Technology

Levin Sees Spectrum Return Reality

Former FCC advisor believes broadcast will cooperate 6/07/2010 12:10:00 AM Eastern

IN HIS first extensive interview since
leaving the FCC earlier this month,
former chief broadband advisor Blair
Levin
, now a senior fellow at the Aspen Institute
in Washington, talks with B&C Washington
Bureau Chief John Eggerton about
several issues, starting with his belief that
despite pushback from broadcasters, there
is a critical mass willing to give up spectrum.
An edited transcript follows.


Title
II is the issue du jour.  What do you
think the FCC should do about clarifying its authority over broadband?

Blair LevinIt reminds me a little bit of the Woody Allen line:
Mankind is at a crossroads. One path leads to complete hopelessness and
despair, the other to utter annihilation. Let's hope we have the wisdom to
choose correctly.

When you listen to the two sides talk about it, you
get this very apocalyptic sense. I am not an expert and the broadband plan very
consciously did not focus on that issue. Our focus was to address what Congress
asked us to address, which was how do we solve certain problems: getting
broadband to everyone, getting higher levels to adoption, and making sure that
we accelerate the movement of the economy to broadband to generate greater economic
growth, productivity growth, as well as to make sure that certain sectors
dominated by the public sector, education, health care, public safety, utilize
broadband more productively.

Those are things that lend themselves to a planning
task, but they are not the stuff of deep legal analysis. We felt that was for
other people to deal with.

I have personally taken the view that there are many
paths to the summit, and that the important thing that the issue du jour is
Title I and Title II, I think in the long run what really matters is how we
change theses processes to improve the way we delivery health care or education
or public safety, and how we get everyone one, and that over the long run,
'Title I and Title II" will have the same meaning as Section 271 (which
allowed local phone companies to compete in long distance telephony). Section
271 was really important in the context of the 1996 [Communications Act
rewrite]. I think that ten years from now as we are trying to improve the way
we handle this tremendous gift of broadband, we won't be so worried about Title
I and Title II.

But
in the interim, if the classification implicates Universal Service Fund migration
to broadband or privacy issues, doesn't the FCC have to do something.

I think things have to be done. It is not my place
to opine on the best way to do it. I certainly have a great amount of personal
sympathy for Chairman Genachowski. I know that some folks have said that his
decision [to propose reclassifying some of broadband under some of Title II
common carrier regs] created uncertainty, in truth the [BitTorrent] court case
created tremendous uncertainty. And whatever path he and the commission choose
will have a level of uncertainty because there will be appeals to the court,
and to Congress and there are political changes. I think it is an unfortunate
diversion from the more important long-term task. But I recognize that in the
short term that is where people will be focused, and that is unfortunate

There is no doubt that there are some issues, in
terms of the FCC, that are implicated by Title I and Title II.  But there are a lot of issues that aren't,
such as the set-top issue, such as spectrum. And more importantly, there are a
whole lot of national purposes issues. CTO Aneesh Chopra is doing a great job
in organizing various folks in the administration to try to make progress on
moving certain critical parts of the economy that have not adopted broadband as
much as they should have--education, health care, government performance. I
think that 10 years from now we will look back and say that is part of the plan
we are most proud of.  

Putting
on your financial analyst hat, what does Wall Street really want, regulatory
certainty or the certainty of no regulation?

I am always amused when people say that Wall Street
wants certainty. Wall Street is fundamentally about betting on probabilities.
Wall Street is very comfortable with uncertainty. It just needs ways to measure
that uncertainty. It is certainly true that it prefers to mitigate
uncertainties, particularly political ones.

But I think it is a mistake to think that anything
that the commission were to do would give it the kind of certainty that some
people appear to be saying is required for investment. I think if you look at
the real numbers on investment, there are lots of things that affect it. One
the simplest level it is always some combination of fear and greed. But the
levels of capital investment were very high in the mid to late 1990's.

There were certainly levels of regulatory
uncertainty. But there were also positive openings in my view in terms of
regulation in terms of new opportunities. There was also a certain element of competition
that in part had to do with policy and in part a maturity in the market.

Wireless and the Internet were newer things and so
there were all kinds of people trying all kinds of different things. And in
that kind of situation you have generally high levels of investment. People
look backwards and say it was overinvestment, but the point is there is a
multiplicity of factors. I think any analysis that focuses on one thing. I am
sure there are moments when that is true, but this does not strike me as one of
them.

You
talked in the speech to ACA about anger over cable bills that reminded you of
anger in the run-up to the Cable Act (which regulated prices), and said the
market or government would likely have to respond. Are cable prices too high,
or is its value underappreciated?

There is a log of interesting work by behavioral
economists that might cast insight into that. I don't really have a strong view
about that. But what I do think it reflects, and it is good news for cable, is
that it has succeeded what is a very powerful platform that does three things
that Americans really want on a universal basis: they want to have a lot of
television. They want to have very robust data communications and they want to have
voice communications, and the broadband platform is a terrific network for
providing them.

The more unfortunate news is that when you become an
essentially platform for universal service, you are going to run into questions
that the government is going to be interested in. So, what you see with cable
is similar to what Google and Facebook are now going through with privacy. If
these were small companies that attracted very few users I don't think people
would be expressing the kind of concerns they are about their privacy issues.

But whenever a platform becomes near universal, you
start to get into these questions.

Looking
back, is there anything you would have done differently on the broadband plan?

There are all kinds of small things that we might
have been clearer about, but fundamentally I am really proud of the work. On a
number of levels I think it is on the right side of history in terms of
direction. The solutions are pretty action-oriented, that they are doable and
not pie in the sky. They are very pragmatic.

I think we have teed up the agenda that is
important. I think it is important that people know what the agenda is for
three-five years. I think there are things particularly in the national purposes
portion that are very important for the future of education and healthcare and
civic engagement in this country.

By 5 o'clock every day I can think of three things I
could have done differently during the course of the day.  But I am very, very proud of the work that we
did.

Senate
Commerce Committee Chairman Jay Rockefeller (D-W.Va.) was critical of the plan
has lacking action and even suggestion for action. How do you respond?

I think the plan is very action oriented. Shortly
after the plan was announced, the FCC announced the policy proceedings that
they were going to do and I think there were 66 of them, and gave a schedule. I
think that that was important. And I think there were a number of steps taken
even before the plan was released in terms of things like rights of way and
e-rate inform. Where we could act quickly, we did.

And furthermore, as part of the plan there was a lot
of activity generated among various stakeholders. For example there is now a
nonprofit devoted to helping seniors get on line. There are now public-private partnerships
devoted to helping private businesses get better tools for utilizing broadband.

I think it was unfortunate that perhaps these things
were not brought to his attention prior to the hearing.

The
spectrum inventory bill is having some trouble getting through the Senate, and
House Communications Subcommittee Chairman Rick Boucher (D-Va.) has suggested
that perhaps 4-year process should be completed before the FCC even decides who
and from where that spectrum should come. The broadband plan has already targeted
amounts and sources, will that have to be delayed or put on hold?

There are a variety of different moving parts to it.
I would say there is a large part of the economy, represented  by the 100-plus companies that wrote the FCC
in October saying that there is a need to start now looking for more spectrum.
Because spectrum is not something you do overnight. So, that process needs to
begin now and I think that is entirely consistent with the spirit of what
Boucher is saying.

If you wait three or four years to even start
looking for more spectrum, then what you are really saying is we're not going
to have more spectrum identified and ready for auction for another 8-10 years,
and that probably is going to be enormously problematic.

I would make two observations about spectrum. First
of all, there appears to be a consensus that a voluntary program that allows
broadcasters to participate in auctions and receive some of the revenues of
those auctions is a good idea. Am I right?

Well,
you have said that you think a voluntary program would be a success, so that
means that you have talked to broadcasters and believe there is a critical mass
willing to give up their spectrum.

Let me first establish the following. I think there
is a consensus that there ought to be a voluntary mechanism.  What has been lost, as far as I know, in every
single public statement, is that in order to have a voluntary mechanism, you
have to have authority given to the FCC to be able to do an incentive auction
and share those proceeds with broadcasters.

So, the key recommendation in that part of the plan
is that the Congress give the FCC authority to share those proceeds.

There is actually a consensus converging that it
would be a good thing to have this voluntary mechanism, but in order to do
that, what people haven't stumbled to yet, you need an incentive technique. And
that is really what the plan is asking for. What the broadcasters are
criticizing is the existing law, which allows the FCC to move them without
giving them compensation.

But
in this consensus for incentive auctions, you think there are enough broadcasters
who are willing to participate enough to get that 120 MHz of spectrum within
five years?

Yes. That is my current belief based on
conversations I have had with broadcasters, based on conversations I have had
on Wall Street, based on when you look at various trends or scenarios. Remember,
we are not talking about all broadcasters in small cities. We're talking about
a minority of broadcasters in a small number of cities because that is where
the need is greatest. Now, there is a repacking that has to be redone on a
national basis, but how the ABC affiliate or the CBS affiliate in New York
would analyze the auction may be very different than the number 25 station in
New York or the number 32 station in Los Angeles.

It may be true that government employees never will
get credit for the crises they presented, but nonetheless one of the benefits
of the planning process is it identified certain problem areas in the future
that should be addressed. If current projections are valid, and they are just
projections, by the middle of this decade, mobile broadband will be more
expensive and of a lower quality service than if we had more spectrum. And if
that is true, the cost of the economy would be the equivalent to having lots of
electrical blackouts, or having our highways with lots of potholes.

You
name occasionally comes up as a possible FCC commissioner candidate. You
interested?

I am sitting here at Aspen thinking about some issue
I think are important to the country, like: "Why do we have texbooks. Why
are we using just an ink-and-paper technology to transmit information when
there are so many benefits to providing that information in electronic form?"

But
wouldn't the commission be a bully platform for pushing that?

I'm not sure. I had a job that was appropriate to my
skill set and was a great opportunity at the time.

E-mail comments to jeggerton@nbmedia.com
and follow him on Twitter: @eggerton

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