Archive for the ‘fcc’ tag
FCC and the Internet: Edit->Undo?
The D.C. Circuit Court of Appeals recently held that the FCC was not authorized to prohibit Comcast from interfering with P2P networking applications, erecting what appears to be a large roadblock on the FCC’s path to net neutrality. The court held that the FCC’s ancillary authority under Section 4(i) of the Communications Act of 1934 did not extend it sufficient power to regulate broadband services absent explicit statutory goals.
The FCC had largely tied its own hands in the case: its designation of broadband as an ‘information service’ under the Bush administration was granted Chevron deference by the Supreme Court in the 2005 Brand X case, leaving it unregulated in an effort to promote investment. The agency simply adopted four principles of net freedom that they expected broadband companies to abide by and went home for dinner. However, with competition in broadband access arguably dwindling rather than burgeoning, public interest groups like the Open Internet Coalition are seeking increased regulation to protect consumer choice, and the FCC wants to lead the way.
As it turns out, the Comcast ruling may not be the big obstacle it first appears to be. The Brand X majority openly accepted the FCC interpretation over the Ninth Circuit’s version, stating that only judicial precedent holding a statute unambiguous can displace agency construction. In a dissent, Justice Scalia argued that the Court was ceding far too much by allowing the FCC to define ambiguous statutory terms and then flip its definition to suit its fancy in future disputes, a fear the majority seemingly shrugged off. Here is a hypothetical presented by Justice Scalia in his Brand X dissent:
Imagine the following sequence of events: FCC action is challenged as ultra vires under the governing statute; the litigation reaches all the way to the Supreme Court of the United States. The Solicitor General sets forth the FCC’s official position (approved by the Commission) regarding interpretation of the statute. Applying Mead, however, the Court denies the agency position Chevron deference, finds that the best interpretation of the statute contradicts the agency’s position, and holds the challenged agency action unlawful. The agency promptly conducts a rulemaking, and adopts a rule that comports with its earlier position–in effect disagreeing with the Supreme Court concerning the best interpretation of the statute. According to today’s opinion, the agency is thereupon free to take the action that the Supreme Court found unlawful. 545 U.S. 967, 1016.
The FCC would appear, at least from Justice Scalia’s viewpoint, to have a semantic out. Michigan Law Professor Susan Crawford argues that the agency should simply relabel high-speed internet services as ‘telecommunications services’, which are subject to regulation under Title II of the Communications Act. Simple enough, no? Not according to one blogger, who analyzes the proposed methodology and concludes that it would open a Pandora’s Box. In fact, Crawford herself recognized difficulty with this strategy in a 2006 article for Berkeley Tech Law Journal:
Congress should act to cabin and explicate the scope of the Commission’s authority to regulate the internet. The difficult and important question of how to govern the internet should be answered explicitly rather than through formalistic re-characterization of internet services by an independent agency. 21 Berkeley Tech. L.J. 873, 931.
In contradicting her recent Op-Ed piece, she highlights an alternative route the FCC can take: ask Congress to redevelop FCC authority and provide more logical regulatory boundaries in light of the dramatic advances in communications technology over the past several decades. Congressional action would add legitimacy to the process and allow for the formation of a structural foundation that represents the importance of internet functionality in the modern age. In the meantime, the National Broadband Plan is moving forward and the FCC plans to launch more than 60 proceedings within the year, authorized or otherwise.
New Legislation Targets Unsolicited Text Message Ads
New Jersey senators Joseph Vitale and Sean Kean have proposed legislation that would impose heavy fines on entities that sent unsolicited text message advertisements. Though the Telephone Consumer Protection Act was enacted prior to the advent of text messaging, such unsolicited text message ads have recently been found to fall under the TCPA. The 9th Circuit has declared this interpretation of the FCC to be reasonable and other circuits are likely to follow. The FCC prohibitions, however, do not include all text messages; rather, they only prohibit those sent from an internet domain name. Messages sent from cell phone to cell phone are exempt.
Vitale and Kean’s bill provides that fines will only be levied in two instances: if the text message causes the recipient to incur a fee or decreases the number of text message the recipient is allocated by his cell phone provider. The fines, only imposed if the advertiser sends more than one per year, are very steep; $10,000 for the first offense, $20,000 for subsequent offenses, and $30,000 if the advertiser knew or should have known the recipient was disabled or elderly. The bill also contains a provision requiring all phone companies to offer New Jersey consumers the option of blocking all incoming and outgoing text messages. Senator Vitale explains the motivation of the legislation, “We have to do a much better job in New Jersey to protect consumers from unsolicited text advertisements which can drive their cell phone bills through the roof.”
Certainly the New Jersey bill correctly recognizes the need to close the loopholes in the FCC’s regulation; however, it is still deficient. Firstly, in many cases it would be impossible to determine whether an advertiser knew or should have known if the recipient was disabled or elderly. The bill contains no guidance on what type of inquiry, if any, the advertiser should undertake to determine if the recipient falls into one of those categories. In many cases, it seems unlikely the advertiser would have enough information to know the recipient’s status. If the bill’s intent is to protect these groups, the additional fee should be levied regardless of the advertiser’s knowledge; otherwise, it is unlikely they will ever be subject to this additional fine.
More importantly, under the terms of the bill, unsolicited text messages to a recipient who had an unlimited text messaging plan would be permitted; a consumer with an unlimited plan would not incur a fee or a decreased number of available messages. Thus, the bill does not properly deal with the nuisance of unsolicited texts, rather it only recognizes the monetary cost. Such a stance is unreasonable; a consumer would have to receive a massive amount of unsolicited ads for any real cost to be incurred. Sprint, AT&T and T-mobile charge only twenty cents per text message. Most consumers would not be aggravated by this minimal charge, but rather at the annoyance of unsolicited contact. The bill should be amended to prohibit all unsolicited text ads, even if the consumer suffers no monetary loss. With this alteration, the bill would operate as an effective deterrent.
FCC re-examines cableCARD as part of the national broadband plan
Most people don’t think of TV when the subject of broadband internet comes up. That may change if the FCC gets its way. The commission is currently reviewing some of its TV policies as part of its National Broadband Plan to encourage nationwide adoption. Last month, an FCC task force identified several current hurdles to overcome, including what it calls the “Television Set-Top Box Innovation Gap.” The focus on television comes from a task force finding that 99% of American households have television sets, while only 76% have computers. Despite the relative ubiquity however, the task force notes that current innovation is limited with regard to the convergence of video, TV, and internet-based services.
This may be due to the fact that cableCARD has yet to meet its goals under the Telecommunications Act of 1996. Under the act, the FCC has authority to ensure that cable and satellite television networks are open to third-party devices. Similar to the earlier Carterfone decision (allowing customers to connect third-party phones to the AT&T network), the goal is to foster innovation through competition. Roughly the same size and shape to a laptop PCMCIA card, a cableCARD can be inserted into a compatible device, like a TiVo, and allows it to access encrypted video content such as video on demand or HD channels without requiring a separate cable box. Since the TiVo could also be connected to the internet, the ability to combine the two sources has potential for a number of interactive applications. Despite this, adoption has been slow and cableCARD devices have not yet achieved significant market share.
As a result, the FCC announced earlier this month that it is seeking public comment on methods to bridge the set-top box gap. Specifically, it stated that cableCARD “has not achieved its intended result” and therefore the commission is considering other options. This might result in a modification of the current standard, or may involve scrapping cableCARD in favor of a whole new standard. The FCC has already received numerous suggestions, ranging from complete overhauls to tweaks of the existing standard. It will be very interesting to see what direction the commission decides to take when they submit the final plan to Congress in February.
The Big Test – Proposed Comcast and NBC Universal Merger
The proposed merger between Comcast and NBC Universal is a major test for the Obama administration’s positions on vertical mergers and media consolidation. Comcast has already made some commitments to aid it during the review process, which is likely to take at least a year. These commitments include continuing free over-the-air broadcast of NBC and Telemundo as well as enhancing availability of children’s programming and Hispanic-focused content through on demand capabilities and some use of the digital spectrum available to various channels.
The big questions left are how the Obama administration will react to the proposed merger and what conditions might be placed on the merger once its terms become more concrete. The merger would see a significant combination of internet service provision, television programming distribution, television programming production, and news gathering into one entity. At the very least, Comcast’s position as “one of the nation’s leading providers of cable, entertainment and communications products and services” is certain to raise a lot of questions during the review process.
An interesting effect of entering the review process is how Comcast’s need to enhance its image to aid in regulatory agency approval, and how this might affect the ability of other television networks to demand better retransmission terms from Comcast. It is entirely possible that Comcast may have to take a softer line in its negotiations and pay more for local broadcasts than it has in the past, in order to help convince regulatory agencies that the merger will not have anticompetitive effects.
Ready or Not, Digital Broadcasting is Almost Here
by: Sarah Carmody, Associate Editor, MTTLR
Under the Digital Television Transition and Public Safety Act of 2005, Congress mandated that all full-power television broadcast stations stop broadcasting in analog format and broadcast only in digital after February 17, 2009.1 While it is somewhat unusual for Congress to mandate an upgrade in technology for consumers rather then letting the technology market drive itself, there are a couple of motives here that make the situation different from, for instance, a mandate to upgrade from VHS to DVD. First, the changeover will free up frequencies for public safety communications (such as police, fire, and emergency rescue).2 Second, the 700 megahertz band is in the process of being auctioned off to companies for advancing commercial wireless services for consumers.3 While these outcomes will be beneficial for society, the pragmatic challenges of the changeover are causing skeptics to question the implementation of the digital transition.
Feasibility of the Transition
One question that consumer advocates are raising is the feasibility of the conversion, both because of the number of consumers who must take action to continue receiving broadcasts and the technological subject matter. While cable and satellite customers might have to make changes to their service or equipment, the group most affected by the transition is television viewers who don’t subscribe to cable or satellite and have an analog television. These viewers must obtain a digital-to-analog converter in order to continue viewing programming, and will otherwise be receiving all static beginning next February. Nielsen estimates that 13% of American households, or approximately 14.3 million households, watch television via an over-the-air signal only and thus must install a converter if they want to continue viewing.4 As of November, only 31% of this group was aware of the upcoming transition.5 While these statistics are grim, there is hope that the FCC will be able to pull together an effective strategy to make this transition painless.
First, the FCC has an incredibly effective tool for creating notice and explaining the transition—television commercials! Running commercials on non-cable stations is an obvious and likely effective way of reaching the targeted group. The FCC has also set up an informative, albeit busy, website, www.dtv.gov (with a considerably ominous countdown-to-DTV-transition clock), that explains the transition and links to another, more straightforward, website run by the National Telecommunications and Information Administration that allows consumers to obtain up to two coupons worth $40 each for digital-to-analog converter boxes.6
The demographics of the most-affected group also encourage the hope that the transition will be successful. The primary households affected are young—35% are aged 18-34, and household education levels are similar to those of the overall U.S. population.7 Only 16% of these households are over the age of 55,8 and thus most are in a good position to be familiar enough with technology to understand the digital transition and make the straightforward installation of the converter box. For those who don’t have internet access, the FCC is also prepared to answer inquiries about the transition over the phone or through traditional mail.9
For those skeptics who still think that the transition’s current timeframe is unreasonable,10 a good analogy would be to the Medicare Part D sign-up that took place in 2005-2006. The Medicare sign-up was also a government-organized alteration of the system where beneficiaries had to take action by a deadline in order to continue receiving a benefit. In the six-month enrollment period for the prescription-coverage program, 29million beneficiaries signed up for the program, leaving only 4.5 million left without a known source of coverage.11 This is an 87% success rate for a program that by most accounts was terribly confusing and inadequately implemented. The digital transition is arguably more straightforward than the Medicare sign-up, as there aren’t options to choose from, but rather a single solution (a converter box) for analog televisions that aren’t hooked up to cable/satellite. Furthermore, most Medicare participants (87%)are senior citizens aged 65 and older12, only 32% of whom had internet access to research their options.13 Comparatively, 71% of all adults have internet access where they can access digital transition information.14
Objections to the Coupon Program
In addition to general concerns over the feasibility of the transition, the coupon program to subsidize the purchase of converter boxes has generated its own negative exposure for a couple of reasons. First, there is concern that there will not be enough coupons for everyone who requires one.15 Second, conservative groups such as The Heritage Foundation argue against the use of government funds to support the coupons at all.16
This second objection can be dismissed relatively easily. The argument is that since there is no“right to television,”17 Congress should not have authorized $1.5 billion18 to implement the coupon program.This subsidy argument is misleading, however. The Commerce Department must reimburse the Treasury for the coupon program with a nearly $7.4 billion deposit using the proceeds from the 700 megahertz band auction, so the government is not taking a loss with the coupon program.19 The rest of the auction proceeds are going towards other programs, including the communications systems for public safety mentioned above.20 Perhaps some will argue that all proceeds of the auction should go to the Treasury without paying for the coupon program, but the coupon seems to be a reasonable compensation for consumers who are in an exceptional position of being forced to upgrade their technology.
The more significant concern is whether there will be enough coupons and converters for each analog television that is currently relying on over-the-air transmission. The Commerce Department has determined that it will have enough funding to issue 33.5 million coupons21 and can issue up to 2 coupons per household.22 In addition to the estimated 14.3 million households receiving only over-the-air broadcasting, there are 23.9 million more households that have at least one analog television not connected to their satellite or cable service.23 While some of these households use their analog televisions only for video games or DVDs, there may end up being more analog televisions that need conversion than there are coupons. Since the level of awareness about the digital transition is so low at this point,it is difficult to estimate how consumers will react. Demand for the coupons will also be affected by the number of consumers who will take this as an opportunity to upgrade to either a new digital-compatible television or to a cable or satellite service. As of January 18th, 3.4 million coupons have already been requested.24 While the Commerce Department encouraged retailers to be prepared to redeem the coupons for the converter boxes starting, January 1, 200825 it doesn’t seem that many have met that goal. I performed test searches from the coupon application website26for local retailers who are selling the converters in various locales and came up with very few results.
In the end, I am confident that the year left before the deadline will be ample time for the FCC to educate consumers on the transition. The budgeted 33.5 million coupons will likely be nearly adequate to cover those who will need the converter. The main concern at this point is insuring that retailers are prepared and have enough converters in inventory for all of us Luddites who aren’t ready to give up our rabbit-ears.
1DigitalTelevision Transition and Public Safety Act of 2005, Pub. L. No. 109-171,120 Stat. 21 (2005).
2 Federal Communications Commission, All-Digital Television is Coming (And Sooner Than You Think!), (last visited January 21, 2008). See also Federal Communications Commission, FCC 07-228, Third Periodic Review of the Commission’s Rules and Policies Affecting the Conversion To Digital Television (2007).
3 Federal Communications Commission, supra note 2.
4Id.
5 Cable& Telecommunications Association for Marketing,The Digital Transition: Is It Changing Consumers?, (last visited January 21, 2008). See also Hansell, Saul, Rabbit-EarUsers Don’t Know The End (of Analog TV) Is Near, New York Times Bits Blog, December 20, 2007.
6 U.S.Dept. of Commerce, TV Converter Box Coupon Program, (last visited January 21, 2008).
7 C&TAM, supra note 5.
8 Id.
9 Federal Communications Commission, All-Digital Television is Coming (And Sooner Than You Think!), (last visited January 21, 2008).
10See Susan Crawford, Why the Digital Transition, Susan Crawford Blog, (last visited January 21, 2008), see alsoHansell, supra note 5.
11 Pear, Robert, BipartisanSenate Group Seeks to Lift Late Fee on Medicare Drug Plan, New York Times, May 17, 2006.
12 Medicare Rights Center, Medicare Statistics: The Medicare Population, (last visited January 21,2008).
13 Pew Internet & American Life Project,Who’sOnline, (last visited January 21, 2008).
14 Id.
15 See generally The Consumerist, 5 Reasons to Fret Over DTV Coupons, (last visited January 21, 2008), and Digital TV Facts, DTV Converter Box Coupons, (last viewed January 21, 2008).
16 Gattuso, James L., No TV Left Behind: Digital Transition Subsidies for Basement Televisions,The Heritage Foundation, February 5, 2007.
17 Id.
18 Digital Television Transition and Public Safety Act of 2005, Pub. L. No. 109-171,§ 3005, 120 Stat. 21 (2005).
19 Id. § 3004.
20 National Telecommunications and Information Administration, Testimony of John M.R. Kneuer, Assistant Secretary for Communications and Information and Administrator, National Telecommunications and Information Administration, U.S. Department of Commerce, Hearing before the Energy and Commerce Committee, House of Representatives, National Telecommunications and Information Administration, Mar. 22, 2007.
21 Rules to Implement and Administer a Coupon Program for Digital-to-Analog Converter Boxes, 72 Fed. Reg. 12,097 (Mar. 15, 2007) (to be codified at 47 C.F.R.pt 301).
22Digital Television Transition and Public Safety Act § 3005.
23 C&TAM, supra note 5.
24 U.S. Department of Commerce, TV Converter Box Coupon Program,Coupon Counts by State, (last visited January 21, 2008).
25 Rules to Implement and Administer a Coupon Program for Digital-to-Analog Converter Boxes, 72 Fed. Reg. 12,097.
26 U.S. Department of Commerce, TV Converter Box Coupon Program, Locate a Converter Box Retailer near you, (last visited January 21, 2008).
Making the wireless world more web-friendly
by: Professor Susan Crawford
Visiting Professor of Law, University of Michigan Law School
Member, ICANN Board of Directors
Founder, OneWebDay
Your wireless carrier (in the U.S., probably AT&T or Verizon Wireless) has a lot of control over the handset you can use and the applications that can run on that device. In fact, wireless carriers routinely ask for (and get) an enormous slice of the revenue from applications that work on their networks, and they force handset manufacturers to jump through all kinds of hoops in order to be allowed to sell devices that can connect to these networks. (You can’t, usually, buy devices except through the wireless carrier itself.)
There has been a great deal of consolidation in the wireless carrier market: twelve wireless carriers that were independent as of 1999 have combined (through merger, spinoff, or joint venture) into four large wireless carriers: AT&T, VZ, (and, far behind in terms of size) T-Mobile and Sprint. AT&T and VZ together control more than half the market and the lion’s share of new subscribers. The competitive picture isn’t great — AT&T and VZ actually charge more per minute than other, smaller carriers (like Sprint).
Until the FCC’s 1968 seminal Carterfone decision, which allowed non-AT&T equipment to be connected to the telephone network, consumers were not free to buy and use devices of their own choice for ordinary telephone communications. Carterfone led to the broad use of the modem and the fax machine, and arguably the birth of the commercial internet. But this open attachment regime has not to date applied to the wireless world, as either a legal or practical matter. The wireless carriers are in complete control.
This has had bad effects on the ecosystem of the wireless world. It’s essentially a closed system, for both applications and devices. We’ve gotten used to locked phones that cannot be switched between service providers and two year contracts with heavy penalties for early termination. Here’s the Washington Post from this past summer:
Currently, the major U.S. wireless carriers, including AT&T and Verizon Wireless, largely decide which Web sites, music-download services and search engines their customers can access on their cellphones. This is accomplished by wireless companies determining which cellphones will receive their services: AT&T, for example, is the only carrier available to users of Apple’s iPhone.
This isn’t a great situation for consumers or innovators.
Google’s paired announcements yesterday were aimed at addressing this situation in a way that will – ultimately – be very good for Google.
First, they said they were releasing a software “stack” – an open software platform called Android – that would be available under an open-source license. The idea is that anyone could adopt that platform (which includes an operating system, middleware, a user-friendly interface, and some applications) and use it on their phones or in their networks. They’ll be releasing tools for developers to use in writing for that stack, which will (they hope) spur the creation of impossibly cool applications that everyone will have to have. They’ll have big developer conferences someday for Android, just like Microsoft does, creating buzz, t-shirts, and a general sense of well-being and connectedness.
Second, they announced a large consortium of companies that will help in further developing Android and pushing it out into the world – the Open Handset Alliance. It’s significant that this group includes T-Mobile and Sprint, the smaller guys in the U.S. It’s also significant that some large handset manufacturers (but not Nokia, why?) and chipset creators are involved too. This will give these guys courage to fight the depredations of the current breaking-kneecaps wireless carrier situation in the U.S. I bet the handset manufacturers are feeling some relief. There’s strength in numbers. This is like unionizing to challenge The Man.
Yes, Om Malik is right, this is a big PR move. But the goal is to raise things up a level, to make this platform so ubiquitous and crammed with so many great applications (including Google ad-serving thingies) that the incumbents won’t be able to avoid it. Now, nothing guarantees that this platform will stay open. In fact, VZ could adopt it and close it to applications it viewed to be competing with its core services – like Skype. But the hope is that this kind of modular approach will become the norm in the wireless world.
In fact, the goal is greater than that – the goal is to make the wireless world much more like the PC world, where there is no necessary connection between transport and content and anyone can introduce the new cool thing.
This clearly helps Google. Of course it does. Why would they do it otherwise? There will be new landscapes to plaster with ads, new ways to make money out of disorder. We won’t be able to find a thing or a person we need without Google’s help.
But this initiative also leaves room for new Googles to show up in the wireless ecosystem, and to take advantage of new kinds of cheap, portable devices that are much better than what we’ve got now.
Maybe I’ll finally be able to afford a cool phone.