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Fake News and Filter Bubbles: The Quello Search Project

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Wednesday, October 11th, 2017

Bill Dutton will present the findings of the Quello Search Project to kick off a workshop on fake news and filter bubbles at Bruegel, a European think tank, specializing in economics, that is based in Brussels. Background on the Quello Search Project can be found in the initial report of the project, Search and Politics: The Uses and Impacts of Search in Britain, France, Germany, Italy, Poland, Spain, and the United States. A short blog about the thrust of our findings is also online, entitled “Fake News, Echo Chambers and Filter Bubbles: Underresearched and Overhyped“.

Brussels

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How to assess consolidation in broadcasting.

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Monday, October 2nd, 2017

Last week, Vincent (Vinnie) Curren, Principal at Breakthrough Public Media Consulting, Inc., gave an insightful Quello Center presentation about the technological and market potential of ATSC 3.0, an IP-based standard created by the Advanced Television Systems Committee (ATSC).[1] As CNET put it, this standard was created with the idea that most devices would be Internet-connected, enabling a hybrid system whereby the main content (audio and video) would be sent over the air, but other content (advertisements) would be sent over broadband and integrated into the program. This creates some very interesting opportunities for individualized marketing, though as ATSC touts in a somewhat cutesy promotional video, ATSC 3.0 is capable of a lot more.

Vincent Curren

The conversation with Vinnie took an interesting turn (to me anyhow), when he contrasted the state of public broadcasting in Michigan with that in Arkansas. According to Vinnie, public broadcast station management in Michigan is highly balkanized, whereas in Arkansas, it is largely centralized. This implied far fewer individual station engineers and managers in Arkansas, where budget savings from having a smaller bureaucracy are instead applied toward better local news coverage. Effectively, Vinnie was touting the benefits of merger to (state level) monopoly.

This statement immediately set off my antitrust alarm (which sounds like this). After all, even if a merger between two firms that preserves both firms’ products (e.g., broadcast stations) can reduce costs, monopolistic ownership could still raise prices above that in a duopoly by internalizing competition between the firms. More specifically, when one firm in a duopoly raises its price, some of its customers will switch to its competitor’s product and vice versa. This competitive threat puts downward pressure on prices relative to what happens under a monopoly. When a monopolist sells both products, a rise in the price of one positively impacts demand for the other, inducing the monopolist to set higher prices unless a merger to monopoly lowers costs sufficiently to offset this anti-competitive effect. The fact that antitrust practitioners seldom consent to a merger to monopoly suggests that the anti-competitive effect usually dominates.

However, the broadcasting market is different! Broadcasters operate in a multi-sided market that is likely to become even more complicated by the spread of ATSC 3.0. First, consumers of content do not pay broadcasters to watch television. Instead, broadcasters subsidize consumers, but charge advertisers for airing commercials (though in the case of public broadcasting, this is largely supplemented by contributions from viewers like you). Broadcasters may also charge retransmission fees to cable operators who carry broadcasting content and do charge consumers for content generally. Moreover, with ATS 3.0, Internet service providers will have to be involved in this market if advertisements are to be integrated via broadband. This means that the effect of merger operates through a mechanism that is far more complex than the “internalization of competition.”

After Vinnie’s presentation I considered whether economists have attempted to tackle the issue of merger in a multi-sided market. The issue is relatively understudied, but two papers stood out in my literature search:[2]

  1. Chandra, A., & Collard‐Wexler, A. (2009). Mergers in Two‐Sided Markets: An Application to the Canadian Newspaper Industry. Journal of Economics & Management Strategy, 18(4), 1045-1070.
  2. Tremblay, M. J. (2017). Market Power and Mergers in Multi-Sided Markets. Available at https://ssrn.com/abstract=2972701.

Chandra and Collard‐Wexler (2009) theoretically explore a two-sided merger from duopoly to monopoly and then use difference-in-differences approaches to empirically investigate mergers by newspaper publishers. As in many other two-sided markets, newspaper publishers offer one side (consumers) a subsidy by charging below cost. This is because newspapers not only value readers’ circulation revenue, but also the value that advertisers place on consumers. In the model of Chandra and Collard‐Wexler (2009), the key factor that determines how newspaper mergers affect prices is how newspapers value the marginal consumer who is indifferent between two competing newspapers.

If the revenue that this consumer indirectly brings in through advertisement consumption is lower than the loss to the newspaper of subsidizing the consumer’s newspaper purchase, then competing duopolists will set higher circulation prices in equilibrium than a monopoly owner of the two papers (even absent any cost reduction by the monopolist). This result is driven in large part by the authors’ assumption that consumers who are indifferent between the two papers will turn out to be less valuable to advertisers, and hence will bring in advertising revenues that are lower than the subsidy they enjoy on the paper. The assumption is well motivated in the paper, but may not necessarily apply in broadcasting. Moreover, if the reader provides a positive value to the newspaper, then mergers can still increase prices (unless cost reduction is sufficient to counteract market power).[3]

Tremblay (2017) sets up a relatively general multi-sided platform model that he uses to measure platform market power and to assess the effect of platform mergers. In this model, multiple platforms that facilitate interactions between distinct groups (e.g., broadcasters might serve consumers of content and advertisers) compete by pricing for each interaction facilitated by the platform.

The model highlights the complexity of analyzing multi-sided markets by recognizing that demand for any interaction is a function of not only the vector of prices involved in that interaction—as in a “one-sided” market—but also of the vector of all other interaction types! Thus, not only must we consider the demand response to a change in price for that interaction, but also the demand response to the numerous potential externalities that might exist (e.g., a negative network externality can occur on media platforms where greater consumer advertisements diminish consumer usage on the platform).[4]

As such, in addition to consisting of the usual marginal cost and demand elasticity contingent markup, the equilibrium price for a specific interaction is also dictated by what Tremblay refers to as “marginal profit elsewhere,” which consists of the marginal changes that the interaction in question engenders on all other interactions. Moreover, in the case of a multi-platform seller (e.g., broadcaster that owns multiple stations), as might follow post-merger, the equilibrium price is impacted not only by the standard diversion term that gauges the extent to which a merger can internalize competition, but also by “diversion elsewhere,” which results from multi-sidedness. This “diversion elsewhere” means that some platform prices may decrease post-merger, suggesting that even without cost-reduction benefits, a horizontal platform merger may be efficient.

Certain factors complicate matters even further in broadcasting. As Vinnie pointed out, a significant part of a local television station’s advertising revenue comes from national advertisers, especially in the larger markets. In many cases, prices are not set unilaterally, but are determined through negotiations with advertisers. A larger multiple-market footprint gives larger broadcast groups leverage when they negotiate pricing for national clients. The effect of a broadcasting merger surely depends on this countervailing bargaining power as well as on whether content consumers view advertising as a good or a bad.

Additionally, a significant part of local station revenue comes from “retransmission consent fees.”[5] If it opts for retransmission consent, a cable service provider is not required to carry the broadcaster’s channel, but if the cable operator chooses to do so, the broadcaster can demand “retransmission” or rights fees.  A large station owner like Sinclair, which operates hundreds of stations, has additional leverage when negotiating retransmission consent fees with a large cable operator like Comcast. Of course, cable companies may pass these fees down in the form of higher prices to consumers. The additional revenue on the broadcaster side may lead to better content, but that will probably come at a higher price for cable service.

ADDENDUM

After reading this post, a former colleague who is very knowledgeable in this area pointed out that there has been some research on the trade-offs of consolidation in two-sided markets and related issues that predates the modern multi-sided market literature.

An early two-sided market analysis by Robert Masson, Ram Mudambi, and Robert Reynolds (1990) shows that competition can sometimes lead to a price increase. Moreover, in the model, competition either makes advertisers better off while making media-consumers worse off or the other way around. An even older related piece by James Rosse (1970) seeks to estimate cost functions in the newspaper industry without cost data. Yet another article concerning the newspaper industry by Roger Blair and Richard Romano (1993), looks at newspaper monopolists, which as the authors point out, nevertheless frequently sold newspapers at below cost. I suspect that the two-sided logic for this to occur is a lot more clear to economists today than it was in 1993.

 

[1] ATSC is an international, non-profit organization developing voluntary standards for digital television. Member organizations represent the broadcast, broadcast equipment, motion picture, consumer electronics, computer, cable, satellite, and semiconductor industries. See https://www.atsc.org/about-us/about-atsc/.

[2] Other related work includes Filistrucchi et al. (2012) and Song (2013). See Filistrucchi, L., Klein, T. J., & Michielsen, T. O. (2012). Assessing unilateral merger effects in a two-sided market: an application to the Dutch daily newspaper market. Journal of Competition Law and Economics, 8(2), 297-329; Song, M. (2013). Estimating platform market power in two-sided markets with an application to magazine advertising. Available at https://ssrn.com/abstract=1908621.

[3] Note that I have not discussed the impact of merger on the price of advertising. The authors find that the effect on advertising price is indirect: if there is an increase in a newspaper’s circulation price, this will increase the average value to advertisers of that newspaper.

[4] In the words of Tremblay, demand contains an infinite feedback loop because demand for an interaction by platform X is a function of demand for an interaction Y and vice versa.

[5] Commercial stations have a choice between two options with respect to making their programming available to cable and satellite systems. They can exercise “must carry.”  If they do this, the cable service provider is required to carry the broadcaster’s primary channel but does not have to pay the broadcaster any rights fees for carrying the channel.  Alternatively, cable service providers can exercise “retransmission consent.”

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Conference on Emerging Media at Peking University

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Sunday, September 24th, 2017

The new department of Emerging Media at Peking University, Beijing, China, held a conference on 15 September 2017 on its subject, ‘Emerging Media’, subtitled Connection, Innovation, Transformation. Peking University is at the top of universities across China, so its establishment of this department about four years ago is reminiscent of Oxford University establishing the Oxford Internet Institute (OII) in 2001. I expect that this new department will have an even larger impact on the development of the field of Internet and new media studies across China and around the world. It was an honor to give one of the keynotes around our research on the political implications of search.

My thanks to the Dean, Professor XIE Xinzhou, and his colleagues at Peking University, including Professors WANG Xiuli (Charlene), Professor LI Wei and TIAN Lily, from Peking Un, and many helpful students, such as Rita Ji, who helped me throughout my stay. Their team pulled together colleagues from around the world, including James Katz (Boston College), S. Shyam Sundar (Penn State), Leopoldina Fortunati (Un of Udine), ZHOU Baohua (Fudan), WEI Ran (Un of South Carolina), Erik P. Bucy (Texas Tech), WANG Xiaoguang (Wuhan Un), ZHANNG Hongzhong (Beijing Normal Un), Kuang WenBo (Renmin Un), HAN Gang (Iowa State Un), Gil De Zoniga Homero (a former OII SDP student, now chaired professor at Un of Vienna), Eriko Uematsu (Musashino Gakuin Un), Neta Kligler-Vilenchik (Hebrew Un of Jerusalem), YU Nan (Un of Central Florida), and my former colleague while visiting the OII, Professor JIN Jianbain (Tsinghua Un).

They organized an engaging several days of talks and visits, such as to the Headquarters of Sina Weibo, giving all of us a personal sense of current developments around the Internet and social media in China.

James Katz and Bill Dutton

Conference at Peking University Dept Emerging Media

Dutton Speaking at Peking

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Welcome to Dr Laleah Fernandez

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Monday, September 18th, 2017

We are thrilled to welcome Dr Laleah Fernandez to our research team at the Quello Center. Laleah joined us in early September as the Quello Postdoctoral Research Fellow and hit the ground running as we finalize contracts for some new and exciting research projects. As an MSU alumna who earned her Ph.D. in Media and Information Studies, her M.A. in Advertising and her B.A in Journalism, Laleah is a true Spartan and a great asset to the Center.

Laleah Fernandez

With her strong background in policy work and media research, Laleah will play a key role in the Rocket Fiber project on access to the Internet in Detroit, as well as the Google search project. She will also be developing strategies for better connecting the Quello Center with the state policy communities of greatest relevance to our work.

Previous to coming to the Quello Center, Laleah was an Assistant Professor in the Department of Information and Computing Science at the University of Wisconsin – Green Bay. Her research interests include network analysis and the role of new and emerging media in community-level and global mobilization efforts. Laleah has published research and reviews in the areas of advertising, economic development, mobilization, and science communication.

We are excited to have her on board, and we look forward to working with her! Welcome, Laleah!

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Annus Mirabilis for MSU Spartans?

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Wednesday, August 30th, 2017

After what was arguably an Annus Horribills for MSU in several respects, the new academic year begins with news that bodes well for the new academic year. It could herald a real Annus Mirabilis.

Namely, Michigan State University (MSU) is doing a terrific job at what a public university is supposed to do.

MSU

First, it is educating a huge number of Michigan students. Its enrollment is over 50,000 students, and this year saw MSU’s largest class in its history – 8,000 first-year students, plus 1,550 transfer students (Lansing State Journal 8/28/17). And most (72%) are Michigan students, with MSU being the top destination for public high school graduates in Michigan.

Second, it is a diverse class. For example, we have the largest intake of African-American students of any Big Ten university. 610 African-American students in the first year cohort. MSU is contradicting worrisome trends in diversity across the US.

Thirdly, students are getting jobs. MSU has been tenth in the nation in its job placement rate http://www.onlineschoolscenter.com/30-colleges-impressive-job-placement-rates-career-services/ It has since risen to third. Incredible.

Add to this news that MSU was named at one of the world’s 50 powerhouse universities by the Times Higher Education supplement. This means it is one of the top 50 universities in the nation that is likely to challenge the Ivy League universities in the coming years.

So the new academic year is looking good for MSU Spartans.

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Should the FCC price-cap business broadband?

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Saturday, August 26th, 2017

Last month, prolific telecomm researcher Susan Crawford wrote about the multi-billion dollar market for business data services (BDS). This market consists of “middle mile” networks used to connect consumers and businesses across cities and neighborhoods. As I explained in a 2016 Quello Center presentation concerning this market (previously referred to as “special access”), these connections, which are owned by “local exchange carriers,” are used, for example, by large businesses to facilitate intranet communication, by cell-phone providers to funnel voice and data traffic between towers, and by banks to connect to their ATMs. Incumbent local exchange carriers (ILECs) also wholesale business data services to rival, competitive local exchange carriers (CLECs), who compete with them head on.

Ajit Pai reciting Lewis Carroll’s parable on the dangers of over-regulation in the communications sector.

Professor Crawford’s concern, and that of others before her,[1] is that unregulated ILECs will exploit their monopoly power to keep prices high and competition out. As Crawford notes, following a massive data collection to analyze the BDS market, in 2016, the Commission appeared on the cusp of extending regulation in this market, but reversed course following the 2017 change in leadership (see 2017 Commission Order here). In particular, the FCC provided that there would be no new regulation of packet-based BDS, and that the continuation of currently regulated TDM-based services would be determined by a market test that Crawford called “unbelievably counterfactual [and] low.”[2]

The regulation in question is price-cap regulation of ILECs’ wholesale and retail prices, which, in markets deemed not to be sufficiently competitive, constraints the prices that ILECs charge for various regulated business-data services that they offer. As my former FCC colleague, Omar Nayeem, and I show in a recent theoretical working paper motivated by the FCC’s BDS proceeding and set to be presented at next month’s TPRC conference, while the case for price-cap regulation appears rather strong, Chairman Pai is justified in his evident concern about the potential deleterious effect of regulation on competition.[3]

In our work, Omar and I study a setting in which an ILEC sells business data services in the (enterprise) “retail” market as well as to a potential CLEC, who purchases access to ILEC networks and/or facilities and resells it in the retail market.[4] Our interest is in the static welfare and dynamic investment ramifications of price-cap regulation in this market relative to what would happen without price-cap regulation.

Static Welfare Results: In our static analysis, we consider profits and consumer-surplus levels that would prevail if the FCC capped the ILEC downstream (retail) and wholesale prices for BDS at marginal cost as well as those that would prevail without price-cap regulation. Our interest is not on a comparison of these two scenarios—ILEC profits are obviously lower and consumer surplus higher following price-cap regulation—but rather how the relevant regulatory regime affects competition and incentives by ILECs to foreclose potential entrants.

To our surprise, we discovered that, when price-cap regulation is not in place in such a market, CLEC entry, at least in theory, leads to what Chen and Riordan (2008) have dubbed “price-increasing competition.” That is, the ILEC ends up setting higher prices following CLEC entry than it would as a monopolist. This occurs because the ILEC can exploit its control over the wholesale price of BDS to force the CLEC to set a high retail price, which mitigates the negative impact of entry on the ILEC’s retail sales. In addition, when the wholesale price is high, the incumbent incurs a greater opportunity cost of lowering its price through lost unit sales to the entrant. Thus, the entrant’s reliance on the incumbent in the upstream market undoes the typical effect of entry, which normally is a disciplining force on the incumbent’s retail price.

Naturally, the price-increasing competition that follows wholesale entry can lead consumers to be worse off than they might be under an ILEC monopoly. By forbidding price-increasing competition, price-cap regulation ensures that consumers are better off (because of their increased choice) following entry than they would be under a price-capped ILEC monopoly. Importantly, we find that price caps should not raise any concerns about foreclosure. In particular, the ILEC does not have an incentive to foreclose the CLEC when it is price-cap-regulated unless it also has that incentive in the absence of price caps. The intuition for this finding is rather straightforward: when ILEC retail prices are capped at marginal cost, the only way it can now earn positive economic profit is by selling to the CLEC at wholesale to save on any downstream retailing costs.

Dynamic Investment Results: Though Omar and I investigate the impact of price-cap regulation on both ILEC and CLEC investment incentives, for brevity (as if this blog post weren’t already long enough), I discuss here the impact of price caps on CLEC investments to self-provision. In other words, Omar and I ask the following question: might there be situations under which the CLEC would choose to invest in its own duplicative network facilities to obviate its reliance on wholesale BDS when the ILEC is not price-capped, but choose to continue to rely on wholesale BDS under price caps? Conversely, what about the other way around?

The answer is ex-ante unclear. Under regulation, the ILEC’s initial downstream price is relatively low (equal to marginal cost) and does not drop following self-provisioning (whereas it would drop without price caps as the ILEC responds to its competitor by lowering its price). This means that, under regulation, self-provisioning does not elicit a major competitive response from the ILEC, giving the CLEC a stronger incentive to do so. However, under regulation, the initial wholesale price is low as well (also equal to marginal cost), so that self-provisioning does not lead to as much of a marginal cost reduction as it would in the scenario without price-caps, in which the wholesale price is initially high. What we find is that the latter effect dominates under most reasonable values of the relevant parameters.

If the CLEC has a sufficiently low fixed cost of self-provisioning, it will do so regardless of the presence of price-cap regulation, whereas, if that fixed cost is sufficiently high, the CLEC will remain a wholesale entrant regardless of the regulatory regime. The significance of our finding is that, under most parameter specifications, there is an intermediate range of fixed costs of self-provisioning whereby a CLEC might invest in the scenario without regulation, but would not do so under price-caps.

The idea that regulation might forestall investment is far from new in telecommunications. In the debate over net neutrality, opponents frequently touted the likely deleterious effect of net neutrality on broadband investment.[5] Similarly, in various proceedings involving roaming by wireless service providers, opponents of FCC roaming regulations were concerned with attempts by rivals to “piggy-back” on their networks.

What we find is that this concern is relevant in the context of price-cap regulation as well. However, whether this concern justifies FCC actions to reduce the scope of price-cap regulation is an empirical question we leave for future researchers. In our work, Omar and I found that price-caps have positive social effects, both static and dynamic (though the latter are not discussed in this post). These benefits must be weighed against the concern about forestalling entrant investment.

 

[1] See, for instance, two posts from the Benton Foundation here and here.

[2] Unlike more recent packet-based technologies, time-division multiplexing (TDM) transmits signals by means of synchronized switches at each end of the transmission line.

[3] Most of the analysis in this work was performed while I was at the Quello Center and Omar was an economist at the FCC. In particular, the analysis was begun during the Wheeler administration and completed during the Pai administration, and represents the opinions of the authors, not the FCC or any of its Commissioners.

[4] Indeed, our theoretical framework applies more broadly to markets where firms supply their rivals (i.e., energy, water and sewage, etc.).

[5] George Ford discusses this concern and takes a straightforward econometrics approach to try to answer this question here and in other Phoenix Center Perspectives.

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Quello Assistant Director to Present Research Findings at TPRC Capitol Hill Briefing

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Wednesday, August 23rd, 2017

Dr. Bianca (Bibi) Reisdorf, Quello Assistant Director and Assistant Professor in Media and Information, has been invited to present her research findings on race and digital inequalities at the TPRC Capitol Hill Briefing on Thursday, September 7, 2017. Each year, the TPRC (The 45th Research Conference on Communications, Information, and Internet Policy) panel invites four conference presenters to discuss how their research affects policies at a briefing on Capitol Hill on the day prior to the main conference.

This year’s discussion will be moderated by Dr. Carleen Maitland (Pennsylvania State University), who is also the current chair of the TPRC. Speakers include Professor Michelle P. Connolly (Duke University), who will discuss U.S. Spectrum; Dr. Jonathan Cave (University of Warwick), who will present on Privacy andSecurity; and Professor Philip M. Napoli (Duke University), who will present his work on the First Amendment and Fake News. Dr. Reisdorf will present findings from her work with Dr. Colin Rhinesmith, who is an Assistant Professor at Simmons College, and a Faculty Associate at the Berkman Klein Center for Internet & Society at Harvard University. In their paper, titled Race and Digital Inequality: Policy Implications, they combined quantitative data analyses using Pew data, American Community Survey data, and FCC Form 477 data with qualitative data from a Benton Foundation study on digital inclusion initiatives in several cities across the US. The combination of these rich data sources brought forward deeper insights into what is keeping some of the economically hardest-hit communities offline and how policy can help increase digital equity. For example, quantitative analyses of data on Kansas City, MO, and Kansas City, KS, emphasized existing digital inequalities along factors such as race, income, and education, and showed that fewer fixed broadband providers offer their services in poor urban neighborhoods. The qualitative case study of digital inclusion initiatives across these neighborhoods, however, showed that local, well-designed digital equity programs have a positive impact in mitigating these inequalities. While federal policies can help to provide more infrastructure and service to hard-hit neighborhoods through programs such as Lifeline, local organizations and policymakers can provide context-specific on-the-ground support that builds on the resources and assets already available in the communities to allow meaningful broadband adoption.

The TPRC Capitol Hill Briefing takes place at the 2075 Rayburn House Office Building on Thursday, September 7, 2017, from 3:30-5:00 P.M. and is open to the public. Please register at https://www.eventbrite.com/e/telecom-policy-congressional-briefing-2017-tickets-36809648650 if you would like to attend this talk.

 

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Quello Center Presentations for TPRC 2017

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Saturday, August 19th, 2017

Faculty and staff of the Quello Center will be actively engaged in this year’s Telecommunication Policy Research Conference (TPRC). The following papers on the schedule for the 45th TPRC Research Conference on Communications, Information, and Internet Policy, at George Mason University in Arlington, Virginia:

Social Shaping of the Politics of Internet Search and Networking: Moving Beyond Filter Bubbles, Echo Chambers, and Fake News,” by William H. Dutton and Bianca C. Reisdorf (presenter), Quello Center, Michigan State University; Elizabeth Dubois, Department of Communication, University of Ottawa; and Grant Blank, Oxford Internet Institute, University of Oxford.

“Race and Digital Inequality: Policy Implications,” by C.H. Rhinesmith, Simmons College (presenter), and B.C. Reisdorf, Quello Center.

Price-Cap Regulation of Firms That Supply Their Rivals,” Omar A. Nayeem, Deloitte Tax; and Aleksandr Yankelevich, Quello Center (presenter).

Cyber Security Capacity: Does it Matter?” by William H. Dutton, Quello Center; Sadie Creese, Computer Science, Oxford University; Ruth Shillair, Quello Center (presenter), Maria Bada, Oxford Martin, University of Oxford; Taylor Roberts US Dept of Management and Budget.

Regulating the Open Internet: Past Developments and Emerging Challenges,” by Kendall J. Koning, Department of Media and Information, Michigan State University (presenter); and Aleksandr Yankelevich, Quello Center.

We hope you can join the conference and provide feedback on our papers.

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James H. Quello: A Biographical Note by Lauren Lincoln-Chavez

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Sunday, August 13th, 2017

James H. Quello
A Biographical and Historical Note

Compiled by Lauren Lincoln-Chavez for the James Quello Archive

Early Life

James Henry Quello (April 21,1914-January 24, 2010) was born in Larium, Michigan, a northern Italian copper mining colony. In the 1920’s, the Quello family relocated to Detroit, where Quello’s father opened a grocery store in Highland Park, later working for Ford Motor Company as a factory worker and foreman. In a neighborhood dominated by the Klu Klux Klan, James H. Quello experienced discrimination and racial violence due to his Italian-American heritage. He describes his early years as where he “start[ed] becoming a strong believer in self-defense in school and in life.” After prohibition was repealed, the Quello family returned to Larium, opening a thriving saloon across from the police station.
As a college student at Michigan State University, Quello served in the ROTC and pursued journalism with the intention of becoming a newspaperman. He worked multiple positions for MSU’s college newspaper, including columnist and editor, and served as a newscaster on WKAR; a 500-watt college radio station. He graduated with a Bachelors of Art from the College of Arts and Letters in 1935 and was awarded an honorary Doctor of Humanities degree in 1977 from Michigan State University. In 1975, he received an honorary Doctor of Public Service from Northern Michigan University.

WWII (1941-1945)

A World War II hero, James H. Quello served as a Lieutenant and Lieutenant Colonel, earning several commendations for his service. He survived amphibious landings in Africa, Sicily, Italy, and France, and assault crossings on the Rhine and Danube in Germany. In addition to serving as Lieutenant of the infantry, Quello was paid to write articles for service papers. At the summons of Lieutenant Colonel Sandlin, he witnessed the horrors of the Dachau concentration camp before it was deemed off limits. At the end of the war, Quello was assigned to Camp Blanding, Florida, to train an infantry battalion in preparation for Japan.

Broadcasting Career

In July 1945, James H. Quello began his position as Publicity Director for the Lone Ranger and Green Hornet at the WXYZ-AM Detroit station, where he became the personal liaison between Bing Crosby and the ABC radio network. After WXYZ-AM station was purchased by the ABC network Quello took a position as General Manager at WJR-AM, the dominant 50,000-watt clear channel station. Later, he was promoted to Vice President, where his broadcast executive leadership was distinguished by a doubling in WJR (FM)’s power, the implementation of affirmative action policies, and the placement of J.P. McCarthy in a key drive-time spot; where he was the highest rated morning man for 28 years. Under Quello’s leadership, WJR was awarded numerous awards and citations.

During his tenure, WJR implemented affirmative action policies; hiring the first black Disc Jockey, Bill Lane, in 1949. Quello was the architect of “complete range programming,” featuring minority and adult programming. WJR was the only station to feature a 16-piece orchestra and choir training program for high performing high school students, “Make Way for Youth.” Amongst the graduates were prominent black choral members Freda Payne and Ursula Walker. WJR served as the leader in coordinating with national news networks during Detroit’s 1967 rebellion, providing comprehensive local and national coverage. Quello also wrote articles for fourteen community newspapers, titled “Radiograms” by Jim Henry, and was a Detroit stringer for Variety magazine.

James H. Quello had extensive involvement in the Michigan Association of Broadcasting (MAB), where he served as president and government relations chairman. He was appointed by four different Mayors to serve as a member of the Detroit Housing and Urban Renewal Commission for a total of 21 years, where he advocated for open occupancy and low-cost housing for minorities. He also served as a trustee on the Michigan Veterans Trust Fund for 22 years, where he was appointed by four different Governors, and facilitated innovative initiatives. Quello’s broadcasting career provided a practical foundation for his career as an FCC Commissioner and Chairman (1993).

Federal Communications Commission

James H. Quello’s 24-year career as an FCC Commissioner, 1974-1998, was greatly influential, assisting the FCC in ushering in revolutionary technological changes during a global cultural shift in media and communications. His advocacy for communication and broadcasting policies brought new telecommunications options to the American public through the development of cable and satellite TV, high-definition digital broadcasts, and personal communications services. Quello’s regulatory philosophy was guided by a desire to create flexible policies to accommodate quickly changing technologies, as the world began to expand through economic and political initiatives into new territories, technologies, and cultures.

James Quello

Known for the longest and shortest confirmation hearing, 8 days and 15 minutes, respectively, James H. Quello was first appointed as an FCC Commissioner in 1974 by President Richard Nixon on the recommendation of the Vice President, Gerald Ford, who built his political career representing Michigan in the House of Representatives until 1973. Despite Quello’s bipartisan support, his appointment was heavily contested by Ralph Nader, who viewed Quello as a pawn of the radio and broadcasting industry. Throughout his career as an FCC Commissioner, James H. Quello advocated for equal opportunity; minority ownership; affirmative action policies; free universal television; and deregulation; taking a strong position against sex and violence in television broadcasting, and financial interest and syndication rules. He heavily pursued the fining of shock-jock Howard Stern for anti-indecency rule violations.
Commissioner Quello was a champion for public broadcasting; committed to free over-the-air broadcasting, deregulation, and limiting violence in television broadcasting. He assisted with the modernization of broadcasting transmission systems, bringing HDTV into the modern age with minimal government oversight. A strong proponent of must-carry rules and retransmission consent, he believed these regulations would be beneficial for broadcasters and viewers. Commissioner Quello served as Chair of the TCAF committee, providing assistance to public broadcasting stations seeking financial stability. In the final year of his career as an FCC Commissioner, James H. Quello worked on the 1996 Communications Act, enabling cross-ownership between telecommunications companies; designed to foster marketplace competition, but which was followed by greater concentration of media ownership.

As a supporter of freedom of speech and First Amendment rights, Commissioner Quello supported the deregulation of commercial limitations in television broadcasting (1981). He adamantly argued against the imposition of three hours of educational programming in children’s television programming, contending that educational programming regulations would impose on First Amendment guarantees of freedom of speech, and quantitative regulations would be difficult to uphold in court. He later reversed his position in 1996, after outraged demands from congressmen and senators.

Affirmative Action

During his career as a Commissioner, the FCC initiated affirmative action policies utilizing rigorous standards of equal opportunity employment to increase minority hiring and ownership in broadcasting. Licensees were required to understand the community they served and make efforts to recruit employees represented in the community. In 1977, the Commission adopted affirmative action policies for the review guidelines for EEO license renewal, requiring an in-depth staff review for stations with six to ten full-time employees and no minority or female employees. In 1980, the Commission tightened the EEO review policy, increasing the standards for equal opportunity employment in the broadcasting industry; imposing sanctions on broadcast stations that did not provide opportunities to minorities.

James H. Quello was a consistent advocate for the review of ownership rules. He was the first FCC commissioner to demonstrate support for minority ownership, advocating for affirmative financing policies in commercial broadcasting station ownership. Commissioner Quello also pushed for distress sales to minorities at 75% of appraisal value versus license revocation and for tax certificates with tax breaks for minorities. Clear Channel Communications was the first network to sell a broadcasting station to minority owners, as they were forced to divest due to ownership limitations imposed by the FCC. Commissioner Quello supported improvements to UHF broadcasting to facilitate the development of local public broadcasting initiatives and minority ownership.

Personal Communication Services

Considered the “Father” of Personal Communication Services (PCS), Quello’s initiative helped spurr the development of the cellular industry. Quello served on a commission, which established the regulatory framework for PCS; developing the band plan and regulatory scheme for private land mobile devices. Quello’s staff advocated for a regulatory framework of the Low Earth Orbiting Satellites (LEOS), that made mobile communications globally feasible. Commissioner Quello ushered in a vision of global communication networks.

Chairman (1993)

In 1993, James H. Quello was appointed Acting Chairman by President Bill Clinton, during which the FCC Commission implemented the Cable Act; imposing rate regulations on cable television broadcasting and lifting long-standing restrictions on television networks from entering the market for reruns and syndication. Congress granted the FCC auction authority, raising over $20 billion for the U.S treasury. Additionally, the FCC cleared the way for new wireless phone and two-way data services, expanding opportunities for personal communications services globally. His tenure as Acting Chairman was lauded as a period of transparency and collaboration.

Michigan State University

In 1998, James H. Quello assisted James Spaniolo, Dean of the College of Communication Arts and Sciences, in the development of the James H. and Mary B. Quello Center for Telecommunication Management and Law at Michigan State University, as a multi-disciplinary center within the Department of Media and Information. The Quello Center’s original mission was to support social research of changing communication technologies, industries, and consumer choices through rigorous interdisciplinary research initiatives, global professional opportunities to facilitate cross-disciplinary dialogues, participation in communication policy developments, and expertise and independent research for public and nonprofit institutions. This mission remains central to the Quello Center moving into the digital age. Quello played a major role in the development of the Quello Center, helping to generate over 200 gifts for the Center through a general endowment that has grown to $5 million by 2017. James H. Quello died on January 24, 2010, at the age of 95, in his home in Alexandria, Virginia.

James Quello at MSU

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Keith N. Hampton Elected to Sociological Research Association

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Thursday, August 10th, 2017

Our Quello Research Fellow, Professor Keith N. Hampton, a Professor in the Department of Media & Information in MSU’s College of Communication Arts & Sciences, has received a prestigious award from the Sociological Research Association (SRA) in being elected as a new member. The SRA is an honor society that elects up to only 14 new members a year, based on their excellence in research. As the officers of SRA noted: “SRA election signifies the esteem of your colleagues in the profession and their enthusiasm for your scholarship.”

Prof Keith Hampton

Professor Hampton joined MSU last year and has already been incredibly active in developing new grant proposals, and continuing his stream of academic publications around use of the Internet in shaping many dimensions of community. He is presently involved with the Quello Center’s research on digital divides and social capital in Detroit, and an ambitious proposal on the future of the Internet and community enabled by next generation broadcast standards.

Our congratulations and thanks to Keith for enhancing the stature of the Center, Department, and College of Communication Arts & Sciences at MSU. It goes without saying that his colleagues share the SRA’s enthusiasm for his scholarship, and particularly his presence and impact on our students, faculty and many colleagues.

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