All Over But The Screaming; Assessing the 700 MHz Order: Part I — Putting This In Context

At the end of last week, the FCC released its mammoth 350 page Order on the 700 MHz Auction. As advertised, it resolves most of the major issues, but delegates some details for the Wireless Bureau to resolve so we can continue to have wonky auction fun through the fall. Because the only thing better than Fantasy Football is Fantasy Reserve Prices.

Below, and for the next several posts, I give my patented Sausage Factory long, detailed analysis. Briefly, in my usual contrarian-but-hopefully-sophisticated-and-nuanced-way, I think we did pretty well. In fact I think we totally kicked ass, took names, and got something that — over the long haul — has the potential to seriously revolutionize wireless and broadband policy in the United States.

“Wha?” I hear you cry. “I thought we lost on wholesale. I thought the Order had only wussy half measures that amounts to either a giveaway to the incumbents for crumbs or Google (depending on whom you hate more). Are you just trying to buck us up and make us feel better?”

True, we lost on wholesale and the FCC did not go as far as I would like on the “wireless Carterfone.” But, as with the debate over the AT&T/BS Conditions, we need to assess the results as part of a long-term campaign for reform rather than expecting to achieve a Glorious Revolution in a single stroke. This was our Battle of Britain (or, for those who think of us as a bunch of Socialist enemies of capitalism, our Batte of Stalingrad). We have stood before the united might of the telco, cable and wireless industries, halted the tide of “business as usual,” and extracted some key changes and precedents that we shall leverage for the next phase of the campaign to create a 21st Century information grid worthy of a democracy; an information grid that extends the benefits of modern communications to everyone and eliminates the power of gatekeepers to control what we say and what information we discover.

Which, at the end of the day, is not too shabby — especially when compared to what we expected last April. We got some pretty huge stuff — things that will revolutionize this auction not merely help us for the long term.

Using my “Red Sox scale” of success, this feels to me a lot like the 1975 World Series. Looking back as an adult, I can see that it was one of the finest moments in professional baseball, with the Sox losing by a single run in the 7th game. But at the time, it felt like a Hell of a loss, precisely because we came so close to winning it all.

So I’m not nearly as down as most of my friends in the movement. Part of that has to do with long-term view over short term. Part of that has to do with whether I believe that Martin is acting in good faith or not (again, I’m contrarian in our community by saying “good faith” for reasons I will explain). Part of it has to do with an appreciation of the FCC’s institutional dynamics including, to paraphrase Jon Stewart, the absolute dickishness of the Wireless Bureau staff.

I do see problems and issues in the Order, some of which I hope to get fixed on Recon, some of which reflect rational disagreements on the proper course and what level of risk we should take for political payoff (I’m talking about the reserve price stuff here). And, at the end of the day, we are still facing a host of unknowns that will depend on a future FCC’s willingness to enforce these conditions. But in the end, I’m feeling we at MAP earned our corn and achieved things we can be proud of (I’ll let the other members of PISC speak for themselves on that score, but I hope they feel the same way as well).

Because this is really, really long, and will probably take several days to cover, I am breaking this up into parts. Below, I provide some of the necessary institutional context for understanding the Order and why I think this counts as a big win.

More below . . . .

O.K., everyone knows what we didn’t get: wholesale open access. Wholesale open access would have been a total revolution in wireless and would have guaranteed us not just a “third pipe,” but a dozen competitors in broadband and wireless services in every market. But we didn’t get it.

It is fashionable to hate Martin for that and conclude that, because he didn’t go all the way, he is a miserable bastard who has given us the barest crumbs he could manage. But, as I observed before Martin (and the rest of the Commissioners) operate under real political restraints. I’d have loved it if Martin bucked his whole party (with the exception of Chip Pickering, who just announced he’s not running for reelection) and martyred himself for my cause. I also would love it if Rupert Murdoch woke up tomorrow morning and announced he was sorry for transforming our news media into a cesspit obsessed with partisan snipping and celebrity and that he was donating all his money and assets to Moveon.org to atone. But it ain’t gonna happen. When the Dems in Congress failed to step up to the plate, and when the public safety people said they absolutely would not support wholesale open access (or even device open access) on the shared commercial/public safety block (now the “D block”), that was pretty much all she wrote. So if I am going to get mad at someone for killing wholesale open access, it’ll be the Congressional Ds (with the exception of such stand outs as Kerry, Dorgan, Markey and Doyle who openly supported wholesale) who didn’t want to get too far out ahead of the curve on this one.

Unfortunately, this “Martin sucks” attitude is, IMO opinion, causing people to underappreciate the important things we did get, and to regard the positive with the same suspicion usually reserved for accepting a “birthday cake” from Bugs Bunny with big sparkly candles label T-N-T. And again, there is good reason for this suspicion. The recent flap over AT&T’s passive-resistant compliance with the $10 DSL merger condition raises legitimate questions about whether the FCC will actually enforce any of the licensee conditions it imposes in this Order. But there is a critical difference between the situation here and the situation with AT&T/BS. Over there, Martin (and Tate) absolutely opposed the conditions, thought they were wrong, and only agreed to them because he had no choice. (Not that this is an excuse for a failure to enforce the conditions vigorously, mind). Here, Martin not only believes in these conditions, he has made them a centerpiece of his legacy. He is looking forward to using real cool edge based devices five years from now and reminding us folks in the public interest community how we doubted his wisdom. So I believe Martin actually has every incentive to make his plan work.

Besides, as I pointed out when Martin first floated this, Martin didn’t have to give us anything. In fact, the safest thing to do was to just do nothing and not take any chances with the auction. So I’m inclined to believe that while Martin didn’t (in my opinion) go far enough, he is not trying to screw us on what he did give us.

On the other hand, a read through the Order and its language convince me that the career staff at the Wireless Bureau will do absolutely everything they can to sabotage this. For those of us who read FCC Orders, it practically screams GOD I HATE WRITING THIS CRAP! In particular, they absolutely loath that members of the public have shown up and invaded their little domain. Why? Because sadly, like the cable staff, the Wireless Bureau see themselves as servants of industry rather than watchdogs.

And why not? From the perspective of the Wireless Bureau (particularly the auction division), the wireless world has just been one, big happy ubercompetitive success story since Congress authorized auctions in 1993. Why shouldn’t the Wireless Bureau, handmaiden of this success, raiser of billions of dollars in auction revenues, pat itself on the back for a job well done and continue to “nurture” and “service” the wireless industry. And as for the idea that these political appointees, or even worse, these ignorant savages from the public interest community, should intrude themselves into this land overflowing with competitive milk and honey and dare, DARE to allege that it it has become a corrupt nest of entrenched interests is simply not to be borne! Who the heck do these members of the public think they are anyway? And how much Goddamn competition do they think they need? They should be grateful for the wonderful wireless world we’ve birthed for them and the noble wireless industry we created, rather than demanding all this “open access” and “competition” stuff!

I first ran across this institutional dickishness when working on unlicensed issues. Unlike the Office of Engineering and Technology, where they genuinely welcome public input and mostly care about cool engineering (as evidenced by their recent handling of the white spaces prototye testing), the Wireless Bureau never really seemed to enjoy our discussions, which usually ended with a religious assertion on their part that whatever evidence I might have, it was “obvious” that licensing encouraged more investment, provided better return to the public, got infrastructure built out better, and was just all around much better in every way shape or form than this silly unlicensed stuff.

This institutional dickishness needs to be kept in mind when parsing the language. Because while Martin and the other Commissioners set the high level policy, and Fred Campbell (whom Martin appointed to run the Wireless Bureau) is charged with the overall development and drafting of the Order, the bulk of the work on writing this 350+ page monstrosity must fall to staff. And even Fred is not going to have time to go over it with a fine tooth comb. As a consequence, we end up with language that moves in a generally positive direction, but has these footnotes and odd turns of phrase that appear to undermine the Order and blunt its conclusions.

Case in point is the treatment of anonymous bidding. Despite heavy support for anonymous bidding by Martin and folks from the Office of Strategic Plans and Policies, the auction people in the Bureau hated it with a passion. Why? Well, first of all, the industry hates it. That alone would be enough to make the Wireless Bureau staff hate it. Second, those damn interlopers, the public interest community, really want it. Again, that alone would be enough to make the WB hate it. But the crowning reason above all others for the WB to hate anonymous bidding is that accepting the arguments for anonymous bidding means that the spectrum auctions — particularly of the last few years — are not the wonderful competitive revenue maximizing success stories the WB absolutely knows they were.

Imagine their rage, therefore, when these pushy, arrogant public interest guys submit a careful economic study that shows that their beloved AWS auction was an anticompetitive collusive fraud by the supposedly noble ubercompetitive incumbents. So despite the fact that the Commission voted to adopt anonymous bidding, the Order has a lengthy footnote (n.644) trashing the Rose Report on the AWS auction. Even if the criticisms were just (which, as you might imagine, I think they are not, but I will leave it to Dr. Rose to explain why on his blog), it creates an enormous litigation risk for the FCC to trash the one piece of empirical evidence in support of a major policy change.

When I first pointed this out to people, I got all kinds of paranoid stuff about how Martin really didn’t want to do anything for us, was deliberately planting a landmine, blah blah blah. But that’s just stupid. Since Martin didn’t have to give us anything, and since Martin was teh one who wanted anonymous bidding last time, why on Earth would he support it and then undermine it? Furthermore, even if they did agree with every word in Footnote 644, they would never put something in an Order that completely undercut their argument and created a serious risk of reversal on appeal. While they might not rely on the Rose Report, they certainly wouldn’t trash it.

Then how did this footnote get in theOrder? Welcome to the wonderful world of FCC institutional dynamics. I can’t imagine that Martin (or even Fred Campbell) even noticed footnote 644 in the 350+ page document which, while important, is one of the dozens of documents they must approve every day. On the other hand, footnote 644 completely matches the total dickishness of the Bureau (which could not even bring itself to refer to Greg Rose as “Dr. Rose”). Auction staff would love to sabotage (in this safely anonymous way) anything that casts doubt on the wonderfulness of their existing regulatory regime, goes against the wishes of their “clients” in the wireless industry, or gives any impression that the public interest community had anything to do with this because they really want to make it clear to us that we DON’T MATTER and we should just GO AWAY.

Of course, we have no intention of going away. To the contrary, one of the huge wins for us in this mess is that spectrum policy has become public policy in every sense of the word. These wankers pining for the “good old days” when the public knew its place and the role of the agency was fostering and promoting (not “regulating”) the industry are in for some serious ongoing attitude adjustment.

But in any event, my broader point is that an understanding of this institutional dynamic is necessary when parsing the language of the Order. Rather than viewing this through Martin-suspicious glasses (at least on the stuff we won and on which Martin has staked his political legacy), I am inclined to view these things as evidence of the Wireless Bureau venting their spleens and trying to undermine the regulation of their precious industry “clients.” Still, that’s why we have Petitions for Recon.

Stay tuned . . . .

Up next: Part II: “C” Does Not Stand For “Crap”; Why the Wireless Carterfone Is A Big Win.

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2 Comments

  1. “The recent flap over AT&T’s passive-resistant compliance with the $10 DSL merger condition raises legitimate questions about whether the FCC will actually enforce any of the licensee conditions it imposes in this Order.”: You’re right here, but there’s another point to be made. There is no well-funded interest representing people who want $10 per month DSL.

    The 700 MHz band will have multiple multi-billion-dollar firms, including Intel, Cisco, IBM, Motorola, (take a breath), Google, eBay (Skype), Amazon (probably), RealNetworks, Apple, Microsoft and others all eager to sell stuff that works in the 700 MHz band — services and devices.

    Thus, there is a huge army of lawyers willing to defend consumers’ rights in 700 MHz that simply doesn’t exist in most of telephony because there’s no profit in defending consumers’ rights elsewhere.

  2. Harold says:

    Sadly, you are dead on. Market incentives do make for better enforcement. Or, as I often say, being right is not enough.

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