July 2015

Wired to Fail

When it came to funding broadband projects, the Rural Utilities Service never found its footing in the digital age.

Sometimes, RUS ignored its rural mission by funding high-speed Internet in well-wired population centers. Sometimes, it chose not to make any loans at all. Sometimes, RUS broadband projects stumbled, or failed for want of proper management; loans went delinquent and some borrowers defaulted. Yet despite years of costly missteps that left millions of Americans stranded on the wrong side of the digital divide, a stable of friendly lawmakers swallowed their doubts about RUS and made sure the politically protected agency wasn’t cut out of the historic stimulus effort. It should come as little surprise, then, that four years and four directors later, RUS has failed to deliver on the promise of the stimulus bill. Roughly half of the nearly 300 projects that RUS approved as part of the 2009 Recovery Act have not yet drawn down the full amounts they were awarded. All RUS-funded infrastructure projects were supposed to have completed construction by the end of June, but the agency has declined to say whether these rural networks have been completed.

More than 40 of the projects that RUS initially approved never got started at all, raising questions about how RUS screened its applicants and made its decisions in the first place. But a bigger, more critical deadline looms for those broadband projects still underway: If these networks do not draw all their cash by the end of September, they will have to forfeit what remains. In other words, they altogether may squander as much as $277 million in still-untapped federal funds, which can’t be spent elsewhere in other neglected rural communities. And either way, scores of rural residents who should have benefited from better Internet access — a utility that many consider as essential as electricity — might continue to lack access to the sort of reliable, high-speed service that is common in America’s cities.

How to Feed a Data-Hungry Public

[Commentary] Congressional hearings will take up the need for more wireless spectrum—the invisible radio frequencies that transmit information to and from mobile devices. Auctioning government spectrum to fulfill this need would not only provide significant revenue for the Treasury; it would also greatly benefit data-hungry American consumers. And because these auctions take years to prepare and implement, now is the time to begin the work.

Concepts in the Senate’s Wireless Innovation Act or the Wi-Fi Innovation Act in the House are a constructive place to begin. Congress can create financial incentives—such as allowing government agencies to share in auction proceeds—to encourage agencies like the Pentagon or the Transportation Department to relinquish spectrum that they aren’t efficiently using. But if the agencies balk, Congress should make them give it up. Congress should also consider spectrum sharing. The FCC proposed an idea, endorsed last year by the White House panel of science and technology advisers, to use database technology that would enable the sharing of radio frequencies among commercial broadband, military and other government systems. Spectrum sharing would benefit the armed services, helping to reduce the growing gap between communications technologies available to consumers and those available to our troops. It might also reduce Pentagon equipment costs. Unlicensed spectrum, for which government permission isn’t required for consumers to use, is another opportunity.

If we fail to adopt a plan to transfer federal spectrum to private users, policy makers may inadvertently undermine US competitiveness and job creation. Keeping discussions bipartisan and focused on solving problems through investment, innovation, job growth and new revenue for the Treasury will best ensure that new technologies pioneered in the US are first enjoyed by US consumers.

[Genachowski is a managing director at the Carlyle Group and former chairman of the Federal Communications Commission. McDowell, a former FCC commissioner, is a partner at Wiley Rein LLP and a senior adviser to Berenson]

Bay Area tech innovators honored for helping the disabled

Several Bay Area tech innovators were honored for making the world a better place by helping the disabled. One created an app that helps the hard-of-hearing track multiple voices in a conversation. Another came up with a wearable device that literally speaks for people with cognitive and communicative disabilities. And the third project uses iBeacon technology that allows the visually impaired to navigate public areas.

Issues Mount as Negotiators Gather to Wrap Up Trans-Pacific Trade Pact

The top trade negotiators of the United States and 11 other Pacific nations are gathering at a luxury resort in Maui for one last push to complete the largest regional trade accord in history, roping together 40 percent of the world’s economic output. But even though it is billed as the “final round” of Trans-Pacific Partnership negotiations, trade representatives from the United States, Japan and Pacific nations from Canada and Chile to Australia and Vietnam have high hurdles to clear.

Given the challenges, the prospect of concluding a deal by July 31 — the goal of the Maui conference — is far from certain. Yet despite all the posturing and bluster, United States and Asian officials involved in the talks say they are confident. One Asian negotiator likened the final round to a chess match where all the final moves are mapped out but the players are waiting to take their turns.

FCC Public Notice Accepting Charter/TWC/Bright House Merger Applications for Transfer

On June 25, 2015, Charter Communications, Time Warner Cable, and Advance/Newhouse Partnership (together the “Applicants”) submitted joint applications to the Federal Communications Commission seeking consent to transfer control of various FCC licenses and other authorizations pursuant to Sections 214 and 310(d) of the Communications Act of 1934. These transfers are a necessary component of proposed transactions through which Charter, Time Warner Cable, and Advance/Newhouse’s Bright House Networks will merge (the “Transaction”). The applications for transfer of control of the licenses and other authorizations referred to in this Public Notice have been accepted for filing upon initial review. [MB Docket No. 15-149]

AT&T: FCC Fine Is 'Indefensible,' 'Coercion'

AT&T has come out swinging at the Federal Communications Commission over the agency's proposed $100 million fine for allegedly violating the transparency rule in the FCC's 2010 network neutrality order, calling it "unprecedented and indefensible" -- and in part unconstitutional -- and saying a court will throw it out if it is imposed.

AT&T wants the FCC to withdraw the proposed fine. The FCC proposed the fine in June 2015, and this is AT&T's chance to respond before the FCC decides whether to rule the apparent liability an actual one. Signaling that slowing broadband speeds is not an acceptable business model, the FCC’s Enforcement Bureau on June 17 proposed fining AT&T Mobile $100 million over its maximum bit rate approach to what AT&T says is a small minority of unlimited plan users whose heavy use could impair others’ online experience. Swallowing that fine was not one of the conditions on the AT&T-DirecTV deal, which was obvious from AT&T's response Monday (July 27) to the FCC notice of apparent liability (NAL). It called the FCC decision arbitrary, excessive and beyond its statutory authority.

FCC’s Pai Pans Wireless Repack of TV Stations

Federal Communications Commission member Ajit Pai has a host of serious bones to pick with the FCC's incentive auction plans — particularly repacking TV stations in the wireless band — and will make them clear to members of the House Communications Subcommittee in testimony scheduled for July 28.

Pai's concerns are over both the substance and process and while he was pleased the FCC put off a vote on the auction framework from July 16 to Aug. 6, he thinks the FCC should hold an en banc stakeholder hearing before holding that vote. Commissioner Pai says that, on the process side, the FCC has not provided broadcasters enough information and in a sufficiently timely manner. He also says his suggestions for improving the auction have fallen on deaf ears. He says that he has heard complaints that the FCC has not supplied enough information for the public to assess the validity of the chairman's incentive auction procedures plan, and says he doesn't think he has gotten enough info to assess it either. But one thing he appears sure of is that the plan repacks too many broadcasters in the wireless band, including the downlink portion.

Google Rolls Out New Consent Policy in European Union

Google said its AdSense advertising service for websites will require online publishers that get visitors from the European Union to specifically ask for consent to use their data, amid heavy regulatory scrutiny in the region.

The company is making the changes after requests from authorities in the EU. The consent policy covers topics such as data collection, sharing and usage -- along with the storing and accessing of cookies, tools that help track consumers’ activity online. Google is asking websites that use its ad tools to get explicit user permission as it faces stepped-up regulatory attention in Europe. The new consent policy will cover related products DoubleClick Ad Exchange and DoubleClick for Publishers, tools for managing ads on websites.

Donald Trump is a superhero – but not in a good way

[Commentary] Hovering above all the brouhaha about Donald Trump’s bizarre presidential candidacy floats one critical question: Are we an electorate or are we an audience?

Trump has bet on the latter, while his competitors, even one like Sen Ted Cruz (R-TX), who has positions close to Trump on many issues, bet on the former. Trump certainly isn’t the first candidate to conflate entertainment and politics. When Ronald Reagan was asked if it was hard adjusting to being president after being an actor, he replied that he couldn’t imagine anyone being president without being an actor. Reagan was right. Performance skills, including the skill of drawing attention to oneself, are now intrinsic to political skills if one hopes to become president. But Reagan was talking about communication, which is why he always invoked President Franklin D. Roosevelt, another great communicator, as a model. He wasn’t talking about replacing substantive policy with performance. Something has happened over the past 15 years or so that has radically altered the relationship between performance and politics. It is partly due to the US political arena, in which a candidate must constantly try to grab attention. More subtly, however, it is also due to America’s ever-shifting popular culture, in which new kinds of narratives regularly push aside older ones.

Usually sooner rather than later, the lights come up in the theater, and the audience walks out into the bracing real world from which they had been escaping. At least that is the way it has always been. Trump is in a movie. His competitors are in a primary. If he somehow manages to sustain his candidacy, if the power of popular culture has so embedded itself in Americans’ consciousness as to make the public re-envision the world, it will say less about Trump than about a sea change in US political culture — from one that is about governance to one that is about putting on an exhilarating show.

[Neal Gabler is the author of “Life: The Movie: How Entertainment Conquered Reality.”]

FCC's Pai Calls AT&T-DirecTV Conditions 'Forced Tribute'

Commissioner Ajit Pai of the Federal Communications Commission outlined his partial dissent from the AT&T-DirecTV merger approval on July 27 with a lengthy statement. Commissioner Pai approved the underlying merger, as did all the commissioners. But he dissented from the "17 pages of conditions" put on the deal.

Commissioner Pai has long argued against "regulating by condition" -- applying conditions that serve a particular regulatory agenda but are not merger-specific -- and suggested the FCC's demands on the deal were not supported and constituted a regulator "wish list" that had nothing to do with deal at hand. "These conditions are the forced tribute that the company must offer to mollify the Capitol," he said. In fact, Commissioner Pai said that the deal needed no conditions, and pointed to the Justice Department approval of the deal as not threatening competition. While Commissioner Mignon Clyburn praised the condition mandating high-speed, low-cost broadband to low-income households, Commissioner Pai saw it very differently. "When the Commission instructs a regulated entity that it must offer a particular service for no more than a particular price, there is a name for that: It is called rate regulation." He also says the FCC condition preventing the combined company from discriminating against unaffiliated over-the-top providers is not justified. In fact, he says, the evidence suggests the opposite, that any attempt to hamper broadband customers access to OTT providers would hurt the company, not help it.