The big picture: Why the Verizon/NARAL flap matters
I arrived in DC in the middle of last night without a phone charger, having left mine in Manhattan last weekend. So this morning my first stop was a Verizon Wireless store downtown. Right in the store, in a corner, I plugged in my phone and called back someone who had a lot of questions about yesterday’s kerfuffle. Sitting on the floor, I tried to explain why this story matters.
[The convenience of the VZ store downtown (and in fact the ubiquitousness of those stores in most cities in the US) is a telling sign, so although I certainly recognize that it might seem like abusing their hospitality and electricity to rail about them from their own sales floor I decided to use it as an element in this story. Thanks, Verizon Wireless.]
Did VZ act illegally? No. Although the regulatory story here is tricky, the bottom line is that although the FCC could require that short codes be offered on a nondiscriminatory basis, they don’t. The Communications Act says that commercial cellular providers have to act in a nondiscriminatory fashion to the extent they are providing “commercial mobile services.” But “commercial mobile telephone services” are defined as services that are interconnected with the traditional phone network - reachable via dialing a phone number. Arguably, the short codes that the carriers allow people to subscribe to (”send me weather reports daily for $2.99 a month!”) are not “phone number” services. They’re private numbers controlled by the carrier. So they’re not covered by this nondiscrimination mandate. And VZ and all the rest of the carriers have many rules about who gets allocated a short code - I linked to those rules yesterday.
If VZ didn’t act illegally, why should we care? The shock of the public in learning that wireless carriers don’t act like common carriers should tell us something. From the consumer’s perspective, a communication (for data, to a person, using any device, whatever) is a communication. We assume that communications that feel just like phone calls are supposed to be provided on a common carriage, nondiscriminatory basis. We think of communications as a utility, like electricity or water, that is regulated by the government. It’s alarming to find out that these gigantic wireless carriers think of themselves as providing a private service within which they can discriminate for any reason or no reason at all.
But isn’t the wireless market competitive? Why would we need government intervention? Here’s where the long view is important. Wireless prices have been steadily rising since 1999, at the same time that the industry has been concentrating: twelve wireless carriers that were independent as of 1999 have combined (through merger, spinoff, or joint venture) into these four large wireless carriers - Verizon, AT&T, Sprint, and T-Mobile. Verizon and AT&T already control 51% of the wireless market in the US and are growing very quickly. Verizon ($22.6 billion operating cash flow) and AT&T ($17.8 billion operating cash flow) combined have 64% of the net additions to wireless subscriptions and 120 million subscribers. These are rich networks that are getting richer.
But the salient marketplace isn’t necessarily the market for wireless phone calls. These same two companies, Verizon and AT&T, control DSL internet access through regional monopolies across the country, and offer these wireless services as part of packages that tie together traditional phone services, “IPTV” access, and internet access. Everything is bundled. The elements of these bundles don’t compete against each other, really. And, as readers of this blog are tired of hearing, we don’t have real competition for highspeed internet access.
But this issue is all about wireless phone calls. So what? This issue matters because Verizon and AT&T see the wireless future - and we should too. These phone companies are making their key revenue in the wireless area, and they like the control that they have there. They understand that we’ll all be accessing all data/interaction/people using mobile handsets, and they’d like to wrest control of these communications from the PC arena - which is traditionally more open. They’d like to have mobile phone standards, which allow network providers to charge for every transaction we do using a handset, apply to all of our interactions. They’d like all applications to have to ask permission before they can be accessed - because that will allow the carrier to charge. So they’re hoping to move away from the traditional phone-common-carriage model to the “future” wireless-carrier-private-actor model as both a regulatory matter and as a business imperative, and they have the market power to do this.
That’s why this story matters. More than a billion handsets will be bought around the world next year. We’ll all be going online using mobile devices. If the wireless “we get to discriminate” model of regulation applies to handsets in the U.S., the mobile carriers will be able to act as gatekeepers in the marketplace of ideas, choosing winners and losers. The fact that a Verizon lawyer was empowered to say NARAL’s texts were “unsavory” as a matter of company policy
is hugely important - Verizon may have withdrawn this particular decision (smart move), but that’s just the tip of the iceberg.
We have to decide what model for communications regulation we want. Do we want the carriers to decide what we do online, or do we want the carriers just to be carriers? “Online,” “cell phone,” “telephone,” and “cable” all feel the same to the consumer. It’s all just data traveling fast. The regulatory reluctance of the FCC and the weirdly out-of-date structure of the Communications Act are allowing for differential treatment of the same kinds of transactions — the FCC knows this, and so it is strongly leaning in the deregulatory direction. “We’ll treat everything the same way and everything will be a private network. The market will be victorious!” But as a matter of social policy and our own future, we should sharply question that direction. We don’t have enough competition or enough enlightened, nondiscriminatory communications companies to allow us to be confident that the market will be able to do anything. We should move back towards common carriage for telecommunications - which will require that control over transport be separated from content.
So Verizon Wireless stores are everywhere, and incredibly convenient, because we’re addicted to these devices. They’ll be even more important in the years to come. But we shouldn’t be addicted to the regulatory model that currently governs our use of these devices. This will take leadership to change.
Long rules for short codes
The Verizon/NARAL tornado that passed through the US telecommunications village today (brief, but with a lasting effect) propelled me into reading the carrier rules for use of short codes.
They’re remarkable.
Take a look at Verizon’s rules, starting on p. 40 of the pdf. No bad words, no chat services, no gaming, no dating services - nothing that Verizon thinks would either offend people or compete with its own services.
Buying regulation
So now AT&T has joined Verizon (and Frontline) in challenging the FCC’s 700 MHz proposed rules.
AT&T’s beef is not about the no-locking, no-blocking rules - rather, they’re focused on the block of spectrum that a commercial private actor is supposed to use to build out a network for public safety’s purposes (the “public/private partnership”). They’re saying it’s too hard to do a deal with public safety officials before the auction. There just isn’t enough information coming from public safety about what it needs.
I’m focused on two things: (1) Verizon’s arguments (we should know more in the next few weeks, when they file their statement of issues due October 10), and (2) the lawfulness of the entire “reserve price” scheme.
Think about it. How can the FCC condition regulations (about what should be a common-carriage public
service anyway) on the payment of money? And then have the rules dissolve if
it doesn’t get the money? This is such a pure quid pro quo - it’s government for
sale. Completely screwy. But how do you say “completely screwy” in legalese?
Sure, it’s arbitrary. But is there some constitutional dimension to the arbitrariness?
Amateur Hour: Nov. 2, NYLS
From the esteemed Dan Hunter comes the following:
From television (YouTube and Revver) to advertising
(craigslist and consumer-made TV ads), movies (Machinima), photography (Flickr
and iStockPhoto), and news (blogs and citizen journalism), technology is
enabling amateurs to produce and distribute high-quality content that people
want to watch, read, consume, re-use, and buy. Media and entertainment
companies are facing a range of challenging new issues.
On November 2, 2007, New York Law School’s Institute
for Information Law & Policy will host the inaugural Amateur Hour Conference
to bring together leaders in business, law and technology to focus on the
opportunities and challenges of user-generated content to traditional media
& entertainment businesses.
Confirmed speakers include Professor Clay Shirky (NYU
professor, and author of the forthcoming book “Here Comes Everybody”), Kai
Falkenberg (Editorial Counsel, Forbes Magazine), Nathan Freitas (Co-founder,
Cruxy.com), Heather Moosnick (VP Business Development, CBS Interactive Audience
Network), Brian Murphy (Partner, Frankfurt Kurnit Klein & Selz, PC), Marni
Pedorella (Vice President, Intellectual Property, NBC Universal), Stanley
Pierre-Louis (Vice-President and Associate General Counsel, Viacom Inc.), Lisa
Stancati (Assistant General Counsel, ESPN), Marty Schwimmer (The Trademark
Blog), David Sternbach (Director Legal & Business Affairs, A&E
Television Networks), and Ken Werner (President, Warner Bros. Domestic TV
Distribution).
Amateur Hour follows in the cutting-edge and
interdisciplinary tradition of New York Law School’s enormously successful State
of Play conferences, which for the last five years have brought together
scholars, technologists, and business leaders to study virtual worlds. The
Amateur Hour conference will begin a new series of conversations about the
changes that the Internet brings to media and entertainment.
Space is limited so please register early. We look forward to seeing you at Amateur Hour.
For conference schedule and registration please
visit: New York Law School-Amateur Hour.
I checked, and the registration fee is a delightfully participatory $50.
Why the digital transition
One of my students asked whether his television set, connected to a cable system but with no set-top box, would be able to receive digital television after February 17, 2009.
So I decided to try the experiment of being a consumer with this question. I was happy to see the NCTA has this site with information about how this will work. And this:
The good news for cable customers is
that the digital transition should be easy. Thanks to a compromise
adopted by the FCC in September 2007, cable companies will carry the
main digital signal of “must carry” commercial broadcast TV stations
and will duplicate that signal into analog format so that all channels
can be viewed on any older analog TV sets connected to cable.
That’s putting a bright spin on a mandate that cable systems do the work of transforming digital broadcast signals into analog so that a majority of
the people with cable subscriptions will be able to continue to watch all of their local
broadcast stations on analog TVs until at least 2012. (I’m not sure whether cable systems will be allowed to charge for offering the analog version of the digital signal.) Also, see the words “main digital signal”? The FCC agreed to allow cable operators to remove sub-channels from the
broadcasters’ digital signal so as to allow as much compression of the signal as possible.
But if you’re not connected to cable this could be tricky. The first converter box has been approved [site requires free registration], but it costs $69.99. Lots of hearings are scheduled to examine how on earth consumers will hear about the digital transition and be allocated vouchers for these boxes.
Why are we going through all of these conniptions with broadcast, when the broadcasters themselves realize that they won’t survive unless the cable systems carry their signals? When their sub-channels won’t be carried? And when broadcasting is becoming just a subset of online content anyway?
The answer is that over-the-air television is free (in that you don’t have to pay a subscription fee, even you do have to spend time watching the ads), and no one wants to be the politician who strands people without a television signal.
Soon we’ll all be in virtual Google-worlds…
Jottit.com
I know it's so common to think Aaron Swartz is special because he was a co-author of RSS when he was 14.
But I really like one of his new side-projects, jottit.com. Go take a look.
It's always been so hard for ordinary people to create web sites. This one allows you to pick a name for your site, then “claim” it, decide whether to apply a password to it, and whether other people will be allowed to edit it. Then you're on your way, setting up your site.
This would be great as a place to share notes and links easily without using rigid templates or fancy authoring software. It's sort of an automatic, right-away wiki. While you're editing, you can see what your page is going to look like. It's extremely simple and clean.
The ham band
When I was in high school I remember going with a group to play a concert in an Elks lodge. The room was dusky and the building was a little broken down. There was a giant sign in the room where we played that read, “Keep America Strong. Ask A Young Man To Become An Elk.” The people there were boisterous and kindly.
Well, I think I’ve found the home of the telecommunications-Elks. It’s amateur radio. The ARRL Ham Radio License Manual is full of folksy, boisterous, exclamation-point-studded advice. You get the feeling that every ham is sincere and fun-loving:
Why don’t people just buy radios and transmit anyway [without a license]? . . . Because it’s quite apparent to hams who has and who hasn’t passed a license exam. You’ll find yourself attracting the attention of the Federal Communications Commission, but more importantly, you won’t fit in and you won’t have fun.
A long, friendly conversation is known in ham-dom as a “ragchew.” And this was my favorite part, about Morse code:
Many operators enjoy the rhythm and musicality of “the code,” as well. Aside from its utility as a communications protocol, it’s a skill like whistling or painting that you can enjoy for its own sake. Listening to a skilled Morse operator chatting away or relaying messages is quite a treat!
I have a very soft place in my heart for the Elks, and for the hams, and I very much enjoyed my day with the amateur radio manual. It all works out so smoothly - voltage, current, resistance, and power all relate, and you get to sit there imagining contacting other hams in state after state. “CQ CQ CQ, this is W1AW calling CQ!” the manual instructs, and I can’t wait until I get my own call sign.
A woman sitting a row behind me in the plane told me she was jealous of my studying the manual - she wants to get her amateur license too. She told me that she saw the latest Bruce Willis movie last night and that ham radio saved the day. “It was so exciting!” she said.
Keep America Strong. Ask A Young Person To Become A Ham.
A thousand posts
Four Septembers ago, I started this blog. It’s mostly been a delight, a homecoming each day, to be here and write a little. Today is my thousandth post. So I’ll keep it short. Enough already!
First, for Kaliya Hamlin, who has to go through life rhyming with an overbearing regulatory cost-shifting scheme, a big congratulations for the upcoming She’sGeeky unconference on Oct. 22-23. I can’t be there, but I’m with you in spirit.
Second, for everyone that’s had anything to do with OneWebDay all around the world, a huge thanks in advance, and for all the years to come.
Pond-jumping
On April 18, 2006, I was in Oxford (thanks to Jonathan Zittrain) giving a talk at the Oxford Internet Institute that Google Desktop tells me was titled “Seeing the Net: Recent FCC Developments.” The slides I talked through had to do with Bellhead/Nethead differences and the new laws, new institutions, and new asymmetries of information that the telco-incumbent-persuaded FCC was forwarding. Because it was Oxford I wrote out my notes in some detail, and I can see that I talked about net neutrality at length.
I tried to convey the idea that allowing network access providers to discriminate was bad policy - it advances the interests of autonomous actors (the network providers) without sufficient regard for the overall social good. I’m confident I talked about sidewalks, substrates, and openness.
Well, I distinctly remember being told by some Ofcom representatives who were there (this was 18 months ago, so I feel I’m not violating any confidentiality now) that neutrality was always going to be a solely American issue. They were extremely confident. Their arms were folded, and they told me what was what, and neutrality was simply not on the table. “You’re assuming the presence of a network,” they told me. “Of course prioritization is necessary for broadband access - otherwise the providers won’t be able to recoup their expenses.”
Yesterday CNET reported that there’s a professor in the UK (Nigel Shadbolt) that thinks it’s time for the UK and Europe to get into the neutrality tussle. According to Shadbolt:
[The Web is] ‘all about making content visibly available to anybody who chooses to take it and not have intrinsically built in a system of ways of applying explicit filtering.’
He’s convinced this issue will be relevant for the U.K.:
‘We can’t not have the discussion,’ added Shadbolt. ‘It’s not as if it’s of no relevance to us. What happens in the U.S. will make its way here.”
It makes me glad to see Nigel Shadbolt suggesting that net neutrality isn’t just American. I’m sure he’s getting the same chilly reception I did, but at least he has the right accent - “Nigel Shadbolt” clearly is a native.
Beginnings and end-games
There was a big BusinessWeek story recently about the enormous contributions cell phones can make in developing countries — and particularly in Africa.
‘Mobile technology has brought many fruits, and no bad things,’ insists Isaac Mahenia, a schoolteacher and part-time farmer in Muruguru. Abraham Maragua. . .agrees that life is finally getting better in the village, and that mobile phones are part of the change.
I thought this was a pretty strong and interesting story, and I took it at face value.
But other people whose opinions I respect saw this differently - as an advertisement for the mobile phone industry in Africa. And, even more strongly, as an excuse for developed nations to limit their investment in development. Wireless doesn’t help with access to the internet unless there are fiber connections (somewhere) to connect to, and without basic infrastructure and a certain stability those fiber or copper connections won’t be safe. Infrastructure like this (fiber, copper, water, electricity) requires longterm investment. Wireless isn’t a substitute for all of that. Subscribers will be sharing scarce connections to the internet, and in the end the country won’t make all that much progress. But wireless carriers will indeed do well.
Someone sent me a second story that relates to this one. It’s from newspapers in California decrying the unbelievable lobbying strength of the carriers there. The headline tells the story: “Activists Say Industry Money Silences Pro-Consumer Bills.”
The industry doesn’t want people to pay pro-rated termination fees, arguing that high set fees subsidize the free-ish cellphones that consumers enjoy. So switching is hard. The industry doesn’t want to allow unlocked phones (evidenced yet again by Verizon’s lawsuit last week). The industry doesn’t want clear disclosures about taxes and fees associated with phone bills.
At the same time, lots of cell-phone-company money goes to Republicans in California, and “[o]f the $7.2 million handed out by telecom companies with cell phone divisions since 2005, more than $600,000 has gone to the California Democratic Party.” So bills that might require consumer-friendly behavior in California are dying.
These two stories go together, in a sense. In the first, new, developing-world consumers are benefiting from cellphones and aren’t aware that it isn’t a good idea to skip infrastructural steps — and the wireless carriers are doing well. In the second, “old,” developed-world consumers are benefiting from cellphones and aren’t aware of how locked-in they are to high termination fees and locked-up equipment — and the wireless carriers are doing well. No conventional means will have much effect on any of this.