September 2008

Ex-Chairmen Now Big critics of Federal Communications Commission

Former Federal Communications Commission Chairmen Michael Powell and William Kennard -- now top advisors to presidential hopefuls Sen McCain and Obama, respectively -- spoke candidly about their experiences heading the regulatory agency at a National Press Club event Tuesday. Held by the Information Economy Project at George Mason University, the forum was meant to provide frank advice on telecom policy to the next Administration, but also gave the ex-chairmen a chance to offer some surprisingly harsh words for their erstwhile agency's record, on issues as diverse as indecency and antitrust regulation.

Powell was particularly critical of the FCC's recent actions on the broadcast indecency front -- including his own decisions. Powell was equally acerbic on the subject of the agency's merger review process, which he suggested added little of value to the ordinary antitrust review conducted by the Department of Justice. He especially blasted the practice of imposing "voluntary conditions" on mergers, saying it had become an abusive means of exercising authority well outside the scope of the agency's legitimate regulatory powers.

On the question of a national broadband policy, Powell said that most of the potential approaches that have been laid out can be reduced to the idea that people "expect government to write a big check." In the current economic climate, he mocked the idea that there would be any political will in Congress to shell out billions annually rolling out rural fiber, though he added that he would "be one of the first to support such a thing if I thought it were politically feasible."

Kennard focused more in his remarks on the internal politics and procedures of the FCC. The FCC appointment process has become more politicized, Kennard argued, ever since President Clinton and former Senate Majority Leader Trent Lott struck a deal to let Republicans pick agency boards. The result, he said, was that instead of being staffed like a management team, with commissioners chosen for complementary expertise to produce a board that works well together, party leaders would be afforded their patronage picks. Decision-making has become more predictable, said Kennard, as the views of commissioners now tend to reflect those of their patrons on Capitol Hill. As a result, policy-making had also become more contentious and partisan.

House Panel Examines Cell Phone Taxation

The House Judiciary Subcommittee on Commercial and Administrative Law examined legislation Thursday that would impose a five-year moratorium on any new discriminatory state or local taxes on mobile services, mobile service providers, and mobile service property. The bill was introduced by Rep. Zoe Lofgren (D-CA) in April. The average wireless customer pays more than twice as much in taxes for their cell phone service (15.2 percent) as they do for other goods and services (7.1 percent), she noted. That tax burden is significant when one considers that more than 39 million American wireless subscribers earn less than $25,000 a year.

What's Needed Is a Better DTV Converter

[Commentary] If you have been following viewers' complaints from around the country and reading the articles describing the outcome of the shutdown in Wilmington, N.C., let me assure you: The reception problem is consistent with the system design. There should not be any surprise. Broadcast and government engineers are aware of the reality, but their leaders are in denial. If you think that the designed reliability of our service is not a handicap, think about the Emergency Alert System failing 10 percent of the time at 50 percent of the locations and whether that is adequate for homeland security. Fortunately, there is a way to correct for the ATSC system's inherent shortcomings. Basically, we need a new converter box. (Oded Bendov is president of the TV Transmission Antenna Group, a consulting engineering firm.)

Federal lawsuits take on the humble hyperlink

[Commentary] A pair of recent federal court cases coming from Wisconsin and Illinois have threatened to turn the most primitive functionality of the web -- the hyperlink -- into an "ask permission before linking" system.

Google search share grows in August

Internet users performed 11.7 billion searches in the U.S. in August, choosing Google 63 percent of the time, according to ComScore's monthly analysis released Thursday. That's an increase of 1.1 percentage points from 61.9 percent in July, the analyst firm said.

Lawmakers Press FCC On AT&T's Public Program Offerings

Members of a powerful House committee are pressing the Federal Communications Commission to put a stop to how AT&T offers public and educational programming on its fledgling paid TV service. While FCC Commissioners have yet to weigh in, FCC Media Bureau Chief Monica Shah Desai said Wednesday that AT&T's practice of placing public programming on a single channel where subscribers scroll through a menu of options violates the law. "I would be anxious to place this issue in front of the commissioners for them to decide, with our view that this would be a violation of the statute," Desai said at a hearing. Rep Jose Serrano (D-NY), who chairs the House Appropriations Financial Services Subcommittee, said AT&T's method falls short. "Many concerns have been raised that this approach makes the channels more difficult to view, offers inferior quality and results in the loss of features such as closed captioning," he said. Subcommittee member Mark Kirk (R-IL) said AT&T wouldn't get help from Republicans. "I'm completely with you on nailing AT&T with what they're doing over public access," he said. "It does appear that AT&T is in violation of Illinois law. We need to make sure that there is a very convenient place, especially for our seniors, to find out what's happening in their community."

Ready to Compete Act Introduced in Congress

The Ready to Compete Act (HR 6856) would expand the scope and funding of noncommercial TV's educational efforts for both kids and adults. The bill would expand the Department of Education-backed Ready to Learn and Ready to Teach initiatives, as well as adding two more. Ready to Achieve would be an on-demand digital service that would let teachers tap into public TV's archives of educational programming, while Ready to Earn would target adult learning in a "changing economy." The bill was introduced this week by Reps. John Yarmuth (D-KY) and Ray LaHood (R-IL).

The Wall Street Lesson For Network Neutrality

[Commentary] As the institutions of Wall Street continue to crumble one after another, there's a lesson to be learned for those of us who want to make sure the Internet remains as free and open in the future as it has been in the past. The underpinning the whole mess is a philosophy about business and government. That way of thinking posits that deregulation is the best path for the economy, and that government is best when it's out of the way to let the private sector do what it wants. Into the midst of this debacle, the fact that there is even a debate over Net Neutrality seems foolish, and the fact that the Federal Communications Commission (FCC) is being criticized for taking a stand against Comcast's throttling of BitTorrent traffic (and lying about it) seems oblivious at best. The laws regulating the telecommunications world and those regulating the financial world have a joint history. The Communications Act of 1934 wasn't passed in a vacuum. It was part of a new generation of laws that passed after the Depression, including the Securities Act of 1933 and the Securities Exchange Act of 1934. A law was passed in 1935 giving the Federal government the power to regulate interstate electricity, which updated a 1920 law governing water power much as the Communications Act updated the Federal Radio Act of 1927. The Communications Act, as with the laws of the same era, was passed with the intent of protecting the public from the abuses of private industry. The basic tenets of non-discrimination were written into that law. If regulators do their jobs, everyone wins - the industry makes money and provides services, and consumers aren't harmed. If regulators don't do their jobs, and/or if a compliant Congress passes laws allowing for an industry to run wild by taking away federal regulation, then it's a different story. That's what happened in financial services and in telecommunications the last few years, and now we're suffering the results.

Is Home Broadband Adoption Slowing?

There are indications that the growth rate in home high-speed adoption is slowing. Two factors jump to mind as reasons for this slowdown. First, high growth rates become more difficult to sustain as society marches up the adoption curve; it becomes a tougher sell to reach non-adopters once the 50% threshold is passed. Remaining non-adopters - the 9% of dial-up users and 25% of non-Internet users - are older and lower-income Americans. They are not likely candidates for upgrades in household communications technology. Second is the economy. With unemployment now up to 6.1% (from 5.0% in December 2007) and growing economy uncertainty, adding to household expenditures with a broadband connection may not be a priority for some people. On a monthly basis, broadband is still more costly than dial up by a $34.50 to $19.70 margin, according to our May 2008 survey. This pattern -- economic slowdown and a stall in tech adoption -- was evident in the 2001 recession with respect to general Internet adoption. At the start of that recession in March 2001, 57% of Americans were Internet users, a figure that changed very little over the next year. By March 2002, 58% of U.S. adults were online users.

US: Home of the Internet, but not home when the broadband salesman calls

The latest broadband country statistics are out and the US is once again nowhere to be found in the top ten. Indeed, landing this time way down at 16th, barely edging out Russia and behind Latvia, Lithuania, and Slovenia. The study, commissioned by US gear maker Cisco listed Japan as the hands-down Internet speed leader offering what the study described "robust" broadband technology. The study was performed by researchers at Oxford University in the UK and Spain's Oviedo University. The top 10 speediest BB Internet countries after number 1 Japan are Sweden, the Netherlands, Latvia, Korea, Switzerland, Lithuania, Denmark, Germany, and Slovenia in that order. Oddly, the US' lack of Internet prowess is not a big issue for the American public and is not often mentioned on the campaign trail compared to gay marriage and moose hunting. There is however a bill quietly wending its way through the legislature that might help, called the Broadband Data Improvement Act introduced last year. That law would mandate research on broadband deployment and adoption in every state offering solutions to improve penetration. The bill's main champion is Senate Commerce Committee Chairman Daniel K. Inouye (D-Hawaii) who is apparently paddling against the tide.

Benton

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