Monthly Archives: December 2010

Dec 01 2010
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FCC Chairman Proposes Garbage, Calls it Net Neutrality

President Obama’s FCC Chairman, Julius Genachowski, has a reputation in DC of being a “tepid” regulator. From reports of his net neutrality proposal, he’s living up to that reputation.

The proposal does not meet Obama’s campaign promises, or Obama’s other agencies’ actions, on net neutrality. It is “make-believe net neutrality.”

Here are why the proposal is a meaningless gesture.

  • It exempts wireless. Like the Google-Verizon proposal, Julius’s makes an artificial distinction between accessing the Internet through a wire and through a wireless connection. No nondiscrimination rule applies to wireless. The Chairman’s fig leaf is to ban “blocking” on wireless, but not discrimination. And this ban on blocking applies only to voice and video technologies–not new and innovative technologies yet unimagined. That is, this proposal is weaker than the Republicans’ 2005 policy principles, which would forbid all blocking; the proposal is nowhere near including a “fifth principle” of nondiscrimination on wireless that Democrats long called for. This wireless exemption comes despite predictions that, within the decade, most users will access the Internet wirelessly. It also comes despite the FCC’s National Broadband Plan betting on wireless to expand Internet access–a bet that would require broadcasters and government agencies to abandon spectrum holdings.Under Julius’ proposal, Sprint Wireless could discriminate against, say, Skype, degrading it to make it less reliable–so long as they don’t block it. Outside voice or video, anything is fair game. AT&T Wireless could make its own social network load faster than Facebook, or could make Fox News or MSNBC load faster than CNN or BBC, based on payments. While Skype, Facebook, and Fox News could maybe fend for themselves, innovative start-ups will be unable to reach wireless users without permission from gatekeepers like AT&T.
  • The proposal may not ban paid-priority. A ban on paid priority is central to any real net neutrality proposal, beginning with the Snowe-Dorgan bill of 2006. Indeed, the notion of “payment for priority” is what started the net neutrality fight; in late 2005, AT&T’s CEO said that Vonage and Google had to stop using his pipes for free. The only way a carrier could charge for priority is if basic Internet access was not sufficient for a company to compete; if Yahoo! does need priority to compete effectively, why pay? Without a ban on paid priority, we can expect basic access to deteriorate so companies have to pay for priority.  I am guessing the proposal does not ban paid priority clearly because of earlier reports, and because recent reports refer to “unreasonable discrimination.”  “Unreasonable discrimination” is a term from section 202 of the Communications Act, and has applied to phone companies’ pricing. AT&T has long argued that phone companies could differentially price for access under section 202, so “unreasonable discrimination” would permit charging Google a price for priority, so long as that price were available to all other search engines. This could lead to exclusive deals. AT&T can simply set a high, monopoly-level price for search-engine priority that only Google can pay, one that no upstart (like StumbleUpon?) could afford.
  • There may no jurisdiction for any of this anyway. In April, the D.C. Circuit interpreted Title I of the Communications Act narrowly, severely curtailing the FCC’s ability to adopt rules for Internet access. This was the Free Press-Comcast decision, which the FCC General Counsel argued for the FCC and I argued for consumer groups and tech companies. It was a shellacking. After a month of studying the question, the FCC General Counsel concluded the obvious: relying on Title I authority after that case was irresponsible and doomed to failure. The Chairman made a video explaining how the FCC should rely on authority under Title II, which is something that several Justices of the Supreme Court (including Scalia) thought the FCC should have done from the beginning. The Chairman described reclassifying to Title II as the principled center, but without principle, the center keeps shifting.In the proposal, the FCC will not reclassify. It will either build its house on the sand of Title I, citing multiple provisions as it did in the Free Press-Comcast case, expecting an obvious repeat-shellacking. Reports suggest a “new” theory, with “additional analysis.”  Reading between the lines, this may be the theory that was discussed months ago, even before the FP-Comcast decision was issued. This theory, which I remember discussing as early as 2007, rests on section 706 of the 1996 Telecommunications Act (codified at 47 USC 1302). I am skeptical that provision can support net neutrality, even after the negative report described in that section, but I will wait to see the details. Certainly, this is an untested theory, and its scope and outer bounds are unclear.
  • Enforcement is unclear. It’s not clear if there are sufficient announced penalties or inexpensive, rapid procedures that start-ups and consumers could actually use.

Despite all these compromises, the Republicans have still come out guns blazing:

Rep. Marsha Blackburn (R-Tenn.) a member of the House Energy and Commerce Committee, said Tuesday afternoon that she would work to topple any FCC-led net neutrality order.

“This is a hysterical reaction by the FCC to a hypothetical problem,” she said, adding that Genachowski “has little if any congressional support” for the action. To overturn any order, Blackburn vowed to reintroduce her bill to prevent the FCC’s policy making process.

It’s like the famous (Lessig) quote: “Sold my soul and nothing happened.”

Dec 01 2010
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The FCC Chairman’s D.C. Reputation: Or the Wimpy Kid Who Could Preserve an Open Internet

Because the Federal Communications Commission may (finally) adopt a network neutrality rule in December, the future of an open Internet rests largely on the shoulders of its Chairman.

“Who’s that?” you may wonder.

His name is Julius Genachowski and his reputation in DC is widely known, but is likely less known to the general public. I began writing this post because there are two stories about his reputation that I can’t link to, because they’re not available online. They come from expensive inside-the-beltway publications, the kind that follow executive agency chairmen well enough to provide telling details for lobbyists. The kind of publications few Americans would have access to.

So I figured I would share them here with the general public, and discuss some other news stories about the Chairman as well.

For better or worse, accurate or not, the FCC Chairman’s reputation in DC, Silicon Valley, and Wall Street is this: he is a wimp who doesn’t like to do actual work. He’s more “Diary of a Wimpy Kid” than Harry Potter.

This would be less worrisome if the future of the Internet didn’t rest on his fragile shoulders.

Thin-Skinned: Susceptible to Industry Criticism

Last year, in October, the FCC Chairman Julius Genachowski buckled to AT&T and proposed a loophole-ridden net neutrality rule, despite months of strong promises and stronger rhetoric, including in the Obama campaign’s technology agenda.

In the weeks before this buckling, a publication called Communications Daily explained the significance of the confrontation between Julius and AT&T on net neutrality–Julius’s supposedly signature issue. This confrontation was Julius’s first political test; it setting the tone of all future political tests. (In all of them, Julius’s reputation is to have shown almost astonishing cowardice, coupled with incompetently bad political strategy.)

I reproduce this short Communications Daily quote here, because it signifies that, even before this first test, Julius’s corporate opponents believed Julius very thin-skinned and likely to abandon “competition, innovation, and consumers” (his usual talking point) if the corporations pressured him.

According to Comm. Daily in October 2009:

The regulatory battle is the first major political test for Genachowski, who assumed the chairmanship in late June after a long stint in the private sector. A government source, describing him as “very thin-skinned,” said congressional Republicans have calculated that their best strategy is a campaign of relentless pressure and criticism.

Soon afterwards, Julius buckled to AT&T’s pressure.

Julius Likes Glamorous Trappings, Doesn’t Like Actually Working

Julius has been criticized for having no major accomplishments. He has done so little that his team tries to claim “accomplishments” that are not even rules–they’re reports and documents merely opening inquiries or rule-making proceedings. This has resulted in the reputation of liking “being” Chairman, but not liking “doing” what a Chairman does.

This is David Hatch, in the National Journal, explaining (and grading) Julius’s reputation in July of 2010.

Reputation (C). Genachowski’s reputation (deserved or not) is that he relishes the glamorous trappings of his job — the international business trips, hobnobbing with Silicon Valley heavyweights and face time with President Obama and other luminaries — but disdains the roll-up-your-sleeves work of policymaking and slogging through hours of dry testimony. Even more worrisome for him is that watchdog groups such as Free Press that were initially in his corner have morphed into his harshest critics.

So, thanks to Comm. Daily and National Journal for saying in print what many say in meetings, in board rooms, and at conferences.

And Tepid… While  Claiming He is “Seeking Consensus” or Delivering for Consumers

Reporters and observers commonly call the Chairman or his actions “tepid” (see here, here,here, here, here, here).

Tepid means lacking in force or conviction. Reporters use this word to be polite.

While Julius is tepid, he talks about needing “consensus” to act–and then, like many politicians, he will pretend he has attained victory. Imagine bank regulators seeking industry “consensus” to regulate derivatives, or environmental regulators seeking “consensus” with BP over the safety of offshore drilling. This approach has failed in the past, and is not even designed to reach the right result (just one acceptable to industry). It usually reflects a lack of principle or unwillingness to do the right thing in the face of industry pressure. Label it “consensus,” but many would consider it unprincipled and tepid.

Finally, all tepid politicians have an incentive to claim they’re delivering for consumers, even if they’re not. So don’t expect the FCC Chairman to announce that he has buckled to pressure by the largest political forces of AT&T, Verizon, and Comcast, while abandoning competition, innovation, and consumers. You’ll have to read between the lines to know if you can trust him on this one.

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