Six years ago, the Phoenix Center released (and later published) a paper entitled Network Neutrality and Foreclosing Market Exchange: A Transaction Cost Analysis. In that paper, we analyzed the effects of network neutrality proposals that foreclose or severely limit market transactions between content providers and broadband service providers. Our model revealed that under plausible conditions, rules that prohibit efficient commercial transactions between content and broadband service providers could, in fact, be bad for all participants: consumers would pay higher prices, the profits of the broadband service provider would decline, and the sales of Internet content providers would also decline. As a result, such proposals would …
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FCC Rules Block Broadband Price Cuts…
May 13th, 2013 | Posted by in Federal Communications Commission | Law and Economics | Net Neutrality | Regulation | Wireless - (0 Comments)Will the FCC Exclude Bidders from the Upcoming Voluntary Incentive Auction?
April 4th, 2013 | Posted by in Federal Communications Commission | Incentive Auctions | Incumbent Exclusion Rules | Spectrum | Spectrum Caps | Spectrum Exhaust | Spectrum Screen | Wireless - (Comments Off)
Last year, when Congress was debating the voluntary incentive auction provisions of the Middle Class Tax Relief and Jobs Creation Act, many argued—including FCC outgoing Chairman Julius Genachowski—that the Commission should have the authority to adopt auction participation rules so that it could prevent an “excessive concentration of licenses” under Section 309(j)(3)(B) of te Communications Act. While Congress did not include any specific auction participation rules in the Middle Class Tax Relief and Jobs Creation Act, Section 6404 of the new legislation states that “Nothing … affects any authority the Commission has to adopt and enforce rules of general applicability, including rules concerning spectrum aggregation …
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Spectrum Exhaust and the Monopolization Narrative…
April 3rd, 2013 | Posted by in Federal Communications Commission | Incumbent Exclusion Rules | Industry Structure and Market Performance | Merger Review | Mobile Broadband | Spectrum Caps | Spectrum Exhaust | Spectrum Screen | Wireless - (Comments Off)In a recent speech, outgoing FCC Chairman Julius Genachowski once again reiterated the critical importance of spectrum policy “breakthroughs” to address the “tremendous stress” on the capacity of the nation’s wireless networks “from growing digital demand.” While Congress and regulators are doing what they can, including addressing tower siting (here and here), reallocating and sharing government spectrum (here and here), and moving forward with the voluntary incentive auctions for broadcast spectrum, these actions represent only partial (and possibly untimely) solutions to spectrum exhaust. Addressing the problem in the near term will require secondary market transactions for spectrum, where spectrum is reassigned from lower to higher …
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The Sixteenth CMRS Competition Report: A Paralysis Born in Humility
March 25th, 2013 | Posted by in Broadband | CMRS Reports | Federal Communications Commission | Law and Economics | Mobile Broadband | Regulation | Spectrum | Wireless - (3 Comments)Each year, Section 331(c)(1)(C) of the Communications Act directs the Federal Communications Commission (FCC) to “review competitive market conditions with respect to commercial mobile services and shall include in its annual report an analysis of those conditions.” To this end, the agency released its Sixteenth Annual CMRS Report last week. In this latest report, the FCC makes few formal findings, but instead “focuses on presenting the best data available on competition throughout this sector of the economy and highlighting several key trends in the mobile wireless industry.” (Sixteenth Report at ¶ 2.) Consistent with the other CMRS Reports issued under Chairman Julius Genachowski’s watch, the …
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Copyright and Wireless Carterfone (Part Deux)…
March 7th, 2013 | Posted by in Copyright | Federal Communications Commission | Handset Exclusivity | Industry Structure and Market Performance | Intellectual Property | Interoperability | Law and Economics | Mobile Broadband | Wireless - (Comments Off)Last month, I authored a blog discussing the Librarian of Congress’s recent decision not to exempt handset unlocking of new phones from the anti-circumvention petitions of the Digital Millennium Copyright Act (“DMCA”). Since that blog was posted, copyright-reform activists launched an on-line campaign to have the White House “ask the Librarian of Congress to rescind this decision, and failing that, champion a bill that makes unlocking permanently legal.” Last week, in a post by R. David Edelman, Senior Advisor for Internet, Innovation Policy, entitled It’s Time to Legalize Cell Phone Unlocking, the White House joined in the dispute stating: The White House agrees … that …
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Copyright and Wireless Carterfone…
February 7th, 2013 | Posted by in Copyright | Handset Exclusivity | Intellectual Property | Interoperability | Law and Economics | Mobile Broadband | Wireless - (Comments Off)Recently, a renewed interest in long-term contracts and the practice of locking handsets to networks has emerged from an unlikely source: Copyright law. Making a very long and complicated story short, under Section 1201(a)(1)(A) of the Digital Millennium Copyright Act (DMCA), it is unlawful to circumvent certain technological measures employed by or on behalf of copyright owners to protect their works. That said, copyright law always embeds some balance between owner and user, and Section 1201(a)(1)(B) limits the prohibition for subsection (A) by exempting those persons who are “adversely affected by virtue of such prohibition in their ability to make noninfringing uses of that particular …
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Economic Theory in Action: The FCC’s Assault on the Mobile Broadband Consumer…
November 30th, 2012 | Posted by in "Over the Top" Services | Broadband | Federal Communications Commission | Industry Structure and Market Performance | Law and Economics | MVPDs | Net Neutrality | Network Agnostic Devices | Regulation | Wireless - (Comments Off)Recently, I spotted an interesting blog by Scott Wallsten at the Technology Policy Institute. In this blog, Scott discusses the FCC’s recent decision that Verizon violated the open access rules of the 700 MHz C-Block auction by charging its customers an additional $20 per month on its data plans to tether a device. In response, Verizon paid a fine and now allows tethering on all new data plans. However, Scott observes that: Verizon effectively abandoned the post-paid market for light users after the FCC decision. Verizon no longer offers individual plans. Even consumers with only a single smartphone must purchase a shared data plan. That’s …
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Why the FCC Should Not “Tax” Efforts to Repurpose Spectrum…
October 12th, 2012 | Posted by in Federal Communications Commission | Law and Economics | Spectrum | Spectrum Exhaust | Wireless - (Comments Off)The mobile revolution is threatened today by the lack of sufficient commercial spectrum to satiate America’s ever-increasing appetite for wireless devices. While efforts are underway to hold voluntary incentive auctions for broadcast spectrum and to free-up unused or underutilized government spectrum, most agree that these initiatives are years away from putting spectrum in the hands of commercial users and will be insufficient standing alone to resolve spectrum exhaust even if fully successful. As a result, the spectrum community is now exploring ways to repurpose spectrum from lower- to higher-valued uses to satisfy the growing demand. For example, we have recently seen activity involving the potential …
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The Curious Case of the FCC’s Spectrum Screen NPRM…
October 9th, 2012 | Posted by in Federal Communications Commission | Incumbent Exclusion Rules | Mobile Broadband | Regulation | Regulatory Reform | Spectrum | Spectrum Caps | Spectrum Exhaust | Spectrum Screen | Wireless - (Comments Off)With the ever-present specter of spectrum exhaust hanging over the wireless industry, policymakers are constantly faced with the corresponding question of how to allocate spectrum among competing providers to ensure that market does not devolve into one with “excessive” concentration under Section 309(j)(3)(B) of the Communications Act. Since the 1990’s, the FCC has tried a variety of approaches—from outright spectrum caps to the current and more flexible case-by-case “spectrum screen”—to try to manage its statutory charge. As to be expected given the huge stakes at hand, stakeholders vehemently disagree as to the best approach moving forward (particularly with the new voluntary incentive auctions for broadcast …
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Susan Crawford and the Economics of the Wireless Industry…
August 10th, 2012 | Posted by in "Over the Top" Services | Federal Communications Commission | Incentive Auctions | Incumbent Exclusion Rules | Industry Structure and Market Performance | Law and Economics | Mobile Broadband | Net Neutrality | Regulation | Spectrum | Spectrum Caps | Spectrum Exhaust | Susan Crawford | Wireless - (Comments Off)Last week, Professor Susan Crawford authored an op-ed entitled What’s Good for Verizon and AT&T Is Terrible for American Consumers. While Professor Crawford’s emotional argument is a bit scattered, her depiction of an industry in transition provides a useful foundation for discussing the future of broadband in the United States. First, Professor Crawford argues that wireless broadband is a “commodity,” and one that consumers are increasingly using as a substitute for traditional “voice” and “texting” services. This substitution is arguably true and, as such, we should therefore expect to see broadband providers increasingly employing and experimenting with a variety of pricing plans in an effort …
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