Scott Wallsten: Hi and welcome back to the Technology Policy Institute’s podcast, Two Think Minimum. It’s Wednesday, March 11th, 2020 and I’m Scott Wallsten, TPI president and senior fellow. I’m joined by Blair Levin, who is currently a nonresident fellow with the Brookings Institution and a policy advisor at New Street. Blair’s worked for the past 25 years at a high level at the intersection of broadband policy and capital markets. And most importantly for the purpose of this conversation, he led the FCC’s national broadband plan back in 2009 to 2010. I was the economics director for the plan, which meant that Blair was my boss. Blair, great to have you.
Blair Levin: Great to talk to you again.
Scott: So we’re recording this podcast over Zoom, as the world moves towards virtual interactions in response to the coronavirus, but you weren’t actually able to get on other than through the phone network, which may is something we can talk about later. But before we get to that in broad strokes, what did you think the broadband plan got right?
Blair: It got a bunch of things right, there are a few things that got wrong, then I’ll be happy to talk about as well. The first thing I would say, and this is not just a tribute to you, but it is a tribute to you, we got the hiring right. We hired a really perfect team of 70 people. They were very diverse in their views. I think that they all had a commitment to try and understand the facts before trying to answer questions, which I think was a really important thing. I think they were all incredibly hard working and so if, as I think about the question, what advice would you give to someone doing another version of it? The first thing is hire well and you were terrific in there along with the people in there. The second thing that I got right was processed. We were supposedly given a year. The truth is we were given about six months to do the project, so we really accelerated it by both being very public about what were the questions we were trying to answer and very public about what we thought the facts were and allowing people to change our minds if they could bring in better facts. Very public about what questions we were trying to answer, and then eventually we got to very public about what options we were considering. So you know, pretty much every FCC meeting had a presentation from the team. It was really designed to allow the public to make our end product better. The third thing we got right was the questions that we were asking, which really were, fundamentally, how do you get networks everywhere, the access problem, how do you get everybody on, the adoption problem, and how do you utilize that platform to improve the delivery of public goods like health care, education, job training, job placement, public safety, public health. I would say we actually missed a couple of questions that if I could do it again, I’d do it. One was how do we make sure we have the right information? We got a lot of great information, but we didn’t create an ongoing process for the FCC to get the right information. Part of that was just the problem of the way we were funded. In an ideal world, what you would do is you would first map the situation. Then you would develop a plan based on that map, based in part on that map, and then you would fund a bunch of projects. Because of the way recovery act worked, we first funded a bunch of projects. Then we did the plan that we didn’t have.
Scott: Great. Then that was the last…
Blair: That’s just the way it worked, but it turned out that the map was deficient and the FCC as an institution is deficient in gathering information. I’d just say in projects I’ve done since that, for California, for refugees on behalf of the World Bank and UNHCR, I have atoned for my sins by always saying the first thing is to have government be a respected, trusted, important source of information for all stakeholders, it’s especially essential. Something else we didn’t get right was understanding and it’s related. We were proposing a lot of things for which there wasn’t a natural institution in government to own it and I think anyone doing a plan should understand things don’t happen because they’re a good idea. They happen because there’s an institution that is fundamentally graded on whether they implement that good idea. That would be another thing that I would say that any new plan should do and by the way any government initiative,
Scott: But by that you, I don’t think you mean proposing new institutions for those but focusing on things where there is a mechanism to get them done.
Blair: Yeah. Although I think in the case of data platform regulation, there may well need to be an new institution and that’s something which is very different than 10 years ago. Reasonable minds can differ about that. There’s actually a very healthy debate about that, but I would not take creating new institutions off the table. It is much better to, shall we say, enlarge the capability of an existing institution because setting up the new institution does take a long time and effort and then there is a whole series of policies which I think we largely got right.
Scott: Well actually before you go on to that though, let me follow up on one of the things you said. What we got, what the plan did wrong. You said, we want to make sure to have the right information when you start, which seems like good advice for most things in life, but
Blair: Advice that many in the current government don’t take seriously. It’s part of the problem we’re having with the coronavirus today.
Scott: Yeah, yeah, that’s exactly right. I am not sure they really understand what information is. But it’s often hard to know even how to define that information and who should get it. I mean the FCC still has a lot of those problems and it’s not because they’re stupid or they don’t know what they’re doing, it’s just it’s hard to change things and we argue a lot over what exactly should be collected and who should collect it.
Blair: Look, the industry doesn’t really want to give the government that information. And there are legitimate reasons for the industry not to, A, it’s time consuming. B, it’s expensive. Or I should say there’s an expense to assembling, that’s expensive. But C, some of the information has competitive value, which they don’t want other people to get. On the other hand, the government has a legitimate public reasons for wanting to get that information. So threading that needle is always going to be a problem. But that’s the challenge, right? I mean that’s the work.
Scott: Well I’ve often thought that much of the FCC’s data gathering capabilities should go somewhere else like BEA or BLS and we can do some things through surveys that they try to do now through accounts. And you know the people who really know about data and the government are those folks at BEA and BLS and we don’t really engage them much at all in this area.
Blair: No, I think that’s a great analogy and we should have done kind of an initiative on how do we turn the FCC into what is the equivalent of the BLS for statistics and back communications. I think it’s vitally important for the country, the economy, which before the coronavirus was increasingly a function of what happens over the network and now is going to be even more so. It’s critical to have that kind of data to understand what’s going on in the economy. We don’t and that’s a loss.
Scott: I interrupted you. You were going to talk about the specific policies.
Blair: Well, I think there are a couple of things that I think clearly were successful. I would say the most successful piece was in the category of spectrum. There had been about 35 national broadband plans done before we did ours. Almost all of them focused totally on the question of how do we get wireline networks into the rural areas of our country. We focused on that, or I should say we did a big initiative on that, but we focused on other things as well. One of them was spectrum, which I think is now it’s obvious that it’s really important, probably the single most important initiative that the plan was the broadcast incentive auction. Not only did it more than pay for the plan and many, many, many times over in terms of government revenues, more importantly, it freed up a very significant amount of spectrum. But I want to emphasize that the plan, you know, policy is a football game. You’re on a team and nobody wins a play or a game with a single thing that only they do. Congress had to pass a law. It did. People before us had to propose the idea, which they did. It was lying around and no one was taking it seriously until we really started to emphasize it, but I think the incentive auction was a tremendous success in terms of freeing up spectrum and a very market oriented way, very efficiently. Some people were disappointed by the amount of money raised, forgetting that there was an auction previously that raised a ton of money. The broadcaster had been smart, by the way. They would have opposed us which delayed it, which meant instead of auctioning  first, but that’s their problem. But the bigger point is we really gathered a lot of the early Obama team together to talk about spectrum in a way that actually freed up a lot of spectrum, raised a lot of money, very important for the rollout of 4G and now I think some of that spectrum is, the incentive auction is the spectrum the T-Mobile is relying on for its 5G initiatives as well as of course what they want they’re getting from the Sprint Deal.
Scott: And it’s kind of amazing, when I went back to, when I was looking over the planning the plan again this morning, when we started there were 50 megahertz in the pipeline and if we, today, we’re sort of at that stage, we were just talking about only 50 megahertz additional. It’s so simple, almost inconceivable because now we’ve gotten used to having large amounts of spectrum coming out and that was not true before the plan, at least not regularly.
Blair: That’s right. And look again, I don’t mind beating up on the Trump administration, but that’s all I’m purpose for saying what I’m about to say. No one should be surprised by that. But we had a pretty coordinated effort and you know, between the FCC and NTIA, there was a lot of good work on spectrum and you don’t have the kind of battles that even the Republican members of Congress are just appalled by in terms of the battles between NTIA and the FCC over spectrum issues. And part of that was because we actually spent six to nine months working with pretty much everyone in the government, talking about what are the spectrum needs for the next 10 years. We had this attitude that we’d like to actually solve the problems before anybody even knows there’s a problem, fix the pothole before anyone drives over it. And that’s what we did with spectrum. And I think that worked really well. I think also the transition from universal service from supporting voice to supporting broadband. I might be critical of certain details of how the FCC did it, but fundamentally in the broad sweep we have almost seamlessly transition from subsidizing one use to subsidizing another and was that was important. Two of the most successful things in the plan actually aren’t in the plan, but they came out of the plan. I think they’re really important because it tells you that it’s the planning process and the ideas it generates and the conversations it generates, that’s the support. So one of the things is that, and you will remember this, we couldn’t figure out how to drive another upgrade cycle. We hired our friends at Columbia to do a study of all the publicly available information about new deployments. And we realized that for the first time since the beginning of the commercial internet, there was no plan for a national provider to build a better network than the current existing network. The upgrades had stopped. And it was really because wall street had said to FIOS, had said to Verizon, this FIOS investment is not going to pay off and therefore AT&T and centurylink weren’t going to do it and therefore the cable guys weren’t because they weren’t going to overbuild their own network or improve it, and there were no third parties at that time and that was a problem because we could see in Asia already, Korea, Japan, others buildings fiber to get gigabit networks. Make a long story short, this led to conversations that led to Google Fiber, led to other initiatives including one that I did called kick on you and that really accelerated the upgrade. You know, we would’ve gotten there eventually, but it’s great that we got there faster. Google Fiber was not a business success, but from a policy perspective, it really drove an upgrade cycle so that when we were doing the plan, the average speed download speed was 4.1 megs, now it’s, I think, 96.25 or something like that. That’s an incredible increase and as we’re going to see as people do remote work and remote learning and all kinds of, and a lot of streaming, having that extra speed’s really important. So that kind of came out of the plan. Would that have happened otherwise? I don’t know, but it was certainly helpful. The other one was Comcast internet essentials. David Cohen, the general counsel was at a talk that John Horrigan who you and I worked with gave about problems of adoption and David’s reaction was, our company really ought to deal with this, and created the program. 8 million Americans are now online who otherwise wouldn’t be online. That’s an important numbers. And those are people whose kids are now going to be attending class online or otherwise they wouldn’t be able to, could do their homework online. So I would say those are two things that were successful as well. There were 200 recommendations. There were others I can point to, but those are kind of I think big picture. I would mention
Scott: When you talk about how, I don’t remember whether you use this word or note, but it’s surprising to see such a large share of the networks offering such high speeds. How do you see the broadband ecosystem now relative to what you expected in 2010. So, in 2010 what did you hope things would look like in 2020 and then I guess a related question is given all of the things that changed along the way, how do you feel about where we are now?
Blair: Yeah, I have a view which is not very popular in Washington DC, but you know part of that is because I look at the world, I do a lot of wall street advising, but Wall Street forces you to be much more fact oriented. They are not into DC spin. Wall Street has its problems and has its blind spots. But if I were to go say to them things in the way that people in DC speak, I wouldn’t have a job because things have to be data based. They can’t be ideological. They can’t reflect a world that you want to be true. So a couple of things that I would say. Number one, as to the first digital divide, this is the one that everybody wants to talk about. We need to get more broadband to rural areas. I agree with that. I think we’ve done a lot of that. But more important is I look at certain technology trends. I feel real confident that in a few years we’re going to get to where we need to be. And so while it takes up 95% of the political capital, there’s very little discussion about the implications of what’s going to happen in satellites. And with this happening with 5G, it’s not really 5G, it’s really fixed wireless and some mobile wireless, but it’s higher capacity wireless. What’s going to happen with the Microsoft airband initiatives, what’s going to happen with rural call ups? I see a number of things that over the next three to five years, I think we’ll get close. You never really saw the problem 100% but you just are trying to, you know, get from 80% to 95% to 98%. 95% of the political capital spent on broadband, in terms of the digital divide, it’s about the rural problem, which again, it exists, but there are a lot of services in the work and I would just say, as we look at the way universal services being done, we’re not changing it in light of what T-Mobile’s commitments were, vis-a-vis of their deal, we’re not changing it in light of what the satellite guys can do. By that, I mean the new satellite guys, not the ones who recently won the auction, but I think we’re going to find that those things are helpful of closing that gap. The second gap, which I think we should be devoting a lot more resources to is adoption, but it’s a very complicated, there’s a lot of dispute, very legitimate dispute and very hard to really discern what’s going on. Basically whether the real challenge is the affordability, relevance or digital literacy. It’s certainly a combination of all three. Don’t want to debate that here unless you want to debate it, but the big point I would make is we have to devote more to that, but as I sit here today and I think about where I think the greatest failing was in the last 10 years and what is the most important digital divide over the next 10 years? It’s a digital divide, no one is talking about and that is the digital divide between what we should be doing on the network and what we’re actually doing on the network, in terms of improving how we deliver public goods. Again, healthcare, education, job training,
Scott: That’s going to be a difficult divide to define though because at least part of it, once you talk about the way something should be, you’re immediately going to be in all kinds of ideological debates. Although maybe not exactly left versus right ideology. But it sounds like it’s a hard thing to define. I don’t know where we should be.
Blair: Absolutely. That doesn’t mean it’s not, what I want to try to do and talking about the plan is not so much about what we did but talk about where we should be going. Draw a map going forward and it just seems to me that…The Wall Street Journal had a really interesting article last fall saying that Americans are buying too much bandwidth and pointing out that really, in terms of how people use it, 25 is fine, 50 is fine. Why are all these people buying a gig or buying 500 or 200, they never used it. And to me this is kind of amusing. For lots of reasons it’s amusing. But the Wall Street Journal I think is factually correct but I think they’ve missed a number of important points. To me, the most important one is, for the first time, bandwidth is not the constraint on economic growth and social progress and that’s critical. If we’re talking about a world in which there’s four megabits of download, bandwidth is an enormous constraint. There’s lots of stuff you can’t do that we know, today, we would like to be doing. Now we’re at a situation which is where we want to be. Where is, for a critical mass of Americans, they have enough bandwidth. The question is, can we figure out how to better deliver those public goods and services using that platform instead of using a different means. Let me offer an example of where I think we fall short that is quite timely, but we could use lots of examples. Where on the internet today can you go, simply put in your zip code and you will immediately find out what is the status of the spread of the coronavirus near your zip code and in your zip code.
Scott: Probably somewhere in Korea they do that.
Blair: Absolutely. You can’t do it in the United States or at least I haven’t been able to find it and I’ve been trying. You can get a great map on Hopkins where the virus is, internationally, but the thing that most people who start coughing want to know is it around my neighborhood and then second, where do I get tested, and third Where do I get treated? If you just had a website that did those three things, that would be a really great thing and how is it that the federal government does doesn’t have that website up and running? It’s because nobody in the federal government thought of it. Now. There are lots of critical things to be said about the federal government’s response, but my point is who is in the government is responsible for making sure that in terms of mitigating the damage, we get people the information they need. If there was ever a time where you would want to have government focused on creating that kind of information, it would be now. Again, it doesn’t happen. Why? Because we actually don’t think of it, because not a single press person has asked about it. Nobody asked the person testifying today about it. We don’t think about it that way. We really haven’t changed the way we operate to think about broadband first as a way of addressing these problems.
Scott: What’s an example of that in a sort of non-crisis area?
Blair: Well one of the ideas we had in the plan was we thought the Department of Labor should essentially create a job search engine that did a variety of things and not only you would put in your zip code and it would tell you jobs in the area, but more importantly you would put in information about who you are, what your educational background is, the jobs you’ve had. It would tell you what jobs you were qualified for today in the neighborhood. It would also tell you kind of what classes you could take given where you’re at that could upgrade your skills, particularly to fit jobs in your area that are available today. The problem is Labor has a lot of offices where they give career counseling, but this is the kind of thing where I think if we were starting from scratch we would do that, of course part of the problem is we’re not starting from scratch with everything. But there are a variety of different ways in which government can improve, deliver these goods and services over the internet. And we had some ideas, I assure you that if we had an idea 10 years ago, there are better ideas out there now.
Scott: There must be. Going back to the digital divide for a minute, and we know all the problems that the ways that rural subsidies have not been effective and reasons why it gets so much more attention than the income-based digital divide. And it’ll be interesting to see as more service in rural areas, what happens to the funding? It’s unlikely that it’s ever going to go down, but with the income-based digital divide, and like you said, there’s a debate over what exactly the reasons are. I’ve been sorry that we haven’t seen more experiments and studies of what works and what doesn’t and I would like to see, if we were redoing the plan again, I would like to see some discussion of what are the kinds of things that we just don’t know yet. But we could know if we put a little effort in it.
Blair: Oh Scott, you’re so wonderfully naive. No, it was one of the joys of working with you as you would ask questions like that. No, look, one of the things, I would have a lot of sympathy for anyone trying to do what I did, partly because it would be much harder to hire the diversity of views that we were able to do. But the other is, what has captured Washington is a view that one should know the answer before one asks the question and we didn’t do that. We very consciously tried to avoid doing that. But I see very little at the FCC these days that reflects an honest attempt to actually study a problem, solve it. You look at, for example, the broadband, the climate advisory commission, which was composed almost entirely of people from business or they had one or two representatives of cities and they described their mandate as investigating the regulatory obstacles to deployment. Well, there are lots of obstacles to deployment. Other countries have solved that problem in a variety of different ways. It’s not all at the city. You know, for example, one obstacle which they found or which was noted, but nonetheless did not stop them from saying that cities are the sole cause of all the harms, was a labor force problem. Okay, well that’s kind of interesting, but if you force cities to do everything on a 30 day basis, but you can’t actually build out anything any faster because it takes a year to get the workforce, what problem are you actually solving? Because as far as I can tell, the only problem the FCC has solved is unemployment by lawyers because you now have lots of lawsuits about the way they approached it. They didn’t consider, for example, network sharing, which, I’m not saying it’s the right solution, but I’m just saying that McKinsey pointed out that a bunch of countries were doing that and saving 40% in terms of the cost of deployment, stuff like that.
Scott: Well, we often are able to hire lots of lawyers through legislation. That’s most of what the FCBA is.
Blair: But I certainly agree with you. One of the great things about the plan was it allowed us to start from scratch and kind of just ask these basic questions, gather a bunch of data and then start formulating answers. I think every now and then, you can’t do that every year, but you should do it on a periodic basis where you’re kind of trying to start as much as possible with a blank piece of paper and saying, what do we really know and what do we not know? I have started some speeches I’ve given about smart cities by saying, what’s the definition of a smart city? The definition is a city that actually learns, where you actually have, you know any better than the traffic signals and the sewer lines and the garbage, the systems, the ability to learn. And that sounds like really simple. So let me contrast it with pretty much every speech, every FCC commissioner in the last few years has given, it goes like this. Recently I was in insert name of state. While there I visited with insert name of occupations always including teachers, firefighters, hospital workers, and the kind of job that you would expect in that particular state, and I talked to a bunch of them and what I learned was everything I’ve been saying for the last 15 years was 100% right. Well, that’s not learning, but that is the political culture of the moment. Let me mention one other thing that I think you would agree with me on this. We wasted no time in the 377 pages of national broadband plan criticizing people who came before us. It was just, no, why would we do that? And yet when you look at pretty much every speech by one of the Republican commissioners of the FCC today, it starts with everything was horrible before we got here and now everything is great. Well, okay, fine. Like if it makes you feel better, but like what is the purpose of doing that? You’re certainly not building coalitions by doing that. And you’re also not really analyzing the problem well. I saw Ajit Pai’s speech on C-band where he, I actually agreed with a lot of what he did, but he starts it by saying, when we got there, there was nothing, there was no spectrum that was available to be sold. Well, that’s, as a factual matter, not true. Absolutely not true, but it also undercuts the institutional credibility of the institution, of the FCC, as if it only should exist with the Ajit Pai as its chair. And I’m utterly opposed to that point of view about government. I think the FCC staff, there’s such a value in having kind of a civil service that actually understands these issues and has dealt with them all variety of different contexts. And I don’t want to waste any time criticizing the past. I mean, I’m not above politics, but I’m just saying that again is the kind of thing I would hate it if the purpose of a plan was simply to criticize what the previous administration did because you’d never build the kind of necessary coalitions to actually accomplish great things. So that’s another thing I’m actually kind of proud of.
Scott: Yeah, that’s true. That’s absolutely true. If somebody came to you today and said, all right, here’s a piece of paper. It’s time, you said the plan was in beta and always would be, it’s time to redraft it. Would you do it?
Blair: Well, that’s a personal question.
Scott: Yeah, I know. That’s why I’m asking you personally.
Blair: Well, you know, would you join me again, Scott, can I ask you, can I turn the question back, would you come over?
Scott: Oh no.
Blair: My last couple of years, the most joyous thing has been being a grandfather it’s really awesome. I recommended it to everybody. I know that there are some people who sadly, at least in my view, for whatever reasons don’t get that experience and do lots of other things, I’m sure they find equally fulfilling at the age that I’m at. But my point is I don’t think I could do it that way again. I wouldn’t mind being a senior advisor to such an effort and I think the effort will be, let’s talk about how the effort would be really different. To me one big obvious thing, and you and your team spend a lot of time thinking about these issues, when we did the national broadband plan in 2009 and 10 broadband and the data platforms were basically considered 100% good and it’s not surprising that most of what we wrote was about how do you create incentives for building on outwards, getting people to adopt, utilizing it better. Now, you could say it’s 70/30 you could say it’s 30/70 you could say it’s 50/50 but the point is there’s a lot of skepticism about the value of it and the values on the applications. So you would not only have a document that has had incentives for some things, you would also have to talk about constraints. Where do you want to constrain behavior? There’s a lot of horrible information about the coronavirus on the internet today. Whose job, and people are going to die because of that. I’m not being overdramatic here. There just are people who believe it’s only the flu and therefore they go to large gatherings and say, yeah, I’ve been tested, I haven’t been, it’s not that serious. I don’t feel like that bad. It’s like those kinds of things happen. And how do we as a society address that? I don’t have answers. I just know that there are a lot of questions about the obligation of either folks like Google and Facebook and Twitter and the obligation of government to make sure that the platform is actually a healthy platform and creates information, allows debate, honors the first amendment but doesn’t include a lot of false information that really is life threatening and has other negative repercussions. There’s all kinds of other things. There’s a lot of antitrust issues that we didn’t have to address and I think certainly are competition issues. There’s a variety of different ways to look at it in terms of how the platform should be regulated. So you have all of those things. Another thing that’s really different is the document is very domestic, because at that point, pretty much all the big applications were US generated. We were the center of the universe in terms of the broadband world. That’s not true anymore. And you have to take into account the implications of the EU regulating. You have to take into account China in many different ways. So I think it would be a very different kind of project. I hope somebody takes it on, I’d be happy to volunteer to help.
Scott: You’re talking about much more of a broadband ecosystem report with competition and platforms. I mean, actually the plan talked about some of these a little bit. There’s a really, I think, nice discussion of privacy in it where it laid out, here are the pros and the cons. Here’s what, here’s the good that comes with the data. Here are the concerns we have with collecting it and using it. You can read it today and it still reads as current.
Blair: It does and you know, privacy. There’s kind of in the weeds story. I had someone who I really wanted to bring on to write the privacy part of it. He was, in my opinion, the best person. The problem was he was a lobbyist for a public interest group and file documents at the FCC and under the Obama rules, lobbyist were not allowed to be hired, this sound so quaint back in those days as you now have X lobbyists actually running the departments. But it took me almost four months to get approval to hire him and by then it was too late for him to really write it. So we wrote what to me was a truncated section. I agree, I think it reads pretty well. But privacy would be another one of those issues you do a much bigger piece on that. And privacy is a two way street. Part of the reason we don’t have the applications that I was hoping we’d have education, healthcare is because of concerns about personal data, very legitimate concerns. And then how we work that out. Ideology doesn’t help you. You got to actually analyze it and do some of the hard work and then you make judgment calls about where the trade offs are.
Scott: So I think we’re about out of time,
Blair: But Scott, didn’t I ask you, when you read your own sections, what do you say? Hey I got that part right. I’m often credited with being the writer of the plan. I always crack up. As you know, I did not write the plan. People like you wrote the plan. How do you think about what you do?
Scott: I was hoping to avoid that question. I actually like what I did and you know part of the plan was you talked about all the input people gave and there were papers behind it and at one particular paper I wrote with Colleen Callahan on competition, broadband competition is still getting cited pretty frequently and I’m pleased with that and I think the right parts of it ended up in the plan and it was a great experience. I liked the data that we got to work with the ability to ask questions and answer them and you’re right, If we were doing it today, we would think about competition in a different way. At the time we looked at it, narrowly isn’t quite the right word, but it was just broadband competition. That was the big question. That’s still a question, right? It’s still a big issue, but we didn’t consider competition in other areas. In areas that rely on broadband and that’s of course a huge area because then you could define what the entire economy that way, but if we could narrow it down properly, I think that would be something worth considering. And that was pretty much not an answer.
Blair: Is there anything that, now in retrospect, wish you had written differently? I mean from my perspective there are certain things, there were these small tactical things, like I wish we had addressed the question of receivers standards. It’s an obscure question in some ways, but it’s interesting how receiver standards keep coming up in spectrum debates. We didn’t really address that. I think that it’s always hard to address because there were a bunch of receivers that were built on a time where people weren’t as sensitive to the needs of spectrum and that that has slowed down the utilization of certain parts of spectrum.
Scott: The thing that I wish we’d been able to include would’ve been more empirical work on wireline/wireless substitutability. Of course, we know 10 years ago that was true, I mean it was substitutable only for a small group of people, but if we had started to get some estimates of cross elasticities, it would’ve been a nice baseline to see how to the market is changing over time. And I think potentially we had the resources available to do it and you know, often those kinds of resources don’t exist elsewhere. So that would have been nice. I thought we wrote a pretty good description of what that kind of competition could look like and perfect competition and how it matters, whether the firms can identify the subgroups of the market and so on. But it would have been a nice approach. I don’t know that we would’ve had the bandwidth, so to speak, to do it, but that would have been a nice addition.
Blair: Well, I certainly think that’s one of the most important issues for the next decade. I will tell you one of the interesting things in our debate about adoption, the should you include people using mobile phones because there’s a lot of evidence that particularly low income people are buying internet connections on their mobile phones and then don’t have it in the house and they’re making a very conscious choice about that. They can’t afford two different services or at least they’re not prioritizing those two different services. But as we watch for kids having to do homework, which you can’t really do on your mobile phone, as we watch now, you know, school systems being shut down so the kids have to attend classes remotely. You really can’t do that over your phone or you can’t do it very effectively. As we see remote work being done, there’s an interesting question of, given the use case whether they’re really competitive and I think you would know more than me, as an economist, whether the fact that someone is choosing not to buy the in-home but using the mobile, does that mean mobile is actually competing with wired or are they still kind of two separate things? My intuition is they’re separate. I know that there are various people who have argued at the FCC that there should be one broadband market. If you do that, of course you basically are saying, well then why can’t AT&T and Verizon merge, which I think most people would regard is probably a mistake. I’m not 100% sure, but I think it’s a mistake. But now we have this really interesting question of will 5G compete with cable. I think the best view is it will compete in a very small number of homes. And I think what the FCC said about T-Mobile competing everywhere, it’s just wrong and I don’t know anyone on Wall Street who believes it. I do think though, in some areas, it makes sense. The problem is the cost of using spectrum to deliver big streams of data. It’s so expensive, you’re better off using it for moble services not fixed services, but you know I could be wrong. It’s very interesting to see what Charlie Ergen is going to do.
Scott: Yeah, it’s always interesting to see what he’ll do but [inaudible]
Blair: Now is a much better issue. Anybody should be trying to create the baseline and try to create metrics for which we basically say that mobile competes with fixed.
Scott: Right. And there are there related issues. People use their phone as a hotspot in which case their phone is providing the internet service and then you’re using for something else. And if you could actually use that hotspot for unlimited video streaming to your television, then it probably would really be a just about a full substitute. But I don’t believe anybody does that. But you also see, though, in the data is people across the board, and in particular low income households, having fewer laptops or desktops at home. This is just from the current population survey. So there’s a question of maybe you get the internet in the house one way or another, whether it’s through a mobile phone and a hotspot or a hard line that’s still doesn’t by itself give kids that ability to do their homework. And that’s something that people talk about ten years ago, probably even further. But I think in some ways we’ve made a lot of progress on getting low income people online even though that digital divide is so much bigger than the rural divided. But as internet connections increase, the number of computers in the home seems to decrease. So does that mean that it’s not actually helping the kids do their homework? I don’t know.
Blair: I don’t know the answer to that, but I think that’s one of the things it would be, this is what we’re saying, the FCC ought to aspire to have that credibility of a Bureau of Labor Statistics and providing information about the platform, the network and the platform and how it’s being used and all that. That would be a very valuable thing to know because that is where the world is going.
Scott: Well on that. We should probably wrap up, so thanks so much for talking.
Blair: Yeah, well thank you so much for doing this. Let me just say again, it was so much fun to work with you and everyone else on the team. You know, we had a couple of events scheduled for the 10th anniversary that we will be canceling because of the coronavirus, but there is some small solace for us who kind of read all of these stories about, you know, schools saying the kids are all going to be doing their classes remotely and others saying the workers are going to be doing everything remotely. And probably knowing that if the broadband world had been what it was 10 years ago, that would simply not be possible. That is not to say that it was the broadband plan uniquely and solely responsible for the import changes, but it’s nice to know that we played some role in making it possible that there could be some mitigation of what’s going to be very devastating situation for the country and the world.
Scott: That’s true. I hope so. All right. Thanks so much Blair.
Blair: Thank you. I’ll talk to you later. Bye.