Ownership

[Commentary] Sharing economy companies have had no shortage of regulatory battles, but companies such as Uber, Airbnb, and TaskRabbit are innovating and improving regulation by incorporating the very trust created through their platforms. Arun Sundararajan, author of “The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism” (MIT Press, 2016), observes that regulation need not originate with the government. He writes that it can take a myriad of forms while still being rational, ethical, and participatory. He describes three models of regulation used by sharing platforms: peer-to-peer, self-regulatory, and data-driven delegation.

The way that sharing economy platforms are innovating regulation with digital trust systems exposes the effort by digital elites to impose Title II utility regulation from 1934 on the internet as backward and out of date. While sharing economy entrepreneurs are creating a decentralized, innovative, and distributed world and are finding and transforming passive assets into productive ones, Title II advocates want to centralize and aggregate power beneath a single government agency that we the people have never authorized to regulate broadband. We should resist this like we would any faction that wants to usurp power. Meanwhile, we should encourage the Federal Communications Commission and Internet service providers to experiment with these innovative forms of regulation.

[Roslyn Layton is a PhD Fellow at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark. She is also a member of the Trump FCC Transition Team.]

A planned municipal broadband sale of BVU Optinet is in jeopardy, thanks to a disagreement regarding wireless tower assets. One of the early pioneers in municipal broadband, Bristol (VA) based BVU Optinet was put up for sale back in February 2016 for $50 million to Sunset Digital Communications. That deal may now be in trouble.

A government oversight board, the Virginia Coalfield Coalition (VCC) approved the sale of BVU Optinet to Sunset Digital, but with conditions that Sunset now objects to. The board wants operational control of the wireless tower network currently operated by BVU Optinet transferred to a different service provider, Scott County Telephone Cooperative. BVU operates 22 wireless towers throughout the region, and is valued at $14 million. There is a difference of opinion between the VCC and Sunset as to whether the tower network was a part of the original $50 million deal. Sunset Digital is calling foul, and says that condition could kill the deal. “Those are conditions that we [previously] said were not acceptable,” said Jeff Mitchell, an attorney for Sunset Digital.

Mountain View's (CA) tech startups are girding themselves for a big political fight over the data vital to their businesses. Smaller web companies say they could be crippled by slower bandwidth while premium data service is reserved for the large tech giants. The issue is network neutrality, the principle that all internet traffic should be treated equally. If the proposed changes go forward, the internet as we know it would come to resemble cable TV, said Gigi Sohn, a Mozilla fellow who previously served as an Federal Communications Commission attorney.

President Donald Trump vowed to cut back on "job-killing" regulations on the tech industry in a meeting with business executives. President Trump met with leaders from the drone and broadband industries at the White House, the latest event in the administration's "tech week." “We want to remain number one in certain areas,” President Trump said. “We’re going to give you the competitive advantage that you need." “My administration has been laser focused on removing government barriers to job growth and prosperity. We’ve created a deregulation task force to find wasteful, intrusive and job-killing regulations, which there are many,” he continued.

Execs from AT&T, Sprint, Verizon and General Electric joined representatives from drone and venture capital firms attended the meeting, titled “American Leadership in Emerging Technology.” The administration has been soliciting recommendations on tech policy and modernizing government IT from industry CEOs. The execs discussed drones, 5G wireless broadband, the so-called Internet of Things and financing emerging technology in three breakout sessions prior to their meeting with the president in the East Room of the White House.

A tiny Internet service provider has sued Comcast, alleging that the cable giant and its hired contractors cut the smaller company's wires in order to take over its customer base. Telecom Cable LLC had "229 satisfied customers" in Weston Lakes and Corrigan (TX) when Comcast and its contractors sabotaged its network, the lawsuit filed recently in Harris County District Court said. Comcast had tried to buy Telecom Cable's Weston Lakes operations in 2013 "but refused to pay what they were worth," the complaint says.

Starting in June 2015, Comcast and two contractors it hired "systematically destroyed Telecom’s business by cutting its lines and running off its customers," the lawsuit says. Comcast destroyed or damaged the lines serving all Telecom Cable customers in Weston Lakes and never repaired them, the lawsuit claims. Telecom Cable owner Anthony Luna estimated the value of his business at about $1.8 million, which he is seeking to recover. He is also seeking other damages from Comcast and its contractors, including exemplary damages that under state statute could "amount to a maximum of twice the amount of economic damages, plus up to $750,000 of non-economic damages," the complaint says.

Charter has agreed to pay $13 million to New York State after failing to complete broadband construction that was required as part of its purchase of Time Warner Cable. Charter can get $12 million of that back if it completes the buildout under a revised schedule.

Charter was required to extend its network to 36,250 homes and businesses in the state within one year of the TWC merger being approved, but it only completed the buildout to 15,164 of them by the May 18 deadline, state officials said. The NY Public Service Commission is taking public comments on the settlement before giving it final approval. The $13 million payment includes $1 million in grants for computer equipment and Internet access for low-income residents. The other $12 million is "a security to meet its network expansion commitment going forward," which Charter can recover upon completing the merger conditions. "To ensure the company keeps its promise, Charter will forfeit its right to earn back up to $1 million each time it misses a six-month build-out target," the state said. Charter can "earn back up to $12 million based on future performance," the settlement said.

A group of Democratic Sens is calling on the Justice Department to block the proposed AT&T-Time Warner merger, arguing the megadeal would hurt consumers. “Before initiating the next big wave of media consolidation, you must consider how the $85 billion deal will impact Americans' wallets, as well as their access to a wide-range of news and entertainment programming,” the Sens wrote in a letter to Attorney General Jeff Sessions. “Should you determine that the substantial harms to competition and consumers arising from the transaction outweigh the purported benefits, you should reject the proposed acquisition.”

The group is led by Sen Al Franken (D-MN) and includes Sens Ed Markey (D-MA), Ron Wyden (D-OR), Elizabeth Warren (D-MA), Jeff Merkley (D-OR), Bernie Sanders (I-VT), Maria Cantwell (D-WA), Richard Blumenthal (D-CT), Cory Booker (D-NJ), Sherrod Brown (D-OH), and Tammy Baldwin (D-WI). In their letter, the Democrats argued the merger could lead to less competition among mobile broadband and television providers. And they raised concerns AT&T could violate net neutrality principles by restricting competitors' online and television content in favor of its own.

The real information problem—which we at the Hewlett Foundation are actively exploring with potential philanthropic interventions as part of our democracy reform work with the Madison Initiative—is biased news, including misinformation, disinformation and propaganda. Research shows that many citizens are psychologically predisposed to want to read biased news that reaffirms their pre-existing beliefs and tribal identities. This creates obvious pernicious incentives for commercial technology platforms that want to keep people on their sites. So, compared with fake news, biased news will be harder to address.

Polarization and hyper-partisanship remain the key concerns at Madison. However, some recent evidence calls into question the correlation between growing ideological polarization and social media, given that the most rapidly polarizing—older—demographics are the least likely users of social media. So while some actors are motivated by ideological partisanship, some are profit motivated, some seek to amplify prejudices via hate speech, and still others appear not particularly ideological, but instead most interested in shifting the balance of power domestically (or in the case of Russia globally, towards a more illiberal democracy).

Charter Communications responded to charges by New York regulators that it’s behind on obligations to expand its network tied to its merger last year with Time Warner Cable.

"Charter has met and even exceeded the vast majority of our key year-one commitments in New York associated with the merger," the company said in a statement. While it conceded that some delays have been caused by pole-attachment issues, the No. 2 U.S. cable operator added: "Thousands of upstate consumers now have access to Spectrum services where approvals and make-ready have occurred, and we have a solid deployment plan to reach the thousands of additional homes in our commitment.” The statement came after the New York Department of Public Service announced that Comcast is behind in its pledge, and that the cable company had agreed to pay $12 million on network expansion, as well as another $1 million to provide telecom equipment to low-income New York residents.

Comcast shares have tripled over the past five years even as network neutrality was debated and then approved by President Barack Obama's Federal Communications Commission in February 2015. Yet despite a pronouncement from President Donald Trump's new FCC Chairman, Ajit Pai, that he plans to kill net neutrality rules that regulate internet service providers as public utilities, the outlook for Comcast's stock going forward isn't nearly as bright, media analyst firm MoffettNathanson LLC said in a reported published June 20.

That's partly to do with Comcast's prosperous run-up -- sales grew to $80 billion in 2016 from $55 billion in 2011 -- as well as accelerating declines in cable TV subscribers and a flattening picture for internet growth. For MoffettNathanson, it all comes down to pricing power. Yes, your friendly neighborhood (monopoly) broadband provider can be expected to use Washington's deregulatory mood to raise prices. But it's unclear whether Comcast and other broadband providers will be able to hike prices enough to offset broader slowdowns in their core businesses: internet services and pay-TV.