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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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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 ›