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All posts by Blair Levin

My Valentine’s Day with Rural Telcos: Know Hope

It is no secret that rural phone companies are not fond of the Broadband Plan or me.  (The enmity is not mutual.  I have great respect for them but think the universal service system on which they have come to depend is problematic for the country.) Thus, it was felicitous that I spent Valentine’s Day at the National Telecommunications Cooperative Association Convention, participating in a two round debate.

The first round involved debating two rural Telco executives.  My primary message–more as a former analyst than as a Broadband team member—was the debate over USF/ICC reform will probably be resolved through an industry consensus or result in a stalemate, and that a stalemate hurts them because every significant market and political trend is weakening their position.  I asked them, if not now, when?

Their message for me was that rate of return regulation had worked well and ought to continue unchanged.  When I pointed out that it resulted in 7 million homes without broadband at the same time that we were spending $20,000 a year for a single home in some areas, they responded that it was only $17,000, while also

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Love the Goal; the Speech, Not So Much

Apparently, I am quoted in the trade press as saying I didn’t like the goal in the National Broadband Plan of 100Mbps to 100 million homes.  Actually, what I thought I said was that I liked the goal but didn’t like the speech that announced the goal because of how it defined the Plan.  But here is the relevant part of yesterday’s talk, as prepared for delivery, which explains why I thought the speech was counterproductive and that the President’s speech yesterday did a much better job of defining a vision that will lead our country in the right way.

“The President’s speech today, perhaps the most significant speech ever delivered by a President on the subject of communications, demonstrates his understanding of the priority we must give to make sure we have a good mobile communications highway everywhere, as well as advanced applications.

Not everyone understands this and frankly, the roll-out process for the Plan bears some of the blame.

Unfortunately, during the rollout of the Plan, one speech—which established a goal of 100Mbps to 100 million homes—attracted a great deal of attention.

I didn’t have a problem with

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2 + 2 does not = 20; or why I’m glad I’m not an equity analyst

It was fun, in a wonky but not a theatrical sense, listening to Tuesday’s FCC meeting on Universal Service and Intercarrier Compensation Reform.   All five Commissioners eloquently described the need for reform.  The framework, which came out of the National Broadband Plan (which borrowed much from the work over the last decade by many others, including Chairmen Kennard, Powell and Martin) is commendable.  It’s progress that concepts, such as using reverse auctions or setting up a cap-ex fund, once controversial, are garnering a consensus.  While I haven’t read the NPRM, I know the staff filled in many of the details the Plan did not cover and made adjustments as the math merited; both to their credit.  It’s a big step forward.

But like the dog in the Sherlock Holmes story whose lack of bark was the critical clue, what didn’t happen was the most interesting part.  I heard what each thought was wrong but I didn’t hear how they would each make the necessary trade offs or prioritize addressing different needs.  To illustrate my point, take Commissioner McDowell’s statement that we have to shrink the size of the fund.  Given

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Did I Call Rob McDowell a Marxist? No, but isn’t it curious…..

In reporting on something I said at a conference Friday, The Hill newspaper ran a story headlined “Ex-FCC official slams GOP commissioner for ‘Marx-Friendly’ policy.” Catchy headline.  But the story was clear, and I was even clearer in my comments, I wasn’t really calling Commissioner Robert McDowell a Marxist.

What I was really doing was asking for McDowell’s help in reforming the FCC’s universal service fund.  In his Wall Street Journal editorials and his Commission statements, he has stated his fervent commitment to capitalism and free markets.  I was hoping he would take the same analytic view of universal service.  After all, our current system of rate of return regulation—a system born more than a century ago designed to serve a completely different market–involves using the government’s power to assess consumers to subsidize private companies and insure their permanent profitability, no matter what changes in technology or consumer preferences there are in the market.  I am not sure how to characterize the system—one which McDowell has quietly watched hand out billions during his tenure–but you can’t call it capitalism or the free market at work.  

Not only should the expenditure

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Message to PUCs: Forward or Backward?

While many from the FCC are headed to Vegas to see the latest, coolest devices displayed at the Consumer Electronic Show, I am heading to wintery New York for a conference of State PUC officials.  I’m going to talk about the national broadband plan and universal service fund (USF) and intercarrier compensation (ICC) reform.  Oddly, I think I will have more fun.  I guess there is no accounting for taste.

Most of what I will say relates to what we analyzed through the planning process: that USF and ICC are the two largest revenue streams controlled by the FCC affecting the broadband ecosystem, that the logic and financial underpinnings of both are rapidly breaking down, and that neither is designed to fill the critical gaps in that ecosystem.  To make matters worse, the most prevalent idea in broadband policy–that the primary metric by which a nation’s broadband policy should be judged is the speed of the wireline network to the most rural of residents—is both profoundly wrong and badly affects the way many think about USF and ICC.  That idea, applied as many propose, would lead us backwards, slowing down

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U.S. Led Nations in Manufacturing Productivity Gains in 2009

The Bureau of Labor Statistics has released data comparing 19 nations in percent change in manufacturing productivity, output, and hours between 2008-2009. International manufacturing productivity, 2009″ indicates that U.S. manufacturing output per hour grew 7.7 percent, more than any other nation. Japan (-11.4 percent) and Germany (-9.3 percent) took up the rear.

The U.S. ranked 6th in change in output (-5.9 percent) and 18th in change in hours (-12.6 percent), the relatively large drop in hours reflecting the high productivity gains.

To what extent are U.S. productivity gains the result of capital improvements? (Annual expenditures on machinery and equipment dropped 22.8 percent.) Increased physical demands on individual workers? (The number of production/nonsupervisory workers per manufacturing establishment fell by an estimated 12.2 percent.) What are the implications for competitiveness? Comments welcome.


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