Wednesday, September 25, 2019
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US Net Neutrality rules produced no impacts on telecommunication investment
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Consolidation, deregulation & lack of accountability in the US media and broadband industries
Scoping New Policy Frameworks for Local Broadband Networks
FCC Announces Launch of Lifeline National Verifier in 11 States
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This paper examines the impacts of net neutrality rule changes in the United States in 2010, 2015, and 2017 on telecommunication industry investment levels. The paper tackles the issue with a comprehensive dataset with full time series coverage for all SEC-registered telecommunications firms from 2009 to 2018. The author tracks new capital expenditures incurred, which reflects new investment decisions made rather than old investment decisions materialized, with quarterly data and exact issuance dates. The paper uses a standard difference-in-difference model and a variety of robustness checks to examine causal impact effects of net neutrality rule changes. The paper finds net neutrality rule changes in the United States had no impact on telecommunication industry investment levels based on the data, outcome variable, and limiting assumptions used. This empirical question featured heavily as the key economic question in the 2015 Open Internet Order issuance and 2017 repeal process. However, research has failed to adequately address the question due to a short timeframe for research and methodological issues. The paper offers the only analysis with a full dataset and a sufficient time period of observation to properly examine effects. As such, it offers an incremental step forward in research assessing network neutrality empirically.
Moving backwards: consolidation, deregulation & lack of accountability in the US media and broadband industries
The US broadband and media industries are increasingly becoming consolidated, deregulated and freed of accountability, with little attention either from policymakers or the media. While Mexico is moving forward -- having recently developed new institutions and regulations intended to promote competition and accountability in telecommunications and media, the US is moving backwards. Competition in broadband and media in the US is vanishing as a result of decisions, big and small, by the Trump Administration.
[Gigi B. Sohn is a Distinguished Fellow, Georgetown Law Institute for Technology Law & Policy and Benton Senior Fellow and Public Advocate]
Over many years, locally-initiated and operated broadband infrastructure projects have attempted to resolve the last-mile dilemma. Many generations of do-it-yourself (DIY) network efforts that are either wireless, such as community mesh networks, or wired, such as fiber cooperatives, exist, but in the U.S. scaled developments have been stalled for a variety of reasons that include regulatory prohibitions. This research examines a current ‘third wave’ of community networking, marked by local and DIY efforts as well as technological innovations. We investigate approaches that are technological, managerial, and also aimed at regulatory and economic incentives that may be appropriate in the U.S. We argue that this ‘third wave’ of community networking efforts and technology demonstrates new connectivity models that can solve some of the nation’s broadband problems, especially when accompanied by supportive federal and state policies. The technological, organization, and market implications of the third wave of community networks suggest new policies helpful to provide improved broadband services in various regions amidst incumbent protectionism.
Lawmakers are trying to find ways to provide broadband service to people living in rural areas of Georgia. But that plan might be on hold. Federal Communications Commission data showed the limited reach of broadband, but a second look by Georgia has shown the data is all wrong. Georgia's Department of Community Affairs did its own broadband mapping, counting down to each customer with data from individual broadband providers. Georgia’s new statewide map is expected to be done by the summer of 2020.
In 2015, aware that business tenants increasingly depended on high-quality broadband and that residents considered fast broadband a quality-of-life issue, Fairlawn (OH) resolved to make gigabit broadband available to all homes and businesses. The city built a municipal fiber network essentially as an amenity, with no requirement that service revenue cover the cost of the build. It was willing to subsidize the network out of the general fund if necessary. Its goal was to boost property values and local businesses by inducing people to “eat, live and stay here in Fairlawn,” according to Ernie Staten, Fairlawn’s deputy service director. Three years after the network launch, the gamble appears to have paid off handsomely. The network, called FairlawnGig, quickly gained popularity because of its reliability, speed – now up to 2.5 Gbps for small and midsized businesses and 100 Gbps for enterprise customers – and meticulous attention to customer service. With a residential take rate higher than 50 percent, FairlawnGig is financially stable; service revenues are now sufficient to cover the operating budget and soon will begin to pay down the debt.
The city of Morgantown (WV) and DBI Networks LLC, doing business as ClearFiber, have reached a settlement in the lawsuit filed on June 4 by the fiber-optic Internet service provider. The suit, which was filed in US District Court, accused the city denying access to public rights-of-way by refusing to issue a license agreement, resulting in prohibition of service, bar to entry, discriminatory management of public rights of way, and a violation of due process. The settlement amends the non-exclusive franchise agreement the parties executed in April 2017 and describes the application process ClearFiber must complete prior to working in the public right-of-way, and lays out a change in franchise fees — from 5% of gross revenues to 25 cents per linear foot of cable placed in the public right-of-way.
The Federal Communications Commission's Wireline Competition Bureau (Bureau) announced the launch of the National Lifeline Eligibility Verifier for all new enrollments in Arizona, Connecticut, Georgia, Iowa, Kansas, Nebraska, Nevada, New York, Vermont, Virginia, and West Virginia. Starting on October 23, 2019, eligible telecommunications carriers (ETCs) in these eleven states will be required to use the National Verifier’s eligibility determination process for all consumers applying for Lifeline service and must cease using legacy eligibility processes for prospective Lifeline subscribers. USAC will continue after October 23, 2019 to verify that subscribers in the National Verifier for these eleven states are eligible to receive Lifeline service through the process that was initiated during the soft launch on June 25, 2019. In addition, annual recertification will now be conducted by the National Verifier for all Lifeline consumers in these eleven states.
The Federal Communications Commission has learned that Sprint claimed monthly subsidies for serving approximately 885,000 Lifeline subscribers, even though those subscribers were not using the service. That would be a violation of a key rule—the “non-usage” rule—designed to prevent waste, fraud, and abuse in the Lifeline program. The 885,000 subscribers represent nearly 30% of Sprint’s Lifeline subscriber base and nearly 10% of the entire Lifeline program’s subscriber base. The non-usage rule requires Lifeline providers of “free” service to de-enroll subscribers who don’t use their phones—a rule meant to protect Lifeline from wasting payments on service not provided. The FCC developed this and other rules after investigations showed that companies hawked free Lifeline service aggressively and indiscriminately, knowing that they would get paid each month even if consumer didn’t use their phones. And because the consumer paid nothing, he or she had no incentive to relinquish the subscription. Under the non-usage rule, providers of free service may only be reimbursed for a Lifeline subscriber if that subscriber has used the service at least once in the past 30 days. Providers must de-enroll inactive subscribers after giving them 15 days’ notice. Program-wide, the rule resulted in approximately 3.1 million de-enrollments in 2018. Sprint’s apparent disregard of the non-usage rule initially came to light as a result of an investigation by the Oregon Public Utility Commission.
The misconduct alleged today, if true, amounts to corporate malfeasance. A single company apparently misappropriated funds for nearly 10 percent of the entire Lifeline program. I am outraged. There is no credible way that the merger before us can proceed until this Lifeline investigation is resolved and responsible parties are held accountable. Without the benefit of the findings of this investigation into what appears to be the worst case of Lifeline violations in Federal Communications Commission history, it is impossible for us to trust in the integrity and completeness of the record, evaluate the character and fitness of the applicants, and exercise our statutorily defined obligation to grant only license transfers that serve the public interest. I call for our staff to conduct a thorough review during this pause – the integrity of our merger review process is at stake.
The Senate Antitrust Subcommittee heard from various parties on whether Big Tech companies have been allowed to become serial innovation killers, buying up tech start-up competitors before those competitors are large enough to raise red flags with regulators. A Federal Trade Commission witness said the agency was definitely retrospectively reviewing such "killer acqs" (acquisitions), and could break up or shake up already-merged companies if that is the appropriate structural remedy.
Subcommittee Chairman Mike Lee (R-UT) said that over-enforcement is not a "cost-free" proposition. He conceded that some mergers may be for anticompetitive reasons, but because they can't see the future, it is difficult to predict in advance which deals should be blocked--Instagram, for example, versus some similar effort that does not gain traction. Sen Richard Blumenthal (D-CT) and Bruce Hoffman, director of the FTC's Bureau of Competition, agreed that some of the tech issues they were discussing sounded and looked like the kinds of anticompetititive practices in the Microsoft antitrust case. Sen Blumenthal pointed out he was a key player in that Microsoft investigation. One of the Microsoft remedies was interoperability, and not just internet browsers.
In 2018, I talked about our 5G FAST plan. The plan has three central planks: freeing up spectrum, promoting wireless infrastructure, and modernizing our regulations to promote more fiber deployment. We’ve been active on all three fronts, and there’s mounting evidence that our efforts are working. We’re working on the complicated task of freeing up spectrum for 5G in the 3.7-4.2 GHz band, commonly called the C-Band. This is a critical band for 5G, and I’m optimistic that we will have results to show on this front this fall. Also, the Federal Communications Commission is studying reallocation of spectrum in the 3.1-3.55 GHz band for commercial use, and I hope our federal partners will join us in that effort.
As for modernizing our regulations to promote fiber deployment, we’ve made it easier for carriers to transition from yesterday’s copper networks to tomorrow’s fiber networks. We’ve ended utility-style broadband regulation inspired by rules from the 1930s. And we’ve also adopted a new policy known as “one-touch make-ready.” These policies are working as well. In 2018, for example, fiber was deployed to more new homes in the United States than any year before. And infrastructure investment was up by $3 billion last year compared to 2017.
As many of you know, the World Radiocommunication Conference is just around the corner.At the FCC, our priorities for WRC-19 track the same priorities we have at home and for our region: closing the digital divide and promoting 5G and other next-generation innovations. We need to enable regional and global spectrum harmonization opportunities for all services, including broadcasting, Wi-Fi, mobile technologies, and satellites. We need to create international economies of scale, roaming, and interoperability, lowering prices for manufacturers and consumers
US mobile operators are launching 5G networks in a multitude of cities, with urban smartphone users now experiencing some of the fastest real-world mobile download speeds to date to build on the existing state of US mobile experience. However, many rural users will likely have to wait several years before they see a 5G connection even with moves to launch 5G on lower frequency bands. In the meantime, rural users will have to settle for connecting to legacy 4G and 3G networks.
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Opensignal users on Verizon’s network experienced the highest 4G Availability across the rural U.S. Unlike users on other carriers, our Verizon users on average connected to 4G more than 80% of the time in all types of rural locales from Fringe to Remote.
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Opensignal’s users on AT&T and T-Mobile's networks enjoyed a faster Download Speed Experience across the rural U.S. than users on other carriers, including Verizon. In the Distant and Remote rural areas AT&T users experienced average download speeds of 15 Mbps and 14.6 Mbps respectively compared with 13.8 Mbps and 12.3 Mbps for users on Verizon.
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Our users on Verizon’s network saw the fastest Upload Speed Experience across all types of rural locales compared with users connecting with AT&T, T-Mobile, or Sprint. Verizon users experienced speeds of 5.4 Mbps, 3.7 Mbps and 3.7 Mbps in Fringe, Distant and Remote rural areas.
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Across all of the rural US, our AT&T users on average experienced lower latencies than their peers on other networks. Even small latency differences affect the experience of real-time applications like multiplayer games. For example, our Verizon rural users experienced latencies between 3.7 and 4.5 milliseconds slower compared with users on AT&T in rural locales, while our T-Mobile users’ latencies were between 4.9 and 8.8 milliseconds slower.
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Across the rural U.S. Sprint users had a weaker mobile network experience in all of our metrics compared with our users on other networks. After the T-Mobile-Sprint merger completes, the new company will aim to transition rural Sprint users to a stronger experience — Opensignal will monitor how the new company’s mobile experience changes.
Security
House Commerce Committee Leaders Introduce the Secure and Trusted Communications Networks Act
House Commerce Committee Chairman Frank Pallone, Jr. (D-NJ), Ranking Member Greg Walden (R-OR), Reps Doris Matsui (D-CA), and Brett Guthrie (R-KY) introduced the Secure and Trusted Communications Networks Act (HR 4459), a bipartisan bill to help secure America’s telecommunications supply chain. "This bipartisan legislation will protect our nation’s communications networks from foreign adversaries by helping small and rural wireless providers root-out suspect network equipment and replace it with more secure equipment. We must get this done to protect our national security,” they wrote. The bill:
- Prohibits the use of federal funds to purchase communications equipment or services from any company that poses a national security risk to American communications networks.
- Requires the Federal Communications Commission to establish the Secure and Trusted Communications Reimbursement Program to assist small communications providers with the costs of removing prohibited equipment or services from their networks and replacing the prohibited equipment with more secure communications equipment or services.
Benton (www.benton.org) provides the only free, reliable, and non-partisan daily digest that curates and distributes news related to universal broadband, while connecting communications, democracy, and public interest issues. Posted Monday through Friday, this service provides updates on important industry developments, policy issues, and other related news events. While the summaries are factually accurate, their sometimes informal tone may not always represent the tone of the original articles. Headlines are compiled by Kevin Taglang (headlines AT benton DOT org) and Robbie McBeath (rmcbeath AT benton DOT org) — we welcome your comments.
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