American Enterprise Institute

[Commentary] What would happen if the US Department of Energy decided to help low-income households afford solar power by giving money to companies which report that they lease solar panels to these households? In all likelihood, fraud would be a difficult and costly problem, and solar companies would benefit more than the households. Despite the obvious flaws of a system where companies receive money based upon their service claims, this is essentially how the Federal Communications Commission’s Lifeline program works: Telecommunications companies receive money based upon how many households they claim as Lifeline customers. There is a better way — a direct subsidy would be more beneficial to low-income households. If the Lifeline program were ended at the federal level, states would likely need to change their systems as well. That would be complicated, but it is time to get telephone companies and telephone regulators out of the business of public assistance, leaving it to government agencies that are designed to be experts in that field.

[Jamison the director and Gunter Professor of the Public Utility Research Center at the University of Florida. He is also part of the Trump Administration’s FCC Transition team]

[Commentary] Feb 8 is the 21st anniversary of the 1996 Telecommunications Act. It’s an opportunity to to review the Act for its relevance to the converged world of communications, content, and computing. Indeed, updating the Act enjoyed wide support three years ago, when a broad array of stakeholders participated in the House Commerce Committee’s “#CommActUpdate” process through a series of thought papers on regulatory modernization, spectrum policy, competition, interconnection, universal service, and video content and distribution.

This rational, inclusive, and orderly process collected hundreds of substantive responses until it was hijacked by advocacy groups which aimed to nationalize networks by reclassifying broadband network providers under Title II of the Telecommunications Act. This was a beginning step by the FCC to tax and regulate the internet like the telephone network and to limit free speech, which fortunately has been halted by a backlash of 60 million voters against over-regulation.

[Rosyln Layton is currently aiding with the FCC transition, and is a PhD Fellow at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark]

[Commentary] There seems to be a growing consensus that the Federal Communications Commission’s structure is outdated and hinders its work. What should be done? Implement a structure that moves away from antiquated silos — wireline, wireless, and media — to one that reflects the dynamic digital ecosystem and that empowers sound analytical work. The existing structure limits how people think, encourages regulations that limit innovation, and facilitates industry capture.

To return the US to a position of world leadership, guiding principles for our policies should include: 1) Any person should have the right to purchase communications services from anyone else at any time (i.e., no entry restrictions for network, functions, applications, and content); 2) Anyone should be allowed to provide any communications service using any legally placed and acquired technologies (i.e., no technology restrictions); and 3) No government activity or regulation should provide a uneconomic favored position to any provider (i.e., no distortion of customer-led markets).

A new structure would include a bureau of economics that analyzes markets and conducts regulatory impact assessments, a bureau of engineering that assesses technologies and is responsible for radio spectrum and equipment licensing, a competition bureau that enforces rules that protect liberal markets, and a consumer protection bureau. The first two bureaus are all about analysis, and the latter two are all about enforcement, with the engineering bureau playing a significant enforcement role with respect to radio spectrum and equipment. Effective leadership will be needed to address the adaptive challenges of letting go of long-held traditions and embracing new values of rigorous analysis, political and industry independence, transparency, etc. Congress will need to act to focus the agency on ex ante regulation only in the presence of monopoly and on managing scarce resources (such as radio spectrum and funds for universal service) consistent with dynamic and competitive markets.

[Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida – and a member of President Trump’s FCC Transition team]

[Commentary] As much as “making America (or any country) great again” addresses the consequences of flows of production offshore, it behoves policy-makers to consider the parallel responsibilities of ensuring that American consumers (and indeed those of all other jurisdictions) pay their fair share of taxes as part of the social contract with their fellow countrymen. Given new technologies coming available (such as blockchain technology), rethinking internet taxes to focus upon the primary interest — the consumption of goods and services by taxpayer-citizens — warrants further consideration.

[Howell is a faculty member at the School of Management, Victoria University of Wellington, New Zealand.]

[Commentary] We’ve been discussing technological “convergence” in one way or another for at least 25 years. 25 years ago, convergence meant that we might soon be sending voice, data, and video over the same wire. Telephone, cable, fax, and television, in other words, might mush together.

In the last few years, however, the tensions between technological reality and our outdated communications laws have reached a breaking point. No matter which side one took in the network neutrality wars, it became apparent to nearly all — including legislators, regulators, and judges — that the 1934 and 1996 Acts governing communications no longer fit the world in which we live. Some tried to force our converged world into the old silos, but it didn’t work. Political upheaval in Washington may come with challenges. But one advantage is that it provides an opportunity to sweep away this legal clutter. With some luck and good will on both sides, it may even lead to a durable, bipartisan framework that can propel the technology economy for decades to come.

[Bret Swanson president of Entropy Economics LLC]

[Commentary] The short answer is, “No!” In an independent regulatory agency like the Federal Communications Commission, political alliances should be left at the door. That has not been the case the past few years and now is the time for change.

Politics isn’t the only thing to blame for the wide swings in FCC regulatory decision-making. The agency has also lost its way. Originally designed to regulate monopoly telephone companies, oversee broadcasters who had exclusive rights, and manage scarce radio spectrum, the FCC’s authorizing statues are badly outdated, despite having been updated in the Telecommunications Act of 1996. Now that competition is the norm, industry players seek to use the agency’s authority for ex ante regulations to hinder rivals, to the detriment of customers. A statutory change should direct the agency to focus on managing radio spectrum and, if needed, subsidies for broadband in rural, high cost areas where affordability is an issue. It should restrict the agency from engaging in ex ante regulation except in the case of actual monopoly, and when a rigorous cost-benefit analysis, followed up with evaluations, demonstrates that ex ante regulation improves outcomes for customers. Absent a statutory change, the commission itself can use its authority to forebear from regulation wherever there is competition and means test its subsidies.

[Mark Jamison is part of the FCC transition team for President Trump. He is the Gunter Professor of the Public Utility Research Center at the University of Florida]

[Commentary] There are a number of cybersecurity policies that could loom large in 2017, but two issues are certain to cause heated debate and conflict. The first is the contentious issue of encryption, which pits US intelligence and law enforcement agencies against privacy advocates and Silicon Valley. The second relates to the expiration of the Section 702 surveillance provision of the USA Freedom Act. This blog posting will take up the encryption debate, and a subsequent posting will analyze the coming struggle over Section 702 renewal.

[Claude Barfield is a former consultant to the Office of the US Trade Representative.]

[Commentary] In many areas of law and policy, the priorities of President-elect Donald Trump seem difficult to predict. But the context of intellectual property (IP) law and policy is different. Simply put, President-elect Trump will soon become – by far – the most experienced user of domestic and international IP rights ever to serve as the President of the United States. During his long business career, Trump pursued sophisticated, usually unified, branding strategies based upon his last name, had great success in the copyright industries, and has used the IP-like rights granted by state laws that protect reputational, privacy, and publicity rights.

The President-elect’s broad familiarity with US IP rights thus suggests a businessman’s approach to IP issues – one that focuses on practical issues, like cost-effective enforceability. Such an enforcement focus could also help strengthen middle-class America by ensuring that federal IP rights can be enforced by ordinary, local businesses, not just by coastal conglomerates. It could be implemented as follows:
Domestically, focus on improving private enforcement of US IP rights – particularly on the internet.
Internationally, focus on enforcing IP-related provisions of existing US trade agreements.

[Tom Sydnor previously served as Director of the Center for the Study of Digital Property at the Progress & Freedom Foundation.]

[Commentary] On Jan 4, it was announced that the New York Times app for Apple devices would no longer be available in China. This is notable, because the Times app bypassed Chinese internet censorship, and so Apple is meaningfully reducing Chinese access to unfiltered media.

According to Apple, this action was in response to a declaration by the Chinese government that the app violates local law. The story has been widely reported and has caused some concern about the precedent being set. Should US companies aid in Chinese censorship? This question in turn reflects a broader unease about the way that multinational technology companies enable government misbehavior.

[Ariel Rabkin was a postdoctoral researcher at Princeton University from 2012 to 2014.]

[Commentary] Reflecting on the deadweight loss of Christmas inevitably leads (for a technology policy scholar) to considering the deadweight losses associated with government and municipal beneficence in gifting fiber broadband networks to constituents. If fiber is to be gifted by governments, the deadweight loss of taxation attends every dollar of public funds applied to the network. This begs the question of whether, given competition for the use of these funds, a fiber network represents their most productive use. Would the same amount of money deliver more benefit if applied, for example, to improvements in other government or municipal infrastructures, such as roads or schooling? While this question appears self-evident, it rarely enters into discussion when government funding of fiber networks is proposed.

[Howell is a faculty member at the School of Management, Victoria University of Wellington, New Zealand.]