such an apparently cynical manipulation absolutely cannot be within the spirit of the law. It turns Read More ›

Scott Leith of the Atlanta Journal-Constitution reports it’s “highly unlikely” the FCC will be able to vote Dec. 20 to approve the AT&T/BellSouth merger. Two Democrats who are set to lead the House Energy & Commerce Committee and the subcommittee responsible for telecommunications are trying to push the merger into next year, when they expect to have far more leverage and can damand some consideration for letting the deal go through.

• Dingell, don’t forget, opposes eliminating video franchising, which is an impediment to competition but which mayors see as an important source of revenue and corporate contributions to civic causes.
• Markey wants to construct a net neutrality regime that includes a “fifth principle of non-discrimination” (see my recent post for more on this matter). Markey’s a dreamer, who sees the Internet as a tool for empowerment if managed like the postal or highway systems. He pushed the “Open Video System” provision in the 1996 Telecom Act, which was also intended to give consumers access to many sources of content by regulating the world wide web like a public utility. The thing is, OVS didn’t attract a penny in investment. So even though it was the product of good intentions and appeared like it could become a giant engine for social justice and equality, OVS actually harmed consumers by delaying competitive entry in the video market. But the dream never dies, does it?

The new House of Representatives convenes Jan. 4, so the FCC has a few precious weeks to free the Telecosm, by enacting video franchise reform and approving the AT&T/BellSouth merger, before Dingell and Markey can overwhelm the Republican commissioners with information requests, oversight hearings, media sensationalism and other intimidation. The FCC would be in a far better position to act now, while it still has the chance.

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Why didn’t the Baby Bells compete with one another when Congress ended their exclusive franchises in 1996? Each possessed the necessary expertise and vast resources. The FCC was most eager to help. Did the Baby Bells conspire to carve up their territories in order to maintain their respective monopolies? In Bell Atlantic Corp. v. Twombly, counsel for Twombly allege that they did, though they can’t cite any direct evidence. The Supreme Court heard oral arguments yesterday. Counsel for Twombly are alleging, for now, that a conspiracy can be inferred. Their logic is it would have been in the Bells’ self-interest to compete. And they even told Congress they would. But they didn’t. Each fought to get in the long-distance market Read More ›

The once and future chairman of the House Energy & Commerce Committee, John Dingell, recently supported strong net neutrality regulation (to prevent “private taxation of the Internet”) and opposed cable franchise reform. Now he has warned the FCC that it ought to postpone consideration of the AT&T-BellSouth merger until next year. These positions suggest Dingell believes there are benefits of regulation.
Perhaps he does. Yet, this is the same man who forcefully advocated deregulation when Congress debated the Telecommunications Act of 1996. During the floor debate on Aug. 2, 1995, Dingell noted:

… the rates of AT&T, MCI, and Sprint fly in perfect formation. They fly like the formation of the nuts and bolts in an aircraft, all tied together by invisible forces, which has led to a situation where they all make money and nobody gets into that because of the behavior of Judge Green and his law clerks and a gaggle of Justice Department lawyers and three floors of AT&T lawyers, who have been foreclosing the participation of any other person in or outside of the telecommunications industry.

Regulation, although meant to benefit consumers, was exploited by the regualted entities to maintain higher prices even though computers and fiber optics were driving down the cost of providing service.
Then, when the FCC decided to try to jump start local competition through cost-based unbundling and other gimmicks under former chairmen Reed E. Hundt and William E. Kennard, Dingell went ballistic. For example, here is what Dingell told one trade group on Mar. 2, 1998:

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