Cute as a Button: The Schemes and ‘Confessions’ of Reed Hundt

Sorry to say, there are people in public life who, were hubris a lubricant, could forego ambulation and just glide on down the road.  Reed Hundt, the former chairman of the FCC, is one such person.

Hundt is back in the news these days because policies he clandestinely pursued while chairman are now thought by some (including Hundt himself) to be coming to fruition at the hands of his former FCC aides and confidantes, one of whom, Julius Genachowski, is now chairman.

This, and more, was revealed in a speech Hundt gave last month at Columbia University.  The subject of his address was the national broadband plan, then set to be released by the FCC just a week later, and what he characterized as a “confession or admission” of the role he played, years earlier, in using his office as chairman to systematically elevate broadband, at the expense of broadcasting, as the “common medium.”

To quote the great man himself: “The choice to favor the Internet over broadcasting was initially made in first-draft form by some of the people who are now running the FCC.”

One can only imagine how happy this revelation must have made the current FCC chairman since, if we’re to believe Hundt, not only was Genachowski a co-conspirator, so to speak, he was just a tagalong – the horse to Hundt’s Lady Godiva.

Lest you think for even a minute that the gentleman feels remorse about any of this, be advised: He doesn’t.  Quite the contrary, Hundt is pleased as punch with the way he handled things, amused even, and he wants you to see it the same way.  Rather like a school boy pulling a prank on the headmaster, Hundt sees his scheming not only as smart and justifiable but as positively cute in the way it confounded all but those few in the know.

How else to explain his characterization of his efforts to suppress broadcasting – by delaying, for instance, its transition to HDTV – as “a little naughty?”  Or his boast, re the ability of people to use the telephone network, for free, to connect to the Internet, as a case of the government “stealing the value from the telephone network and giving it to society?”

Not everyone sees the humor.  One who is particularly unamused is Gordon Smith, formerly Senator Smith, and now head of the National Association of Broadcasters. As reported in Broadcasting & Cable, Smith had this to say when asked what he thought of Hundt’s speech: “Frankly, I was rather offended, as a former member of the Senate Commerce Committee, that his secret musings were never shared with the elected representatives of the American people.”

Actually, Hundt’s Columbia performance isn’t the first time he’s spoken (what shall we call it?) “candidly.”  Years earlier there was the book, You Say You Want a Revolution, that he wrote not long after leaving the FCC.

Sandwiched between characterizations of some of his fellow commissioners as the “Gang of Three,” and innumerable accounts of the commercial rabble with whom he was obliged to spend time, Hundt wrote some things that are of a piece with his Columbia speech.

One of these describes a meeting he had in 1995 with Bill Gates. Hundt writes:

We had come to appeal to Gates’ self-interest.  As everyone on the West Coast knew, computing was heading directly toward communications….  With Gates as commander-in-chief, the entrepreneurs could win a lobbying war even against the powerful broadcasters….

I wanted Gates to go after the spectrum, because the auction was such a pure and sensible goal.  Later, depending on how the meeting went, we would ask for his help in connecting every classroom to the information highway….

If those who bought the spectrum at an open auction could ignore the networks’ deal with Congress and abandon high-definition television, they could transmit digital information to PCs….

Gates rocked in his chair.  His eyes magnified by his glasses, he stared at me, and asked urgently, "Does anyone else know about this?"

Elsewhere in the book, Hundt describes his attendance at a meeting hosted by the Gores (Tipper and Al), also in 1995, on the topic of Families and the Media:  

Then the President and Vice President each said they would support the children’s television initiative.  I had become part of the Administration’s political agenda – perhaps the first time in history that FCC issues were in the center ring of the political circus.  Al singled me out in the crowd.  I stood up.  The auditorium applauded.  The event made the national news.  It was intoxicating; it was much more important to be there in Nashville than at, say, an NAB convention.

Many people would agree that the Internet already is, or will become, the “common medium.”  And in an age when Saul Alinsky is held up as a role model, and the ends justify the means, views and acts like Hundt’s will almost certainly escape widespread censure.  But there’s this one small problem with the government picking the industrial winners and losers: What happens if they’re wrong?

Of course we know that governmental estimates and projections are never wrong.  But imagine that sometime in the future it happens.  Wouldn’t that be something?  Because, you know, in that case the government would not only have distorted the marketplace, it might have created problems it hadn’t even considered.

As it happens, there’s a claim in Hundt’s book that hints of this very problem.  In the same chapter in which he wrote of his meeting with Bill Gates, Hundt claimed that “big-screen televisions would cost so much that less than one percent of Americans would buy them.”

Imagine our surprise, then, when we check now with people at the Consumer Electronics Association, and are told that, in 2010, almost half (about 47 percent) of all TV sets sold are big screen.  Could this mean, Hundt’s furtive schemes notwithstanding, that the Internet won’t be the only common medium?  Go figure.

Cross posted at Huffington Post, April 21, 2010.

D.C. Circuit’s ‘Net Neutrality’ Decision

The D.C. Circuit Court’s decision, while obviously correct, will not slake the thirst of anyone looking for intellectual arguments for or against the FCC’s proposed regulation of the ISPs’ network-management practices. Because the court ruled that the FCC lacked the "ancillary" authority it asserted, the body of the decision amounts to little more than a refutation of the respondents’ argument that earlier Supreme Court decisions provided precedent for the FCC’s claims.

The "legalistic" nature of this decision aside, there is something important here. It is widely surmised (and feared) that, thus rebuffed, the FCC will attempt to get to its desired result – network neutrality, as it’s called – by attempting to regulate ISPs, like phone companies, under Title II of the Communications Act.

But look what’s happening here. On the basis of claims of abuse so slim they’re very nearly invisible, the FCC has proposed to expand and codify that agency’s "Internet principles" in a way that guarantees its regulatory oversight of the freest, most democratic, and fastest-growing communications medium in the country. And for what? Because of fears that Internet providers might look for ways to insulate everybody else from the negative consequences of the actions of a relative handful of bandwidth hogs?

One of the intervenors in this case – Free Press, whose sole reason for being is the subjugation of the commercial media and communications companies to the yoke of government – coined the phrase "Net Neutrality: The First Amendment of the Internet." The reality, as someone put it, is that codified net neutrality is more nearly "The Fairness Doctrine of the Internet."

For now, nobody knows for sure what will happen next – whether the FCC, or Congress, will push ahead in the conviction that this too is an issue of such "transformative" importance the only thing that matters is getting it done. But in this, as in so many things, the wiser course would be to rethink the matter entirely. It rarely happens that government acts more efficiently than the marketplace, and net neutrality is almost certainly no exception to that rule.

Stuart Benjamin: The FCC’s ‘Spectrum Reformer’

Amid their other problems, broadcasters now have a new one: the FCC’s recently appointed Scholar in Residence, Stuart Benjamin, a law school professor at Duke University.  According to an FCC press release, Benjamin will work on “spectrum reform,” among other issues.  The problem that broadcasters have is with some articles written by Professor Benjamin, earlier this year, on that very subject.

One such, “Roasting the Pig To Burn Down the House,” seeks to answer the question being asked by all fair-minded people: “Should we welcome new regulations on broadcasters that will make broadcasting unprofitable?”  And the answer, according to Benjamin, is “yes.”  Or, as he puts it: “Some regulations that would be undesirable standing on their own will be desirable once we factor in the degree to which they will hasten the demise of over-the-air broadcasting.”

In the same piece Professor Benjamin happily acknowledges, in passing, something that broadcasters have argued – namely that some new administrative regulations, like the so-called advisory boards, “could prove fairly costly.”

A few months later, whilst opining on the Volokh Conspiracy blog site, Benjamin gleefully commented on another rueful development, a Supreme Court decision on indecency regulations (FCC v. Fox) that, as he puts it, “makes life worse for local stations” that can’t afford tape delay systems.  As with the added expense of advisory boards, Benjamin sees this too as a good thing.  “Local television broadcasters,” he says, ”have a new disincentive to airing live local events – and viewers have less reason to watch local broadcasters.”

Never mind for a minute that Benjamin’s comments are informed by what he sees as the inevitable collapse of broadcasting (he gives it only about 20 years to live, even without a nudge), and that he sincerely believes that broadcast TV is not the highest and best use of the spectrum.  The remarkable thing is why the FCC would bring aboard, and give this particular portfolio to, someone with Benjamin’s baggage?

It would be funny if it were a joke.  But as one long-time broadcasting executive put it, it raises real questions about the kind of personnel vetting that’s going on at the FCC.  If views like those that Benjamin has published aren’t enough to disqualify him from appointment to the position he’s just been given, what would it take?  A manual on how to poison station managers?

The dust has barely settled on the government’s years-long campaign to engineer TV’s digital conversion – a conversion that many broadcasters think holds great promise for their industry – and along comes this character, as out of some film noir production, whose ghoulish fantasy is to put broadcasters out of the broadcasting business.

Not to worry, though.  Once broadcasting has been polished off, the FCC can focus all its energy on regulating the Internet.

Net Neutrality: Whose First Amendment?

It shouldn’t come as any great revelation that when the government proposes regulations affecting the media, there very well might be implications for the First Amendment.  Raising such concerns, and then examining their validity, is a normal part of the regulatory process.

Kyle McSlarrow did just that last Wednesday in a speech to a Media Institute luncheon audience.  As president and CEO of the National Cable & Telecommunications Association,  McSlarrow was rightly concerned that the FCC’s proposed regulatory enforcement of “net neutrality” would impair the First Amendment rights of Internet service providers, especially to the extent that they offer other types of programming services apart from Internet access.  He also noted that such rules could impair the free speech of start-up content providers who are willing to pay extra for priority distribution of their content to better compete with established entities, and for others who use the Internet.  

The response to McSlarrow’s speech by many proponents of net neutrality regulation was nothing short of remarkable for its rancor.

The underlying assumption of this net neutrality crowd and their ilk was the tired old mantra: Big media are bad.  Corporations are bad.  Corporations don’t deserve First Amendment rights.  The bloggers from this camp (including a former Free Press lawyer) seemed at once incredulous and offended that anyone (except maybe Washington lobbyists) could assert with a straight face that media companies are speakers with First Amendment rights.  

The other underlying assumption involves the revisionist view that the First Amendment is a tool the government has an obligation to use affirmatively to promote diversity of speech, rather than what it was created to be: a protection against government censorship of speech.

It would be bad enough if the reactions to McSlarrow’s speech suffered only from flawed assumptions like these.  That wouldn’t even be so terrible, because one can always challenge another’s assumptions and hope to engage in something resembling a serious debate.

It’s possible to do that, for example, with the response offered by the ACLU, which noted that ISPs do have First Amendment rights when they’re providing their own content, but should function as common carriers (like phone companies) when they’re carrying the content of others.  Whether tiered pricing for different levels of service amounts to discrimination and implicates free speech is at least something that can be debated.    

But the level of vitriol is running so high among many in the net neutrality crowd that some writers are totally twisting what McSlarrow said, and attributing to him words he never uttered and positions he never (and I believe would never) take.  For example, blogger Marvin Ammori (with the Free Press connections) wrote: “According to the NCTA’s Kyle McSlarrow … Americans (like you) don’t have rights to access or upload content on the Internet.”  FALSE.  McSlarrow never said any such thing.  Ammori calls McSlarrow’s reasoning “silly” and “offensive.”  But if anything is silly and offensive, it is Ammori’s fabrications.  

One is reminded of the Cold War, when the Soviet propaganda machine excelled at “disinformation” – false information which, if repeated enough and eventually picked up by a credible outlet, would be regarded as true.  Ordinarily I wouldn’t bother commenting on the more egregious responses to McSlarrow’s speech, because they’re just not worthy of serious comment.  But I’m taking the time because so much of what has been written needs to be identified for what it is – disinformation – that will only stifle meaningful debate and do a disservice to the First Amendment.   

And while we’re talking about this constitutional guarantee, let’s not forget the big picture, which can easily become obscured by the details (and heat) of the moment.  Do we really want the FCC regulating a whole new realm – the Internet – which heretofore has been a safe haven for free speech?  Virtually everyone in the net neutrality camp seems to think this is a great idea.  I do not.  In fact, I think it’s a terrible idea.  For speech to be truly free, government regulators should be kept as far away as possible, whatever the medium.  Maybe this is where the real debate over net neutrality and the First Amendment should focus.       

Chairman Genachowski’s Modest Proposal re Net Neutrality

FCC Chairman Genachowski’s proposal to extend and codify the FCC’s “Internet principles,” delivered in a speech just yesterday, has already attracted a substantial amount of commentary.  There is no doubt that his proposed rulemaking will be the subject of much literature issuing from The Media Institute proper, and in this space as well, in days to come.

For now, however, just a few observations, in no particular order of importance: First, for those of us who take a perverse delight in the use and abuse of language in policymaking circles, there is much that is droll in the way that industry players have responded.  Like a man about to be executed, seizing on the offer of a last cigarette as a chance to spin or delay the inevitable, many of the broadband access providers’ comments seek to glom onto some part of the chairman’s proposal as will allow them to buy time.

Thus have several of the companies, and their associations, complimented the chairman for promising an "open proceeding" or some such.  Not to be smug, if we at The Media Institute were lobbyists we too would probably say such things.  Since, however, we are not, we can speak more plainly.

The reason this proposal has come into being, and will undoubtedly be passed in some form, is not because of some new threat (or old threat, for that matter) to the “free and open” Internet.  Rather like blaming, as someone once said, the Johnstown Flood on a leaky toilet in Altoona, the record of “abuse” by broadband providers is so inconsequential it doesn’t begin to explain the need for such an intrusion into the marketplace.

No, the reason this proposal is at hand is because of something more prosaic.  It is, would you believe, because of politics.  It is because there are now three Democrats on the Commission and only two Republicans.  (Some would argue that even during Kevin Martin’s reign there were three Democrats, but that’s another matter entirely.)

The best evidence that this is the case can be seen in comments from inside the FCC itself, specifically those of the Republican commissioners, McDowell and Baker.  Not only do they express skepticism about the wisdom of the proposed rulemaking, they openly question whether “factual and legal conclusions may have been drawn before the process has begun.”

Back in the day, at the dawn of the Internet, the concern was that the FCC not become the Federal Computer Commission.  That was then and this is now, but the concern that animated that sentiment survives.  It is that the government is a poor substitute for the marketplace in allocating resources.

Because Chairman Genachowski knows that the strongest criticism of his proposal is that it will frustrate investment and innovation in the broadband space, he looks to preempt the argument by denying it.  His plan, he says, amounts only to “rules of the road” that will actually stimulate investment and innovation.

Well, time will tell but the view from here is much less rosy.  The greater likelihood is that: (1) There will be less private sector investment than would otherwise be the case; (2) that the investments that are made will come from tech firms that employ a peculiarly large number of lobbyists; and (3) that when the dust settles, the only lasting impact will be in the legal precedent established by putting the camel’s nose of government under this particular tent.

Time Warner Cable and Consumption-Based Billing


Time Warner Cable has had quite a bumpy ride for the past couple weeks.  Having announced earlier a plan to conduct trials of a consumption-based billing policy, in which users would be charged based on the amount of data they download and upload, by week’s end the company was obliged to suspend the trials altogether.

What happened in between were the protests of some customers and bloggers, the usual mischief of some of the “public interest” lobbies (they’re from Washington and they know what you want), and most importantly, the intervention, as critics, of a congressman (Massa) and a U.S. senator (Schumer).

Aside from the fact that broadband users who consume unusually large amounts of bandwidth, downloading movies and the like, would have to pay more, it’s not immediately clear what’s wrong with consumption-based billing.  That is, after all, the way we pay for most things, and it protects those who use less from having to subsidize the payments of those who use much more.

No matter.  In an age when information “wants to be free,” and everyone is entitled to everything, arguments based on marketplace economics are probably not going to persuade a lot of people, and certainly not grandstanding members of Congress.

Which is why, at the end of last week, Glenn Britt, Time Warner Cable’s CEO, announced a suspension of the trials scheduled for later this year in Rochester, N.Y., Austin and San Antonio, Texas, and Greensboro, N.C.

In a display of their usual savoir-faire, several of the “public interest” moguls were full of gloating, like that of Timothy Karr of Free Press: “We’re glad to see Time Warner Cable’s price-gouging scheme collapse in the face of consumer opposition.  Let this be a lesson to other Internet service providers looking to head down a similar path.”

Only slightly less tiresome was the statement of Gigi Sohn of Public Knowledge: “The company properly listened to its subscribers, the public and policymakers, all of whom (emphasis added) were highly critical of the proposition in the first place.”

The celebrations, however, may be a bit premature.  What Time Warner Cable said was that it was suspending the trials, not abandoning consumption-based billing, and that in the meantime it was going to deploy measurement tools, a kind of “gas gauge,” that would allow users to see how much bandwidth they were using each month.

Assume that some months from now it transpires that the vast majority of users consume bandwidth in amounts that would qualify them for the lowest and cheapest tiers, while only a small minority would have to pay at the highest rates.  Now that would be awkward, wouldn’t it?