June 30, 2016 4:45 PM

The FCC's Special Access Special Delivery

Earlier this week, I had a post explaining just how far afield the Tariff Investigations Order portion of the FCC's special access, now "business data services" ("BDS"), Tariff Investigations Order and Further Notice of Proposed Rulemaking ("FNPRM") strayed from rational decision-making.  Unfortunately, since Chairman Tom Wheeler has taken the helm of the FCC, irregular departures from reasoned--and, more importantly, fair--decision-making have become the norm for this proceeding.  

Procedurally Fair?

Yesterday, AT&T posted a statement on its public policy blog once again drawing attention to the lack of procedural due process with which AT&T believes the FCC has conducted its BDS inquiry.  AT&T's Senior Vice President--Federal Regulatory, Bob Quinn provided a detailed description of the Commission's latest procedural irregularity: the Commission's introduction into the record of this 228 page filing containing previously-unseen revisions/critiques/analyses of the work of the FCC's 3d party economic expert--on the same day that public comments were due. AT&T concludes that,  

the [FCC's] lack of due process only reinforces that this agency is driving to reach a pre-ordained outcome.

See, AT&T Public Policy Blog.  AT&T's statement was its second this year (previously here).

AT&T's charges deserve more attention than "ordinary" criticisms of adversely-affected parties, because not only do AT&T's complaints refer to procedural fairness (not whether the FCC agrees with AT&T), and its previous complaint about this issue came 2 months before the company suffered an adverse decision.  Finally, AT&T's concerns--that the Commission is driving toward a pre-ordained outcome--seem to be supported  by independent events (from those cited by AT&T) taking place in the FNPRM proceeding this week.

The INCOMPAS-Verizon Proposal Advances

As mentioned in a previous post, on April 7th, INCOMPAS (the CLEC trade association) and Verizon started combining their BDS regulatory advocacy.  Chairman Wheeler lauded the proposal immediately, as did the most politically influential lobbying/interest group here, and the FCC prominently mentioned the proposal in the first paragraph of its pending FNPRM. See Order/FNPRM at para. 159.
 
Earlier this week, on June 27th, INCOMPAS and Verizon sent in another joint letter  ("INCOMPAS-Verizon June 27th Letter")--elaborating on the parties' previous "compromise" proposal.  Chairman Wheeler seems unlikely to share Adam Smith's skepticism that,

[p]eople of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
Thus, we can expect the Commission to take direction from this second, more specific, appeal for greater regulation.

Despite Contradicting the FCC's Own "Findings"

The INCOMPAS-Verizon proposal clearly has traction with the Chairman's Office, at a minimum.  This is in no way more apparent than in the fact that the principle point of the letter would require the Commission to immediately renounce one of the "key findings" in its FNPRM--yet, the parties feel no obligation to address, or explain, this apparent inconsistency with the market realities, as seen by the Commission.

In its FNPRM, the FCC lists as one of its "key geographic market findings" the observation that,

[p]otential competition is important, that is, nearby suppliers can constrain BDS prices. For example, we find that fiber-based competitive supply within at least half a mile generally has a material effect on prices of BDS with bandwidths of 50 Mbps or less, even in the presence of nearby UNE-based and HFC-based competition.

See Order/FNPRM at para 161.  In other words, the FCC observes that many areas of the country exhibit competitive characteristics, notwithstanding the number of actual competitors offering service in these census blocks.  Instead, the Commission observes, the presence of a potential competitor within a half mile of a building will constrain the prices of every other competitor actually serving the building--even for the smallest capacities of bandwidth (50 Mbps and below).

Compare, however, the "compromise" offered by INCOMPAS and Verizon that,

we agree that all Business Data Services at or below a specified threshold should be deemed non-competitive in all census blocks. We agree that the specified threshold should be no lower than 50 Mbps.
See, INCOMPAS-VZ June 27th Letter at p. 2 (point 2).  And, in case you're wondering what a "non-competitive" designation means, the parties "support ex ante price regulation for all Business Data Services deemed non-competitive." Id. (point 6).  

Thus, while the FCC makes a "key finding" that prices are constrained--even at the lowest capacity levels--without regulation in many parts of the country (notwithstanding the number of actual competitors selling service in these areas), INCOMPAS and Verizon urge the Commission to adopt a nationwide presumption that the opposite is true.  Given the apparent influence of these parties with this Commission (and the undisputed clout of those supporting this compromise), I'd be willing to bet that the Commission ends up believing the advocacy of INCOMPAS and Verizon over "its own lyin' eyes."

***

It's easy to dismiss the protestations of parties that don't prevail in a Commission matter as "sour grapes."  But, it's harder to ignore complaints--before a party has even lost--that they won't get a fair chance to be heard, then the integrity of the system is called into question and we should all be interested.  Finally, concerns about the FCC moving toward a pre-ordained outcome are worse still when any casual observer can notice that some parties have a map to that pre-ordained destination--and others, including the public, are just along for the ride.

June 27, 2016 10:53 AM

Inside the Looking Glass: the FCC's BDS Order

In his Dissenting Statement from the FCC's recent Business Data Services Order and Further Notice of Proposed Rulemaking ("BDS Order"), FCC Commissioner Ajit Pai compares the FCC's decision to expand its regulation of the "business data services" market to the world Alice encountered in  "Through the Looking Glass, and What Alice Found There."  In order to give you some idea of what Commissioner Pai was talking about, let's just look at some of the most obvious errors the FCC makes in its wholesale abandonment of rational decision-making.
 
Background

Business data services ("BDS") are dedicated circuits that transmit data at speeds of 1.5Mbps or 45Mbps between the customer's location and another point on the incumbent LEC ("ILEC") network.  After the break-up of AT&T in 1982, the FCC set prices for the competitive "long-distance" inputs (supplied by the ILECs) of switched and "special" access.  Almost 35 years later, in its BDS Order, the Commission renames "special access" as BDS, but continues price regulation.

In its BDS Order, the FCC makes a finding that certain provisions in the legacy incumbent telephone company discount tariffs for business data services are "unjust and unreasonable." Notably, the FCC made no finding as to the "just and reasonable" nature of the ILECs' basic "month-to-month" retail rates for BDS. 

The Commission found only that certain terms and conditions the ILECs required in order for a customer to qualify for the largest discounts off the retail rate were "unjust and unreasonable."  Moreover, the Commission also found that the some of the penalties (for the customer failing to meet purchase volume, or contract term, commitments) allowed the ILECs to recover more from a "breached" contract than the ILEC would have received if the customer had fully performed. 

The Threshold Fallacy

From the outset, we can readily see that the FCC has a bit of a logic problem that it needs to explain, before it can resolve the tariff complaints.  The "month-to-month" BDS rates have not been challenged as unjust/unreasonable, nor do these rates require a purchaser to agree to buy any specific number of circuits or hold the circuits for any period of time. 

Given that any customer can purchase BDS on "just and reasonable" rates, terms, and conditions, then wouldn't any rates below the "month-to-month" BDS rates--regardless of terms and conditions--have to be, by definition, just and reasonable rates?  The Commission never explains how it can rationally determine that any terms and conditions--which result in lower prices than the already-established-just-and-reasonable-prices--can be "unjust and unreasonable."

John_Tenniel_Alice_and_the_Knitting_Sheep_2.jpg
 
Where's the Law?

When you read the BDS Order, one of the first things you'll notice--as opposed to every other FCC Order--is that the Commission never explains the prevailing legal standard.  Of course, the FCC notes that Section 201(b) of the Communications Act requires that,

[a]ll charges . . . for and in connection with such communication service, shall be just and reasonable, and any such charge . . . that is unjust or unreasonable is declared to be unlawful . . .
See 47 U.S.C. Sec. 201, but this tells us nothing about what the "just and reasonable" requirement means

Moreover, because "just and reasonable" is an unambiguous, statutory term, the Commission will get no deference from the Court of Appeals.  So, why wouldn't the Commission at least get the precedent it wants to rely on in its Order?  

What the Law Says

In Verizon v. FCC, 535 U.S. 467 (2002), the Supreme Court's review of its Iowa Utilities Board remand to the 8th Circuit, Justice Souter, writing for the majority, offers a historical summary of the evolution of the "just and reasonable" standard with respect to rates between businesses (vs. rates between the utility and the public).

When commercial parties did avail themselves of rate agreements, the principal regulatory responsibility was not to relieve a contracting party of an unreasonable rate . . . but to protect against potential discrimination by favorable contract rates between allied businesses to the detriment of other wholesale customers.

See, Verizon, at p. 479 (internal citations omitted).  Justice Souter also notes that, with respect to rates/terms set by contract between two commercial providers, the Court has previously stated that,

the sole concern of the Commission would seem to be whether the rate is so low as to adversely affect the public interest--as where it might impair the financial ability of the public utility to continue its service, cast upon other consumers an excessive burden or be unduly discriminatory.

Id. at pp. 479-480 (citing FPC v. Sierra Pacific Power Co., 350 U. S. 348, 355 (1956)). 

Thus, Supreme Court precedent, with respect to "just and reasonable," would limit the Commission's ability to step in and void a contract tariff rate/term between two sophisticated entities to situations where the rate was too low, and reflected an improvident "giveaway" to a commercial customer, at the expense of other customers. 

Competition Cannot Be Harmed By Limitations on BDS Discount Availability

In its BDS Order, the FCC states that it has previously expressed concerns about the "potential anticompetitive nature" of the ILECs' term and volume discount plans. Order at para 92.  The latest expression of concern the FCC cites is from 1996--when Congress gave the FCC a much more effective tool for determining prices/terms between ILECs and their competitors--the Telecommunications Act of 1996, which allows the FCC to order ILECs to provide access to "unbundled network elements" ("UNEs"), at rates much lower than BDS tariff rates, if the FCC believes that competitors would be impaired in their ability to compete "but for" access to the UNEs. 

But, the Commission knows the CLECs/wireless carriers cannot credibly make such a claim.  In 2004, the D.C. Circuit pointed out,

[a]s we noted with respect to wireless carriers' UNE demands, competitors cannot generally be said to be impaired by having to purchase special access services from ILECs, rather than leasing the necessary facilities at UNE rates, where robust competition in the relevant markets belies any suggestion that the lack of unbundling makes entry uneconomic.
U.S. Telecom Ass'n. v. FCC, 359 F.3d 554, 591 (D.C. Cir. 2004) (emphasis added) .

***

The FCC and the ILECs' wholesale BDS customers have known for quite a while that the FCC couldn't credibly require ILECs to give them access to UNEs, because BDS availability has stimulated, not thwarted, competition in related markets.  But, the statutory term, "just and reasonable," sort of sounds like an unbounded grant of Goldilocks-level discretion.  The FCC, seeing saw no reason to reflect on logic, or precedent, moved ahead with its plans to help another privileged class of competitors. And that is how the FCC went Through the Looking Glass.
 

April 13, 2016 11:10 AM

Has Verizon Pulled a "Costanza?"

One of my favorite episodes of the TV comedy series "Seinfeld" is called "The Opposite," in which George Costanza reflects on his life, and realizes it is the opposite of what he hoped it would be.  At the diner, George tells his friends "that every decision I've ever made, in my entire life, has been wrong."  His best friend, Jerry, suggests "[i]f every instinct you have is wrong, then the opposite would have to be right."  (quotes from IMDB, episode 5.21)  By the end of the episode, after consistently "doing the opposite" of what he would normally do, George's life has corrected itself: he is dating a beautiful woman, has his dream job with the New York Yankees, and is able to move out of his parents' house. 


                                       Verizon Training Video

The episode starts with the universal human emotion of regret, and then humorously illustrates common logical fallacies, which are presented as both problem ("every decision I've ever made has been wrong") and solution ("the opposite would have to be right").  And, even though both problem and solution are products of fallacious reasoning . . . hijinks ensue--and problems resolve.  But, certainly, no one would actually take this seriously--especially not one of the largest companies in the country--would they?  

If its Public Policy Blog is reflective of its corporate mindset, Verizon--based on a couple of recent posts--appears to be willing to give George's zany solution a try.  But, are they really "doing the opposite," or have they just changed--as competition forces all firms to do?

A Net-Neutrality Flip?

First, on March 21st, Verizon in the context of net neutrality decides to "make clear what Verizon stands for and what kind of policies we support, regardless of the outcome of [the pending Open Internet Order appeal]."  And, as it turns out, the rules/policies that Verizon thinks "are fair, even-handed, good for consumers and essential for us and others to thrive going forward" . . . are pretty much the same rules the Commission adopted in its first Open Internet Order in 2010.  In other words, Verizon now endorses the very rules that were vacated as the result of the D.C. Circuit's decision in . . . Verizon v. FCC.    

Clearly, Verizon was seized with regret over an appeal it now realizes it could have lived with, but traded for worse rules, and is now "doing the opposite," right?  At first glance, it would seem to be the case, but, the blog is quick to explain that this is not a simple case of human regret (or any other human emotion) finding its way into Verizon's corporate offices.  

Rather, according to Verizon, it is not the same company it was five years ago, when it appealed the FCC's 2010 Open Internet Order.  In the intervening time period, Verizon notes, it has "invested billions in businesses that depend on the ability to reach customers over the networks and platforms of others."  Indeed, since 2013, Verizon has built its Digital Media, content and ad delivery, business through the acquisitions of EdgeCast, upLynk, Intel's OnCue ad delivery platform, and AOL.  

Thus, Verizon's net neutrality position is not really an example of it doing "the opposite" (though, of course, it would have saved itself and everyone else a lot of hassle and expense had it just recognized this before it appealed the 2010 Open Internet Order).  But this isn't Verizon's only, or even best, example of "doing the opposite" in the last month alone.

Verizon's Special Access "Compromise"

Last week Verizon decided to "up" the "opposite," and suggested--along with Chip Pickering, head of INCOMPAS (the rival carrier association formerly known as CompTel)--that the FCC should probably go ahead and regulate "new networks" along with the old special access circuits still subject to FCC regulation.  Verizon has long fought against any regulation of its data transmission services and has already received FCC forbearance and been selling its packet, Ethernet, and SONET optical services without regulation for almost 10 years, so this is a clear Costanza-esque flip-flop, right?

Let's take a closer look at the letter that Verizon and INCOMPAS jointly sent the FCC.  The letter asks the FCC to: 1) immediately, make all dedicated services--regardless of technology--"subject to Title II of the Communications Act, including Sections 201 and 202;" 2) seek comment on a permanent regulatory framework, which would include ex ante price regulation in "relevant markets" where competition is "insufficient."

When looking at whether Verizon is really "doing the opposite," it helps to keep in mind the "not the same Verizon" caveat.  In addition to Verizon's recent digital media investments, the company has been divesting itself of its wireline (telephone + ISP + TV) properties for years, and at an accelerating pace in the wake of the FCC's reclassification of Internet access services.  Similarly, based on Verizon's pending XO Communications acquisition, and its reported interest in Yahoo!, Verizon may well see INCOMPAS as more of a future trade association, and less of a regulatory opponent, these days.  

Until the terms "relevant market" and "insufficient competition" are defined, it's difficult to say how much of Verizon's future revenues are likely to be affected.  Given the Chairman's immediate endorsement of the "compromise," it's doubtful that Verizon is worried about having too much of its future revenues tied up by the regulation it's endorsing.  On the other hand, if you are a cable company--or a telecom carrier with some unique routes--Verizon's "compromise" seems more like the good, old-fashioned, Washington-style compromise . . . of someone else's opportunities.   

*        *        *

In his more lucid, less politically-driven, first days on the job, Chairman Wheeler noted that every previous "network revolution" changed the world dramatically, and counseled that "we should not, therefore, be surprised when today's network revolution hurls new realities at us with an ever-increasing velocity."  When the velocity of new realities forces a rational economic actor to change positions as dramatically as a TV sitcom actor, it's safe to assume that the industry forcing those new realities is not subject to anything but competitive market forces.  So, why is it so hard for Chairman Wheeler to accept that the last thing a dynamically evolving "revolution" needs is more regulation?

March 17, 2016 4:48 PM

FCC Chairman Wheeler's Privacy Shell Game

In the past week, Chairman Wheeler has become the pied piper of the tech press.  He's been fawningly referred to as "the Dragonslayer," and, "the broadband industry's worst nightmare" (an encomium previously reserved for Comcast).  

Starting with a Huffington Post editorial entitled, "It's Your Data: Empowering Consumers to Protect Online Privacy," the Chairman has spawned copy that would draw an immediate FTC fine if it were attached to a product instead of a policy.  For example, NPR's headline, says the Chairman's proposed Internet privacy rules are going to "Let Consumers Set the Cost of Internet Privacy." New York Magazine's headline went further, saying  "The FCC Wants to Let Us Choose How Much the Internet Knows About Us."  

Unfortunately for Internet users, the reality is that--on the Internet--privacy is binary; you either have it, or you don't.  Moreover, as the Erin Andrews case demonstrates, on the Internet, when your information is lost to one person, it's available to everyone.  What is most concerning is not that the Chairman's proposed ISP privacy rules can't deliver on these fantastic promises, but that in the Chairman's Set Top Box NPRM, consumers are actually losing privacy that they used to have.   

Your Information Is Already on the Internet

It's no secret that, "your information is the commodity that drives the internet economy."  Nor is it any secret that this is the price the largest "free" websites/services charge for their services--such as those provided by Apple, Google, Facebook, and Microsoft.  

Likewise, Google is the leading online advertiser because it knows the most about you--and, according to the NY Times it is only getting better at gathering your information.  If you're interested, and have a Google account, here's an article with some links that allow you to see how much Google knows about you, based on your self-identified use of its apps.  But, these links don't tell you how much "pretty close to personal" data Google has collected on you, or what it has acquired through your use of its Android mobile operating system and mobile apps--which now account for 60% of mobile devices in the U.S.

The firms mentioned above are just the ones that you know have your information.  There is a whole industry comprised of firms, the names of which most people wouldn't recognize, called "data brokers."  These data brokers also track your Internet usage--and combine that information with other, personal information that they buy from your online merchants--to form a pretty accurate personal profile of all your online activity, which they make available to anyone willing to pay. 

ISP Privacy Rules Won't Give You "More" Privacy

Not surprisingly, according to experts, your ISP doesn't have any information about you that isn't already available from multiple other sources.  In fact, Professor Peter Swire of Georgia Tech says that, due to consumers' increased use of encryption, multiple connected devices, and proxy services, like VPNs, your ISP may actually know less about your Internet behavior than the websites you visit.

Of course, every expert doesn't agree completely with Prof. Swire's conclusions. In a thorough article presenting the opposing side, Computerworld reports that some experts disagree with Prof. Swire about how much of a consumer's Internet traffic ISPs can see--because encryption isn't always as effective as consumers might think, and even VPNs/DNS proxy services can be configured poorly.   Thus, Computerworld counsels readers to assume the worst, and that, "[m]uch like Google, your ISP knows everything about you."


                Now you all know everything about me . . .

Said differently, "the Internet" will not know one less fact about me if my ISP stops being the nth company to tell advertisers that I'm the leading YouTube viewer of "Lancelot Link: Secret Chimp" videos.  Rather, as Roslyn Layton explains, the effect of the proposed rules will be confined mostly to the ISPs, who must rely on consumers to pay an even larger share of the network costs, and the online advertising market--which needs more competition, not less. But, as for me, I get no "more" privacy than I have now.

Set Top Boxes Aren't Cheaper If You Pay with Your Privacy

Almost 30 years ago, during the politically polarized Senate confirmation hearings on President Reagan's Supreme Court nominee--Judge Robert Bork--some of the Judge's opponents were able to obtain his video rental history from his video store.  His opponents didn't find anything embarrassing, but they sparked a bi-partisan public outcry for laws to protect citizens from this type of repulsive invasion of privacy. Here's a contemporary article from the Chicago Tribune.   

Congress, though, was in front of the public this time, and Judge Bork's enemies could not have obtained his TV viewing records (if he was even a cable subscriber at the time), because in 1984 Congress had passed the Cable Communications Policy Act, protecting video subscribers' privacy. 47 U.S.C. 631   Since then, the FCC has had rules in place preventing the disclosure of personally-identifiable viewer information to third parties. 

In its Set Top Box NPRM, the Commission asserts that it will not totally ignore the requirements of the law, but the proposed rules would require the regulated entity (your cable or satellite MVPD) to send your personally-identifiable information to an unregulated third party providing a video navigation service.  The Commission suggests just asking Google and the data brokers to "self-certify" that they are complying with the legal obligations that apply to cable/satellite companies. See, NPRM at paras 73-74, 78.

Putting aside the dubious legality of the FCC's proposal, the Commission is exhibiting an almost-willful disregard for the purpose of the statute--or even worse, the importance of television as a shared medium.  The very nature of specific, viewer-tracked, ad delivery--of the kind Google proposes--is invasive.  Unless everyone gets the ad for [insert embarrassing product], then only the consumer gets embarrassed--when his friends watching March Madness ask, "why do I only see this ad at your house?"  

The Commission is expected to initiate an NPRM at its March 31st Open Meeting, for the purpose of ensuring that "consumers know what they are agreeing to when they sign up for Internet service."  There is nothing wrong with this goal.  In fact, it sounds a lot like the 32 year old law requiring TV providers to tell consumers the "nature of personally identifiable information collected or to be collected with respect to the subscriber and the nature of the use of such information."  Let's hope the data brokers are OK with that . . .

March 15, 2016 10:07 AM

What's Good for Google . . . Is Good for the FCC

More than a year before the Chairman's "unlock the box" initiative, the Chairman had a different idea:  if the FCC made it easier to become an over-the-top ("OTT") multi-channel video programming distributor ("MVPD"), then more companies would enter the market, and this competition would benefit all subscription video consumers.  You might think this would appeal to a new entrant with TV ambitions, like Google.

After all, the subscription TV market is devilishly hard to penetrate even if you can get the capital to build a distribution system.  A year ago, Google had 20,000 customers in Kansas City--after 5 years of trying.  But, Google wasn't in love with the Chairman's idea.  Why not?

The Market Is Internet Advertising . . . on TV Screens

Google is the dominant company in Internet advertising because it sells information about you--that it learns from your use of its applications, and devices--to advertisers.   If you're using the Internet, whether on a computer, mobile phone, or tablet, then there's a 70-85% likelihood that you're looking at Google ads (according this WSJ article re: the FTC Bureau of Competition 2012 staff recommendation on Google's abuse of its market power in online advertising). 

When you watch TV, however, the ads you see are not targeted at you personally, because they haven't been placed by Google.  This is something Google has been trying to fix since shortly after it first announced plans to build a fiber network.  Google, through its Google TV, and then Android TV, project makes "smart TVs" (with Google software built into the TV) and "buddy boxes" (set top boxes that work with a cable box/cable remote) available to consumers.  But none of these efforts have been particularly successful--leading industry observers to conclude that Google needed "another path to the TV screen."  

Then, a year ago, Google decided to try an "experiment" in Kansas City in which it combined its TV customers' content, and viewing history, with its advertising algorithms in order to sell targeted ads on the customers' TV screens.  Most likely, Google discovered that the content itself was the secret ingredient that would allow it to integrate the TV screen into its advertising universe.  

So why not become an OTT MVPD in the proceeding that Chairman Wheeler had initiated in December of 2014?  One obvious problem with this strategy is that MVPDs have long been subject to extremely strict FCC rules about disclosing customers' personally-identifiable information--rules that don't apply to edge providers like Google. The other problem with this approach is that the subscription TV market is devilishly hard to penetrate--just to get access to the customer's video content. Thus, shortly after Google announced its Kansas City TV experiment, it (along with several of its Google TV partners, trade associations, and pressure groups) formed the Consumer Video Choice Coalition ("CVCC") and began lobbying the Commission on a new set of issues.

The FCC Unbundles Video to Create "Device Market" Competition?

On February 18th, after 6 months of intensive lobbying by the CVCC, the FCC voted to require multichannel video programming distributors (hereinafter "MVPDs") to, effectively, "unbundle" the video stream going to and from the customer's television.  See, "Set Top Box NPRM".   The Commission explains that its proposed rules requiring video stream unbundling are necessary "because MVPDs offer products that directly compete with navigation devices and therefore have an incentive to withhold permission or constrain innovation, which would frustrate Section 629's goal of assuring a commercial market for navigation devices." Set Top Box NPRM at para 12. 

The FCC seems to believe that if it can imply that the MVPDs were responsible for the failure of the Commission's CableCARD rules, and that the MVPDs would likely frustrate any future rules to facilitate device interoperability, then it will be justified in implementing full-scale video stream unbundling.  So, on the thinnest of grounds--a couple of anecdotes, and a facially absurd theory--the FCC asserts that that MVPDs "offered poor support" for the CableCARD rules, and have the ability and incentive to frustrate the manufacture/sale of navigation devices by third parties. Set Top Box NPRM at paras 7, 12, and 28. The actual answer to the Commission's question was already available--but it wasn't the right answer.

The Commission's theory regarding MVPD's "incentive and ability" to foreclose third party sales of navigation devices has been litigated through trial in two separate consumer class action antitrust cases, and this theory has never been found to be supported by any evidence.  See, Jarrett v. Insight Communications Co., (W.D. Ky. July 14, 2014)  
 and Healy v. Cox Enterprises (W.D. Ok. Dec. 15, 2015).  If you bother to read either of these cases, you may also be surprised to learn that the device manufacturing market is very competitive--with at least 5 major vendors competing for each cable system.

So, as was the case with the Commission's reclassification of broadband Internet access, a very small number of privileged entities (Google, its partners and pressure groups) benefit from rules designed to address conduct that is not even hypothetically rational--much less, likely.   Still, you might think, who cares if the TV providers now have to compete with Google to sell ads to viewers?  But, Google won't be competing with your TV provider.

Don't Expect Much New Competition in the Device, or Online Advertising, Markets

One of the issues from the Commission's Net Neutrality Order (currently on appeal) is whether the FCC could, as part of reclassifying broadband Internet access as a "telecommunications service," classify all of an Internet user's formerly non-confidential information (the kind Google sells to advertisers) as "Customer Proprietary Network Information" ("CPNI") under Section 222 of the Act.  The statutory definition of CPNI is fairly broad, and includes information "made available to the carrier by the customer solely by virtue of the carrier-customer relationship." 47 USC 222(f)(1).  

If the DC Circuit agrees with the FCC that previously non-confidential customer data is now CPNI, as the result of the Commission's change in service definitions, then the FCC could limit the ability of ISPs to provide customer usage information to advertisers.  This was exactly the position that was being urged on the Commission by the Eric Schmidt/Google-funded pressure group New America, only a week before Chairman Wheeler put his "unlock the box" editorial on Recode.   

Last Wednesday, in a Senate Judiciary Committee Oversight Hearing, FTC chair, Edith Ramirez, was grilled on why the FTC overrode the recommendations of its Bureau of Competition and closed an investigation into Google's abuse of its market dominance in the online advertising market.  Not un-ironically, two days later, the FCC released a "fact sheet,"   describing its proposed rules to prevent ISPs from competing in that market by providing the same kind of ads that Google does--over your computer, mobile, and now, TV screens.