Congress is supposed to write the laws, but these days it often prefers to delegate to the executive branch, and then cheer or boo the results. Twice amid the New Deal, but not since, the Supreme Court struck down statutes as abdications of Congress’s lawmaking power. Yet the Court has another chance in the case that the Justices will consider Wednesday, FCC v. Consumers’ Research. The Telecommunications Act of 1996 tells the Federal Communications Commission to levy money from phone carriers to subsidize “universal service.” Congress gave the FCC vague “principles” to pursue, including “affordable rates” and “equitable” telecom contributions. The rest is up to the bureaucracy, including the amount of the tax. In recent years it has neared $10 billion, which gets passed on to consumers. What’s more, the FCC handed implementation to a nonprofit, the Universal Service Administrative Company, or USAC. No problem, the government’s brief argues: A delegation is constitutionally fine as long as Congress “supplies an intelligible principle to guide the agency.” In the FCC’s case, the law “specifies who must pay universal service contributions, the terms on which they must do so, the purposes for which the funds must be used, the types of services that the Commission must subsidize, and the types of entities that may receive funding.” The law’s challengers reply that this is “delegation running riot.” The FCC’s power to raise revenue from telecom providers is “unbounded by any statutory caps or rates.” The fuzzy principles that Congress set forth aren’t much practical guidance, and the FCC “can even add new principles and—taking the cake—redefine ‘universal service’ itself, based on an ‘evolving’ standard the FCC determines.”

The Infrastructure Investment and Jobs Act provided over $42 billion in subsidies for broadband deployment via the Broadband Equity, Access, and Deployment program. Although BEAD funds are supposed to be disbursed on a technology-neutral basis, the Biden Administration mandated a preference for fiber deployment, even when alternative technologies—including satellite broadband—are the more efficient mechanism to serve certain high-cost areas. With the recent election of President Donald Trump to the presidency, the government’s preference for fiber now faces significant uncertainty. In this context, the Brattle Group released a commissioned study claiming substantial economic benefits from fiber deployment based on a Differences-in-Differences regression model. In this bulletin, I describe several methodological problems in the Brattle Group’s approach, including a failure to evaluate key assumptions of DID models and the misspecification of the regression models, and then evaluate their study’s findings using the same data sources. 

The marketing arm of the broadband industry spends a lot of time convincing folks that the most important part of a broadband product is download speed. This makes sense if fiber of cable are competing in a market against slower technologies. But it seems like most advertising about speed is to convince existing customers to upgrade to faster speeds. While download speed is performance, the industry doesn’t spend much time talking about the other important aspects of broadband:

• Upload Speed: Households that make multiple simultaneous upload connections like video calls, gaming, or connecting to a work or school server quickly come to understand the importance of upload speeds if they don’t have enough. This was the primary problem that millions of households subscribed to cable companies encountered during the pandemic when they suddenly were using a lot of upload.
• Oversubscription: Home broadband connections are served by technologies that share bandwidth across multiple customers. Your internet services provider is very unlikely to tell you the number of people sharing your node or the amount of bandwidth feeding your node. The Federal Communications Commission’s broadband labels require ISPs to disclose their network practices, but nobody tells you statistics like this that would help you compare the ISPs competing for your business.
• Reliability. If operated properly, fiber networks tend to be the most reliable. But there are exceptions, and it all boils down to the quality of your local ISP as it does to the technology. It’s hard to say that any factor is more important than reliability if your ISP regularly has network outages when you want to use broadband.

It’s a question that has baffled many minds for years. The mismatch between the U.S. population growth rate and U.S. wireless carriers’ ability to add oodles of new phone customers every quarter has mystified some Wall Street analysts for eons. “Investors have been puzzling over the industry’s ‘excess growth’ for years now,” wrote Craig Moffett of MoffettNathanson Research. “Wireless is, after all, a fully saturated industry in the U.S. And yet total industry growth (not just postpaid phone, but total phone, including prepaid) has consistently been far faster than population growth. For years.” Young people getting their first phones sooner is one of the most commonly cited explanations for the excessive growth. That’s certainly real, but it can’t come close to explaining the magnitude of the gap. What if gig workers could explain some of this? After all, drivers at companies like Uber, DoorDash, Instacart, Lyft, Grubhub and other services often use second or third phones to manage their business.