Archive for July, 2007

Just a quick note, because I've been tied up all day with one thing and another – Kim Hart of the Washington Post has a fine article here about the implications of the FCC's meeting tomorrow.

And this entry from Web Pro News, by Jason Lee Miller:

Seen as the
last line of defense against the telecommunications industry's desire to keep
mobile phone subscribers bound in contracts, using select phones, accessing
approved websites, downloading approved applications (sounds familiar to the Net
Neutrality worries, doesn't?), Google pledged to bid $4.6 billion on a chunk of
the spectrum, but only if all four conditions of openness were met.

This
infuriated AT&T, who accused Google of trying to stack the deck in its
favor, which is an activity reserved exclusively for AT&T.

Plus this AP story.

I'll be in the middle of a short symposium tomorrow when the Commission meets, so let me know how it goes. 

Someone asked me a question today about Google's new partnership with Sprint. 

Sprint/Nextel is the third largest wireless carrier in the U.S., falling far behind Verizon and AT&T – who together control 51% of the wireless market.  (Sprint services are also resold by Comcast and Time Warner as part of their packages.)

Sprint has announced it won't bid in the 700 MHz auction.  Sprint has other plans.

About a year ago, Sprint announced that it would “invest up to three billion dollars over the next few years in a joint venture with Intel, Motorola, and Samsung in the development of a mobile Worldwide Interoperability for Microwave Access, or WiMAX network.”  (From this research paper by Christopher Glaser.)  Sprint has been hard at work on the standard for mobile WiMAX, which is an IEEE 802.16e standard.

Mobile WiMAX is a big deal (if it could work) because it would allow a lot more data to move much more quickly than it does over traditional wireless networks.  It's slower than DSL or cable modem service, but it's mobile and much faster than what our cellphones can offer now.  As the Glaser paper points out, because the waves are shorter there will need to be a lot more base stations put up — and there are other downsides (you should read his paper).

Sprint bought up (cheaply, I understand) licenses to transmit using spectrum in the 2.5 GHz area — much higher frequencies, shorter wave-lengths than 700 MHz.  Sprint and Clearwire announced last week that they will they “will link their respective WiMax wireless broadband networks to
give subscribers a seamless roaming experience across territories that
eventually will cover 300 million U.S. residents. The network will
deliver between 2M bps (bits per second) and 4M bps downstream and
about half that speed upstream, they said.”

The idea is that this would cost about $50 a month.

Here's another advantage to 2.5 GHz – not only do Sprint and Clearwire have big holdings in this area, but I understand that other countries are also looking at 2.5 GHz as the place for WiMAX deployment.  So that means that equipment etc. could work (potentially) worldwide.  That isn't the case with 700 MHz, where only the U.S. is deploying it (so far) for wireless services.  Everyone else is still using 700 MHz for television.

Now Sprint and Google have announced they're working together.  Here's the press-release-speak:

Sprint network bandwidth, location detection and
presence capabilities will be matched with Google’s popular communications
suite – Google AppsTM – that combines the GmailTM, Google CalendarTM and Google
TalkTM services. Customers will be able to experience a new form of interactive
communications, high speed Internet browsing, local and location-centric
services, and multimedia services including music, video, TV and on-demand
products.

So what does this mean?  Google is spreading its bets, and sees global potential in WiMAX.  The standard may not be fully baked, but if it worked you could have a clear alternative to the existing locked-up wireless world in the U.S.  So Google may be throwing its weight behind cable companies and Sprint rather than dealing directly with AT&T and Verizon.

It's obvious that Google isn't conditioning its collaboration with Sprint on complete openness.  The Sprint network won't be sold wholesale – something that Google is clamoring for in the 700 MHz auction.  The Sprint network may not (we can't tell yet) allow any device to use it.  Sprint is saying that it will provide open standard APIs
(application programming interfaces) to people who want to create customized products for browsable
devices, so that may open up the application world – right now application developers have to pay 40-50% of their revenue to a carrier in order to have their application be usable on phones that are locked to that carrier's network.  Can't really tell, though – it's too early – whether Sprint will ease up on taking a cut.

But there's no guarantee that Sprint will be giving access on a non-prioritized basis to the entire internet. 

Is Google being hypocritical?  Perhaps, on one level.  Openness may go out the window when you have to keep your shareholders in mind.  On another level, Google could say that it's impossible to get at the wireless world using the 700 MHz spectrum because that has been locked up by the existing carriers.  So they're simply trying another route, and the benefits to consumers will far outweigh any niggling concerns about openness. 

Or maybe they just wanted to make sure that the Google phone had a distributor.

Verizon has joined AT&T in favoring the Martin plan.

The summer brawl over the 700 MHz auction does seem to be steaming to a close.  For now, at least.  

It's very likely that the “open device, open application” rules won't be sufficiently clear or enforceable to make a difference.  Remember the 1996 Act?  All those good intentions about making the incumbent telephone companies open up their equipment for use by competitive (non-incumbent) local companies?  Because there was so much litigation over what
rates an incumbent could charge for use of its equipment, the
interconnection/unbundling regime prescribed by the 1996 Act failed.
Meanwhile, competitive local telephone companies went out of business, as did ISPs. 

You can just imagine how much the winner of the national blocks in this 700 MHz auction (who will be Verizon or AT&T) will want to fight over certification standards for devices and differential treatment of applications.  At the same time, they'll be creating enormous path-dependencies for an entire generation of technology.  They'll buy time with lawsuits.

Or, on another front, maybe Frontline will sue (although it's tough to see the business model for doing so).  Frontline had an audacious, solves-all-problems plan.  Maybe they'll join with public safety officials in saying that the Commission's auction rules won't result in the right kind of dedicated network (the kind that Congress wanted), and that therefore the auction is unlawful.

It's frustrating.  Someone said to me today, “Why don't we just have a few days of riots?”  I can't imagine Americans rioting over communications policy, and neither can you.  The Commission wouldn't be moved by riots – neither would the Congress.  Google is right that the “foreclosure value” to the incumbents of these
licenses isn't the same as their market value, and so the incumbents
will spend whatever it takes to block new entrants. The people who want things to change don't have any levers to pull at the moment. 

But there can always be lawsuits.

Today's links: 

1. Harold Feld, for explaining all the politics behind the 700 MHz endgame.

This is legacy time. History will reward Martin & the Democrats
richly for daring something new rather than taking the safe course. By
contrast, the safer course may minimize political backlash, but it will
also ensure that this proceeding is chiefly remembered as the missed
opportunity to create a brighter broadband future.


2. Brough Turner, for unearthing some interesting spectrum policy background.

3. The FCC, for scheduling a meeting next Tuesday at which they'll adopt the 700 MHz rules.

4. Jeremy Denk, for writing the first MadLibs concert review.

I'm at music camp, so I can't produce anything more substantive here.  Someday I'll tell you about music camp in a nicely-turned essay, but right now I'm mostly glad that there's only half a week to go.  Yes, it's fun.  But you can have too much of a good thing.

Because the federal government won't act, the states are taking the lead on global warming issues.

Here's another fascinating federalism question:  if the federal government won't do anything about the various depredations of the telcos, is there a role for the states? States have consumer protection laws and investigative powers.  And sometimes they're willing to take risks that the federal government won't.

I heard this evening that the ACLU of Connecticut, joining up with Connecticut AG Richard Blumenthal, convinced a federal court in California that the Connecticut state Public Utilities Commission had jurisdiction to investigate the NSA spying scandal. 

(Update:  story is here, order is here. Maine, Missouri, New Jersey, and Vermont were also involved.)

The case started more than a year ago, when the ACLU-CT filed a complaint with the state utilities commission, the DPUC, asking that the DPUC investigate AT&T and Verizon's reported disclosure of private calling information of Connecticut
customers to the National Security Agency without court orders, warrants or
subpoenas. 

The Connecticut DPUC denied motions by the telcos to dismiss the complaint, and said it wanted to go ahead.  (Not all state PUCs have been bold enough to act in this area, by the way.)  The case was consolidated with others in front of San Francisco District Court Judge Vaughn Walker. 

(He's the same judge who said earlier this year that AT&T couldn't credibly argue that investigating the NSA scandal would necessarily reveal “state secrets”
that would harm national security.  That decision is on appeal before the Ninth Circuit.  You may remember that the Sixth Circuit recently held that plaintiffs complaining about unwarranted wiretapping by NSA didn't have standing – and couldn't, because of the State Secrets Doctrine.)

I understand that Judge Walker has now agreed with the Connecticut ACLU that the state utilities commission has jurisdiction to investigate.  They want to look into what the telcos who operate in Connecticut did with information about Connecticut customers.  So the standing question that tripped up the Sixth Circuit case won't be a problem.

But then there's still the State Secrets Doctrine.  How would that work here?  According to the Sixth Circuit, there are two ways the doctrine can be applied – (1) as an evidentiary privilege, dictating that if the proof needed for the defendant to defend himself is itself a secret, then the case may have to be dismissed, (2) as a justiciability matter – “If litigation would necessitate admission or disclosure of even the existence of [a state] secret, then the case is non-justiciable and must be dismissed on the pleadings.”

Here, the Connecticut state utilities commission just wants answers to some questions:  Did AT&T/Verizon turn over customer data without a subpoena or other form of legal process?  The answer to that question can't possibly be a secret. 

This is big.  It's another route by which to get information before a judge about the relationship between the telcos and national security actors in this country.  The FCC isn't doing anything about CPNI, as far as I know (happy to be corrected), so the states feel they need to act.

Next step:  wouldn't it be great if the state AGs investigated collusion between the regional-duopoly telcos and cablecos in connection with the provision of high-speeed internet access?  What set of tacit agreements may have led to such an absence of competition? 

Rick Whitt of Google has a fine post up today. 

Google's letter of last Friday gives a tremendous shot in the arm to optimism.  Optimism had really been suffering lately, sort of moping around trying to see the bright side of things.  This FCC/Google story won't necessarily have a glowing ending, but it's been nice to have a few days of thinking that change might be possible.  Thanks for that, Rick and Google.

The presidential debate just finished, and according to the NYTimes liveblogging site most of the candidates just look relieved that it's over.  A good day for online video? From the Times:

8:50 p.m.: Cynicism Mr. Obama just offered a good
summary of many of the questions in this debate. Almost every question,
he said, reflected “cynicism” about the capacity of any of the
candidates to change the country.

Who has any capacity to change anything around here?  We've got an enormous digital divide, Paul Krugman points out today that the French have a saner telecommunications policy than we do, and Jeff Jarvis says the debate was a huge disappointment.  We can't even do that right.

Here's a letter from Google that you should read.  It's significant, for at least three reasons:

1.  This is the moment when the internet mindset finally engages with the telecom mindset in a concrete way.  Google's point is that highspeed internet access is just that – access.  Google wants the pipes to be commoditized, to be as open as possible so that, like the internet itself, this transport can make possible all kinds of innovation, economic growth, and creativity.  The pipes, the sidewalks, shouldn't be controlling or monetizing the conversations that we have as we walk along.

2.  Google is not doing this out of sheer goodwill towards humanity.  Google has in mind that this spectrum could be used to create a realtime auction for internet access – with Google running the auction.  You, the user, wouldn't see the auction going on.  Your retail provider of access would be going through a central Google-clearinghouse that would serve as a spot, instant market.  This will use spectrum much more efficiently, yes, but it also puts Google right in the center.  If Google's plan works, this will be the moment when the inefficient market for access, like the inefficient market for advertising and search, will be leveraged by Google.

3.  Google is willing to say it would pay the minimum, reserved price of $4.6 billion for twelve large regional licenses that (packaged together) would create a national license.  This means that Google is actually willing to put its money behind its telecommunications policy goals.  This changes the landscape significantly.

The story in a nutshell:  the FCC is about to create rules for an auction of former-TV spectrum.  Chairman Martin has created a compromise that would provide for devices to work across networks and for applications not to be blocked.  But that's less than half the openness we need – it doesn't require that access be on a wholesale basis.  Wholesale access would create platform-competition in the wireless broadband market, which right now is dominated by Verizon and AT&T and their closed-world approach.  (Not that this 22 MHz block would necessarily be enough for highspeed access – but it would be a big step, and could be leveraged by smart radios and other clever devices that would be able to use “whitespaces” for even faster speed.)  So Google is saying it's willing to pay the minimum price, if and only if the “open access” conditions tied to this license are real.

Very nice article by J.H. Snider about the Art of Spectrum Lobbying — it turns out that the real game isn't really the license conditions, it's modifying the license conditions after you have the license (which is very hard to follow from the outside).  Someone has to figure out how to tell this story so that mainstream media outlets will write about the scandals in this area.

Great piece from FreePress by S. Derek Turner debunking US broadband myths — particularly the old canard that we're so far behind because we have so much low-population-density territory.  Baloney!  The report states:  There is absolutely no correlation between a country's population density and its broadband penetration.

Nice BusinessWeek piece by Jennifer Schenker about the French lead in high-speed internet access infrastructure.

And today's terrific post by Harold Feld explaining why AT&T may have decided it was a good idea to support Chairman Martin in this morning's USA TODAY.

It was a hot, muggy, miserable, spitting-rain day today in NYC.  Cabs can't get across Midtown, people are sweating helplessly — but the web keeps producing great trails to follow.

I was struck by the description of Einstein's later life that Walter Isaacson's new biography provides.  There he is, day after day, year after year, carefully working through ideas that might support a unified field theory of some kind.  According to Isaacson, Einstein often got quite excited about one notion or another, and some newspaper would find out – headlines would trumpet something like “Einstein Solves Riddle of Universe” – and then he'd decide that his latest move was just bunk, worthless, and he'd start in again the next day.  The next year, still more headlines, but no solution.

Even on his deathbed Einstein was playing with equations, hoping that the screen would be ripped back and he'd see through to the essence of everything.

Although Einstein didn't seem to be anguished by this (at least as Isaacson describes him), there is always the possibility of anguish over the enterprise – what if the lifelong obsession  doesn't pay off?  Perhaps he got through it by playing the violin.

===

As promised yesterday, snippets from 1993-94 about the fabulous new world of “personal communications services” opening up as a result of spectrum auctions.  We've ended up with auctions that replicate what happened in the first years of radio – pleasing incumbents – but now we've got a heavily-concentrated marketplace for the key bottleneck of internet access.  Shouldn't the advent of the internet have shifted the focus to improving internet access for everyone?  The New York Times:

“Using the
digital electronics of computers, the new “personal communications
services” will be capable of sending data, images and perhaps even video
to an expanding family of nomadic computing devices — palm-size computers,
electronic notepads and what some people call mutant devices that combine the
features of a telephone, computer and pager.” 

*

“We are about to launch a huge industry in the next week,”
said Scott Schelle, the vice president of American Personal Communications, a
small company that is 70 percent owned by the Washington Post Company and has
built one of the first experimental personal communications services systems in
the United States. “The timing is important because communications,
computers and media are converging just as the wireless revolution is coming of
age.” 

*

Almost every communications
company has something to gain or something to fear with the expansion of
wireless and next week's new rules. “This will shake the foundations of
the entire telecommunications industry,” remarked Alfred C. Sikes, who
served as the chairman of the F.C.C. under President George Bush and is now the
president of Hearst New Media and Technology, a unit of the Hearst Corporation.

*

“An auction is bound to be better
than the alternatives” of giving away licenses by lottery or awarding them
to the best lobbyists. (former FCC official).

I spent some time over the last few days trying to understand how we got in the position of auctioning off airwaves that have been painfully wrested from the broadcasters (who would rather eat their children than give up on spectrum) to the highest bidder.

The plan is that the auction could net about $15 billion.  That's about what the US spends each month on the Iraq war.  So it's not a lot.

In exchange for this, most pundits are saying the rules floated by Chairman Martin will almost inevitably end up with the current wireless incumbents winning the auction.  That's a big loss on a number of vectors – these auctions began in the Clinton era with the grand hope of a brand new telecommunications sector, full of upstarts and new forms of data transmission that would catapault the US into the future.  (You should read the speeches!  I'll dig some up for you in future posts.)

It's also a big loss for the “public interest” that the auction should, by law, be serving.  Congress has said pretty clearly that the auction is supposed to promote economic
opportunity and competition and ensure new and innovative technologies are accessible;
to avoid concentration; and to note the interests of small businesses.  None of that will happen if the incumbents win.

The other tradeoff, of course, is the unknown richness of innovation that could be unleashed if we did things differently.  Just look at everything that happened with 802.11 — all that — who could have known?

Comparative hearings didn't work, lotteries were a nightmare, and we seem to be lurching towards an auction with deeply political assumptions embedded in the rules. But I'm trying to be optimistic.  There's still time for things to change.  The Carterfone ideas (no locking of devices to networks, no blocking of applications) are just great, and we're all waiting to see how that comes out in actual language.  The public interest can be served in an auction, if the rules are set up the right way.