Paul Kaputska has the best wrap-up of the 700 MHz press releases and statements online, with comments from major players.  Rick Whitt is polite and welcoming, noting the progress that's been made (who would have thought any move towards unlocking devices from networks was possible?) while saying it would have been better to have included wholesale requirements.

But while even mainstream media was (finally) focusing on the moderate, incremental, and possibly hopelessly unenforceable (and ultimately meaningless) steps taken by the FCC today in announcing its auction rules, something else happened.

The FCC's Office of Engineering and Technology announced initial testing results for a couple of prototype devices that might be used in the television white spaces.  This is important news too, because there's been a lot of hope that (1) part of these white spaces (unused by TV broadcasters) could be made available for unlicensed use by (2) opportunistic devices that would sense when frequencies were in use by television or other signals. 

In fact, the incumbents have often said in the 700 MHz wars that everyone who's anxious to see unlicensed, adventurous uses of spectrum shouldn't worry because they would get that through the white spaces proceeding.

Well, things don't look too good so far for those prototype devices, one of which came in from Microsoft and another from a group made up of Dell, EarthLink, Google, HP, Intel, Microsoft, and Philips Electronics.  (Good overview story here about the Philips prototype.)  The FCC-types don't think the devices are sensitive enough. 

This may be equally serious news - the incumbent telcos will continue to control the wireless carrier market for broadband access, and the incumbent broadcasters will block unlicensed use of spectrum they're not even using, for fear that some old TV won't be able to pick up a signal. 

All of this is enough to make me want to look around for some cheerful news - here's some:  John Wilbanks of ScienceCommons.org is launching the next scientific revolution.  For him, the telco-analogue is the publisher of scientific papers, who locks up facts and science behind copyright agreements and un-parseable PDFs.  But he's making huge progress.  So there.

Just a quick note, because I've been tied up all day with one thing and another - Kim Hart of the Washington Post has a fine article here about the implications of the FCC's meeting tomorrow.

And this entry from Web Pro News, by Jason Lee Miller:

Seen as the last line of defense against the telecommunications industry's desire to keep mobile phone subscribers bound in contracts, using select phones, accessing approved websites, downloading approved applications (sounds familiar to the Net Neutrality worries, doesn't?), Google pledged to bid $4.6 billion on a chunk of the spectrum, but only if all four conditions of openness were met.

This infuriated AT&T, who accused Google of trying to stack the deck in its favor, which is an activity reserved exclusively for AT&T.

Plus this AP story.

I'll be in the middle of a short symposium tomorrow when the Commission meets, so let me know how it goes. 

Someone asked me a question today about Google's new partnership with Sprint. 

Sprint/Nextel is the third largest wireless carrier in the U.S., falling far behind Verizon and AT&T - who together control 51% of the wireless market.  (Sprint services are also resold by Comcast and Time Warner as part of their packages.)

Sprint has announced it won't bid in the 700 MHz auction.  Sprint has other plans.

About a year ago, Sprint announced that it would "invest up to three billion dollars over the next few years in a joint venture with Intel, Motorola, and Samsung in the development of a mobile Worldwide Interoperability for Microwave Access, or WiMAX network."  (From this research paper by Christopher Glaser.)  Sprint has been hard at work on the standard for mobile WiMAX, which is an IEEE 802.16e standard.

Mobile WiMAX is a big deal (if it could work) because it would allow a lot more data to move much more quickly than it does over traditional wireless networks.  It's slower than DSL or cable modem service, but it's mobile and much faster than what our cellphones can offer now.  As the Glaser paper points out, because the waves are shorter there will need to be a lot more base stations put up -- and there are other downsides (you should read his paper).

Sprint bought up (cheaply, I understand) licenses to transmit using spectrum in the 2.5 GHz area -- much higher frequencies, shorter wave-lengths than 700 MHz.  Sprint and Clearwire announced last week that they will they "will link their respective WiMax wireless broadband networks to give subscribers a seamless roaming experience across territories that eventually will cover 300 million U.S. residents. The network will deliver between 2M bps (bits per second) and 4M bps downstream and about half that speed upstream, they said."

The idea is that this would cost about $50 a month.

Here's another advantage to 2.5 GHz - not only do Sprint and Clearwire have big holdings in this area, but I understand that other countries are also looking at 2.5 GHz as the place for WiMAX deployment.  So that means that equipment etc. could work (potentially) worldwide.  That isn't the case with 700 MHz, where only the U.S. is deploying it (so far) for wireless services.  Everyone else is still using 700 MHz for television.

Now Sprint and Google have announced they're working together.  Here's the press-release-speak:

Sprint network bandwidth, location detection and presence capabilities will be matched with Google’s popular communications suite – Google AppsTM – that combines the GmailTM, Google CalendarTM and Google TalkTM services. Customers will be able to experience a new form of interactive communications, high speed Internet browsing, local and location-centric services, and multimedia services including music, video, TV and on-demand products.

So what does this mean?  Google is spreading its bets, and sees global potential in WiMAX.  The standard may not be fully baked, but if it worked you could have a clear alternative to the existing locked-up wireless world in the U.S.  So Google may be throwing its weight behind cable companies and Sprint rather than dealing directly with AT&T and Verizon.

It's obvious that Google isn't conditioning its collaboration with Sprint on complete openness.  The Sprint network won't be sold wholesale - something that Google is clamoring for in the 700 MHz auction.  The Sprint network may not (we can't tell yet) allow any device to use it.  Sprint is saying that it will provide open standard APIs (application programming interfaces) to people who want to create customized products for browsable devices, so that may open up the application world - right now application developers have to pay 40-50% of their revenue to a carrier in order to have their application be usable on phones that are locked to that carrier's network.  Can't really tell, though - it's too early - whether Sprint will ease up on taking a cut.

But there's no guarantee that Sprint will be giving access on a non-prioritized basis to the entire internet. 

Is Google being hypocritical?  Perhaps, on one level.  Openness may go out the window when you have to keep your shareholders in mind.  On another level, Google could say that it's impossible to get at the wireless world using the 700 MHz spectrum because that has been locked up by the existing carriers.  So they're simply trying another route, and the benefits to consumers will far outweigh any niggling concerns about openness. 

Or maybe they just wanted to make sure that the Google phone had a distributor.

Verizon has joined AT&T in favoring the Martin plan.

The summer brawl over the 700 MHz auction does seem to be steaming to a close.  For now, at least.  

It's very likely that the "open device, open application" rules won't be sufficiently clear or enforceable to make a difference.  Remember the 1996 Act?  All those good intentions about making the incumbent telephone companies open up their equipment for use by competitive (non-incumbent) local companies?  Because there was so much litigation over what rates an incumbent could charge for use of its equipment, the interconnection/unbundling regime prescribed by the 1996 Act failed. Meanwhile, competitive local telephone companies went out of business, as did ISPs. 

You can just imagine how much the winner of the national blocks in this 700 MHz auction (who will be Verizon or AT&T) will want to fight over certification standards for devices and differential treatment of applications.  At the same time, they'll be creating enormous path-dependencies for an entire generation of technology.  They'll buy time with lawsuits.

Or, on another front, maybe Frontline will sue (although it's tough to see the business model for doing so).  Frontline had an audacious, solves-all-problems plan.  Maybe they'll join with public safety officials in saying that the Commission's auction rules won't result in the right kind of dedicated network (the kind that Congress wanted), and that therefore the auction is unlawful.

It's frustrating.  Someone said to me today, "Why don't we just have a few days of riots?"  I can't imagine Americans rioting over communications policy, and neither can you.  The Commission wouldn't be moved by riots - neither would the Congress.  Google is right that the "foreclosure value" to the incumbents of these licenses isn't the same as their market value, and so the incumbents will spend whatever it takes to block new entrants. The people who want things to change don't have any levers to pull at the moment. 

But there can always be lawsuits.

Today's links: 

1. Harold Feld, for explaining all the politics behind the 700 MHz endgame.

This is legacy time. History will reward Martin & the Democrats richly for daring something new rather than taking the safe course. By contrast, the safer course may minimize political backlash, but it will also ensure that this proceeding is chiefly remembered as the missed opportunity to create a brighter broadband future.

2. Brough Turner, for unearthing some interesting spectrum policy background.

3. The FCC, for scheduling a meeting next Tuesday at which they'll adopt the 700 MHz rules.

4. Jeremy Denk, for writing the first MadLibs concert review.

I'm at music camp, so I can't produce anything more substantive here.  Someday I'll tell you about music camp in a nicely-turned essay, but right now I'm mostly glad that there's only half a week to go.  Yes, it's fun.  But you can have too much of a good thing.

Because the federal government won't act, the states are taking the lead on global warming issues.

Here's another fascinating federalism question:  if the federal government won't do anything about the various depredations of the telcos, is there a role for the states? States have consumer protection laws and investigative powers.  And sometimes they're willing to take risks that the federal government won't.

I heard this evening that the ACLU of Connecticut, joining up with Connecticut AG Richard Blumenthal, convinced a federal court in California that the Connecticut state Public Utilities Commission had jurisdiction to investigate the NSA spying scandal. 

(Update:  story is here, order is here. Maine, Missouri, New Jersey, and Vermont were also involved.)

The case started more than a year ago, when the ACLU-CT filed a complaint with the state utilities commission, the DPUC, asking that the DPUC investigate AT&T and Verizon's reported disclosure of private calling information of Connecticut customers to the National Security Agency without court orders, warrants or subpoenas. 

The Connecticut DPUC denied motions by the telcos to dismiss the complaint, and said it wanted to go ahead.  (Not all state PUCs have been bold enough to act in this area, by the way.)  The case was consolidated with others in front of San Francisco District Court Judge Vaughn Walker. 

(He's the same judge who said earlier this year that AT&T couldn't credibly argue that investigating the NSA scandal would necessarily reveal "state secrets" that would harm national security.  That decision is on appeal before the Ninth Circuit.  You may remember that the Sixth Circuit recently held that plaintiffs complaining about unwarranted wiretapping by NSA didn't have standing - and couldn't, because of the State Secrets Doctrine.)

I understand that Judge Walker has now agreed with the Connecticut ACLU that the state utilities commission has jurisdiction to investigate.  They want to look into what the telcos who operate in Connecticut did with information about Connecticut customers.  So the standing question that tripped up the Sixth Circuit case won't be a problem.

But then there's still the State Secrets Doctrine.  How would that work here?  According to the Sixth Circuit, there are two ways the doctrine can be applied - (1) as an evidentiary privilege, dictating that if the proof needed for the defendant to defend himself is itself a secret, then the case may have to be dismissed, (2) as a justiciability matter - "If litigation would necessitate admission or disclosure of even the existence of [a state] secret, then the case is non-justiciable and must be dismissed on the pleadings."

Here, the Connecticut state utilities commission just wants answers to some questions:  Did AT&T/Verizon turn over customer data without a subpoena or other form of legal process?  The answer to that question can't possibly be a secret. 

This is big.  It's another route by which to get information before a judge about the relationship between the telcos and national security actors in this country.  The FCC isn't doing anything about CPNI, as far as I know (happy to be corrected), so the states feel they need to act.

Next step:  wouldn't it be great if the state AGs investigated collusion between the regional-duopoly telcos and cablecos in connection with the provision of high-speeed internet access?  What set of tacit agreements may have led to such an absence of competition? 

Rick Whitt of Google has a fine post up today. 

Google's letter of last Friday gives a tremendous shot in the arm to optimism.  Optimism had really been suffering lately, sort of moping around trying to see the bright side of things.  This FCC/Google story won't necessarily have a glowing ending, but it's been nice to have a few days of thinking that change might be possible.  Thanks for that, Rick and Google.

The presidential debate just finished, and according to the NYTimes liveblogging site most of the candidates just look relieved that it's over.  A good day for online video? From the Times:

8:50 p.m.: Cynicism Mr. Obama just offered a good summary of many of the questions in this debate. Almost every question, he said, reflected “cynicism” about the capacity of any of the candidates to change the country.

Who has any capacity to change anything around here?  We've got an enormous digital divide, Paul Krugman points out today that the French have a saner telecommunications policy than we do, and Jeff Jarvis says the debate was a huge disappointment.  We can't even do that right.

Here's a letter from Google that you should read.  It's significant, for at least three reasons:

1.  This is the moment when the internet mindset finally engages with the telecom mindset in a concrete way.  Google's point is that highspeed internet access is just that - access.  Google wants the pipes to be commoditized, to be as open as possible so that, like the internet itself, this transport can make possible all kinds of innovation, economic growth, and creativity.  The pipes, the sidewalks, shouldn't be controlling or monetizing the conversations that we have as we walk along.

2.  Google is not doing this out of sheer goodwill towards humanity.  Google has in mind that this spectrum could be used to create a realtime auction for internet access - with Google running the auction.  You, the user, wouldn't see the auction going on.  Your retail provider of access would be going through a central Google-clearinghouse that would serve as a spot, instant market.  This will use spectrum much more efficiently, yes, but it also puts Google right in the center.  If Google's plan works, this will be the moment when the inefficient market for access, like the inefficient market for advertising and search, will be leveraged by Google.

3.  Google is willing to say it would pay the minimum, reserved price of $4.6 billion for twelve large regional licenses that (packaged together) would create a national license.  This means that Google is actually willing to put its money behind its telecommunications policy goals.  This changes the landscape significantly.

The story in a nutshell:  the FCC is about to create rules for an auction of former-TV spectrum.  Chairman Martin has created a compromise that would provide for devices to work across networks and for applications not to be blocked.  But that's less than half the openness we need - it doesn't require that access be on a wholesale basis.  Wholesale access would create platform-competition in the wireless broadband market, which right now is dominated by Verizon and AT&T and their closed-world approach.  (Not that this 22 MHz block would necessarily be enough for highspeed access - but it would be a big step, and could be leveraged by smart radios and other clever devices that would be able to use "whitespaces" for even faster speed.)  So Google is saying it's willing to pay the minimum price, if and only if the "open access" conditions tied to this license are real.

Very nice article by J.H. Snider about the Art of Spectrum Lobbying -- it turns out that the real game isn't really the license conditions, it's modifying the license conditions after you have the license (which is very hard to follow from the outside).  Someone has to figure out how to tell this story so that mainstream media outlets will write about the scandals in this area.

Great piece from FreePress by S. Derek Turner debunking US broadband myths -- particularly the old canard that we're so far behind because we have so much low-population-density territory.  Baloney!  The report states:  There is absolutely no correlation between a country's population density and its broadband penetration.

Nice BusinessWeek piece by Jennifer Schenker about the French lead in high-speed internet access infrastructure.

And today's terrific post by Harold Feld explaining why AT&T may have decided it was a good idea to support Chairman Martin in this morning's USA TODAY.

It was a hot, muggy, miserable, spitting-rain day today in NYC.  Cabs can't get across Midtown, people are sweating helplessly -- but the web keeps producing great trails to follow.

I was struck by the description of Einstein's later life that Walter Isaacson's new biography provides.  There he is, day after day, year after year, carefully working through ideas that might support a unified field theory of some kind.  According to Isaacson, Einstein often got quite excited about one notion or another, and some newspaper would find out - headlines would trumpet something like "Einstein Solves Riddle of Universe" - and then he'd decide that his latest move was just bunk, worthless, and he'd start in again the next day.  The next year, still more headlines, but no solution.

Even on his deathbed Einstein was playing with equations, hoping that the screen would be ripped back and he'd see through to the essence of everything.

Although Einstein didn't seem to be anguished by this (at least as Isaacson describes him), there is always the possibility of anguish over the enterprise - what if the lifelong obsession  doesn't pay off?  Perhaps he got through it by playing the violin.

===

As promised yesterday, snippets from 1993-94 about the fabulous new world of "personal communications services" opening up as a result of spectrum auctions.  We've ended up with auctions that replicate what happened in the first years of radio - pleasing incumbents - but now we've got a heavily-concentrated marketplace for the key bottleneck of internet access.  Shouldn't the advent of the internet have shifted the focus to improving internet access for everyone?  The New York Times:

“Using the digital electronics of computers, the new "personal communications services" will be capable of sending data, images and perhaps even video to an expanding family of nomadic computing devices -- palm-size computers, electronic notepads and what some people call mutant devices that combine the features of a telephone, computer and pager.” 

*

"We are about to launch a huge industry in the next week," said Scott Schelle, the vice president of American Personal Communications, a small company that is 70 percent owned by the Washington Post Company and has built one of the first experimental personal communications services systems in the United States. "The timing is important because communications, computers and media are converging just as the wireless revolution is coming of age." 

*

Almost every communications company has something to gain or something to fear with the expansion of wireless and next week's new rules. "This will shake the foundations of the entire telecommunications industry," remarked Alfred C. Sikes, who served as the chairman of the F.C.C. under President George Bush and is now the president of Hearst New Media and Technology, a unit of the Hearst Corporation.

*

"An auction is bound to be better than the alternatives" of giving away licenses by lottery or awarding them to the best lobbyists. (former FCC official).

I spent some time over the last few days trying to understand how we got in the position of auctioning off airwaves that have been painfully wrested from the broadcasters (who would rather eat their children than give up on spectrum) to the highest bidder.

The plan is that the auction could net about $15 billion.  That's about what the US spends each month on the Iraq war.  So it's not a lot.

In exchange for this, most pundits are saying the rules floated by Chairman Martin will almost inevitably end up with the current wireless incumbents winning the auction.  That's a big loss on a number of vectors - these auctions began in the Clinton era with the grand hope of a brand new telecommunications sector, full of upstarts and new forms of data transmission that would catapault the US into the future.  (You should read the speeches!  I'll dig some up for you in future posts.)

It's also a big loss for the "public interest" that the auction should, by law, be serving.  Congress has said pretty clearly that the auction is supposed to promote economic opportunity and competition and ensure new and innovative technologies are accessible; to avoid concentration; and to note the interests of small businesses.  None of that will happen if the incumbents win.

The other tradeoff, of course, is the unknown richness of innovation that could be unleashed if we did things differently.  Just look at everything that happened with 802.11 -- all that -- who could have known?

Comparative hearings didn't work, lotteries were a nightmare, and we seem to be lurching towards an auction with deeply political assumptions embedded in the rules. But I'm trying to be optimistic.  There's still time for things to change.  The Carterfone ideas (no locking of devices to networks, no blocking of applications) are just great, and we're all waiting to see how that comes out in actual language.  The public interest can be served in an auction, if the rules are set up the right way.

You should really know about "State of Play V: Building the Global Metaverse."  It's the fifth annual State of Play conference on the future of virtual worlds, organized by New York Law School in conjunction with Trinity University, and with the support of Harvard Law School, Yale Law School, and Nanyang Technological University in Singapore.

The conference will feature experts from around the world talking about:

+ Cross-cultural communication and avatar-to-avatar diplomacy
+ Strategies for understanding behaviors and values of virtual world residents
+ Regulating speech, property, and addiction
+ Building transnational businesses in virtual worlds
+ Using virtual environments to teach students of all ages
+ Space, place, and virtual world cultures

Plus new documentaries.  Plus lots of workshops. You should go.  They'll archive everything, but why not go in person?  :-)

(Thanks to Dan Hunter and Beth Noveck.)

A brawl has erupted at the FCC and in Congress over what rules should apply to an auction of a narrow swath of electromagnetic spectrum. Because the auction is likely to reap $20 billion in revenue for the U.S. Treasury, Congressional interest is high.  All of the players in the current communications industry are involved in the fight, making strong arguments about the conditions under which this spectrum should be licensed.  The size of the spectrum licenses (local, regional, or national?), the business model of the licensee (wholesale or retail?), and the obligations of the licensee to public safety officials (build a network for public safety, or make some services available at a low price?) all are subjects of extensive commentary.

Reports about this 700 MHz auction have prompted a vigorous debate in the press and the blogosphere about the goals and expectations of U.S. communications policy.  Opponents of license conditions typically focus on the revenue to be gathered through the auction, and argue that any limitation on what could be done by licensees will diminish the market value of these licenses.  (Sad rumor about this argument here in a post by Harold Feld suggesting that the Bells are hard at work commissioning a favorable report from OMB that will show that license conditions will depress revenue from the auction.) 

Defenders of license conditions make different arguments.  Many argue that the market for wireless highspeed internet access is highly concentrated, and that license conditions could spark additional competition.  In an editorial, the Los Angeles Times says, for example, that “the point isn’t to raise the most money for the Treasury, it’s to generate the broadest public benefit from these valuable public airwaves. . . The FCC should [ ] require winning bidders to provide wholesale access to their networks.”   Others argue that the most important element of the auction should be to require the winner to build a national public safety network. Still others argue that the auction should be focused on allowing new models of dynamic spectrum allocation to thrive that could also take advantage of unlicensed airwaves elsewhere on the spectrum dial.

The debate over the rules to be applied to the 700 MHz auction is just one example of a broader problem in communications regulation that has been exacerbated by the advent of the internet. 

The problem is this:  What is the "public interest" to be served in regulating communications in the 21st century? Both the FCC and Congress are confronted with multiple demands, including:  (1) Congress’s own budgetary needs, (2) the needs of public safety officials, (3) the demands of existing communications companies, and (4) the demands of companies that would like to be new entrants in the communications industry.  A threshold problem is which of these groups, all of which claim to represent the public interest, should be the beneficiaries of the rules. 

For example, in the case of the 700 MHz auction, should the FCC focus on generating the most auction revenue possible, leaving the resulting questions about competition to the marketplace?  Alternatively, should the FCC support proposals that serve public safety by providing that a licensee must build a free national network for their use, or proposals that serve future innovators who want to manufacture devices for use on wireless networks?

How should the FCC and Congress choose among (or combine) the various "public interest" claims involved in spectrum policy?

The real story of the 700 MHz auction lies in its repetition of the three great themes of radio regulation that have been playing out since the time this regulation began:  protection of incumbents, uneasiness about new technology, and priority of public safety.  Nothing much has changed in the American regulatory landscape since 1912, when hundreds of thousands of amateur radio enthusiasts and other small operators were swept into spectrum Siberia.  The technological landscape has changed dramatically, however.  Over the last ten years, highspeed access to the open internet by general-purpose devices has become increasingly important to the economic and cultural development of people around the globe. This changed technical reality should have more effect on U.S. spectrum policy than it currently does. 

Broadly speaking, regulators should choose spectrum policy actions by weighing (1) the effects on longterm improved internet access created by a specific policy against (2) the short-term incentives of particular incumbents.  A wish to maximize overall improved internet access might encourage the adoption of rules that limited the vertical integration of oligopolist incumbents and mandated open, ubiquitous transport. Such rules would benefit developers, users, companies, and public safety alike. 

Perhaps the "public interest" should be understood to have a temporal aspect as well as a substantive one.  It could be understood to mean "the longterm economic and cultural interest of the greatest number of Americans."

But at the moment the negotiation over the "public interest" is more accurately described as a brawl.

====Summer Friday video link. Medieval tech support - the "making of."  ht: John Firestone.

Assemblage, the box of Joseph Cornell.

Although no one in the wider world seems to have seen a copy of the document, Chairman Martin is known to be circulating draft rules for the 700 MHz auction.   It sounds as if it's a collection of elements with which no one will be fully satisfied. 

To review for a moment:  This auction has been triggered by the statutorily-required release of spectrum by broadcasters (as part of the nation's transition to digital televion).  The Deficit Reduction Act requires the FCC to start this 700 MHz spectrum auction no later than Jan. 28, 2008 and deposit the proceeds of that auction (which may be as much as $20 billion) in the Digital Television Transition and Public Safety Fund by June 30, 2008.  The date by which the DTV transition must be completed is February 17, 2009 (just after the Super Bowl).  Bidders have said they need six months to prepare for the end-of-January auction, so we're running out of time for these auction rules to be released.  (It seems that time is getting so short that someone will ask for more of it.)

This is, people say, the last great auction of spectrum we'll see for a long time.

This chunk of 700 MHz spectrum includes 60 MHz to be auctioned to commercial users and another 24 MHz to be set aside for public safety agencies. Frontline had wanted a nationwide license of 10 MHz of commercial spectrum to be auctioned with 12 MHz of public safety spectrum to add up to a 22 MHz-wide network that would have both public safety and commercial users. Frontline's proposal included other elements that it wanted added to the auction rules, such as ensuring that whoever ran this 10+12 MHz would be required to operate a wholesale network (while being treated as a small business for bidding credit purposes, if the winner was in fact a small business); would be required to build (for free) a network for public safety use; would allow commercial uses of the 22 MHz to be preempted in case of an emergency; would not block the use of any application on the network (with some caveats); and would allow certified devices to attach to its network (without the device manufacturer having to ask specifically for the carrier's permission).

Google, meanwhile, asked the Commission to verify that any wholesaler of access would be allowed to provide for dynamic spectrum auctions among retailers.  Google has also made clear that it is interested in open access conditions being applied to some portion of the auctioned spectrum.

What's in the draft rules?  Again, no one knows except the people who have seen them.  I understand that some of the elements of the Frontline proposal are still in play, in modified form:  the idea of a nationwide license for 10 MHz, and the idea that the winners of the other, regional blocks of spectrum would be obligated to allow certified devices and not block applications. 

Importantly, however, the idea that the winner of the nationwide chunk would be obliged to operate on a wholesale basis seems to have been defeated.  That's a big deal, because some people think this 10 MHz could provide a competitive wireless broadband alternative to the existing incumbents.  (But 10 MHz by itself wouldn't have been enough, even with a wholesale requirement -- you'd need a lot more spectrum to create a real competitive force.  Even the 22 MHz that was proposed by Frontline probably wasn't enough.)

Also importantly, the notion that the winner would have to "use it or lose it" - build an actual network using the spectrum on a geographic basis - is gone. That's a big deal, because the incumbents don't really need this spectrum.  They already have a lot of spectrum. So if Verizon wins this auction, it can just breathe a sigh of relief and build out just enough to satisfy some light population requirements.  The foreclosure value of the spectrum - the value of blocking a potential competitor - may be greater to an incumbent than its actual market value.

And also importantly, whoever wins the 10 MHz national license has to share with public safety.  This is easy for Verizon, but won't support the business model of any new entrant.  Poof.

Interestingly, the word is that anonymous bidding will apply to the commercial parts of this auction.  That's interesting because there's ample evidence that the mere presence of an incumbent (deep pockets, willing to spend anything) in an auction scares away new entrants.

Just three take-aways:

1.  If the rules come out the way predicted, they will protect incumbents against a new nationwide entrant in the wireless broadband access market.  First, it will be very easy to block a new entrant from buying all of the regional licenses they'd need to piece together a nationwide presence.  Second, the absence of a wholesaling requirement will mean that no real competition will emerge.

2.  The no-locking-device and no-blocking-application moves are welcome, but I predict they will end up being so narrowly implemented and so unenforceable as a practical matter that we will end up mired in details - and still years behind Europe.

3.  It's unclear that public safety will get what it wants and needs.

This morning the House Commerce Committee, chaired by Rep. Markey (D-MA), is holding a hearing about a range of wireless issues:  the role of states in providing consumer protection in this market, and the role of Congress and the FCC in protecting innovation.  Markey's focused in particular on early termination fees and portability generally.  He's also concerned that the carriers are exerting too much control over the features and functions of wireless devices.  He's aware that Carterphone broke Ma Bell's stranglehold over devices for the wireline marketplace, and says the FCC could do the same thing for wireless.  Markey urges the FCC to seize the opportunity to require open access for wireless services in the upcoming auction, and welcomes Chairman Martin's suggestion that this may happen for a portion of the auctioned spectrum.

How you see this set of issues turns in part on whether you believe the wireless sector is competitive or not.

The battle lines are clearly drawn here; Rep. Upton (R-MI) says that "innovation" happens when there is enough spectrum available for wireless services, and that we can best enhance consumer choice through the operation of market forces.  He asserts that the wireless market is highly competitive, with four national carriers and many regional players, and that there's no need to emulate policies that have applied in the past to monopolists.  Indeed, from his perspective imposing Carterphone requirements on wireless networks would "punish" current innovative wireless carriers.

The public safety theme is muted in this hearing - Rep. Harman (D-CA) says that her priority is to assure open access, wholesaling, and a national, not regional approach in the 700 MHz auction, so that when the next attack on US soil happens (she says likely this summer), we will be fixing the interoperable communications problem faced by first responders.  And the Verizon witness notes that more flexible phones that work across networks would not necessarily be compliant with new E911 standards requiring access to public safety answering points, disabled-access requirements, GPS, and radio-frequency emission standards.  (This was skillfully done -- require Carterphone, and no one will be able to call for help.)

Even the state-preemption theme gets little play.  Tony Clark of the North Dakota PSC presents very credible testimony that states should continue to have enforcement powers (and the state AGs support him), but no one takes him up on it.

What everyone wants to talk about is competition and Carterphone.  Steven Zipperstein, GC of Verizon Wireless, says his customers aren't asking about being able to bring other devices onto the Verizon network.  (A response could be: consumer expectations are extraordinarily low in this country when it comes to wireless phones.)   Zipperstein also notes that if there's a business plan supporting open access, an entrepreneur will enter the 700MHz auction and carry out that plan voluntarily.

Tim Wu says that we've allowed a spectrum-based oligopoly in wireless to control innovation and the development of new devices, and that the US is not leading the world in this area as a result.  He points out that over 90% of the retail market for new devices is controlled by the four national carriers, and they've successfully imposed a bottleneck -tying the devices to their networks.  He makes the strong point that Americans should see these phones as property that they're not being allowed to use freely.

Philip Verveer, of Willkie, Farr, notes that Part 68 (the certification rules carrying out Carterphone, so that any certified device can attach to wireline) took 10 years to write.  He says the wireless market is vigorously competitive and can't be described as an oligopoly.

Jason Devitt, of Vindigo and Skydeck is outspoken, clear, and heroic.  He's making the point that he's furious that he has to ask for permission to innovate - refrigerators don't have to ask for permission to attach to the electrical grid (beyond certification), cars don't have to ask for permission to use highways, but he has to ask his competitors the carriers permission to introduce a new application on their network.  He has some concrete examples:  the Verizon phone work on GSM networks in Europe, but not the US;  why can't he provide an application that allows a phone to work on all four networks in the US?  Why are ringtones so expensive?  Why won't carriers take any legal risk?

After hearing from the CTIA representative, Chris Murray of Consumers Union takes the floor, and makes some simple points very persuasively.  He thinks we've got tight oligopoly behavior here, because two dominant providers control wireline, broadband isn't competitive, and very few actors can bundle wireless with these other services. He's worried about hefty termination fees, and he notes that preempting state enforcement (where the damages can be paying back these termination fees) will remove a way of policing this kind of behavior.  And he says clearly that applications are being stopped from reaching consumers.  Things are going better in Europe because they don't allow the carriers to carry out this locking-down behavior.

Jason Devitt makes a strong point:  there are very few people dumb and crazy enough to fight the carriers.  Chrmn. Markey: "At least you were crazy enough to come and testify here."

The New York Times reported today that Bill Clinton was reading Drew Westen's The Political Brain this past weekend. I feel so trendy.  I was reading it too. 

Clinton does come off awfully well in this book.  He and FDR are among the few emotionally-intelligent-and-communicating-it Presidents the Democratic party has produced.  Westen's point is that politics is a marketplace of emotions and narratives, not a marketplace of ideas.  He writes persuasively.  It does seem as if the Democrats have been steadily missing all possible boats for decades. 

At one point today I had Political Brain in my hand while a big screen was projecting images in front of me.  On that screen were two images:  President Bush speaking in a folksy way to people about healthcare, and the Oakland airport being evacuated because of a terrorism scare.  The sound was off, and I could see Bush's relaxed shoulders and his easy way of making eye contact.  People were just nodding along with him, smiling benevolently.  Meanwhile, things are not going too well for this country, and airports get evacuated.  He's a guy people would want to have a beer with, but he may be governing (if Cheney isn't doing absolutely everything) with that same gut sense - and it's not working. 

The Democrats don't seem to be able to find that kind of good-guy, emotionally-connected candidate.  Westen's point is that in order to govern (rationally!) the first step is to get elected.  You can't take that first step without emotion.

===Today, Chairman Martin feints towards "open access," in a shrewd political move.  If he can defuse network neutrality advocates by claiming to be giving them something they wanted, without really doing so, that will be quite a trick.  I'll explain the trick tomorrow, along with a report on the "iPhone hearing." 

According to Susan Douglas's "Inventing American Broadcasting, 1899-1922," in 1912 the U.S. had several hundred thousand active amateur radio operators.  These were boys and men who built their own stations, as a hobby - the explosion of amateurism happened because crystal detectors became widely available in 1906. 

They did amazingly ingenious things to replicate the tuning coil, which was covered by a Marconi patent. The amateurs put other items to use:  "[W]hen Quaker Oats began packaging its oatmeal in cylindrical cardboard containers, these tubes became the standard core for the tuning coil."

And they bought components from stores like this one:


At the time, anyone with this kind of inexpensive homemade equipment could transmit and receive signals at whatever frequency they wanted.

The amateurs got swept up in fierce currents of centralization and control, coming from many different directions - big corporations and new institutions of government were arriving on the scene at the same time.  Secretary of Commerce Herbert Hoover took strong action to allocate the airwaves, backed up by Congress, in ways that would essentially protect all the major broadcasters and eliminate new entrants and marginal amateurs.  Listeners were assured that they wouldn't have to buy new receivers that could tune in new stations.

I'm just starting to look into this early, pre-1920s history of radio.  It seems to me that in this summer's 700 MHz auction many of these same historical themes are playing out in much the same way they did in Hoover's era.  So far, I've identified three:

1.  protection of incumbents (rich get richer, sweeping away amateurs and new entrants)
2.  resistance to new technology (now, resistance to software-defined radios and dynamic auctions for use of spectrum)
3.  military preemption (important in Hoover's time as now).

I'm sure there are more. 

Douglas's description of the hero-amateurs, who were "radio" before it meant "broadcasting," is enthralling.  It wasn't inevitable that we turned towards broadcasting in the 1920s, and it isn't inevitable that we reject new entrants providing internet-access-enhancing models today.

David Weinberger has done us all a favor by explaining structural separation in terms everyone can understand -- I hope you will read what he's written here.

Meanwhile, Moscow has two-thirds (600,000) of the fiber connections (about a million) we now have in the entire U.S. (those U.S. connections thanks to Verizon's FiOS program).  John Quarterman asks if it's "Sputnik time."  Steve Levy had a fine piece pointing out that "Americans are paying more to putter around the Net at golf-cart speeds than citizens elsewhere spend to race around the Web in Porsches—often seven to 10 times as much."

But the FTC has issued a report saying that, basically, all things considered, when you look at the situation in a certain way, everything is just fine.  Reaction from Public Knowledge is here.

At this point in our country's history, the strongest metaphor, the most convincing argument, has a hard time getting through and having an effect on policy.  This is a strange, blank-walled time; it will be difficult for Weinberger, Quarterman, Levy, or Public Knowledge to get even a response, much less feel that they're having an impact. 

The only branch of government that can help is Congress - the courts will defer to whatever the FCC does, and the executive branch is delighted to keep the incumbents happy (and very unlikely to show any leadership in any creative direction on this issue).  But without different leadership in place, Congress is completely unlikely to act in a way that will fix our national highspeed internet access problem.

==

Meanwhile, no one can stand up in a federal court and challenge the President's secret and illegal domestic wiretapping program, because the program is secret.  This effectively immunizes the wiretapping scheme from judicial review.

We have standing doctrines for good reasons - they keep courts from wandering into ruling on abstract questions of policy.  But this result subverts the work of the Church Committee.   If the courts, the executive, and Congress can't help, it's time for the fourth branch -- journalists -- to reveal even more of the story.  And by journalists I mean obsessive, passionate bloggers.  Surely there's a leak somewhere.

Harold Feld has pointed out that AT&T hasn't completely rejected the idea of bidding on spectrum whose use is conditioned on compliance with open access rules.

One of the most interesting things about that 10MHz block, if it gets auctioned in the manner Frontline suggests, is that it will be a huge national license.  Google has filed comments saying very interesting things about ensuring that the holder of that huge national license could run dynamic auctions for its use.  This would be like turning the market for spectrum into the market for pay-for-click search -- you run the auction among competitive retail providers of transport, automatically, when they need access. 

It would be quite a thing to see how the Google model actually worked.  It could end up being much more efficient in its use of spectrum than the command/control model we have now.

How much would it be worth to AT&T and Verizon to ensure that this dynamic auction model never gets tried?  Would it be worth bidding for, and winning, this 10MHz even though they already have enough spectrum?  Will they be willing to pay more for this blocking opportunity than the new entrants (whoever they are) are willing to pay to start up their own network provision?

We're all waiting, as Harold says, to see what rules the Commission comes up with.  He notes that AT&T says it hasn't changed its position.  But I think things are looking good for open access -- and good for a blocking manuver on the part of the incumbents. 

Happy Fourth, a day late.

Yesterday, the Ninth Circuit issued its opinion in Perfect 10 v. Visa.  (You may remember the Perfect 10 v. Amazon opinion of a couple of months ago, also from the Ninth Circuit - Eric Goldman wrote about it here.)

Perfect 10 operates a subscription site that “feature[s] tasteful copyrighted images of the world’s most beautiful natural models.”  It sued Google and Amazon claiming that the display of thumbnail images in response to search queries constituted copyright infringement, and it sued Visa and MasterCard for furnishing payment services that forwarded the business of allegedly infringing sites - many of which operate offshore.

Although both of these decisions are facially "good" for these intermediaries -- none of them are found directly liable for copyright infringement, the search engines aren't necessarily secondarily liable for copyright infringement, and the functions of the credit card actors are found to be sufficiently different from those of the search engines that the secondary liability claim as to them is dismissed -- they both have strange and troubling vibrations.  They both suggest that infringement liability can exist everywhere, in every part of the chain of relationships between end-users and infringement, as long as the right kind of "knowledge" exists.

Copyright plaintiffs have long wanted to use intermediaries like search engines and credit card companies as easy-to-pound levers to solve the plaintiffs' perceived online problems.  The actual infringers are small and agile, and may not be reachable by service of process in the U.S.  Plus, you don't make yourself popular by suing grandmothers, and there is always the risk that an innocent, young or old, will be in the pile of end-users that you go after.  So it's a very popular move to go after the big actors providing multiple-use platforms to end-users.  They have money, corporate ties, and physical offices - and when those offices are in the U.S. it's easy to serve them with process.

The Amazon case suggests that a search engine “could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10’s copyrighted works, and failed to take such steps.”  That standard creates quite a cloud for intermediaries.  How much knowledge is required?  A phone call to customer service? A chat session?  How expensive do the fixer-upper measures (taken to "prevent further damage") have to be before they cease to be "simple"?  How much failure is actionable, across what span of time?

The Visa case says that standard is fine for search engines, but tries manfully to distinguish credit card services from search engine facilities.  Judge Kozinski, dissenting, isn't buying the distinctions his colleagues establish:

According to the majority, “Google may materially contribute to infringement by making it fast and easy for third parties to locate and distribute infringing material, whereas Defendants [credit card cos] make it easier for infringement to be profitable, which tends to increase financial incentives to infringe, which in turn tends to increase infringement.” The majority is mistaken; there is no “additional step.” Defendants participate in every credit card sale of pirated images; the images are delivered to the buyer only after defendants approve the transaction and process the payment. This is not just an economic incentive for infringement; it’s an essential step in the infringement process. In any event, I don’t see why it matters whether there is an “additional step.” Materiality turns on how significantly the activity helps infringement, not on whether it’s characterized as one step or two steps removed from it.

The Amazon standard is a swamp, which isn't great news for the internet ecosystem.  Kozinski's reasoning may be persuasive - his point is:  what's the difference between one link in the chain of connection and another?  Who cares when and by whom an unauthorized copy is made?  He sees copyright law as economic policy; we've decided to protect owners of copyright, and that means protecting them against the depredations of everyone involved in the infringement, whether they're duplicating files or just handing over the cash.

Because it's a web out there, and because we've got lots of U.S. actors who depend on protection from liability in order to operate massive free multi-purpose platforms that end-users really like, extending the monopoly of copyright to cover every possible intermediary would bring the system to its knees.  Unlimited liability for intermediaries housed in this country could have the effect of driving a great deal of innovation offshore.
 
These are just vibrations - the opinions both go mostly in the "right" direction.  But other shoes, in other circuits, can always drop.

==update:  report that a Belgian court has ruled that an ISP must stop file-sharing on its network.  Thanks to Dirk van der Woude. 

"This is an extremely significant ruling which bears out exactly what we have been saying for the last two years - that the internet's gatekeepers, the ISPs, have a responsibility to help control copyright-infringing traffic on their networks," IFPI Chairman and CEO John Kennedy said.

"The court has confirmed that the ISPs have both a legal responsibility and the technical means to tackle piracy. This is a decision that we hope will set the mould for government policy and for courts in other countries in Europe and around the world," he added.

We're reaching the thousandth post here, soon - not now, but soon.  So it was refreshing this evening to hear from a treasured relative of mine, a woman about my age, who said, "You have a blog?  Why?"  Seemed like a moment to reflect. (Hi, Linda!)

"Blog" is one of the most disliked words these days.  It's up there with "netiquette" and "wiki".  Something about
those words makes people wince. 

Bad news first: Technorati says there are 175,000 new blogs each day. Over 18 updates a second  -- 1.6 million posts per day.

Good news for those of you who really don't want to hear about this: Hugh McLeod says blogs have peaked.  They’re on the downswing because it's hard to have a blog. And who wants to be a little broadcaster?  What people really want to do is get together with their friends.  So look at this list:  QQ in China has 160 million subscribers, 183 million people are on MySpace. More than 96% of 20-somethings in Korea spend time in Cyworld.

I'm new to Facebook, and I'm feeling "old media" for remaining fond of blogs.  I run through many blogs on most days, seeing what people are writing about.

Recently, I caught a glimpse of a candidate for public office, on television, posing with his ballot half-in, half-out of the box.  Fifty cameras flashed as part of that televised image, clattering fiercely.  What a waste!  I thought.  Why do all those physical pictures have to be taken, all of the same scene?  All that equipment!  Couldn't that be done better online with a single shared digital file? 

But then, of course, that's the great thing about these much-maligned blogs - they give a thousand word-pictures of the same event.  Are shards worthwhile?  Maybe so - maybe if that candidate, viewed from another direction, was doing something quite different, we'd want to know.  And if we only had one image we wouldn't have had the full story. 

When I went to law school, I had the sense that we all pretty much knew what the role of lawyers was.  This view was such an essential part of the legal landscape that we took it for granted, much as we take for granted the idea that there is such a thing as an identifiable moment in time or a persistent "identity" for any given person.

Lawyers were skilled advocates standing in the well of a court (literally, inside the bar).  Lawyers were capable of looking up regulations and understanding them deeply, so that they could give advice on the details of a rule.  Lawyers were counselors, framing transactions in light of the facts in the past and the legal risks involved.  We were also told, my very first week in law school, that we were "off the treadmill."  We didn't know exactly what that meant, but it sounded good.  We weren't going to be doing menial tasks, even while we were busy (presumably) looking things up.

At that time, the universal rules of American lawyers seemed fixed.  Constant, understandable.  We were going to be hardworking, we were going to follow the rules, and we were going to have an "off the treadmill" life.  This Newtonian view made sense to me.  Wisdom would come in time, as it had come to all of the generations before us.  (Most importantly, from my perspective, I would be able to support myself.  But that's not what this little post is about.)

Things have changed.

In the electronic world we now inhabit, most lawyers rarely argue before courts; anyone can look up a rule; and deals get done by the lawyers who have done exactly that type of deal before and can pull it off for the lowest price.  We my be finding (like Einstein) that many of the classical assumptions we started off with don't work in a world that is very different from the one in which those assumptions were born and grew up.  This is disturbing.  It's just as disturbing as the notion that time depends on the observer, and the idea that each of our identities changes in light of our life experience and the influence of the minds of the people around us.  But it could free us up to be different kinds of lawyers.

In Investigations, Stuart Kauffman tells the story of a squirrel who leaps from a tree to escape a predator and is amazed to find she can fly - those ugly folds of skin under her arms, which had led to her exclusion from the clan, turned out to be extraordinarily useful.  Here's the idea:  lawyers have pre-adaptations (Kauffman calls them "exaptations") that are very useful for the new physics of lawyering. 

One exaptation lawyers have is the ability to tell stories and to analogize using concrete real-life events.  We're also a very visual bunch, and we can see what's important from a stream of information - we're great at patterns.  Lawyers' neuroplasticity is their great value-add - they learn how to learn.  Now the key may be to be able to structure visual online planning resources of various kinds (to avoid liability, to provide inexpensive tools for avoiding disputes, to visualize risk) that embody advice without the lawyer actually having to be there in the flesh.  We'll have to use our exaptations to build great planning/advice-giving platforms.  This takes awareness of the new physics:  the importance of peripheral vision, the role of visualization generally, and the centrality of design and algorithm.

Nothing ever goes away.  Law firms aren't going to disappear in my lifetime.  But it does seem to me that lawyers will have to evolve to deal with a system that is vastly different from what was in place just twenty years ago.  Everyone has access to all the information, so lawyers can't charge for looking things up.  They can only stay "off the treadmill" if they let go of the idea that they have some omniscient brooding right to charge for the kinds of tasks they used to do.  Like newspapers, movie studios, telephone companies, and post offices, lawyers will have to adapt to the new physics of the internet.