We missed last week’s round-up so we could celebrate Veterans Day and we’ll be away next week for a long Thanksgiving Day break, so here’s what’s been going on in November.
National Test of the Emergency Alert System
On November 9 at 2pm (eastern), the Federal Emergency Management Agency and the Federal Communications Commission conducted the first national test of the Emergency Alert System. All television channels and radio stations in the United States were supposed to be interrupted by a brief test. But, like most tests, some passed and some failed.
Viewers and listeners in many states said they saw and heard the alerts at the scheduled time, but others said they did not. There was no immediate explanation for the discrepancies, but that was one of the purposes of the test — to find out how well the system would work in an actual emergency. Many of the reported failures affected cable and satellite television subscribers, and some were quite puzzling. Some DirecTV subscribers said their TV sets played the Lady Gaga song “Paparazzi” when the test was under way. Some Time Warner Cable subscribers in New York said the test never appeared on screen. Some Comcast subscribers in northern Virginia said their TV sets were switched over to QVC before the alert was shown. Many other viewers and listeners reported that the alert arrived right on time at 2 p.m. Eastern. It halted digital video recorder playback in some households and surprised radio listeners in their cars.
The discrepancies led House Subcommittee on Communications and Technology Chairman Greg Walden (R-OR) to bring FEMA and FCC officials in for a review of the test on Nov 17. When he announced the briefing, Chairman Walden, a former broadcaster himself, said, "By many accounts, last week's test had major problems. In my home state of Oregon, most -- if not all -- stations didn't even receive the signal…. I look forward to hearing where the agencies can relay what worked, what didn't, and where we can go from here to fix it."
Cyberwarfare and Cybersecurity
This week, the Department of Defense laid out its most explicit cyberwarfare policy to date, stating that if directed by the president, it will launch “offensive cyber operations” in response to hostile acts. But the report is still silent on a number of important issues, such as rules of engagement outside designated battle zones — a sign of how challenging the policy debate is in the newest and most complex realm of warfare. The report reiterated that the United States will “exhaust all options prior to using force whenever we can” in response to a hostile act in cyberspace. And it reflects the tensions inherent in cyber policy. Taken with past budget documents, it suggests a need for automated, pre-approved responses to some hostile acts in cyberspace.
The 112th Congress has been grappling with cybersecurity issues since last year when many predicted enough common ground between Republican and Democrats to pass legislation. This week, Senate Majority Leader Harry Reid (D-NV) indicated plans to debate wide-ranging cybersecurity legislation during the first work period of 2012.
Universal Broadband
On November 9, the Department of Commerce’s Economics and Statistics Administration (ESA) and National Telecommunications and Information Administration (NTIA) released a report, “Exploring the Digital Nation,” that analyzes broadband Internet adoption in the United States.
Overall, approximately seven out of ten households in the United States subscribe to broadband service. The report finds a strong correlation between broadband adoption and socio-economic factors, such as income and education, but says these differences do not explain the entire broadband adoption gap that exists along racial, ethnic, and geographic lines. Even after accounting for socio-economic differences, certain minority and rural households still lag in broadband adoption.
Shane Greenstein dove into the numbers a bit in a piece for Digitopoly. For dial-up Internet users, the two biggest reasons for not using broadband are expense and availability. Both of those should get better over time, albeit slowly. There is still hope for more converts. For people who don’t currently use the Net at all, the first and third biggest reasons for non-use are “don’t need it, not interested” and “No computer/computer inadequate.” Why is that bad news? Simply stated, this is the population that will fuel most of the future growth. Yet, neither of those reasons for not adopting will go away easily. Both issues defy resolution, either through good marketing campaigns from private providers, or with any reasonable policy intervention. Finally, the second most common reason for non-adoption — too expensive — will eventually be overcome, but it too is likely to be slowly overcome, as already noted. In short, new adopters will be hard to come by.
On November 9, however, the FCC announced a major expansion of the Connect to Compete program to help improve broadband adoption. (See more here) Here’s some highlights:
- Participating National Cable & Telecommunications Association member cable companies will offer all eligible families two-years of $9.95 + tax broadband cable Internet, with a no installation/activation fee option and no modem rental fees (with an option to purchase a $10 modem).
- Redemtech, a technology refurbishment company, has committed to offer a refurbished $150 + tax powerful laptop, or desktop with LCD monitor, to all eligible school lunch families, shipped to the home.
- Microsoft, starting early next year, will work with its hardware partners to introduce a series of affordable, high-quality education computers, starting at $250, that include Windows and Office. Microsoft’s ongoing commitment to digital inclusion worldwide means they view access to broadband and a computer as a right for all, not a privilege for some.
- Morgan Stanley has committed to contributing its significant microfinance expertise to assist Connect to Compete in its development of a microcredit program to help families afford the upfront cost of a PC. This program will also aim to provide financial literacy training and help families build credit history through successful loan repayment. These microloans will be provided by community-based financial institutions.
- Altman Vilandrie & Company (AV&Co.), a strategy consulting firm, is contributing its industry expertise and analytic consulting capabilities to the Connect to Compete initiative. They will help integrate the generous public and private sponsor contributions into a sustainable program through the development of a business and operating plan.
Collecting Taxes on Internet Purchases
As we all gear up for Cyber Monday and other shopping holy days, Congress appears ready to grapple with the issue of Internet sales taxes. The Supreme Court said Congress had the power to do so in a 1992 decision. But the issue has languished partly because endorsing tax collection on the Internet — an unofficial tax-free haven for shoppers — has not been a popular political position. Both “brick and mortar” retailers and online outlets are hiring lobbyists for the fight.
On November 9, a bipartisan group of 10 senators introduced the Marketplace Fairness Act (S.1832). The bill allow states to collect sales taxes from Internet retailers if they adopt one of two sales tax simplification options outlined in the legislation. The bill is supported Amazon -- which has opposed legislation in Illinois, California and other states to collect online sales taxes because of the complexity created by a state-by-state approach. Sears Holdings and other traditional retailers such as Wal-Mart Stores also back the measure. However, eBay still opposes the legislation, according to a tally of supporters and opponents provided by a lobbyist for interests that favor it.
Privacy Push
Privacy was another issue some thought a divided Congress might be able to address this year. On Nov 9, Sens. John Kerry (D-MA) and John McCain (R-AR) pressed the Department of Commerce and the Federal Trade Commission to release their final reports on consumer privacy protections. Both agencies released draft reports last December that identified gaps in current privacy protections, but neither has issued its final report. “Consumers are confused and concerned about how their information is collected and distributed, and firms collecting information on people are not bound to any common set of practices and are making them up as they go along," the senators wrote. "Congress and the public could use the guidance of the expert agencies in the form of final reports to help make sense of current practices and how to best protect innovation without sacrificing people’s privacy." In their letter the senators note the draft reports both concluded that industry self-regulation had failed to provide adequate privacy protections for consumers, suggesting the need for legislation. "And both reports presented what the expert staff at your agencies considered would constitute a better framework for addressing privacy issues in commerce. We leaned heavily on those frameworks to construct S.799, the Commercial Privacy Bill of Rights," the letter states.
On Nov 11, we saw reports that Facebook was close to reaching an agreement with the FTC over charges that it misled users about its use of their personal information, the latest sign of widening public concern over privacy in the digital age. A rumored settlement would require Facebook to obtain users' consent before making "material retroactive changes" to its privacy policies. We’ve seen no official announcement a week later, however. And that same week, Reps Edward Markey (D-MA) and Joe Barton (R-Texas) wrote to Facebook founder Mark Zuckerberg asking him to explain a February patent application they claim raises concerns about Facebook tracking users on other websites. The lawmakers quote experts that claim the patent application contemplates tracking users on websites aside from Facebook and sending them targeted advertisements based on the information gleaned from such tracking.
Senate Commerce Committee Chairman Jay Rockefeller made privacy a major issue at the nomination hearing for two Federal Trade Commission members including FTC Chairman Jon Leibowitz. Chairman Rockefeller encouraged the FTC to crackdown on Facebook for allegedly misleading users about its privacy policy. He said that any action the FTC takes against Facebook should require Facebook to obtain its users' consent before changing any policies and should set up a "rigorous enforcement regime." Chairman Rockefeller also indicated this week he will hold a hearing to look into reports that Facebook tracks its users on the Web after they log out. On the House side, Subcommittee on Commerce, Manufacturing and Trade Chairman Mary Bono Mack (R-CA) wants Facebook to come before Congress to explain why Facebook members got swarmed by pornographic and violent images this week. Chairman Bono Mack directed her staff to bring in Facebook officials next week for a briefing to learn more about the wave of pornographic and violent images that spread through Facebook's automated content-sharing systems. Among the questions Bono Mack wants answered: How many people were impacted? What actually happened? How did it happen? Could the vulnerability be used to gather users' personal information? What is Facebook doing to prevent future intrusions?
On Nov 14, U.S. Deputy Chief Technology Officer Daniel Weitzner said Internet firms should come up with self-imposed privacy rules that would be enforced by the FTC. He suggested any privacy law should be “flexible” and “pro-innovation.” He described the White House’s approach as an “alternative regulatory model,” saying that any new online privacy law should be “flexible” and “pro-innovation.” Weitzner warned that the Internet needs growing room without too many strict rules. “The traditional rule-making process lacks flexibility and agility in the Internet environment,” Weitzner said. “We are much more interested in depending on responsible companies to take a consumer privacy bill of rights and implement them through in voluntarily developing enforceable standards of conduct.”
China’s Internet Censorship
One below-the-radar headline was word that China's top IT firms have pledged to step up the regulation of their services as government authorities have intensified calls to control the development of the nation's Internet. Authorities have said they want to promote the "healthy development" of the Internet in fighting such rumors. But experts have said Chinese officials are in fact worried that the nation's Twitter-like social networking sites are becoming platforms to criticize the government. Chinese companies are already required to abide by the country's strict censorship laws, which block content and websites deemed politically sensitive or anti-government. Foreign sites like Facebook, Twitter and YouTube are currently blocked. During last week's meeting, China's top IT firms also agreed to crackdown on Internet rumors, online pornography and scams. The head of China's IT authority, the State Internet Information Office, said the companies must also take the lead in enhancing the credibility of online media companies while also strengthening their management. On November 17, witnesses told the Congressional-Executive Commission on China that China's strong control of Internet communication undermines human rights and has significant impact on its relationship with the United States.
SOPA
On November 16, the House Committee on the Judiciary held a hearing on the Stop Online Piracy Act (HR 3261 and also known as SOPA). The bill allows the Attorney General to seek injunctions against foreign websites that steal and sell American innovations and products. The bill increases criminal penalties for individuals who traffic in counterfeit medicine and military goods, which put innocent civilians and American soldiers at risk. And it improves coordination between IP enforcement agencies in the US. But there’s warnings the bill would be the most sweeping overhaul of copyright law in at least a decade. Facebook, Google and other Silicon Valley Internet giants jointly warned federal lawmakers against anti-piracy legislation they fear could place too much responsibility on firms like them. While the director of the U.S. Copyright Office says that unless Congress continues to take serious steps to combat online piracy the nation's copyright system cannot be sustained.
House Judiciary Committee Chairman Lamar Smith (R-TX) says that free speech concerns about the bill are “false and misleading” and that law-abiding websites have nothing to fear. This bill, he staff points out, specifically targets websites that are dedicated to the illegal sale and distribution of counterfeit material and products. It does not target the lawful activity of legitimate websites. Because this bill focuses on illegal activity, legitimate and lawful American businesses should have nothing to worry about. Chairman Smith said that he is planning to mark up the legislation before the end of the year.
There’s bi-partisan support for SOPA, but also strong opposition. Minority Leader Rep. Nancy Pelosi (D- CA) said that Congress needs to “find a better solution” than SOPA. Earlier this week, fellow-Californian Reps. Anna Eshoo (D), Doris Matsui (D), Mike Thompson (D), John Campbell (R), Zoe Lofgren (D), Mike Honda (D) and George Miller (D) all signed a letter to the House Judiciary Committee outlining their opposition. Reps. Jared Polis (D-CO), Ron Paul (R-TX), Lloyd Doggett (D-TX) and Mike Doyle (D- PA), also signed the letter.
Lobbying on the issue is fierce. According to figures compiled by the Center for Responsive Politics, the film, music and TV industries have spent more than $91 million on lobbying so far this year — an amount that puts them on pace to beat all of their previous spending records. Not to be outdone, Google and its tech cohorts — including eBay, Yahoo and Facebook — have been ramping up spending and are looking for a hired gun to lead their newly revamped coalition.
This week’s hearing wasn’t exactly balanced as noted by Rep Darrell Issa (R-CA) (and Stop Online Piracy Act: Broad bill needs scrutiny and Why the House is stacking the deck on Internet piracy). And we’ve seen many cautions about the bill: Stop the Great Firewall of America ; Remember the "borderless" Internet? It's officially dead here’s one of the more… um, calmer takes on what’s going on with the bill Sen Ron Wyden (D-OR) has vowed to block passage of a similar bill, the PROTECT IP Act (S. 968) , that has already been approved by the Senate Judiciary Committee.
Net Neutrality Passes a Test, But Faces More
On November 10, the Senate voted to keep in place the Federal Communications Commission's controversial rules aimed at preserving open Internet access. (Actually, the Senate voted 52-46 along party lines not to bring the resolution to a floor vote.) Republicans had pushed to overturn the rules, arguing the FCC overstepped its authority and that regulation of the Internet will stifle its growth. Most Democrats, including President Barack Obama, argue that the regulations are needed to preserve an open Internet as the telecommunications industry becomes more consolidated. The White House had threatened to veto the motion to rescind the rules
Some say the new rules – which are schedule to go into effect Nov 20 -- won’t change things much. Other observers say they don’t mean much because what the FCC really needs to do is address the lack of competition in the broadband marketplace.
Public Knowledge’s Art Brodsky noted that the vote was more about partisanship and gamesmanship than about policy. That’s because the rules were the result of a deal cut between FCC Chairman Julius Genachowski and AT&T to keep wireless access to the Internet largely out of any Open Internet scheme. While AT&T and Verizon, which is challenging the rules in court, probably wouldn’t object if the Senate voted to overturn the rules, they weren’t making an overt campaign of it in Congress as the vote neared. Those companies also are smart enough to know that whatever vote total occurred wouldn’t be enough to sustain a Presidential veto. In the end, the fight for an Open Internet, on Nov 10, came down to another misleading attack on Big Government, and overwhelming regulation done by unelected bureaucrats and all sorts of other rhetoric that bore only a faint resemblance to reality. What is undeniably real is that an Open Internet, a truly Open Internet, benefits everyone, from Google to the single-person blog.
The real question, then, is what happens next. Verizon and MetroPCS are pursuing lawsuits against the FCC, claiming the agency doesn't have the legal authority to issue network neutrality/open Internet rules. Meanwhile, on the other side of the question, the group Free Press has also sued the FCC because the rules don't apply to mobile services. The question could remain open for years. The idea behind net neutrality is to prevent ISPs from slowing down or speeding up traffic (or even blocking it) to favor one source or type of data over another. It comes down to this: data flows on the Internet must be regulated. The question is whether to put that control in the hands of government (which would protect the status quo) or in the hands of corporations (which could potentially decide which kinds of content people can easily access.) It increasingly looks like the ultimate decision will be made by the federal courts. Just one party, we learned, filed a petition for reconsideration of the rules, asking the FCC for clarification of the "special services" aspect of the order
This week, we’ve seen some interesting network neutrality-related research come out:
- Krishna Gummadi, the head of the Networked Systems Research Group at the Max Planck Institute for Software Systems, in Saarbrücken, Germany, says ISPs are selectively slowing broadband speeds to keep traffic flowing on its network, using a sorting technique called throttling.
- Internet Service Providers like AT&T and Verizon, have said they need to charge content providers for prioritization so they can invest in improving infrastructure: faster internet service for all, they say. But placing a price on prioritizing content creates an inherent disincentive to expand infrastructure. Internet service providers would profit from a congested Internet in which some content providers will be more than willing to pay an additional fee for faster delivery to users. Content providers like the New York Times and Google would have little choice but to fork it over to get their information to end users. But end users would be unlikely to see the promised upgrades in speed. Those are some of the results of research we conducted on the Internet market. Despite the fierce back-and-forth on net neutrality, there is a surprising lack of rigorous economic analysis on the topic. To change that, we built a game-theoretic economic model to address this question: Do ISPs have more incentive to expand their infrastructure capacity when network neutrality is abolished? Our analysis shows that if net neutrality were abolished, ISPs actually have less incentive to expand infrastructure.
- The Brattle Group says the FCC’s rules must clearly define what constitutes a violation, how broadband providers can comply, and what happens when a violation occurs. Stakeholders — including industry, regulatory, and public interest — must reach accord on three pivotal issues: 1) regulators must define what measurable performance standards and network management practices violate net neutrality; 2) enforcement and corrections must be clearly defined and proportional to the seriousness of the violation; and 3) recognizing the constantly and rapidly evolving nature of the Internet and its content, today's rules may not be applicable five years from now.
AT&T/T-Mobile
Earlier this month, AT&T re-estimated the close date for the deal as June 2012 instead of March 2012.
For many of us around the country, AT&T’s proposed acquisition of T-Mobile has been simmering on the back burner of late. But in DC, apparently, there’s a constant barrage of advertising in support of the deal. In a letter to WUSA, Gannett's CBS affiliate, one of the Washington (DC) stations airing the ads, the Media Access Project charges the ads are deceptive and misleading, and therefore, the station has a public interest obligation to make sure the ad is accurate or pull it from the airwaves. Since MAP can't appeal to the Federal Trade Commission (AT&T isn't selling a product), it referred to the Federal Communications Commission's public interest programming rule from 1960 that states: "With respect to advertising material, the licensee has the additional responsibility to take all reasonable measures to eliminate any false, misleading or deceptive matter...." In a letter to WUSA general manager Alan Horlick, MAP argues that AT&T's jobs and investment claims are unsupported by the Economic Policy Institute study on which the claim relies, and that the math behind the $8 billion investment claim doesn't add up. At the very least, MAP wants WUSA to ask AT&T "to explain."
AT&T (and the Communications Workers of America) claim the acquisition of T-Mobile would create up to 96,000 jobs, and it has pledged not to eliminate thousands more — an argument it hopes will put political pressure on regulators still deciding the fate of the deal. Foes of the deal, including Sprint and public interest groups, say the deal will actually kill jobs — and they’re demanding that TV stations stop airing commercials in which AT&T says otherwise.
MAP’s move is just the latest AT&T must deal with. Harold Feld of Public Knowledge wrote earlier this month: “Any tactician knows that battles can be won or lost by defining the battlefield. Skirmishes like the fight over whether Sprint and C Spire (formerly Cell South) can go ahead with their private lawsuits against AT&T’s acquisition of T-Mobile help define the terrain for the bigger fights to come. By ruling on what constitutes a recognizable injury under the antitrust rules and making preliminary determinations about the nature of the market, the Order sets the boundaries of what arguments the Department of Justice can make and what it will need to do to prove its case. Where AT&T manages to have certain market definitions locked in and certain potential injuries excluded as not cognizable under antitrust in these early rounds, it gains an advantage. By contrast, where the court rejects AT&T’s efforts to limit the scope of the review by adopting different market definitions or recognizing certain injuries as addressed by the antitrust law, DoJ gains an advantage.
Feld gets at some of the hand-to-hand combat we’re seeing now. Sprint Nextel must provide AT&T with updated internal documents relevant to AT&T’s defense against the DoJ suit. AT&T complained that the Justice Department was too slow in telling who its witnesses would be (Oh, yeah, the government will have to name up to 18 potential witnesses on November 16, with additional witnesses named on December 5 and Jan 6. AT&T will name up to 18 witnesses on November 23, with additional witnesses named on December 12 and January 6. Each side will be allowed about 35 witnesses. The trial begins February 13.) AT&T denied all claims in antitrust lawsuits by Sprint Nextel and Cellular South. The DoJ asks the court to allow prosecutors to discuss with outside lawyers and consultants documents AT&T gave the FCC. These all seem like inside baseball now, but these moves will define the battlefield.
FCC Reform Bills
Two weeks ago, we highlighted efforts in the House and the FCC to reform the agency’s processes for making decisions. On November 7, FCC Chairman Genachowski highlighted the reforms the FCC has already made – and looked forward to additional reform coming. The FCC has eliminated 190 obsolete regulations and identified twenty-five data collections that may be eliminated. The FCC has reformed and updated many rules. It has reduced backlogs, including an 89% reduction in satellite licensing applications and a 30% reduction in broadcast licensing applications. The FCC has significantly reduced the time between the vote on an FCC decision such as a rulemaking order and the release of the full text of the decision. It used to take on average 14 calendar days after a vote for the FCC to release the full text of its decisions, and major orders could take weeks or months to be released as language was finalized and documents were processed. Now our average is down to just 3 days, with a majority of decisions released within one day of the vote. The FCC also overhauled its website. It’s the first website that makes government data available in formats that can help entrepreneurs build innovative applications, including making all application programming interfaces or “APIs” available for developers.
The FCC plans to review experimental radio licensing policies. The FCC is examining rule changes that might remove impediments to the development of dynamic spectrum access technology, which will allow for more efficient spectrum use. The FCC is moving forward with a proceeding designed to protect consumers from fraudulent charges on their telephone bills – what’s commonly called cramming. The FCC will be undertaking a comprehensive review of the Commission’s technical standards for cable television service in response to changes in cable television systems technology.
House Communications and Technology Subcommittee Chairman Greg Walden (R-OR) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL) recognized the FCC’s progress, but said it still had a long way to go AND that Congress must enshrine the reform in legislation. They see legislation as a way to apply President Barack Obama's regulatory reform principles to independent agencies -- in this case the FCC -- not bound by his Executive Order on regulatory review. http://benton.org/node/105313 The goal, Walden and Rep Adam Kinzinger (R-IL) wrote in The Hill, is a 21st century FCC.
On November 16, Walden’s subcommittee approved the Federal Communications Commission Process Reform Act of 2011 (H.R. 3309) by a vote of 14 to 9, and the Federal Communications Commission Consolidated Reporting Act of 2011 (H.R. 3310) by voice vote. The panel rejected an amendment from Rep. Anna Eshoo (D-CA), the subcommittee's ranking member, that would have expanded the authority of the FCC to review corporate mergers.
No, no, no… Thank You
Headlines is taking an extended holiday break. We will return Monday, November 28. Normally, DC would be quiet around Thanksgiving, but we’re likely to hear lots about the debt reduction supercommittee. Scheduled events return the week of the 28th, including a FCC meeting focused on broadband adoption and spectrum for medical devices.
And, as we gather around the turkey, we’ll be giving thanks for all our readers. Happy Thanksgiving.