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Abstract:
My colleague Barbara Esbin and I address a petition filed by the Rural Cellular Association (RCA) asking the FCC to prohibit exclusive arrangements between wireless handset producers and carriers. The RCA petition claims that large wireless companies have an unfair market advantage by giving their customers exclusive access to certain advanced smart phones, such as the Apple/AT&T iPhone - and that this anticompetitive practice is harmful to rural consumers served by RCA members.

We debunk RCA's arguments premised on a supposed lack of competition in wireless markets. We also explain the virtues - or at least, the practical necessity - of exclusivity: such arrangements ultimately benefit all consumers by allowing handset manufacturers (i) to fund expensive development efforts for new mobile products through revenue-sharing and (ii) to develop truly innovative devices by ensuring that new services function properly on the provider's network.

FCC, iphone, communications, exclusive, progress and freedom foundation, handset, wireless, internet, apple, at&t, smart phone

Abstract:
U.S. regulators would be ill-advised to abandon current de-regulatory policies encouraging facilities-based competition in communications markets and return to models developed for monopoly service markets. Functional separation should be viewed as an extraordinary remedy for persisting competitive problems and is inappropriate for effectively competitive markets.

There have been recent discussions in Europe over the use of functional separation of wireline access networks to cure persistent problems involving access network discrimination by vertically integrated dominant providers.

Yet the regulatory environment in markets that have implemented separation should be noted to stand in contrast with the deregulation in the U.S. communications market, where policymakers have abandoned prior structural and non-structural Computer Inquiry safeguards. Continuation of Computer Inquiry mandates developed for narrowband, single-purpose networks was found to be inappropriate and unnecessary for today's converged broadband networks. Moreover, the Federal Communications Commission concluded there was sufficient "actual and expected competition" to justify changing the regulatory regime.

With Telecom Italia's recently announced "operational separation" of its wholesale access services and retail units, the "voluntary" corporate restructuring, developed with the approval of Italy's communications regulatory body, AGCOM, is best viewed as a solution solely for the Italian communications market which is lacking a widely deployed competitive provider. The restructuring is meant to ease concerns particular to the Italian marketplace and can not necessarily be considered an ideal model for regulation in other markets.

In the U.S., reversion to a functional separation regulatory model would require a sudden and extreme policy reversal that would render the telecommunications sector wholly unattractive to investors. Instead, policy makers should focus on the dual challenges of bringing broadband deployment to areas presently unserved by any provider and preserving and expanding existing levels of competition by removing remaining disincentives to investment and making more spectrum available to wireless providers.

Telecom Italia, telecommunications, broadband, cable, operational separation,open access,wholesale access,broadband competition,Comcast,access network,broadband regulation,FCC,wireless,british telecom,spectrum,ex ante,AGCOM,wireline,antitrust,Verizon,AT&T,FIOS,U-verse,carrier incumbents,telcos

Abstract:
Professor Eli Noam has written a thoughtful piece for the Financial Times entitled "Separating telecoms?" about the "spectre" of forced separation of network infrastructure management from service provisioning that is haunting European incumbent telecommunications companies.

Noam suggests that European regulators seek "negotiated compacts," rather than address the discrimination problem (indirectly) through the imposition of various degrees of functional, structural or full separation (divestiture) of the operations of telecommunications companies or (directly) through additional regulation or legislation.

In contrast, a recent publication by Free Press, entitled "Dismantling Digital Deregulation: Towards a National Broadband Strategy," cites deregulation as the "root of America's broadband decline." Free Press essentially calls for the reversal of nearly every de-regulatory decision made by the FCC since 1996 and the imposition or re-imposition of pervasive telecommunications regulation, without regard for the costs of such a radical reversal of policy.

Professor Noam's suggestions about how to strike a grand regulatory compromise on structural separations deserve serious study and consideration by America's regulators. They may also provide a template for discussion about how to resolve the highly polarized and seemingly never-ending debate over whether we need to impose common carrier or net neutrality mandates on broadband Internet access service providers.

Noam,Free Press,Separating Telecoms,Dismantling Digital Deregulation,telecommunications,broadband,cable,operational separation,open access,wholesale access,broadband competition,Comcast,access network,broadband regulation,FCC,negotiated compacts,social compacts,antitrust,carrier incumbents,telcos

Abstract:
The United States moved closer to Net Neutrality regulation this year when the Federal Communications Commission found that Comcast, a cable broadband Internet service provider, violated a set of Internet policy principles the FCC adopted in 2005 by limiting peer-to-peer (P2P) traffic. The ruling was the culmination of a ten-year effort that began as a call for wholesale open access to the cable platform for third-party Internet service providers.

I have written elsewhere on legal and procedural flaws that may doom the Network Management Order (See, e.g., Barbara Esbin, The Law is Whatever the Nobles Do: Undue Process at the FCC, http://www.pff.org/issues-pubs/pops/2008/pop15.12undueprocess.pdf). [1] In summary: (1) the FCC has not been granted explicit authority to regulate the provision of broadband information services; (2) the ancillary jurisdiction on which the FCC relied was not reasonably related to its other statutorily mandated responsibilities; (3) having failed to adopt enforceable rules concerning broadband network management, the FCC could not lawfully subject Comcast to an adjudication concerning its practices; and (4) the Complaint filed against Comcast was defective in several respects and should have been dismissed.

The Network Management Order has been appealed by Comcast and several advocacy groups. Comcast challenges the basis on which the FCC found that it had violated federal policy in the absence of pre-existing legally enforceable rules. The advocacy groups appealed the FCC's failure to order Comcast to immediately cease and desist interfering with P2P traffic. The appeals have been consolidated and will be heard by the D.C. Circuit Court of Appeals, a court that has shown little patience for the FCC’s unusual procedures and the FCC's use of the doctrine of ancillary jurisdiction to expand its reach. Meanwhile, several network operators have announced bandwidth caps or plans to implement them.

FCC,broadband regulation,comcast,comcast ruling,network neutrality,net neutrality,adjudicate,formal complaint,peer-to-peer,Internet Policy Statement,rulemaking,adjudication,McDowell,Chairman Martin,Network Management,cable,internet,telecommunications,broadband policy,common carrier,NCTA,open access

Abstract:
There appear to be serious flaws in the legal and procedural actions taken by the Federal Communications Commission when it found Comcast guilty of violating the principles announced in its 2005 Internet Policy Statement.

Particularly questionable is the Commission's decision to combine adjudication, or enforcement actions directed at specific past behaviors, and rulemaking, or prospective rules generally applicable across an industry, in the same procedure.

Among other failings, the FCC has never released a notice of proposed rulemaking that either publicly outlined the rules to be applied to Comcast's broadband network management practices or the procedural vehicle the FCC would use to handle violations of such rules. It appears that the Commission also failed to provide Comcast with adequate process in which to address complaints, by relying on statements made in unrelated proceedings for notice and by claiming the two public hearings the company was invited to speak at satisfied due process opportunity to be heard requirements.

The Commission also lacked established procedures for addressing Formal Complaints against a non-common carrier. It appears to have both created a new set of such procedures at the same time it applied them to Comcast, and established a new framework for [handling] similar complaints in the future.

Now that the FCC has asserted its authority to regulate Internet provider broadband network management practices, the question arises, 'who will regulate the regulator?' This is not an idle inquiry, but rather an urgent problem.

Whether one believes that government-mandated norms of behavior for 'bandwidth providers' are good or bad policy, the only acceptable means by which government may impose such mandates is through scrupulous compliance with its own procedures.

FCC,undue process,Kafka,broadband regulation,comcast,comcast ruling,network neutrality,net neutrality,adjudicate,formal complaint,peer-to-peer,Internet Policy Statement,rulemaking,adjudication,McDowell,Chairman Martin,Network Management,cable,internet,telecommunications,broadband policy,bandwidth

Abstract:
The Federal Communications Commission is justified in claiming jurisdiction over early termination fees for wireless phone service.

The question of whether ETFs can be classified under the Federal Communications Act as rates charged or terms and conditions may not be solely determinative of FCC jurisdiction, as federal regulation also extends to carrier practices and regulations in connection with interstate communications services.

The assertion of federal jurisdiction over such fees would avoid a patchwork of potentially inconsistent and unnecessary regulation that could deter investment and innovation in wireless communications services and would have little benefit for consumers.

Policymakers should avoid action that would prohibit ETFs as an option in wireless phone contracts due to prevalent competition in the market and consumer preference for these alternative pricing plans. Instead, federal policymakers should continue the established light touch regulatory regime already imposed on the industry.

Issues concerning the reasonableness of wireless service contract ETFs and the manner in which they are assessed and imposed should be determined by the FCC, with input from all interested parties, including the state public utilities commissions and consumer advocates.

ETFs, ETF, early termination fees, wireless, wireline, broadband, FCC, wireless carriers, state regulation, term contracts, Early termination, telecommunications, wireless industry, NARUC, wireless contracts

Abstract:
Conclusions in the 2006 annual video competition report released by the Federal Communications Commission undercut the rationale for additional regulation of cable providers. Although the data used in the report is 30 months out-of-date, it illustrates a steady trend of increasing competition among video service providers and increasing sources of diverse information and video programming.

The most important finding of the recently released Thirteenth Annual Video Competition Report is the continuation of trends discussed in previous reports: cable competition is growing, consumer choice of diverse sources of video programming and information is increasing and cable operators are offering an ever-increasing array of video and non-video services.

These results undermine the arguments for both increased regulation and sustaining the current level of regulation of cable in two ways. First, the report indicates even as of June 2006, cable penetration is unlikely to have surpassed 70% of the market, the threshold in which cable would be open to further regulation. Second, the report reveals that as of that date, the vertical integration of video programming and distribution channels was decreasing, and the video market was successfully providing consumers with a diversity of information sources, including new distribution methods, such as the Internet.

Especially lamentable is the 14 month delay in the release of the report, keeping vital statistics about the video marketplace out of the hands of both Congress and consumers. Had the FCC been up to date with its annual video competition reports, it might have discovered that the answer to [the perceived twin problems of] cable pricing and the inability of consumers to buy programming on a per-channel basis - are already being addressed through technological innovation and market forces without the expenditure of a single "full time equivalent" federal employee man or woman hour.

Competition Report,FCC,Kevin Martin,CMRS,Video Programming,video,cable programming,cable,thirteenth report, 13th report,free market,direct broadcast satellite,DBS,innovation,cable operators,wireline,wireless,digital video,internet video,multichannel,MVPD,video programming,mcdowell,copps,fios

Abstract:
Matthew Lasar asks the $64,000 question on Ars Technica: "Did Congress really give the FCC power to protect the Net?

The jurisdictional question, as Lasar notes, lies at the heart of the viability of the FCC's proposed net neutrality rules. The answer depends on one's view of what regulatory powers Congress bestowed upon the agency in the Communications Act of 1934, as amended: Broadly stated, the FCC was created and given jurisdiction over interstate wire and radio commerce in communication for the purpose of making available "a rapid, efficient, Nationwide, and world-wide wire and radio communication service with adequate facilities at reasonable charges." It is in the understanding of specifically how the FCC was to go about carrying out this broad purpose that reasonable minds disagree.

The FCC has made clear its view that it may regulate the network management practices of broadband Internet service providers under its implied or "ancillary jurisdiction."

But Congress has never given the FCC any authority to regulate the Internet for the purpose of ensuring net neutrality. In place of explicit congressional authority, we expect the FCC will rely on its "ancillary jurisdiction," a position that amounts to "we can regulate the Internet however we like without waiting for Congress to act."

The problem with the doctrine of ancillary jurisdiction is that it is potentially limitless as exercise after exercise takes the FCC further and further away from its core congressionally-delegated regulatory responsibilities. Express delegations of regulatory authority by Congress are important for two reasons: they both give power and limit its exercise in ways agreed upon by our elected representatives through duly-enacted legislation. It is particularly important that unelected government officials stay within the bounds of these delegations. Our individual freedoms as well as our democracy depend on it.

ancillary jurisdiction, jurisdiction,FCC,James Speta, Glen Robinson, Esbin, Lasar, net neutrality,Communications Act, 1934, common carrier, spectrum, wireless, network management, wireless regulation, Comcast P2P order, broadband regulation, undue process, internet regulation, Electronic Freedom Fou

Abstract:
The FCC Procedural Reform for Openness and Clarity Encouraging Sensible Solutions Act (FCC PROCESS Act) is a commendable effort to improve decision making at the Commission, and upon analysis it is evident the proposed reforms would do much in improving both transparency and timeliness in the Commission. However, recent challenges to the Commission's decisions suggest reform is needed at the institutional level.

Two additional reforms that Congress should consider include imposing deadlines on the FCC's ability to hold requests for agency action that require public notice and comment, and addressing the agency's approach to its adjudicatory processes.

Furthermore, a new approach to communications regulation should be considered in order to update and clarify the agency's authority and jurisdiction. At present, the Commission's regulatory authority is structured under separate titles defined by technology, leaving IP-based services subject to vaguely defined ancillary jurisdiction. Reformers should consider a new regulatory approach to better fit the modern communications market. Our domestic regulatory policy debate is continually hobbled by the need to conduct it in the 'terms of the past' rather than in accordance with the reality of the networks and services of today, let alone the needs of tomorrow's network, service and applications developers and providers.

Barton,Joe Barton, FCC reform, FCC procedural reform,Sensible solutions act,FCC Process act,Sunshine Act,APA,administrative procedures act,Tentative Decision,Notices of Proposed Rulemaking,Annual Video Competition Report,Notice of Inquiry,Communications Act,telecommunications,Free Press,Comcast,DACA

Abstract:
The current dispute between the NFL Network and cable operators over carriage arrangements is a sign the market is working rather than failing. Proposed state legislation mandating arbitration for these disputes negates the programming distributor's ability to negotiate price, terms and conditions, and is excessive considering suppliers of video programming already share a good deal of market power to balance that held by the programming distributor. The requirement to carry the programming in dispute at a rate determined by a third party would be a "must-carry" obligation.

The problems that arise with the five arguments offered by the NFL Network to justify proposed state legislation are as follows:

- Programmer carriage choices may not reflect consumer preferences. Simple substitution of cable operator carriage choices with programmer choices is less likely than current framework of market negotiations to protect consumers.

- Mandatory arbitration is government intervention. Despite claims that it is a "process remedy" for failed negotiations, mandatory arbitration where one party alone determines carriage terms and condition is government intervention.

- Current federal remedies are effective to address competitive harms. Program carriage rules administered by the Federal Communications Commission are sufficient to address allegations of discrimination and competitive harm. The recent complaint to the FCC filed by the NFL Network claiming discrimination by a cable operator illustrates there is no need for state intervention.

- Behavior addressed by the proposed state legislation would be preempted by federal regulation. Section 616 of the Communications Act, giving the FCC jurisdiction over program carriage disputes, was enacted to address fears of anticompetitive discrimination by vertically-integrated cable operators.

- "Arbitrate and carry" rules would violate the First Amendment rights of cable operators. The proposed state legislation would impose carriage obligations which are not sufficiently well tailored to serve an important government interest.

carriage disputes, NFL network,vertically intergrated,common carriage,cable operators,independent programmers,commercial arbitration,program carriage deals,digital programming,FCC,must carry,video programming,multichannel video,MVPD,comcast,time warner,video competition,DBS providers,directv,cable

Abstract:
The Federal Communications Commission (FCC) is required by the 1992 Cable Act to produce an "Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming," otherwise known as the "Annual Video Competition Report." These annual reports are eagerly awaited not merely by lawmakers but everyone who monitors developments in the video marketplace.

Twelve installments of the Annual Video Competition Report have been produced since the requirement took effect, but the 13th annual report has inexplicably been stuck in regulatory limbo for almost two years. When the report comes out, it will reflect the state of the video marketplace as of June 30, 2006, which is when the last reporting cycle ended.

It is difficult to avoid speculating that one cause of delay is its failure to provide the critical empirical support for FCC Chairman Kevin Martin's "70/70" plan for expanding the Commission's powers over the cable industry, a plan that was widely discussed in the weeks leading up to the report's adoption last November.

Importantly, however, when the FCC voted on the latest annual report at that November meeting, the agency did released a handful of encouraging findings from the report, albeit without much fanfare. Vertical integration has fallen steadily since the first Annual Video Competition Report was issued. Most new pay TV channels today are independently owned and offer an unprecedented diversity of programming options.

The summary of the upcoming report also mentioned that although cable continues to serve the largest percentage of MVPD subscribers, its market share had fallen to approximately 68.2 percent as of June 2006 and that market share of cable's largest competitor, DBS service, had increased as of June 2006 to 29 percent.

These trends are a strong sign of how healthy and vibrantly competitive this marketplace is today.

FCC,video competition,media marketplace,free market,video competition report,McDowell,cable industry,vertical integration,cable operators,cable networks,video programming,TV programming,Cable Act,video markets,MVPD,DBS,cable competition,

Abstract:
The D.C. Circuit Court of Appeals in Cohen v. U.S. (No. 08-5088) rebuffed an attempt by the IRS to treat as a general statement of policy a Notice by which it both conceded its refund obligation for certain improperly collected telephone excise taxes and established a binding and exclusive refund process, and found instead it had created a legally binding rule.

The D.C. Circuit's reasoning in the Cohen case could be an indication of the fate of the FCC's 2008 Comcast P2P Order, currently in the midst of its briefing cycle before that same court, where the FCC claimed to subsequently enforce its 2005 Internet Policy Statement against Comcast.

The Cohen decision is like a looking-glass version of the FCC's Comcast action - it shows what happens when an agency tries to claim that a prospective binding rule is merely a statement of general policy - in contrast to the FCC acting as if a policy statement is as binding and enforceable as a rule.

Therefore it is probable the FCC will conclude that the legal justifications and course pursued in the Comcast P2P Order are unsustainable and that Congress has not delegated to it broad authority to regulate the Internet or Internet services. The best legal strategy, accordingly, may very well be for the agency to seek such authority from Congress, should it determine that it needs to act in this area - a proposition subject to great debate. As Chairman Genachowski stated, "If we don't [have the tools to enforce violations of the FCC's open Internet principles], we will say so." This is a refreshing departure from the past. Let us hope that the new FCC Chairman will approach this very important task in a less Humpty Dumpty-like fashion than his predecessor.

Humpty Dumpty, Comcast P2P Order, Comcast, Internet Policy Statement, Cohen,Cohen vs. US, Cohen decision, FCC, looking glass, binding rule, policy statement, chairman martin, IRS, telecommunications, broadband, broadband regulation, taxes, excise tax, substantive rule, Genachowski, P2P

Abstract:
Much ink already has been spilled over the September 21st announcement by FCC Chairman Genachowski to circulate a notice of proposed rulemaking expanding and codifying the FCC's four Internet policy principles. The key question is whether the FCC possesses the statutory authority it would require to expand and codify the Internet policy principles? No, at least not for the reasons the agency has advanced to date.

The question of regulatory jurisdiction is not so directly implicated when the FCC propounds broad, but unenforceable, policy principles, as it did with its 2005 Internet Policy Statement. But legally binding "rules of the road," must rest on a convincing factual predicate and must come within the scope of the regulatory powers delegated to the FCC by Congress. And it is the latter that is called into question by the FCC's reliance on the doctrine of "ancillary jurisdiction" in its Comcast P2P Order, currently on review before the D.C. Circuit Court of Appeals, a court not especially hospitable to such claims.

Given the stakes, the Brief is surprisingly tepid in its defense of this exercise of the FCC's ancillary jurisdiction.

The Brief eschews detailed arguments in support of all seven statutory provisions it cited in the Comcast P2P Order, and rests its case almost entirely on section 230(b).

The remainder of the Brief offers only the barest support for the other sources of ancillary jurisdiction discussed in the Comcast P2P Order. In fact, in its opening pages, the Brief attempts to locate support for the ancillary jurisdiction claim on yet an eighth statutory provision, section 543. which was not even cited in the underlying order!

The FCC will find that the Communications Act constrains its ability to do much more than issue broad statements of policy and principle concerning the provision of Internet services.

FCC, genachowski, Internet Policy Statement, Comcast P2P Order,ancillary jurisdiction, comcast, bittorrent, Cohen v. US, Good Samaritan, cable, cable regulation,broadband regulation, cable television, Internet Freedom Preservation Act, Dorgan, Snowe,Communications Act ,internet traffic, internet ser

Abstract:
The Federal Communications Commission appears to be conducting a far-ranging data gathering effort concerning cable prices and analog-to-digital channel movements under the guise of individual complaint enforcement. The FCC's regular processes and procedures appear to have been perverted to achieve ends not within the agency's delegated authority, making it difficult to conceive how consumers will benefit from this diversion of public and private resources.

Four flaws in the FCC's investigation:
(1) the FCC has very limited authority to regulate cable rate levels;
(2) it is local franchising authorities that are statutorily empowered to carry out enforcement activities related to service change notifications;
(3) the FCC has no rules either prohibiting cable operators from migrating cable programming channels from analog to digital or requiring corresponding per-channel rate reductions; and
(4) to the extent the FCC is required by Congress to collect data on the multichannel video programming distributor market and cable pricing generally, the agency is directed to do so by means of its annual video competition and price survey reports. Thus, not only is the digital cable probe being conducted in a manner that calls into question the fundamental fairness of agency processes (with guilt virtually presumed), it seems to be pursuing goals hard to fathom.

The probe is likely to slow progress on ensuring a smooth transition to digital television transmission and encouraging the speedy deployment of ever faster broadband services as enormous resources are diverted to producing and reviewing information relevant mostly to activities that lie outside the scope of the FCC's regulatory jurisdiction.

The public interest would be better served if the FCC would 'stick to its knitting' and faithfully carry out its statutory mission.

Kafka,Undue Process,FCC,telecommunications,cable regulation,broadband regulation,local franchising authorities,LFA,cable programming,MVPD,digital programming,video competition,cable operators,Letters of Inquiry,cable channels,Comcast,NCTA,Paperwork Reduction Act,a la carte,CPST,Furchtgott-Roth