Telecommunications

As a congressman, Ron Wyden once said that competition is too important to be left to the marketplace. Today, Senator Wyden (D-OR) introduced a “net neutrality” bill (S. 2360) which he thinks is needed to prevent the construction of a “priority lane” on the Internet. National Journal’s Technology Daily ($), paraphrased Wyden saying that “it is perfectly acceptable for broadband providers to charge consumers more for faster speeds, but that it is not acceptable to charge businesses for faster Internet delivery.” That’s like saying businesses shouldn’t pay taxes. The Wyden proposal may be intended merely to ensure that the Internet will function like the telephone network, but in reality it is a radical proposal that would actually shift future costs Read More ›

House Energy & Commerce Chairman Joe Barton (R-TX), along with Reps. Chip Pickering (R-MS) and Fred Upton (R-MI) have an alternative plan in mind for cable franchise reform, according to this afternoon’s National Journal’s Technology Daily ($). Like the Dingell plan, the Republican vision includes a national franchise according to which new entrants would pay the customary 5% franchise fee to localities. But the Republican is superior in two critical respects: No build-out requirement. No requirement to negotiate with local franchise authorities as a pre-condition to obtain a national franchise. It may sound counterintuitive, but the absence of a build-out requirement is actually better for consumers because it reduces investment risk. Tens of billions of dollars are necessary to extend Read More ›

A draft franchise reform proposal authored by Ranking Member John Dingell (D-MI) of the House Energy & Commerce Committee, details of which were reported in today’s Communications Daily ($), increases the likelihood that final legislation would: Allow new video entrants to avoid in-kind contributions to cities (currently averaging approx. 3% of gross revenues) on top of the customary 5% (of gross revenues) fee, Would give the new entrants 10 years to provide their service to every household, and Allow the incumbent cable operator to opt in to the streamlined process as soon as the new entrant has a 15% market share. Dingell, who has traditionally defended the cities on franchise issues — and intends to do so again — reportedly Read More ›

On deregulation: “It is ironic that cellphone service is widely available at low cost [in India] because it was regarded as a luxury and therefore left to the market, while electricity is hard to obtain because it has been regarded as a necessity and therefore managed by the government.” –Former Council of Economic Advisors Chairman Martin Feldstein, writing in the Wall Street Journal, Feb. 16, 2006. * * * On net neutrality: “with or without a new law, the FCC will affect the future in a major way by its approach to the question of broadband’s openness. Sometimes called net neutrality, the question of openness is multidimensional. It is hard to define and harder to answer. Chairman Martin and his Read More ›

Yesterday the head of the trade association representing most of the nation’s telephone companies testified that telephone companies will not block, impair or degrade what consumers and vendors can do on the Internet. “Today, I make the same commitment to you that our member companies make to their Internet customers: We will not block, impair, or degrade content, applications, or services. That is the plainest and most direct way I know to address concerns that have been raised about net neutrality.” –Walter B. McCormick, Jr. President and Chief Executive Officer United States Telecom Association February 7, 2006 As a practical matter, a voluntary commitment is significant because it is a de facto standard by which the actions of individual companies Read More ›

The U.S. Conference of Mayors have written a letter to the chairman and ranking member of the House and Senate commerce committees opposing franchise reform. One sentence (“Congress may ensure our citizens and businesses benefit from the rewrite of the Communications Act through preserving local franchising authority”) may have been unintended or may reveal profound ignorance and profound arrogance. Many local officials see the primary value of the franchise process as an opportunity to extract noncash concessions from new entrants. That’s understandable. Although local revenues are increasing, Medicaid and education continue to devour city budgets. What are local politicians to do? In the late 1990s, local officials and their consultants at Miller & Van Eaton took broadband deployment for granted Read More ›

Last night in his State of the State address, Gov. Mitch Daniels of Indiana endorsed what I think is the nation’s most aggressive effort to reform state telecom laws. The relevant excerpt: “Perhaps the single most important step government can take for our economic future is to ensure the best possible infrastructure, the strongest possible framework, to support the businesses of tomorrow. “In a wired world, “infrastructure” no longer means just roads, rail lines, or waterways but also the invisible fibers and frequencies over which today’s most vital and valuable commerce is transacted. It is time to modernize a telecommunications regulatory system set up for the age of monopolies and copper wire to unleash this century’s most dynamic, diverse and Read More ›

Could changing technologies and evolving voice telephony service plans effectively doom the century-old telephone excise tax before politicians ever get around to it? Blogger Jim Glass has been following the story and notes a new class action law suit that we’d actually support. The suit targets the IRS for illegally collecting some $9 billion or more in taxes that don’t meet its own definition under the phone excise law, which was enacted in 1898 to support the Spanish-American War. IRS regulations say the tax applies to calls measured in “time and distance,” but from mobile phones to VoIP, many of today’s calls aren’t measured by time or distance, and often neither. The IRS has already lost all 10 relevant court Read More ›

Good news from here in my home state of Indiana: State Sen. Brandt Hershman has introduced bold and far-reaching telecom reform legislation that would, among other things, (1) remove telecommunications from its historically defined role as a “utility” and block the state utility commission from regulating all but the most basic telephone services; (2) block any regulation of broadband services or technologies and limit IURC authority over wholesale matters so as not to go beyond FCC rules; and (3) provide for a statewide video service franchise, enabling major new fiber-optic (or wireless or powerline) bandwidth providers to enter the market almost immediately instead of wrangling with several hundred local boards and councils over franchise fees and restrictions. As far as Read More ›

Last Friday the Indiana Utility Regulatory Commission issued a ruling, following more than two years of study, describing the competitive landscape of telecom in the state and modifying rules for both incumbent and competitive service providers. The Commission’s broad stated goal for the ruling was “regulatory parity.” But the kind of parity it delivered serves the interests of only one group: the regulators themselves. After mildly lowering some of the price floors currently imposed on Indiana’s incumbent telecom companies, the Commission then inexplicably imposed those same price floors and cost reporting requirements on the previously unregulated competitive carriers, the CLECs. Clearly imposing price floors across the entire industry does not help consumers. Isn’t the theory that competition is supposed to Read More ›