issue: Telecom

The Daily Caller: Who Pays For Net Neutrality?

Posted on by The Progressive Policy Institute

A new report by PPI Senior Fellow Hal Singer and Brookings Nonresident Senior Fellow Robert Litan, Outdated Regulations Will Make Consumers Pay More for Broadband, was covered in a story by The Daily Caller:

“Outdated Regulations will Make Consumers Pay More for Broadband” — a recent study by Robert Litan and Hal Singer of the Progressive Policy Institute entitled — quantifies the extra taxes and fees that apply to Title II utility telecommunications service, but not Internet service. The study conservatively estimates that new Title II utility regulations would increase broadband taxes and fees $17 billion or roughly $85 per American household per year.

Read the article in its entirety at The Daily Caller.

Outdated Regulations Will Make Consumers Pay More for Broadband

Posted on by The Progressive Policy Institute

Self-styled consumer advocates are pressuring federal regulators to “reclassify” access to the Internet as a public utility. If they get their way, U.S. consumers will have to dig deeper into their pockets to pay for both residential fixed and wireless broadband services.

How deep? We have calculated that the average annual increase in state and local fees levied on U.S. wireline and wireless broadband subscribers will be $67 and $72, respectively. And the annual increase in federal fees per household will be roughly $17. When you add it all up, reclassification could add a whopping $15 billion in new user fees on top of the planned $1.5 billion extra to fund the E-Rate program. The higher fees would come on top of the adverse impact on consumers of less investment and slower innovation that would result from reclassification.

How did we reach this precipice? In early November, FCC Chairman Tom Wheeler floated a “hybrid” compromise that would have deemed Internet service providers (ISPs)—telcos and cable companies—as public utilities under Title II of the Communications Act of 1934 for purposes of their dealings with websites, such as Netflix. But when it came to the rates and download speeds offered to broadband customers, ISPs would continue to be subject to “light touch” regulation under Section 706 of the Telecommunications Act of 1996, which directs the Commission to promote broadband deployment. This would allow them to give their customers choices: those who were willing to pay more for higher speeds could. Think of it as being willing to pay more to take the faster Acela train as opposed to the regular Amtrak line.

Download “2014.12-Litan-Singer_Outdated-Regulations-Will-Make-Consumers-Pay-More-for-Broadband/”

The Washington Post: Strong net neutrality rules could cost you $84 a year or more in new fees

Posted on by The Progressive Policy Institute

A new report by PPI Senior Fellow Hal Singer and Brookings Nonresident Senior Fellow Robert Litan, Outdated Regulations Will Make Consumers Pay More for Broadband, was covered in a story by The Washington Post:

In a paper published by the Progressive Policy Institute, Singer and Litan argue that these and other charges stemming from various state and local rules could add $84 or more to a U.S. household’s yearly Internet bill…

The study is the latest effort by opponents of strong net neutrality rules to describe the potential economic fallout of regulating ISPs under Title II. Last month, telecom lobbyists argued to the FCC that aggressive regulation would slow down the pace of industry investment in network upgrades, to the tune of $45 billion over the next five years.

Read the article in its entirety at The Washington Post.

Multichannel News: Consumer Bills Could Soar Under Title II

Posted on by The Progressive Policy Institute

A new report by PPI Senior Fellow Hal Singer and Brookings Nonresident Senior Fellow Robert Litan, Outdated Regulations Will Make Consumers Pay More for Broadband, was covered in a story by Multichannel News:

Consumers’ broadband bills could go up close to $90 a year if the FCC reclassifies Internet access service under Title II common carrier regs, according to an analysis by the Hal Singer of the Progressive Policy Institute and Robert Litan of Brookings.

According to a paper being released today (Dec. 1), the average increase in state and local fees on wireline, and potentially wireless, broadband, would be $67 and $72 annually, plus an added $17 per year in federal fees.

Added together, they argue that reclassification could add up to $17 billion new fees on top of the $1.5 billion the FCC is planning to add to the E-rate Universal Service Fund to promote higher-speed broadband connections to schools and libraries.

Read the article in its entirety at Multichannel News.

Consumers’ broadband bills could go up close to $90 a year if the FCC reclassifies Internet access service under Title II common carrier regs, according to an analysis by the *Hal Singer of the Progressive Policy Institute and **Robert Litan of Brookings.

 

According to a paper being released today (Dec. 1), the average increase in state and local fees on wireline, and potentially wireless, broadband, would be $67 and $72 annually, plus an added $17 per year in federal fees.

 

Added together, they argue that reclassification could add up to $17 billion new fees on top of the $1.5 billion the FCC is planning to add to the E-rate Universal Service Fund to promote higher-speed broadband connections to schools and libraries.

– See more at: https://www.multichannel.com/news/policy/analysis-consumer-bills-could-soar-under-title-ii/385929#sthash.ej78Tuxq.dpuf

Consumers’ broadband bills could go up close to $90 a year if the FCC reclassifies Internet access service under Title II common carrier regs, according to an analysis by the *Hal Singer of the Progressive Policy Institute and **Robert Litan of Brookings.

 

According to a paper being released today (Dec. 1), the average increase in state and local fees on wireline, and potentially wireless, broadband, would be $67 and $72 annually, plus an added $17 per year in federal fees.

 

Added together, they argue that reclassification could add up to $17 billion new fees on top of the $1.5 billion the FCC is planning to add to the E-rate Universal Service Fund to promote higher-speed broadband connections to schools and libraries.

– See more at: https://www.multichannel.com/news/policy/analysis-consumer-bills-could-soar-under-title-ii/385929#sthash.ej78Tuxq.dpuf

Consumers’ broadband bills could go up close to $90 a year if the FCC reclassifies Internet access service under Title II common carrier regs, according to an analysis by the *Hal Singer of the Progressive Policy Institute and **Robert Litan of Brookings.

 

According to a paper being released today (Dec. 1), the average increase in state and local fees on wireline, and potentially wireless, broadband, would be $67 and $72 annually, plus an added $17 per year in federal fees.

 

Added together, they argue that reclassification could add up to $17 billion new fees on top of the $1.5 billion the FCC is planning to add to the E-rate Universal Service Fund to promote higher-speed broadband connections to schools and libraries.

– See more at: https://www.multichannel.com/news/policy/analysis-consumer-bills-could-soar-under-title-ii/385929#sthash.ej78Tuxq.dpuf

Politico: STUDY SAYS TITLE II WILL COST BILLIONS IN NEW STATE AND LOCAL FEES

Posted on by The Progressive Policy Institute

A new report by PPI Senior Fellow Hal Singer and Brookings Nonresident Senior Fellow Robert Litan, Outdated Regulations Will Make Consumers Pay More for Broadband, was covered in a story by Politico:

Tech companies, public interest advocates and now even President Barack Obama have made the push for reclassifying Internet services as a way to achieve net neutrality. A new paper out today from the Progressive Policy Institute’s Hal Singer and Robert Litan argues such reclassification will ultimately pass billions in costs to consumers. They calculate that reclass that under Title II could make ISPs subject to both federal and state fees that apply to those services — and result in $15 billion in new state and local fees annually. (They go state-by-state and apply local tax rates to average wireline and wireless bills to make their calculations.) They also estimate a $2 billion increase in federal USF fees, using a more complicated formula. The paper will be live here, at 10 a.m.: https://bit.ly/12hkNUJ

Read the article in its entirety at Politico.

The Hill: $17B tax hike from Obama Web rules

Posted on by The Progressive Policy Institute

A new report by PPI Senior Fellow Hal Singer and Brookings Nonresident Senior Fellow Robert Litan, Outdated Regulations Will Make Consumers Pay More for Broadband, was covered in a story by The Hill:

If Obama’s plan is put into place, “U.S. consumers will have to dig deeper into their pockets to pay for both residential fixed and wireless broadband services,” wrote the authors of a new Progressive Policy Institute study.

“The higher fees would come on top of the adverse impact on consumers of less investment and slower innovation that would result from reclassification,” they added.

Read the article in its entirety at The Hill.

Europe should focus on spurring European tech growth

Posted on by The Progressive Policy Institute

The European Parliament is expected to vote on Thursday on whether Google should be required to spin off its search engine. But that vote — and any subsequent legal action by the European Commission against Google — misses the real questions: Why isn’t Europe able to produce the sort of leading-edge tech companies which seem to routinely come out of the United States, and now, Asia? Where is the European Amazon, Twitter, Samsung or even Alibaba, the Chinese e-commerce company that recently had the biggest global initial public offering ever?

Rather than going after American companies, the European Commission and Parliament should focus on policy changes that would spur European technology growth. In particular, Europe would benefit from boosting spending on research and development; improving the climate for entrepreneurship; and encouraging consumers and businesses to use more data.

Let’s start with research and development spending, which provides essential long-term support for innovative companies. In 2012, Europe spent about 2 percent of gross domestic product (GPD) on research and development. Meanwhile, the United States spent almost 3 percent of GDP on research and development, an enormous gap that has persisted for years. European leaders, aware of the gap, have set a goal of reaching the 3 percent level by 2020. So far, though, there’s been little or no movement in that direction.

Or take support for entrepreneurship. The latest Global Entrepreneurship Index, just released this month, pegs the United States as the top country for entrepreneurship, based on such factors as cultural attitude and availability of risk capital. As the authors of the report note, “the U.S. not only remains the most entrepreneurial country in the world, it also is increasing its lead.” The U.S. has an index score of 85. By contrast, the countries in the European Union have an average index score of 60.1 (weighted by country gross domestic product), and a median index score of 54.5. Some major European countries, such as Italy, make business startups exceedingly difficult. Anything that can be done to make entrepreneurship easier, including relaxing a difficult regulatory environment in some countries, would increase the odds of producing a major tech startup.

Finally, Europe is way behind in the amount of data used per person. Based on a study by Cisco, the Progressive Policy Institute has calculated that European countries such as France and Germany use 22.6 and 18.9 gigabytes of data per person per month, respectively. Meanwhile the United States uses 58.3 gigabytes of data per person per month, triple that of Germany. Just look at data used by business, the differential narrows but is still enormous in relative terms. U.S. businesses use 8.5 gigabytes per capita per month, compared to 4.5 in Germany and 3.7 in France.

Why does data use matter? For Internet companies, data use is a good proxy measure for the size of the potential market. If you want to grow a profitable tech company, it’s easier to do so in the United States, where data consumption is higher. That suggests that if Europe’s leaders want to create the conditions for homegrown tech giants, they should encourage European consumers and businesses to use more data.

It’s easy for politicians to say that they want innovation and growth, and hard for them to take the steps necessary to foster such growth. Taking on Google is an easy shot for the European Parliament, without tackling Europe’s underlying issues.

Read the op-ed on The Hill.

The Hill: Title II is wrong way to keep an open Internet

Posted on by The Progressive Policy Institute

The Progressive Policy Institute was cited in an article in The Hill advising against President Obama’s recent endorsement of Title II reclassification in the net neutrality debate.

According to the Progressive Policy Institute, broadband providers spent “roughly $46 billion in broadband investment in 2013.” To continue promoting this type of private sector investment we must not over-regulate innovative broadband providers using antiquated policies that may end up being litigated for years and diminish the certainty of being able to bring high-speed, advanced broadband networks to all Americans.

Read the full piece at the Hill.

Outdated cable box rule harms the data-driven economy

Posted on by The Progressive Policy Institute

Innovating in the digital age requires flexible rules that keep pace with the latest technology. This is especially true in the video services market, where change has been fast and furious. That’s why Congress should act to repeal an expensive and innovation-restricting requirement on the design of set-top cable boxes — without limiting the choice of retail devices that consumers enjoy today.

Currently, the Federal Communications Commission (FCC) mandates that each cable box — the electronic device in your home that links your TV with your cable provider — use a particular type of technology known as a “CableCARD.” This is a credit card-sized security device that enables the box to access the channels and other services to which you subscribe. The FCC’s rule, formally known as the “integration ban,” requires that these security functions cannot be hard-wired or otherwise integrated within boxes leased to consumers by their cable company.

The CableCARD requirement is a good example of how not to regulate in the dynamic data-driven economy, a topic on which the Progressive Policy Institute (PPI) has written extensively. In this case, the intention behind requiring CableCARDs was to foster a retail marketplace for set-top boxes, similar to telephones. Customers who decided to buy cable boxes instead of leasing them could use the box across different cable providers by obtaining a CableCARD from their provider to access its services. To ensure that cable operators would support CableCARDs, the FCC also required operators to include the cards in their leased set-top boxes.

Continue reading at The Hill.

The Washington Post: Obama’s plan to regulate the Internet would do more harm than good

Posted on by The Progressive Policy Institute

President Obama’s call this week to regulate the Internet as a public utility is like pushing to replace the engine of a car that runs perfectly well. The U.S. data sector — including wired and wireless broadband — is the envy of the world, administering a powerful boost to consumer welfare, generating high-paying jobs and encouraging tens of billions of dollars in corporate investment. Indeed, the prices of data-related goods and services have dropped by almost 20 percent since 2007.

Putting the Federal Communications Commission in charge of regulating broadband rates and micromanaging Web services, as the president proposes, would slow innovation and raise costs. It would be bad news for the economy. It would also be a serious misstep for the Democratic Party, marking a retreat from market-based, pro-competition policies pioneered by President Bill Clinton in the 1990s.

The issue here is how best to ensure an open Internet, in which big and small companies alike have unfettered access to customers. After the courts threw out the old open Internet rules in January, virtually all concerned parties agreed the United States needed strong regulations to prevent blocking or discrimination online, to require real transparency for network-management policies by Internet service providers and to ban paid prioritization that could divide the Internet into fast-lane “haves” and slow-lane “have-nots.”

Continue reading at the Washington Post.

The Rise of the Data-driven Consumer

Posted on by The Progressive Policy Institute

PPI is strongly committed to the success of the data-driven economy.  The beneficiaries of the data-driven economy includes Americans as consumers, workers and citizens. Participants in the data-driven economy includes edge providers,  internet service providers,  and in the future, entities such  as healthcare networks and internet-enabled state and local governments.  We acknowledge that strong differences of opinion exist about the right way to achieve the success of the data-driven economy—notably the debate over Title II regulation of broadband. However, we believe that we all share a vision of how the data-driven economy can benefit Americans.

In that spirit, we share here some of the results from our soon-to-be released paper on data and consumer welfare gains since the recession, by Michael Mandel and Diana Carew.  We analyzed how Americans are consuming data-related goods and services, including everything from cable, wireless, and internet service to computers, software and content.

Here are the main results of our analysis:

  •  The prices of data-related goods and services have dropped by almost 20 percent since 2007.
  •  Real consumption of data-related goods and services per person has risen by 48 percent since 2007.
  • Real consumption per person of all other goods and services—from healthcare to housing to autos to food—is only up 0.9 percent since 2007.
  • As a result, the data sector has been the main force driving average gains in consumer welfare since 2007.  By our estimate, data-related goods and services account for roughly 70 percent of the gain in average consumer welfare over that stretch. *
  • Stunningly, real personal consumption per capita of all goods and services outside of data, healthcare, and housing actually fell by 3.0 percent since 2007. Real consumption per capita has fallen for motor vehicles and parts; furniture; food; jewelry; and even financial services.
  • From this perspective, the recent election was a referendum on what many Americans already know – in the non-data sector, stagnant real wages have failed to keep up with inflation.

Our results show we are truly in a “data-driven economy” – data-related goods and services  are driving post-recession gains in consumer welfare. Outside of health and housing, non-data-related goods and services are simply not part of the story.

Without the success of the data sector, American consumers would be far worse off than they are today.  Whatever we do about regulating the Internet must take into account that it’s the most vibrant sector of the economy.

*In the forthcoming paper, we define average consumer welfare as real personal consumption expenditures per capita. By this measure, average consumer welfare has  risen by 3.1% since the third quarter of 2007.  Of that gain, 0.9%, or roughly 30%,  comes from non-data-related goods and services.  The rest, or 70%,  comes from data-related goods and services.

 

 

NYT: Net Neutrality Debate: Internet Access and Costs Are Top Issues

Posted on by The Progressive Policy Institute

A policy report by PPI Senior Fellow Hal Singer and Brookings Non-resident Fellow Bob Litan was cited in a New York Times article suggesting that the regulation of broadband Internet with restraint can be achieved through lighter means that does not put at risk other crucial objectives — like broadening access to the Internet and tackling the nation’s very real digital divide.

A report published this year by Robert Litan of the Brookings Institution and Hal Singer of the Progressive Policy Institute recommends “pick the policy that maximizes total investment across the entire Internet ecosystem.”

Read the entire article at The New York Times.

NYT: Obama’s Call for Net Neutrality Sets Up Fight Over Rules

Posted on by The Progressive Policy Institute

PPI Chief Economic Strategist was interviewed by the New York Times in a story detailing President Obama’s recent endorsement of Title II regulation of broadband Internet and the implications of that endorsement.

But critics of the proposal say regulating Internet service like a utility, without subjecting it to the same aggressive oversight of industries like electricity or water, will be a tough balancing act for the commission.

“Forbearance is a fig leaf here, especially when it comes to big issues like rate regulation,” said Michael Mandel, chief economic strategist at the Progressive Policy Institute, which dislikes the prospect of treating broadband like a utility. “The F.C.C. can forbear easily from day-to-day rate decisions. But I don’t see how they can stay out of that when there are big innovative leaps.”

Mr. Mandel pointed to the introduction of the iPhone as an example. When that device was released, AT&T needed to develop a new type of data service package to charge consumers who wanted to use the iPhone’s ability to connect to the Internet.

Read the entire article at The New York Times.

Regulating the Open Internet: A Letter to Pro-growth Progressives

Posted on by The Progressive Policy Institute

To Whom It May Concern:

As Democrats who care about the dual priorities of protecting broadband consumers and stimulating broadband investment, we are gravely concerned about President Obama’s endorsement today of monopoly-era, common carrier regulations (called “Title II”) for broadband providers. The president’s proposal does not balance these goals, nor move us towards compromise on other, arguably more critical, communications issues.

First, Title II is not necessary to protect consumers from the hypothetical threat of discrimination by broadband providers against edge providers. In Verizon v. FCC, the D.C. Circuit made clear that the Federal Communications Commission (FCC) could regulate pay-for-priority deals—and even reverse them after the fact—under Section 706 of the 1996 Act.

Second, Title II itself isn’t guaranteed to stop pay-for-priority by broadband service providers. Title II would merely require that the terms of any pay-for-priority deal be extended to all comers. The monopoly-era cases of generations ago in which the FCC used Title II to proscribe “inherently unjust” conduct have nothing to do with a competitive broadband provider offering paid priority. Thus, the prospect that Title II could be used to bar pay-for-priority deals is very small.

Third, the more likely rationale for imposing Title II is to pursue an aggressive regulatory agenda unrelated to net neutrality, in particular, “unbundling,” the policy that requires companies that make investments in broadband infrastructure to share them with competitors at government-set prices. But when this policy was ended in the decade following the bi-partisan 1996 Act, an explosion of investment by telcos and cable companies in broadband infrastructure resulted, which allowed the U.S. to catch up to the rest of the world. Both the Clinton and Bush Administrations supported this consensus. Moving backwards to a forced-sharing regime would likely chill broadband investment, along with its job-creation and impact on growth, and preserve the “digital divide.”

Fourth, the net neutrality saga has diverted the FCC’s resources for nearly a decade. By eschewing real compromise made possible by the D.C. Circuit Court, and instead pursuing a radical prescription of Title II, the FCC guarantees itself a drawn-out litigation battle with broadband providers. Other, more critical policies, such as broadband deployment in underserved areas and freeing up spectrum for wireless, will sit on the back burner.

Broadband providers have made clear they would not challenge net neutrality rules based on the FCC’s Section 706 authority, so long as the rules made some effort to accommodate arrangements with edge providers that led to new and improved services. That compromise would be consistent with the desire expressed by the American electorate to find the middle ground and reject extreme intervention in the U.S. economy.

Sincerely,

Ev Ehrlich, PPI Senior Fellow

Michael Mandel, PPI Chief Economic Strategist

Hal Singer, PPI Senior Fellow

A Better Path Forward on Open Internet

Posted on by The Progressive Policy Institute

This morning, President Obama spoke out urging the Federal Communication Commission (FCC) to regulate broadband Internet as as a utility.

In a September policy brief, The Best Path Forward on Net Neutrality, PPI Senior Fellow Hal Singer and Brookings Non-Resident Senior Fellow Robert Litan explained how Title II enforcement in the late 1990s chilled cable/telcom investment. They argue that by relying on its Section 706 authority the FCC can promote greater investment across both edge and content providers compared to Title II. It will also allow the FCC to avoid any unintended consequences, such as creeping regulation, that encompasses content providers or other ISP services.

Download “2014.09-Litan-Singer_The-Best-Path-Forward-on-Net-Neutrality“