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February 2015

FCC Confirms Feb 26 Open Meeting Agenda

The Federal Communications Commission will hold an Open Meeting on Thursday, February 26, 2015. The FCC will consider:

  1. A Memorandum Opinion and Order addressing petitions filed by two municipal broadband providers asking that the Commission preempt provisions of state laws in North Carolina and Tennessee that restrict the abilities of communities to provide broadband service.
  2. A Report and Order on Remand, Declaratory Ruling, and Order that responds to the Verizon court remand and adopts strong open Internet rules, grounded in multiple sources of the Commission’s legal authority, to ensure that Americans reap the economic, social, and civic benefits of an open Internet today and into the future.

FCC's 'General Conduct' Standard Draws Concern

There was some concern in cable and Internet circles that the Federal Communications Commission's seven-factor test for deciding if an Internet service provider practice hurts consumers or edge providers could put the agency in the business of making content calls on free expression on the Internet. That test, among the new proposed network neutrality rules under a Title II order scheduled to be voted by the FCC Feb. 26, has raised concerns about an online indecency regime or even political litmus tests.

A vague general conduct standard could give the FCC too much leeway to regulate outside of "bright-line" regulations -- no blocking, no throttling, no paid prioritization -- that give the industry some certainty, even if they don't like those constraints. Apparently, the seven factors include 1) the effect on free expression, 2) the effect on competition, innovation, investment or deployment, 3) whether the practice is application agnostic, 4) whether the end-user remains in control, 5) whether it is a standard, and 6) what technology is used, mobile or fixed. The FCC plans to apply that test to interconnection issues, zero-rating plans, and anything else that falls outside its bright line rules.

The perils of Title II regulation in one graph

[Commentary] In the 1990s, when New Zealand’s telephony markets were governed predominantly by competition law, fierce infrastructure competition translated into substantial gains to consumers in the form of lower prices for better services. However, when key telephony services shifted to an industry-specific regime in 2000 -- arguably the lightest in the OECD at the time -- these consumer benefits bottomed out.

A vibrant, diverse industry with experimentation in both prices and services rapidly became moribund, depriving consumers of the welfare gains they enjoyed under a more liberal regime. The lessons from New Zealand are instructive for the US, given the parallels between the re-regulatory decisions made in New Zealand in 2000 and the Title II debate currently blaring in the US. It would be a shame if the United States did not heed the message from New Zealand. If you want consumers to have access to dynamic product variety at lower costs, ex-ante, industry-specific regulation is not the way to go.

[Howell is general manager for the New Zealand Institute for the Study of Competition and Regulation]

Network neutrality battle is really about FCC independence

[Commentary] The Federal Communications Commission is independent of the executive branch and accountable to Congress and the courts. Congress expects FCC chairmen to take personal responsibility for the agency’s decisions. That is a good way for FCC commissioners to think about their roles as they are buffeted by political winds in an era of divided government.

Regulatory agencies exist because Congress cannot shoulder the burden of passing laws that are as technical or time-sensitive as regulations. Congress needs regulators to turn its laws into detailed, practical rules. In addition, Congress sometimes asks agencies to balance competing goals. One senator exaggerated only somewhat when he said of the 1996 Telecommunications Act, “We put one thing in and then we put the opposite in. You figure it out when you write the rules.” That is the law FCC Chairman Tom Wheeler and the rest of the commission must interpret as they weigh their final decision on network neutrality. However, although Congress routinely delegates much power to agencies whose leaders are picked by the president, it does not want the president to dictate the actions of those agencies.

The Administrative Procedure Act (APA) of 1946 describes the compromise. An independent regulatory agency can act only in accordance with federal statutes and on the basis of a public record. The judiciary can amend or reject agency rules that it considers to be inconsistent with or beyond the legislative mandate or not supported by the public record. Indeed, the commission must tackle the net-neutrality issue precisely because the court threw out its previous decision on the topic. Stretched across the three poles of government -- executive, legislative and judicial -- the FCC is in a free-fire zone of vigorous input. But under the APA, anyone telling the FCC what to do in making a rule must speak in public. It is not in any way unusual for the executive branch to advise the FCC in public about what rules to write.

[Hundt was chairman of the Federal Communications Commission from 1993 to 1997]

Dish’s Ergen Rattles TV Industry With $50 Billion Binge on Bandwidth

Charlie Ergen is using a new Web-entertainment service and $50 billion in airwaves to upend pay TV as we know it.

The founder of Dish Network beat his rivals to market in February with Sling TV, a $20-a-month online service that offers live channels and sports at a fourth of the cost of a typical cable bundle. Including the latest government sale of wireless airwaves, Ergen has also amassed a $50 billion trove of bandwidth that could let Dish compete for data and voice customers for the first time. A new wireless network would level the field for Dish, while Sling TV jumpstarts the stalled TV business. Ergen, who controls the third largest U.S. pay-TV service, may be pressed to outline his plans on Feb. 23, when Dish reports fourth-quarter results.

“Charlie is breaking apart the delivery from the content,” said Roger Entner, an analyst with Recon Analytics LLC in Dedham, Massachusetts. “This is an innocent start with profound implications.”

T-Mobile’s Latest Grappling Tactic

[Commentary] In the battle for control of the wireless airwaves, T-Mobile US is employing a judo technique. Namely, it is trying to use larger rivals’ heft and dominance of a recent government spectrum auction to its own advantage in the next auction. If the effort is successful, T-Mobile, Sprint and other smaller players could get valuable spectrum without paying the steep prices the most recent auction implied.

T-Mobile is also being strategic in directing its appeal to consumers, even if the government is its real audience. When regulators signaled that they would reject a planned bid for T-Mobile by Sprint to preserve competition, T-Mobile responded by giving them exactly what they wanted. The carrier’s aggressive pricing has caused a wave of promotions and price cuts among competitors. But the need to pursue a go-it-alone strategy puts it at a disadvantage in acquiring spectrum. So T-Mobile may be sending a message that, having upheld its end of the bargain, the government should level the playing field. Investors have so far benefited from Legere’s aggressive tactics. From their point of view, no matter how his latest ploy turns out, it is worth a shot.

Hollywood's diversity problem beyond 'Selma': Asian, Latino stories are missing

[Commentary] The Oscar nominees this year and most years, and the movie industry they represent, fall woefully short when it comes to mirroring American society and, increasingly, the moviegoing audience. And that's especially true when it comes to the fastest-growing racial group in the nation, Asians, and the largest minority group, Latinos.

The Ralph J. Bunche Center for African American Studies at UCLA last year released a comprehensive “Hollywood Diversity Report” (the second one comes out Feb. 25). It's not a pretty picture. Minorities are underrepresented compared to their numbers in the overall population by a factor of about 3-1 among lead roles in film and among film directors. That ratio is nearly 5-1 when it comes to screenwriters. On TV, minorities do best on cable, where they're only underrepresented 2-1 among lead actors in dramas and comedies. Among show creators, the discrepancy is nearly 9-1 in broadcast, nearly 5-1 in cable. All this when ratings and box office tend to rise when casts match the nation's racial and ethnic diversity. “The decision makers,” the report concluded, “routinely surround themselves with people with whom they feel comfortable -- people who think (and often look) like them.” Worse, they peddle the notion that there is a “necessary tradeoff between diversity and excellence” and diversity and box office.

The entertainment industry is a difficult, risky and expensive proposition by any measure. Adding the pressure of achieving racial diversity will, for some, feel forced or cumbersome. It's more comfortable to rely on those you already know and what you think has worked in the past. But for its very survival, Hollywood has to change, in every color. It will be good for the industry's bottom line and good for our nation's collective soul.

[Jose Antonio Vargas is the founder of Define American, a media and culture organization. Janet Yang is a film producer whose credits include “The Joy Luck Club.”]

Conditions for people who make your gadgets are improving – barely

Apple’s latest report on the conditions in its supplier factories included an announcement that it was banning “bonded labor” in its supply chain. The move applies to workers who travel across borders and pay to get jobs in its supplier factories.

Yet since the report came out, reaction is already fading. Some industry observers applauded Apple’s action and moved on. But it’s worth pausing a second to consider what the somewhat dry language in Apple’s announcement is really talking about. After all, the thing Apple banned would be beyond intolerable to any American worker. The process works like this: Employment agencies recruit workers. They then charge them placement fees for jobs, often in foreign countries. Those fees end up putting workers in debt to the agency. If that wasn't bad enough, according to Apple's own audits, some agencies held the passports of bonded workers in safes until their debts were paid off. It's pretty close to what some might call indentured servitude. And that's what Apple -- the tech company that has taken a lot of heat and also offers the most information about its factory conditions -- has only just stopped.

BT receives broadband pricing boost from European Commission

BT has received a boost in the battle over broadband pricing after the European Commission asked UK regulator Ofcom to redesign proposals intended to protect competitors of the former telecoms monopoly.

In January, Ofcom published draft rules to prevent BT, which owns the UK’s biggest wholesale broadband network, from squeezing the margins of companies that use its infrastructure, such as TalkTalk and Sky. The commission, which has the right to make unbinding comments on the rules, said, “Ofcom’s proposed approach lacks the necessary flexibility in particular with regards to the treatment of costs for BT Sports”. The current proposals could lead to BT “increasing retail prices or reducing costs for BT Sports”, the commission added.

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