FCC chair Pai sounds smarter when he’s not the smartest guy in the room

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Once he left the big stage at the Mobile World Congress Americas in San Francisco last week, Federal Communications Commission chairman Ajit Pai walked a couple of blocks to an event put on by the Lincoln Network, a Silicon Valley political club with a libertarian outlook. It was a much smaller stage, but he seemed completely at home in a room full of smart people – some even smarter than him – who would rather let the market sort things out than to try to fine tune the Digital Age using the blunt, mindless tools of government.

The moderator, tech journalist Ina Fried, asked Pai what does ideal regulation look like?

Ideal regulation is regulation that solves a market failure, regulation that creates a competitive market place that otherwise would not exist but for those rules. That’s part of the reason why I consistently say…what is the problem we’re trying to solve? And do the costs of this regulation outweigh the benefits?…What are the impacts of the rule? Is the rule solving the market failure, and if not we could have unintended consequences that could actually disincentivise investment or distort the market place in ways that wouldn’t serve consumers. How do you measure the cost and benefits? So those are some of the things I think about. And so that’s why I don’t really like the term deregulation or hyper regulation. Simply, in my view at least, the goal is to make sure our goals are tailored to the market place that exists in 2017.

Pai has a coherent philosophy of political economy and a sense of right and wrong: without it, he wouldn’t have broken with FCC tradition and political expediency and begun publishing draft decisions weeks before commissioners vote, instead of weeks afterwards, as his predecessors did. If he can hold onto his values and seek facts beyond those shovelled by the lobbyists and lawyers that slither through the halls of the FCC, there’s hope of rational decisions ahead.

If.

War for California’s broadband future isn’t (quite) over

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The politics of broadband in California are largely driven by the campaign cash that incumbent telephone and cable companies – and sometimes the unions representing their employees – stuff into the pockets of senators and assembly members. That influence is moderated by the energetic, but often futile efforts of broadband activists across the state. So it was with assembly bill 1665, which is on its way to governor Brown’s desk.

If he signs it, AB 1665 will transform the California Advanced Services Fund (CASF) from a useful source of capital for broadband companies that aim to inject at least a little competition into California’s highly concentrated, sclerotic broadband market into a $300 million slush fund, mostly for telcos with rural monopolies, like AT&T and Frontier, but also allowing a taste for cable companies, like Comcast and Charter.

The fight against the pork barrel that AB 1665 became was led by a loose coalition of regional broadband consortia representing largely rural, coastal areas, beginning at Del Norte County on the Oregon border and running south through Monterey County, skipping San Francisco and San Mateo counties, which have stayed out of the fray. Independent Internet service providers and the umbrella organisation which represents many of them – CISPA – were also on the front line.

Their reaction was swift to the lopsided votes that put AB 1665 on track to become California law. You can read a running compilation here, but Sean McLaughlin, the executive director of Access Humboldt put it well…

Sadly, in AB 1665 public interests have been subverted to benefit private interests. We know that the broadband provider industry, rooted in a history of monopoly dominance over the telecommunications marketplace, has captured our legislature when a thoughtful proposal for public support to bridge the digital divide is perverted into a thoughtless gift to private interests.

The official vote tallies notwithstanding – politics is a complicated sport – several lawmakers stood against the tide of lobbyist cash and love. First among them was senator Mike McGuire (D – Healdsburg), who challenged the conventional, campaign contribution-centric wisdom at the California capitol and openly opposed AB 1665.

Senate majority leader Bill Monning (D – Monterey) refused to vote in favor of the bill. Assemblymen Mark Stone (D – Santa Cruz) and Marc Levine (D – San Rafael) signed on as co-authors months ago in the hope of reaching a sane result, and then conspicuously withdrew their names when the pork turned rancid. They all deserve thanks.

Several – but not all – republicans opposed AB 1665. Assemblyman Randy Voepel (R – Santee), who previously endorsed an independent CASF proposal in his district, voted no and was joined by seven of his assembly colleagues, most from southern California’s Axis of Anita Bryant, but also including Jordan Cunningham from San Luis Obispo.

The war isn’t quite over. Broadband advocates will make their case to Brown, and then wait. He has until 15 October 2017 to decide.

I’m part of that loose coalition. I’m involved and not making any apologies. Take it for what it’s worth.

CETF audit, more CPUC reforms approved by California legislature

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A second round of California Public Utilities Committee reorganisation was approved in the final hours of the legislative session on Friday night. Senate bills 19 and 385 are heading to the governor’s desk. The main one is SB 19, carried by senator Jerry Hill (D – San Mateo), who has been deeply involved in CPUC reform efforts ever since a massive, fatal explosion of a PG&E pipeline in San Bruno in 2010.

There are general changes that affect the way the commission does business overall. Area code assignments aside, none specifically relate to the way telecommunication services or companies are regulated.

SB 19 expands the commission’s audit responsibilities, and a legislative staff analysis makes it clear that the broadband-focused California Emerging Technology Fund is a primary target…

The CPUC has often negotiated settlements, particularly related to mergers of companies, which create new entities or programs. For example, the California Emerging Technology Fund (CETF) was developed and funded as a separate nonprofit entity by the CPUC through the approved mergers between SBC-AT&T and Verizon-MCI. Last year, [former assemblyman Mike Gatto] requested an audit of the CETF. However, the CPUC had suggested that they lack the statutory authority to conduct an audit of CETF and other similarly constructed entities.

This bill will ensure the CPUC has the statutory authority to conduct such audits and require the audits are conducted in a manner that adheres to approved general auditing practices.

Other changes include banning public utility executives from becoming CPUC commissioners for “two years after leaving the employment of the utility”. Commissioners would directly appoint the chief administrative law judge and a chief internal auditor. The job of staff ethics officer would be baked into law and the public advisor’s office would be responsible for handling complaints about the way the commission does business.

Some of the CPUC’s transportation-related duties would be transferred to other state departments, including regulation of moving companies, private buses, and some water transportation and passenger aircraft. The changes seem to be consistent with governor Brown’s wishes and it’s a good bet he’ll approve both bills.

Big telecom cash and influence buys three big wins in California legislature

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The California legislature slipped past its midnight deadline last night, and kept working, or not, for a couple hours into the morning. From a broadband perspective, it didn’t make much difference. Assembly bill 375 never made it to a floor vote in the senate, let alone to the necessary final vote in the assembly.

As a result, California will not enact Internet privacy rules that were axed earlier this year by congressional republicans and the Trump administration. It was the second victory of the night and the third in two days for big telecoms companies that sent a monster wave of lobbyists and cash contributions washing over senators and assembly members.

AB 1665 passed by a wide margin – 68 to 8 was the final count – earlier in the evening. It lowers California’s broadband speed standard to 6 Mbps down/1 Mbps up and, in effect, gives $300 million to AT&T and Frontier to make minimal upgrades that will hit that pitiful target. On Thursday, legislators narrowly approved senate bill 649, which gives telecoms companies the automatic right to attach wireless equipment to publicly owned infrastructure, like street lights or traffic signals, for a sweetheart rental rate of $250 per year, far below market value.

It’s now up to governor Brown to decide if AB 1665 and SB 649 will become law.

One welcome change this year was a new deadline for amending legislation. As a result, yesterday was less hectic, if no more productive, than previous end-of-the-session pushes. Last November, California voters approved proposition 54, which requires lawmakers to post bills on the Internet at least 72 hours before a final vote. Earlier in the session, there was some weaseling around with what that means, but as time ticked down there was no avoiding its clear meaning: nothing changed after Tuesday night. Whether you like what’s in a bill or not, at least you had a chance to read it and respond accordingly before it became law. Or not.

Big telecom money sets up clean sweep of broadband bills in Sacramento

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One key broadband bill is on its way to governor Brown’s desk, another is likely to follow and a third is heading for oblivion. That result will be a trifecta for telephone and cable companies who came to the table with deep pockets full of campaign cash and even longer arms to hand it out.

Senate bill 649 won narrow, bipartisan approval in the senate yesterday. The tally was 22 yes votes – 21 were needed – with 10 noes and 8 abstentions. Instead of trying for a rational makeover of the way local governments make decisions on where wireless facilities can be installed, lawmakers opted for a multi-million dollar gift to major campaign contributors telephone and cable companies. SB 649 streamlines some permit processes – too much or too little is open to debate – but also requires local governments to rent space on street lights, traffic signals and other “vertical” infrastructure they own at a giveaway price that is, in many cases, hundreds, even thousands, of dollars below market value. The assembly passed it with five votes to spare on Wednesday and now the senate has concurred.

After skating through the senate on Wednesday, assembly bill 1665 is queued up for a final vote in the assembly today. It reinstates a tax on phone bills, puts $300 million for infrastructure subsidies into the California Advanced Services Fund and then games the rules to make it virtually impossible for independent projects to tap into it. On the other hand incumbents, like AT&T and Frontier, get privileged access to the money. To make the gift even sweeter, California’s minimum broadband standard is lowered to 6 Mbps download and 1 Mbps upload speeds, relieving AT&T and Frontier of the inconvenience of upgrading 1990s vintage DSL systems.

Hope is fading fast for assembly bill 375. It would write Internet privacy rules into California law. Democrats in Washington, D.C. slammed congressional republicans and the Trump administration for scrapping the federal privacy regulations that AB 375 mirrors. Which makes it difficult for the democratic supermajority in the California legislature to publicly oppose the bill. But it’s even harder for them to approve it, since doing so would run counter to the wheelbarrow loads of money advice they get from big telephone and cable companies. AB 375 is stuck in the clubbable senate rules committee where it can die a lonely death.

Lawmakers have until 11:59 p.m. tonight to act. After that, Brown has 30 days to either veto or approve any of the bills that reach his desk

Californian ISP privacy rules wounded, but still twitching

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One last try at baking Internet privacy rules into California law is underway. Assembly bill 1665 was amended on Tuesday, just ahead of a new 72-hour deadline for posting the final version of proposed legislation – the California legislature’s current session clocks out tomorrow night.

Arguably, the changes are an improvement. Specific security and disclosure requirements were cut out, along with references to telephone service, with the result that the bill focuses on the core issue: what can Internet service providers do with information about and provided by their customers?

AB 375 would…

Prohibit broadband Internet access service providers, as defined, from using, disclosing, or permitting access to customer proprietary information, as defined…

[and] would prohibit those providers from refusing to provide broadband Internet access service, or in any way limiting that service, to a customer who does not waive his or her privacy rights guaranteed by law or regulation, and would prohibit those providers from charging a customer a penalty, penalizing a customer in any way, or offering a customer a discount or another benefit, as a direct or indirect consequence of a customer’s decision to, or refusal to, waive his or her privacy rights guaranteed by law or regulation.

Security is very important of course, and ISPs should give customers proper notice about privacy policies too, but there are already rules in place that address at least some of those concerns. Core ISP privacy regulations, on the other hand, were completely scrapped by the federal government earlier this year. A simple and focused fix for that one, specific problem has advantages, not least that it offers clarity for ISPs and consumers alike.

One change, though, isn’t so helpful. If the bill passes, California’s ISP privacy law won’t take effect until 1 January, 2019. That gives the bill’s opponents – big political contributors like AT&T, Comcast and other incumbents – all of 2018 to kill it, via a court challenge, federal preemption or new legislation in Sacramento. That’s also an election year, when the scramble for campaign cash reaches manic levels.

But AB 375 isn’t law yet. As of this morning, it is still stuck in the powerful and very opaque senate rules committee, a club for party leaders of both persuasions. Unless it’s released for floor votes in the senate and assembly before tomorrow, it’ll die a quiet death.

U.S. mobile show reboots with international scope and brains. Mostly

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Rebranding and a return to San Francisco has reversed CTIA’s slide into trade show oblivion. Now known as the Mobile World Congress Americas and run by GSMA, the outfit that puts on the Mobile World Congress in Barcelona in February, the show is drawing a more international crowd and a better class of speakers. Or at least speakers that are living up to MWC’s standards.

The first keynote yesterday featured Carlos Slim Domit, the chairman of America Movil, which is the largest mobile telecoms company in Latin America, and the fourth largest in the world. He talked a little bit about his company and a lot about the road ahead in Latin America, where mobile telecoms are taking on a central and growing role in everyday life, and where carriers are struggling with ever increasing demand for bandwidth on the one hand, and a deep digital gulf that mirrors social divisions on the other.

Slim was followed by Ajit Pai, the chairman of the Federal Communications Commission. His speech didn’t break any news, but it was a lucid overview of the issues the FCC is taking on this year, with a focus on mobile topics in general and spectrum availability in particular.

It was a welcome contrast to recent CTIA keynotes, which over the past few years featured elaborate marketing videos accompanied by increasingly junior executives grinning their way through vapid scripts that might have been written by Mister Rogers. As if to remind us how good we have it now, CTIA president Meredith Attwell Baker briefly took us back to the bad old days with a third grade-level, walk-about-the-stage presentation complete with pictures of puppies.

The new MWC Americas show owes a lot to its roots. In Europe, speakers are expected to offer whatever wisdom they can about the topic at hand, rather than deliver tacky sales pitches or smarmy presentations. The show still has one major problem, though: head to head competition with Apple’s annual fall launch event. It’ll never win that fight, particularly since next year’s show is the same week (although they’re moving it to Los Angeles). Even in the press room, where one might expect live streams from the conference program, the video display was stuck on an endless replay of Tim Cook and friends.

Apple will take augmented reality to the next level today

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Reality augmented by instant info.

Augmented reality – AR – will take a big step forward later today when Apple launches iOS version 11. It includes ARkit, which is Apple’s new platform for running augmented reality apps, instantly putting the technology onto more than 300 million devices, as soon as the iOS update is downloaded.

At least, that was the hot gossip yesterday at the Mobile World Congress Americas trade show in San Francisco. It’s always risky to take Apple rumors at face value, but AR companies at the show are taking this one seriously.

Up until now, AR hasn’t gained much traction in the consumer market, Pokemon Go notwithstanding. But it has a growing foothold in industrial and business-to-business markets.

With augmented reality, a smart phone screen or totally geeked up glasses can overlay digital information on the real world. The photo above shows AR glasses displaying port labels for a circuit board as soon as the wearer looks at it. That kind of automatic information speeds up work and reduces errors.

I wrote about Vuzix, a company that makes AR glasses, nearly five years ago. They had great expectations – as did Google with its Glass product – for consumer applications, which were not fulfilled. Since then, they’ve focused on industrial applications and found happiness in vertical markets. One customer they talk about it is Airbus, the European airliner manufacturer. When workers are assembling complex wiring harnesses, the digital overlay on the Vuzix M300 glasses sorts out wires by color and tells them which hole each one needs to go into.

The immediate effect of Apple’s presumed announcement will be to boost the commercial side of the AR business. The cost of adopting the technology will drop to near zero for anyone who already has an iPhone, and the bar won’t be that much higher for someone who just buys one off the shelf. Pure consumer applications will be slower out of the gate, but with an instant market of hundreds of millions of users, it won’t take long to catch up.

More telco perks added to $300 million broadband subsidy bill as California senate vote nears

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Incumbent telephone and cable companies convinced their friends in the California legislature to add another slab of pork to a broadband subsidy bill, as the senate prepares to vote on it. Assembly bill 1665 started out as a telco-centric bill, and subsequent amendments, including the the ones added on Friday, have made it even more one-sided – in most areas of the state, it will be impossible for independent broadband projects to qualify for support from the California Advanced Services Fund (CASF).

Two assembly members have taken their names off of the bill. Mark Stone (D – Santa Cruz) and Marc Levine (D – San Rafael) were co-authors, but they both withdrew their support as the gifts to telephone and cable companies became more blatant and local opposition grew in their districts.

AB 1665 reinstates a tax on telephone bills, and pumps $300 million into CASF for infrastructure grants. But it re-writes the rules of the program, lowering the minimum acceptable broadband speed to 6 Mbps download and 1 Mbps upload. If you have service available at that level, then your community isn’t eligible for broadband upgrade grants. But even if you don’t, the money won’t be coming to your town, except by way of your incumbent telephone company.

The bill also allows AT&T and Frontier Communications to reserve areas based on 1. promises of future upgrades and 2. acceptance of federal subsidy money. They would be able to apply for CASF grants in those otherwise eligible areas, but independent projects would be out of luck. AT&T and Frontier will be free to game the system and pocket most of the $300 million in return for providing service that doesn’t meet California’s current minimum standard of 6 Mbps down/1.5 Mbps up, if they so choose.

The amendments added to AB 1665 on Friday reinforce those privileges, among other things explicitly excluding areas where AT&T and Frontier are receiving federal subsidies.

Cable companies get some perks too. They’ll be able to launder grant money through their customers, and avoid oversight by the California Public Utilities Commission. Cable lobbyists also tightened the screws on public housing communities, who will no longer be able to use CASF money to install WiFi equipment and offer free access if someone is selling broadband service at 6 Mbps down/1 Mbps up or better. Even if that service costs more than residents are supposed to be able to afford.

A vote could come as early as tomorrow in the senate. If it gets the necessary two-thirds majority, it’ll go back to the assembly for a concurrence vote on amendments.

San Francisco broadband law gains independent ISP access to hundreds of buildings

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A San Francisco municipal ordinance that gives tenants of multi-unit buildings the right to get broadband service from any qualified provider of their choosing has had a dramatic impact on the market, at least according to CALTEL, a lobbying group for independent telecoms companies in California. In comments filed with the Federal Communications Commission, CALTEL says San Francisco’s ordinance has opened doors for Sonic.net, California’s largest independent ISP…

Sonic now reports that the ordinance has been instrumental in assisting it to gain access to approximately 300 multi-tenant buildings in San Francisco. These facts also confirm San Francisco’s determination that the Commission’s “efforts…to enhance competition among providers of communications services in [multiple tenant environments] have not been successful,” and that it needed to “complement the Commission’s actions by prohibiting property owners from denying persons living or working in MTEs in San Francisco their right to choose a communications provider.

The FCC has two multiple tenant environment proceedings underway. One involves a direct challenge to the San Francisco ordinance and the other is a general enquiry into how, or even if, the FCC should regulate access to buildings and whether it should allow the sort of exclusive deals landlords make with broadband providers that the City and County of San Francisco wants to outlaw. It’s more than just apartment and office buildings. The FCC’s enquiry also includes “gated communities, mobile home parks, garden apartments, and other centrally managed residential real estate developments”, as well as home owner associations.

CALTEL argues that one-size-fits-all federal regulation is the wrong approach, because circumstances vary widely from state to state, and city to city. San Francisco’s desperately tight housing market combined with local rent control creates perverse incentives for landlords: lousy broadband service is one way to churn out existing tenants and bring in new ones who can be charged significantly higher rents.