Analysis

[Commentary] Could a consumer revolt against cable television rates before the 1992 election replay with digital data in the upcoming election cycle?

Rep Marsha Blackburn (R-TN), chair of the of the House Commerce Committee’s Subcommittee on Communications and Technology, introduced a bill that requires internet service providers to get opt-in consent from consumers before sharing sensitive personal information, and allow opt-out of sharing other information. Her abrupt and unconventional turn on internet privacy came after widespread public reaction to the congressional repeal of the Federal Communications Commission’s privacy rules.

Those who believe that the bill is not likely to pick up any legislative momentum might argue that general anxiety about digital trails left across the internet does not pack the political punch of rising cable rates that consumers could feel when they balanced their checkbooks each month. Blackburn’s bill also may be seen as a response to some of the edge providers that were most vocal in their objections to the repeal of the privacy rules.

"There is no other industry in the world like broadcasting,” the CEO of the National Association of Broadcasters (NAB) Gordon Smith told his annual convention. “No other industry has, at its core, such an overarching focus on bringing communities together and serving the public good,” Smith opined. “No other media industry is as dedicated to supporting our local communities.” That “overarching focus” on “serving the public good” is being stealthily watered down, with the industry’s support, by the Trump Federal Communications Commission. In little-noticed decisions, the agency has been removing regulatory requirements to protect broadcast localism, shield a diversity of local voices, and avoid the establishment of a dominant national broadcaster.

Exhibit One: imagine broadcast localism without a local broadcast studio. The Trump FCC, voting along party lines, is now preparing to eliminate this “fundamental” part of a licensee’s local community obligation.
Exhibit Two: skirting Congress’ mandate that no single broadcaster have more than 39 percent of the national audience.
Exhibit Three: using contracts to get around local ownership rules.
In short, the Trump FCC has set the stage for a dramatic overhaul of the national landscape. It took no time for one company to seize the opportunity.

Sinclair Broadcast Group, owner of more TV stations than anyone else and a Trump election ally, quickly embraced the new reality. It now appears that broadcast localism, a diversity of local voices, and the congressional mandate against one company dominating local broadcasting are about to become casualties of the Trump FCC.

[Tom Wheeler is the former Chairman to the Federal Communications Commission]

If Congress grants an exception to legacy news publishers to pressure Google and Facebook, it might lead to the kind of concessions publishers have won in Europe. In the US, pressure on Facebook and Google has been successful in helping publishers gain traction, but the culture of European publishing and the vigor of its regulatory environment is totally different from the free-market roots of the US news industry.

Whatever the outcome, a larger question remains about the right relationship between journalism and the most powerful companies in the world. This is a long-term issue, which is unlikely to be settled by one group or cartel gaining regulatory concessions but, rather, by a more profound change in the regulatory and commercial environment.

Three of the largest internet service providers and the cable television industry’s primary trade association have spent more than a half-billion dollars lobbying the federal government during the past decade on issues that include network neutrality, according to a MapLight analysis.

Comcast, AT&T, Verizon and the National Cable & Telecommunications Association (NCTA) have spent $572 million on attempts to influence the Federal Communications Commission and other government agencies since 2008. The amount represents more than $100 for each of the 5.6 million public comments on the FCC’s proposed elimination of net neutrality rules. Despite the resources devoted to the rollback by the big internet service providers, net neutrality advocates haven’t been totally bereft of support in the nation’s capital. Amazon, the world’s largest online retailer, has spent $41.1 million lobbying in the nation’s capital. Facebook, which boasts 2 billion unique monthly users, has spent almost $43.3 million.

To support the 2015 Open Internet Order (OIO), the Federal Communications Commission cited four potential violations of network neutrality over the previous ten years, only two of which it explicitly challenged. Why, then, did the FCC say a rule was desperately needed and Broadband Internet Access Service (BIAS) providers say the rule would be devastating given that their past behavior meant that the rule would not affect them much? To mix common sense with econspeak, why did anyone care about the Order if it was not binding? Tim Brennan, professor in the School of Public Policy at the University of Maryland, Baltimore County and former FCC Chief Economist, addresses this question and explores the potential effects of the OIO 2015 rule in “The Post-Internet Order Broadband Sector: Lessons from the Pre-Open Internet Order Experience.” In particular, he explores what lessons policymakers might learn from the handful of cases as they continue to grapple with net neutrality.

This post is the fourth in a series featuring the contents of a recent special issue of the Review of Industrial Organization, organized by the Technology Policy Institute and the University of Pennsylvania’s Center for Technology, Innovation, and Competition. The short answer to why the Order matters if it doesn’t matter is that it is likely to affect future business models and network development. The longer answer is more nuanced. In summary, Brennan notes that the current net neutrality debate can be informed by past events, and should include additional issues in the present. He contends that things might not change all that much, under 2015 OIO or future net neutrality rules, but policymakers must consider how BIAS providers will be incentivized to innovate while stuck between edge providers and end users.

This study evaluates the estimated impact of the Federal Communications Commission’s recent efforts to remove barriers to investment into next-generation wireless and wireline broadband networks, and thereby to accelerate the transition from legacy copper networks to next-generation services.

We estimate that these proposed changes could have a significant impact not only on new wireless and wireline broadband infrastructure investment, but could also positively impact job creation, economic output and consumer welfare. Our models forecast that with these new rules in place, up to an incremental 26.7 million premises would become economical to serve with next generation networks, driving up to $45.3 billion in capital investment. This investment would be made by incumbent service providers across the country and is expected to take place over at least five years.

This reply to "The Curious Absence of Economic Analysis at the Federal Communications Commission" (Faulhaber, Singer, & Urschel, 2017) makes three claims.

First, we document the paper's undisclosed origins as a white paper commissioned by an advocacy group with deep ties to the telecommunications industry. Second, we describe two of the authors' active participation, on behalf of clients, in a range of contested issues before the FCC in recent years, none of which they disclose. Finally, our review of FCC workshops, roundtables, seminars, dockets and rulings—including during its landmark 2015 Open Internet Order and several blockbuster mergers and acquisitions—provides detailed evidence to refute the paper's core "curious absence" charge. The stakes could not be higher, we conclude, as the new FCC chair Ajit Pai has repeatedly referenced the paper to justify his rollback of FCC regulations—including, crucially, the common carriage/net neutrality rules so vigorously opposed by the paper's funders.

[Commentary] What is the role of cities in assuring that their residents have the affordable bandwidth necessary to thrive in the 21st century information economy? Municipal governments—more than other jurisdictions—will directly affect the cost of deploying fiber, the foundation for the abundant bandwidth that will serve next generation networks like 5G Mobile and the Internet of Things. Yet with a huge range of choices on how to influence their local broadband market, governments can struggle to understand how best to proceed. Into that breach arrives a new report entitled “Municipal Fiber in the United States: An Empirical Assessment of Financial Performance” by Christopher S. Yoo and Timothy Pfenninger of the University of Pennsylvania. Its stated purpose is to help municipalities by filling an “information gap by conducting a systematic analysis of every municipal fiber project in the United States.” Critically, the report concludes that the projects are money losers. I’m certain the report will provide sound bites for opponents of such projects. Unfortunately, for municipal leaders seeking a map for the path forward, it is both largely irrelevant and misleading. It’s a shame that the authors narrowly focused their gaze on Excel spreadsheets while ignoring how markets and communities are responding to the need for more abundant bandwidth. The report’s core message—which can be summarized as ‘let them eat DSL’—is one that does not deserve serious attention from cities.

Ever since Congress repealed the Federal Communication Commission’s broadband privacy rules, consumers have expressed outrage over their lack of privacy protections when accessing broadband networks. In response to the public outcry, members of Congress have introduced legislation to enhance consumers’ online privacy protections.

Thus far, Sens Ed Markey (D-MA), Richard Blumenthal (D-CT), and Reps Jerry McNerney (D-CA), and Marsha Blackburn (R-TN) have all introduced online privacy legislation. Each bill has strong components that provide various levels of online privacy protections for consumers. However, the three bills all have limitations that must be addressed to provide Americans all the privacy protections they deserve. Fortunately, the bills at least open the door to a discussion on what true comprehensive online privacy legislation should look like and what protections consumers expect when it comes to their online privacy.

Some of the nation's biggest Internet service providers are begging a court not to weaken the power of a major regulatory agency — the Federal Trade Commission — in a case that has implications for businesses and consumers nationwide and puts the companies at odds with another key industry player, AT&T.

The request earlier this week by Charter, Comcast, Cox and Verizon seeks to shore up the FTC's ability to regulate Internet providers, in a case about whether the FTC can punish AT&T for allegedly misleading consumers with its marketing of "unlimited" data plans. But the case also has other implications. It could create an undesirable regulatory environment for the companies, they say. "At first glance, [our] position might seem surprising — four leading corporations are arguing in favor of restoring the FTC’s authority to regulate," the ISPs wrote. They added: "If the FTC is divested of jurisdiction," the companies wrote, "it is likely that a variety of federal, state, and local government agencies that lack the appropriate reach, perspective, and experience … will attempt to fill the perceived 'regulatory gaps,' thereby creating a patchwork of unreasonable, duplicative, and inconsistent rules."