Bret Swanson

We’ve been working to fill [the tricky gap between urban and rural broadband access] for more than two decades. Around 95 percent of the US population today has access to broadband of at least 25 megabits per second. 99 percent of non-rural households do, and 98 percent of non-rural households enjoy access to 100 megabits-per-second service.

The Federal Communications Commission just gave the wireless infrastructure effort a lift by streamlining the rules for deploying small cells. I found last week’s editorial by the mayor of San Jose (CA) quite odd. Mayor Sam Liccardo argued that the new FCC rules to encourage faster deployment are an industry effort to “usurp control over these coveted public assets and utilize publicly owned streetlight poles for their own profit, not the public benefit.” But the new streamlining rules do no such thing. Public rights of way will still be public.

[Commentary] The network neutrality activists won a bigger victory than they ever expected when the Federal Communications Commission dropped the hammer of Title II telephone regulation onto the internet. It may therefore be useful to recount a little history as an inoculation against the coming fever. Here are some of the empty stories that led to Title II, which will likely be repeated in various forms in the coming months.

To change the nation’s bipartisan internet policy, the activists had to manufacture a story of US broadband failure. In service of the failed-broadband argument, the FCC in 2009 commissioned a report from Harvard’s Berkman Center on the state of US broadband. After withering critiques by eminent economists, Berkman excised some of the most egregious mistakes and issued an updated version, but the report was so compromised that the FCC quit citing the research. The false Netflix narrative: Perhaps no event over the past 15 years advanced the effort to regulate the internet as much as the supposed throttling of Netflix in the winter of 2013–14.

Net neutrality was never about anything so technical as “treating all bits equally” or anything so economic as protecting “innovation at the edge.” It was about gaining bureaucratic and political control of the digital economy – and thus, increasingly, because of the centrality of information networks, the physical economy, too. A rollback of this short-lived, unnecessary policy will thus ensure the internet’s continued upward trajectory.

[Swanson is president of Entropy Economics LLC]

[Commentary] Today’s internet has transformed media and delivered prodigious value to consumers in entertainment, ecommerce, and personal productivity. Yet the next waves of the internet will extend to new industries in the physical world, delivering a far greater variety of services and requiring connectivity that is even faster, more ubiquitous, and more robust than today. To drive and accommodate this embrace of information by the real economy, we’ll need something bigger and better than the internet. We’ll need the “exanet.”

If the first several decades of internet were based on interoperability through digital packet switching and expanded capacity via fiber optics and broadband, the next phase will (in addition to continual capacity additions) focus on ubiquity, latency, reliability, application diversity, and security.

[Swanson is president of Entropy Economics LLC]

[Commentary] We’ve been discussing technological “convergence” in one way or another for at least 25 years. 25 years ago, convergence meant that we might soon be sending voice, data, and video over the same wire. Telephone, cable, fax, and television, in other words, might mush together.

In the last few years, however, the tensions between technological reality and our outdated communications laws have reached a breaking point. No matter which side one took in the network neutrality wars, it became apparent to nearly all — including legislators, regulators, and judges — that the 1934 and 1996 Acts governing communications no longer fit the world in which we live. Some tried to force our converged world into the old silos, but it didn’t work. Political upheaval in Washington may come with challenges. But one advantage is that it provides an opportunity to sweep away this legal clutter. With some luck and good will on both sides, it may even lead to a durable, bipartisan framework that can propel the technology economy for decades to come.

[Bret Swanson president of Entropy Economics LLC]

[Commentary] Liberal economists recently have begun to worry about industry concentration and market power. Some conservatives may even distrust these firms for their aggressive efforts over the last decade to push the Federal Communications Commission to regulate broadband and wireless network firms, better known as the “net neutrality” wars.

But turning against these titans of American innovation would be foolhardy for consumers, workers, and for the US economy. The best way to regulate the size, behavior, and prices of technology’s titans is by removing the obstacles to vibrant entrepreneurship, thus allowing the next Google or Amazon to challenge, displace, or transcend today’s titans.

[Bret Swanson is president of Entropy Economics LLC.]

[Commentary] President-elect Donald Trump may learn that the technology firms, who at first glance have little to do with the industrial economy, will in fact play a central role in transforming and reviving the physical economy in places like Pennsylvania, Michigan, and Wisconsin. For it is information technology that will power the Internet of Things, connected cars, smart infrastructure, additive 3D manufacturing, and revolutions in health care, energy, and education.

Silicon Valley might come to appreciate an administration that doesn’t strangle public financing markets with rules and costs that discourage initial public offerings (IPOs), or for that matter block other innovations in biotech, fintech, transportation, and health. Trump, in turn, might learn about the complexity and necessity of integrated global supply-chains, the importance of cross-border data flows, the positive-sum virtues of free and open trade, and the heroic achievements of immigrant technologists and entrepreneurs, who create far more jobs than they could ever take.

[Bret Swanson is president of the technology research firm Entropy Economics LLC and a visiting fellow at the American Enterprise Institute’s Center for Internet, Communications, and Technology Policy.]

[Commentary] The political upheaval in Washington offers a rare chance to fundamentally rethink the way we govern our economy’s leading edge technology industries. These industries contain both the nation’s largest infrastructure investors (AT&T, Verizon, Comcast) and also many of the world’s most valuable firms (Apple, Google, Microsoft, Facebook, Amazon, IBM, Oracle). To the extent government policy played a role in this success, it is partly the result of design but also part happy accident. The Internet grew up outside the regulatory reach of the 1934 Communications Act, and the Telecommunications Act of 1996, which contemplated the internet only briefly, directing a policy of regulatory restraint. The good judgement and good luck, however, may be running out.

[Bret Swanson is president of Entropy Economics LLC]

[Commentary] Recently, AT&T CEO Randall Stephenson plainly acknowledged Google’s victory in the biggest tech policy debate of the last 15 years: “On neutrality. You guys from Google, you won. It’s done.” Yet the sad irony is that Google’s “win” on policy — the imposition in 2015 of old and voluminous monopoly telephone rules onto modern broadband — made Google’s own broadband deployment efforts even more difficult. We have long said that Title II regulation would make broadband less competitive, and Google’s exit of the business is evidence of this effect.

Fifth-generation wireless, or 5G, is a suite of technologies that will be the foundation of the Internet, and of most of the economy, for the next 20 years. It includes more advanced air interface protocols, new “software defined” network architectures, use of huge new swaths of high-frequency spectrum, and deployment of millions of small cells, all of which will dramatically expand coverage and capacity. But not just for mobile. 5G will also power connected cars and the Internet of Things. It could even become a real competitive offering for fixed residential broadband, delivering both interactive Web video and TV-like high-definition video the way only cable and fiber-to-the-home do today. 5G could be powerful enough to deliver a video service on par with cable TV or broadband. Satellite will still have an important role for high definition TV, but 5G can overcome satellite’s limited capacity for interactivity (given the latency incurred over the 46,000-mile round trip to space and back). This new competitive broadband service might be enough to push the AT&T-TW partnership over the line with regulators. And it should also serve as a warning to future market meddlers at the FCC: technology is almost always far more powerful, and pro-consumer, than clever attempts to shape yesterday’s markets.

[Bret Swanson is president of Entropy Economics LLC]

[Commentary] No good deed goes unpunished. Try giving away free stuff to consumers, and Washington gets very suspicious. Especially if it involves Internet content. We’ve talked a lot about the case of “zero rating” or “free data,” the practice of exempting certain content from data allowances on mobile broadband plans. Free data can be thought of like toll-free 800 numbers or even simply as advertising. Early examples are T-Mobile’s Binge On and Verizon’s FreeBee. AT&T and Comcast have similar programs, and Facebook famously offered a mobile plan called Free Basics in India before the government there shut it down.

Unlike India, the Federal Communications Commission (FCC) has not yet prohibited free data in the US. But the agency has been investigating the practice for 10 months, so far without resolution. Still, according to FCC Commissioner Michael O’Rielly, the FCC inquiry itself has led companies to keep free data offerings on the drawing board, not in the marketplace. Not to be outdone, the Department of Justice (DOJ) is threatening to shut down the University of California-Berkeley’s free online educational offerings. In an investigation unrelated to free data, DOJ says Berkeley’s numerous and heterogeneous online courses don’t comply with the Americans with Disabilities Act and must be fixed or taken down. DOJ claims the multitude of free course videos don’t all contain proper captioning or sound or video quality.

[Bret Swanson is president of Entropy Economics LLC]