What the United States Can Learn From OFCOM’s Olympic Spectrum Plan…

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With the Olympic Games opening tonight, it doesn’t take a PhD in electrical engineering to recognize that the broadband infrastructure in the United Kingdom will be stretched to its limits.  According to a recent article, in order to accommodate the huge spike in expected traffic, the Olympics network will span 30,000 connections across 94 locations and will include: 5,500 kilometres of new fiber optic cables; 2,200 switches; 1,800 wireless access points; 7,000 cable TV sockets; 16,500 telephones; and 65,000 active network ports (active connections). But with nearly a million people expected to attend the Games—nearly all of which will be Continue Reading »

New Congressional Staff Report Shows Job Creators Still Buried by Regulatory Red Tape…

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This week, the House Committee on Government Oversight and Reform released a new Staff Report entitled Continuing Oversight of Regulatory Impediments to Job Creation:  Job Creators Still Buried by Red Tape. Among other significant data, the Staff Report found that: From 2010 to 2011, the number of final rules issued by federal agencies rose from 3,573 to 3,807—a 6.5 percent increase.  During that same time frame, the number of proposed rules increased 18.8 percent; The published regulatory burden for 2012 could exceed $105 billion, according to the American Action Forum, headed by a former director of the Congressional Budget Office; Continue Reading »

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 »