Regulation

For those who want to hear some of the best arguments and rebuttals for/against Title II reclassification of broadband, please listen to the 13 minute back-and-forth between Professor Susan Crawford and I today.

• Harvard Law Professor Crawford is the leading proponent for common carrier regulation of broadband.
• Click here for the audio stream.

It’s a good precursor of the debate ahead. 

• It is also part 8 of my Title II Reclassification Research Series

Title II Reclassification Series

A new European study from Britain’s Office of Communications tries to argue that the EU’s wireless regulation approach is better than America’s. The New York Times’ clever headline on the report sees right through it: “Europeans pay less for mobile use, but at a cost."

In Europe, regulators regularly lower prices and roaming rates for political purposes, ignoring the market economics or economic sustainability of their regulatory approach. The EU’s politics-of-the-moment interest in lower prices, based more on operating costs than total costs that fund long-term investments in infrastructure, ultimately harms consumer value.   

FCC staff just muffed an easy opportunity to advance the IP transition on the FCC’s timetable in the National Broadband Plan.

Apparently FCC staff missed the big picture here.

1. On November 25^th, AT&T proposed a baby step forward in the IP Transition.

AT&T did not propose any change in special access rates. AT&T simply proposed that its special access contract term-lengths, synch up with the FCC’s own goals for when the IP transition should be complete.

Instead of promoting investment certainty -- by respecting its own IP transition timetable that the private sector has come to rely on for infrastructure investment planning -- FCC staff announced an unnecessary five-month investigative delay.  

Please don’t miss my new white paper:  A Modern Vision for the FCC: How the FCC Can Modernize its Policy Approaches for the 21^st Century (here/PDF).

• It is the first comprehensive review of FCC policy and vision through the lens of what is modern vs. what is nostalgist.
• Please don’t miss the first slide, a chart that concisely defines modern vs. nostalgist FCC visions.
• My recommendation -- A Modern FCC Policy Agenda -- is near the end of this post.    

NetCompetition Capitol Hill Event:

If you are interested in learning the linchpin issue to watch to discern whether the FCC’s competition policy will be modern or nostalgist directionally, don’t miss my Daily Caller Op-ed: “The Modern FCC Competition-Policy Linchpin” – here.

• It is Part 6 in the Modernization Consensus Research Series.

Modernization Consensus Series

Part 1: Implications of Google's Broadband Plans for Competition and Regulation - Part 1 Modernization Consensus Series [1-28-13]

Just like the wisdom that one cannot make a silk purse from a sow’s ear; one cannot make “modern” FCC policy from obsolete communications law.

Apparently that is not stopping Former FCC Chairman Reed Hundt and Greg Rosston from trying in their new white paper: “Articulating a Modern Approach to FCC Competition Policy.”   

Their paper contrives:  “three different competition policy approaches: the classicrole of regulating terms and conditions of sale, the modernrole of using various tools to create largely deregulated, multi-firm, competitive markets, and the laissez-faire approach of believing that unregulated markets, even if monopolized, will produce the best outcome.”

Economic rationality, competition, and broadband pricing freedom are the big winners, and common carrier-like net neutrality was the big loser, if the Appeals Court panel decides Verizon v. FCC as expected.

Monday’s intense tag-team grilling of the FCC’s lawyer by Judges Tatel and Silberman left most observers thinking the Court will decide it is illegal for the FCC to impose common-carrier-like regulation on broadband providers -- regardless of what else they decide.  

September 9^th looks to be a challenging day for the FCC.

For many good reasons, the FCC will face a skeptical D.C. Circuit Court of Appeals panel Monday in oral arguments for Verizon vs. FCC. The FCC will be defending its Open Internet order which mandated neutrality.

Overall the court will be skeptical because the FCC largely ignored the law, Congress, the facts, and the Constitution. Essentially, the FCC made up an industry problem that does not exist in order to repurpose itself for the Internet age. Simply, the FCC is not asking for slack from the court (i.e. Chevron Deference), it’s basically asking for carte blanche to grant itself unbounded authority going forward.

Verizon enjoys the advantage in this case because it need prevail in only one of its several strong challenges to the FCC’s order, while the FCC must convince the court to completely reject all of Verizon’s arguments.

Specifically, why will this court be skeptical here?

Information may want to be free, but physical networks are costly.

Few proponents of net neutrality appreciate the trillions of dollars of investment it has taken to build and upgrade the Internet’s vast and varied infrastructure that we all enjoy today. Simply, the Internet is not free of cost.

Economical policies have made the Internet universal and have enabled users to access the content, apps, and devices of their choice – what net neutrality is supposedly all about. On the other hand, uneconomical policies that discourage economic growth, return-on-investment, or respect for property can have unintended consequences and can threaten the proverbial goose that lays the golden eggs.