February 2013

Until very recently, America’s battles have all been waged somewhere in physical space—on land, in the air, on water or in outer space. Many of these domains come along with inherent features that make life harder or easier in battle. Americans are quickly learning now about a fifth domain: cyberspace.

In some ways, this battlespace is the same as the others. It’s an arena where countries are competing with one another for political or economic advantage. But it’s also different in some fundamental ways. And how the world decides to use this space will go a long way toward determining how disruptive -- or destructive -- war in this domain will become. Michael Hayden, the former CIA director under President George W. Bush, believes the United States has a lead role to play in setting up man-made institutions to shape state behavior. Unlike air, sea or land, Hayden told an audience at George Washington University Tuesday, cyberspace “is almost defenseless. There are no natural barriers up here in this domain.” There are a few ways to solve this problem. One is to make some cyber activities prohibitively costly. A more significant step would be for Americans to decide how they want to be protected in cyberspace. It’s a more complicated problem than today’s debates over information-sharing and privacy currently capture.

On February 8, Agriculture Secretary Thomas Vilsack met with Federal Communications Commission Chairman Julius Genachowski to share recommendations on sustainable rural broadband deployment under the FCC’s Universal Service Fund Transformation Order.

The recommendations include:

1. Accelerate broadband deployment in rural areas by establishing a separate Connect America Fund for rural rate of Return Carriers and modifying the existing universal service support to increase broadband investment and adoption among consumers of rural rate of return carriers.
2. Combine the unused incremental support under CAF Phase 1, Round 1 with the second round of 2013 CAC Phase 1 funds for support and distribution to rural price capped carriers.
3. Adjust Regression Analysis-based caps to correct the structural and data integrity concerns of rural carriers and apply the caps incrementally. Provide RUS with confidential access to the regression model to assist USDA in managing its lending programs.
4. Defer adoption of the Further Notice of proposed Rulemaking that proposed additional caps and cost constraints on rural carriers until the impact of the existing caps are fully implemented and integrated into rural carrier business plans.
5. Modify and expand the waiver process to support the maintenance or extension of broadband service in rural areas and the repayment of debt incurred prior to the Order.

[Commentary] Lots of people aspire to being “cord-cutters.” There’s an undeniable populist yearning to want to stick it to The Man for the evil of forcing them to pay “too much” money for TV news and entertainment. But how many have really done it, instead of just wishing they have? Some data on this topic is questionable. For example, according to a Cowen & Co. survey of 1,200 consumers released this week, about 23% of Netflix subscribers claimed they have canceled pay TV service. Wow. Really? As of the end of 2012, Netflix had 27.1 million U.S. streaming subscribers. That would mean some 6.2 million consumers have canceled their pay-TV service since Netflix launched its Internet streaming service, if the Cowen & Co. survey squares with reality. Now, as of Q3 2012, Nielsen estimated there were 5.3 million households with broadcast-only TV and broadband, as well as around 3.75 million with neither over-the-air or pay TV but with television sets. So that gives you in the neighborhood of about 9 million potential non-pay-TV homes that could be Netflix streamers. Is it likely that more than two-thirds of those homes both (a) canceled pay TV service in the last few years and (b) are currently Netflix subscribers? It’s technically possible but seems implausible.

The Federal Communications Commission (FCC) adopted a Report and Order that furthers the goal of improving our nation’s wireless infrastructure by expanding the reach of wireless coverage for consumers. These new rules governing signal boosters – which amplify signals between wireless devices and wireless networks – will substantially improve signal booster design by requiring manufacturers to include safeguards that protect wireless networks. As a result, all four nationwide carriers, as well as many rural and regional carriers, have consented to the use of boosters on their networks, as long as those boosters meet the technical specifications outlined in the Order.

The Order addresses two classes of signal boosters – consumer and industrial – with distinct regulatory requirements for each. Specifically, consumer signal boosters must meet stringent technical specifications (Network Protection Standard), and are authorized under provider licenses subject to provider consent, voluntarily provided in this case by most carriers. Consumers must register their signal booster with their provider prior to use. Labeling requirements ensure that consumers understand these terms of use. Consumer boosters can be used on most mainstream wireless bands: cellular, PCS, AWS-1, 700 MHz, and ESMR (after rebanding). The use of consumer boosters may not cause interference to wireless networks even if a device meets the Network Protection Standard. The Order also details rules for industrial signal boosters designed to cover large areas such as stadiums, airports, and tunnels. Industrial signal boosters will continue to fall under the existing authorization process, and must be installed and operated in coordination with licensees.