Rob Frieden

[Commentary] Moving in for the kill, incumbent carriers have stretched their home team advantage.  With millions in lobbying, campaign contributions and sponsored research, along with a like-minded Federal Communications Commission majority, the unpleasantness of the prior 8 year Obama stretch largely will evaporate very quickly. Money well spent. Rather than frame regulatory debates in terms of midlevel issues of economic theory and political philosophy, think lower tier: cold hard cash money. Follow the money.

[Commentary] While couched in noble terms of promoting competition, innovation and freedom, the Federal Communications Commission soon will combine two initiatives that will enhance the likelihood that Sprint and T-Mobile will stop operating as separate companies within 18 months. In the same manner at the regulatory approval of airline mergers, the FCC will make all sorts of conclusions sorely lacking empirical evidence and common sense.

FCC Chairman Ajit Pai’s game plan starts with a report to Congress that the wireless marketplace is robustly competitive. The Commission can then leverage its marketplace assessment to conclude that even a further concentration in an already massively concentrated industry will not matter. Virtually overnight, the remaining firms will have far less incentives to enhance the value proposition for subscribers as T-Mobile and Sprint have done much to the chagrin of their larger, innovation-free competitors AT&T and Verizon who control over 67% of the market and serve about 275 million of the nation’s 405 million subscribers.

[Rob Frieden serves as Pioneers Chair and Professor of Telecommunications and Law at Penn State University.]

[Commentary] Who made the following public statement: "What would be best for consumers? My view is pretty simple. Our goal should not be to unlock the box; it should be to eliminate the box. If you are a cable customer and you don’t want to have a set-top box, you shouldn’t be required to have one. This goal is technically feasible, and it reflects most consumers’ preferences—including my own."
A) President Donald Trump;
B) FCC Chairman Ajit Pai
C) Former FCC Chairman Thomas Wheeler
D) Harold Feld, Senior Vice President, Public Knowledge (an advocacy group)
The answer: B. Perhaps Chairman Pai will replace the prior set-top box proceeding with one more likely to achieve his stated objectives. Maybe not. Chairman Pai appears to send mixed messages.

[Commentary] Federal Communications Commission Chairman Ajit Pai has opposed broadband consumer privacy protection safeguards largely based on a false dichotomy: that Internet content providers, like evil Google and Facebook could collect, process and exploit consumer usage data, while ISPs could not. This is a false dichotomy, because consumers willingly opt to barter their usage data in exchange for “free” advertiser supported content access, while broadband subscribers will have to allow such surveillance and sales of usage data as a hidden or obscure cost of service.

[Commentary] Federal Communications Commission Chairman Pai has launched a charm offensive showcasing his commitment to transparency and regulatory restraint. However, behind the scenes, he ignores due process, the rule of law, FCC tradition, bipartisanship and fair play to shut down previous FCC initiatives of which he disapproves.

[Commentary] Dear Commissioner Pai:
Congratulations on your likely nomination to become Chairman of the Federal Communications Commission.

I hope you will take every effort to achieve consensus which used to be the usual outcome of matters before the FCC. Issues did not have a Republican position and an opposite Democratic one. Most votes were unanimous, because fair minded Commissioners—led by a fair-minded Chairman—could achieve a just and proper outcome, even if it disappointed a major incumbent. No one had to overreach, or grandstand. No one had to write 50 page dissents. No one dared resort to smugness, righteous indignation and arrogance. I share your excitement about the promise of telecommunications and information technology to enhance national welfare and make life better for all. Such potential makes it that much more important that you strive to lead by example and refrain from using your considerable power to settle all the grudges you bear.

[Rob Frieden serves as Pioneers Chair and Professor of Telecommunications and Law at Penn State University.]

[Commentary] As unorthodox as it might seem, Senior Circuit Judge Stephen F. Williams dissenting opinion in a major Federal Communications Commission case offers a likely roadmap on how the FCC will operate with Trump appointees and a Republican majority. Judge Williams’ extensive opinion in U.S. Telecom v. FCC has a flavor remarkably unlike a legal dissent. At its best, his work identifies real defects in the logic used by the FCC to reclassify broadband Internet access as a telecommunications service. Additionally, the Judge raises legitimate questions about the FCC’s rationales supporting a near total prohibition on paid prioritization of traffic. I fear Judge Williams dissent foreshadows an FCC willing to misinterpret case law and statutory mandates to achieve a desired outcome. I worry that an infatuation with economics will legitimize bogus rationales that the FCC will embrace hook, line and sinker. Who needs a maverick wireless carrier like T-Mobile when economists prove that any and all markets work just fine with 3 competitors? Lastly, I have concerns that FCC decision makers will overplay their hand. I have seen ample and unjustified arrogance, hubris and political intrigue at the FCC. It looks like the new management will continue—if not expand—the trend.

[Commentary] It should come as no surprise that the Federal Communications Commission will substantially change its regulatory approach, wingspan and philosophy under a President-elect Donald Trump appointed Chairman. One can readily predict that the new FCC will largely undo what has transpired in previous years. However, that conclusion warrants greater calibration. As a threshold matter, the new senior managers at the FCC will have to establish new broad themes and missions. They have several options, some of which will limit how deregulatory and libertarian the Commission can proceed. Several ways forward come to mind:

1) Channeling Trump Populism—the FCC can execute President Trump’s mission of standing up to cronyism and rent seeking, even when it harms traditional constituencies and stakeholders.
2) What’s Good for Incumbents is Good for America—the FCC can revert to the comfortable and typical bias in favor of incumbents like Comcast, Verizon, AT&T and the major broadcast networks.
3) A Libertarian Credo—the FCC can reduce its regulatory wingspan, budget and economic impact by concentrating on limited core statutory mandates, such as spectrum management.
4) Humility—without having the goal of draining the FCC’s pond, senior managers can temper their partisanship and snarkiness by refraining from mission creep.

Highlights:
Zero rating/Sponsored data plans exempt specific content from metering or provide free access to limited content.
Opponents have concerns about effects on incentives for innovation while advocates consider subsidies a proven way to promote universal access.
Calibrated zero rating can promote positive spillover and free rider opportunities without extending incumbent market dominance.
If disputes arise, ex ante safeguards can provide flexible remedies.

[Commentary] AT&T has a business plan to integrate vertically throughout the information, communications and entertainment (“ICE”) ecosystem. Acquisitions provide the fastest way for the company to move up and down the ICE “food chain” of content creation, syndication, distribution and delivery to consumers. Vertical integration can achieve operational efficiencies as a single company can achieve savings through scale and a wide footprint of related business ventures. On the other hand, it takes remarkably talented and nimble management to handle different components in the food chain.

Depending on how your rate AT&T senior management, the company has wisely invested in the convergence of content and conduit, or it has unwisely deviated from its true competency. Bear in mind that at divestiture from AT&T, companies like Verizon (then Bell Atlantic) invested heavily in content creation. Verizon failed, because it did not ascend the content creation learning curve quickly enough. Can you teach old dogs new tricks? Bellhead telephone company senior management have to acquire the skills and understand the culture of Netheads and Contentheads. Companies like Verizon and AT&T have made the transition into the Nethead world through acquisitions of companies such as MCI and UUNet. Now comes an even harder challenge to embrace the Contenthead culture of Hollywood. Good luck with that!

[Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law, Penn State University]