The Father of Spectrum Auctions

In case it had escaped your notice, famed economist and Nobel Laureate Ronald Coase died earlier this month at the age of 102.

Coase’s contributions to the field of economics were numerous and substantial. He first gained notoriety addressing the very elemental, but deceptively difficult question of why firms exist. His seminal 1937 paper entitled “The Nature of the Firm” introduced the concept of transaction costs, and theorized that firms exist to reduce these costs by performing certain functions, which would otherwise need to be procured in the open marketplace, themselves.

Anybody who has slogged through an upper-level economics class has almost certainly encountered the Coase Theorem, which states that when two parties confront an externality—an action on the part of one that positively or negatively impacts the other—the most efficient solution is not government intervention, but direct bargaining between the two parties. For example, if a lawfully-operating industrial plant’s emissions are negatively impacting local air quality, an efficient solution would be for those affected to pay the plant to reduce emissions to a socially acceptable level.

Coase had a major and ongoing impact on the telecommunications industry, as well. In a 1959 paper entitled “The Federal Communications Commission,” Coase posited that rather than having the government assign rights to radio waves in a first-come, first-served manner, spectrum should instead be treated as a commodity and auctioned off to the bidder who most highly valued it. Read more

NTIA Petition Asks the FCC for a Wireless Device Unlocking Rule

The National Telecommunications and Information Administration (NTIA) recently filed a petition for rulemaking asking the FCC to adopt a rule requiring mobile wireless providers to allow consumers to “unlock” any wireless device purchased from that provider. This would enable the customer to continue to use their device if they choose to obtain service from another provider.

If you own a mobile wireless device (cell-phone, smart-phone, tablet, etc.), chances are that you have at one time or another thought of switching providers. And chances are that you know that you can’t always take your device with you because it’s “locked”; in other words, you can’t take it to a new provider and obtain service using that device. It’s worth noting that a number of providers do sell unlocked devices and some will allow a consumer to unlock their phone, if their contract has expired. Read more

USF Waivers: Promise vs. Practice

In this update, I wanted to discuss the status of the waiver mechanism that is supposed to help ensure that USF/ICC reforms do not threaten the mission of universal service for the benefit of rural consumers.

Stepping back, the waiver process outlined in the FCC’s November 2011 order required the production of evidence resembling a state rate case. (Interestingly, it doesn’t appear that anything near the same burden is necessarily required of those who assert waivers aren’t needed in specific cases.) The order also put forward a standard for relief that was not tethered to the objectives of universal service. While the waiver process promised relief from harms caused by reforms, such relief was available only to the extent that a carrier could “demonstrate that it needs additional support in order for its customers to continue receiving voice service in areas where there is no terrestrial alternative.” The FCC even specifically warned that it would “subject [waiver] requests to a rigorous, thorough and searching review” and that it did not “expect to grant waiver requests routinely.” In many respects, the waiver process came across almost more as a justification to defend the reforms—“but, see, we’ve got this waiver process if things go badly!” —than a practical means of ensuring that carriers of last resort could rely on universal service support in delivering affordable, quality services to consumers. Read more

Update on the 2013 Policy Plan

In the wake of a terrific Legislative & Policy (L&P) Conference last week, I wanted to take a step back and talk about our policy plan for 2013—what it is and how we’re doing on it. The core objectives in that plan drive everything that NTCA staff does, with every possible initiative, meeting, “ask,” letter or filing viewed through the prism of, “What does this do to move the ball forward?” I provided an overview at the L&P Conference, and I’ve done the same at a number of state association meetings and other events over the past several months. At the L&P conference, however, I had so many people indicate that the overview helped in “connecting the dots” between various efforts that I thought it might make sense to share it a bit more broadly.

The core objectives of our policy plan haven’t changed significantly since 2012, but they’ve evolved as time marches on and developments transpire. For example, our two primary themes remain essentially the same. We need to: (1) create regulatory certainty; and (2) build a broadband future. By contrast, in 2010 and 2011, those themes were “restoring” regulatory certainty and “saving” rural broadband. Starting in 2012, we realized that “restoring” and “saving” were too rooted in the past, as if we wanted to “put things back the way they were” rather than evolve into something bigger and better. It struck us that just as telcos are innovators in their communities—you’re so much more than telephone companies now—we needed our policy plan to look and speak to the future as well. Moreover, “restoring” and “saving” simply aren’t enough. The fact is that the regulatory fabric was already fraying and needed updating beyond mere “restoration,” and just “saving” rural broadband is insufficient given that you need to keep upgrading your networks to meet consumer demands and remain reasonably comparable. Read more

FCC’s Gigabit Workshop Echoes NTCA’s Smart Rural Community Initiative

The FCC held a workshop last week focused on Gigabit Communities, with the goal of outlining how broadband providers can work with local and state leaders to deploy networks capable of delivering speeds of at least 1 gigabit per second to end-users. The workshop included proponents of privately owned systems, in addition to those involved in municipal systems and those deployed through public-private partnerships. Many of the issues discussed dovetail closely with matters highlighted by the Smart Rural Community initiative that NTCA has pursued for the past year.

FCC Chairman Julius Genachowski opened the workshop, noting that he had issued a “Gigabit City Challenge” in January while speaking to the U.S. Conference of Mayors. In that address, the Chairman challenged service providers and community leaders to establish at least one community with a gigabit-capable network in every state by 2015. Toward that end, the Chairman promised last week that the FCC would: Read more

The New ABCs of Rural Telecom Policy: Anecdotes, Boogeymen and Catchphrases

It has been about a month since I sent my last DC update out, but between the Rural Telecom meeting, NTCA and OPASTCO unification, and what seems like an endless supply of filings to make and the need to meet and engage a new Congress, it has been quite the month…and while we’ve still got a lot of work in the next few weeks, I wanted to take a minute to draw your attention to a statement made in the wake of a recent meeting between FCC Chairman Genachowski and USDA Secretary Vilsack.

By way of background, NTCA staff has worked diligently to help policymakers understand the effects of the FCC’s universal service reforms on small telcos and what might help address some of the concerns arising out of those reforms. In fact, USDA is seeing the same thing we are—in a letter to the FCC, USDA reports that it saw demand for its loans drop in 2012, and we’re likewise hearing from members that regulatory uncertainty is chilling demand for capital and investment. Read more

Genachowski Calls for 1 GB Broadband Service in All 50 States by 2015

Speaking January 18 at the U.S. Conference of Mayors Winter Meeting, FCC Chairman Julius Genachowski called upon broadband providers and state and municipal community leaders to work together to ensure that every state will have at least one “gigabit community” no later than 2015.

“American economic history teaches a clear lesson about infrastructure,” Genachowski told meeting attendees. “If we build it, innovation will come. The U.S. needs a critical mass of gigabit communities nationwide so that innovators can develop next-generation applications and services that will drive economic growth and global competitiveness.”

According to the Fiber to the Home (FTTH) Council, approximately 42 communities in 14 states are currently served by ultra-high-speed fiber Internet providers; i.e., those capable of offering 1 Gbps service to customers. Read more

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