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All posts by Doug Brake

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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Premature Privacy Concerns Over Verizon-AOL Deal

The recent announcement that Verizon Communications Inc. intends to acquire AOL Inc. generated a surprising amount of media coverage, and unfortunately some groups are using the news as an excuse to push for expanded privacy regulations that would stifle innovation and competition in the burgeoning mobile ecosystem.

By telecom standards, this is not a huge transaction. At $4.4 billion, it is a full order of magnitude smaller than either the AT&T-DirecTV deal or the ill-fated Comcast-Time Warner Cable merger. And Verizon’s purchase of the 45% stake Vodafone had in Verizon Wireless was almost 30 times larger. Nevertheless, reporters flocked to the story, perhaps drawn by potential jokes about promotional CDs or the opportunity to poke fun at the 2 million Americans who remain AOL dial-up subscribers.

More likely interest in the deal was driven by its implications for the business Verizon wants to become. AOL is well known for its content, such as Huffington Post and TechCruch, but its growth is now in online ad sales—especially in video ads. The nation’s leading wireless company is looking down the road and seeing mobile video (presumably sprinkled with advertisements) as the future.

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Still Not Falling Behind

Earlier this week the Center for Public Integrity (CPI) published what purports to be an investigative look at broadband competition, speed, and prices, concluding that “U.S. Internet users pay more and have fewer choices than Europeans.” This is a common myth that we at ITIF have long worked to dispel, but apparently some myths die hard.

CPI duplicates the usual argument made in this space, attempting to compare a handful of French and U.S. cities, claiming that because French cities offer more broadband “choices,” they have lower price, and higher adoption. CPI suggests that the supposed success demonstrated in their “snapshot” should push us to emulate France’s open access policies. There are a number of problems with this picture.

CPI compares a set of advertised broadband rates in a handful of French cities to American cities. Let’s start by pulling back a bit and looking at country-wide data. If you are going to opine on national policy direction, it’s worthwhile to at least take a passing glance on the statistics at a national level, instead of comparing five French cities with five American ones. Compiled below are

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New York, D.C. and Title II

I can see the headlines now: “ISPs tell Wall Street and Washington mostly, but not quite exactly, the same thing about Title II.” Doesn’t quite have the right ring to it…

Instead, Brian Fung at the Washington Post has been reporting a number of stories attempting to show that network operators are telling Wall Street and Washington two entirely different stories and musing on some potential policy implications of such possible discrepancies.

Yesterday afternoon, Bob Quinn with AT&T expressed his surprise at the line of stories. I must say I agree with Mr. Quinn – Fung is really stretching his interpretations. Here I suggest we go to the primary sources: The transcripts of interviews with executives from Comcast and Time Warner Cable that Mr. Quinn reproduces are quite up-front with their thinking on Title II. They clearly state that the Title II framework is bad policy and bad for investment. Nobody in D.C. has claimed that the world will melt under Title II. But, let’s be clear, to the extent any of these statements can be read to say carriers can live under Title II with forbearance done properly (a

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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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ITIF’s Top 10 Net Neutrality Hits

This past Thursday, the FCC voted to kick off a new attempt at open Internet regulations, marking yet another milestone in the history of the net neutrality debate. Over the years ITIF has been at the forefront of this debate, and will continue to do so. Below is a top-10 list of ITIF publications that both explain how advanced IP networks actually work and advance our “third way,” middle-ground approach.  To see all of ITIF’s work in this area, please go to www.itif.org and click on “issues: broadband”

1. A “Third Way” on Network Neutrality

In May, 2006 Rob Atkinson and Phil Weiser bemoaned the fact that “the network neutrality debate denies the reasonable concerns articulated by each side and obscures the contours of a sensible solution.” Eight years later, and this paper’s diagnosis and cure still hold value. It argues that policymakers should ensure a baseline of a high-bandwidth, best-efforts Internet connection while taking an “antitrust-like” approach to any discriminatory access arrangements.

2. Designed for Change: End-to-end Arguments, Internet Innovation, and the Net Neutrality Debate

One of the meatier ITIF publications on net neutrality, this report digs into the

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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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Government Funded Networks: What (Little) We Learn from Recent Reports

Government funding of broadband networks is once again garnering discussion. FCC Chairman Tom Wheeler’s Feb. 19 announcement on Net Neutrality indicates that the Commission may consider Federal pre-emption of state laws restricting municipal communications networks. On the tail of that announcement comes a report from the Government Accountability Office providing some anecdotal evidence of the way small businesses use ten different federally subsidized or municipally run networks. Unfortunately, it is difficult to draw any general conclusions from the report, as it draws on only a handful of interviews with users of a select few networks – a limitation the report itself acknowledges.

I have no beef with the report itself – this GAO report, like all GAO reports I’ve read, is precise, well-written, and self-aware, though I must say I question the value of a study with such a small sample size and so little information about the networks discussed. My concern is that many are misinterpreting the report as offering broad evidence of the success of government run or funded networks. As the report says, “the results of [the GAO’s] interviews cannot be projected to all service providers and

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