April 2016

The Federal Communications Commission's set-top box Notice of Proposed Rulemaking (NPRM) is "likely to artificially distort competition to the detriment of consumers," according to former FCC chief economist Steven Wildman. That is according to a new paper commissioned by the National Cable & Telecommunications Association to be submitted with its official comments on the proposal. Unofficially, it has already clearly shared its belief that the proposal to share set-top info and content with third parties would distort competition and hurt consumers. In his paper, Wildman challenges the assertion that the lack of a retail market for set-tops—99% are still leased from multichannel video programming distributors the FCC has pointed out on many occasions—is evidence of market failure that harms consumers.

"Economic theory tells us...that it is sometimes more efficient – and reflects consumers’ preferences – to sell consumers a product system’s components as an integrated bundle. That is likely to be the case with respect to set-top boxes," Wildman concludes. He also says the studies that showed pricing of set-tops as not competitive were inaccurate. He also says that the proposal would encourage navigation device makers to repack programming and sell access to that new package to advertisers, which would diminish ad dollars available to MVPDs, distort competition and "promote inferior services and diminish the quantity, quality and diversity of video programming."

Since the start of the most recent encryption debate, lawful hacking has been pitched by many experts as a more desirable alternative to mandating that companies build government backdoors into their products. Academics have explored legal and technical frameworks for letting police and government agencies hack into suspects' devices by finding and exploiting vulnerabilities, which would allow investigators to collect crucial evidence without catastrophically damaging the security of average users by forcing companies to weaken encryption. But during a congressional hearing of the House Commerce Committee on April 19, the FBI's executive director of technology Amy Hess dismissed the idea outright, saying that agents lack the specialization necessary to effectively harness those hacking capabilities—and that it would be impossible for the Bureau to develop them.

“These types of solutions that we may employ require a lot of highly-skilled, specialized resources that we may not have immediately available to us,” Hess said when asked by Rep Diana DeGette (D-CO) why the FBI can't use its own technical resources toward overcoming encryption without Apple or other companies' help. But when asked whether the FBI could simply develop those resources to up its hacking game, Hess responded, “I don’t see that as possible.” “I think that we really need the cooperation of industry, we need the cooperation of academia, we need the cooperation of the private sector in order to come up with solutions,” she said.

On March 1, several members of the Senate Communications Subcommittee wrote to Federal Communications Commission Chairman Tom Wheeler urging the FCC to work with stakeholders to identify more accurate ways to measure available mobile wireless coverage. On April 4, Chairman Wheeler responded by saying the FCC is currently working to improve how it measures mobile coverage. Chairman Wheeler said the biggest challenge involved the process of data collection.

He wrote, "For a variety of reasons, the data collected by the states and third party commercial vendors did not always accurately reflect the real world experiences of your constituents. Recognizing the need to improve our mobile coverage data, the Commission adopted an order in 2013 that required mobile wireless data collection from one of the most reliable sources available -- the mobile wireless carriers themselves....In addition, please rest assured that, given the importance of this issue, the Commission remains open to working with stakeholders regarding additional data sources, including new third party sources, and methods that we can employ to obtain more reliable information on mobile broadband coverage...The Commission is also seeking to provide greater public accessibility into the data it collects. Specifically, to better serve the American public, the Commission is seeking additional funds in the upcoming fiscal year to provide improved mapping capabilities of mobile coverage data. Unfortunately, in the past two fiscal years the Commission was not successful in securing funding requests that would have enabled us to update the National Broadband Map. As a result, the data reflected on that map is now outdated."

Investment in rural broadband boosts the economy – not just locally, but beyond – according to a new broadband economic impact report from The Hudson Institute sponsored by the Foundation for Rural Service. Rural broadband service providers contributed $24.2 billion to the economies of the states in which they operate in 2015, report author Hanns Kuttner said. And two thirds of this impact was felt in urban, rather than rural areas, according to the report titled “The Economic Impact of Rural Broadband.” This occurs, in large part, because key equipment and services needed to support broadband construction come from urban areas, the author noted. “Broadband is a relatively capital intensive sector and the capital goods overwhelmingly come from outside the areas rural broadband providers serve,” the report states. Other key findings of the Hudson Institute’s rural broadband economic impact report:

• The rural broadband industry supported 69,600 jobs in 2015, including its own employees and employees of companies from which the industry purchased goods and services.
• Rural broadband supported over $100 billion in e-commerce in 2015, with the largest share in manufacturing. About $10 billion involved retail sales. If broadband had the same reach in rural areas that it does in urban areas, sales would have been at least $1 billion higher.