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Telecom Policy

Editorial: Ivan Seidenberg for FCC Chair
Wednesday, 15 December 2010 01:09
Dave_Ivan_Seidenberg_Dick_Wiley_smallerObama wants some senior executives in government, and Ivan has already passed the torch to Lowell McAdam at Verizon. Seidenberg built FiOS, the best large network in the Western World. His state-of-the-art LTE network will soon cover 90% of the U.S.  His 40 years of experience - literally beginning as a lineman - are unparalleled. He has been right so often on industry trends it's astonishing. In 1999, Ivan told wall street the CLECs wouldn't matter and the fight would come down to telco versus cable. It took five years before most of the best in the business saw that. 
    My pro-consumer bias means I often have disagreed with Ivan, but I have enormous respect for his knowledge and ability to get things done. Genachowski on the other hand is now two years into the Obama regime within essentially only one accomplishment to point to: dramatically improved morale at the FCC. On major issues, Genachowski's has achieved almost nothing. His current proposals - especially USF with a huge Internet tax - are far less consumer oriented than his conservative Republican predecessor, Kevin Martin.
    As a practical matter, Jules' FCC is unwilling to oppose the corporations. Jim Cicconi, AT&T uber-lobbyist, controlled the FCC net neutrality rules coming next week. Jules made a political decision not to do anything on neutrality AT&T wouldn't accept. That gave Cicconi veto power. The Comcast deal is going through with largely symbolic terms even though just about every economist opposed to media concentration thinks Jules should just say no. There's billions in a Bell giveaway built into Jules' USF/ICC proposals, although he probably doesn't even realize that.
    In which case, I'd much rather have a competent and effective corporate executive running the FCC. There's a natural alternate job for lawyer Julius. Verizon's Tom Tauke is at a likely retirement age. Verizon paid Bob Barr $7M/year as counsel. That would be generous incentive for his early resignation.
AT&T Fighting Fine for Terrible Service
Sunday, 05 December 2010 14:01
Welcome_Connecticut"AT&T had failed service standards for repairs every month between 2001 and 2009," Connecticut's Department of Public Utility Control determined. Verizon's record in New York is similar. It's cheaper for a telco to fire employees and skimp on repairs. AT&T fired another 160 employees in Connecticut early this year, reducing annual costs by about $15M but making reliable service even more difficult to deliver. 
     Randall Stephenson, I've written elsewhere, has done a remarkably effective job for the shareholders of the company and is proving an extremely competent CEO. Regulators become necessary when what's good for shareholders is not what's good for the rest of us, such as reliable communication. The DPUC after eight years fined AT&T $1.1M, about six cents per line per year. Luther Turmelle in the New Haven Register reports AT&T has refused to pay that fine and is trying to negotiate it down. Connecticut's Attorney General, Richard Brodsky, is infuriated at AT&T's stalling. AT&T in 1998 spent $4.4B to buy the Connecticut operations, then the independent company SNET. 
    Back in 1998, the FCC approved the takeover. Then FCC Chairman Bill Kennard looking back said the merger approvals were the biggest mistake he made. There was plenty of warning at the time. The Connecticut Office of Consumer Counsel (OCC) argued that SBC's commitments to maintain service quality "lack enforceability," and that SBC would have the incentive and ability to permit service to deteriorate to those customers with the "fewest competitive options." 
   The fine is 1/4 of 1/10 of 1% of the price of the company.


Yes, Nicholas, There are FCC Reporters
Friday, 03 December 2010 00:51
Nicholas Lemann, Dean of the Columbia Journalism School, asked me if there still were any reporters focused on the FCC because he couldn't think of any outside the trade press. In fact, Cecilia Kang of the Washington Post, Amy Schatz of the Wall Street Journal, Joelle Tessler of AP, Roger Cheng of Dow Jones, Todd Shields of Bloomberg, and Jasmin Melvin of Reuters spend most of their time covering the FCC and related issues. Michael Copps had just spoken. I asked a question about the far too frequent 'he said, she said" articles from D.C. and whether reporters should do the legwork to determine which of the contradictory advocates was lying. So I thought to highlight some of the best work coming from the D.C. reporters. I hope they point me to articles they were proud of, especially those that involved reporting beyond the predictable comments of DC officials and lobbyists, which I'll add below.
For example:
Todd Shields AT&T Gains FCC's Ear as Regulators Near Decision on Net Neutrality Rules reported AT&T uber-lobbyist Jim Cicconi called on FCC chief of staff Eddie Lazarus six times in three weeks as Lazarus was drafting the Net Neutrality rules. His report of AT&T and similar lobbying practices I believe was reflected in subsequent news reports and Wall Street analysis suggesting the rules favored AT&T over consumers.    
Jim Crowe's a Hypocrite, But He's Right
Tuesday, 30 November 2010 18:49
Level 3 Communications
Jim Crowe in 2005 tried to pull on Cogent what Comcast is doing to him today. He went to D.C. to personally rail against neutrality. So some people are laughing when he begs for government help in a fight against Comcast, whose 1/4th of the U.S. Internet population allowed them to beat Level 3 into submission. 
    When they started squeezing the small ISPs in the 1990's only a few of us spoke out. When the telcos/cablecos squeezed out even the big ISPs alike AOL, there was more of an outcry but it failed. When Level 3 tried to use size/market power to squeeze Cogent in 2005, few protested. When Comcast - with AT&T.Verizon panting to join - comes after Level 3, will no one effective be left to speak out?
        Level 3's new comments correspond to what I and others have been saying for a decade. Welcome, Jim, and glad you now see the light. Here's their statement.
For the Record: Open Internet Petition
Friday, 19 November 2010 18:56
I was called a "Net pioneer" by several reporters because I was one of the signers of the On-Advancing-the-Open-Internet-by-Distinguishing-it-from-Specialized-Services statement. I'm nothing of the sort, of course, but I was proud to sign alongside true pioneers like David Reed, Bruce Perens, and Steve Wozniak. AT&T introduced a "managed services" exemption into the BellSouth merger agreement in 2006, a loophole big enough for 500 video channels to evade any neutrality regulations. The word from Wired and some D.C. reporters is that Genachowski has caved on this one, giving the Bells enough loopholes  that the coming neutrality rules will be nice rhetoric but Verizon or AT&T can easily bypass any rules. For better or worse. 
     MSNBC has just censured Joe Scarborough for making political contributions to Republicans and Keith Olbermann, for giving some money to Democrats. The network believes contributions should be prohibited because they imply a reporter might be biased. I think that's hogwash. Being human implies that a reporter is biased and pretending otherwise is deceitful. I've come to know many reporters doing this gig and nearly all the best have strong personal opinions. 
     I have a strong pro-consumer bias and don't pretend otherwise. It's my job as a reporter to write the truth despite my bias and it's up to the reader to judge whether I remain able to write the truth. If I could have afforded it, I would have generously contributed to the campaigns of Barack Obama and others. I've given (modest) donation to the Electronic Frontier Foundation and others.  I've signed this FCC petition and filed when I feel strongly on an issue. 
      Any reporter or news organization that thinks they have no bias is probably mistaken. I just don't pretend. 
Feting Jules
Thursday, 09 December 2010 16:42
julius_genachowskiJules Genachowski will be feted by 1,500 lobbyists/lawyers at the FCBA Chairman's Dinner. It's remarkable to look at the huge Hilton Ballroom and realize it represents more than $billion in influence. Many $5+M lawyers, like Dick Wiley and Griffin Bell, will attend along with literally dozens of $M partners of the major firms. $2M/year lobbyists will likely include Kyle McSlarrow from cable and Steve Largent from wireless.

Since Jules doesn't take bribes, companies like AT&T and Comcast need to go to Plan B. They hire the 2+2=5 gang, folks capable of persuading most of D.C. almost anything.  Tom Tauke of Verizon, David Cohen of Comcast and Jim Cicconi of AT&T each have separate $100M+ influence budgets. They create a "climate of opinion" and make sure their "friends" have the funding to dominate the D.C. agenda.

He'll smile a lot, tell a few jokes designed not to be mean, and hope to safely leave the building, where Ronald Reagan was shot in 1981.
Economics of Collecting by Receiving Carrier: Costs of Internet Go Up (Draft 0.5)
Friday, 03 December 2010 09:38
Comcast, AT&T, Verizon and similar have "market power" because of a "terminating monopoly." That allows them to charge far more than a market would to terminate traffic. Comcast and AT&T each have close to a quarter of the U.S. Internet users. As a practical matter, Level 3 discovered they have to pay virtually whatever Comcast asks. They would be out of business if cut off from such a large part of the market.
       Setting charges where competition is weak (termination) is less efficient, economically, than where the market is strong. The backbone side, carrying video and other traffic, is reasonably competitive. Half a dozen large companies (Level 3, AT&T, Verizon/MCI, Global Crossing, NTT, Sprint) offer service. That's consistently driven prices down as Moore's Law has reduced the cost of providing the service.
       Streaming video as an alternative to TV services failed miserably around 2001 because the price to carry a movie was measured in dollars. Only the highest price content viable. By 2007-8, the price was down to dimes. YouTube and Daily Motion became viable businesses, although still only a fraction of the screen or low quality. In 2010, the price is in pennies. HD television at a low price (Netflix) or advertiser-supported (Hulu) is viable. Compression today is 4-5 times more effective than in 2001, a related improvement. 
       The best encoded films from Netflix, such as The Tudors, actually look great on Jennie's 50 inch TV. She's connected via DSL at 3 megabits. Verizon's DSL is rock-solid but that limits the streaming rate to 2.5 megabits or so. Live football with lots of motion might require 5-6 megabits for near-perfect HD with today's codecs, but most HD actually watched on U.S. satellite or cable is live encoded to less than that. Pre-encoding in two passes reduces the necessary bandwidth even further, meaning video on demand does not require the same bit-rate as live TV. 
        Europe is leading the way on reducing terminating charges on mobile phone calls and is finding consumers save money. Consumers can buy minutes and SIM cards from many sources, keeping prices down. Carriers, who would prefer higher charges, are fiercely resisting giving up the right to charge where they have market power. 
        Only the carrier shareholders benefit by setting the charge at termination. That's why it's accurate to speak of "toll booths on the Internet."
For the Record: Dave on Comcast Level 3 Issues
Wednesday, 01 December 2010 20:25
Jason Livingood pointed out a significant error in my posting to Dave Farber's Interesting People list, although I believe the analysis holds. First is my initial comments, than my back and forth with Jason. Painfully geeky. I'll try to edit it to a clear article as soon as I can.
For the Record: Dave on Comcast/Level 3
Tuesday, 30 November 2010 00:38
Comcast's Joe Waz argued on the Comcast blog and Dave Farber's list that Comcast should charge Level 3 because the they were downloading from Level 3 more than they were uploading. The issue is that today essentially all U.S. broadband providers upload far less than they download. That would mean charging everyone, something I disagree with. So I posted

A question.
Are you contending that Comcast need not peer with carriers with substantial asymmetry, say within 100% of the national average?
  I ask because the current ratio of downstream to upstream traffic on the U.S. Internet is about 4:1, which means essentially everyone except the carriers will have significantly asymmetric traffic with any large carrier such as Comcast. Comcast will always receive far more traffic than it sends with any backbone provider and the proportion is increasing.
  Which implies that Comcast could charge for just about all the traffic coming in. If I'm reading you wrong, please get back to me.
I haven't heard from Joe with an answer. 
Ben Popken of the Consumerist called as well, and quoted me saying
"Industry analyst Dave Burstein told Consumerist, "The Justice Department should step in with antitrust."
Editorial: Hire or Fire Scott Barash at Universal Service
Saturday, 11 September 2010 19:26
Scott Barash as "Acting CEO" doesn't have the power or confidence to improve the agency. After 4 years and 9 months as "acting" it's time to either give him the job or find someone else. The person running the agency needs to have the authority to get things done.
As acting head of USAC, Scott Barash has been essentially invisible. That's smart when you have no security in a job. Years ago I learned being "acting" anything is a terrible position. I spent 14 months "acting" at WBAI-FM and in practice couldn't do what the job required. People I ask speak well of Barash personally. His resume is strong, and he may be the right person to create USAC's future. If so, Julius should give him the job and the backing to do it well.


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