Bridge Span 18-8: Behold! The Free Market Works

Yesterday Comcast announced that it is in the market for buying most of the media assets of Twenty-First Century Fox for cash, preparing a bid to best Disney which already made an offer. The media will call this a “bidding war,” but the truth behind the hyperbole is that this is the free market operating as it should. The bidding highlights the robust competitive marketplace in online video.

This healthy level of competition can be seen across the technology and communications industries. Ironically Washington, D.C. seems to want to ignore such obvious evidence most recently with a Senate vote to reverse the FCC on its order to lift restrictions on the internet. That decision followed on the heels of what should have been widely understood as an embarrassing Senate hearing about Facebook. Nevertheless, despite the demonstrated ignorance the Senators involved in questioning during the hearing, the chamber has continued its sophistry asserting that competition is scarce.

But the desire of competitors to acquire Fox’s media assets should make plain at least this fact – that the technology and communications industries are highly competitive and filled with valuable assets, intellectual and otherwise. The daily fight is to bring the best to consumers to justify the value of those assets, or to add complimentary assets to drive even greater value to consumers. The value in this proposed deal is not just in the U.S. but around the world. Many of the assets up for sale are located globally.

That U.S. companies are growing internationally, either organically or through acquisition, typically indicates a strong industry and a strong U.S. economy. That is true in this case. Compare that to when international companies are buying up assets in the U.S., that is typically a signal that our economy is hurting and that the assets are a good buy…for someone else. Importantly, the international operations considered here would allow more effective competition in the robust global landscape by gaining some advantages of scale.

The owners, the shareholders, will have the final say in who can purchase the assets. They should act in their best interests as they are, in fact, the owners of the business, owners of the property that has been built and created in the private sector. The market is working. Sellers are wanting to sell, buyers are lining up with their best offers, the owners will make a decision in the best interest of the shareholders, and the U.S. economy will benefit with consumers winning, both here and around the world.

Bridge Span 18-7: A CRA and the Ghouls of the Senate

For two decades the internet hummed along, creating new opportunities for people, business, and ideas. For all that time, under both Democrat and Republican control, the FCC, following the clear lead of Congress as laid out in the 1996 Communications Act, pursued a light regulatory touch while staying out of the way of progress, innovation and invention. But, unfortunately in 2015, the FCC in the thrall of activists, abruptly changed course acted strictly along party lines and without citing any harm or unsolved challenges, placed the internet under heavy handed government control that went far beyond the principles of net neutrality and imposed the “Open Internet Order.”

This move “reclassified” broadband traffic as a Title II telecommunications service, meaning that broadband providers of all sorts would have to manage their systems, and be beholden, to government technology restrictions literally more than 70 years old. Those rules were created to regulate rotary dial telephones provided by a monopoly. Rarely has a better example of government hyper micro-management of an imagined potential future concern been conceived. Of course, the rules were never about solving a problem, fixing a broken process or protecting consumers. In fact, they placed consumers at risk as the new rules eliminated proven privacy protections for consumers. Instead the heavy-handed regulations were merely about placing one of the most innovative, vibrant sectors of the U.S. economy into the unrelenting grip of government control. Investment plummeted, consumers lost out on new innovations and privacy was placed at greater risk.

Thankfully, in 2017, the FCC moved to strike this approach, restoring the historical free and open internet. Restoring an internet to once again include a light regulatory touch while staying out of the way of progress, innovation and invention.

But now Senate Democrats want to return to those days of ill-conceived heavy-handed control and are willing to take advantage of the severely ill Senator McCain to get their way. Tomorrow, Senator Markey will begin the process of forcing a vote to overturn the light touch FCC rules using the Congressional Review Act. The Congressional Review Act empowers Congress to reverse a recently passed federal regulation and, if successful, the CRA vote blocks any future consideration of the rule so that agencies do not just pass the same rule again batting it back to Congress.

To pass, the CRA only requires 50 votes given Senator McCain’s absence, providing an advantage to those who merely want a political victory. The vote will largely be a piece of Congressional theatre, political kabuki in advance of elections, as the issue is highly unlikely to move forward in the House or receive a signature by the President. This fact makes the timing of the vote all the more unseemly, to exploit Mr. McCain’s medical absence.

Several political types, including some in the Senate, have done the right thing, such as Senator Graham, Joe Biden or Joe Lieberman who all have gone to visit with Mr. McCain as he recovers from recent hospitalization. Senator Chris Coons abstained from a confirmation vote for Mr. Pompeo out of respect to the absence and recovery of Senator McCain, allowing the nominee to move forward. Sadly, others scheme and ghoulishly leverage the brain cancer treatment, surgery and recovery, merely for political one-upmanship.

The end result of this game is only harm to consumers as their privacy protections are again ripped away, a massive decrease in investment and innovation, and one more severe blow to decency in the U.S. Senate. Any one Democrat, or more, could do the right thing. What is that?

There is no doubt that “net neutrality” is an issue that Congress must address. Congress is designed with the intent that it is the institution to project the will of the people. The FCC’s role has no such intent and the FCC no such design. We cannot afford to risk our future of health, communications, transportation, entertainment, work and education to those preferring social experiments above social success. But that said, the right format is a real debate on the subject, not a debate about an arcane procedure to reverse a reversal of a less than thoughtful administrative order.

Those who would show support to Mr. Markey should do so by doing all they can to force the Senate to consider net neutrality legislation during this session. At the same time they should leave the CRA opportunism behind.

Bridge Span 18-6: Your Privacy at Risk When Government Drives Your Car?

The sudden outrage expressed leading up to the Facebook hearings was more than a little surprising. After decades of talk about privacy and that consumers were giving away volumes of information online for very little in return, they suddenly seem to have come to understand that when one makes information “public” on social media or other websites that the information is in fact public. Perhaps the silver lining will be a heightened sense of individual ownership in details about themselves, a turn to good old individual responsibility. But while the country is distracted by the current outrage, other security and privacy challenges lurk nearby as our cars may start reporting on us.

In 1999, the FCC set aside the 5.9 GHz band of spectrum for “Dedicated Short Range Communications (DSRC)” and “Intelligent Transportation Systems (ITS),” a vehicle to vehicle communications system, programs of the Department of Transportation. Despite every advantage being provided nothing resulted over time even, except the wasting of more than $1 billion in taxpayer money. But regardless, in December of 2016, the Obama administration in its very last moments proposed a pricey mandate requiring that that all new cars and trucks have DSRC technology embedded in them. And again, nothing happened. The Transportation Department last said it was still reviewing comments over a year later. Others have indicated a decision was being made at “higher levels” in the new administration as to what to do next. In the meantime, the marketplace has marched on using radar, lidar and cameras.

That block of spectrum cordoned off for this government adventure has become increasingly valuable over the decades. Valuable in terms of money certainly, but more importantly the band had become valuable in terms innovation opportunity. For years, the 5.9 GHz band has been desired to provide additional wireless bandwidth, recognizing that this band of spectrum is what will help consumers get to gigabit wi-fi. The band is very well suited to serving taxpayers directly, by providing them a means of receiving faster mobile broadband now, providing greater speeds for the last 100 feet.

In addition to wasted money and lost opportunity, a very real problem has been one of privacy and security. In the case of these government technologies, the privacy challenges make those for social media look easy.

That the internet was not built with security and privacy as part of its design is a glitch that has haunted the internet industry. So, since the beginning, such features have had to have been “bolted on” to try to provide enough security to consumers that they would feel comfortable using and storing their information via the web. Because the cars would be communicating, DSRC and other vehicle to vehicle technologies raise all of the same privacy and security issues. The DoT record is filled with concerns about hacks, spoofing, phishing and false information that are real obstacles to a fully trusted vehicle communications system.

Placing those same potential vulnerabilities behind the wheel of a car is a poor idea. But, the biggest privacy challenge may come from elsewhere.
Government has been trying to get behind the wheel for years, and that goal is nearer at hand more now than ever. As identified years ago by Kamila Pajer, in TechCentralStation.com, “Many countries are seriously considering introducing surveillance tools and road pricing systems based on Global Positioning System (GPS) and Global System for Mobile Communications (GSM) technology that will trace cars and tax their drivers.” But it gets worse. “If the technology allows,” she wrote, these governments might “even decide where and at what speed the vehicle goes if it allows it to move at all.” Years ago, the National Transportation Safety Board was already requiring that electronic data recorders be included in all new cars made in the U.S., and the DoT was already at work on the ITS and DRSC. These technologies go well beyond GPS and GSM when it comes to tracking cars.

This government created communications technology is being pitched as a means to relieve congestion and improve safety, but it could turn out to be a tool that allows the state or hackers to invade privacy and risk our safety. The application of technology should increase privacy and freedom, not deprive it. Improperly used, the freedom-enhancing benefits of technology can turn into shackles that limit and constrain. The government industrial policy efforts around automated vehicles should end, for the sake of our safety, security and privacy.