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Expand Lifeline, But Keep Consumer Choice

(3/31/16 Ed Note: ITIF congratulates the FCC on its historic vote to transition the Lifeline program into the 21st century. Broadband is the predominant communications platform of today, and supporting broadband access for low-income Americans is long-overdue progress. In addition to broadband support, administrative reforms will streamline the program and reduce the potential for fraud. The FCC made some improvements to the initial draft order, specifically delaying the phase-out of support for standalone voice. However, it would have been better to offer consumers even more flexibility, and it is disappointing to see the minimum standards remain.)

The Federal Communications Commission (FCC) is nearing a historic vote to expand the Lifeline program, which subsidizes communications for low-income Americans. After the rules go into place, recipients will be able to put the $9.25-per-month subsidy towards broadband Internet access instead of the voice telephone service the program originally supported. Such an expansion of the Lifeline program represents a tremendous step toward achieving the goal of ensuring every American has affordable access to the Internet.

As more and more services migrate online, realizing the full promise of the digital economy requires that

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Net Neutrality Oral Argument Rundown: A Wake-up Call for Legislation

This morning saw the Federal Communications Commission’s (FCC) third attempt to defend net neutrality rules in court, with the U.S. Court of Appeals for the D.C. Circuit hearing oral argument in US Telecom v. FCC. A three judge panel, composed of Judges Tatel, Williams, and Srinivasan, heard from a series of lawyers, with the main arguments against reclassification made by Peter Keisler and defended by FCC General Counsel Jon Sallet. Sallet did an impressive job with the hand he was dealt, skillfully defending the FCC’s gerrymandering. That said, he did run into some tough questions from the judges—questions the FCC simply doesn’t have good answers for.

This case is a big one, with a lot more at stake than particular rules to protect the open Internet. When the FCC was pushed into reversing course for its open Internet order, classifying broadband providers as common carriers under Title II of the Communications Act instead of staying the course with rules grounded in section 706, it fundamentally changed the underlying framework of how this country regulates the communications industry. These changes are so sweeping, involving multiple changes in regulatory definitions and statutory

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One Small Step for Auctions, One Giant Leap for the Spectrum Relocation Fund

President Obama has now signed into law the Bipartisan Budget Act of 2015, which puts into force a title specific to radio spectrum auctions. Telecom legislation is a rare bird, and many were excited to see authorization for the next tranche of spectrum auctions. There is some good and some bad—here is a rundown of what’s in the new law, and what we at ITIF would have liked to see.

First the good. The title of the legislation specific to spectrum, a.k.a. the “Spectrum Pipeline Act of 2015,” makes much needed changes to what is known as the spectrum relocation fund, or “SRF.” The SRF is a pot of money managed by the Office of Management and Budget to pay for federal entities to transition radio systems when their spectrum is repurposed for other uses. Eight years after the creation of the fund in 2004, the 2012 Tax Relief Act—which extended the FCC’s auction authority and set the upcoming 600 MHz incentive auction in motion—expanded the types of costs which federal agencies could recover from the SRF. However, those funds were still limited to planning and research directly

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First Air-to-Ground and Ground-to-Air Radio Communications. July 1917

Federal Spectrum Opportunities

At last Wednesday’s Senate Commerce, Science and Transportation hearing on wireless spectrum, senators and witnesses alike expressed a general desire to “free up” more spectrum for wireless broadband. Sen. Bill Nelson (D-FL) said, “Spectrum legislation is not only necessary, but it has traditionally been bipartisan.” Along the same line, Sen. Brian Shatz (D-HI) said, “there is a real opportunity for bipartisan consensus” on spectrum legislation. It’s true, spectrum policy, although often difficult and complex, is rarely mired in partisan disagreement. Growing demand for additional wireless capacity for streaming video, Internet of Things (IoT), and machine-to-machine communications makes clear that relatively low-cost opportunities to repurpose spectrum are no-brainers we can all get behind.

However, a bit further down in the weeds there was a point of disagreement among the witnesses that is worth teasing apart. It has to do with mechanisms to seek out inefficient uses of spectrum by the federal government. There was general agreement on the panel that federal users will be a significant source of spectrum in the future, but not exactly consensus on the particular mechanisms to repurpose that spectrum.

There has been a lot of talk

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Foreclosing Incentives: Spectrum Set-Asides in the Incentive Auction

The months are ticking down to the historic spectrum swap between broadcasters and wireless providers. With time running out to craft the incentive auction rules, a coalition flying the banner “Save Wireless Choice” is pushing for additional spectrum to be set aside for those carriers who have not acquired much in the way of airwaves below 1 GHz. To be clear, we are talking about an additional spectrum reservation; the FCC already plans on setting aside up to 30 megahertz of valuable 600 MHz spectrum only accessible by bidders with less than 45 megahertz of sub-1 GHz spectrum.

It is worth digging into the specifics of the Save Wireless Choice ask. The group is asking that the FCC raise the maximum reserved spectrum available for carriers with limited spectrum below 1 GHz in the incentive auction from 30 megahertz to 40 megahertz. While this may sound simple, the ask is surprisingly bold, though it takes a bit of unpacking to explain why.

The FCC’s incentive auction is an unprecedented attempt to coordinate a two-sided auction, playing match maker between spectrum-hungry mobile carriers and TV broadcasters willing to part

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Mobile Telecom Offers Enormous Benefits, Finds New Report

Boston Consulting Group and Qualcomm have just released a new report examining the impact of mobile devices on the economy, focusing on the benefits mobile brings to small businesses and consumers in six countries including the United States, Germany, Korea, Brazil, China and India. The authors estimate that mobile technologies increase consumer welfare by the equivalent of 10 percent of total income in developed countries, and 20-45 percent of total income in developing countries. In fact, the total value that mobile brings to consumers is estimated to be more than double the size of the of the entire mobile industry revenue.

These economic gains have been enabled by remarkable technological progress. Global average cost per megabyte has declined from nearly 98 percent between 2005 and 2013, while maximum data speed has increased from ~10 to 250 mbps over the same period. These vast changes in cost and performance have made mobile technology affordable to billions of people around the world. Even so, more technological progress is necessary: 90 percent of mobile technology users report having problems with their connection. 5G and 6G technologies will continue to improve access and connectivity

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Flaws Remain in OTI’s “Cost of Connectivity”

The Open Technology Institute recently released the latest version of its “Cost of Connectivity” report. We at ITIF have repeatedly criticized past “Cost of Connectivity” reports for their flawed methodology (criticisms, by the way, shared with many others). The most recent OTI report continues this tradition, relying only on advertised broadband plans in a handful of cities. In keeping with this tradition, we offer the following constructive criticism in hopes that OTI will continue to improve their methodology going forward. One big improvement in this year’s report is the decision to drop the comparison of “Triple Play” bundles, with the recognition that the variation in cost and quality of programming bundles from country to country is too great to offer a meaningful comparison. Hopefully next year’s report will recognize the U.S. broadband market for the success it is and leave us with even less ammo for criticism.

It is not clear that we can draw any real conclusions from this year’s collection of data, given the tiny sample size and the disparity between advertised and actual speeds in Europe, not to mention the remarkable differences in history, culture, and

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Harry Reid, Title II, and The Rashomon Effect

Rashomon, for those readers who aren’t big film buffs, is a 1950’s Japanese masterpiece about a rape and murder mystery told through four different points of view. The film’s brilliant technique, now commonplace in modern narratives, presents different witnesses’ contradictory, self-serving accounts of the crimes with the audience left to sort out the truth. All the spin in policy debates these days can make interpreting current events feel like a similar exercise, with some advocates being all too eager to seize on and promote a particular interpretation, no matter how strained it may be. Case in point: Harry Reid’s recent letter to David Segal of Demand Progress on net neutrality.

Appreciating the subtleties of Reid’s letter requires some context. The most recent iteration of the now decade-long debate over net neutrality has actually seen widespread agreement over the general principles of the open Internet. All the major carriers insist they have no interest blocking or degrading traffic or splitting up websites into tiers or packages. The real controversy is over the appropriate jurisdictional framework for the FCC to build its rules on. There are two possible starting points: either

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Interconnection: Towards a New Regime

Internet interconnection usually doesn’t make for big news. The term refers to the agreements that connect up the Internet’s component networks and since they usually “just work” they rarely attract the media’s spotlight. We don’t particularly care how our House of Cards gets to our screen or whether our video bits travel long distance though a transit provider or cached closer to home on a content delivery network (CDN), so long as it works.  So long as it works. Now old news, it was around October when some Netflix users first began seeing their streams slow.

This touched off a rather public spat, with a back and forth of blog posts from Netflix and Verizon. Tensions rose after Netflix began placing notices on customer’s screens accusing Verizon’s network for the slow streams. Verizon responded with a cease and desist with which Netflix appears to have complied. On top of all this, FCC Chairman Tom Wheeler recently released a statement announcing a relatively informal investigation into recent interconnection deals.

On Wednesday, at an event hosted by the Congressional Internet Caucus Advisory Committee, David Clark, noted Internet engineer and MIT researcher,

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Net Neutrality Misunderstandings

The Wall Street Journal reported Wednesday that FCC Chairman Tom Wheeler was set to circulate a draft of rules to be proposed to codify net neutrality. This initial story prompted a sudden outpouring of inaccurate reporting and misplaced vitriol. There are a number of unfortunate misunderstandings ITIF would like to help clear up in the hopes that Chairman Wheeler is not deterred from what is a very reasonable approach to a difficult policy problem. The Chairman took to the FCC blog on Thursday to try to “set the record straight,” unfortunately, with today’s powerful echo-chambers and viral proliferation of over-reactions, setting the record straight is a very difficult task.

Chairman Wheeler explained that he intends to propose rules that will allow for a case-by-case analysis of traffic management, allowing practices that are “commercially reasonable” to all on reasonable terms. Any type of practice that harms competition or consumers as a result of abuse of market power would be prohibited. ITIF has long been an advocate for these types of restrictions on broadband providers.

We believe the general direction of Wheeler’s proposals to be a good balance between protecting consumers and

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