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June 19, 2017 12:48 PM

Rep. Marsha Blackburn Exposes Hypocrisy on Broadband Privacy

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                                                     photo credit: Gage Skidmore Marsha Blackburn via photopin (license)

As noted previously, the FCC's "broadband privacy" rulemaking was really a shadow war, fought by third party advocacy groups funded by the Internet giants, like Google, Facebook, and others.  The recent legislative battle to repeal the FCC Privacy rules was no different.  Yet, within the past month, Rep. Marsha Blackburn (R-TN) "introduced the Balancing the Rights of Web Surfers Equally and Responsibly ("BROWSER") Act of 2017 to protect the online privacy of Americans."  In doing so, Blackburn has revealed what these previous "privacy" battles have been about: protecting the Internet giants' commercial advantage in the online advertising market. 

"Broadband Privacy" Is Not Online Privacy

Remember the flood of news stories fueled by interest-group-manufactured outrage about how Congress didn't care about your privacy online?   The ostensible basis for this outrage was that Congress used its authority under the 1996 Congressional Review Act to eliminate the Wheeler FCC's efforts to further advantage the biggest online advertisers (i.e., Google and Facebook) under the guise of "protecting" the privacy of ISP customers.  

Commonly omitted from those stories--and the legislative debate as well--was the fact that the FCC's "privacy" rules did not apply to consumers' information online, but only regulated the ISPs' use of this information (on a non-user-specific basis) to compete with Google/Facebook for online advertising revenue. Yet, at the first mention of using the CRA to repeal the FCC's ISP-specific rules, Rep. Frank Pallone (D-NJ) stated, "[c]onsumers should not have to worry about their financial, medical and other personal information begin shared without their permission." 

Likewise, after the Senate voted to repeal the Wheeler Commission's privacy rules (on March 23), Sen. Edward Markey (D-MA) issued this statement:

The American public wants us to strengthen privacy protections, not weaken them. We should not have to forgo our fundamental right to privacy just because our homes and phones are connected to the internet.

Reading these statements, one might reasonably assume that Congressman Pallone and Senator Markey care, generally, about protecting your personal information--regardless of who is collecting and selling that information.

However, after the CRA was adopted by the House, and the FCC's ISP-specific rules were repealed, Sen. Markey pivoted away from consumers, and their general online privacy, and toward his most important constituents--the Internet giants.  Rather than work toward legislation that would create online privacy rights for consumers, Markey instead declares his intention "to introduce legislation that directs the FCC to reinstate strong broadband privacy rules." (Emphasis added)  On April 6th, Sen. Markey did exactly what he promised, and introduced legislation that would merely direct the FCC to impose its prior regulations on ISPs. 

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The PR Campaign: Chicken-Little Meets Michael Corleone

As FCC Chairman Pai noted, the FCC's 2015 rules were driven by "hypothetical harms and hysterical prophecies of doom."  This was fueled by the Internet giants that fought the CRA legislation by using their surrogate groups to successfully plant similarly-exaggerated, chicken-little stories through friendly media outlets, such as Motherboard and DSL Reports.   

The media frenzy they created essentially promoted hysterical speculation without regard for facts.  My personal favorite is "Internet Activists Plot 2018 Electoral Revenge Against Republican Sellouts," from Motherboard.  The article, cites the "usual" sources (the tech giants' third party advocacy groups), and prominently features a picture of House Communications & Technology Subcommittee Chair Marsha Blackburn (R-TN) as the putative target for this "electoral revenge" (which subsequently occurred when Silicon Valley-funded Fight for the Future put up a misleading billboard in Rep. Blackburn's district).

Like the Silicon Valley advocacy groups he loves to cite, Motherboard tech policy contributor, Sam Gustin really doesn't like Rep. Blackburn.  Whether through a subconscious desire to appeal to the sexist bias of its Silicon Valley idols, or purely unintentional, Motherboard's privacy articles provide a good illustration of what the NY Times calls "sexist political criticism" that uniquely plagues strong female politicians, through its practice of always introducing Blackburn by immediately putting her character/competency in question.

For example, in this article the Senate sponsor of the CRA repeal of the FCC broadband privacy rules, Sen. Jeff Flake (R-AZ) is introduced simply as "the Arizona Republican."  Rep. Blackburn, however, is introduced as "the Tennessee Republican who has received colossal sums of campaign cash from the telecom industry."  The reader is left to imply that Rep. Blackburn--as opposed to Sen. Flake--is either corrupt, or only interested in furthering her personal ambition; though she and Sen. Flake are described as doing the exact same thing.

Haters Gonna Hate

When Rep. Marsha Blackburn introduced the BROWSER Act (that would re-apply the FCC's rules to ISPs as well as the Internet giants), one would have expected the self-proclaimed "consumer online privacy" groups to immediately declare victory.  None of the Internet giants' big 3rd party advocacy groups (EFF, Free Press, New America's OTI) has even commented on privacy since Blackburn introduced her bill--except for this press release by Google-supported Public Knowledge, to "clarify" that it "did not support" Blackburn's bill, as a Boston Globe article had reported.  If you hadn't noticed so far, this issue was never really about consumers.  

Rather, as the Washington Post's Brian Fung explains, the issue was always about politics and money.  Ironically, to improve consumers' privacy rights online would be for Democrats to cede the privacy issue for the election.  Worse still, it would put Democrats on the wrong side of their core "Silicon Valley" constituency; the tech giants. Thus, Rep. Frank Pallone seems to have moved past his concerns about consumers' personal information, given that Rep. Blackburn has exactly 0 Democratic co-sponsors of her Browser Act.

Consequently, the tech giants' media outlets--so aggressively pro-privacy when it was just an ISP/Republican issue--have been largely silent on Blackburn's bill.  Motherboard's Gustin has written nothing on privacy since his "plotting revenge" article.  DSL Reports' Karl Bode--with his characteristic tin-foil hat logic (see, e.g., "AT&T Fools Entire Media With Giant Gigabit Fiber Bluff" arguing that AT&T's ultra-fast "Gigapower" Internet service is a PR hoax)--faults Blackburn for introducing a bill that "she knows won't pass."   Advocate journalist Bode quickly concludes that Blackburn, of course, knows that her bill won't pass because--back to Gustin's only biographical point--she's in the pocket of ISPs, and they won't like the bill, because they...and her...are just, you know, evil.

What Is Privacy Worth?

Google, and Facebook, et al., were mad enough, when Congress eliminated the regulatory barriers to entry that the Wheeler FCC had imposed on ISPs, but to give consumers any  control over the heretofore unfettered ability of the online ad giants to use and monetize personal consumer data was more than they could handle. So, the web giants now argue, according to the Business Insider, that if consumers are in control of their privacy, "Facebook won't be free."  

This statement calls to mind the laughably-superficial reasoning, by Public Knowledge President Gene Kimmelman, as to why the proposed AT&T/Time Warner combination should be regarded with greater suspicion than other firms also competing for consumers' leisure attention, like the Internet platform giants.  Kimmelman dismisses the Internet giants as "competitors" to traditional content, because "none of them charges me $200/month to access their online content." (See, 12/07/16 Senate Judiciary Committee Hearing  at 2:21:50-2:23:30)

Sen. Jeff Flake perceptively identifies the flaw in this logic, asking witness Mark Cuban if it matters who is actually "paying" when considering whether firms compete in the same market for consumers' attention.  Cuban succinctly observes that, "if you're not paying for content, you are the content." Hearing video at 2:23:44 (emphasis added).  Cuban's point is that online consumers are giving the platform giants something these companies can readily exchange for cash--their personal information. 

The Internet giants' argument (and that of their surrogate groups) rests on the notion that consumers' personal information is of little value, and therefore the content that the consumer receives from the platform giants is a great deal.  Yet, if the Internet giants' services are indeed valued more by consumers than the consumers value their own privacy, then what's the harm in letting consumers decide how they wish to pay--in terms of  cash or personal data--for these services?  

The beauty of Blackburn's bill is that it gives consumers the right to make that decision, and for this she deserves more credit than she's gotten.  Let's hope that at least some Democrats agree this is a choice that should be returned to consumers.


October 15, 2012 9:25 AM

Regulation Can Promote Investment and Consumer Welfare (You Just Might Agree With Jim Cicconi)

Whatever you think might be the purpose for which the FCC was created, you're probably wrong.  Congress explains the purpose of the Commission in one gigantic, and barely comprehensible, run-on sentence contained in Section 1 of the Communications Act of 1934.  To make it easier, I'll break it into a couple sentences.

The goal of the Act was to ensure that citizens had nondiscriminatory access "to rapid, efficient, Nation-wide, and world-wide radio and wire communications services" with "adequate facilities at reasonable charges."  Radio and wire communication services are to be made available at reasonable charges for the "purpose of national defense" and to "promot[e] the safety of life and property."

The first few times you read it, this provision sounds reasonable; if only because Congress uses the word "reasonable" twice in the same really long sentence.
 
Now that you know the purpose of the Act, what do you think this FCC thinks its purpose is?  If you didn't have the context of the Act and you only looked at the Chairman's bio, you would be forgiven for thinking he was the Chairman of some kind of mini Federal Reserve Bank for the telecommunications industry.  The notion of promoting investment is mentioned more than any other single concept, and "job creation" is also listed prominently in the first paragraph. 

To be fair, there isn't anything flatly antithetical to the FCC's official purpose in any FCC Commissioner's literature, speeches, or statements.  This is the problem.  The breadth of the Act's purpose almost certainly ensures that no two FCCs will define their focus or their actions in any consistent way.  The only person I've ever heard offer a solution is Jim Cicconi of AT&T.

His point is so non-controversial that it's easy to miss.  All he says is that the FCC should be "re-chartered" by Congress to focus on consumer protection.  The problem, he argues, is that the public--and many members of Congress--expect the FCC to act whenever a consumer issue arises. 

But, he explains, because the legislatively-defined purpose is not well-suited for the public's expectations of the FCC, "it leads [the FCC] into some adventurism in interpreting their own statutes."  Here is a report of his quote in 2008, again almost 4 years later at a Phoenix Center event, in his own words here, and again in May of this year here.  
 
You know what's weird about this statement?  I've only heard it from Cicconi.  I must have spent more than 5 hours looking at Internet search results to try to get some other cite for this idea.  But, I couldn't find anything by anyone saying anything similar.  It's just him! 

The better question is why no one else has raised this point?  My guess is that most people think that the official "purpose" of the FCC is written so broadly that Congress wouldn't need to change a thing for the FCC to focus on consumer protection.  Again, this is a problem. 

Look back at what the Chairman says is his focus. Is it any wonder that it's become cliché-like for someone on every side of telecom policy debates to argue that the FCC should decide in their favor because it "promotes investment?"   Likewise, the statement that a regulatory policy "promotes investment" has become almost boilerplate in every major FCC Order over the past few years. 

But, "investment", or "promoting investment" can never be meaningful regulatory goals,   because these terms offer the regulated firms no transparency of purpose or predictable consistency across political administrations.  Regardless of whether the regulator sides with one industry group or another, in a carrier-centric scheme the regulator can always say it is "promoting investment" by the "winning" side.  Changes in technology, as well as changes in political dominance, virtually guarantee an artificially-distorted regulatory environment.

The value of the last point cannot be understated.  Because a carrier-centric regulator will necessarily create policies with disparate effects on competing companies, these disparities in regulation will always find a political voice. 

The result is what we have now--unproductive partisan bickering over the economic interests of competing firms.  The voice of the consumer gets lost in this cacophony, if it ever finds its way into these quarrels at all. 

On the other hand, if the regulator is charged with the clearer obligation to focus on protecting the interests of communications consumers, regardless of the "regulatory classification" of the offending firm, then regulated firms can more easily discern the future expectations of the regulator. 

The almost zen-like paradox of Cicconi's proposal is that the regulator cannot promote investment by focusing its decisions on the investment of the regulated firms.  Rather, the regulator must have some transparent focus on something other than the business models of competing firms.

An explicitly consumer-focused regulator would have the ability to redress consumer harms perpetrated by any company that contributes to a communications service that consumers purchase.  Not only will consumers enjoy greater protection, and less confusion as to which state or federal agency can resolve their concern, but communications firms will benefit from a certainty not possible today, and both the FCC and Congress will also enjoy the same clarity of focus.
 
May 17, 2012 3:23 PM

U.S. Mobile Data: More Bricks, Less Straw

As punishment for requesting their freedom, the Egyptian Pharaoh told the Israelite slaves that they had to maintain their quota of bricks, but with less of an essential input: straw.  The burden of meeting demand with less resources applies as well in today's mobile services marketplace.  Wireless carriers face demands for greater bandwidth to support growing mobile data services but, for the intermediate term, cannot expect additional spectrum capacity--it's essential input--on either a firm-specific or industry-wide basis.  

It's unanimous: no matter who you talk to about wireless data, everyone agrees that "more bricks, less straw" is the unavoidable policy.  Thus, as wireless data demand continues to show no sign of abating, wireless service providers will simply have to make do with less than optimal spectrum capacity. So if we're stuck in a "more bandwidth demand, less capacity supply" world, how do we solve the problem of how to ration capacity?  

Who Needs Spectrum When You Can Upgrade Your Capacity?

So what's a wireless operator to do?  Well, for starters, you upgrade existing capacity like crazy by constantly deploying the most efficient technology.  But this isn't cheap.  Since wireless data exploded in 2007 with the iPhone, AT&T alone has gone through a 3G upgrade, an HSPA upgrade, an HSPA+ upgrade, and, more recently, is in the midst of an upgrade to LTE.  

Other companies have accelerated their own pace of upgrades as well.  From December '06 (right before the iPhone launch) through December '11 (when most firms still have a long way to go to realize full LTE deployment) industry capex has increased by almost 50%, according to CTIA (the actual numbers are in a report that I can't afford, so take my word for it).  But, even these improvements won't keep up with surging demand.

With No Spectrum Relief In Sight, Do You Play The Price Card?

Given the limited options for rationing capacity another, though unpopular, move is to raise prices.  Over the last several months we've seen AT&T raise data prices, after realizing that the government was not--anytime soon--going to allow AT&T to efficiently augment its own capacity.  Verizon quickly followed suit.  For now, Sprint appears to be content to let its shareholders shoulder the costs of increased wireless data demand.  But to be sure, increased demand without increased supply does create network strain--regardless of who pays.

Last week, at the CTIA Conference, Chairman Genachowski maintained/reasoned/disputed that the failure of the AT&T and T-Mobile merger last year had anything to do with AT&T's decision to raise prices.  Yet, the Chairman knows better, as he has been a leading prophet of the spectrum shortage.    

How to Recover Costs of Spectrum-less Capacity Expansion?

Given the costs of constantly upgrading capacity, how does a carrier manage excess data demand?  As I indicated above, raising prices sounds like a simple solution, but must account for the fact that big data users are contract customers.  That's how smartphones, and data plans become affordable, and predictable.  

You see, the problem with raising prices for wireless data is that you can really only raise prices to the marginal customer (i.e., the person who's not your customer yet).  Crazy, right?  "Raising prices" is a statement of frustration and designed to curb consumption.  Carriers are telling prospective customers that the network is nearing capacity and use of the remaining capacity will cost you. This is a horrible situation--who wants to be the (unpopular Redskins owner) Dan Snyder of wireless data?

If Sophisticated Buyers Want to Subsidize Consumers, Let Them!

Carriers know that raising prices for mobile data, or throttling data speeds to the largest users of mobile data, is no way to treat your biggest fans.  But with the popularity of mobile device applications, which constantly stream information to and from the customer's phone, customers can unintentionally (and unnecessarily) stress capacity.  Applications can distort data consumption in a way that even the most conscientious web surfers cannot offset.

So, earlier this year, at a conference in Barcelona, an AT&T executive suggested that maybe some applications providers would want to buy capacity in bulk in order to assure their customers that using the desired app wouldn't cause the customer to exceed their usage cap, or become subject to throttling.  Not a bad idea, right?  I mean the applications developer knows how much bandwidth their customers use, and they have a lot more buying power than the consumer.  

Given the public's embrace of mobile data, and the cost of continually augmenting capacity, especially for firms with sub-optimal spectrum allocations, one would think the "public interest" would support options that allow customers to still enjoy wireless data, but at a lower cost/consumption threshold.  One would think . . . .

But Don't Tell Public Knowledge!

The AT&T suggestion seemed harmless enough, but the reaction from the self-proclaimed public interest group Public Knowledge was alarmingly critical.  Then again, this is the same group that published a paper arguing that all wireless carriers should provide flat-rated mobile data service.  The irony, of course, is that flat-rated price structures cannot be profitable unless the majority of users pay for more data than they consume.

The notion of "more bricks, less straw" is, for regulators and service providers, an unfortunate and dystopic reality.  Uniquely, Public Knowledge seems to relish the "more megabytes, less capacity" future with a fondness that can't help but be compared with how the ancient Egyptian brick consumers' lobby must have felt . . . right before the brick supply crashed.

December 1, 2011 11:53 PM

Two Winners on Deck to Join FCC

Yesterday, the Senate held confirmation hearings on the nominations of Jessica Rosenworcel (testimony here), and Ajit Pai (testimony here) to fill two FCC seats--one of which is vacant, and another will become vacant upon the adjournment of the present Congress.  I have had the privilege to work with both nominees, and this is probably the last time I can respectfully refer to either by their first names (instead of "Commissioner").  I can't think of two better candidates, or more deserving people to serve on the Commission. Sometimes even Congress gets it right.

I worked with Ajit as a colleague at the Antitrust Division.  He's got a great sense of humor, and is a truly committed public servant.  Plus, he's a super-smart lawyer.  I like Ajit a lot, I've worked with him personally, and I'm very proud of him.  He'll do a wonderful job for the public and I really look forward to seeing him make a positive difference at the Commission.

As far as Jessica goes, I've known her for more than 10 years--though I've never "worked with" her in the sense that we both got paid by the same employer--I have worked with her in my capacity as an attorney representing competitive carriers.  Whether as a staff attorney, or a legal advisor to Commissioner Copps, Jessica was always fair, patient, and willing to hear you out.  

She made sure she understood your arguments, even if she didn't agree, and was never dismissive no matter how small the party or their issue of concern.  She is also a super-smart lawyer, and has exceptional political instincts, which will make her seem a lot more like a "veteran" commissioner than most people just stepping into the job.

Both candidates acquitted themselves well in the face of questioning by the Senate Commerce Committee.  Don't believe me?  Then watch it for yourself here.

Finally, Ajit--you did great, brother, and I mean that sincerely. But, on the "speaking truth to power", "keeping it real" front, there's no question that Jessica laid it down and picked it up. 

Check out the hearing at about the 1:08 point where both are asked the same question by Sen. Blunt (R-MO)--about whether the FCC staff or the Chairman released the "staff report and analysis" as part of the Wireless Telecommunication's Bureau order granting AT&T and DT's joint request to withdraw their license transfer applications. See previous blog for background.  Jessica could have hedged, but instead she laid down the stone cold truth.  I love that!

November 10, 2011 2:14 PM

Even My Boring Blogs Are Worth Reading

I'll be the first to admit that not everything I write is some kind of jewel that's just going to draw everybody in and make salient, compelling points in a hilariously entertaining fashion.  Truth be told, sometimes I don't even try.  While I always write about subjects that hold some interest for me (and try to make points that other people aren't talking about), sometimes I write about things that seem to only interest me.

One of those times was about 6 weeks ago, in a post entitled "Should the Merger Guidelines Come with Guidelines?  The point of the post was that the Guidelines don't really account for barriers to exit (which increase barriers to prospective entry), especially when merger enforcement could exacerbate already-high entry barriers by adding "barriers to exit", which would not otherwise exist.  Does anyone even follow the reasoning that the agency--by undertaking an enforcement action--can change the original characteristics of the market on which its action is focused?  I didn't think so.

BUT, if you did read the whole post, you would have seen this quote "Perhaps China Telecom, Carlos Slim, SingTel, or some other prolific foreign telecom investor, will, at some point, come to DT's rescue?" (emphasis added)   If you read this far, then you wouldn't have been at all surprised to see this story from Bloomberg a couple days ago, announcing that China Telecom plans to enter the U.S. market sometime in 2012.  Interestingly, the President of China Telecom Americas does not rule out entering on an own-facilities basis, noting that "money is not a problem."

So, on the off chance that the government and AT&T are unable to work out a satisfactory compromise that allows AT&T to expand output, protects consumers and rewards DT's substantial investment, it looks like all hope might not be lost for DT.  I write this for you 4 readers that did read that post.  Rest assured, I'm doing my best to provide a thorough analysis of all potential consequences of government actions--even unintended consequences.

If you're one of my few readers . . .  thank you . . . and please give your friends this message: "Telecomsense: Just Shut Up and Read It!"