American Enterprise Institute

[Commentary] Now that Brexit is underway, maybe we can ask the Brits to help us with some of our own independence problems. In particular, could we get some guidance on how to make the Federal Communications Commission more independent and substantive? Can we reform the FCC without losing its world-class talents? Yes. The problem appears to be largely governance.

Taking lessons from the Brits (and others), a new governance model would have a small executive team that is responsible for carrying out the work of the agency, subject to a board made up of economists, accountants, engineers, social scientists, and business persons whose professional loyalties are to their professions, not politics. As with today’s commission, the board would be held accountable by courts, administrative procedures, and congressional oversight, and members would serve staggered terms and could not be removed without cause. A key difference would be selection: Appointments would be made by a joint committee consisting of equal numbers of Republican and Democratic members of Congress, board members, and representatives of academia and business. It appears that regulation by president-appointed commissions is an idea whose time has passed in the US. If we make effective reforms, maybe the US can once again become a world leader in effective regulation.

[Mark Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida and serves as its director of telecommunications studies.]

[Commentary] The Federal Communications Commission’s open Internet rules address free data and zero rating on a case-by-case basis. The Body of European Regulators of Electronic Communications’ (BEREC) non-binding guidelines for implementing network neutrality in the European Union also support this approach. While case-by-case assessment may be a workable solution for zero rating, it is not unproblematic. Allocating scarce regulatory resources and selecting the forum in which the analysis takes place is not straightforward. Given the dearth of academic literature on the topic, here are four questions to help regulators assess the economic merits of specific zero rated offers and to prioritize whether a given zero-rated offer warrants scrutiny.

1. What perfect or very close substitutes would the zero rating offer foreclose?
2. Is the zero-rated offer intended to increase the number of individuals using the Internet?
3. Which party makes the zero rating complaint?
4. Is free data being used to lower consumers’ search costs, thereby boosting competition?

[Roslyn Layton is a PhD Fellow at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark. Bronwyn Howell is a faculty member at the School of Management, Victoria University of Wellington, New Zealand.]

[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]

[Commentary] Recently, all five Commissioners of the Federal Communications Commission yet again found themselves facing tough questions in a Senate oversight hearing which highlighted the partisan nature of policymaking at the FCC.

The hearing highlighted the continuing soap opera regarding whether or not FCC Chairman Tom Wheeler will step down (as is customary when a new president takes office), and whether Commissioner Jessica Rosenworcel will be re-confirmed (a quid pro quo promised to get Republican Commissioner Mike O’Rielly on board). The political reality of the commissioner appointment process is at odds with the very premise of an expert, independent agency. It demonstrates that the so-called independent expert agency is subject to the same jockeying and gerrymandering as politics itself. Given the political nature of the FCC’s leadership, it may come as little surprise that the agency has difficulty accomplishing even the most basic function of telecom regulation: collecting information.

The FCC’s disregard for information requests also extends to the public. Two years ago, the Washington Post reported that in the run-up to the September 15th deadline for comments in the open internet rulemaking process, “grass-roots activists and staffers inside the FCC worked together, hour-by-hour” in an “unusual collaboration” to keep the FCC’s information technology systems running.

[Roslyn Layton is a PhD Fellow at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark.]

[Commentary] The Federal Communications Commission (FCC) is the embodiment of the Progressive and New Deal era ideals from which it was born. Under Tom Wheeler’s leadership, it has consistently championed progressive policies supported and advanced by progressive advocates and interests. At each turn, the commission wastes no opportunity to congratulate itself for the good work that it is doing on behalf of the American public — on behalf of the entire American public, including those most in need of assistance from the government. It is surprising, then, that many of the commission’s flagship policy efforts are, in fact, regressive, benefiting those who already have ample access to telecommunications and media resources at the expense of those lacking such access. Cases in point: set-top boxes, network neutrality, and broadband privacy.

[Hurwitz is an assistant professor at the University of Nebraska College of Law]

[Commentary] For the past two years, internet policy types have debated the wisdom of reclassification — the decision by the Federal Communications Commission (FCC) to saddle broadband providers with arcane statutory common carriage restrictions originally developed to discipline 19th century railroads. Just when we thought we had covered every possible angle of that debate, the Ninth Circuit Court of Appeals added a new wrinkle.

In FTC v. AT&T Mobility, the court broadly exempted common carriers from a key antitrust law designed to promote fair competition. The ruling could have far-reaching implications for the future of internet regulation. A status-based common carrier exemption made sense in the early 1900s, when Congress relied on other mechanisms such as tariffs to discipline common carrier monopolies. It is more problematic today, where competitive markets require antitrust oversight to police against abuses. The FCC may aggrandize power to itself to fill the gap, but as it has shown in the privacy proceeding, it does not always view issues through a competition law perspective. Overall, the Ninth Circuit has shown yet another unintended consequence of the FCC’s hasty decision to resurrect common carriage as a vehicle for its paid prioritization ban — and I fear this will not be the last.
[Lyons is an associate professor at Boston College Law School]

[Commentary] RIP, America’s robust video market. Federal Communications Commission Chairman Tom Wheeler has a plan for you and he doesn’t intend to let you refuse it. The week of Sept 5 the FCC released a fact sheet on Chairman Wheeler’s new plan to rid the world’s most vibrant video marketplace of set-top boxes, those devices that almost all cable TV customers choose to lease each month. His plan? Force creation of an app and a standard app license that would take over the video marketplace. What could be more innovative than government-directed software and business contracts?

Apps may be the future of video entertainment, but that does not mean that government should be making this choice. Often, economic regulation pits regulators against customers in determining industry direction. Only one will win: Either the customers will determine the future by deciding which products and services are worth buying, or the regulator will drive the future by coercing the industry into ignoring market signals. Given the unprecedented value customers have enjoyed from US tech and video markets, let’s hope the Wheeler-app doesn’t happen.

[Mark Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida]

[Commentary] On Aug 30, the Body of European Regulators for Electronic Communication (BEREC) released their network neutrality guidelines. To recap, the European Union's net neutrality rules came into effect April 30; BEREC’s task has been to create the guidelines for implementing these rules. While BEREC’s chairman promised that their work would stay faithful to the law, the end result indicates something different. What’s in the new updated guidelines? Here are three key takeaways:

1. Content application providers have the same rights as as human users.
2. Traffic management remains murky and complex.
3. National regulatory authorities have many new obligations.

What happens next? Most likely, litigation.

[Roslyn Layton is a PhD Fellow at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark]

[Commentary] Much of the Federal Communications Commission municipal broadband order focused on the benefits of municipal broadband as a policy matter. The agency stressed the value of facilities-based competition and the effects of municipal entry on prices and service levels of incumbent private broadband providers. But legally, this was little more than smoke and mirrors. The key question before the court was not whether municipal broadband was good policy. Rather, the key question was who should decide whether municipal broadband is good policy and what restrictions, if any, should be placed upon municipal broadband providers. More specifically, the case represented a classic power struggle between the FCC and the states. Can a federal agency in Washington tell the sovereign states what they can and cannot do with regard to the cities they operate?

Unfortunately for the FCC, the contours of its authority to preempt state law were settled long ago. The broader lesson to be learned is that agencies should pay more than mere lip service to the legal restrictions on their authority. It is not enough to be right on policy; there are (and should be) limits on the ability of agencies to finesse the law to achieve narrow policy objectives. These legal restrictions often indicate broader, more fundamental principles at stake than the outcome of a particular policy dispute — in this case, state sovereignty. It seems an important lesson to remember as the telecommunications community struggles with the effects of reclassifying broadband as a public utility in order to secure a per se ban on paid prioritization.

[Lyons is an associate professor at Boston College Law School]

[Commentary] On July 21, yet another interest group weighed in on the network neutrality debate: academics. In a letter organized by Stanford’s Barbara van Schewick, the 126 signatories, described by van Schewick as “leading” academics, claimed that the European Union net neutrality law, unless amended through guidelines from the Body of European Regulators for Electronic Communication (BEREC), will frustrate academics’ “ability to research, collaborate, and educate.” Given the seriousness of this assertion, TechPolicyDaily.com investigated the substance behind the claims.

Of all the inconsistencies this letter represents, the most important is these academics’ failure to support policy with research and academic evidence. It appears that in a clicktivist world, it is enough for academics to lend their name and university affiliation to an effort without having to deliver any substance. Moreover, policymakers appear to believe that an academic stamp of approval — any name, as long as it is attached to an academic title — is sufficient representation for the entire community. Such practices are a disservice to universities, bona fide academics, and anyone who expects telecom regulators to make decisions based on substantive evidence.

[Roslyn Layton is a PhD Fellow at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark.]