FAA rules out Internet drones and delivery copters for now

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Amazon’s planned drone deliver service didn’t get any love from the Federal Aviation Administration, nor did proposals to use unmanned aircraft as Internet access points, but at least the door is now open for companies to use the technology for commercial purposes. After two years of thinking about it, the FAA released draft regulations that would allow commercial drone use within limits. A summary is here.

For example, operators (or an observer) need to maintain visual line of sight with the drone, which can’t deliver cargo and can’t fly any higher than 500 feet or faster than 100 miles an hour. You can’t fly over “any person not involved in the operations”. Although still very restrictive, the rules aren’t as bad as feared – earlier rumors had the FAA bowing to lobbyists for pilots and requiring full on licensing and other commercial aviation red tape. That didn’t happen.

The rules aren’t final yet. The FAA is thinking about carving out an exception for very light drones, up to 2 kilograms, that might open the door for flights over people or even autonomous operation.

Amazon isn’t happy, saying it might move drone delivery research and development out of the U.S. To make a package delivery service work, the rules would have to allow cargo drop offs, autonomous flying out of the view of operators and flights pretty much anyway, whether or not people were around. That’s not on offer.

The FAA’s proposed rules aren’t particularly relevant to proposals to use unmanned aircraft as – take your pick – tall towers or low flying satellites for telecommunications purposes. But the draft does open the door to more experimentation, so it’s a step in the right direction.

Still waiting to read the actual FCC net neutrality and muni broadband decisions

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The suspense is killing the Internet.

The FCC’s decisions yesterday to preempt state bans on municipal broadband projects and regulate Internet service and infrastructure using common carrier rules are still under wraps. The commission wasted no time in posting laudatory summaries, which largely reiterated past public statements. The (prepared) comments the commissioners made during the voting session were also quickly up on the FCC’s website.

But the actual text of the decisions they approved yesterday haven’t been made public.

As I noted a couple of days ago, there was the usual last minute scramble to finalise the language, so FCC staff probably didn’t have much time to prepare the approved version for a public launch. But it shouldn’t take much time.

The press releases and commissioner statements don’t shed much light on the critical details. Democrat-appointed chairman Tom Wheeler’s panglossian summary and republican commissioner Ajit Pai’s flaming dissent regarding the decision to overturn (severe) state restrictions on municipal broadband in Tennessee and North Carolina might indicate that the actual text is long on social justice rhetoric and short on constitutional reasoning. Or it might just be a reflection of the personalities behind the comments.

Frustrating.

The same bipolar representations are clouding the decision to bring the Internet under common carrier rules. It’s either the dawn of a new age of freedom and prosperity or a water slide into the apocalypse.

The California Public Utilities Commission – the nation’s second most powerful and important telecoms regulator – has figured out how to release pending decisions in advance, provide opportunities for fast public feedback and post ongoing updates as changes in the text are made ahead of any votes. There’s no excuse – motive, certainly, but no excuse – for the FCC to make momentous decisions behind closed doors.

FCC imposes common carrier rules on the Internet, preempts muni broadband bans

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The deed is done. Both, actually. The FCC voted this morning to use common carrier rules to regulate Internet infrastructure and service, and to preempt two state bans on municipal broadband in two particular communities.

“The Internet is simply too important to allow broadband providers to be the ones making the rules”, said chairman Tom Wheeler.

The three democrats on the commission – chairman Tom Wheeler and commissioners Jessica Rosenworcel and Mignon Clyburn – voted (and spoke) in favor; the two republican commissioners – Ajit Pai and Michael O’Rielly – voted against, after reading lengthy and sharply worded dissenting statements.

So far, all we have are commissioner statements and press releases summarising the actions, but largely reiterating previously released talking points. We’re still waiting on the release of the full text of the decisions. I’ll update this post with a link to the texts when available, and post my take on the details as I work my way through it all.

In its first action this morning, the FCC ruled that state restrictions on municipal broadband in Tennessee and North Carolina are superseded by federal law, according to the summary in the commission’s press release

There is a clear conflict, the Order finds, between Section 706 of the Telecommunications Act of 1996, which directs the FCC to take action to remove barriers to broadband investment and competition, and provisions of the Tennessee and North Carolina law that erect barriers to expansion of service into surrounding communities, including unserved and underserved areas.

Wheeler had previously said that the FCC’s action would be specifically tailored to the specific circumstances in Wilson, North Carolina and Chattanooga, Tennessee, and that might be what’s in the actual text, but the language in the press release clearly has a much wider aim.

How the FCC will vote is certain, what’s to be approved isn’t

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Tomorrow should be the big day. Common carrier regulation of broadband infrastructure and service is scheduled to be on the table at the FCC. There’s a possibility it could be bumped a month, though. Republican commissioners Ajit Pai and Michael O’Rielly want it delayed. Actually, they want it stopped altogether. But democrats hold three of the five commission seats, so that’s a sideshow.

One of the democrats, Mignon Clyburn, is reportedly pushing chair Tom Wheeler to make changes. Since this is all happening behind closed doors, it’s not certain if she wants to pull back or double down, or just shuffle things around for whatever reason. And there are likely others twisting Wheeler’s arm, too.

Assuming it does come to a vote, though, the outcome is a foregone conclusion: the democratic party appointees – Clyburn, Wheeler and Jessica Rosenworcel – will vote in favor; Pai and O’Rielly will vote against.

What we’ll learn from the meeting are the critical details and actual language of the new rules. Probably. The FCC sometimes takes several days to publicly post the full text of decisions, but given the intense attention on this issue it’s likely to move quickly. If it doesn’t, count on someone scanning a hard copy – official or bootleg – and pushing it out.

Once approved, the new rules will take effect after the formalities have been completed. Expect court challenges and congressional blustering, but, revolutionary or not, this decision is in the FCC’s regulatory comfort zone and the working assumption is that it’ll stick.

Commissioners will also vote – again, almost certainly in favor and split 3 to 2 on party lines – on preempting two particular state bans on municipal broadband. Wheeler said these decisions will send “a clear message and provides precedent for how the Commission would view similar restrictions”. The FCC is on shakier legal ground, so we’ll see a couple years of litigation before there’s any hard effect, if at all.

In the meantime, state legislators will, at least, look over their shoulders when considering any muni broadband bills and, at most, begin crafting statutory language that skirts around the FCC’s decision. There are any number of lobbyists from Comcast, AT&T, Verizon and the rest who will be happy to help.

Three points to watch for in FCC muni broadband decision

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The FCC has to win an uphill fight against past court decisions if Thursday’s expected preemption of two particular state bans on municipal broadband is to have any practical effect.

The primary obstacle is Gregory v. Ashcroft, a 1991 U.S. supreme court decision that said, in effect, if congress wants to “upset the usual constitutional balance of federal and state powers” then it must make that intention “unmistakably clear in the language of the statute”. In 2004, the supreme court relied on that principle in Nixon v. Missouri Municipal League, which – seemingly very plainly – said congress didn’t give the FCC authority to interfere with how states manage the telecoms activities of subordinate agencies. Cities and counties are not independent: both are created by state governments and given particular responsibilities and powers, which vary from state to state.

But it’s a lawyer’s job to find loopholes and end runs around problems like that. So expect the FCC’s decision to explain why this time is different. Possible lines of attack include…

  • The Nixon case was about one particular section of U.S. telecoms law and there’s another section – 706 – that actually does give the FCC that power. Look for some kind of basis for saying the very broadband language of section 706, which the courts have already found inadequate to support net neutrality rules, is a “plain statement” by congress in “unmistakably clear” terms that it intended to give the FCC authority to tell states how to delegate broadband work to cities and counties.
  • Broadband service is so fundamentally different from, say, wireline telephone that it can only be regulated at the federal level, if the FCC is to achieve the goals set by congress.
  • At least one of the muni utilities involved in the FCC proceeding – Chattanooga, Tennessee, possibly – is actually an independent corporation rather than a political subdivision of its respective state. That’s a scenario the Nixon decision specifically avoids addressing.

To withstand court challenges, the FCC’s decision has to demonstrate why its authority to preempt state management of subordinate agencies either meets the unmistakably clear plain statement standard or is irrelevant to it. That’ll be a tough case to make, but I’m looking forward to reading it.

Temporary conditions will make Comcast’s Californian monopoly permanent

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It won’t get any better when the referee leaves the ring.

One of the more fascinating aspects of a proposed California Public Utilities Commission decision approving the Comcast/Time-Warner/Charter mega merger and market swap is an analysis of the resulting broadband market in the state. Prepared for the CPUC’s office of ratepayer advocates by Lee Selwyn, a telecommunications analyst, the study reaches the bottom line conclusion that if Comcast swallows up all of Time-Warner and Charter subscribers in California (except for Charter’s subs in the Lake Tahoe area), Comcast would have monopoly control of the broadband market in 78% of its expanded service area.

That’s using the FCC’s new broadband standard of 25 Mbps download speed. If you run it based on the CPUC’s current minimum of 6 Mbps down, Comcast’s monopoly control drops to 17% – that’s largely because AT&T offers at least 6 Mbps down in most of its service area, but not 25 Mbps.

From a microeconomics standpoint, though, a duopoly isn’t much better than a monopoly – either way, the companies involved can control pricing and service levels without much regard for consumers. Selwyn’s calculations show duopoly control of the new service area at 99% for 25 Mbps service and 88% for 6 Mbps.

As bad as it looks, the reality is probably be worse. The published numbers don’t include upload speed calculations. Given AT&T practice of squeezing more download speed out of ageing copper systems by sharply throttling upload capacity, Comcast would have an even greater monopoly and duopoly control.

The proposed decision also pegs Comcast’s prospective combined share of Californian households at 84%, a figure supported by Selwyn’s analysis. In other words, at the 25 Mbps level, Comcast would have monopoly control of two-thirds – 66% – of Californian homes, and be the dominant duopoly partner in about three-quarters – 74% – of the state at 6 Mbps.

Selwyn’s report is being kept confidential by the CPUC, at least for the time being. He used data provided by the companies that’s so far been deemed proprietary, so there’s no opportunity to dive deeper into it.

But the published figures tell a damning story. If the merger and market swap is approved, Comcast would have effective control of broadband service in California, and be able to maximise the value of the money it stuffs in political pockets at the state capitol and the local level.

The proposed decision includes a number of conditions Comcast would have to meet – including pricing, customer service and simple good behavior – but only for two to five years. Comcast’s stranglehold, though, would be permanent. Californians would be better served if the CPUC rejected the merger completely.

Download the numbers in a spreadsheet here.

Download the numbers as a pdf file.

Download the full text of the proposed decision here.

Vague rules will make the FCC a poor referee

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It’s always a bad call when a ref begs to be noticed.

FCC chairman Tom Wheeler says he wants to be the Internet’s referee. He’s used that description of how he see’s the FCC role in managing the broadband ecosystem several times, most recently in a Colorado speech where he talked about his proposal to bring the Internet under common carrier regulations…

The proposal also looks forward into the broadband future to assure there are basic ground rules and a referee on the field to enforce them. In general, if an action hurts consumers, competition, or innovation, the FCC will have the authority to throw the flag.

Wheeler’s original plan, which he floated last May, contained only a vague statement that Internet service providers shouldn’t do anything that’s “commercially unreasonable”, a term that the FCC would interpret and define as complaints came in. But that plan didn’t fly. So the next step was to craft presumably tighter rules, based on the FCC’s authority to regulate telecoms companies as common carriers.

We haven’t seen those rules yet, and likely won’t until after the FCC votes next Thursday. When we do though, an important – arguably the most important – question will be how well those rules are written. Vague or precise? Limited or wide ranging? Based on objective standards or subjective judgements?

Among my other sins, I’ve been a sports referee – triathlon – for 18 years. I’ve worked, and competed, under a wide variety of competitive rules and enforcement policies. There are two basic models: precisely written, objective rules enforced by low profile refs that rely on observation, and vague, discretionary rules freely interpreted by officials who insert themselves – and their egos – into the competition.

Wheeler clearly belongs in the latter category. But good rules and transparent enforcement policy go a long way toward limiting the damage a bad referee can do. The details of next week’s decision are important, but the underlying ethic and craftsmanship will matter more in years to come.

Common carrier opponents’ talking points miss the point

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Unfortunately, it’s the way the game is played.

At first it seemed like there might be something resembling a public debate about the merits of bringing broadband infrastructure and service under common carrier rules before the FCC votes on it.

First, chairman Tom Wheeler delivered his sales pitch for the proposed rules. Then, commissioner Ajit Pai countered with substantive objections to what’s in the still-secret draft. But at the same time, he labeled it “President Obama’s plan to regulate the Internet”.

And that was the end of any meaningful discussion.

What we’ve seen since is a series of press releases from Pai and fellow republican-appointee Michael O’Rielly that read like talking points written by party hacks. More examples are here and here. Which might well be the case: although it is nominally independent, the partisan allocation of seats on the commission – two for each party, with the tie-breaking chairman’s slot going to the party holding the white house – ensures ongoing coordination with political sponsors on both sides of the aisle, informal or otherwise.

When the conversation stops being about the ideas that are on the table and turns into a cheerleading session for people who already agree with each other, the pretence of an independent decision making process evaporates. It’s too much to hope that an open process would lead to a broad consensus. Everyone doesn’t have to agree 100%, though. There just needs to be enough mutual comprehension to move forward with some degree of certainty once the decision has been made.

The FCC’s practice of keeping its work in hermetically sealed partisan compartments that are only opened to public view after decisions are final is good for politics – and politicians of all persuasions – but a bad way to make public policy.

Oops, Charter proves it can’t serve public housing residents

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Okay, people, you have to tell me these things, alright? I’ve been frozen for 30 years, okay?

In a self-defeating gesture, Charter Communications is challenging four public housing broadband grant applications made to the California Advanced Services Fund (CASF).

Charter claims residents at four complexes – two in Long Beach and two in San Bernardino – can buy Internet service at speeds in the 100 Mbps download and 5 Mbps upload range.

Unfortunately for Charter, it doesn’t really matter.

CASF rules for public housing are different from those for the general public. It’s a lot easier for a public housing project to qualify for a broadband facilities grant. As the rules adopted by the California Public Utilities Commission state, in the end, it doesn’t really matter if an incumbent is already providing service…

[Publicly-supported housing communities] without wiring will receive priority over PSCs which already have wiring, but both entities are eligible for these funds.

Worst case, the four challenged projects will be delayed a few months (assuming there isn’t a flood of applications in April). But arguably, it’s not enough just to have wiring – or service – in the building…

The applicant will have the opportunity to rebut the challenge by showing with adequate documentation that services are not available to 100 percent of residents, or that although the units may have wiring to support broadband Internet service, residents do not subscribe to that service.

Helpfully, Charter volunteers that not all residents are broadband subscribers. In fact, most aren’t. According to Charter’s filing, of the 101 units included in the four projects, only 29 buy broadband service.

That’s a 29% take rate. Which is less than half the Californian average of 74%.

Neither the applicants nor Charter provided any market research as to why the broadband adoption rate in those complexes is so dismal. But it’s a fair guess that the primary reason is the combination of low household incomes and high cable broadband prices.

Far from debunking claims made by the applicants, Charter has provided conclusive proof that, speed requirements aside, the CASF public housing program is dead on target.

Comcast has to clean up its act if it wants to merge in California

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How about starting with some botox and a manicure?

If Comcast wants approval for its mega merger and market swap with Time-Warner and Charter, it’s going to have to meet some stiff, if mostly temporary, conditions. That’s the preliminary determination of a California Public Utilities Commission administrative law judge in his review of the deal.

The proposed decision – there’s still some back and forth to come, and final approval is subject to a vote by the five commissioners – reaffirms that the CPUC has authority under federal law to assess the impact of the merger on broadband, as well as telephone, service in California. It rejects calls to prevent the merger completely, instead imposing broadband (and telephone) performance, pricing and build out requirements on what would be a greatly expanded Comcast.

As the proposed decision notes, Comcast’s share of Californian homes would grow from 34% to 84% and regarding “the provision of broadband speeds at or above 25 Mbps, which represents Comcast’s standard broadband offering and is considered the FCC’s benchmark broadband speed, almost 80% of Californians will have Comcast as their only provider”.

Those conditions would require Comcast to…

  • Build out broadband service to every home in its new territory that currently gets cable TV service within 2 years, and expand into some nearby areas.
  • Within five years, ensure that all homes in its service area can get broadband service at 25 Mbps down/3 Mbps up. That’s the new FCC standard, which the proposed decision would also “take official notice of”.
  • Offer many services, including standalone Internet access, to its entire expanded service area at Time-Warner rates. Time-Warner sells standalone Internet service at prices ranging from $15 per month for 3 Mbps to $45 per month for 100 Mbps. This price cap would last five years.
  • Expand its $10 per month Internet package for low income households to its new service area, hit hard benchmarks for selling it, and up the service level to 10 Mbps down/1 Mbps up.

There’s more, including provisions for schools and libraries, customer service and reporting standards, supplier diversity, handicapped access, lifeline and 911 service and battery back ups. My favorite, though is…

Comcast shall for a period of five years following the effective date of the parent company merger neither oppose, directly or indirectly, nor fund opposition to, any municipal broadband development plan in California, nor any CASF or CTF application within its service territory that otherwise meets the requirements of CASF or CTF.

That won’t stop Comcast’s lobbying efforts, but it will blunt some of its nastier tendencies.

There’s a lot that has to happen before any of this would take effect. Not only does it have to survive review by the commission and inevitable court challenges, but the merger has to be approved at the federal level too. And then there’s next week’s impending decision by the FCC to bring broadband under common carrier rules: to a certain extent, this proposed decision might be read as anticipating that change, but a completely new regulatory regime might also require a complete rewrite.

Download the full text of the proposed decision here.