Category Archives: Federal Communications Commission

Some Thoughts on this Week’s FCC Oversight Hearing…

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This week, the House Energy and Commerce Committee held an oversight hearing of the Federal Communications Commission.  As to be expected, the issues covered ranged far and wide, demonstrating once again the diversity, multitude and complexity of issues pending before policymakers.  While I have no intention of commenting on them all in this blog post, I would like to highlight a few observations. First and foremost, it was a pleasure to watch new FCC Commissioners Jessica Rosenworcel and Ajit Pai answer questions with both thoughtfulness and, more importantly, significant substantive knowledge about the complexities of our industry.  Both have certainly Continue Reading »

How the Retransmission Fight May Affect MVPD Industry Structure…

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One of the growing hot-button issues of late has been the fight between programming networks (including traditional broadcast networks) and multichannel video programming distributors (“MVPDs”) over retransmission fees.  As we have seen with increasing frequency, as a programming carriage contract expiration deadline looms larger, either the MVPD pays up, or the channel goes dark.  Just this week, DirecTV just dropped a whopping SEVENTEEN channels owned by Viacom—running the full gamut from MTV to Comedy Central—from their lineup when the parties failed to reach a commercial agreement. In retaliation, Viacom pulled much of their coveted programming from free Internet outlets.  Needless Continue Reading »

Well, this is interesting…

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Earlier this month, the trade press reported that FCC Chairman Julius Genachowski was circulating an order among his fellow Commissioners that not only would re-evaluate how the agency de-regulates special access services provided by incumbent local exchange companies (“ILECs”) but would also “temporarily suspend consideration of pricing flexibility pending the development of as new framework.”  In a recent blog, Phoenix Center Chief Economist George Ford criticized this plan, arguing that the admitted failure of regulation is not a valid reason to suspend deregulation, and that this “regulate first mentality” threatens investment in the industry.  As George stated, “the agency’s decision Continue Reading »

Sending the Wrong Signals on Special Access Deregulation…

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As both the courts and the Federal Communications Commission have consistently recognized, price regulation is “far from an exact science”.  For this reason, since the late 1980s, the FCC has slowly and steadily sought to eliminate the direct price regulation of communications services at nearly every possible opportunity.  (See, e.g., the FCC’s Competitive Carrier paradigm, which culminated in the total forbearance from tariffing requirements.)  Given this long-standing policy, it is indeed curious that the FCC is reportedly circulating an order among its Commissioners that not only would re-evaluate how the agency de-regulates special access services provided by incumbent local exchange Continue Reading »

When in Doubt, Regulate…

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In 1999, the FCC began to grant incumbent LECs pricing flexibility on special access services in some Metropolitan Statistical Areas (“MSAs”) when specific evidence of competitive alternatives were proven to be present.  Ever since, whether or not the Commission was justified in following the path toward deregulation of special access services has been disputed.  A proceeding initiated in 2002 on the topic of special access pricing flexibility remains open today. Recent press reports indicate that FCC Chairman Julius Genachowski is now circulating a proposal that would transform the way the FCC regulates such high capacity services.  Among other things, this Continue Reading »

Senator Kohl, Wireless Economics and the “Public Interest” Standard…

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Last week, Senator Herb Kohl, the powerful Chairman of the Antitrust, Competition Policy and Consumer Rights Sub-Committee of the Senate Judiciary Committee, wrote a letter to Attorney General Eric Holder and FCC Chairman Julius Genachowski informing them that he “believes” that the pending acquisition of unused spectrum by Verizon from a consortium of cable companies “presents serious competition concerns.”  In support of this position, Senator Kohl not only argues that there is excess concentration in the current wireless market (dominated by Verizon and AT&T), but that the transaction would allow a “dominant firm” to gain “access to essential inputs needed Continue Reading »

Julius Genachowski’s Speech at CTIA…

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In his recent keynote speech at the CTIA show in New Orleans, Federal Communications Commission Chairman Julius Genachowski reiterated his (and the industry’s) concern that the “demand for mobile services is on pace to exceed the capacity of our mobile networks” and, therefore, we must “tackle the capacity challenge.” The Chairman has previously foretold of a future where spectrum exhaust could make “consumers […] face slower speeds, more dropped connections, and higher prices.” Plainly, spectrum exhaust remains a key challenge for both mobile service providers and policymakers. The Chairman also took the chance in his CTIA speech to challenge what Continue Reading »

What is the Effect of Regulation on Investment?

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What is the effect of regulation on investment?  At a high level of abstraction, it is impossible to say.  Rate-of-return regulation, for example, is criticized by economists for possibly encouraging too much investment—a principle known as the Averch-Johnson Effect.  On the other hand, if a firm fears that the regulator will alter the rules in a way that reduces the ability to earn profits on large, long-term capital investments, then the incentive to make such investments is reduced.  Importantly, the issue is not, as some claim, just about “regulatory uncertainty.”  There could be great uncertainty about future rule changes, but Continue Reading »

Does Political “Kabuki Theater” Help or Hurt the Regulatory Review Process?

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Recently, The Hill reported that Representatives Henry Waxman and Anna Eshoo—the ranking members of the House Energy and Commerce Committee and its Subcommittee on Communications and Technology, respectively—wrote a letter to Committee Chairman Fred Upton calling for a hearing to examine the proposed sale of wireless spectrum to Verizon by a consortium of cable companies.  Without question, Congress has the authority to hold a hearing on anything they deem relevant at any time they want.  That said, and with all due respect to the powers of the legislative branch, it is unclear what a politically-charged hearing would contribute at this Continue Reading »

A Response to Steven Crowley at GigaOm…

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This past February, we released a paper entitled Wireless Competition After Spectrum Exhaust.  As far as we can tell, this paper was the first serious attempt to model the effect of spectrum exhaust on mobile wireless competition.  We found that the addition of a binding capacity constraint (i.e., spectrum exhaust) to the standard Cournot model of competition reveals that that fewer—not more—firms would lead to lower price, more investment, and more jobs.  Our paper, not unexpectedly, raised a few eyebrows.  (For a CliffsNotes summary of our paper, see my February 8, 2012 blog post.) This weekend, Steven Crowley at GigaOm, Continue Reading »