Category Archives: News Center

The FCC’s STB Proposal Will Hinder Innovation, Increase Prices, and be Detrimental to Consumer Welfare

Tech Entrepreneurs Can Learn A Lot About Marketing From Tesla

By: Mike Montgomery

Beating expectations on Wednesday, Tesla Motors TSLA -4.11% reported $1.6 billion in revenue for the first quarter on a 45% sales jump from last year. The fact that the climb came with a 57 cent per-share loss didn’t bother investors who were braced for a 58 cent per-share loss.

The Elon Musk hype machine rolls on as Tesla prepares to roll out 500,000 units of its newest car, the Model 3.

Cars are not the kind of thing people usually wait hours in line to buy. But that’s exactly what happened last month when Tesla Motors started taking down payments for the Model 3. The car won’t even be available until 2017 and certainly no one has given it a test-drive, but at $35,000, it costs less than half the price of a Model S — and that’s all most people need to know.

Silicon Valley types like to throw the word “disruption” around a lot, but Elon Musk is truly disrupting the car industry. Not only did he manage to create a car so exciting that people are lining up overnight just to put down a payment, but those locations where customers were dropping their money? They’re not even actual stores. You can’t buy a Tesla there — you can only purchase one online. The storefronts you see are simply places where people can test-drive the vehicle. This business model, which bypasses the dealership, is of course upsetting the car-sales landscape and is under attack by the dealership lobby.

But it’s important to remember that disruption in and of itself should never really be the end goal. Not every industry needs to be disrupted. If entrepreneurs are going to work to disrupt, they have to make sure there is a positive end goal — that consumers are going to benefit, that work is going to become more efficient or that some overall good comes from the disruption.

Read the full article here.

The FCC’s Unintended Consequences Problem

By: Mike Montgomery

The Federal Communications Commission (FCC) is developing a nasty habit of passing rules that end up doing more harm than good. These rules may initially be well intentioned but the end result is that some certainly stifle innovation. We’re seeing a very clear example of that right now in the Wi-Fi router industry.

Last year, the FCC put rules in place to stop people from messing with the radio frequencies (RF) inside Wi-Fi routers. They wanted to make sure that the RFs didn’t interfere with things like medical devices and weather radars. They didn’t mandate that router boxes be locked to all modifications, but they also didn’t think through the potential ripple effects of the mandate.

In response to the new rules, a router company called TP-Link went ahead and locked its boxes to all outside modifications, which could have a chilling effect on future innovation. The reason — it was too difficult to block users from one part of the box (the radio frequencies) and give them access to other parts of the box. It was easier and cheaper to just block users from tampering with the software all together. When customers complained, TP-Link told them to call the FCC.

This might seem like an obscure incident that only hard-core tech enthusiasts would care about but it points to a larger problem. The FCC is quick to make decisions that might work politically but don’t work practically.

Read the full article here.

CALinnovates’ Comment on FCC’s Set Top Box Proposal

FCC’s Set-Top Proposal Draws Crowd

By: John Eggerton

Commenters flooded the FCC Friday, the deadline for initial input on chairman Tom Wheeler’s proposal to “unlock” MVPD set-top box info and share it with third-party navigation devices.

“No demonstrable market problem exists to justify the kind of intrusive tech mandates proposed by the Commission,” said the Free State Foundation. “And it highly doubtful that any conceivable benefit could outweigh the heavy costs that the Commission now ignores – costs which will initially be paid by MVPDs or program content owners, but will ultimately be paid by consumers. The Commission performed no cost-benefit analysis of its proposal prior to its Notice. Nor did it even seek input to conduct such an analysis.”

Agreeing that it was an unnecessary and counterproductive government attempt to enforce tech policy on an innovative space was California tech advocacy group CALinnovates.

“Our analysis found that the FCC’s proposal would result in higher bills,” said CALinnovates executive director Mike Montgomery of the group’s filing. “It is apparent that with this set-top box proposal the FCC is missing the forest for the trees.  Specifically, the Commission obsesses over the size of one ancient, crumbling tree – missing the thriving vegetation sprouting around it.”

The Telecommunications Industry Association, which represents the manufacturers and suppliers of communications networks, was another critic of the proposal. TIA said in its filing that the FCC is operating on the faulty premise that the marketplace is not “replete” with navigation choices. It also says the standards setting provisions “could lead to device incompatibility, and risk pre-determining which technologies will prevail over time, contrary to widely followed standards making protocols.”

Read the full article here.

This piece can also be viewed here on Multichannel News.

FCC Set-Top Box Proposal Based Upon Faulty Economic Foundation, Will Harm Consumers, Innovators And Golden Age Of Television, Warns CALinnovates

Proposal Based Upon Flawed Data Fails to Embrace Consumer-Driven Promise of App-Based Future

SAN FRANCISCOApril 22, 2016 /PRNewswire-USNewswire/ — The Federal Communication Commission’s (FCC) set-top box proposal is an example of a one-size-fits-all tech mandate that rarely if ever works in practice and should be scuttled, tech advocacy group CALinnovates said in its filing to the agency.

“Our analysis found that the FCC’s proposal would result in higher bills, more advertisements, and less diversity and innovation on TV,” said CALinnovates Executive Director Mike Montgomery. “It is apparent that with this set-top box proposal the FCC is missing the forest for the trees.  Specifically, the Commission obsesses over the size of one ancient, crumbling tree – missing the thriving vegetation sprouting around it.”

In its filing, CALinnovates warns that the rulemaking is unnecessary given the breakneck speed of innovation in the marketplace. “Indeed, with change proceeding at such a rapid pace, one can only imagine how much the video consumption market will advance and reinvent itself before the FCC could even promulgate, much less implement, a final rule,” added Montgomery.

CALinnovates’ filing also included an in-depth analysis by Dr. Christian M. Dippon of NERA Economic Consulting. Dr. Dippon’s economic analysis highlights the number of ways that the FCC’s proposal will harm the entire video distribution ecosystem, including customers, suppliers, MVPDs, and content creators.

“If the FCC nevertheless implements its proposed regulations, there is no realistic promise of lower prices and increased innovation,” writes Dr. Dippon. “To the contrary, any intervention in a competitive market stands to harm the market, its participants, and ultimately consumers.”

Read the full release here.

FCC Proposal Threatens Innovation, TV’s Current Golden Age

By: Mike Montgomery

By any standard, it’s never been easier to watch what you want, when you want it, how you want it. Things like AppleTVRoku and Amazon’s Firestick bring Internet streaming to your television while apps like FXNow, HBOGo and WatchESPN bring television viewing to tablets and phones. The viewing worlds are converging and all of us who love TV are much better off because of it.

Yet for some reason, the FCC is trying to scramble the delicate balance that has enabled this Golden Age of content by forcing cable and satellite companies to undo the intricate deals they have put together with content creators in Hollywood and around the world to distribute the content consumers enjoy access to today and open those streams up to anyone who wants to repackage them.

The FCC claims that the proposal is meant to spur innovation. But that seems to be a ridiculous statement on two fronts.

First, we already have plenty of competition and innovation coming from new streaming boxes. Look at Apple TV, Roku, Chromecast, etc.

Second, the proposal actually undermines the cable and satellite companies’ incentive to innovate. Under the FCC’s proposal, the companies would have to disclose any technological innovation before introducing it. This would give any competitors plenty of time to copy those innovations and implement them on their own.

Would the companies that are clamoring for this deal want that same standard to apply in the tech industry? From my view running a tech advocacy coalition, the answer is a resounding “NO!”

Read the full article here.

Announcement by Comcast, Roku and Samsung highlights illusory narrative from FCC on set-top boxes

April 20th, 2016

“Today’s announcement that Xfinity customers will be able to access their content via the Roku platform, HTML5 apps and connected TVs such as the Samsung Smart TV without the need for a leased or owned set-top box is the latest example of how users can watch what they want, when they want and how they want. It’s also a not-so-subtle reminder to the FCC that innovation is happening at breakneck speed and is being driven by consumer demand rather than regulatory intervention. Innovation, such as the Xfinity Partner Program, continues to reshape the entertainment horizon.

Moving forward, we expect more examples of how live broadcast TV, on-demand options and gaming will continue to converge to the delight of consumers, their viewing preferences and their checkbooks. Soon the days of set-top boxes will be a distant memory. The Xfinity TV Partner Program announcement further cements our views that regulatory intervention in the set-top box market is unwarranted, as the future, according to consumers, is app-driven rather than box-driven. Despite today’s outstanding news from Comcast, Roku and Samsung, the FCC continues to careen down a perilous path that endangers future investment and innovation in the virtuous cycle that supports the current Golden Age of television.”

Netflix Exploited a Gaping Loophole in Net Neutrality Regulations

By: Mike Montgomery

Netflix hasn’t looked this bad since the whole Qwikster fiasco.

The streaming video company recently admitted that is has been throttling data speeds for customers watching Netflix on Verizon and AT&T-powered devices. If you’re one of those unlucky Netflix subscribers, like me, and were wondering why your video stream wasn’t as glossy and smooth as it should have been, now you know the reason.

Apparently, this has been going on for five years. So while Netflix was not only lobbying the Federal Communications Commission (FCC) and demanding that Internet Service Providers (ISPs) be prohibited from a litany of items that most everyone agrees are bad for the digital era, the streaming giant alleged that certain ISPs (such as Verizon) were throttling Netflix’s video traffic to their customers. The FCC relied on that misrepresentation as a basis for their regulatory intervention.

Netflix is defending itself by saying that it wasn’t trying to hurt customers. In fact, it was trying to help them because video uses a lot of data so they were just trying to save customers from the expense of exceeding their data limits. But secretively slowing traffic on its own network to a large base of its subscribers while blaming others is simply abhorrent behavior from a previously trusted brand.

And terribly hypocritical.

The Netflix story should teach everyone even remotely interested in the Net Neutrality debate that there are entities in the Internet ecosystem, beyond ISPs, that have the ability and power to impact the future of an Open Internet.

I’d like to say I’m surprised but I’m not. When the FCC decided last year to regulate the Internet under Title II of the Communications Act, I wrote that this wasn’t the end of the fight. Although many supporters felt they had won a major victory, I pointed out that the rule was not going to be enough.

While ISPs are now required to treat all data equally, “edge providers” like Netflix do not need to abide by those same rules. So while Netflix argued that companies like Verizon were throttling its content, Netflix was lying to regulators, the press and consumers.

Read the full article here.

How We Can Close California’s Digital Divide

By: Kish Rajan

California is the center of technological innovation. Our state is home to tech companies that are changing people’s lives all over the world. But there is still a small sliver of Californians, about 1.3 percent of the population, who live in areas where there isn’t access to the Internet, according to a recent study.

And about one in five people who have access don’t use the Internet. There are many different reasons why people don’t go online. According to a study by the Pew Research Center, 34 percent of adults who don’t use the Internet say they don’t find it relevant to their lives. Another 32 percent say they find the Internet too difficult to use.

This points to a real problem. The Internet today is about so much more than cat videos and social media. Don’t get me wrong — those things are great. But people can now use the Web to apply for jobs, sign up for health care and stay in touch with loved ones. People who believe the Internet is irrelevant, or too difficult to use, are increasingly isolating themselves from their communities and society as a whole.

This is the modern digital divide or as we call it, Digital Divide 2.0. Almost everyone has access to the Internet. Even people who may not have a broadband line to their house can access the Internet through their schools and libraries. According to a recent study by James E. Prieger, an associate professor of economics and public policy at Pepperdine University School of Public Policy, access isn’t the biggest problem. He writes: “… the main barrier to increased adoption is not access but the value proposition for consumers.”

So what can be done to improve the value proposition of the Internet for the select few who are abstaining? One good fix would be to modernize our communications policies to focus on closing the Digital Divide 2.0. California’s communications laws actually encourage people to stay isolated on phone lines, which keeps them shut away from a wide world of information. We have to re-imagine the goal of communications policy, which in the 1950s began and ended with making sure people had access to a phone.

Read the full article here.