2014 August

Thune’s Slippery Slope Toward Susan Crawford’s Dumb-Pipe Dream

Posted by | Video | 2 Comments

Senator Thune, the ranking Republican on the Senate Commerce Committee, is crusading to force TV stations to offer their channels directly to pay-TV customers on an individual, ‘á la carte’ basis. Thune bills his ‘Local Choice’ proposal as a ‘new’ idea, but there is nothing new about government meddling in the relationships between cable networks and content providers. The intellectual basis for Thune’s á la carte proposal is no different from the basis which underpins arguments in favor of ‘net neutrality’.

Debates over á la carte access to individual TV channels and net neutrality appear to be unrelated on the surface. But beneath the overheated rhetoric, they share the same DNA. Cable operators are the central player in both dramas. They play the role of an ‘Internet service provider’ (ISP) who provides access to the Internet in net neutrality debates, and the role of a ‘multichannel video programming distributor’ (MVPD) who provides access to cable TV in á la carte debates, but the ‘pipes’ that cable operators use to provide both services are exactly the same — it is only the jargon (ISP versus MVPD) and the legal rules that change.

The fact that the intermediary roles played by cable operators as ‘ISPs’ and ‘MVPDs’ are fundamentally the same is why Senator Thune’s support for an á la carte mandate in his Local Choice proposal is so alarming. It would force cable operators to offer each local TV channel to their subscribers on an á la carte basis at an individual price set by the TV station and would prohibit any opportunity for cable operators and TV stations to engage in market negotiations regarding channel pricing and packaging. Read More

Net Neutrality: How Sponsored Data Plans Would Promote Competition on the ‘Edge’

Posted by | Net Neutrality Series | One Comment

This is the fourth post in the CBIT net neutrality series. A shorter version of this post was previously published by 4G Trends.

I’ve previously explained how the theory of ‘gatekeeper control’ underlying the FCC’s 2010 approach to net neutrality is applicable to any Internet intermediary that is capable of blocking, degrading, or favoring particular Internet services, applications, or content — a category of ‘non-ISP gatekeepers’ that includes the mobile operating systems offered by Apple and Google. The FCC has nevertheless focused its net neutrality efforts entirely on ISPs.

The result of the FCC’s myopic regulatory strategy: Google has engaged in precisely the type of behavior that net neutrality was intended to prevent in order to cement its control over the Android operating system and mobile search. Read More

Political Ads Are Litmus Test for FCC Chairman Tom Wheeler

Posted by | Regulatory State, Video | No Comments

Since he took the helm of the Federal Communications Commission, Tom Wheeler, the former chief cable industry lobbyist, has come under fire for playing favorites with his former employers.

Now, the embattled Chairman is scrambling to clean up the mess caused by exempting pay-TV operators from political ad disclosures as candidates gear up for the election this November.

The law has long required broadcast television stations, cable operators, and satellite television to maintain publicly-accessible political files that disclose the identity of candidates and organizations that buy political ad time and how much it costs. That changed in 2012, when the FCC started requiring that broadcast television stations publish their political files in a searchable database hosted by the FCC.

Making it that much easier for attack groups to monitor rival political spending on broadcast television has given ad buyers an incentive to shift their campaign focus to less-transparent pay-TV channels. This and other FCC policies that tilt the playing field against TV stations are increasing the pressure on television networks to sell their programming to pay-TV directly, and could end free over-the-air television as we know it.

Some groups on the left have taken notice and decided its time to close this gaping pay-TV loophole. The Campaign Legal Center, Common Cause, and the Sunlight Foundation recently filed a petition asking the FCC to expand the online filing requirement for political ads to pay-TV operators. Wheeler has put the petition out for comment, but didn’t commit to taking any action on it.

The petition is a compelling litmus test for Wheeler. If Wheeler truly is as “rabidly pro-competition” as he claims, he’ll act on the petition sooner rather than later. Read More

Local Choice Proposal for Partial Á La Carte Is Irreconcilable with the Ideals of Constitutional Government

Posted by | Video | No Comments

I’m starting to get worried that the partial à la carte mandate in the decidedly Orwellian “Local Choice” proposal wasn’t merely an August reverie. The leaders of the Senate Commerce Committee, which floated the proposal to the press, have neither disavowed it nor introduced an alternative. Could the Committee actually be serious about a proposal that is so flatly irreconcilable with the ideals of constitutional government?

I hope not. The proposal is a blatant case of the government concealing an effort to pick winners and losers in the marketplace behind a masque of consumer protection. Its approach to problem solving goes like this:

  • Disputes between video programmers and video distributors sometimes result in blackouts that prevent consumers from watching certain channels.
  • The government should protect consumers from blackouts by mandating that programmers sell their channels on an à la carte basis.
  • Both cable and broadcast channels have been blacked out during disputes.
  • The Local Choice proposal would nevertheless apply the à la carte mandate only to broadcast channels.
  • Consumers would receive no protection from blackouts involving cable channels.

The proposal doesn’t explain why consumers don’t need to be protected from cable channel blackouts — like the one involving Dodgers baseball games in Los Angeles — because Senate Committees aren’t in the habit of admitting to industry favoritism. Read More

Campbell Speaking at 4G World, Co-Located at CTIA2014

Posted by | Event | No Comments

On September 10, 2014, I’ll be addressing wireless net neutrality on September 10 at the 4G World event co-located with CTIA2014 in Las Vegas, Nevada. I’m participating in a panel session entitled Who Pays for Mobile Network Infrastructure in a Post Net-Neutrality 4G World. You can register for 4G World HERE.

The Rick Perry Veto and Ferguson: Holding the Police State Accountable

Posted by | Regulatory State | No Comments

There is no obvious connection between the juxtaposed headlines about Texas Governor Rick Perry’s indictment for demanding the resignation of a district attorney with statewide responsibility for prosecuting political corruption and the police violence in Ferguson, Missouri. But it’s there, stark and unyielding, in the video of Travis County District Attorney Rosemary Lehmberg’s booking the night she was arrested for driving with a blood alcohol level almost three-times the legal limit.

Given her unique position of public trust, its reasonable to expect that Lehmberg would take responsibility for her actions, express remorse for the danger she caused, or at the very least, cooperate with the booking agents. Instead she behaved as a corrupt politician whose political status makes her untouchable. Read More

Net Neutrality: Title II Forbearance Is a Pig in a Poke

Posted by | Net Neutrality Series | 2 Comments

This is the third post in the CBIT net neutrality series. Previous posts in the series are available HERE and HERE.

The previous post in this series concluded that the gatekeeper theory of net neutrality regulation is radically over-broad under Title II and inconsistent with the competition theory of communications regulation set forth by Congress in the Communications Act. The proponents of Title II reclassification are trying to sell the FCC on the idea that forbearance is the solution to this over-breadth problem.

What they are really selling is a pig in a poke. It is unlikely that the FCC could grant forbearance from certain Title II tariffing requirements under the FCC’s current regulatory standard, and the net neutrality proponents who are selling forbearance as a solution haven’t indicated that they would actually support it. To the contrary, they have implied that reclassification would result in the regulation of broadband as a public utility.

What happens if net neutrality supporters oppose any form of forbearance after the FCC has already reclassified broadband services as telecommunications? A regulatory disaster of biblical proportions, that’s what. Read More

Net Neutrality: FCC Gatekeeper Theory Applies to Google, Apple, and Netflix

Posted by | Net Neutrality Series | 3 Comments

This is the second post in a series addressing fundamental questions presented by the prospect of applying per se net neutrality rules under Title II. The first post is available HERE.

The first post in this series concluded that the logic of the gatekeeper theory the FCC used to justify the imposition of per se net neutrality rules extends to any Internet intermediary that is capable of blocking, degrading, or favoring particular Internet services, applications, or content. This post presents a brief analysis of some intermediary services to which the gatekeeper theory would apply if the FCC relies on it to impose per se net neutrality rules under Title II.

The analysis demonstrates that Internet companies must also ‘ask permission’ to pass gates erected by Google, Apple, and Netflix (non-ISP gatekeepers) in order to obtain access to end users:

  • These non-ISP gatekeepers routinely use their gatekeeper control to block, degrade, or discriminate against upstream edge providers (far edge providers);
  • End users may incur significant costs in switching from one non-ISP gatekeeper to another; and
  • These non-ISP gatekeepers provide services in market segments that are highly concentrated.

It would thus be arbitrary and capricious for the FCC to impose per se net neutrality obligations only on ISPs under Title II.

To be clear, I’m not suggesting that reclassification of broadband Internet access services as ‘telecommunications services’ under Title II is necessary or that the FCC should otherwise regulate non-ISP gatekeepers. The analysis in the post is intended to illustrate that the FCC’s theory of gatekeeper control is radically over-broad under Title II and inconsistent with the competition theory of communications regulation set forth by Congress in the Communications Act. Read More

Net Neutrality: FCC Theory Would Extend Beyond ISPs Under Title II

Posted by | Net Neutrality Series | 5 Comments

This is the first in a series of net neutrality posts that will address fundamental questions presented by the prospect of applying per se net neutrality rules under Title II.

There is more at stake than net neutrality in the reclassification debate at the Federal Communications Commission (FCC). Imposing per se prohibitions against business-to-business arrangements involving ‘paid prioritization’ under Title II would be a radical departure from the core principles embodied in our communications laws. Yet the nature of this departure and its predictable consequences have received little attention thus far. That must change.

By its own logic, the theory of ‘gatekeeper control’ the FCC relied on to justify its imposition of per se net neutrality rules extends to any Internet intermediary that is capable of blocking, degrading, or favoring particular Internet services, applications, or content. If the FCC were to apply this theory under Title II, it would be required to impose net neutrality obligations on a host of Internet companies that have not been subject to common carrier regulation, including Google, Apple, and Netflix.

Summary of Regulatory Theories Governing Communications

A brief review of the prevailing theories of communications regulation in different eras is helpful in understanding why many companies that are considered ‘edge’ providers today would inevitably be subject to common carrier regulation if the FCC imposes per se net neutrality regulations under Title II. These theories are either embodied in the Communications Act or, with respect to net neutrality, in an FCC order.

cbit-theory-chart-08-12-14-v3
Natural Monopoly Era. The Communications Act of 1934 presumed that telephone service was a natural monopoly. As implemented by the FCC, the 1934 Act subsidized uniformly low rates for residential telephone service through tariff filings.

Competitive Era. The Telecommunications Act of 1996 presumes that removing barriers to entry enables competition among communications services and envisions an era in which market-based competition completely supplants Title II regulation as the means of protecting consumers. The 1996 Act promotes competition and reduces regulation by removing barriers to entry.

Net Neutrality Era. The Open Internet Order presumes that Internet companies must have ‘neutral’ access to all end users on all Internet platforms at all times in order to survive, irrespective of competition. Per se net neutrality rules regulate gatekeepers in order to subsidize access to end users for upstream Internet companies, who are presumed to pass their resulting benefits on to all end users. Read More

Does Senator Thune Embrace the Underlying Principle of ‘Strong’ Net Neutrality?

Posted by | Broadband Internet, Video | One Comment

Last Friday Broadcasting and Cable reported that the Senate Commerce Committee is proposing to replace market negotiations for retransmission consent with mandatory à la carte pricing for broadcast programming. The ‘local choice’ proposal would require TV stations to either (1) provide their programming to pay-TV operators for free or (2) offer their programming to pay-TV subscribers for a set per-subscriber price on an à la carte basis.

By eliminating any potential for market negotiations between pay-TV operators (who transmit the video content to subscribers) and TV stations (who provide the video content), the proposal would have the effect of separating content from distribution. It just so happens that this is the same goal that pro-net neutrality groups seek to achieve. Read More