Assessing the 700 MHz Order Part II: “C” Does Not stand For “Crap;” Why the Wireless Carterfone Condition Is A Big Win.

Few things in the last few days have generated more discussion and overall pessimism in the Order than the C Block “wireless Carterfone” or “network attachment” conditions. “A tease,” says Art Brodsky. “Crippled by loopholes,” opines Susan Crawford.

“Not so fast!” Says yr hmbl obdnt blogger. In point of fact, there is a a hell of a lot here to like in the C Block conditions. Not just for trying to get actual devices attached, but in terms of FCC precedent and broader spectrum policy. This is an “Eyes on the Prize” moment, similar to the preliminary decisions that culminated in Brown v. Board of Education. We did not win the grand prize, but we got a lot good precedent for future spectrum reform.

Further, as I explain below, I do not think the conditions the FCC imposed here are meaningless. To the contrary, I think the rules are about as aggressive as possible to draft (as I worked hard with Commissioner Adelstein and his staff to think of anything I could possibly add to them). But at the end of the day, what matters is the political will. If the next FCC (which will be the FCC that enforces this) wants to give these license conditions meaning, it has the tools to do so. If a future FCC wants to make this meaningless, then there is nothing we can do no matter how well we draft things.

And I will add that if anyone has some better ideas on what to put in as rules, they should certainly file Petitions for Reconsideration

My analysis of why the C Block conditions do matter below . . . .

Here, I am going to have a major split with my friends who consider these conditions worthless. In many ways, this mirrors the debate we had over whether the AT&T/BS conditions were worthless. It goes down to the fact that, at the end of the day, no matter how clever you try to be, it will boil down to the FCC’s willingness to enforce the rules.

I also have a touch of professional pride on the line here. I was very, very worried about getting conditions that would have real impact. So was Commissioner Adelstein — who was absolutely determined to get the best enforcement rules possible for this and invited me to pass on anything I could come up with to make these conditions real. I consulted with everyone I could think of who had useful information — especially our engineering friends at Columbia Telecommunications Corporation (CTC), who did amazing pro bono engineering work for us in this proceeding — to see what the heck they could possibly come up with that we could translate into a rule that would ensure that the wirelessCarterfone condition had real meaning. Nor did we get serious push back from Martin. To the contrary, having staked his political capital on making this work, he wanted to make sure these conditions had real meaning as well. To the extent we got serious pushback, it came (no surprise) from the Bureau, who took to this like I do to root canal.

So lets look at the rules themselves and the supposed “numerous loopholes” (Par. 222-26). The FCC has made it pretty clear in its language what it wants: open standards developed by industry consensus through organizations that are more than just a collection of existing incumbents. (That is to say, organizations more like the IETF and not like Cablelabs.) The FCC did it’s best to shift the burden of proof to the licensee and identify some of the standard nasty tricks as things it will not permit. The licensee must publish the standards (which the Order strongly hints should go on the licensee’s website), cannot give special deals to “preferred vendors,” and strongly endorses (albeit does not compel) non-proprietary protocols .

Of great significance, the Order explicitly prohibits any interference with competing services on the device, such as wifi or ring tones. And, in language as close to net neutrality as we are going to see out of this Commission, the Order states:

In addition, C Block licensees cannot exclude applications or devices solely on the basis that such applications or devices would unreasonably increase bandwidth demands. We anticipate that demand can be adequately managed through feasible facility improvements or technology-neutral capacity pricing that does not discriminate against subscribers using third-party devices or applications. In that regard, we emphasize that C Block licensees may not impose any additional discriminatory charges (one-time or recurring) or conditions on customers who seek to use devices or applications outside of those provided by the licensee.

Finally, there is one sentence in here that makes all this worth the price of admission, especially since I know the Wireless Bureau people must have had conniptions over it. In addressing the argument by Verizon that requiring them to do wireless Carterfone violated the licensee’s First Amendment rights, the Order states:

To the extent that a choice of device or application implicates First Amendment values at all, we think that our requirements promote rather than restrict expressive freedom because they provide consumers with greater choice in the devices and applications they may use to communicate.

I have been trying to force that statement out of the Commission for years. You can see my article on the subject here. Oh, the Wireless Bureau staff did their best to wriggle out of it, undermine it, and mitigate the damage to their industry buddies. I particularly like the way they not only refused to cite Red Lion or even NBC v. U.S., but absolutely insisted on analyzing Verizon Wireless’s First Amendment claim under “intermediate scrutiny” rather than “rational basis” (for the non-lawyers, this is way too complicated to explain; suffice it to say it represents another effort by the Wireless Bureau to serve their “clients” at the expense of the public by giving the wireless guys stronger First Amendment rights than they actually have — without any basis in law for doing so). But nevertheless, despite their total dickish kicking and screaming, despite their violation of the Administrative Procedure Act by ignoring our First Amendment arguments as if we had never made them, they were compelled to affirm that open device standards serve the values of the First Amendment and promote expressive freedom.

Similarly, the FCC rejected the the argument that only market failure can justify regulation. The Order explicitly finds that the FCC should require the C Block licensee(s) to permit a subscriber to attach any device that will not harm the network because it serves the public interest to require it. And a finding that the condition serves the public interest, regardless of whether or not the market is competitive, is sufficient for the FCC to impose this regulation.

Woooooo Hooooooo!!!!!!! A straightforward reaffirmation of the the public interest standard! Forced out of gritted teeth of the Wireless Bureau staff, like a spoiled 6 year old forced to give back a stolen toy and made to say “I’m sorry,” but there it is. A slam dunk in your face rejection of the proposition that only a market failure can justify regulation “in the public interest.”

Wait, I need to channel my inner Cartman for a minute. Ooooohhhh Schweet! They will respect my authoratah! Suck my balls!

O.K., sorry about that. Back now.

Susan Crawford points out that this language still leaves loopholes. Yes. That’s true. If a future FCC wants, it can ignore the intent of the Order and let the licensee gut the rules. But now we come to the limits of drafting authority. Because you can try to put whatever you want on the page. And it’s absolutely essential to do the best job possible. But in the end, it all comes down to the question of political will. If the FCC wants to give these rules meaning, it has put enough conditions on the license and described prohibited conduct in sufficient detail to enforce them effectively. If the FCC does not want to give the conditions meaning, then it can always just ignore the law and do whatever it wants.

Similarly, I gotta disagree with my friend and fellow PISC-er Art Brodsky when he calls getting wireless Careterfone just on the C Block “a tease.” Like him, I’m disappointed that the FCC didn’t go further. But I really think Martin went as far as he could politically. I prefer to salute him for taking a hefty political risk for going as far as he went rather than chastise him as a wuss and a tease for not going as far as I’d like (and, I believe, as far as the logic of the Order should have carried them). What we got today matters and has (I believe) real impact. And it will ultimately help us get to where we need to go — whether through the Skype Petition or through future legislation or some other rulemaking. Because we have no gotten an admission by the FCC that it is technically feasible to do device attachment rules, and that we can require such conditions even if we consider the wireless market “competitive.”

Now that people have awakened to this issue, I do not believe they will sit passively on their patooties and wait for industry to “get around” to opening things up a smidgen at a time. The Minutemen didn’t win the revolution by stopping the British at of Lexington and Concord or by keeping them off Bunker Hill (alright, Breed’s Hill). This isn’t a “tease.” It’s the spectrum shot heard round the world. Public to government and incumbents, “can you hear us now? Good.”

Stay tuned . . . .

Up Next: Assessing the 700 MHz Order Part III: Why Anonymous Bidding Alone Makes This A Big Win.

Previous: Assessing the 700 MHz Order Part I: Puting Everything In Context.

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3 Comments

  1. Mitch Shapiro says:

    Harold,
    Thanks for this great analysis of the FCC’s 700 MHz order, and for your role in making its gains a reality. If next year begins an extended period of Democratic control of the White House, Congress and FCC, the political will you note as so important seems especially likely to become a reality.

  2. Harold says:

    I can certainly hope! I’d trust Martin to do it, but I expect him to leave in January 2009 no matter who wins. By tradition, the incoming President gets his choice of Chairman.

  3. Tom Coseven says:

    Harold — Great insight! This is a victory that can be built upon. It still isn’t clear whether enough people will recognize the opportunity.

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