issue: Telecom

Will the FCC Go Nuclear?

Posted on by The Progressive Policy Institute

The D.C. Circuit Court ruled yesterday (PDF) that the Federal Communications Commission (FCC) doesn’t have authority over the Internet. Back in 2007, Comcast was filtering the Internet connections of users who were suspected of using file-sharing programs and eating up a lot more bandwidth than expected. The FCC told Comcast to cut it out, under the concept of net neutrality, which required that all packets of data sent over the Internet be treated equally. Comcast challenged the FCC’s right to do that, and yesterday the court agreed with the Philly-based company.

The FCC had argued that it had the right under the authority given to it by Title I of the Communications Act of 1934, which established the FCC. According to the FCC’s argument, Title I empowered the commission to regulate Internet connectivity as an “ancillary” authority, even though it wasn’t explicitly charged to do so by Congress in the act (which, after all, was passed more than half a century before the World Wide Web was launched). The D.C. Circuit Court said no, Title I does not give the FCC that authority. While the decision can be appealed to the Supreme Court, which could reverse the ruling, even proponents of a strong net neutrality role for the FCC admit the decision is pretty solid.

While the case is technically a “win” for Comcast (their challenge was upheld) some observers say it could turn out to be a Pyrrhic victory. Now the FCC could claim authority to regulate Internet communication under its Title II powers. Regulating the Internet under Title II, which covers “common carriers,” would require Internet service providers (ISPs) to adhere to net neutrality as a common carrier requirement. This means that physical providers of an Internet connection to your house (in other words, traditional phone and cable companies that have evolved into ISPs) would be limited in their ability to manage the information going over their networks — unable to prioritize some data over other data — much as phone companies have no control over whom you talk to over your phone line.

This is apocalyptically referred to as “the nuclear option,” as it would result in a radical change in how telecommunications firms view Internet connectivity. Title II would require them to behave more like utilities. Proponents of this idea say its potential upside would be increased competition in services provided over that connection. Critics, including the ISPs themselves, say the potential downside is that ISPs could lose a big incentive (profit maximization) to invest in our residential broadband connections, which are lagging behind other countries like South Korea.

In its own discussions of a National Broadband Plan, the FCC has avoided the Title I vs Title II debate. However, with this ruling, the appeals court has forced the commission’s hand. The best solution for the FCC could be to go before Congress for clarification of its role in regulating the internet. As our friend Brian Wingfield points out, it’ll be a tech lobbying fight, but the FCC would have a better chance with a Democratic Congress than it’s likely to have in the courts.

The appeals court has ruled that the FCC lacks the authority to regulate Internet, but it may also lack the ability. The communications sector is changing rapidly. Some ISPs are acquiring content creators, and others are providing mobile services only previously seen in Dick Tracy cartoons. The FCC was established to regulate what was then regarded as a “natural” telephone monopoly. What’s needed is either an FCC with a dramatically transformed mandate or — maybe better — a new entity dedicated to protecting the environment for continuous innovation on the Internet.

Making Haiti the World’s First Wireless Country

Posted on by The Progressive Policy Institute

Channeling my inner Rahm: never waste a good crisis. The earthquake in Haiti was, and continues to be, tragic. However, at least one entrepreneur sees an opportunity to rebuild a critical part of Haiti’s infrastructure and probably make a few bucks in the meantime:

John Stanton, founder of Voice Stream and former chief executive of T-Mobile USA, wants the Haitian government to forget about rebuilding its copper wire communications network. Instead, he thinks Haiti should go mobile. … Stanton called for the Haitian government to create an all-wireless nation with more robust networks for the population of nearly 10 million and to build an economy centered on mobile technology.

Should Haiti choose to open up some wireless bandwidth, Stanton claims that he’ll put up $100 million of his company’s money. While the idea has merit, implementation involves a few caveats, one of which comes from PPI-alum Rob Atkinson, now president of the Information Technology & Innovation Foundation. He notes, “This could be a good strategy for as long as 20 years even, but I just don’t see it as an ultimate strategy because at a certain point you need fixed wire for services that require more bandwidth.”

Furthermore, there’s a question about competition — Stanton is angling for the first-mover advantage and trying to seize the initiative where he sees opportunity. But as with any government contract (even Haitian ones after a massive natural disaster), there’s the worry that a single-source supplier will distort the upside while dragging its heels on the outputs.

But on the whole, the idea tracks closely with what Mike Derham and I advocated in a PPI Policy Memo on Haitian reconstruction. We said that Haiti should embrace cell phone technology as a vital tool in facilitating capital flow:

Sub-Saharan Africa has adopted programs like M-PESA to allow people to use their cell phones as checking accounts. The time and effort necessary to establish a similar system in Haiti would be worthwhile. Credit can be transferred to individual phone numbers — including from overseas — and that credit can then be used for purchases from other phone owners who have a similar plan (including prepaid) from their provider. Cell coverage is one of the few institutions that covers all of Haiti. It is also an institution that has worked through the crisis, and that the American military is working to make sure stays running.

Wireless technology should a vital institution in Haiti, and Stanton’s offer should be evaluated seriously with that in mind.

Photo credit: https://www.flickr.com/photos/ifrc/ / CC BY-NC-ND 2.0

Google vs. China

Posted on by The Progressive Policy Institute

If you need a pet story to follow over the next year, Google and China is it. The issues at hand — freedom, human rights, censorship, and the almighty dollar — define, in a microcosm, China’s internal struggle to shape a coherent, enduring image on the world stage. Can China have its cake and eat it too — censorship and repression on one hand, and Western companies that help foster economic growth on the other? The long-term fallout from this story could set precedent for decades to come.

Here’s a quick recap: Google, whose slogan is “Don’t Be Evil”,  January revealed that it — along with 22 other companies– was the victim of a cyberattack sponsored by Beijing. As part of China’s intrusion, the Google email accounts of prominent human rights activists were hacked. Here was the company’s conclusion at the time, from Google’s blog:

These attacks and the surveillance they have uncovered — combined with the attempts over the past year to further limit free speech on the web — have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

After some additional research, the hammer just dropped yesterday:

We also made clear that these attacks and the surveillance they uncovered — combined with attempts over the last year to further limit free speech on the web in China including the persistent blocking of websites such as Facebook, Twitter, YouTube, Google Docs and Blogger — had led us to conclude that we could no longer continue censoring our results on Google.cn.

So earlier today we stopped censoring our search services — Google Search, Google News, and Google Images — on Google.cn. Users visiting Google.cn are now being redirected to Google.com.hk, where we are offering uncensored search in simplified Chinese, specifically designed for users in mainland China and delivered via our servers in Hong Kong. Users in Hong Kong will continue to receive their existing uncensored, traditional Chinese service, also from Google.com.hk.

It is highly likely that Beijing will attempt to censor Google.com.hk, and their efforts will likely test the limits of what has become known as the Great Firewall of China. Unfortunately, I’m not enough of a tech-geek to know how feasible this is, but we’ll soon find out.

But the precedents that Google’s move sets will be far-reaching, and define American internet companies’ role in China for years. Will American corporations join Google, or attempt to replace it? Secretary of State Clinton spoke passionately that American businesses’ refusal “to support politically motivated censorship will become a trademark characteristic of American technology companies. It should be part of our national brand.” But is it too tempting for Yahoo.cn (which exists) and Bing.cn (which doesn’t… yet) to vacuum up the market share Google’s departure leaves hanging out there? And what about slightly more ambiguous cases, like Amazon.cn, which aren’t in the search engine business, but do exist and do provide Chinese with access to information?

And what would be necessary for Beijing to give way? Is there a conceivable scenario under which China might eventually permit unfettered searches of its internet content? And does this spat extend to companies beyond the information sector? Should it? Will the Obama adminstration bring pressure to bear on U.S. companies to, in turn, help pressure Beijing? Will non-information sector American companies abandon China in a mass protest against censorship? It is difficult to imagine any scenario where a major non-censored U.S. corporation forsakes its access to a market of 1.3 billion people, right? But Google’s decision is astounding and could create waves.

Photo credit: https://www.flickr.com/photos/shekharsahu/ / CC BY-NC-ND 2.0

FCC Can Win a Supporting Role Nod on Broadcast TV Fees

Posted on by The Progressive Policy Institute

So I wasn’t the only one who thought the FCC dropped the ball in its dealing with the carriage fee kerfuffle over the weekend—some of the nation’s largest cable and broadcast companies have sent a letter to the FCC to that effect.

In a petition filed with the FCC, Time Warner Cable, Verizon Communications, Cablevision and advocacy group Public Knowledge said that regulations governing transmissions from broadcasters to subscription-television providers are outdated and warned that last weekend’s standoff between Cablevision and Walt Disney Co. will be repeated unless the FCC issues new rules. They also called on regulators to assign an arbitrator during stalled negotiations and to require broadcasters to maintain their signals if talks break down.

Updating technology and media legislation is a perennial issue in an era where rules are oftentimes obsolete as soon as they’re spelled out. But it’s rare that you see industry players go to the government and ask to be regulated further. In this case, the FCC should take them up on the offer.

The most immediate benefits will come from the willingness of both broadcasters and cable companies to submit to arbitration, and the signal maintenance requirement. The debate between broadcasters and cable companies is broadly not one of principle, but of money. This negotiation lends itself readily to arbitration, as both sides are not facing an all-or-nothing choice, but seeking a middle ground is reached on fee pricing. Arbitration means that they will find that middle ground faster.

In the off chance that they can’t find that middle ground in time for a “major television event” (whether it be the Oscars, a bowl game, or the 24 season finale), the signal maintenance requirement means that consumers wouldn’t be the loser if talks broke down. Agreeing to extend exiting contracts an additional couple of days is much less costly to either party than the damage done by angering customers in a fiasco like last Sunday’s Oscar-fest.

The FCC should take this opportunity to work with industry—and not impose a solution on them—on a negotiation framework that will be as big a hit with consumers than Sandra Bullock’s role in The Blind Side was with the Academy of Motion Picture Arts & Sciences.

NY Lost at the Oscars Last Night

Posted on by The Progressive Policy Institute

“So did you watch the Oscars last night?”

You probably heard that question at least 20 times around the water cooler this morning, and followed it up debating the merits of Avatar vs. The Hurt Locker or Jeff Bridges (who will always be “The Dude” to me) vs. Colin Firth…unless you were one of three million households in New York City, in which case you were fuming that Cablevision and ABC conspired to keep the Academy Awards off your TV screen. In a last-ditch effort to not alienate all their viewers, the two companies — which had allowed ABC service to Cablevision subscribers to expire at midnight the night before the Oscars — got ABC back on Cablevision under an “agreement in principle” about the time Christoph Waltz was accepting the best supporting actor award.

How two of the largest entertainment companies in the country (ABC you know; Cablevision, in addition to being the nation’s fifth largest cable company, owns Madison Square Garden and Radio City Music Hall) could work together to keep the biggest night in entertainment from viewers would seem to boggle the mind.

Cable operators provide local terrestrial broadcast stations over their cable systems under a “must carry” rule, paying carriage fees to provide free-to-air local channels. This arrangement — a leftover from the birth of the cable era in the 1980s — is how you can get your local affiliate on your cable box. But now that “everyone” has cable (87 percent of households in the U.S. subscribe to satellite or cable), terrestrial providers have noticed that they could be charging cable providers for as much as they are paying for the Home Shopping Network. Needless to say, while cable providers want rates to reflect what they feel is the cost of providing a free-to-air channel, local stations want to have the special relationship they have with viewers priced into their carriage fees.

With the conversion of free-to-air analog signal to digital broadcast TV — indistinguishable in quality from the basic cable signal — the stakes seem to have gotten higher. The first shots in this particular war rang out among the New Year’s fireworks, when Fox Television and Time Warner Cable came to a last-minute agreement on providing Fox TV (and the bowl games it broadcast) to 13 million Time Warner subscribers. Fox was looking to get one dollar per subscriber from Time Warner, while the cable provider hoped to continue paying in the neighborhood of the existing nickel-per-customer fee structure.

As local broadcasters are a patchwork across the country, their carriage fee agreements come up for renewal on an irregular basis. The game of chicken was played again this past week between ABC and Cablevision — and with no agreement and neither side blinking, the cars crashed. New York area Cablevision viewers were the losers, though I’m sure Time Warner subscribers and local bars were very popular last night.

The impasse raised the attention of Sen. John Kerry and the Senate Commerce Subcommittee on Communications, Technology, and the Internet — who unsurprisingly thought this was as head-slappingly bad an idea as the rest of us — but the Federal Communications Commission (FCC) has jurisdiction over the issue. FCC media bureau chief William Lake emailed a tepid statement yesterday urging “both parties to quickly reach a resolution for the benefit of viewers.” Rather than taking a passive role with service providers, content providers, and consumers, the FCC should have taken a proactive role in this issue. The goal should have been to keep the players involved from grandstanding in an attempt to gain an undue advantage, and bring them both to the table in search of a solution beneficial to both parties and — most importantly — us viewers.

China and the Cyber Threat

Posted on by The Progressive Policy Institute

James Fallows of The Atlantic has an excellent piece on China and the cyber threat (as well as some other points on the Chinese military). A few excerpts about cybersecurity:

China has hundreds of millions of Internet users, mostly young. In any culture, this would mean a large hacker population; in China, where tight control and near chaos often coexist, it means an Internet with plenty of potential outlaws and with carefully directed government efforts, too. In a report for the U.S.-China Economic and Security Review Commission late last year, Northrop Grumman prepared a time line of electronic intrusions and disruptions coming from sites inside China since 1999. In most cases it was impossible to tell whether the activity was amateur or government-planned, the report said. But whatever their source, the disruptions were a problem. And in some instances, the “depth of resources” and the “extremely focused targeting of defense engineering data, US military operational information, and China-related policy information” suggested an effort that would be “difficult at best without some type of state-sponsorship.”

[…]

[Cyber authorities] stressed that Chinese organizations and individuals were a serious source of electronic threats—but far from the only one, or perhaps even the main one. You could take this as good news about U.S.-China relations, but it was usually meant as bad news about the problem as a whole.

[…]

This led to another, more surprising theme: that the main damage done to date through cyberwar has involved not theft of military secrets nor acts of electronic sabotage but rather business-versus-business spying. Some military secrets have indeed leaked out, the most consequential probably being those that would help the Chinese navy develop a modern submarine fleet. And many people said that if the United States someday ended up at war against China—or Russia, or some other country—then each side would certainly use electronic tools to attack the other’s military and perhaps its civilian infrastructure. But short of outright war, the main losses have come through economic espionage. “You could think of it as taking a shortcut on the ‘D’ of R&D,” research and development, one former government official said.

And Fallows adds one general extraordinarily striking cautionary note that has little to do with China, but that all policy makers should pay attention to:

[N]early everyone in the business believes that we are living in, yes, a pre-9/11 era when it comes to the security and resilience of electronic information systems. Something very big—bigger than the Google-China case—is likely to go wrong, they said, and once it does, everyone will ask how we could have been so complacent for so long. Electronic-commerce systems are already in a constant war against online fraud. [emphasis added]

The entire piece is worth your time, but those are the big highlights. From my perspective, I’ve seen first-hand how the Pentagon is well-aware of the threat and is devoting substantial assets to detect and disrupt the intrusions. I’m not just talking about the NSA’s new cyber command either — cyber is the hot, new frontier and that creates incentives for every agency under the sun to grab a few million smackers from the budget for working the issue. But where’s the line between effective cyber defense and too many agencies tripping over one another?

On Net Neutrality, Google and Verizon Find Common Ground

Posted on by The Progressive Policy Institute

It’s been about a week since the deadline for comments on the FCC’s notice of proposed rulemaking for net neutrality. Regulators are no doubt immersed in what promises to be an extremely long review process (in a somewhat unusual move, various advocacy organizations directed their supporters to submit comments directly — by at least one account, over 120,000 were submitted).

None of those comments attracted as much attention as the joint filing between Google and Verizon. An Internet service provider (ISP) and a content producer on the same side of this debate? It might not seem like a natural fit. It’s consequently tempting to look at the Google/Verizon proposal as an indication of what a possible net neutrality compromise could look like. But is it? And, just as important: would it be a good idea?

In truth, the partnership isn’t as unusual as one might think. Google and Verizon have collaborated on this issue before, publishing a joint blog post in advance of the FCC notice. It’s not entirely surprising: among the ISPs, Verizon’s current market position makes it uniquely amenable to the case being made by the content provider bloc. With DSL hitting technical limits and receding into a role as a budget broadband option, Verizon has undertaken a major infrastructure upgrade to FiOS — one that should leave them with a substantially higher-capacity network than the cable ISPs can offer. They’re also a new entrant to the digital-television marketplace. In short, Verizon is gunning for the Comcasts of the world, and doing so as a bit of an underdog. It has little reason to fight for a regulatory environment in which the network operators currently at the top of the heap can use their market power to entrench their positions.

So does the jointly submitted letter represent a good-faith common ground, free of the hyperbole and deliberate obfuscation that has characterized so much of this debate? Well, kind of. There’s a pleasant lack of “the FCC is about to accidentally break the internet!”-style fear-mongering. But there isn’t too much else on offer: some opening paeans to the Internet and consumer choice; an endorsement of transparency; a gentle reminder that neither party wants to be on the hook for enforcing intellectual property laws; and muted terror at the realization that the FCC is about to do… well, something.

From this flows the one really substantive idea in the letter: a proposal to create one or more “technical advisory groups” consisting of industry stakeholders, which would resolve neutrality-related disputes on a case-by-case basis, acting as a layer of mediation before the government became involved. Optimists will see this as an attempt to avoid the potential inefficiencies of regulation. Cynics will see it as a recipe for regulatory capture before the regulations are even written. And of course it’s not clear which stakeholders would have a say in these advisory groups. Would Joost? Or Sopcast users? It may be difficult to identify scrappy startups that deserve a seat at the table, particularly if they aren’t corporate entities.

More than anything, the letter serves as a reminder of how nebulous the net neutrality debate has become. What could the ISPs do to our society if they decided to press their advantage? It’s easy to let one’s imagination run wild and conjure net neutrality threats to virtually any cause or principle — hence the various framings of net neutrality as a fundamental economic/political/human rights/feminist issue.

But it’s worth keeping in mind that the only unambiguous violation of net neutrality that we’ve yet seen is Comcast’s decision to monkey with Bittorrent users’ reset packets — and, relatedly, some ISPs’ decision to throttle all encrypted traffic in an effort to fight Bittorrent (though this is still largely a Canadian phenomenon). That’s not to say that neutrality regulation isn’t worth pursuing. But whatever system is established should at least be able to deal with the one problematic case we’ve actually seen — and while the details could prove me wrong, the advisory group proposal doesn’t strike me as being up to the task. Verizon and Google’s common ground may indeed prove to be a useful preview of the FCC’s final vision of net neutrality, but it seems unlikely to be the whole picture.

Secretary Clinton, Cyber Diplomacy, and Google

Posted on by The Progressive Policy Institute

Echoing FDR in reference to cyber-repression in places like Vietnam, North Korea, Tunisia, and Uzbekistan, Secretary of State Hillary Clinton today outlined her vision of a world with five Internet freedoms: freedom of expression, freedom of worship, freedom to connect online everywhere, freedom from fear of cyber attacks, and freedom from want – the idea that information networks are a “great leveler” that can help lift people out of poverty.

Clinton’s speech clearly signals that fostering free access to the Internet can be a powerful tool that can help loosen the grip of the most repressive regimes. And to that end, she launched a new $15 million project for grassroots civic participation and new media capabilities in the Middle East and North Africa. Small, to be sure, but a worthy start.

But on the panel following Secretary Clinton’s speech, Rebecca MacKinnon of the Open Society Institute warned that though online access no doubt promotes openness, the Internet is not “freedom juice” that can be simply injected into a country and hope that all its oppressive tendencies vanish. That’s because places like China have done a devilish job of networking authoritarianism – a policy that toes a tight line by plugging into the global economy while blocking the receipt of global information. China is of course hardly alone – up to 40 countries (including some nominal democracies) now censor Internet content.

Finally, Clinton had a few words pointedly directed at private sector Internet companies, whom she encouraged to embrace the principals of openness as part of American companies stand for:

I hope that refusal to support politically motivated censorship will become a trademark characteristic of American technology companies. It should be part of our national brand. The private sector has a shared responsibility to help safeguard free expression … And when their business dealings threaten to undermine this freedom, they need to consider what’s right, not simply the prospect of quick profits.

Thus far, Google is the standard-bearer on this issue. The company’s slogan – Don’t Be Evil – has been invoked as it weighs whether to withdraw from China following allegedly government-sponsored cyber attacks on Google-housed email addresses of human rights activists. Since Google and its ilk in effect own the leverage of cyber-diplomacy, it makes sense that the State Department is cajoling them in this direction. I’d expect to see more Foggy Bottom conferences with various Silicon Valley CEO’s to drive home this point in the near future. That’s a good thing.

Finally, the business argument is worth examining. Contrary to the American market, Google isn’t quite as ubiquitous in China as it is stateside. That said, the WSJ grades Google.cn’s results (under censorship) as superior to its Chinese rival Baidu. The article concludes, “From a policy standpoint, the worst move China could make would be to force Baidu’s main competitor out of the country, leaving Baidu with no incentive to spend on R&D and improve its results.” But I’m not so sure — if China wants to stem the flow of information, why would they need a better search engine?