FCC

Ed Markey (D-MA) and Anna Eshoo (D-CA) last week introduced HR 3458, The Internet Freedom Preservation Act of 2009 (PDF). This bill is much better than past bills in that it doesn’t contain any prohibition on classes of service or preferential treatment of packets based on protocol or application, as opposed to based on source, destination, or owner. It still, however, gives the FCC new powers to regulate the Internet and puts the onus of developing specific regulations on the FCC. And it looks like the language will give the FCC the power to regulate Apple’s iTunes store with respect to iPhone Internet-related applications, as well as to force the opening up of wireless walled gardens. The bill leaves open to the FCC the ability to treat “private transmission capacity services” as exempt from the requirements of the bill, so long as they don’t impact Internet capacity for the end user. It also provides disclosure requirements for ISPs to report on any methods they use for network and capacity management that may impact Internet traffic. ...

The FCC rule on “fleeting expletives,” permitting massive fines even for individual occurrences of the “seven words you can’t say on television,” arguing that they always have sexual connotations even when used as an intensifier, was upheld by the U.S. Supreme Court in a 5-4 decision. The decision is noteworthy for using the terms “F-word” and “S-word” and “fing” and “s*” in its text, rather than spelling them out. Clarence Thomas’ concurrence in the majority, however, questioned the constitutional basis of the FCC’s ability to regulate content. It should be just a matter of time before the FCC’s ability to regulate indecency is curtailed, but the Supreme Court did not rule on that issue in this case. Adam Thierer at the Technology Liberation Front has a thorough commentary: Part 1, Part 2, Part 3, Part 4 Thierer points out that Scalia, purportedly a strict constitutionalist, in his decision has endorsed a brand-new justification for the FCC’s power to regulate broadcast content. The original justification was that the airwaves were a scarce resource that needed to be protected for productive uses; the new argument is that because there are so many unregulated alternatives like cable, satellite, and the Internet, that the government needs to protect one last refuge from offensive content. (Previously, previously.)

There’s a telecom panel at the Netroots Nation conference today on the subject of “Big Telecom: An Emerging Threat to Our Democracy?” The implied answer is yes, and it appears that every participant on the panel will be making that case. Here’s the description of the panel: Massive telecom companies control virtually all of our voice and internet communications these days—and new evidence shows a near-total lack of commitment to our democracy. AT&T has proposed filtering all content traveling on its network. Verizon tried initially to block NARAL’s pro-choice text messages. Most telecom companies are fighting net neutrality. Can democracy survive an assault by those who control the tubes?The panel members don’t include anyone with any experience managing or operating an actual telecom network, but instead includes two people who have repeatedly demonstrated not only an ignorance of telecom law, technology, and policy, but who have misrepresented facts and failed to engage with the arguments of their critics, Matt Stoller and Timothy Karr (see posts on this blog in the “net neutrality” category). The closest person to a representative of a telecom is Michael Kieschnick of Working Assets, a company that is a reseller of long distance and wireless service on Sprint’s network. I agree with many of their positions–I don’t think ISPs should be allowed to block websites on the basis of disagreement with content. I think ISPs should be transparent about their network management processes and filtering. Where I disagree with them is that they advocate that the FCC step in to regulate the Internet in a way that it has never had authority to do so before, and demand that network operators not be allowed to implement classes of service with different rates of charges, or even usage caps. Art Brodsky expresses the point which has also been made by Robb Topolsky of Public Knowledge, Timothy Karr of Free Press, and Matt Stoller: In the name of “network management,” some companies want to throttle down the use of legal applications, like BitTorrent which may, coincidentally, provide competition in entertainment programming. They want to impose usage caps across the board on all customers which would stifle innovation and curb the use of video (there’s that anti-competitive meme again) without actually solving the problem of the so-called “bandwidth hogs.” The way caps are being discussed now, they would only lead to higher prices and less usage for an industry that already charges more for less than most broadband providers around the world. Parts of our broadband industry may be the only sector in the world that wants to cut down the amount of its product it wants customers to use.Brodsky’s last sentence is clearly false–broadband is like a fixed-price all-you-can-eat buffet. All businesses want to maximize their profits by maximizing revenue and minimizing costs. When bandwidth is sold at a fixed cost in unlimited amounts, where a small number of users are consuming the majority of the service, it’s in the business’s interest to restrict those users or charge them more for what they consume in order to satisfy the rest in a cost-effective manner. The options are few–you can either restrict the “bandwidth hogs” in some way, charge them more so that they pay for what they use, or raise the price for everyone. These guys seem to advocate the latter approach, while I’m in favor of allowing all the options to be used in a competitive market. Where I disagree with Comcast’s approach in issuing RST packets to block BitTorrent traffic is not that they did it, but that they were not transparent about what they were doing (and apparently didn’t quite get it quite right–it should not have completely broken BitTorrent, but only slowed it down). Brodsky’s suggestion that Comcast has an interest in blocking BitTorrent because it provides competition in the entertainment space is absurd–they have an interest in blocking it because it’s a very popular application which itself exploits Internet protocols in a way not anticipated by the designers in order to consume more bandwidth, getting around the congestion controls in TCP/IP by using multiple TCP streams. If BitTorrent traffic wasn’t filling up the majority of Comcast’s bandwidth, they’d have no interest in it, except when the MPAA and RIAA issue them subpoenas about their users infringing copyrights. If the government prohibits the use of differential classes of service (which is already heavily used by private companies to give priority to applications within their enterprise which have requirements for low latency and jitter, such as real-time streaming audio and video, including Voice over IP) and requires that congestion be dealt with by building out infrastructure sufficiently that there will never be congestion no matter how many users max out their connectivity with BitTorrent, that will reduce competition by culling smaller companies out of the picture and making market entry more difficult. In any environment where a provider’s upstream capacity is less than the sum of the capacity to every customer (and that’s everywhere, today, and always has been), all-you-can-eat bandwidth is like a commons. The more that is available, the more the heavy users will consume, to the detriment of each other and the light users. Without setting caps and having tiered pricing or implementing technology that prioritizes packets and drops from the heavy users and from less-realtime-sensitive applications first (like BitTorrent), there are no incentives against consuming everything that is available. I also think it’s a huge mistake to have the FCC start regulating the Internet. FCC chairman Kevin Martin would no doubt love to place indecency standards and filtering requirements on Internet content. Once you open the door to FCC regulation of the Internet, that becomes more likely. And the FCC has been completely ineffectual at dealing with existing abuses like fraudulent telemarketing, illegal prerecord calls to residences and cell phones, caller ID spoofing, etc., already covered by statute and regulation. I’d rather see clear statutes that include private rights of action than entrust control of the Internet to the FCC. The FCC is a slow-moving bureaucracy, and AT&T and Verizon have the deepest pockets, the most lawyers, and the most personnel who have shuffled back and forth between government (including the NSA) and industry. That gives AT&T and Verizon the tactical advantage, and leads to less competition rather than more. Which brings me to the warrantless wiretapping and telecom immunity issues, which Cindy Cohn of the EFF no doubt addressed on the Netroots Nation panel. I suspect I have little if any disagreement with her. I’ve long been a supporter of the EFF, as are many people involved in the management of ISPs. I strongly oppose telecom immunity for warrantless wiretapping, a complete abdication of Congress’ responsibility to support the U.S. Constitution. But this shows the power of AT&T and Verizon. Not only did they get what they wanted, but the very infrastructure which was built to do this massive interception of traffic for the NSA and for law enforcement interception under the CALEA laws was built for them with assistance from government funds. All telecoms have to be compliant with CALEA (now including VoIP and broadband Internet providers), but the big incumbents who were most capable of affording it on their own got it at the lowest costs, while their competition was required to build it out at their own expense even if it never gets used. But there are legitimate uses for deep packet inspection, for understanding the nature of the traffic on a network for management purposes, including tracking down security and abuse issues. Since it is in the hands of the end user to use encryption to protect sensitive content, I think use of DPI by network providers is reasonable for the purposes of providing better service in the same way that it’s reasonable for a voice provider to intercept traffic for quality measurement purposes. It’s also reasonable for interception to occur for “lawful intercept,” but it should always require a court order (i.e., both executive and judicial branch approval) on reasonable grounds. The difficulty of obtaining wiretaps depicted in the television program “The Wire” is how it should be. I’ve written a lot on these issues, much which can be found in this blog’s Network Neutrality Index. If any reader of this blog happens to have attended the Netroots Nation telecom panel or comes across a description of its content, please point me to it, as I’d like to see what was said. I don’t have high hopes for the accuracy or reasonability of statements from Stoller and Karr, but I could be surprised, and the other panelists probably had interesting and important things to say. (See my Blogger profile for the disclosure of my employment by Global Crossing, which is currently listed by Renesys as the #3 network provider on the Internet in terms of number of customers, ahead of AT&T and Verizon, behind Sprint and Level 3.) UPDATE: The “Big Telecom” panel was live-blogged (dead, unarchived link: http://openleft.com/showDiary.do;jsessionid=C865142FFB85E14AAD27045B9A342B15?diaryId=7032"). Stoller’s anecdote about the Bill of Rights on metal is referring to Dean Cameron’s “security edition” of the Bill of Rights, which was also promoted by Penn Jillette. ...

The Parents Television Council, the organization that is responsible for generating over 99.8% of all indecency complaints to the FCC, has further demonstrated its own complete pointlessness by putting out a website that assembles a collection of the most indecent clips from broadcast television, with no parental controls of any kind on the page. Each clip is categorized with labels like “sex,” “violence,” and “foul language." What’s a kid more likely to come across? A five-second bit in one of thousands of television shows, or a huge collection of the worst of the worst all in one place on the Internet? It’s high time for broadcast television indecency rules to be dropped. (Via The Agitator.)

FCC Kevin Martin has responded to the Second Circuit Court of Appeals’ decision on “fleeting expletives," which not only went completely against the FCC but suggested that the grounds for the FCC’s authority to regulate indecency on the broadcast airwaves may no longer exist. Here’s part of what he had to say: I completely disagree with the Court’s ruling and am disappointed for American families. I find it hard to believe that the New York court would tell American families that “shit” and “fuck” are fine to say on broadcast television during the hours when children are most likely to be in the audience. The court even says the Commission is “divorced from reality.” It is the New York court, not the Commission, that is divorced from reality in concluding that the word “fuck” does not invoke a sexual connotation. ...

The Arizona Republic has just caught on to the fact that there’s a lot of mortgage fraud going on in Phoenix: A wave of mortgage fraud is rippling through pockets of the Valley, inflating home values through scams called cash-back deals. Left unchecked, cash-back deals cost homeowners and lenders millions of dollars and could erode confidence and values in Arizona’s real estate market. The fraud involves obtaining a mortgage for more than a home is worth and pocketing the extra money in cash. Neighbors may then discover home values in the area are exaggerated. Homeowners stuck with overpriced mortgages may never recover the difference. And lenders end up with bad loans that, in the long run, could hurt the Arizona real estate market, the largest segment of the state economy. While the extent of the fraud is unclear, an Arizona Republic investigation into these cash-back deals found organized groups of speculators have bought multiple homes this way, leaving whole neighborhoods with inflated values. Add to these the individual deals done by amateurs who hear others talk about the easy money they made from cash-back sales. State investigators and real estate industry leaders want more enforcement and greater public awareness to stop the spread of cash-back deals before the damage mounts. “Mortgage fraud in the Valley has become so prevalent people think it’s a normal business practice,” said Amy Swaney, a mortgage banker with Premier Financial Services and past president of the Arizona Mortgage Lenders Association. Under federal law it is illegal to misrepresent the value of a home to a lender. Everyone who is a party to the deal is subject to prosecution. Felecia Rotellini is a Notre Dame law school graduate and former assistant attorney general who is now superintendent of the Arizona Department of Financial Institutions. Her agency regulates mortgage lenders, state banks and credit unions in the state. Alarmed by what she was hearing from lenders and real estate agents, she has just pulled together state and federal regulators to form an Arizona mortgage fraud task force. “People need to understand these cash-back deals are illegal and stop,” she said. “We are going after mortgage fraud." I think this is likely to be too little, too late. When I was actively suing telemarketers using illegal prerecorded calls to residences in 2003, the worst offenders were mortgage brokers. In the process of going after some of them, I found signs that some of them were engaged in other illegal activities as well, such as defrauding other lenders, defrauding their customers, defrauding the IRS and Arizona Department of Revenue, and transferring assets between entities prior to filing bankruptcy to evade creditors. I found the Arizona State Department of Banking (now known as the Arizona State Department of Financial Institutions), which regulates mortgage brokers, to be completely uninterested in investigating–though they did send some warning letters after I won judgments against brokers, which prompted some of them to pay their judgments. They said that they did not have resources to investigate my claims of violations, even though I offered up specific areas of the law that they are supposed to enforce (they don’t enforce the Telephone Consumer Protection Act or FCC regulations). There’s more on this subject at Ben Jones’ Housing Bubble Blog. UPDATE (January 22, 2007): Arizona Senator Jay Tibshraeny has introduced a bill making mortgage fraud a felony. But it’s already criminal activity covered under current laws–adding more laws against it doesn’t do anything to cause those laws to be enforced.

At Slate, Jack Shafer argues for the abolition of the FCC, drawing heavily from Peter Huber’s book, Law and Disorder in Cyberspace. For a critique of Huber, see Tom W. Bell’s “The Common Law in Cyberspace” from the Michigan Law Review (1999, vol. 97, pp. 1746ff). (Hat tip to Jesse Walker at the Reason blog.)

Talking Points Memo has been collecting examples of information (website content, reports, studies, etc.) that the Bush administration has suppressed because they were somehow contrary to the administration’s positions. The list has become fairly lengthy. Here’s what they’ve got so far: * In March, the administration announced it would no longer produce the Census Bureau’s Survey of Income and Program Participation, which identifies which programs best assist low-income families, while also tracking health insurance coverage and child support. * In 2005, after a government report showed an increase in terrorism around the world, the administration announced it would stop publishing its annual report on international terrorism. ...

Looks like the FCC had a hard day before the U.S. Court of Appeals defending its arbitrary indecency standards, and Susan Crawford points out an example of just how absurd those standards have become in the era of YouTube. UPDATE (June 4, 2007): The Second Circuit Court of Appeals has issued its decision in Fox Television Stations v. the FCC, and the FCC has decisively lost. Adam Thierer points out how the case could pave the way for completely removing the FCC’s authority to regulate content for indecency. Susan Crawford reports on the content of the decision in the form of a letter to the FCC. UPDATE (April 28, 2009): The U.S. Supreme Court has reversed the 2nd Circuit in a 5-4 ruling.

The Center for Public Integrity has set up a “Media Tracker” based on FCC data by zip code which allows you to see how well-connected your zip code is. For each zip code, it will list the number of broadband providers and the number of owners of various media resources in your area (newspapers, radio and television stations. My zip code comes up as “well connected” with 18 broadband providers (a few more than the ones I identified in my survey of Phoenix-area broadband providers).