PaiThe new men and the issues they should face. I know several. They are smart, dedicated, and believe in what they are doing. They are hardline against regulation and have often supported the telcos against the FCC. It’s likely Trump era policies will echo Bush II. Bush’s first FCC Chairman, Mike Powell, was close to Eisenach’s PFF.  I hope they focus on government waste, such as the $100 scandal at RUS that’s been covered up or how much of USF/CAF is pure giveaway. (about half, based on what the telco CEOs are telling Wall Street.)

 

Ajit Pai looks to take over the FCC. He has a brilliant legal mind but needs a deeper knowledge of the facts on the ground and technology. (If I wasn't on deadline, I'd find and include half a dozen examples. See Neutrality and investment below.)

 

He has a plan to extend broadband that needs to be informed by how much has been wasted in government programs to do so. He's very well informed about the D.C. discussion, but needs to know more to recognize lobbyist lies.

In particular, he's recommending "incentives" rather than results on sharply defined problems. Incentives are a mistake unless there's a good reason to believe they will work. In broadband, most money spent on incentives (Stimulus, CAF, RUS) under Dems went to companies for builds they would have done anyway. Pai, who hates waste, can do better; his current broadband proposals don't solve the problem. 

 

At RUS, Dems have for four years been covering up a $100M problem with Sandwich Islands. If 10% of the USF recipients are cheating, that's hundreds of telcos. The Obama folks didn't take serious action against more than half a dozen. The last three Chairman have persuaded USAC to avoid questioning anything and massive fraud is going on. The many honorable telcos in USF are hurt by those who cheat.

 

"True market policy" Someone who truly believes in markets would emphasize more effective competition. "You have competition without competitors," his former boss Kevin Martin used to say. He has a remarkable opportunity to bring a fifth company to the market. Poker player Charlie Ergen at DISH has invested $10's of billions in spectrum which carries buildout requirements he is totally ignoring. Charlie has said publicly he is not going to build, an eff you to the Commission. The Commission just settled a similar problem with Straight Path on fairly generous terms but Ergen thinks they will let him get away with murder. Pai should Just Say No because the law is on his side. I wouldn't want to play poker with Charlie but this time he has a losing hand.

 

George Akerlof, Michael Spence and Joseph Stiglitz won a Nobel Prize for demonstrating that asymmetric information poisons markets. Washington usually ignores that. If consumers don't have good information, market efficiency suffers. At the FCC, that should start with accurate and detailed information about speeds, limits, and terms. I've spent 17 years in this business and can't tell you what the actual speed of a provider's broadband. "Up to" speeds that don't reflect typical experience are fraudulent. Sky in the UK is now advertising average speeds; Germany and Britain have announced rules. The market can't do a good job regulating prices with all the confusion.

 

Particularly deceptive is the typical carrier's "disclosure" on traffic management, which amounts to "Sometimes we'll slow you down but we won't tell you when or how much." Comcast a while back said their traffic management was typically applied a few times a month for 15 minutes. It always delivered at least 70% of regular speeds - not bad when the regular speeds are now 50 megabits. That's what "reasonable traffic management could be and I don't think anyone would object. But if it was typically two hours a night, that should be disclosed.

 

Pai's instinct is to reject requirements for information because he doesn't like regulation. There's a big difference between regulation that protects competition and that which holds back progress.

 

Pai's opinions Pai's first speech proposed (1) the FCC should be as nimble as the industry it oversees; (2) the FCC should prioritize the removal of regulatory barriers to infrastructure investment; and (3) the FCC should accelerate its efforts to allocate additional spectrum for mobile broadband. Being nimble and getting fast results is basic good management. Voice over IP was delayed for years because the FCC didn't have the guts to decide. Go for it.

 

Pai has been eloquent on the need for transparency and openness. Dem Julius Genachowski had three press conferences in four years. At an event in the Bronx, the announcement said he'd answer questions. Because I wanted an accurate answer, I sent over a question in advance, "About how many previously unserved homes have received new service since you took office?" I think that was a reasonable question for a Chairman who said expanding broadband was his highest priority. At the event, he announced he didn't have time for questions and then spent 20 minutes in the hall chatting amiably with everyone except reporters. To my dismay, Obama's people didn't live up to his campaign pledge of transparency. 

 

Pai would win kudos if once a month he held a press conference. He's sharp enough to handle it. Since most of the best telecom reporters are not in D.C., call-ins are essential. This is a just do it. It would also be a good way to outdo the Dems. Most of the press is going to be biased against Pai, as they are against Trump. Win them over by delivering on the promises your predecessor reneged on.

 

Removal of regulatory barriers has been a promise of the last four FCC Chairmen, both Democrat and Republican. The good news is that nearly every regulation that really held things back has already been eliminated. Pai will cut regulation and the telcos will cheer about how this will incent investment.The real result will be extremely modest. Talk about incentives is meaningless drivel unless they will actually raise investment.

Additional spectrum is a good thing but won't make a big difference. The current auction became in at less than half previous prices because technology is improving so fast there isn't much need for spectrum. World class engineers like Marty Cooper, Dennis Roberson, and AJ Paulraj told Washington in 2014 about the technology leaps coming; they haven't listened. 

Pai needs engineers, not lobbyists We all know about politicians, lobbyists, and truth. On spectrum, the gap between the talk in DC and what I hear from the best engineers is very wide.  If we're lucky, Pai and Wilbur Ross will listen to top engineers and not the D.C. lobbyists. Their natural best sources are the top technical people at the giant companies: Tony Werner at Comcast, Balin Nair at Liberty, as well as the top people at AT&T and Verizon have earned my respect. These are people I listen to very closely anytime they speak in public. Like most engineers, they are terrible liars. Their companies try to keep them away from D.C., but if you win their confidence you will learn a great deal.  

Bill Smith recently retired after two decades running the networks at BellSouth and AT&T. (Katrina was just one of his big jobs.) He's a great guy, has earned enormous respect, and has worked effectively on D.C. committees. I've never talked politics with him, only tech, so I don't know whether he is a Republican or Democrat. 

The FCC desperately needs at least one technical member.  There's an open FCC seat for either party. It would be a brilliant move to give him a seat; we haven't had anyone who knows networks on the FCC in at least two decades. The engineers at the FCC are excellent, but to keep their jobs they had almost always to defer to the pols. Contrary to popular belief, those on the FCC (both parties) have almost all been hard working, smart, deeply informed on the D.C. part of the issues, and honorable. I haven't seen anything that even smells like financial corruption at the FCC; Dale Hatfield told me similar, based on his 20 years at the FCC.

Another very interesting advisor would be former Chairman Kevin Martin, who went out of his way to listen to the best technical people. Kevin told me he made his Net Neutrality decision based on what he heard from Dave Clark at MIT, one of the dozen most important builders of the Internet. I remember a tech conference where I saw Kevin sit quietly listening through two days of very dry technical presentations. Almost all the pols at events like that make their speech, maybe take meetings, and leave. Kevin was a hardcore Bush operative, but he sought the best experts he could find. He gave an ear to a broadband expert who joked he would normally be outside picketing, not having a chat in the Chairman's office. 

 

---------------------------------------- 

Internationally, Trump’s telecom policies will be America First! The absolute priority will be security - the freedom of the NSA to do what the NSA does. (That’s why the government has put $millions into a campaign to cripple the ITU. The 14 delegates to the ITU/WCIT from three letter agencies were not there to protect freedom of speech.) We will support the interests of U.S. companies, including when they break the law. (Qualcomm.) We will protect worldwide unreasonable royalty rates, protect cartels in transit/backhaul, and encouraging blocking parts of the Internet to help Hollywood. We will offer almost no funding to help poor countries and hide that by second rate propaganda. In other words, just what the Obama people have quietly been doing for years. (I’m on a State Dept. committee and seen that from the inside.)

------------------------------- 

The New York Times took a cheap shot at Trump tech lead Jeff Eisenach, leaving the impression that he was a bought and paid for Verizon shill. Not. He’s been a small government ideologue since at least 1993, when he teamed with Gingrich to form PFF. I profoundly disagree with many of his opinions but know him to be an excellent economist.

I believe their positions were not changed because of the money they took from the telcos. Eric Rabe of Verizon once explained, "We help our friends." Rather than paying people to support their positions, Verizon sought out those who already agreed. They funded the work and their $100M influence budget makes sure it's very visible in DC. The evidence-based medicine people have large and convincing that medical company spending steers the public discussion their way. Telecom is more extreme because there is so little public or non-partisan money. Most of the "think tanks" and many of the Professors thrive with the telco and cable funding. The consumer point of point is typically out-numbered 10-1 in policy circles, except on Neutrality. There are fewer than a dozen advocates funded in D.C. who put the public interest and consumers first. There are more than dozens at each of AT&T, Verizon, Comcast, and Google. With pay as high as $16M/year (David Cohen of Comcast per an SEC filing,) theyy get many exceptional persuaders.     

 

 

The world needs a good news source on Internet and telecom policy. I hope to create one. Catch a mistake? Email me please.  Dave Burstein

Latest

Professor Noam's "Many Internets" http://bit.ly/ManyNets

Until about 2010, everyone agreed the Net was a "network of networks," not a monolithic entity. There was a central authority, ICANN, keeping track of domain names, but that was a minor administrative function.
Columbia Professor Noam suggests we might be better off accepting that some nations or groups might want to organize their networks differently. It's easy to see demand for an Internet with much more effective filters against material some think harmful to children. (Any 10 year old can easily find porn today. Many do.)
Internet translation is getting better very quickly. You might want an "Internet" that translates everything into your language. Google Chrome translation isn't perfect but I was able to research most of this story on Russian language sites. With a few more years progress, I might welcome an alternate that brings me everything in English, including caching for better performance.
De facto, Internet news is already split, as hundreds of millions only get their news from Facebook. Google AMP pages, including for news, also favor selected parts of the net
Centralizing the DNS doesn't prevent censorship, as the Chinese have demonstrated. There are many Jewish and Muslim fundamentalists who want to block what they consider blasphemy and limit free speech. See http://www.nytimes.com/2012/05/21/nyregion/ultra-orthodox-jews-hold-rally-on-internet-at-citi-field.html . More from Noam http://bit.ly/ManyNets

Russia Orders Alternate Root Internet System http://bit.ly/RussiaDNS
It's actually practical and not necessarily a problem.The Security Council of the Russian Federation, headed by Vladimir Putin, has ordered the "government to develop an independent internet infrastructure for BRICS nations, which would continue to work in the event of global internet malfunctions ... This system would be used by countries of the BRICS bloc – Brazil, Russia, India, China and South Africa." RT
Columbia University Professor Eli Noam and then ICANN CEO Fadi Chehadé have both said such a system is perfectly practical as long as there is robust interconnection.
Actually, the battle over ICANN and domain names is essentially symbolic. Managing the DNS is a relatively insignificant task, more clerical than governing. ICANN Chair Steve Crocker pointed out they had very little to do with policy.
Some will claim this is about blocking free speech but that's rhetoric. Russia doesn't need to fiddle with the DNS for censorship, as the Chinese have demonstrated. The wonders of the Internet will continue so long as the resulting nets" are robustly connected. The ICANN and U.S. policy goal should be to help create that system for interconnection.
I expect contentions that “The Russians are taking over our Internet” and “They are splitting the Internet.” The Internet is a “Network of Networks.” It is not a monolith so what would “splitting” it mean or do?
After the WCIT, China realized that ICANN and the DNS are side issues not worth bothering about. They have been building alternate institutions including the World Internet Summit in Wuzhan and the BRICs conferences.  The Chinese have put their main work where decisions that matter are made. Wireless standards are set by 3GPP, where nothing can be approved without China's consent.
The American battle at ITU is proving to be a historic mistake.
Why does Russia want an independent Internet?
They fear that Western sanctions on Russia could cripple the Russian Net. Communications minister, Nikolay Nikiforov, worries about, "a scenario where our esteemed partners would suddenly decide to disconnect us from the internet." I think that's highly unlikely but Nikiforov points out, “Recently, Russia is being addressed in a language of unilateral sanctions: first, our credit cards are being cut off; then the European Parliament says that they’ll disconnect us from SWIFT."
It makes sense for the Russians to be prepared for such a contingency as the Cold War has been warming up on both sides. "Britain's top military chief Air Chief Marshal Sir Stuart Peach just made headlines warning Russian subs "could CRIPPLE Britain by cutting undefended undersea internet cables." Much more http://bit.ly/RussiaDNS

ICANN Continues Excluding Russia & China From the Board http://bit.ly/CEOPromises
No wonder Russia wants an alternate root. Three years ago, ICANN CEO Fadi Chehadé promised "a seat at the table" to Chinese Premier Li. ICANN welched and this year added two more Americans.
Almost all the ICANN board is from the U.S. and close allies; only about 4 of the 18 board members are from countries on the other side of the North/South divide in Internet policy.  Claiming ICANN represents the Global Internet is inappropriate. China is 1/3rd of the Internet but has no representation on the board.
I know many of the board members. They are all basically honorable but generally share a strong opinion on North-South issues.
Larry Strickling of the U.S. government knew just what he was doing with the IANA transition. He handed over to a board with similar positions as the U.S. government.
"The system is unsustainable while it excludes half the world," I have been saying since 2012. More, including the transcript of Fadi's statements,http://bit.ly/CEOPromises

Sorry, Ajit Pai: Smaller Telcos Did Not Reduce Investment After NN Ruling http://bit.ly/SorryPai
Pai justifies his NN choice with the claim, "The impact has been particularly serious for smaller Internet service providers." #wrong (Actually, NN has minimal effects on investment, up or down, I’m convinced. Competition, new technology, customer demand and similar are far more important.)
The two largest suppliers to “smaller ISPs” saw sales go up. Adtran's sales the most recent nine months were $540M, up from $473M the year before. 2016 was $636M, 2015 $600M. Calix the last nine months sold $372M, up from $327M. The full year 2016 was $459M, up from $407M in 2015. Clearfield, a supplier of fiber optic gear, was up 8% in sales in the smaller ISPs.
There is nothing in the data from others that suggests an alternate trend. Anyone could have found this data in a few minutes from the company quarterly reports.
The results in larger companies are ambiguous. I can "prove" capex went up or went down by selecting the right data. The four largest companies' capex - two/thirds of the total - went up from $52.7B in 2015 to $55.7B in 2016. The result remains positive after making sensible adjustments for mergers and acquisitions. That's as close to "proving" that NN led to increased spending as the facts chosen to prove the opposite.
Actually, whether capex went up or down in 2016 tells us almost nothing about the choice on neutrality. Everyone knows a single datapoint could be random or due to other causes. Much more, including the source of the errors http://bit.ly/SorryPai

Elders Bearing Witness: Vint, Timbl, & Many More http://bit.ly/VintTim
Vint Cerf, Tim Berners-Lee, Steve Wozniak and more than a dozen true Internet pioneers wrote Congress to protect Neutrality. The best Congress money can buy didn't listen but I wanted to reproduce their letter.
I hope they are wrong believing "is an imminent threat to the Internet we worked so hard to create." My take is the impact will be moderate in the short run.
From the letter:
We are the pioneers and technologists who created and now operate the Internet, and some of the innovators and business people who, like many others, depend on it for our livelihood. ... The FCC’s proposed Order is based on a flawed and factually inaccurate understanding of Internet technology. These flaws and inaccuracies were documented in detail in a 43-page-long joint comment signed by over 200 of the most prominent Internet pioneers and engineers and submitted to the FCC on July 17, 2017.
Despite this comment, the FCC did not correct its misunderstandings, but instead premised the proposed Order on the very technical flaws the comment explained. The technically-incorrect proposed Order ... More, including the full list, http://bit.ly/VintTim