The FCC is intent on making it easier to get into the cable television business.

The Commission has ordered franchising authorities at the state and local level to lower the requirements placed on new franchisees. Additionally, the Commission served notice on a new rulemaking to decide how these new rules apply to current franchisees. As the official press release (pdf) states:

In the Order, the Commission concludes that the current operation of the franchising process constitutes an unreasonable barrier to entry that impedes the achievement of the interrelated federal goals of enhanced cable competition and accelerated broadband deployment.

The Order addresses several ways by which local franchising authorities are unreasonably refusing to award competitive franchises. These include drawn-out local negotiations with no time limits; unreasonable build-out requirements; unreasonable requests for “in-kind” payments that attempt to subvert the five percent cap on franchise fees; and unreasonable demands with respect to public, educational and government access (or “PEG”).

The FCC’s objections include: “unreasonable build-out requirements” and “unreasonable obligations relating to public, educational, and governmental (’PEG’)” networks.

In other words, if you as a community think a cable company should, say, offer service to the entire community, or provide a certain level of support for public access television, Chairman Martin’s FCC has officially usurped the right to draw that line. Talk about a violation of states’ rights. And here I thought Republicans were 10th-Amendment fundamentalists. (Maybe it’s only Republican voters.)

UPDATE: After sharing this post, I realized that a couple other details should be included. First, the companies seeking to get into the cable business are primarily phone companies. They’d like to sell cable over their still-generally-forthcoming fiber optic lines; given the legal right to evade those messy public interest obligations, they’d really rather not roll out their expensive fiber optic lines in poor and/or sparsely populated areas. (The words “digital divide” should enter your mind here.)

Second, this has implications for network neutrality because the bill onto which neutrality mandates were to be grafted centers on the telcos’ desire to expedite franchising. If the FCC can do it on the administrative level, why bother with the much messier legislative process and all the compromises that might come along? Especially in light of the midterm elections’ outcomes, the telcos are concerned about getting such a bill through without accepting something resembling the Snowe/Dorgan bill as an amendment.

The FCC has decided to allow experimenation in the highly desirable portion of spectrum that currently carries over-the-air TV.

The spectrum, which falls below 900 megahertz, is generally viewed as the Park Avenue of the airwaves. It carries transmissions through walls and other obstructions much more easily than the slices of spectrum that are currently set aside for unlicensed uses–including wifi.

Wifi currently operates in the 2.4 GHz range, a much higher frequency than an unused VHF TV channel. If you’re old or poor enough to have actually used rabbit ears to watch TV, you’re probably well aware of the quality gap between lower-spectrum VHF and higher-spectrum UHF. VHF operates in 3 slots, ranging from 54 to 216 MHz. (See this spectrum map (pdf) for more.) UHF bumps up against the 900 MHz spectrum on which your cordless phone might operate. It’s fine for short-distance transmission, but the TV channels in the high double-digits show that there’s already a big loss of quality relative to the VHF sweet spot.

2.4 GHz spectrum is even less useful. It carries data for shorter distances and requires more power. It is also a rather narrow slice of spectrum that is overcrowded. Wifi, which is unlicensed, must accept interference from but not interfere with amateur radio users, who are the licensed, “primary” users of the spectrum. Many cordless phones also use this spectrum. This makes the current wifi spectrum rather crowded in many urban areas.

Permitting experimentation in the TV spectrum range will ease these problems, allowing people with more geek cred than me to create devices that carry data farther with less power consumption on less crowded airwaves. New devices will still need to avoid causing interference with TV stations, but a flip through the channels will tell you that, even in the NYC area, there are many unused TV channels in any city.

This opens the door for better wireless internet transmission, potentially so much better that it might provide a viable third pipe to compete with DSL and cable. Other unlicensed wireless transmissions will also be possible; as yet untold innovations may result.

While this is exciting, don’t go to Best Buy just yet. The FCC won’t finalize technical requirements for new devices until October, 2007, and devices won’t be for sale until the transition to digital TV happens in February, 2009.

P.S. This again helps illustrate two tangential points I’ve been pushing since this summer. First, policy ideas matter. The Republican Commissioners believe in deregulation, and this policy move fits nicely with that idea. The Democratic Commissioners believe in public interest media policy, and this policy fits nicely with that idea as well. In contrast, when the Democrats view a deregulatory or free-market move as against the public interest, e.g. the slow rebuilding of the old AT&T empire, the FCC gets into a partisan logjam–so much so that AT&T has voluntarily offered as-yet unnamed public-interest concessions to the Dems.

It also helps disprove the simplistic iron-triangle characterization of the agency. There is no group that has more power with the FCC than broadcasters, and they oppose the unlicensed use of TV spectrum. The next most-connected group is the big telecom firms, who want nothing resembling third pipe architecture to succeed. But the FCC went ahead anyway, in spite of concerns from those who “should” be able to dictate policy. For more on how the lack of a perfect iron triangle impacts the network neutrality debate, see this post.

My response to Ed Felten’s policy recommendations (Felten suggests we wait and see before imposing network neutrality mandates), has garnered its own response. Tim Lee of TechLiberation has posted two responses (first) (second), the first of which becomes part of Felten’s sensible follow-up, and the second of which references this thoughtful post by EFF Chairman Brad Templeton.

The very short summary of the dispute goes like this: We network neutrality supporters are so scared of the perils of broadband discrimination that we are willing to accept the perils of imperfect regulation. Opponents are so scared of the perils of regulation that they are willing to accept the perils of discrimination, at least for now.

The other three guys are very intelligent people, one of whom has been dragged into this (reluctantly, I’m sure), and all of whom have thought long and hard about this. As in any decent debate, both sides have some merit.

First, consider the large degree to which we agree: Read more »

Update: This post has been edited. Thanks to Tim Schneider for his excellent legal insight.

The new draft of the Stevens Telecom bill (pdf) features a shameless attempt to deliver just enough compromise on net neutrality to buy off political activist groups (e.g. the Christian Coalition) who are worried about being censored online. It’s not enough.

The draft adds a new Title IX, the “Internet Consumer Bill of Rights Act.” (See p. 144+) Yet Stevens’ bill still reserves for ISPs the right to pick online winners and losers in terms of speed and other quality of service measures, creating an “improved” bill that still stinks.

The new draft seems to be a minor improvement over the previous draft’s mere FCC study on the issue of neutrality. Section 902 requires that each ISP allow consumers to “access and post any lawful content of [their] choosing.” Section 904, “Application of the First Amendment,” insists:

No Internet service provider engaged in interstate commerce may limit, restrict, ban, prohibit, or otherwise regulate content on the Internet because of the religious views, political views, or any other views expressed in such content unless specifically authorized by law.

This is perhaps a 2-degree improvement over the wait-and-see approach of previous drafts, but the bill is still essentially facing backwards. On page 149, the bill tells the FCC that it may not “promulgate any regulations implementing this title,” which means that the FCC must enforce each violation anew. This is highly inefficient and a substantial hurdle to enforcement, which means this section does next to nothing.

Of course, this bill does nothing to prevent Ed Whitacre from carving monopoly profits out of content providers and, because they have no profits to carve, drowning out the noncommercial voices online.

Thanks to Stevens, broadband companies will have to deliver all legal content at some speed while pay-to-play content wizzes by in the fast lane. But the speed difference will cripple all but the richest outlets. Dialup treatment in the broadband era–or 1 Mbps treatment in the (still forthcoming) 30 Mbps era–will muffle the voices of most online speakers.

Props to my fellow Public Knowledge intern Tim Schneider, who smartly incorporates Blair Levin’s Senate testimony into his latest blog post about network neutrality. Levin served as Chief of Staff at the FCC, and he is now a Wall Street analyst.

Levin makes four key points about the likely economic impact of neutrality regulations (or a lack thereof):

1. Regulation doesn’t necessarily reduce investment in network resources. Historically, networking companies (cable, phone, etc.) are as likely to invest more in their networks due to increases in regulation.

2. The goal of regulation should be to maximize investment throughout the internet value chain, not just in last-mile broadband provision. Such value-spreading regulation is historically normal:

The point is, targeted government action may or may not be warranted in this case but a generalized view that such intervention into a business relationship is always wrong or highly unusual is not historically accurate.

Levin also warns that, if companies cannot count on steady or improving quality of general internet service at steady or declining prices, they will reduce their investment in innovative new applications that run on the best-efforts internet. (Of course, I happen to agree with this fear.)

The important thing is that from the perspective of investing in Internet applications and content, knowing that such access will continue to be available would be a critical variable in the investment decision. Without some basic guarantee of an improving, not degrading, open lane, investors in Internet applications would be less willing to invest in new applications.

3. “The primary threat to the market being able to optimize investment is a non-transitory bottleneck in any critical part of the value chain that restricts economic growth.”

Levin does not explicitly take a position on network neutrality, but this sure helps our side a great deal. He continues:

The goal of public policy should be to assure that bottlenecks do not prevent that rising standard of living I noted earlier. Antitrust experts have identified some potential harms that might be relevant here, such as preventing new entrants from entering through adjacent markets, allowing those with a bottleneck to leverage that bottleneck into a related market, or impeding technology development by concentrating technology leadership into a small cadre of firms so that the entrepreneurial function of technology leadership is stymied.

And finally:

4. “The greatest guarantor of the kinds of benefits that network neutrality principles have delivered in the past, and the greatest driver of investment are the same: an opportunity for new, ubiquitous broadband networks.”

I couldn’t agree more: ultimately, we need more broadband networks, e.g. a third and fourth “pipe” via wireless, or satellite that isn’t insanely slow and ridiculously overpriced. If almost all US consumers could choose from five or six competitors who could all deliver broadband access, this would make any calls for net neutrality just silly—we neutrality advocates are only concerned about anticompetitive behavior from firms in a broadband market where nearly everyone has 2 or fewer real choices. But competitive broadband markets would do more than obviate this debate—it would deliver higher quality at lower prices.

Unless you work for an incumbent broadband provider, I know you can dig that.

It appears that network neutrality has really caught a lot of people’s attention, in the general population and (therefore, also) in Congress. The link fest which follows is just a sliver of the gigantic mass of grassroots support and press coverage.

Even the cable industry has acknowledged that net neutrality is now the number one issue in Congress. Moby and Michael Stipe have joined the Save the Internet coalition. Lefty musicians aren’t the only ones jumping on the bandwagon, which has also earned the support of diverse groups, including the Christian Coalition. Another newspaper (among very many) issued an editorial on behalf of network neutrality: the San Jose Mercury News (use BugMeNot.com).

In response to all this popular support, the Telcos (who quietly rolled over the FCC and expected to get their way in Congress with little fanfare) have resorted to creating a front group, complete with a website that is just packed with lies. (No, really: filled with lies. Just ask Jesus’ General.) Other opponents with vested interests in a tiered internet, like Cisco, have also jumped into the fray without mentioning their financial motivations.

Congress has taken note of the outpouring of public support for net neutrality, and a growing bipartisan list of Representatives and Senators are trying to make sure network neutrality goes into any new telecomm law. This includes the leadership of the House Judiciary Committee–most notably, including Chairman James Sensenbrenner (R-WI), who’s VERY right-wing. (He wants to lock up all illegal immigrants as felons and force ISPs to keep records on your internet browsing habits.) The bill also drew immediate support from several consumer and public-interest groups.

In the Senate, a net neutrality bill sponsored by Byron Dorgan (D-ND) and Olympia
Snowe (R-ME) has drawn an even more famous sponsor: Hillary Rodham Clinton (D-NY). Unfortunately, I’m sure that Clinton’s weighing in will only exaccerbate the knee-jerk reaction by the far right wing, who keep parroting the factually inaccurate argument that common carrier requirements would represent a new government intrusion into the internet.

(Quite the contrary, common carrier requirements on voice telephone service were responsible for making dial-up affordable and the dial-up market competitive, wishes of the baby bells to charge extra for modem calls notwithstanding. Net neutrality undoes the FCC’s very recent abrogation of its long tradition of ensuring that telecommunications companies carry all data fairly. For more, see the Brand X ruling. The recency of this change also disproves the telcos’ claim that the lack of internet discrimination means there is no threat; the threat is very real and only growing if we don’t act soon.)

One more link: The Conservative Voice explains “what the misguided have missed regarding network neutrality.” Specifically, he explains why even those on the right who have done their homework generally support network neutrality.

If you want to follow this explosive issue, I recommend you check out FreePress.net’s internet news page. They also have an email digest if you’re more of a passive media person.

This story at CNet makes me want to hurl–not the coverage, but the content.

Verizon basically went to the FCC, said “we want to play the business broadband game by different rules,” and got what they wanted. Chairman Kevin Martin just sat on their petition and it therefore passed. Like a President with a bill passed by both houses of Congress, silence = consent, and Verizon’s petition therefore sailed through without objection.

Well, the two Democratic members of the FCC–Michael Copps and Jonathan Adelstein–objected. But they’re only 50% of the Commission. Why should their votes count when Martin and Verizon are in such clear agreement?

Maybe; FreePress thinks so.