Policy Blog Entries by Phil Weiser

As Harold noted in the comment to my last post, empirical data has a way of settling theoretical disputes. I agree that the net neutrality debate is best understood as how to manage policy under conditions of uncertainty. Those with different premises (or philosophical perspectives) thus come out differently.

I also agree with Harold that it is not a reasonable view to argue that a two firm market is competitive, at least as a general matter (we can argue about exceptions, like Boeing v. Airbus, where there are only a few sophisticated buyers). In the broadband environment, the first challenge—all too ignored in the current debate—is to promote more platforms and, as I think Harold and I both agree, wireless broadband is our best bet.

In terms of wireless broadband, we are uncertain whether and how it will develop. In particular, we do not know whether licenses that are like property (i.e., the AWS ones) or whether leaving spectrum as unlicensed will better faciliate wireless broadband. Given this uncertainty, it seems to me that the best policy is to promote both avenues and the Spectrum Policy Task Force proposed just this approach. In the paper I noted earlier, and with which Harold quarreled, the key point we made is that there is a consensus—and a strong policy basis—for promoting some property-right like licensing of spectrum and thus there is a challege of how to define the contours of those rights.

Unfortunately, this is likely to be my last post. Thank you all for listening.

Arguing with Harold is a great fun because he is so terrifically passionate and articulate as an advocate. For those who don’t know Harold, imagine a one man army—think Rambo—being ready to take on the world. So call me crazy for joining his turf to tussle, but here goes.

Harold’s perspective on network neutrality is clear and relies on a powerful premise—a vertically integrated firm cannot be trusted to allow competition at the applications layer. For Harold, then, the solution is either enforced modularity—confining the transport provider to pure connectivity—or a virtual modularity where the interfaces are standardized and open.

The problem with Harold’s vision is two-fold—(1) it underestimates the considerable logic in favor of openness that will lead most companies to allow rival applications to ride on their platform (yes, there are exceptions to this principle, but I will get to that); and (2) it underestimates the possibility that some applications if not delivered on a vertically integrated basis will not be delivered at all. Under the Computer Inquiry regime Harold praises, for example, consumers did not get the benefit of voicemail services because it was not economic for independent providers to offer them and, for many years, the incumbent phone companies were prevented from offering it.

If one agrees with my critique of Harold’s vision (the details are here), the next question is what type of regulatory regime should one adopt. My vision, as Harold notes, does not dismiss that broadband providers with market power may well have incentives to discriminate and undermine applications providers (particularly those that threaten their core revenues). It does require, however, that regulators find ways to focus on the competitive harms without adopting rules that will give rise to unintended consequences, foreseeable inefficiencies, and potentially pick winners and losers. As my most recent post notes, however, there are real questions as to whether the FCC is institutionally prepared to oversee an antitrust-like model of regulation.

Art’s recent post about conditions on the AT&T-BellSouth merger, and the possible issuance of an Notice of Inquiry on network neutrality, underscore the state of the FCC’s policymaking apparatus. It is not pretty.

The FCC, rather than develop a rule-of-law culture steeped in intellectually rigorous and tractable principles, is riddled with a legislative-like give-and-take legacy of dealmaking, rent-seeking pressures, and industrial policymaking (i.e., picking and choosing winners or handicapping the race). Such a legacy leads many to ask, including one commenter on my net neutrality post, “can we trust the FCC with any substantial policymaking responsibility?” This criticism, by the way, is one of the most powerful reasons behind the critique of the Broadcast Flag—the agency is not to be trusted as a reasonable arbiter of DRM given its traditional sensitivity to political pressures.

The question for the FCC of the future is whether it will develop capabilities to adjudicate competition policy matters (as in net neutrality), define and enforce property-like rights in spectrum, and protect public values in an intellectually honest fashion (say, seeking to evaluate the best strategies for promoting media diversity). To date, I have not paid as much attention to such questions as I should—for an exception, see the second half of this piece—but going forward, the question of what type of FCC should exist may well be far more important than the substantive questions of whether the agency should pursue X or Y policy.

With increasing signs that the telecommunications policy reform effort in Congress is stalled, there is an opportunity for policymakers to go back to the drawing board on net neutrality. From my vantage point, that’s a good thing.

The debate in Congress marked one of the most amusing telecom policy debates in a long time. Just Ask A Ninja or Jon Stewart. The debate was, however, short on careful policy analysis.

Take the Wyden bill, for starters. The bill prevented network owners from making available tiered levels of service for a fee because it feared a “chilling effect on small mom and pop businesses that can’t afford the priority lane, leaving these smaller businesses no hope of competing against the Wal-Marts of the world.” To someone schooled in antitrust principles (like me), this fear smacks of the 1960s “big is bad” mantra that cost consumers big time—i.e., prevented efficiencies of the kind that Walmart and Costco use to save consumers money.

Looking even deeper at the economics behind a system of “pay-to-play” is even more revealing. There are costs of upgrading broadband networks and the question that cable and telephone companies are asking themselves is how they will pay for it. Under the Wyden bill, the answer is—charge consumers. But is it necessarily more efficient only to charge consumers and not producers? In short, there may be a series of reasons behind why different pricing strategies will be more effective at identifying those willing-to-pay more—and thereby making services available cheaper to those willing-to-pay less. (This is a little like popcorn at the movies—those who do buy it are, in effect showing their willingness to pay more for the movie experience, and subsidizing those not willing to pay more.)

The real concern of net neutrality advocates should not be insisting on a single tiered Internet that—at least for those who have heard of Akamai already know—is a fantasy. (For those who are unfamiliar with Akamai, its caching services provide enhanced performance to the big companies who can afford to pay for them.) The real concern is that with only two broadband providers offering service, there remains a risk of anticompetitive conduct that understandably makes policymakers nervous. The question is thus, in an environment where there are real benefits from improving network performance and possible efficiencies from alternative pricing strategies, what should policymakers do. For Rob Atkinson and I, the answer is embrace a third way—i.e., a course different from the “do little” approach of the Stevens bill and the “no tiering” approach of the Wyden bill. In particular, we advocate transparency requirements (to enable consumers to be their own protectors); a competition policy based regime that would provide after-the-fact oversight of non-discriminatory conduct (evaluating whether a legitimate business reason existed for it); and a requirement that the best efforts Internet continue to evolve (in bandwidth) so those unable to pay for prioritization are still able to develop and deploy new services. For the details on our proposal, see here.

In its meeting next week, the FCC will unveil its new Homeland Security Bureau, elevating concerns about how emergency responders communicate. The legacy of emergency responders in term of information management is a most unfortunate tale that most policy observers are all too familiar with. In short, the legacy is one of dedicating spectrum that is used only be a single agency (say, the local fire department) with specially made (and very expensive) equipment that is generally quite antiquated. The result is, quite literally, a recipe for disaster.

There is a better way. The FCC’s new Homeland Security Bureau would do well to begin viewing first responders as part of a “safety enterprise” that should use an enterprise architecture. Like most enterprises, this architecture should take advantage of the power of the Internet protocol and economies of scale from using commercial, off the shelf equipment. Significantly, local agencies need not and should not abandon their old equipment, but should develop an architecture that views legacy radios as only one part of an information management network. This network can connect all sorts of entities that may be relevant to emergency response (say, electric utilities), but only authorize access on a need-to-use basis (rights management, if you will).

It remains to be seen what the FCC’s agenda is for the new bureau, but one along the lines noted above is spelled out in a recent report of the Aspen Institute based on a recent conference (another one of Charlie Firestone’s) and authored by yours truly. Copies are available here.

In the prior post, Harold Feld discusses the implications of the recent AWS auction. To offer an optimistic counterpoint to Harold, let me begin with the good news of that auction for consumers—TMobile lives to fight another day. Unlike other providers, TMobile is more committed to the open Internet (in terms of its web access) and more willing to experiment (including a new wifi/cellular phone in the offing). I could go on here (they were the first to embrace the Treo, for example), but you all get the point. The good news, which Harold glosses over, is that TMobile was the big purchaser and is in a position to roll out its 3G offering and continue to be a supporter of independent innovation and, more generally, act as a maverick in this space.

Speaking of Harold and spectrum policy, I do have to correct the record based on a prior post of Harold’s elsewhere. In that post, Harold expressed his disappointment that Dale Hatfield and I, in a recent paper released by Cato, did not take on the “property rights school of spectrum policy.” As Harold pointed out, Dale and I had previously written on the importance and challenges of enabling a spectrum commons model to work effectively (see here). Unfortunately, Harold misread our recent paper as calling into question our position that unlicensed spectrum is an important tool to promote innovation and consumer welfare. Rather, the recent paper—and I quote—“does not focus on whether a new regime should promote spectrum as part of a commons”; instead, the paper addresses “how promoting a property rights regime in spectrum is not nearly as simple as some people suggest.”

Personally, I believe that spectrum policy should embrace both a commitment to unlicensed spectrum and licensed spectrum. Each model has its benefits and can be used effectively to promote innovation. We did not intend to engage that debate, but rather began with the premise that there will be property rights in spectrum and policymakers will ultimately need to address the question of what it means to grant property-like rights in spectrum. One could even, if they were so inclined, read our paper as underscoring that implementing the property rights model is far more difficult than advertised. (It is, but we still think it is worth the candle.)

In terms of our analysis, the key point for present purposes is that spectrum property rights cannot function like land. If anything, they are more like water rights—fluid and difficult-to-define. Consequently, if policymakers attempt to impose strict property rights on spectrum licenses, they might well create strategic opportunities for firms to purchase spectrum rights with the sole purpose of engaging in hold-up-type behavior. (Spectrum trolls, if you will.) There are alternative property designs that could avoid this problem—a limitation on injunctions; safe harbor rules; and other measures, for example. We have not worked out all of the details, but our central point is that spectrum property rights advocates cannot simple argue “treat spectrum like land” and stop there. In fact, the differences between spectrum and land explain, in part, the reticence of implementing a more thorough-going commitment to property rights.

Harold, I assume that you will have a response, so take it away…

First off, let me thank Gigi Sohn for inviting me as a guest blogger. I have resisted the urge to dive in full time into the blogosphere for several reasons (with the lack of time being the foremost reason), but her invitation was too good to resist.

As readers of this blog appreciate, Public Knowledge and Gigi’s leadership address a critical need in our emerging information economy—all too often, debates on matter of telecommunications policy, digital copyright issues, or patent law feature either a chorus or a food fight (pick whichever metaphor applies) comprised of industry participants without anyone to represent consumers. PK’s emergence on the scene changes this dynamic and answers the question that students often ask me when hearing about the overwhelming votes in favor of laws like the Copyright Term Extension Act—“who represented the public” in such debates?

For my first post, I will address an issue raised by a project I am now working on in connection with the Aspen Institute’s Communications and Society program. This project, under Charlie Firestone’s able leadership, recently hosted a conference on “The Future of Video.” With a number of top flight participants from industry, academia, and government, the conference wrested with a series of difficult questions related to the topic. As the reporter of the conference (or “rapponteur,” as Charlie likes to call the role), it is my job to offer a thoughtful narrative and encapsulation of the discussion from the perspective of being an “informed” observer. So, I figure, how better to be informed than to ask for some feedback from thoughtful PK blog readers.

For your consideration and suggestions, here’s my question: what’s special about the emerging video/media marketplace? My top three suggestions are (1) the ability of users to be producers and offer really cool content that otherwise would not be viewed; (2) the ability of old programs, long locked in the vault of content producers, to be made available (Wonder Woman, anyone?); and (3) the ability to combine content together (mash-ups) for really interesting combinations (try, Gnarls Barkley and Frank Sinatra on for size). As IP gurus appreciate, all three scenarios raise interesting IP issues, which I will look forward to addressing over the next two weeks. Not to mention, I’ll have lots to say about telecom policy, too.