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Federal Communications Commission



Free State Conference

September 11th, 2009 by Admin User

Free State Conference
By Blair Levin, Executive Director, Omnibus Broadband Initiative

——————–

I am here for one reason—friendship.

Many years ago, during my first tour at the FCC, then-Chairman Hundt insisted that we engage with those who disagree with us.

The point was not to convince them that we were right so much as to test our own thinking and policies.

In the course of that constructive engagement, I got to know Randy, and in the years since, I have spend many hours—over coffee, over bagels, over pastrami on rye—talking telecom policy and many other things.

In the course of that dialogue I doubt I‘ve ever convinced him I have been right about anything.

One of the nice things about friendship is it does not require agreement.

And that it leads to a reasoned discussion, all too lacking in today’s Washington D.C.

While none of those conversations led to conversions–on either side–I always left convinced that even while we disagreed, Randy has a thoughtful approach and that he has the best interests of the country in his heart.

The time spent with him made me smarter. It kept me from making certain mistakes I will not reveal.

In fairness to Randy—because he should not be blamed for anything I did–I should say that it also did not keep me from making certain mistakes I also will not reveal.

Given the friendship and the dialogue, I’m confident that 160 days from now, our friendship will not dissuade Randy from finding faults with our plan.

It should not surprise anyone it has already started.

Recently Randy criticized our initial tranche of about 20 workshops, saying “Conducting the workshops has been a `useful exercise’ to involve more people and compile data, but many panels have focused too much what broadband can do, and not what regulatory philosophy can best further the country’s deployment and adoption goals.”

It would neither honor nor be consistent with our friendship if I did not respond.

So let me start by agreeing that data alone does not solve the problem.

But as to the proposition that we should have focused more on regulatory philosophy, I have a philosophic problem with that.

Philosophically I think it is wrong on several levels.

First, it does not recognize the appropriate role of staff. We are not the deciders.

The workshops were driven by staff; indeed by many staff members. For each there was a group who decided who should participate and what the key questions were.

We are trying to serve up facts and options to the Commissioners.

You can have any philosophy you want but if Congress tells you to create a plan to connect every unconnected home and you don’t know how many there are, where they are, the technological options, or the costs of building out and operating the networks, you are going to get the wrong answer no matter how thoughtful your philosophy.

Second, seeking a larger role for philosophy does not recognize the role, in my view, of commission.

It is supposed to be expert agency.

We used to think of this as a requirement to read the law, study the economics, and then do the right thing.

Doing the right thing is where philosophy comes in but it should be bounded by what the law says and what economics would suggest.

Third, it does not recognize the mission of the broadband planning process.

Congress was pretty clear about what they wanted the plan to accomplish.

They didn’t ask for a bumper sticker. They didn’t ask for a report in which we wax eloquent about the world we would like to see.

They ask for plan that includes, and I quote, “an analysis of the most effective and efficient mechanisms for ensuring broadband access by all people of the United States; a detailed strategy for achieving affordability of such service and maximum utilization of broadband infrastructure and service by the public; (and) a plan for use of broadband infrastructure and services in advancing consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, worker training, private sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes.”

It’s a very broad mission. It has many moving pieces.

One can apply philosophy to it, but if anyone thinks the same philosophy is going to give us an answer equally applicable to access to rural America, affordability to low-income America, maximum utilization, and use of broadband in the disparate national purposes, I would suggest that is as likely as an athlete being extraordinarily gifted in basketball, baseball, and football.

If Michael Jordan couldn’t do two, no one’s doing three.

Those three arguments I have just laid out are, at their heart, arguments about the nature of independent agencies. Arguments like this have been going on for a century and with great vigor since the early days of the New Deal, when so many were created.

I doubt we will resolve them today.

But I want to switch gears and discuss a different philosophical reason why I think injecting the workshops with a heavy dose of philosophy would have lead to an unproductive planning process.

And that is that while philosophy is important, it can also be—particularly in Washington D.C.–a deterrent to learning.

My son attends Williams College and recently had me listen to some lectures by a mathematics professor, Edward Burger, on how the problem-solving skills of math apply to a broad range of problem-solving tasks.

One of the Professor’s points is that as we try to solve problems, we engage in pattern recognition.

Over time, we interpret all facts to fit in the framework of the pattern recognition that we have already established over time.

He points out however, that education really only begins when you allow facts to break up your existing patterns and see things in a new light.

This is not easy.

I saw this up close on Wall Street during the middle part of this decade when the first warnings about the systemic risk to the system imbedded in credit default swaps were being voiced.

Even with the popularity of the book The Black Swan, which is a warning about the dangers of thinking the future is always like the present, it was difficult for even the most brilliant and honorable analysts to escape their frame of reference and see what now is obvious about the mathematical likelihood of the eventual collapse of the sub-prime market.

One can see a similar phenomenon when one looks at the record in the broadband proceeding.

It is striking how the parties have stayed within the same framework in looking at a problem that is evolving; seeing things only in the light of long- established patterns that are tied to preferred policy outcomes, not analysis.

One of my favorite examples was a graph provided by a large telco entitled “change in regulation leads to increase in investment.”

The chart shows a 40% rise in telecommunications equipment spending after a change in regulation—change being their term for deregulation that occurred in 2003.

Of course, they violated the first rule of Statistics 101—correlation does not imply causation.

They also violated the second rule of lobbying.

The first rule of course is never wear a tie more expensive than the suit of the government official you are lobbying.

But the second rule is never show the government official evidence that contradicts the point you are making on the very same page.

Because the chart also shows that in the years right after what the telco regards as a regulatory action, passage of the 1996 Telecom Reform Act, investment went up 108%.

So here is a case where the philosophy—that deregulation always leads to increased investment and regulation always leads to decreased investment—blinds one to a far more complicated reality.

And it prevents one from doing a far more sophisticated analysis.

One could—and if you worked on Wall Street you would have to—do many different kinds of analysis, such as looking at the historic relationship between revenues and capital expenditures, the ratio of cap ex to depreciation, or international trends.

All tell you different things about geography, markets and business strategies. None tells you that deregulation is the largest factor in investment trends.

But let’s just quickly consider the chart’s failure to consider the implications across the broader ecology of broadband.

Breaking down the growth in cap ex post 2003, data I have suggests the 40% rise really came from three contributors—wireline telco, cable and wireless. Only wireline was deregulated in 2003; it rose 19%. Cable rose 29%. And wireless rose 52%.

So maybe there’s a pattern here that should cause us to rethink, that should help us learn.

I should note that I don’t mean to imply anything negative or positive about the telco’s policy proposals.

Turns out that that slide is actually not essential to their more important proposals for which other data is more probative.

And to be fair, I could have done the same thing to filings we received from many others from all sides.

In this regard I find it amusing my conservative friend is urging the Commission to focus more on philosophical views.

Indeed we have taken some incoming flak from friends on the left for not doing more to make sure the participants in the workshops were those who would agree a certain philosophical view.

One of my favorites was a critic who accused us of having nothing but the “usual lawyers and lobbyists.”

When the numbers demonstrated that of the scores of participants, almost none were lawyers or lobbyists, he did not admit error, but rather said that his point was correct because the majority of participants represented corporations.

Factually true, but much like the telco lumping together wireless, cable and wireline to try to make a point only about wireline, thinking that Verizon and Clearwire, Comcast and Sezmi, AT&T and Lariat are the same, is, to put it kindly, overbroad and therefore, provides a statistic without meaning.

This reminds me of an old Jewish joke.

Two Jews, leaving Eastern Europe at the turn of the last century have to pay an exit fee. One borrows 20 kopeks, promising to repay it when they get to America. But they lose touch with each other until 30 years later when they run into each other in Chicago. The borrower immediately says how bad he feels about now paying the lender back and takes out some money to repay the loan. But the lender says “don’t bother; for that amount of money, it’s not worth it for me to change my opinion of you.”

Reading some of the commentary, I think it just must not be worth it for some people to change their opinion of the FCC.

And that is my problem with philosophy at this stage of the process—experience suggests that when applied to a policy process, pre-existing philosophies may blind us to changes afoot, may prevent us from thinking anew.

So in the spirit of friendship I am going to say to my friend Randy and those of you here who agree with his critique what Hamlet said to Horatio: “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.”

And the start of the journey is not in philosophy.

We will get to that point in the dialogue when philosophy does matter, where different views about the appropriate role of the public sector will be germane to the issues.

But before we get there, let us try to understand better the nature of the problems which, like the problems our financial sector faced last year, may not be as visible as they will be in the near future.

All sides and all philosophies have something to contribute, if and only if, they take seriously the obligation to provide answers to the questions Congress asked us to address.

So let’s agree that whether one thinks there should be a larger public role or a smaller public role, let’s first try to understand the facts about whether the supply of key inputs for the broadband ecosystem are being inefficiently constrained.

Let’s try to understand the facts about the extent to which a significant portion of our population is functionally illiterate for the 21st Century workforce.

Let’s try to understand agree the needs, costs and options are for the nation-wide interoperable public safety network that many studies have concluded we need.

Let’s agree to take a serious look at whether our current public assets are being effectively deployed to address the problems we know are moving toward, or whether we have the ability to adjust that deployment to take advantage of modern communications networks.

Whatever one’s philosophy of government, we owe it to each other and our country to know the facts before we reach our conclusions and to be willing to rethink our perhaps outdated patterns of thoughts about these problems.

In closing, Randy, thank you for the friendship.

Thank you for your criticism.

Thank you for making us think.

Have a great conference.



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