Policy and regulation

Cities should chart their own destiny

Submitted by acohill on Tue, 01/04/2005 - 11:56

Here is an excellent multi-page opinion article that discusses the plight of towns and cities in light of the recent Pennsylvania legislation that forces communities to ask Verizon's permission to develop broadband systems.

As you read this, it is important to remember that we still have a "seven blind men and an elephant" problem when talking about broadband. It means different things to almost everyone, which is part of the problem. As I've been saying for years, "It's not about the technology." What communities need to spend more time on is education--of businesspeople, of elected leaders, and of local government officials. If you can get most thoughtful people and leaders in the community using the same language to describe the same things (in the context of broadband), you've accomplished something very significant, and greatly simplified the challenge of getting an appropriate telecom infrastructure for the community.

Philadelphia to fight ban on municipal wireless

Submitted by acohill on Mon, 11/22/2004 - 09:32

The City of Philadelphia has been much in the technology news lately because of its ambitious plans to offer wireless broadband throughout much of the city. It's now back in the news with its announcement that it will fight a statewide ban on municipalities offering Internet access and related services.

On the one hand, these legislative attempts to throttle community projects are almost always the handiwork of the incumbent phone companies, who typically are nonpartisan in their strategy--they give money to all legislators, who then too often pass bills favoring these companies. A cynic might view this as selling out the electorate.

On the other hand, I don't believe local governments ought to be in the service business for broadband. It's not the same as water or electricity, and the fact that the community has municipal water and/or electric service does not, in my opinion, necessarily justify going into the broadband business.

As I have said repeatedly, I view more it like roads. Communities build and maintain roads, but they don't own the cars and trucks (or the businesses) that use those roads.

I'm very much in favor of municipal and local government investments in broadband, ESPECIALLY in underserved communities, but I think the way to do it is to keep the delivery of access and services in the private sector, where jobs are created and taxes are paid. It's a little more work and effort at the outset to make sure you have the right business and administrative model, but over the long term, making the private sector a partner is going to have a much better outcome.

Does the FCC control everything digital?

Submitted by acohill on Tue, 11/16/2004 - 09:42

It's hard to know which way the wind blows in the corridors of the FCC. Hard on the heels of thoughtful rulings on the future of VoIP, the FCC has turned around and claimed jurisdiction over, well, everything digital, including your computer. That's the conclusion of a lot of interested parties, anyway.

The current gasoline being thrown on this fire is the Broadcast Flag mandated by the FCC to be supported on all TVs beginning with sets manufactured next year (right around the corner). The broadcast flag is a bit that tells the set or recording device that the content (i.e a television program, movie, etc.) cannot be copied.

The thinking here was that digital TV would never take off unless the content creators (the giant media companies) were protected against rampant piracy. As the Ars Technical article notes, the FCC continues to be too easily influenced by the incumbent media companies, and tends to pay too little attention to consumer interests.

I have to agree. I don't see that Congress has directed the FCC to "make sure the big media companies don't suffer any competition." The FCC ought to be seeking to create a level playing field for all content providers, large and small. Secondarily, the notion that consumers are just a bunch of thieving pirates is not only extraordinarily small-minded, there is absolutely no evidence to support it. VCRs, twenty-five years ago, were going to kill the movie industry. Now movie makers make more from selling recorded movies than they typically make in theatre box office receipts.

We have a more recent example in the music industry. Even while music industry groups continue to sue consumers for filesharing, they are making hundreds of millions of dollars on legal music downloads. Why is the FCC falling for this nonsense?

New technology and new delivery systems for entertainment always create a period of displacement; it's the beauty of creative destruction. Time after time, we have seen new and bigger markets (and new job and work opportunities) emerge out of the ashes of old businesses. As a country, why are we trying to preserve the near monopoly status of buggy whip makers?

The fog of telecom

Submitted by acohill on Mon, 11/15/2004 - 18:36

There is a fair amount of disinformation being bandied about on the issue of community-managed telecom infrastructure. Read this article [link no longer available] by the deceptively name "Heartland Institute" for an example of a very one-sided view of community investments in telecom.

Here's another view. The context here is a proposed community telecom project in Illinois, where the incumbent telecom providers have spent millions to try to convince citizens and community leaders that the sky will fall if communities make investments.

Part of the disinformation campaign involves selective reporting. Bristol, Virginia's widely cited fiber to the home project has been misleadingly reported as bleeding red ink, but the way this is done is by looking at only the first two years of the project, where capital costs were correctly projected to be high. By looking at just the first two years, it's easy to show the project is "losing money" and cheating taxpayers. But the real facts are a bit more difficult--as the project moves into year three, Bristol has a big backlog of consumers and businesses clamoring for service, and the project expects to move into the black ahead of schedule.

Another problem with community infrastructure projects is that they fall into several different categories in terms of business models and levels of investment. Some articles that purport to "prove" that community projects are moneylosers by comparing two entirely different business models--one theoretical and one actual. It's very confusing unless you know what is going on.

We just are not far enough along in most real projects to have reliable data, and that's one of the tricks being played--it's entirely too early to tell if most of these community efforts are going to work over the long run or not. But if anecdotal reports from happy customers are any gauge at all, I'm not greatly worried.

And you always have to compare these theoretical doom and gloom stories with the actuality of most rural communities--little or limited DSL service, lack of choice, high prices, poor service, or some mix of all four.

Finally, the biggest trick of all is to take private sector ROI measures and use them as a yardstick for community projects, claiming that if these projects "don't make money," they aren't worth doing. When was the last time any community used ROI to develop support for a community project? The answer is, "Never." Because it just doesn't make sense in the context of "community good," which is why these things get started in the first place.

What's the ROI on a town park? What's the ROI on the community library? What's the ROI on garbage collection? We don't try to measure community services based on return on investment because that's not why we do them in the first place.

Should community telecom infrastructure projects be based on sound business models? Absolutely, and they should not require long term injections of funding from general tax funds. But that's not the same as trying to treat them as a private sector business.

Don't fall for the tricks.

Big Brother will be watching while you drive

Submitted by acohill on Fri, 11/12/2004 - 12:12

In a deeply disturbing ruling, the National Transportation Safety Board has ruled that car manufacturers must put black box data recorders in new cars and trucks. The boxes will record speed, acceleration, braking, direction, and other data that could be used to reconstruct accidents, among other things.

The problem with this is that the data does not belong to the vehicle owner--it can be accessed by third parties without your consent. Traffic safety experts like to talk at length about how the data is valuable in analyzing accidents and improving vehicle safety. Fair enough, but forcing private property owners to both buy the system and to give law enforcement officials, officers of the court, and other third parties access to the data without the permission of the property owner is not acceptable.

Expect a big fight over this one, and there should be a big fight. This is abusive technology--the fact that we now have the technology to monitor and collect this kind of data does not mean we should automatically force everyone to use, at great loss to our privacy.

More VoIP good news

Submitted by acohill on Fri, 11/12/2004 - 11:50

The FCC released another ruling on VoIP. The Federal Communications Commission has barred states from imposing telecom regulations on Voice over IP telephony providers.

This is additional good news for businesses and consumers who are saving money by using VoIP services (estimated to be well over 4 million customers). State and local taxes on telephone services with no local infrastructure or presence is simply taxation without representation in another form, and revenue-hungry governments ought to keep their hands off VoIP. Taxing things like that just makes the state or locality less competitive globally and retards economic development.

Unfortunately, the FCC has still not ruled on whether VoIP is an information service or a telephone service. If it is considered a telephone service, VoIP would be subject to the no longer relevant telephone regulation of the last century. But so far, the FCC rulings on VoIP have all been in the right direction.

FCC may regulate VoIP

Submitted by acohill on Wed, 10/20/2004 - 06:22

This story says the FCC is interested in regulating VoIP [link no longer available].

FCC Chairman Powell has a point--if the Feds do nothing, some states will certainly step in and try to control the new service and/or try to tax it, leading to only one possible outcome--a mess. The states can't possibly regulate VoIP, because it's not a place-based service. Companies like Vonage and AT&T don't have to any equipment located anywhere in a state to sell VoIP service to residents, and so the notion that a state should be trying to control an out of state company is silly. Nonetheless, some states will try.

According the article, Powell is a big fan of VoIP, and wants to see it succeed. Good. If the FCC uses a light hand here and keeps the states out of it, that's entirely appropriate.

Broadband Over Powerlines (BPL) gets the green light

Submitted by acohill on Tue, 10/19/2004 - 12:56

BPL has the green light from the FCC. The NewsFactor has an article that goes into more detail. I have to agree with the conclusions the author makes--BPL is not likely to be a major factor for rural communities. Like DSL and cable modems, you have to have a critical mass of customers to justify the expense of the equipment. And it is not significantly less expensive to install than DSL or cable, so it won't have a big price advantage.

It may make a difference in some communities, but communities will have to continue to do the hard work of market creation through content and service offerings via a community network project, and ongoing training and education programs.

Like DSL and cable, BPL is another technology that potentially lets a single public or private company capture the entire broadband marketplace (unless the community makes some transport layer infrastructure investments to level the playing field). Once a single company has captured the marketplace, the community's economic future is now at the mercy of that company. Is that what you want?

RTC Conference: What states can do about broadband deployment

Submitted by acohill on Tue, 10/12/2004 - 18:10

Bob Rowe, from the Montana Public Service Commission, is the first speaker in this session.

Rowe says that states have a role in assisting regional deployment of infrastructure and to coordinate facilities permitting.

Local governments have much potential, and can do training, form buying pools, encourage local government investments in infrastructure, and promote egovernment.

The FCC Section 706 Report from September, 2004 notes that the FCC defines broadband as 200 kilobits/second or faster, that the US still lags the rest of the world in broadband deployment, and that the FCC has a mission to encourage "reasonable and timely deployment."

Bill Gillis, from the Center to Bridge the Digital Divide, is the next speaker. Gillis says that we can learn from "innovation businesses."

He says that an innovation business is knowledge intensive, makes extensive use of technology, is creative and flexible with respect o workforce functions, has a global business perspective, and has entrepreneurial management.

Gillis says that states can facilitate exchange of ideas, help the last 30% of residents that do not have broadband service, can help prepare the workforce for the innovation economy, and provide flexible gap capital. Innovation businesses are driving demand for broadband in rural areas.

The final speaker is Al Hammond, from the Santa Clara School of Law and the Alliance for Public Technology.

Hammond says that large parts of rural America lack adequate broadband services, with smaller towns at a real disavantage--only 5% of towns of 10,000 population or less have broadband.

BPL (Broadband over Power Lines) is getting a lot of interest. There are more electric lines to homes and businesses than phone lines, so BPL potentially can be widely deployed. At least 5 companies are manufacturing BPL equipment.

25 million homes have no cable modem or DSL service, and satellite broadband is becoming more affordable, with Wild Blue, a new statellite company, will be offering Internet access for about $50/month. TV programming will also be available, unlike some other satellite broadband systems.

RTC Conference: Wilhelm keynote

Submitted by acohill on Mon, 10/11/2004 - 11:27

I'm at the Rural Telecommunications Congress 8th Annual Conference.

Dr. Tony Wilhelm is the Director of TOP (Technologies Opportunities Program) at the Department of Commerce.

Wilhelm is emphasizing the need to tie technology investments to identified community needs. TOP does not fund infrastructure, it funds applications that use infrastructure to improve communities.

Demand for broadband is outstripping available funds. Demand exists because every facet of communities--first responders, businesses, citizens, local government--have a need for broadband.

Small businesses are using virtual business incubators, some funded by TOP, to help these businesses expand into international markets.

TOP priorities include economic development. Special emphasis this year is on broadband wireless technologies. Wireless projects are growing very rapidly. The third priority is to support faith-based initiatives. Some faith-based projects have included entrepreneurship development, sustainable economic development, and business ecommerce training.

TOP looks for projects that use technology creatively to help communities prosper. A major stumbling block for rural communities is lack of affordable broadband service. The Sevier River project in Utah has dramatically increased available water by providing more timely information to water managers. TOP looks for "infomation" projects that don't just automate (replacing people with technology). Infomation projects go beyond automation to provide leaders and decisionmakers with better tools to manage information and to solve problems.

Technology investments have created about half the productivity gains in the U.S. in recent years.

Successful TOP projects typically include:

Best predictor of success is an organization's ability to integrate new ideas and concepts--organizational maturity, not size. Leadership, leadership, leadership--solid principles and clear goals, good use of talented people, solid values clearly articulated with a willingness to take risks.

eRate disaggregates community buying power

Submitted by acohill on Fri, 10/08/2004 - 09:51

The papers have been full of stories this week about the suspension of eRate payments to schools and libraries. The FCC suspended the program because of chronic abuses by some recipients of the payments. That aside, let me point out some structural shortcomings of the effort.

FCC says broadband use is up

Submitted by acohill on Mon, 09/13/2004 - 08:00

There is a good news/bad news quality to a set of FCC press releases that went out late last week. The good news is that broadband availability in the U.S. is up significantly. The FCC says the number of broadband lines has tripled from 2001 to 2003. Cable modems have about 75% of the marketplace, with DSL far behind with 15%. All other technologies (e.g. fiber, wireless, satellite) composed 10% of the marketplace.

Some of the bad news is that the FCC defines broadband as anything faster than 200 kilobits, a remarkably low bar compared to the rest of the world, which is typically measuring broadband in megabits. The FCC keeps the bar that low so that they can claim we all have lots of broadband.

More bad news is also masked...the FCC says only about 7% of U.S. zip codes have no high speed access. What they don't say is where those zip codes are, but it's a safe bet they represent a lot of rural households. Another telling statistic is that zip codes with four or more providers is up to 46%. Again, that does not represent rural areas.

To be fair, FCC chairman Michael Powell stated in a separate press release that "200 Kbs or even a 1 megabit connection is wholly inadequate for the demands of a growing number of consumers." Powell goes on to say that "information at the speed of light" (i.e. fiber connectivity) is what we really need. He mentions the goal of "universal and affordable access to all by the year 2007," but the Federal government does not really have a plan to get there, except to wait for the private sector to take care of it.

The numbers, to those that aren't out in rural communities (huge areas of the country, actually) look very good. But the reality is that communities that want univeral and affordable broadband will have to make some investments to get it. It's at least as important as roads, water and sewer, and communities routinely spend lots of money on those things.

FCC says broadband cable is not telecom

Submitted by acohill on Tue, 08/31/2004 - 08:09

FCC Chairman Michael Powell is on the side of businesses and consumers when he declared:

“This is about ensuring that high-speed Internet connections aren’t treated like what they’re not: telephones. A successful appeal of this case would ultimately mean lower prices and better service for American consumers. Applying taxes, regulations and concepts from a century ago to today’s cutting-edge services will only stifle innovation and competition.”

Powell and the FCC have appealed a 9th Circuit Court's ruling to the Supreme Court. The Circuit Court previously ruled that cable modem service is a telecom service, which would subject new, cost-saving services like Voice over IP to century old regulation and taxes--an anti-business and anti-consumer stance that benefits only the incumbent telephone service providers.

Tapping our phones: A waste of time?

Submitted by acohill on Mon, 08/23/2004 - 08:00

The New York Times (registration required) has an article this morning on the FCC's decision to require VoIP service providers to implement phonetapping equipment. There will be public hearings before a final decision is made, but if the Federal government proceeds with this, it will burden the nascent industry with large costs and it will be mostly for naught.

Wiretapping a Voice over IP phone requires much more sophisticated equipment than the legacy phone system, and indeed, the term "wiretapping" hardly makes sense, since with VoIP you tap packets, not a physical wire connection. Those costs will be passed directly to consumers, increasing the cost of VoIP services and slowing the potential cost savings to consumers and businesses.

If VoIP tapping is implemented, bad guys won't use it. They will, instead, use any of a myriad of point to point voice conferencing software packages that are already in wide use. It's a little less convenient, but beyond the control of the government to stop. Outlaw such software (very unlikely), and bootleg software to do that will quickly become an illegal business opportunity.

Like so many businesses and governments, the FBI and other Federal agencies have failed to adapt to a changing environment. One can only hope that the public hearings bring this out and save us from the expense, waste, and lost business opportunities.

Cong. Boucher talks about the Induce Act

Submitted by acohill on Tue, 08/10/2004 - 15:09

Congressman Rick Boucher (D, Virginia) represents southwest Virginia, including Blacksburg. Boucher is guest-hosting law professor Lawrence Lessig's blog this week, and there is a cogent and fascinating discussion of the Induce Act. The Induce Act would build on the already questionable DCMA law to make it more difficult (in theory) to pirate digital media.

The Induce Act has already created a firestorm of criticism for its overbroad attempt to stifle piracy by making it illegal to introduct any new technology or device that MIGHT be used for illegal sharing. In other words, as it has been pointed out, the iPod and indeed, all MP3 players would be illegal. Boucher is co-sponsor of a bill that would try to hold back the Induce tide.

Broadband policy changes needed

Submitted by acohill on Sat, 07/31/2004 - 12:34

CNet has a terrific article on community broadband and the policy issues surrounding community development of telecom infrastructure. It's a must-read article; it's long but provides an excellent overview of community telecom landscape, including the benefits communities are seeing, the anti-competitive opposition from the big companies, and the lackluster support for these initiatives at the Federal level.

Bottom line? We're not doing enough in the United States to stay competitive with the rest of the world. Our fractured approach to creating world class networks is being manipulated by special interests and anti-competitive forces, and the Federal government is doing enough. This is depressing stuff, but needs to be thought about carefully.

South Korea is pointed to as an example of how this is being done right. I often reference South Korea myself, but we need to remember South Korea is smaller than two-thirds of the states in the U.S., so the national government there is dealing with a scale that is much smaller. Furthermore, because it is small, there are fewer layers of government.

As much as I would like to see state and Federal help pick up steam, I don't think communities can wait--the risk is too great that the state and Federal governments never do get their act together. Community and regional projects, funded modestly with modest goals, can and will get the job done over time.

New Hampshire wants to tax email and chat

Submitted by acohill on Tue, 07/13/2004 - 06:39

State officials in New Hampshire have announced that they have "discovered" that chat, email, and other Internet services are "two way communication" and have decided that those services fall under the umbrella of a statute written in the early nineties (before the rise of the Internet) that taxes telelphone services.

New Hampshire, like many states, is facing budget shortfalls, so it is understandable they are looking for ways to increase revenues. But given the reliance of the Knowledge Economy on the Internet, it would be hard to find a tax that would do more to discourage the formation of businesses or the the growth of existing businesses. The size of the tax (7%) is especially daunting. Judging from the news coverage of the issue, it's a tempest in a teapot. It would appear that state legislators are not likely to let the bureacrats move forward with this.

A side issue, but an important one, is the fact that outside of perhaps AOL, I don't know of any service providers that are set up to monitor those "communications" uses. Technically, it is easy enough to do, but it would require additional equipment and billing software, and the cost of billing individually for email and chat (so that you could determine how much tax to pay) would be a nightmare. Most providers would probably opt for simply charging a flat monthly fee for email and chat, which is still more than they are doing now.

So the cost of accessing the Internet in New Hampshire would increase directly because of higher provider costs, and you would have the 7% tax on top of that. Not a recipe to compete in the global Knowledge Economy.

Most spam sites are in China

Submitted by acohill on Fri, 07/02/2004 - 09:59

The Register reports that China continues to be the world's primary source of spam Web sites--hosting the Web sites that show up in all that email spam. The U.S. continues to be the source of most email spam.

Why China if most spammers are in the United States? It's getting harder and harder to find a U.S. based Web hosting firm that wants the headaches associated with the complaints and problems associated with spam Web sites. China, half a world a way and run by a communist government that tends to turn a blind eye towards things like respecting copyrights and other niceties of the free world, is happy to take spammers' money for hosting the sites.

Court says it's okay to snoop email

Submitted by acohill on Thu, 07/01/2004 - 09:07

In a troubling ruling, the 1st U.S. Court of Circuit Appeals has said it is okay to read other people's email while it is "stored" on a server. Yahoo! News reports on the legal case of Interloc, a company that read the email of its subscribers to find out what Amazon.com was sending to them, and why.

The ruling seems to rely on hairsplitting, rather than commonsense. Wiretapping of "live" communications has always been subject to rigorous oversight, but email is not "live" in the same sense that a phone conversation is. An email messages transits through several servers, and is stored, sometimes for long periods of time, on the email server used by a particular user. The courts are taking the view that it is okay to read the email while it is stored on a third party machine.

It is as if the court said it was okay to open and read a piece of mail while it is in the mailbox down the street from your house.

It is hard to understand how the judges could so easily trample what seems obvious--email is and should be considered private, and both commercial companies and law enforcement officers should be constrained from reading email without strict oversight.

Fortunately, there is a perfectly good solution to the conundrum--encryption. We have the tools today to encrypt email using public key encryption, and this ruling will hasten more widespread use of encryption for routine communications. Done properly, encryption of email can be nearly transparent, but will be very effective as a deterrent to casual snooping of the kind done by Interloc. Encryption is the equivalent of putting our email in a tamper-resistant envelope; it keeps most people out. Is it perfect? No--but then neither are envelopes, but we've used them for centuries without much fuss or worry.

Unfortunately, part of the problem here is the lack of interest in improving email clients. Most email clients are given away free, so there is little incentive to improve them or to make features like encryption easy to use. But it's a business issue for the private sector, and as the bigger companies demand it, easy to use encryption will spread.

AT&T gets out of local dial tone--sort of

Submitted by acohill on Thu, 06/24/2004 - 09:16

In a widely carried AP report, AT&T has announced it is getting out of local dial tone and long distance in several states, and may abandon most other states shortly. There are two things going on here, and only one of them was discussed in the article.

The article correctly notes that the proximate cause for the AT&T pullback is the FCC ruling that allows the local phone companies to charge higher wholesale rates for their antique copper telephone lines. AT&T has been leasing these in bulk to provide local dialtone. The higher rates make it unprofitable for AT&T to do so.

On the face of it, this looks bad for local communities, as there seems to be less competition, and puts the local phone companies back near their previous monopoly status for dialtone.

What was not covered well in the AP article is the fact that AT&T is making a major push for Voice over IP local and long distance services. The company has wisely decided to abandon the antique phone service market and concentrate on selling what is going to count in the future. It's a smart move.

Some of the phone companies are not standing still, however. SBC has announced it will spend billions on fiber to the neighborhood and fiber to the premises, although the latter will be done only in new neighborhoods for now. The new system will have the capacity for a single channel of HD TV--much higher capacity than existing DSL lines, but still not what will be needed in the future. But the fiber has the carrying capacity--SBC is reluctant to put in the electronics, probably because of cost and because they are trying to control access.

Communities getting these new systems may breathe a sigh of relief that they don't need to do that telecom planning after all, but their headaches are simply being deferred to the future. A monopoly is a monopoly, and it does not matter much if it is a legal monopoly (the old, pre-1996 approach) or a de facto marketplace monopoly.

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