On March 23, the Free State Foundation held its Eighth Annual Telecom Policy Conference at the National Press Club. The conference theme was "The FCC and the Rule of Law."
In addition to an
Opening Keynote Address by Congressman Marsha Blackburn, Vice Chair, House Energy and Commerce Committee; "A Fireside Chat" with FCC Commissioners Mignon Clyburn and Michael O'Rielly; an Address by FTC Commissioner Maureen Ohlhausen on "Privacy Regulation in the Internet Ecosystem"; a "Conversation" with FCC General Counsel Jonathan Sallet; and a Closing Keynote Address by Glenn Lurie, President & CEO, AT&T Mobility and Consumer Operations, there were two multimember panels.
The Free State Foundation is now releasing the transcript of the conference's first panel session, "Perspectives on Hot-Topic Communications Issues."
The panel, which was moderated by Free State Foundation President RANDOLPH MAY, consisted of the following prominent experts:
MEREDITH BAKER, President and CEO, CTIA
WALTER MCCORMICK, President & CEO, United States Telecom Association
MICHAEL POWELL, President & CEO, National Cable & Telecommunications Association
BRAD RAMSAY, General Counsel/Director, Policy Department, NARUC
NICOL TURNER-LEE, Vice President and Chief Research and Policy Officer, Multicultural Media, Telecom and Internet Council
The transcript should be read in its entirety for an appreciation of all of the views of each panelist. Nevertheless, in the meantime, immediately below are selected excerpts in the order of the panelists' presentations. These excerpts provide an indication of the various perspectives presented at the session. But, again, the transcript should be read in its entirety in order to obtain a full appreciation of each panelist's views.
And if you would like to watch the video of the panel session, it is here.
MEREDITH BAKER
I wanted to talk about something optimistic and something that I firmly believe is going to change our future. And that's what the FCC's going to hopefully do this summer, which is a Spectrum Frontiers proceeding. This is going to be key. This is high-band spectrum. For as long as you've had your cell phone we've been using spectrum under three gigahertz... We locked our engineers in a room. We invested a ton of money in R&D and we figured out how to unlock the potential for high-band spectrum. So instead of miles to a tower, I think currently we have 600 megahertz under use in our entire wireless ecosystem. We're talking about 10,000 megahertz in the high-band frequencies that we're going to be able to unlock the value of. These are huge bands as opposed to small slivers. We're talking about meters, not miles to a base station. Think about a network in this room connected by base stations that are the size of a smoke alarm. We are talking about 10 times the speed of our wireless networks for this high band, which is going to be the key to our 5G future. Ten times the speed, 100 times more things connected, and a latency that's going to be 5 times better. So if you think about a 4G car, it'll stop in about 3.5 meters. Under a 5G connected car, it's going to stop in an inch. This is life changing. It is really important what the FCC is going to do this summer and we are particularly excited about this. We need simple rules because the technology on this is really difficult.
MEREDITH BAKER
Spectrum should be a national priority. It's important for all of our lives. The 5G is the next generation of our networks. So if you think about 1G to 2G to 3G, that's when you went from voice to text to broadband. And then in 4G, you actually can access the Internet on your mobile device virtually anywhere you want, almost as fast you want to. So what 5G is going to bring you is the Internet of Things to the extent that a Fitbit isn't doing that currently. It's going to have 100 times more things connected to the Internet, 10 times faster speed. It's going to be high-band and low-band spectrum. What's been so important to us is our 4G lead. We lead the world in 4G. Ninety-eight percent of our people are covered by 4G networks and that has created an ecosystem. They say 100 megahertz equals $30 billion to the economy and a million jobs. That's important. So it's important for us to maintain our lead in 5G. To do that, we need to continue two parallel tracks. One is continue the low-band spectrum. We've got the incentive auction that's going to start on March 29th, and it's pretty important.... High-band spectrum is the Spectrum Frontiers proceeding. If we lead the world in this, then we will lead the world in 5G. We've seen Japan, Korea, and the European Union all wanting to take our lead. It's important for us to keep it.
On Broadband and FCC Privacy Policy:
MEREDITH BAKER
We are obviously committed to consumer privacy and I think that it's working very well under the FTC approach. I hope that the FCC rejects the idea to treat ISPs differently. I think it's confusing to consumers and it's very harmful to competition... I hope that the FCC gives good and thoughtful time to this proceeding. I think we need to take a look, take a breath. Privacy is important. Consumers expect it. But we need to do this in a way that consumers understand and that won't harm competition. So I'm hopeful that the FCC will take a good look at this framework.
WALTER MCCORMICK
The White House itself has said that its agencies should provide the consumer with consistent expectations in this area. And what the FCC is doing is moving forward in a way that is not aimed at consumer protection. It's aimed at market regulation and it is not going to give consumers consistent protection in the area. In fact, if anything, it is going to mislead consumers. It is going to deceive consumers to think that if they opt out in one circumstance or don't opt in to sharing of information that they are protected on the Internet. I think that that is just wrong for an agency to do. Consumers expect their federal government to speak with one voice in this area.
MICHAEL POWELL
[R]estraint is a regulatory tool as much as action is. The Commission certainly has available to it the choice to create a privacy regime for the companies that it oversees that is in consistent harmony with the privacy experience that consumers are having with other providers in the economy. You could make that choice... [Y]ou can't convince me that when a consumer sits down at a computer and fires up Facebook, they make any distinction between what their expectation of privacy is, thinking about whether it's their Comcast ISP or Mark Zuckerberg collecting their data. It's just nonsensical, it seems to me.
MICHAEL POWELL
Video distributors today are subject to privacy protections that include not disclosing consumer data without prior written consent of our subscribers and ensuring that they have a right to contest even government requests for their information, including providing them a federal right of action in court to protect those interests. But if that content gets ported over to a Google box, those privacy protections vanish. And the Commission seems untroubled by that fact. So change your input and you will completely change your privacy protections and expectations. There's no other explanation of that than favoring one for the other.
NICOL TURNER-LEE ON PRIVACY
[T]he privacy concern is very much a resemblance of how the FCC's operating right now, where it is paying particular attention to regulated industries without looking at the ecology in a holistic sense. Clearly, people who are consumers do not have a fragmented experience on the Internet. So putting particular rules on ISPs for their portion - their millisecond portion in some cases - of the Internet experience, is clearly without fault to the other providers that actually make up the entire ecology. Some of us have been in this since early '90s talking about policies around privacy. We all want to see a coherent glide path that keeps consumers' information safe. I don't think anybody in here does not want to see that. But you can't parse up the Internet to pick winners or losers or tighten down on certain aspects of it without looking at the entire user experience.
On Broadband Investment:
WALTER MCCORMICK
I think that one of the big challenges that the Commission has in the coming year is to deal with the fact that there is a slowing of investment. I mean, facts are difficult. I know the Chairman has challenged whether or not there is a slowing of investment. But he himself has said that he doesn't think that broadband is being timely and reasonably deployed. What we have seen is that in every year since the recession in 2009, there have been increases in broadband investment up until the consideration of the Title II proceeding. And in that year, between 2012 and 2013, that was the first year that we saw investment slow. It slowed from 9 percent down to 4 percent. Tthen the following year after it was adopted, investment actually dropped by 4/10ths of a percent.
On the FCC's Set-top Box Proceeding:
MICHAEL POWELL
To me, this proceeding perfectly encapsulates the concerns about unjustified market engineering and intervention, perhaps more than any. And I think it so systematically violates principles of regulatory restraint that have been well worked up over the course of decades. Principle one is it's intervening in a highly and well-functioning market. You cannot find one soul who doesn't recognize that there's probably no more robust tectonically shifting market than video delivery. When this statute was passed, the cable industry had 94 percent market share of multichannel video. There was no existence of DBS in any measure. Telcos were not video providers. In the intervening period, the cable industry has lost over 50 percent in market share of that market to new entrants. In addition, you've had the intervention through the Internet of streaming capability. This has brought in an enormous amount of competitive alternatives in streaming services, not the least of which being Netflix, who in the course of five years goes to the Consumer Electronics Show and announces their global empire with more subscribers than any cable company in the United States. This market is on fire. And even when you turn to boxes, such as they are, the proliferation of boxes, whether it be Apple TV to Amazon Fire to Roku, continues to spill out into the market unrestrained. So it's hard to understand that anybody could find anything that looks like market failure. In fact, the Commission's own video competition report is one of the few that sings glowingly about the level of video activity. So that's a violation.
MICHAEL POWELL
What the Commission is doing is not creating competition in equipment. It's creating an entirely new video service using the inputs and resources owned and belonging to others, violating [another] principle, which is the respect for private property and intellectual property. To allow somebody as formidable and as wealthy as Google to access the intellectual property of others for free as opposed to negotiate for it in order to build a creative video service is just a rent transfer, pure and simple and not for public purposes, for commercial purposes of one over the other. And I think that is also an ill of this proceeding. It really does pick winners and losers.
MICHAEL POWELL
[I]f you expect cost-benefit analysis, a simple application here would show that the costs so dramatically exceed the chimerical illusory benefits that the Commission has proffered. It will be expensive. It requires network engineering. It will require consumers to have a new device. All those costs will be borne by them and it won't even come to fruition for five or six years, at which time this market will have blown long past these dated and rearward looking ideas.
On FCC Independence and the Rule of Law:
MICHAEL POWELL
In my own opinion, it does [raise a rule of law problem] because the FCC, as an independent agency, has to abide by one central administrative legal principle, which is their decision is premised and premised solely on the substantial evidence of a whole of the record that's before them. When the President expresses an opinion, which of course he's entitled to do, but to do it by YouTube video - and by the way, that's not all it included. It included visitations to the Commission by the chief economic advisors to the President after the record was closed without any opportunity for other participants to respond to any of the arguments that were presented. It is naïve in the extreme to pretend that commissioners who are politically appointed aren't unduly influenced by the President of the United States taking such a dramatic and focused direction on a particular proceeding, particularly given the timing of that proceeding. Yes, the Administration often expresses its view. It usually expresses that view through a filing, put in record by the Commerce Department or the Antitrust Division of the Justice Department, written and on the record and subject to review.
On Lifeline Reform:
BRAD RAMSEY
[I]t's really important to permit access to Lifeline support for different levels of service. I continue to think the country is potentially making a mistake by trying to establish only a particular level of broadband provision as the only acceptable level and assuming that that one size fits all to the unique geography and socio-demographics of the country. And I think that increasingly, by promoting that vision, we lose the opportunity to increase access through lower cost alternatives that might be less capability of the high end, but still would be extraordinarily valuable to someone who hasn't even been able to get online yet. I hope we become more granular in the way that we do that.
MEREDITH BAKER
Of course we support the [Lifeline] program. We support the shift to broadband and we support improved program administration. What has to be done is that it has to be done in a way that reflects the market realties and the consumer preference for mobile. We risk right now something that is too fast a transition or mandates that are not based on mobile pricing or packaging in a degree that's going to lessen the program participation for consumers. We hope that we can find some middle ground together on this.
NICOL TURNER-LEE
[T]he issue of foremost importance is obviously Lifeline modernization because of its impact on low-income consumers, and moving forward, as we get into deeper conversation, our hope is that the Lifeline reform will happen in a cautious way that doesn't make the presumption that broadband will be ubiquitously available in all communities in three years. There's some real danger and concern about some of the ambivalence in those proposals that we at MMTC are looking at very carefully to ensure that low-income consumers actually benefit.
NICOL TURNER-LEE
I think it's also important that we're sensitive to this whole concept of skin in the game for low-income consumers. The people that we're trying to reach are already unbanked. They're already geographically isolated. They do not have the means to travel in their wheelchairs to places to re-up their Lifeline card or benefit if that's the case. There's got to be some sensitivity there... And I just want to keep reiterating we're not there yet in the marketplace to assume that three years is enough time for the marketplace to be readily available where broadband becomes an eligible service over voice.
On FCC Policy Regarding Minority Communities and Diverse Entrants:
NICOL TURNER-LEE
In all of the proceedings that we've seen before the FCC, whether it's in the set-top proposal proceeding, whether it's in Spectrum policy, communities of color and other diverse entrants, small businesses, and other new types of businesses will not prosper. And it's very clear that the FCC is not taking diversity into account. The FCC's diversity committee is the only subcommittee at the agency that has not been re-chartered in two years. That's a problem. This is an agency that is actually designed to ensure that the unintended consequences, particularly for minority programming, and the unintended consequences for minority ownership of commercial wireless Spectrum, do not get discussed after the rulemaking has hit the floor, but those consequences are reviewed prior to. And so for groups like ours, out of all the critical issues that are before us on the table, the one big thing that is missing is diversity.
On Muni Broadband Order:
BRAD RAMSEY
I still would be very surprised if any three judges or any circuit would want to uphold the FCC in these circumstances given the precedent from the Supreme Court in Nixon. I looked at this case. This is basically the FCC telling the state whether or not it's going to get into the broadband business and where. The problem with the FCC's analysis is that it treats the state and the state organs as two separate entities. Basically it says, "State, this subdivision of the state is not really part of you, it's an independent entity and you can't tell it what to do." It's completely flawed analysis.
A PDF of the full transcript is here.
And please click here to view a video (approximately 63 minutes) of the entire panel proceeding.
All of the conference videos may be accessed below:
