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The Great Debate Over Telecommunications Competition and Regulation - Episode 476 of the Community Broadband Bits Podcast
On this episode of the Community Broadband Bits podcast, host Christopher Mitchell is joined by occasional guest host Sean Gonsalves, ILSR’s Senior Reporter, Editor, and Researcher to take a hard look at our philosophies around competition and telecommunications regulation.
Sean briefly recaps a recent update by ILSR Researcher and Writer Jericho Casper on preemption developments over the last year. While both Arkansas and the state of Washington regulators opened up opportunities for public entities to get into the broadband market, Ohio treaded dangerously close to squashing competition. Chris and Sean plug the recent GIS position that opened up on our team.
The two get down to the nitty gritty reality of competition in telecommunications, that it tends to be more of the exception than the rule in a market that has historically dominated by monopoly power. They discuss how regulation capable of overcoming this dynamic will be the most impactful locally and not in Washington, D.C.
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Listen to other episodes here or view all episodes in our index. See other podcasts from the Institute for Local Self-Reliance here.
Thanks to Arne Huseby for the music. The song is Warm Duck Shuffle and is licensed under a Creative Commons Attribution (3.0) license.
Sean Gonsalves: I got to say, one signal for me that Title II is the way to go is because there seems to be nothing that strikes fear in the heart of the broadband industry than Title II.
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits Podcast. It's Christopher Mitchell here at the Institute for Local Self-Reliance in Saint Paul, Minnesota. Today we're once again with Sean Gonsalves who is our on the Community Broadband Networks team. He is our senior reporter and editor, and now communications team lead. Welcome to the show, Sean.
Sean Gonsalves: All right. Glad to be back. Honestly, I'm glad to see you back in the saddle. We tried our best to hold it down for a couple of shows.
Christopher Mitchell: I enjoyed them. I think you guys did a good job.
Sean Gonsalves: It was fun. It was fun. We didn't get as much fan mail as I explicitly asked for.
Christopher Mitchell: We're not going to use the word beg.
Sean Gonsalves: Yeah.
Christopher Mitchell: You know, I got to say that 475 episodes about that we're in now. Sometimes it's hard to figure out what to do a little bit differently and things like that. I really appreciate you all stepping up so I wasn't trying to force a couple of extra shows in there where I just wasn't sure who to have on and things like that because we want to keep telling interesting stories. There's tons of folks out there with interesting stories, but we want to keep up in the game and sometimes I just don't have the time to really cultivate a good show.
Sean Gonsalves: A lot of episodes under your belt. It's nice to take a break from time to time. I'm certainly willing participant.
Christopher Mitchell: One of the things I did, I went to the Black Hills of South Dakota. Man, they're pretty, they're awesome and highly recommended.
Sean Gonsalves: Does it actually get warm this time of year in South Dakota?
Christopher Mitchell: Yeah. Oh yeah. It was plenty warm for me and the nights were in the 50s, which was perfect. I guess I always want to tell people, it gets really beautiful out there. You should go check it out. One of the best things about it is that a lot of people don't go check it out. It's nice to escape. We're going to talk about some interesting stuff today. We're going to do a rundown of a couple of different stories that have been percolating around the Muni Networks, at our website. But then, Sean, you're going to grill me. I asked you to come on and to give me a hard time about what's going to be going on in terms of antitrust around broadband and things like that. Why ILSR, here at the Institute for Local Self-Reliance, why we think the way we do about certain things. I think you tend to agree with us so it's kind of a hard assignment, but I appreciate you stepping up to it.
Sean Gonsalves: For sure. I enjoy it. When I was young, a lot of the elders in my family called me Philadelphian lawyer. I'm going to try to harken back to my elementary school days and do my best.
Christopher Mitchell: What's the Philadelphia reference?
Sean Gonsalves: You know what, I did ask a great aunt of mine, "What do you mean Philadelphian lawyer?" She said, "Well, if I said the sky was blue and you said it was red, you would argue with me for three hours. At the end of three hours, everybody in the room would be like, yeah, you got a point. Maybe it is red."
Christopher Mitchell: I grew up not far from Philadelphia. I'm used to people ragging on Philly for us being like horrible fans and things like that of sports teams. I just hadn't heard the lawyer thing before.
Sean Gonsalves: Yeah. Me either. You know what, it's probably, I've never done some kind of linguistic study or word origin. It's probably some pejorative term probably, but I think it was just the point of making that I like to debate and I like to be devil's advocate and I like to grill people. I think that's what that meant.
Christopher Mitchell: All right. We're going to get to that in a second. What are we going to talk about first?
Sean Gonsalves: Actually, one of the interesting stories this week I think is the story that Jericho Casper wrote on preemption. It's an important story. It's something that we track over the years. There's been some interesting movement over the past year, in the first half of 2021 in a couple of states.
Christopher Mitchell: I think we have talked about it a little bit, but one of the things that I've found is that it can be really useful to repeat ourselves because for some reason, people don't listen to every last word of every last podcast and read every last post. For people who are familiar, this is considered as a refreshing of the memory. We're not going to take too long with it. But yeah, we had two huge developments this year. You want to just go over them in brief?
Sean Gonsalves: Believe it or not, for folks who aren't necessarily familiar, there are actually a number of states that have these legal barriers to municipal broadband networks or municipalities building and operating their own locally owned Internet access networks. That number had been 19, 19 states that had some form of barrier or outright bans. We saw it drop down by two, 19 down to 17 by our count. That's because Arkansas and the state of Washington both rolled back significantly the barriers to municipal broadband. In Washington, they essentially allowed the public entities such as public utility districts to get into the retail side of broadband. They had been able to offer wholesale service but not retail service.
Sean Gonsalves: In Arkansas, they essentially rolled back the barriers for municipalities to pursue municipal broadband solutions. The thing that I find most interesting about Arkansas is that it is a state legislature that is dominated by Republicans, and that was a unanimous vote to roll back those restrictions. Where on the federal level earlier in the year, you saw congressional Republicans introduce some bills that would've done the exact opposite and made it much more widespread across the country. It's an interesting I think kind of juxtaposition where you've got that nuance, and that you can't say that this is just totally partisan where it's the Republicans who are opposed to local Internet choice and Democrats who are in favor, it's a mixed bag.
Sean Gonsalves: Arkansas is an interesting example of that. Anyway, and then also of course this year, we almost added one because Ohio, with their last minute anonymous senate amendment that would've banned municipal networks in the state of Ohio. Whoever it was that proposed that in the budget never raised their hand. In fact, because of the public outcry, including from the Republican governor and Lieutenant governor, that budget amendment went down in flames. Ohio did not join the list of states that have municipal broadband bans.
Christopher Mitchell: That's right. But I hear through the grapevine that Ohio may be coming back to revisit that. I don't know if that's still going to be in a special session that would come up or if it'll just be in the 2022 session. From what I hear, Ohio isn't done flirting with the idea of that. Also, Ohio did put 250 million dollars into a state broadband program. That money is only available to, I believe the private sector. We learned Ry found out that Hawaii also created a broadband subsidy program and does not allow public entities to apply for that. That's just frustrating. I mean, we see that in Michigan, Virginia, North Carolina, Tennessee, a bunch of places are doing this where they're only offering subsidies to the companies that have refused to invest in the areas and they just make it harder for communities to solve their own problems.
Christopher Mitchell: It's crazy because you would think they would say, we so value taxpayer dollars, we want to be so careful with taxpayer dollars. We're going to make sure that we put this money into the entity that will do the best job, but instead it's not. It's this sense of, we're going to do this company Time Warner Cable. How old am I? Charter Spectrum, very powerful in Ohio. They're the ones setting this argument out and they're the ones pushing for it. It's frustrating that we see that sort of stuff and it's a poor use of taxpayer dollars when you're going to subsidize, use more money to subsidize a solution that is going to be less good for people in businesses in that area. It's foolish.
Sean Gonsalves: Right. It's frustrating but not surprising. I mean, especially considering that there's sort of inherent ideological advantage that that argument has in the sense that there's this idea out there that's very deeply embedded in a large segment of the population that governments shouldn't be in business whatsoever and that private business will solve everything as it relates to the market. And so they have that sort of advantage of just basically relying on that faith that many people have, that the market will magically solve this problem. In many instances, that may be the case, but certainly in broadband, we've got a failed and broken market. It's stunning that there are folks out there that think somehow business as usual is going to solve these connectivity challenges.
Christopher Mitchell: There's millions of people who have been waiting for 20 years for decent Internet access. There's people out there who are saying, oh, well, you shouldn't do anything with the government because maybe the private sector will solve it eventually. Well, it's crazy thinking. What else do we have going on? We have one other thing I think we're going to talk about. Actually, there's something I didn't put on the list that I wanted to note. Washington always reminds me, because there's such a vibrant movement in Washington now to figure out what to do with this new authority. In Arkansas, there's a bunch of cities who are talking about it as well. But in Washington, there's a real activist movement trying to figure out what can they do. One of the things our colleague Doz will be doing is, and there'll be an announcement about this soon on muninetworks.org, but we have started email lists.
Christopher Mitchell: There's two email lists that'll be national in scope, one of which will be focused on more like announcements and just the occasional breaking news or something like that. It's meant to be low traffic and just easy for people that want to make sure they don't miss big deals. The other one is more discussion, but we also want to keep that moderated and very reasonable. That one would be more about exchanging strategies as like activists in Seattle might be sharing ideas that folks might use in other parts of the country. We may have some guided discussions in there to talk about different strategies, but our goal is to make sure people are in communication with each other. That's something that Doz, our outreach coordinator will be looking into. We already have the list set up on groups.io. Now we just got to get folks aware of them.
Sean Gonsalves: Certainly a worthwhile effort, you know, that networking and sharing lessons learned and strategies and so forth are crucial. Because as you've pointed out many times, this is not a space where we've got a Sierra Club level of organization sharing best practices and lobbying and all these kinds of things.
Christopher Mitchell: Hundreds of activists in every state.
Sean Gonsalves: Yeah, exactly. These are important efforts I think. Something else we should probably also mention sort of, yeah, it is on the website but we should make mention of it. Do you think there are any GIS or data visualization specialists out there listening to our program?
Christopher Mitchell: Or people who know advanced GIS and data visualization. Michelle is departing our team for an exciting opportunity. We're hiring. This is something that is pretty advanced. We're not just looking for someone who's come out of undergrad with a GIS degree, but someone that has experience doing a lot of tying data sets together that may be a little bit challenging. A lot of exciting work to be done in that space. This is a job that can be done anywhere in the U.S. Although, people living in low cost of living places, you may encourage them to apply most cause-
Sean Gonsalves: Are there any of those left?
Christopher Mitchell: I mean, trying to pay a guy in Cape Cod is harder than trying to pay a guy in the Black Hills of South Dakota. I'll tell you that.
Sean Gonsalves: True. True.
Christopher Mitchell: Frankly, the Black Hills have better Internet access than you do, Sean.
Sean Gonsalves: Oh God, don't get me started. It's one of the things that I find fascinating and sometimes personally frustrating, writing about these different municipal networks and you're seeing things like what? People are getting a symmetrical gig for 50 bucks a month?
Christopher Mitchell: Oh, so the podcast that recently came out, probably because we're recording this and it hasn't been released yet, but I think this show will come out right after that one. We just talked about a guy who's building this 10 gig network. Well, a group of people in Los Altos Hills in California. $150 for 10 gig network. It's remarkable what's out there, because I mean, 10 gig is available in many municipal cities but it's often 300 bucks. I mean, you have to pay like 500 bucks for a router that will handle that as it is. It's not a low cost proposition, but it's remarkable what's being done out there.
Sean Gonsalves: It really is. It really is. It's enough to make somebody like me living in a place where you're stuck with one provider who's charging a ridiculous amount very jealous.
Christopher Mitchell: Yes.
Sean Gonsalves: To the point where I've even thought about relocating.
Christopher Mitchell: At least you have a super high reliability. Right? That's what you got out there. Right? It never goes down or anything.
Sean Gonsalves: Oh yeah. Right. It might go down while we're doing this.
Christopher Mitchell: All right. How should we phrase this? How are you going to grill me today? What am I being grilled on?
Sean Gonsalves: I see it as being a grilling about the wisdom or lack thereof of broadband regulation.
Christopher Mitchell: Yeah. We got two paths ahead of us. Right? Which path are we going to take? Can we call people are going down one path dumb?
Sean Gonsalves: Exactly. Exactly. Let's say what those two paths are. There's the regulatory path and then there's what, the pro competition path?
Christopher Mitchell: Yeah. I mean, you might think of it as the break them up path or the fantasy path. But yeah, you have one which is the idea of like, let's have really strong regulators. The other is, let's not allow any one entity to get too big and have too much market share.
Sean Gonsalves: Right. I think what I'd like to grill you on is I'd like for you to make the case why the pro competition path, the one that encourages competitive markets is preferable and the path that we should be more focused on versus the regulatory path, which has all kinds of complexities and hurdles involved but nevertheless is a tool in the toolbox. I guess I'm going to be on the, why aren't we going regulation crazy side of things?
Christopher Mitchell: Yeah. Let me say that and preface this. I don't think people are crazy for choosing a different path than we do at the Institute for Local Self-Reliance. I think both paths are very difficult, both paths have a lot of points at which we can fail, and so it's worth taking that seriously. It's a long term discussion, right? I mean, it's fascinating to go back and learn more about the progressive era for someone who, you know, many of us barely learned about it in high school. Maybe we learned about it a little bit in college. When you go back and you have this sense a hundred years ago from the titans of the era that they could solve all these problems. And that frankly, you just need to have these massive hierarchical organizations around smart people that would make everything easy and everything would be great.
Christopher Mitchell: We collapse time and space, and as long as government didn't get in the way and those inefficient small companies didn't get in the way, these massive corporations would build these cool cars and everything else. I think down that path, it's seductive in some ways, because there are really smart people and some of these corporations can really do pretty incredible things, but it's also a path of corruption. It's a path of an aristocracy in which I feel like the people at the top just end up cementing themselves in and no matter how many bad decisions they make, they will never not be in the top. That's where I feel like, and frankly, some people might even think of that as being more elegant in some ways, because it's not messy. Like the path we want to go down for competition, it can be messy. Right?
Christopher Mitchell: Some communities might not get much competition. Some communities will have interesting companies that then fail or get bought out by someone else. Like it's going to be dynamic. I'm sort of waxing on and on here. Go ahead and cut me off.
Sean Gonsalves: Yeah. No, no, no. I want to tee up the fact that, here's what I think about when I think about regulation is that first of all, my understanding of the history of telecommunication in America is really one of monopoly power where competition is the exception. It's not as if there's like this long, wonderful history of competition and we're in this tiny period where monopoly power has suddenly presented itself. Particularly as it relates to telecommunication, monopoly power has been the rule, not the exception.
Christopher Mitchell: Right. I mean, there's this argument, right? Which it comes out of electricity more but it's the analogs to telecom are so strong. It's not just competition. It's ruinous competition, Sean. That's a term of art that comes back from the electric monopolies, because in the early days of electricity, you had all these companies stringing up all these wires and that's super dangerous. I mean, these are lines that actually, they're not fiber optic lines where if they get cut big deal. These are lines that carry electricity and zap you and children and were real dangerous. It was ugly and it was a mess. There was a sense of we can establish order by just having one entity. It is true that in telecom, as with electricity, as in many things frankly, it is cheaper and more efficient depending on how you want to use definitions of efficient, to have one well organized company that is well regulated, heavily regulated that just does everything.
Christopher Mitchell: You have one set of wires. You don't have extra sets of bucket trucks. It reminds me of this, people talk about in the Pacific Northwest, you're on a highway and you see two trucks carrying logs going the opposite direction. You're like, that seems inefficient, right? I mean, the same logs, where are they going? Can't they better coordinate? It is true that if you had one set and that's just going to do it, they're going to do a great job. Like there's a regulator who's going to make sure they weren't cheating people, that could be really attractive. We did that with electricity, right? We did that with AT&T for all those years. You can go back and study their court cases and the frustrations people have.
Christopher Mitchell: Because the thing is the problem is always people. The issue is that whether it's good faith or not, they start making decisions that are better for themselves than for the customers or the businesses that are dependent on the telecommunications. In electricity, we've had a hundred years of this regulation more or less and less, but I don't know what day is it? What we see is, I mean, Ohio, let's come back to Ohio, right? You have the electric companies that are regulated bribing the elected officials in the state legislature to give them billions of dollars. I mean, the favors. We saw this in South Carolina where there wasn't even bribes necessarily but the regulators just do a terrible job. Because understand that if you're a regulator of one of these industries, you only ever hear from the companies you're regulating from. Right?
Sean Gonsalves: Right.
Christopher Mitchell: You don't go to the grocery store and people are patting you on the back and being like, hey, thanks for keeping my electricity prices low, or, hey, we had that big storm and the power never went out. You're doing a great job. We appreciate that. Right. Nobody notices that.
Sean Gonsalves: They call that regulatory capture.
Christopher Mitchell: Right. Which is I feel like usually people have an edge to them. It's like those regulators are bad people who are just personally ambitious. Well, yeah. But the things that you know as a regulator, it's not like you're going to go out and Apple is going to hire you. You're not going to go and suddenly code for Google or for a really exciting entrepreneurial startup or something like that. The stuff that you learn is relevant for a small number of jobs, and most of those are going to be working for the companies that you're regulating today. You start to see the world in the way that the companies do, because there's no incentive for you to see the world in a different way generally.
Christopher Mitchell: Now states like California and New York, they have systems in which there's money available for the public sector and public organizations to weigh in on these. And that helps, but it's still not good enough. The regulators just aren't that good. Then on top of that, the last thing I'll say about that is that when you have companies the size of Comcast, it's not even clear to me that a federal regulator can do that, can really discipline them because Comcast has so much power. When Comcast wanted to merge with, who was it? One of the mergers that went through, I think it was NBC.
Sean Gonsalves: DirecTV?
Christopher Mitchell: No, no, I think it was NBC Universal. That was AT&T and DirecTV. Susan Crawford talks about this in one of her books, Comcast hired every last lobbying firm in D.C. and law firm that was available that had any real opportunity to be a threat so that they would have a conflict of interest and not be able to take on clients to oppose the Comcast merger. Regulators can't deal with in that world. There's too much private power.
Sean Gonsalves: Okay. These are all good points, but let me push you on this. Just because we've got imperfect regulators and you've got these problems with regulatory capture and so on and so forth, I don't think it's the same thing as saying that we shouldn't have regulation.
Christopher Mitchell: Oh, I'm not saying we shouldn't have regulation. Yeah. No.
Sean Gonsalves: Okay. Good.
Christopher Mitchell: No, and we should. I do think it should be close to the light touch than heavy touch if I'm going to adopt the industry's terms.
Sean Gonsalves: I would also further make the case that a big reason why we need to regulate particularly telecommunication in the broadband space is that communication services are unique. You can't look at them solely in economic terms like speech and information are not commodities like Air Force 1s or peanuts or-
Christopher Mitchell: Pretty sure, Air Force 1 is not a commodity, but I take your point.
Sean Gonsalves: You know what I mean? They're not just these products. It's about, oh, wouldn't it be nice if... There's something fundamental about.
Christopher Mitchell: Yeah, because I'm old, I'll often say they're not iPods. No one knows what an iPod is anymore.
Sean Gonsalves: That's right. That's right. They're not iPods or Walkman.
Christopher Mitchell: Right. Even better. Although the Discman was far preferable, shorter lived.
Sean Gonsalves: Then also, there's this issue where I feel like focusing on cultivating competition is obviously important. It's something that we advocate for and is really important. But it takes so long to foster competitive markets. It's like, what do you do in the meantime?
Christopher Mitchell: And they can die so quickly.
Sean Gonsalves: Exactly.
Christopher Mitchell: Let me argue against myself for a second. Because one of the people who has contributed to our work and is like someone that I think is a good thinker on this, Fred Pilot from El Dorado county. He is constantly attacking, challenging, let's say me, in saying that anytime I talk about a market, it's foolish. It's not even possible to have a market in many of these cases. Do we really want 10 different physical wired networks to choose from. I think that's a good argument. I would say, no, not 10. My vision is more like at least one wholesale network that's available that solves that issue. I mean, there's places in which it's unreasonable to think that, there's places in which we haven't gotten a single high quality network out to like, are we really going to build three there? No, probably not.
Sean Gonsalves: You're very pragmatic. I like the practicality in the way that you approach things. Seriously. It's an important quality to have, especially in this space. One of the things that, just in thinking about this discussion, I was particularly impressed with a book that you recommended I read. Tim Wu's book, The Master Switch. In that last chapter in particular, the Separations Principle. One of the things that he says in there, he says, "Schemes designed to seed or foster competition, or, more dangerous still, new entitlements that are meant to be pro-competitive do little to restrain the monopolist while creating new ways for it to destroy its challengers." In that chapter he talks about how our political system was theoretically designed to prevent abuses of public power.
Sean Gonsalves: But we really haven't done much about applying that separations principle as it relates to private economic power. He talks about some of the tenets that he sees of applying that separations principle to particularly telecommunications. One of the things he says is that, as a general rule, governments do better with negative rules, thou shall nots.
Christopher Mitchell: Simple, simple rules too.
Sean Gonsalves: Simple rules. To your point earlier about the regulatory capture is that another tenets of that separation is that antitrust enforcers really have to adopt structural remedies as opposed to behavioral remedies.
Christopher Mitchell: Yes.
Sean Gonsalves: Do you want to respond to that?
Christopher Mitchell: Yeah. No, I think that's 100% accurate. What it comes down to is if there's a rule that requires three lawyers working tons of over time in order to figure out how to enforce it, it's not going to work. Because you and I, you've been in this space now for a year. It takes so much to be able to comment intelligently on this as we try to do. We engage in a minority of dockets and things like that, where these rules are discussed and things like that. The intricacies of this. Every time you're dealing with those intricacies, we're playing a monopolist turf where they have the power to argue about these rules and how they're enforced. Because there's only so much attention, whether it's public interest groups or the public itself has in this.
Christopher Mitchell: And so simple rules like thou shall not, like you shall not acquire a competitor in a market under these conditions, which already is starting to get more complicated, right? Like under what conditions. But saying like you can't have more than 30% of a share of this market and things like that, it's easier to tell. We've talked a lot about broadband subsidies going to the satellite providers. It gets down to this issue of, well, we all know that satellite can't provide decent telephone service. But for it to be a rule, it's like, oh, well, we have this test that we use. Under these testing conditions, does it achieve this score or not? Then you're like playing with it and whether or not it sort of barely fits it, when in fact we all know it doesn't work well. Like you can just play with these rules behind the scenes and no one notices.
Christopher Mitchell: When you have those complicated rules, it's just ripe for being abused. That's where the regulatory side falls down I think. That's where the elegance is in making sure that if a person is being abused by a company, they have another choice. Maybe that choice is switching to another provider. Maybe that choice is going with a provider where if that provider screws them, they can vote to change the board. Whether that's a co-op or a municipality where they have a direct opportunity to speak out on it. Because we see two systems, right? I'll go back to electricity now, for 70 years, we've had these co-ops, hundreds, like 800 electric co-ops. If you compare their service and their customer satisfaction to the ones that are regulated by the public interest, there's a huge difference.
Christopher Mitchell: It's very clear that even though the co-op board is an imperfect way of structuring this stuff, it works so much better than the regulator having that local interest. I guess I would say that if we were to go a route where we would rely primarily on regulators, they shouldn't be in D.C. The simple fact is the farther away from the people you get, the more corrupt it is, the less people lose a sense of what's important. Let me just say one last thing because I could just keep going on and on, but that's like, the companies will then be like, "Oh, you want us to operate under a patchwork of conditions?" "Yeah. I want you to operate under a patchwork of conditions." Company A and company B, one is in Illinois, one is in Indiana, right.
Christopher Mitchell: They operate under different conditions. If you want to compete with both of them, then you have to compete by the local rules. It's not too much to ask. Then it actually is, it provides a little bit more fairness in the marketplace actually because you don't have one company that's able to get easier rules to comply with simply because they're bigger and they have better lobbyists.
Sean Gonsalves: Yeah. Now speaking of bigger and lobbyist and specifically as it relates to telecommunication and broadband, why not regulate the broadband industry under Title II of the Communications Act?
Christopher Mitchell: Oh, we should. Absolutely. Let's be clear, because for people who don't follow this closely, this is a big debate for the past eight years or so. There were people who said that if we didn't use Title II, which is to say the FCC. A quick history lesson or civics lesson, the FCC is a part of the executive branch. Congress basically says to the executive branch, put into this bucket and that bucket. And so Congress gave the FCC these buckets, one in Title I is information services, which is a variety of things that really didn't want the FCC to have a whole lot of power over. Just sort of let things develop as they would. Title II is telephone services, telecommunication services.
Christopher Mitchell: These are things that we wanted to have much tighter regulation on, including rate control and requirement to share the lines under different circumstances and things like that. In order to heavily regulate broadband, which is currently considered a Title I service and has been for a while, you would actually have to make it a Title II service. The FCC has to go through a process involving public input to say, we officially are deciding that broadband is now a Title II service. They did that under Obama. That gives them much greater power.
Sean Gonsalves: They did it under Obama only as it related to net neutrality.
Christopher Mitchell: Right. Well, that was the big issue, but that meant that broadband is under Title II. If they had decided to, in theory, they could have actually engaged in rate regulation and requirements for Comcast to share their broadband network and things like that. But they said that they would not do that. I think that was the right choice. Although, a lot of people would disagree with me on that. The people I respect. I actually, I do think that broadband is absolutely Title II, which is to say that the FCC should have a lot of power over it under our current regulatory scheme. I could certainly imagine better regulatory schemes, although I don't really trust congress or our public processes right now to develop them.
Christopher Mitchell: In the world of options that we have today, I think having broadband be Title II makes a lot of sense. But I don't think the FCC should go totally into regulating it in the way that they would, they have done for telephone services and things like that because it's a little bit different. One of the things that I would say is different is that we want, I think we want to live in a world with overlapping broadband networks, right? Like I want to have in my home, I would like to have a choice of wired providers. I'd also like to have a series of wireless options like I do right now. Depending on whether you're talking about the mobile services and whatnot. We don't have to spend a lot of time talking about how people want a high quality fixed connection.
Christopher Mitchell: They're not just going to use their mobile services for a variety of reasons, but nonetheless, I have overlapping networks available to me and that's great for resilience as long as they're actually truly overlapping and we don't just have one company that's offering different services with a single point of failure. We want to live in a world that has overlapping services. I think that that involves competition, particularly in urban areas. Part of the competition though, it can't just be crap DSL versus expensive cable. That's that competition. One of the points of competition I think should be a local provider, ideally one that has some kind of public interest requirements. Ideally a city that is providing a variety of options to enable other companies to operate on it. That's my ideal anyway.
Sean Gonsalves: Right. Well, I got to say, one signal for me that Title II is the way to go is because there seems to be nothing that strikes fear in the heart of the broadband industry than Title II. That's got to be a signal that that's the right way to do.
Christopher Mitchell: It's a rule of thumb.
Sean Gonsalves: Yeah.
Christopher Mitchell: They have a number of good points, few compared to the number of points that they will put out in terms of dangers with that. But under the current regulatory system, that's the way to go. I think many of us really fear opening up the box to write a new telecommunications act. Especially given that we just had a group of people try to take over congress to stop the transfer of power and possibly to kill a member of the party, the vice president of the party that they were supporting. There's some real craziness that I feel like we have to reckon with before we do any major long term policy right now.
Sean Gonsalves: Hadn't thought about that, but I mean, well, I shouldn't say... I think about that stuff all the time but I hadn't thought about it in relation to broadband policy.
Christopher Mitchell: I mean, just as an example, one of the people who talks a lot about antitrust is Josh Hawley. Do I trust him to make any kind of policy? No. I think he's corrupt. A lot of these people are really... We can always talk about the flaws of elected officials. I think we have a particularly dangerous crop of elected officials moving in at all levels of power right now. I think we should all be deeply concerned about that.
Sean Gonsalves: Yeah. I do too. Clearly, a lot of people are. By the way, we should also mention that our homie, Harold Feld, makes a lot of these arguments, makes a lot of really good arguments about why elements of Title II are precisely what the doctor ordered or should order.
Christopher Mitchell: Yeah. I think Harold Feld is a deeply thoughtful person on this stuff and strongly supportive of it. But there's others who will strongly argue that we just need congress to step in and say, Comcast can't raise rates anymore or something along those lines. My fear is just that it won't work. We saw an attempt to do that with the Cable Act. What happens is that in order to say you can't raise rates, you have to come up with these legal standards of what's an unreasonable rate increase and this and that. We're just playing in the monopolist turf when it comes to that. I think we'll spend years in the courts in which prices will still go up and we'll ultimately give up because it's not a battle we can win.
Christopher Mitchell: Some people will say, well, that's no reason not to go there. But I say, we have a better option and that option is to make sure that we're creating real competition. Because every time we create a competitive market that Comcast has to respond to, we're taking away a little bit of Comcast power in D.C. That's the way we have to take down a monopolist is by making sure that they aren't just pulling wealth out of our communities and then using it against us in D.C. The way we do that I think is by organizing locally around broadly popular things that people on the left and the right all agree in terms of having locally accountable systems to provide this broadband service.
Sean Gonsalves: Yeah. No, that's excellent. Then just this one last thing, just in the limited case. I did come across a really interesting paper written by Assistant Professor of Law at the University of California, Berkeley. The professor's name is Tejas Narechania. I'm probably mispronouncing his name. I hope he forgives me. It's a really interesting paper in which he makes the case for broadband rate regulation. It's called Convergence and a Case for Broadband Rate Regulation. I'm going to oversimplify, it's about a 50 something page paper. It's really good. The case that he makes is a limited approach where based on the 1992 Cable Television Consumer Protection and Competition Act that emphasizes facility-based competition among cable operators.
Sean Gonsalves: He's saying that the rationale for that as it related to cable rates is the same rationale really that could apply to Internet service. His specific recommendation in that paper is that you have some form of rate regulation only in areas where there's a local monopoly. What do you think about that limited approach? It kind of reminds me of some other things that we've seen in California, but particularly in New York. I know it's being litigated where you, for example, regulate that it's sort of the opposite of thou shall not. It's more that thou shall offer a low income option, so to speak, or a low price.
Christopher Mitchell: I fundamentally think that requiring a low priced option should not be considered rate regulation of the kind that we're talking about. There's rate regulation that says you have to offer a low income option, and that's a real light touch. We can talk about the pros and cons of that, because that can be hard on small companies depending on where they are. But then that is just, it's wholly different from rate regulation, which is we're going to set your entire rate structure and maximums on it and things like that. I think there are people who are trying to use the term rate regulation in ways that don't really fit to argue against that basic tier requirement. I mean, the larger part of your question, the targeted approach, this is something that we know people are thinking about in D.C. and trying to figure out what we can do about areas that don't have good competition.
Christopher Mitchell: It reminds me, frankly, I mean, we go back to the cable television services. When you say an area has a monopoly, well, we have to define what that means. This is where the trouble begins. Because okay, I'm in an area now T-Mobile is offering a fixed service. Does Comcast have a monopoly or does Charter Spectrum have a monopoly if they're the only wired fixed wireless? The reason I pick on that is because I remember on 10, 12 years ago, I was trying to get my head around the way the FCC was dealing with cable competition. Because there was a rule that in markets that did not have effective cable competition, the cable provider had to offer uniform rates across the market in order to protect against a monopoly from just charging very low prices in places where a competitor was trying to come in.
Christopher Mitchell: And so the FCC had to do these periodic determinations of what was effective competition. There was a period where it was clearly, the FCC just said, you know what? We're tired of fighting about this. Every place has effective competition. The lesson I took away from that is the regulator that has to enforce a rule that you might create as a policymaker may not care about the goals that you have as a policymaker. We want a regulator that deeply understands and cares about all of this stuff. I think many regulator employees do. At the same time, if we're asking them to do these thankless jobs, we shouldn't be surprised if they just give up and they say, you know what, we're tired of having this fight in market after market.
Christopher Mitchell: We agree there's cable competition everywhere even if there's not. It's something that we see happening with the regulators. It's easy to spin out hypotheses about, well, we'll just do this in these areas and that in those areas. Someone has to figure out where the lines are between those areas. They get fatigued over time of fighting 30, 40, 50 times with monopoly about where those lines are. That's just what happens over time.
Sean Gonsalves: Would you agree that the problems of affordability are worse than access?
Christopher Mitchell: Right now, absolutely. Yeah. I mean, I think that there's probably two or three times as many Americans who are struggling with affordability problems as compared to a lack of availability.
Sean Gonsalves: I think because that's the case, rate regulation is a very seductive area to talk about.
Christopher Mitchell: Yeah. I mean, but here's the reality, right. We want to do rate regulation, right? FCC has to go through a process in order to say, broadband is Title II we can rate regulate it. Right? In order to do that, we need a three, two FCC. Right now we have a two, two FCC. We don't really know what the path is to having a three, two. For people who aren't familiar. The president has not appointed a new person to the FCC to replace the previous chair, Ajit Pai who stepped down. We have that, that's going to be six months probably. This probably is going to be the first thing that they do, but they're going to start that docket. It's going to be a year of fighting, right? Now we're 18 months out. Then the court cases start, right. We have like, I don't know, three or four years of court cases.
Christopher Mitchell: Now we have to assume that the president is reelected and the new chair of the FCC wants to continue this battle. It's not a foregone conclusion by any stretch of imagination. We have to assume that the FCC wins all of those court cases, potentially at the Supreme Court, which is super deferential to corporations. I mean, people talk about abortion and they talk about a number of other things that the court might be either in step or out of step with the public on. But there's no doubt that like, even a lot of the Democrats that have appointed people to the Supreme Court, super deferential to corporations. Now we have to have the Supreme Court support the FCC in all of this, which doesn't seem super likely. Just in practicality, the best case scenario is an unlikely situation in which in like, I don't know, five or six years, we would have the ability for the FCC to begin regulating rates. It seems unlikely to me.
Sean Gonsalves: Very unlikely.
Christopher Mitchell: But that's the path.
Sean Gonsalves: Right. I guess in conclusion, it's probably worth saying then that, and I don't know if you'd agree with this, that it's not an either or in terms of cultivating competition versus putting in place certain regulations, light touch or otherwise. It's a both and.
Christopher Mitchell: Yes, I think we need to have smart regulations, strategic regulations that can work. Not this sort of thing of, well, maybe we'll study redlining for a while and maybe we'll magically come up with something. But we need to, frankly, if we're going to break up the biggest cable and telephone companies, which might be necessary to have real competition, because just the temptation to abuse a monopoly of having that much power is very common. We need good regulations while we're trying to get to a point, because under no circumstances are we going to have robust marketplaces in three or four years in a lot of places. Right. We need to keep moving in that direction, but we need smart regulation along the way. I think one of the things we'll see is that this is not going away.
Christopher Mitchell: I think some people in congress believe that they're going to drop 42 billion dollars on broadband infrastructure and they're going to be done talking about it for a while. I think they're going to be surprised at how many people are frankly angry at them because they're going to go back to their districts and be like, oh, we invested in broadband. And there's a whole lot of people who are going to be like, my bill just went up and I don't have a choice. What are you doing for me? That's going to be with us for a while. The question is then I think, I mean, this is a question for the audience and their neighbors and things like that. Because Sean, you and I aren't going to save them. Right?
Sean Gonsalves: Right.
Christopher Mitchell: We're out here to try and give hope for people who are doing something. But fundamentally, this changes when people form organizations like the Sierra Club, or join organizations like the Sierra Club. I mean, not to just keep using them, Ducks Unlimited, whatever. Groups that are organized around issues that they care about and then they are effective in. This is not something that, you know, if you just give money to fight for the future or free press or us like great organizations, it's not going to be enough. Fundamentally, we definitely need people to be out there doing stuff.
Sean Gonsalves: Yeah, for sure. Now, do you consider, it's not related to price regulation per se, but would you put this under the regulation umbrella, this move by the FCC or what's in the infrastructure bill that hasn't yet passed but consumer label nutritions.
Christopher Mitchell: Oh, I think it's great. Yeah. Oh no. That's one of the absolute bright line rules, like simple rules. We need ISPs to be very clear about what they're offering. You know, Emma. Emma is working with us right now. She's doing great work in terms of trying to track down some transparency issues. We just see even amongst some municipalities, municipalities and co-ops aren't perfect on this. It's not clear what they're offering at what price. That's ridiculous. The very least, I mean, as someone who's strongly believes in markets, we need clear prices. We need people to be able to understand what they can get with it. A broadband nutrition label is not perfect. It's very difficult to explain what some of that stuff means. Frankly, like some of that stuff is dynamic, changes over time. We need something like that. Frankly, we can't say because it's not perfect, we're not going to do it. We need something like that.
Sean Gonsalves: I guess it should be obvious why transparency is so important. But one of the things that I think, you know, it's not regulation per se but there is power in transparency. We've seen that you really can embarrass companies into doing the right thing. I mean, we see it all the time.
Christopher Mitchell: There's a reason the FCC has not collected and provided pricing information in a usable form to the public, because the big companies are desperately opposed to this. The smaller companies are split. Many of them already have fairly transparent pricing, whether they're publicly owned or privately owned, and some don't. But there's a whole bunch of them that spend a lot of time at the FCC saying, this is unfair. You can't do this. We have this complex pricing. We do pricing on a block by block basis and this and that. Like okay, you need to make it transparent. If you want to engage in a pricing regime that's that complicated and it's going to cost you a lot more to be transparent about it, okay, but you have to be transparent about it. That's on you. But they don't do that.
Christopher Mitchell: The Federal Communication not only hasn't done that, it's not on a path to do it. That's because the companies really would be embarrassed if they had to admit their pricing in a lot of different areas, and they don't want people like us to be able to highlight the gross differences for the same cable plant to be charging people such different rates in different parts of town.
Sean Gonsalves: Well, your honor, the prosecution rest, or was at to the defense. I don't know. I certainly wasn't at the F. Lee Bailey, Johnnie Cochran level of grilling but-
Christopher Mitchell: No, it's a good conversation. You said about like me being pragmatic. I feel like anyone who wants to win in this, frankly, trying to shade the truth or lie about your opponents, it doesn't help. I mean, if you really want to win this in the long term, you have to engage with honest arguments. You have to figure out when you can have honest arguments, because some people are not honest. I might be wrong about some things, but I think almost everyone who deals with me recognize, I try really hard to be honest. That's just because I don't want to spend 20 years of my life doing something I fail at. I think that if I just go around trying to do the easiest thing and make the easy arguments, we're going to lose. We have to grapple with real arguments.
Sean Gonsalves: It reminds me, I used to keep on a note card in my cubicle in the Cape Cod Times newsroom a quote from J.S. Mill that said, "He who knows only his own side of the case knows very little of that." I no longer am in a cubicle but I've wrote those words into my heart and mind and I really think that's true. It's important to, in good faith, wrestle with all of these issues from every conceivable angle if we're going to arrive at a better place. No, it's an interesting conversation. Maybe down the road we can do this on some other issue where we can-
Christopher Mitchell: Yeah, you should ask people to write in because that works really well. Only the people who made it this long will write in.
Sean Gonsalves: If I get the job again, I'll be better. You know what I mean?
Christopher Mitchell: No, I mean, that's the thing is I feel like we're not going to do every episode like this, but I think diving deep into some of these issues and maybe for some people having a better sense of how this stuff fits together, maybe that was useful. I hope people will just drop us a note on social media or send us a note if they like this, or if you've listened this long and you're really angry, you can definitely send me hate mail and I'll take it. Because if you listen to this much while being frustrated, you deserve an outlet.
Sean Gonsalves: No doubt. All right.
Christopher Mitchell: Cool. Thanks, Sean.
Sean Gonsalves: Thank you.
Ry Marcattilio-McCracken We have transcripts for this and other podcasts available at muninetworks.org/broadbandbits. Email us at email@example.com with your ideas for the show. Follow Chris on Twitter, his handle is @communitynets. Follow muninetworks.org stories on Twitter, the handle is @MuniNetworks. Subscribe to this and other podcasts from ILSR, including Building Local Power, Local Energy Rules, and the Composting for Community Podcast. You can access them anywhere you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter at ilsr.org. While you're there, please take a moment to donate. Your support in any amount keeps us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons. This was the Community Broadband Bits Podcast. Thanks for listening.