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RobinHood, Reddit, Retail Investors, and the Role of Regulation

In the course of a week, the share price of GameStop increased by almost 1000%, from $39 per share to around $350 at its peak. The gaming retailer did not suddenly and dramatically change its business model, nor did prospects for the chain of brick-and-mortar stores markedly improve.  The run appears to be driven almost entirely by a community of investors who found each other through the Reddit page, /r/WallStreetBets (“WSB”). The WSB community seized on GameStop as an attractive target for putting what is called a short squeeze on major hedge funds that were openly pessimistic about the company’s prospects. In that sense, it pitted major financial institutions against a committed group of social media users. The short squeeze is being billed as a populist uprising, a parallel of the political movement that propelled Donald Trump to the White House, this time played out on the New York Stock Exchange. At first blush, it tells an appealing narrative, the collective underdogs are taking on the giants of Wall Street and making millions. But, as the squeeze begins to unravel, it prompts questions as to who the real winners and losers will be, and what role, if any, regulators should play in these types of situations moving forward.

WallStreetBets

Reddit bills itself as “a network of communities based on people’s interests.” It calls users to find communities they’re interested in, and become a part of them. /r/WallStreetBets is one of those communities.  The founder of the group, Jaime Rogozinski, described it as “catering to those with a “YOLO” attitude who approached trading as they might with gambling.” It was meant to be a place where retail investors, those not part of major financial institutions, could come to share stories, discuss wins, and commiserate over losses. It was never meant to be used to coordinate a potentially market-destabilizing event such as the GameStop squeeze, and Rogozinski has compared the direction WallStreetBets has taken to “watching a train wreck.”

The GameStop frenzy has been attributed to one Reddit user, using the handle “RoaringKitty,” and his $53,000 bet on the company in 2019.  Inspired by his Reddit posts, TikToks, and YouTube videos about his investment, other uses began to pile in. Though far from professional investment analysts themselves, Redditors poured over the company’s financials, discussing the investment at length in comments sections of Roaring Kitty’s videos, and on the /r/WallStreetBets subreddit. Like the inexplicable virality of one meme over another, this particular investment gathered momentum as more and more bought in—both literally to the stock—and figuratively to the David and Goliath narrative that was equally on sale. It was too good of a chance to pass up, to make money, all at the expense of Wall Street’s hedge funds who had taken the other end of the bet. The move has captured the attention of the country in the past week for some of the same reasons it gained traction in the corners of the internet, it was, at first, equal parts inspiring, amusing, and justice-enhancing. 

The Short Squeeze

The success of the /r/WallStreetBets coordinated buying is in large part due to the nature of the position that the hedge funds had taken on the company. It is worth a short explanation of short positions and options trading. Roaring Kitty and his army of Redditors chose GameStop in part because they noticed large players in the market had taken short positions on the company. In order to short a stock, one sells a borrowed share of the company, and closes out the position by buying a share to return to the lender in the future. A shorter profits when the share price falls over that period of time. They are able to sell high, and then buy low, and keep the difference. The danger in a short position is that the potential downside risk is theoretically limitless. If a shorter sells a share, and then the price continues to rise, there is no end to how unprofitable the trade could end up being when the shorter must inevitably buy a share to return to their lender, thereby “closing out” their short position. This naturally makes investors nervous, and so there is pressure to hedge the risk of a short position by buying shares of the underlying stock early.  Now, the problem is exacerbated by more buy-side pressure. Not only are Roaring Kitty’s armies of Redditors bidding up the share price, the very hedge funds that are short the stock are buying up shares to cover their position. This feedback loop, increased buying creates increased pressure to hedge risk, which creates increased buying which increases pressure, is what is referred to as a short squeeze.

SEC Regulations

While some cheer the success of David over the Wall Street Goliaths, others, including Senator Elizabeth Warren, are concerned. The fear is that, should forces like WSB go unchecked, it could undermine the public’s confidence in the stock market more broadly. Essential to the success of the markets is the notion that they are efficient, they reflect the allocation of capital to the most productive uses. Dramatic swings in share price, untethered from any rigorous economic analysis, and motivated by internet mob mentality, destroys this notion. The common refrain – this is gambling, not investing, needs no more evidence than the subreddit’s name itself: /r/WallStreetBets. The SEC has responded that it is “aware of and actively monitoring” the market volatility to determine if there has been illegal market manipulation. In other words, did the enthusiasm expressed on WSB get to such a point that readers were manipulated into purchasing the stock?  It is a difficult case to make, and one that shows the SEC is not equipped with the enforcement chops to handle this type of situation, another concern expressed by Senator Warren.

As the situation continues to unfold, however, the SEC may have more reason to become involved.  After the unrelenting rally by GME and other stocks targeted by WallStreetBets, online brokerages like Robinhood called a stop to buying activity. The application has cited capital requirements and its own obligations to clearinghouses to cover this huge increase in trading volume, but others have cried foul. The brokerage’s move has been seen as evidence of the stock markets being institutionally rigged against retail investors, and has prompted the SEC to comment that it will “act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws.” There is mounting pressure on the SEC, from both sides, to get involved. Just what they are able to do about it is exactly Senator Warren’s question. What they should be able to do is a broader question that will likely be debated as this situation continues to unfold.

On the one hand, traditional financial institutions are making the case that retail investors are threatening the efficient functioning of the markets with their wild bets. The argument continues, if this activity grows, and hedge funds are forced to sell off shares in other stocks to cover their now incredibly unprofitable short positions, there may be undesirable downward pressure on the market more broadly. Taken to an extreme, this could cause a “sell-off” that threatens to burst a securities market that may be at the end of a bullish run anyways.

On the other hand, retail investors argue that hedge funds calling for the SEC to step in to punish “market manipulation” is the worst form of the pot calling the kettle black. A short squeeze is not a novel concept, nor are activist hedge fund managers immune from engaging in trading that seems personally motivated at times. Further, Robinhood and other e-trading brokerages halted very targeted types of trades. They halted buying, not selling, on four stocks, including GameStop. If exhorting Redditors to buy shares of GameStop might rise to the level of manipulating the market, it is hard to see how preventing traders from making certain types of trades does not as well.

All this will prompt a debate on the proper role of the SEC in market regulation. The outcome of that debate may turn on the perceived winners and losers of the GameStop short squeeze. Given the political climate, there may be bipartisan support for limited enforcement capabilities at the SEC if the winners turn out to be the subredditors on /r/WallStreetBets. It’s been billed as a populist uprising akin to the swell of support for political-outsider Donald Trump on the right, and has garnered support from leaders on the left such as Bernie Sanders and Alexandria Ocasio-Cortez, arguing this is righting the wrongs of an uneven playing field. How does the desire for increased enforcement change, however, when the squeeze unravels, and the big winners are not Roaring Kitty, but instead massive investment firms like BlackRock? It may be satisfying to watch the hedge funds shorting GameStop hurting, but does that satisfaction disappear when it is just a different Wall Street giant that benefits? BlackRock’s stake in GameStop has gone from $174 million to $3.1 billion. That is not a story of David beating Goliath. So, if it winds up that the retail investors on Robinhood are among the ones who are left holding the bag, then where do we go from here?

Lifeline is what the name says, it is an assistance program that creates a line to the outside world necessary to live. Today, that takes the form of broadband, when it began in the 1980’s it was the landline phone.

What is Lifeline? 

 Since its inception, Lifeline has been trying to help the part of our society that is left behind when innovative technologies emerge. One of the public policy concerns that comes with emerging technologies is the group of citizens that are left behind because they cannot either access or afford the new technology. This stifles innovation and creates greater disparities between subsets of our population. During the inception of Lifeline, the objective was to ensure all Americans have the opportunities and security that a phone line brings. This subsidy was given in the form of “universal service.” This goal was achieved by the late 1990’s. With that goal achieved, the FCC looked to the next connection—broadband. In 2016, the FCC began covering broadband services under the universal service fund of Lifeline, and, by 2021, Lifeline will provide assistance for only broadband services.  

What is the framework?

            The current framework provides that Universal Service Administrative Company (USAC) is responsible for data collection, maintenance, support, calculation, and disbursement for low-income programs. In turn, USAC administers the Universal Service Fund (USF.) Universal Service Fund is not only for Lifeline; it also funds Connect America, E-rate, and rural healthcare fund. Universal Service Fund is funded by fees paid by wireless and landline telephone subscribers based on their long distance and international usage. Technically speaking, USF is paid for via an assessment on the telecommunications revenues of certain service providers. Those providers are then allowed to “recover” their contribution from both the business and consumer customers. Check out your wireless bill, there’s likely a charge to “recover” the contribution. It is important to note, that Lifeline was not created to be profit-driven, it is supposed to be self-sufficient.

How does it work on the consumer side?

The primary rules that surround the Lifeline program are:

1. The participants must be enrolled in certain government programs or show they are at or below 135% poverty line as established by Health and Human Services.

Note: In 2012 the FCC established annual certificates and a one-per-household limit.

2. The participant applies online or in-store, with the required documents to prove they live at or below the poverty line or are enrolled in a government program.
3. Once the participant has been approved, they can go to any eligible provider and receive broadband services.
   9. Lifeline covers $9.25 of the bill, per month.

How does it work on the service provider side?

Once the participant has been approved, we turn to the service provider side.

1. The service provider is required to check if the participant has been certified by the National Verifier (NV), a database created and funded by the FCC.
2. From there, the service provider adds a discount to the participant’s bill.
3. The service provider then sends a “bill” to USAC showing how many participants have received this benefit.
4. USAC reimburses the service provider.
5. The service provider is required to check the National Lifeline Accountability Database (NLAD) to ensure that all participants that previously qualified have been recertified. Participants are required to recertify yearly.
6. At any point, the FCC is able to send an audit to the service provider, normally organized by state.
   1. Throughout the audit process if there is a participant that has been identified who failed to recertify or no longer met the requirements, the service provider must pay those funds back to the FCC.
7. The service provider receives $9.25 per Lifeline service from USAC, on behalf of the consumer.

Sounds great, so what is the downside of the Lifeline program?

Lifeline was successful when it came to getting landline phones into American homes. However, like most rules, these are specialized to optimize for a certain outcome, this outcome being connecting the American people via landline phones. We have already begun to see issues at a larger scale with trying to implement rules for a technology it was not originally intended for, such as recertifications, the amount of assistance provided, and the application process.

Recertification

Recertification is essential to ensure USAC is not providing funds for participants that are no longer eligible for Lifeline services. USAC is a finite resource that needs to be closely regulated to ensure that they are reaching the most efficient outcome possible.

On the other hand, the current process is cumbersome and puts the burden on the service providers, even though the effect is felt by USAC. Service providers are required to ensure all participants who signed up for service with a Lifeline subsidy, are still eligible 365 days later. One of the issues that comes with the recertification is there is not an “open enrollment,” in other words, participants sign up on a rolling basis. This means the service providers are having to check NLAD on a continuous basis. If they miss a participant, they will owe that money back to USAC through the audit process.

This effectively makes money that could have been used to provide services through USAC stuck in limbo between the service provider error in checking NLAD — or lack thereof — and the FCC auditing the service provider.

Price

            Since 1996, the subsidy given to Lifeline participants has not exceeded more than $10.00, not including tribal lands. The subsidy sits at $9.25 today. One of the reasons Lifeline was successful with landline services is the amount of help they provided to the consumer. On average Lifeline provided in the beginning had 32.41% – 64.9% of the final bill cover for participants. Today, people have 16.89% of the bill covered. Thus, making the amount of assistance provided substantially lower. (Statistics have been created by the author, though the numbers used to create these came from the Universal Service Monitoring Report)

         This is a clear effect from the flawed system we are currently working with, rules for not only a different era, but a different technology entirely. The people in need of this assistance are feeling the effects of it, not the service provider, not the FCC. As previously mentioned, Lifeline was created under the assumption that it would be self-sufficient. Yet, we see it is dependent on the service provider during the recertification process, and Lifeline only covers about 17% of the bill for people in need of assistance to receive the latest services to connect them to the world. This issue becomes even more pronounced when we factor in the necessity of broadband service in the 21^st century, the only technology that will be covered by Lifeline by 2021.

Application process

            A participant is allowed to apply online or in the store. The first issue we encounter is the lack of language accessibility. That is to say, the application can be completed in English or Spanish, yet we have more than 350 languages spoken in the US between 2009 – 2013. This is a simple barrier to entry that can be fixed.

            Further, an application can be filled out in the store. This is one of a few assistance programs that a participant can go into a 3^rd party or private company to fill out a form for the government. A form that that 3^rd party cannot approve itself. This is yet again another aspect of the Lifeline program that puts the burden on private corporations when Lifeline was created to be self-supportive. When in reality, it is supported by private corporations, at the very least administratively.

What can we do to fix Lifeline when it moves into the age of broadband?

            So, what can be done to fix these rules and regulations before Lifeline fully transforms into a broadband assistance program?

Recertification

This could benefit from an overhaul of rules. Instead of looking to the service providers to self-regulate, the certification, rectification, and verification could come from one entity: the National Verifier. This database provides the network needed to check if a person is eligible for the Lifeline program. It would be little work to implement for the system to automatically check a given participant’s information against the database every 350 days, to ensure everyone is recertified before the 1-year mark.

In turn, if the FCC is taking on the recertification process, it would be in the best interest of the FCC to stop giving funds to service providers and, instead, give it to the consumer. This would take out the administrative burden—on both sides—of auditing. Instead, they could load a credit card every three months with the subsidy funds. For example, if USAC is providing $25 a month, they would put $75 every three months on the credit card. This credit card number would be easily attached to the NV profile for the participant given that, each applicant already has a special NV ID number attached to their “profile.” If the FCC did something of this sort, like a  SNAP program, it would reduce the administrative burden of auditing, take away the possibility of money sitting in limbo or in the pockets of service providers when it shouldn’t be, and would streamline assistance to the people who need it.

Price

            One of the reasons we saw such success with the Lifeline program when it came to landline services was the amount of assistance the government was providing. With that, to obtain the same level of success, and the benefits that come from that success, it is necessary for us to provide the same level of support.

When Lifeline was created, the consumer received service for the price of $7.82- $26.66, with a subsidy ranging between $2.87-15.86. That averages to about $6.50 subsidy per customer. With an inflation rate that results in $1 in 1996 to be $1.67 in 2020, the average subsidy is $10.33 in today’s dollars. In short, when Lifeline started, the government-subsidized anywhere between 32.41% – 64.9% of the bill.

Today, the average rate for voice is $54.76, with a $9.25 subsidy. A 16.89% subsidy by the government, at least 15% lower than the onset of lifeline and at most, 48% reduction in help. Yet, broadband has been added to this framework. Voice and broadband run the average American $120 a month. Which brings the final number to 7.6% in aid from the government, granted consumers can have assistance for voice or broadband but not both.

My proposal is to have Lifeline subsidy go by the Consumer Price Index (CPI.) Every year the FCC will subsidy 40% of the average broadband bill from the year previous. This would amount to about $25-30 a month, based on the 2018 CPI rates. The 40% comes from an average of the percent of subsidy at the inception of Lifeline.

Application

            The application should be left to the FCC, that is, taking away the ability to apply in-store. The private corporations cannot approve these applications, in turn it makes no sense for them to take the paperwork. Instead, the FCC should run an overlay app on the online platform to implement a more accessible platform with more languages. Companies like Google allow for these types of systems. In practice, when the application would ask what language, the PDF would overlay an application in the applicant’s native tongue, they would answer in their native tongue. Once they submitted, the application would turn in an original copy in the person’s native tongue and an English version that has been interpreted by the overlay system.

Takeaways

All in all, these problems already have answers, and the technologies exist to achieve said answers. It only takes a little rework of the rules before Lifeline is a program for broadband. The FCC has a little more than a year to ensure we are spending money to assist the most vulnerable portions of our nation. To keep rules from another era of Lifeline is to be lazy with money that is supposed to go to our citizens.

 

A message from the Colorado Law Black Law Student Alliance

CTLJ stands in solidarity with the Black Lives Matter movement. We would like to use this platform to amplify the voices of the People of Color community. Now is our time to listen. Below is the statement from the CU Black Law Student Association, along with resources to support and self-educate. Please take this time to educate yourselves with us.

In solidarity,
CTLJ v.19 Executive Board

Dear Colleagues,

As the Black Law Students Association (BLSA) at Colorado Law, we are writing to say we unequivocally stand with those who continue the fight against the systemic oppression of black people in this nation. The murders of George Floyd, Breonna Taylor, Ahmaud Arbery, and the many other black people who have lost their lives as a result of the deeply entrenched racism that continues to plague our country and terrorize our communities will not be in vain, as they continue to lay heavy on our hearts.

People of color, particularly black people, are disproportionately affected by COVID-19 due to pre-existing factors like inadequate access to healthcare, chronic health conditions and working in essential fields. Yet, people still felt compelled to leave their homes to speak out against injustice and demand equality. This speaks to the gravity of the problems we are fighting against.

We stand with those who continue the fight against these structures and call upon the larger CU community to take action by donating—if you are able—to bail funds that pay for people unable to afford the cost of buying their own freedom. Below, you will find a list of these funds, as well as resources we believe are helpful during this time.

Black pain is not just about black death. This is also about black grief. We encourage those who need the support to seek out counseling services from the university’s Counseling and Psychiatric Services (https://www.colorado.edu/counseling/).

In Solidarity,

BLSA Executive Board

“Seeking justice means putting in the work.”

Resource(s) Link: https://nationalblsa.wildapricot.org/resources/Next%20Steps%20for%20Social%20Justice.pdf

Donation(s) Link: Bail Funds Across the Country

LA: Black Lives Matter – LA, http://gofundme.com/f/blmla

Philly: https://phillybailfund.org

Chicago: https://chicagobond.org

Minneapolis: Minneapolis, MN: @mnfreedomfund & @reclaimtheblock have asked you to consider donating to an org on this doc http://bit.ly/fundthecommunity

Atlanta: https://actionnetwork.org/fundraising/support-justiceforgeorgefloyd-protesters-in-atlanta

New York: https://freethemall4publichealth.org

Columbus: https://paypal.me/columbusfreedomfund

Brooklyn: https://brooklynbailfund.org/donation-form

Portland: https://gofundme.com/f/pdx-protest-bail-fund

Houston: https://restoringjustice.org/bail

Dallas: https://faithintx.org/bailfund/

Colorado: https://fundly.com/coloradofreedom

Massachusetts: https://massbailfund.org

Toronto: https://gofundme.com/f/toronto-protestor-bail-fund

LGBTQ Freedom Fund: https://lgbtqfund.org

Baltimore: Baltimore, MD: Baltimore Action Legal Team (BALT), https://baltimoreactionlegal.networkforgood.com/projects/60932-everyday-giving

Detroit: https://secure.actblue.com/donate/michigan-solidarity-bail-fund

Nashville, TN: https://nashvillebailfund.org/

Richmond, VA: Richmond County Bail Fund, https://rvabailfund.org/donate

Oakland, CA: Bay Area Relief https://gofundme.com/f/bay-area-bail-fund

Pittsburg, PA: Bukit Bail Fund https://bukitbailfund.org/donate

Milwaukee: https://fundrazr.com/mkefreedomfund?ref=ab_19CDk2_ab_2X8cfsYQq5B2X8cfsYQq5B

Las Vegas: https://secure.actblue.com/donate/vegasfreedomfund

Kansas City: https://kccommunitybailfund.com

Louisville, KY: https://actionnetwork.org/fundraising/louisville-community-bail-fund?source=twitter&

Seattle, WA: NW Community Bail Fund, https://donorbox.org/ncbf

Houston, TX: http://restoringjustice.org/bail

Omaha, NE: The Nebraska Left Coalition, http://PayPal.me/neleftcoalition

Durham, NC: NC Comm. bail fund, https://nccbailfund.org/donate

How separating soldiers from the theatre of war creates new human costs

On January 3^rd, 2020 the United States killed Qasem Suleimani with an MQ-9 Reaper. This drone is manufactured by General Atomics and operated by the U.S. Air Force, U.S. Customs and Border Protection, the Royal Air Force (England), and the Italian Air Force. The Reaper serves as a powerful mobile aerial weapons platform, often carrying out strikes with the effective and expensive Hellfire missile. Government decision makers tout the drone’s surgically precise capabilities. However, public policy organizations, journalists, and activist groups publish civilian casualty counts that find roughly 1 terrorist death per 50 civilian deaths (Zulaika, Hellfire from Paradise Ranch. 2020). Additionally, the resolution of the screens are actually closer to the vision of someone who is legally blind than the vibrant and clear videogames they are often analogized with. (Gusterson, Drone. 2017).

An additional benefit to the military is that drones can be remotely piloted from the United States, keeping airmen and women at home with their families and their bodies out of harm’s way. However, this separation has developed unintended consequences for the airmen and women that are now “deploying” as a day job. Even though drones are considered a good option by the military because of their “unmanned” nature, they cause tangible human consequences.

I am a cultural Anthropology PhD student at University of Colorado at Boulder. I started studying drone pilots and the surrounding communities for my undergraduate anthropology thesis. Over the course of my research I have interviewed and participated in participant observation with drone pilots and sensor operators, other base members, and base protestors in New York State. I will be returning to New York this summer to continue my research.

Pilot Experiences

Alex (not his real name), a drone pilot for the Air National Guard, informed me that he significantly preferred being deployed to this remote form of warfare. I was confused. Drones were supposed to be the better option for those who wanted to be involved in the war effort, they eliminated the very thing so many families dreaded – Deployment. So then why did Alex switch to serving as a drone pilot? His wife and kids decided it was time for him to have a presence at home.

This was a common thread through many of my interviews with pilots. They preferred being deployed, which allowed them to be part of a community that was experiencing the war with them. They could sit and talk out their experiences and quite literally fight for the guys who were deployed with them. But now that they’re deploying as a day job to a fortified trailer on a base nestled into their community, they can coach their kid in soccer after their shift, they can attend school plays, they can be an active part of the community with their family and friends. While these may seem like perks, and to some they certainly are, separating the warrior from the war causes anxiety and other stresses that were not experienced on deployment and not anticipated on the home front.

Despite the glowing potential of staying stateside, conducting war from home causes problems for the commuting warfighter. In addition to things like night shifts screwing up sleep schedules, pilots have a shortened time frame to switch from using their brain for war and using their brain for domestic activities. Now that individuals are home in time for dinner, what were formerly normal questions such as “How was work?” or “What did you do at work today?” are suddenly loaded. Partners understand that death may be an everyday part of their significant other’s lives, but the understanding has not changed the still present barrier to conversations. Pilots are hesitant to talk about their days for a variety of reasons, and partners feel a disconnect with their pilots that they did not when the pilots were fighting war from a plane (Lee, Reaper Force. 2018).

Another interesting experience that pilots discussed with me was their sudden paranoia. It was not always evident in conversation with them that it was what they were discussing but became apparent when reviewing the interview. For example, one pilot told me that he always tried to mix up his commute in case he was being followed. Followed by who? He didn’t know, it was just in case. Another pilot told me he couldn’t shake the feeling he was being followed by a drone. Some pilots started to dream in infrared. Other pilots do not seem to have the same reactions and told me that they are satisfied with their job and the work/life balance it allows. The bag is pretty mixed, but for a system that is “unmanned”, it has visceral implications for the men and women who operate them. The ability to create 24/7 intelligence from the sky over other countries is taking a toll on the people that remain in the United States when part of the war effort.

U.S. Community Experiences

Communities around drone bases in the United States have mobilized in reaction to the extensive use of drones. The protests at places like Creech Air Force Base in Nevada and the 174^th Attack Wing in Syracuse, New York demonstrate these communities’ discontent with the continued use of militarized drones. The protestors are not quiet about their stance and are known for being arrested if they cross the street to the base side of the road. The protests in New York happen biweekly during the summer and are strategically timed for shift change in front of the gate, making them especially disruptive. The protestors informed me that this technique ensured that as many pilots and sensor operators as possible could see that what they are doing is illegal in international law.

However, the war is not the only anxiety that the protestors have about drones. A 50 mile corridor in upstate New York was recently approved to be a testing ground for private and military drone technology. The activists are concerned that the relatively lax rules about drones and the testing of them will evolve into issues around privacy and surveillance on U.S. soil. Protestors also have physical safety concerns living in an area used to test drones. In 2013 a MQ-9 Reaper crashed into Lake Ontario after suffering a software problem shortly after take off from Fort Drum, NY.

If concerns about unknown pilots and technology flying above you sounds familiar, it might be because of the recent spotlight on the mystery drones flying over Colorado and Nebraska communities. The threat of an unknown watcher has disturbed communities and prompted questions such as: Who is flying them? What do they want? Feeling that the government has not done enough to quell public questions and concerns, groups of drone hunters have mobilized to solve the mystery themselves, some of which I have joined to study community reactions to the mystery drones.

Global Community Experiences

Understanding the experience of Americans and drone technology has been the primary focus of my research simply because it is who I have been exposed to through interviews and participant observation. However, there are other people who are impacted by drone strikes. And besides the death toll, the drones have created unintended cultural consequences in the communities they fly over.

Individuals on the ground in North Waziristan, an area in Pakistan on the receiving end of hundreds, if not thousands, of drone strikes, have become self proclaimed “psychiatric patients” because of the continuous drone presence and threat of strike. The drones are not the only problem in these communities. In some areas of Pakistan it was reported that after strikes the Taliban would move through the community and try to determine who were the “spies” on the ground working for the CIA. This has lead to community members being detained and tortured for confessions of compliance and information feeding to the CIA.

Drone strikes have also changed the way people in areas prone to strikes congregate. Community members have shifted cultural practices that they believe attract the attention of drone pilots. Journalists and human rights activists have noticed changes in funerary and burial practices, weddings, and even the way children are educated (Gusterson, Drone. 2017). Parents that have children in areas where drone strikes occur will keep their kids at home with them, and in other cases children are too traumatized by the drone strikes to go to school (Gusterson, Drone. 2017).

**

Drone warfare presents an interesting case study for anthropologists. There are many angles and capacities to interact with communities who are impacted by drones, whether it is the pilot communities themselves, activists and protestors, or the communities where the power of drone technologies are enacted. However, by studying drone pilots I have noticed disturbing connections in other, everyday areas of our lives. In recent exposés, both Facebook and YouTube moderators have come forward reporting similar problems to that of drone pilots: high work-related stress, PTSD, alcoholism, drug use, and dysfunction in their sex life. This indicates that the professional voyeurs in the United States, both in a military application and also the world of our smartphone apps and social media, are put in a position of physical separation from the content they are viewing and moderating, yet are experiencing very real and traumatizing outcomes in their own lives. Separation is not always a solution. As we move into an increasingly digital and automated world, we should be wary of the unintended consequences of our reliance on the optimism around technological innovation and separation as a solution for our problems, from war fighting to interactions on social media.

The exact date of the internet’s advent continues to be debated by scholars, but the origin of one of the internet’s most popular content mediums can be traced directly back to 1976, and the publication of Richard Dawkins’ The Selfish Gene. It was in this book that Dawkins first proposed the concept of a “meme,” which he defined as “a unit of cultural transmission.” Dawkins offered nursery rhymes, catchphrases, and fashion trends as examples of such transmissions.  A couple of decades later, in 1994, internet scholar and attorney Mike Godwin proposed the idea of an internet meme: “A ‘meme,’ of course, is an idea that functions in a mind the same way a gene or virus functions in the body. And an infectious idea (call it a ‘viral meme’) may leap from mind to mind, much as viruses leap from body to body.”

Early examples of internet memes—units of cultural transmission created by and for the internet age—include the late-90s phenomenon of “the hampster dance” and “all your base are belong to us. In 2020, memes might be a certain joke format, a viral “challenge,” or, most popularly, a photo with text laid on top.

While once mostly found on insular internet communities, today memes are the dominant form on content you see on the internet. Memes generally start on Reddit, 4chan, and sometimes Twitter and go viral from as they cross the borders of social media platforms. Demographic-specific groups, long a part of Facebook’s core ecosystem, began to form for the purpose of creating and sharing memes. During the 2016 election, for instance, “Bernie Sander’s Dank Meme Stash” became a repository for political memes about the presidential candidate.

Law School Memes for Edgy T14s is one of those groups. (T14 is shorthand for “Top 14,” referring to a law school’s ranking, though members come from a multitude of variously-ranked law schools all over the country). With more than 70,000 members, Law School Memes has become a social media hub for discussion both serious and frivolous; who is more virtuous, prosecutors versus public defenders, for example. “There’s a space—a very important space—that memes occupy,” Benjamin Burroughs, assistant professor of emerging media at the University of Nevada at Las Vegas, told the Washington Post. “They speak in a language that people have grown up with on social media … which can make them very articulate and very poignant.”

CTLJ briefly chatted with Alex, a third-year law student who helps moderate the group, about what it’s like to maintain a social media community of law student, and what makes a good meme.

CTLJ:  How did you become an admin for this page? What did that entail?

A: Like any young child, it was always my dream to be an admin of a highly popular meme group. Some other law students from Berkeley Law started the group and I just did what everyone should do to get ahead in life: shit-post constantly.

CTLJ:  What’s the most interesting part of being in charge of this type of community? Do you think memes can help foster a sense of community?

A: There are a handful of us who moderate the group. The most interesting part is probably just dealing with the weird interactions in private messages and in real life. For me personally, I’ve gotten the full gamut of vague death threats, fan mail, and sexual propositions. All of the moderators have, at one point or another, dealt with strange (sometimes good, sometimes bad) interactions with people on and offline. It’s a weird vibe. I think the community is really great and generally everyone likes to have fun and has a good sense of humor. Considering how many people participate actively on the page (in the last thirty days we’ve had nearly a million posts, comments, and reactions and we have about 70,000 active and regular users) it’s pretty amazing the environment isn’t way more toxic. In terms of fostering community, I think it’s less about the memes and more about it being a place to share the common experience of being miserable in law school and even miserable as a practicing attorney.

CTLJ:  Why do you think some posts perform better than others? What makes a good meme?

A: Being current is pretty key, that’s the way to flourish in the meme economy. Your memes gotta be fresh baby. You also need to establish that your content isn’t bad or in the very least, build an audience of people who will consume it and appreciate it. There are plenty of people on the page who hate my existence, myself included. But you’ve gotta remember, haters are losers (myself included). You’ve also gotta be willing to delete your bad content. I delete basically anything I post that doesn’t break 120 reactions in the first 60 minutes. It’s brutal out there.

As far as what makes a good meme? You may as well ask Mozart how he wrote The Magic Flute.

What makes a sunset beautiful?

It has to speak to the very soul. In the very least, it has to make some say “heh” and press a button on their phone to give my brain the good chemicals.

All of this also makes me seem like an insane person, which I am.

CTLJ:  What’s your favorite meme from this year? From last year?

A: Way too early in this year to pick out a meme, in my opinion. Some years have some incredible late entries. Last year my top was probably Storming Area 51, in a dead heat with “Are you in the right headspace” text.

CTLJ: Do you think the virality of memes in general is a good or bad thing? What about their ephemerality? Do they foster or hinder good discussion?

A: Memes have been a thing well before we were all extremely online. If you sat around quoting the movie Anchorman, or if you and for some reason every person you know knows the words to “The Krusty Crab Pizza” or the “F.U.N.” song, you’ve participated in meme culture. Life is ephemeral, I see no reason to be alarmed if forms of artistic expression are any different.

CTLJ: Has the group ever received a takedown notice from a copyright holder? What do you think about the legal position of memes in terms of intellectual property?

A: We’ve been safe so far, and typically we’re protected by Fair Use. Who is intellectual property? I don’t know her.

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Spectrum for Sale: FCC moves ahead with public C-band Auction

FCC Chairman Pai recently announced the Commission’s plan to move forward with a public auction to repurpose the C-band for mobile use. Current incumbents, represented by the C-band Alliance (CBA), proposed that the Commission conduct a private auction to facilitate a quick transition and properly compensate incumbents for relocating or transitioning their services out of the band. The Commission initially sought comment from stakeholders concerning, among other things, the legality of such a private auction. Pai’s proposal instead relies on a public auction, similar to the Broadcast Incentive Auction, where proceeds from the sale of spectrum to mobile carriers will be used to compensate incumbents with any residual income deposited in the treasury. Congress has considered legislation that would limit the FCC’s discretion in allocating auction proceeds, but neither proposed bill has found substantial support, most likely as neither bill is good policy. For example, by requiring that 50% of auction proceeds go to the treasury, the 5G Spectrum Act risks driving up the costs of spectrum for bidders or undercompensating incumbents. Similarly, the Spectrum Management and Reallocation to Taxpayers Act also limits the financial recovery for incumbents, potentially denying them adequate compensation for their relocation costs. Ultimately, not only is Pai’s proposal well within the Commission’s legal authority, but his auction plan will enable rapid deployment of mobile services while also adequately and fairly compensating incumbents and taxpayers.

Why the C-band is so valuable

The C-band, 500 megahertz of spectrum between 3.7 and 4.2 gigahertz, is currently used for fixed satellite services, but mobile carriers have sought this valuable mid-band spectrum as part of their plans to develop 5G. Unlike the higher frequencies used for mmWave technologies (another critical aspect of 5G), this valuable mid-band spectrum allows for longer range towers while still providing high data throughput and low latency. While mmWave will help deliver the ultra-high speeds carriers have promised to dense urban environments, mid-band allocations such as C-band will be essential to bringing the promise of 5G to rural communities.

Spectrum auctions

Since 1994, the FCC has used auctions as the primary method for assigning spectrum licenses. Unlike previous methods of spectrum assignment, such as a lottery, the auction policy allows market forces to determine the most valuable use of a particular band. To enable more seamless transition in a particular band, the Commission has used “incentive auctions”, where a band is transitioned by first offering new licenses to bidders, then using the auction proceeds to compensate incumbents for giving up their licenses or relocating their services.

For example, the Broadcast Incentive Auction cleared up spectrum for mobile use by reducing the spectrum available for broadcast television. This transition was due in part to decreased demand for over-the-air television services, and technology advances that enabled more efficient spectrum use by broadcasters. Similarly, the C-band proposal aims to take advantage of decreased demand for fixed satellite services and technology advancements to enable mobile use that has greater economic potential.

The Commission’s authority to conduct incentive auctions is codified at 47 U.S.C. § 309. While this section gives the Commission wide latitude to determine auction procedures, the outer boundaries of what exactly that auction should look like remain untested. The C-band Alliance argued for a private-run auction where the entirety of the auction proceeds would be given to the CBA, who in turn would compensate their members accordingly. While the legality of this approach has been questioned, the CBA argued that this approach avoided the potential hold-out problems of past incentive auctions. One downside of incentive auctions is because it relies on all the incumbent users giving up their licenses, it is subject to a hold-out problem. By working through a single entity, the CBA argued that the auction can be conducted more quickly, allowing the spectrum to be repurposed more quickly for 5G. However, this exercise of Commission authority would be the first of its kind, and judging by the filings of stakeholders, would likley be subject to litigation.

Perhaps responding to this confusion, legislators on the Hill sought to limit the Commission’s discretion in determining auction procedures. One bill, the Spectrum Management and Reallocation to Taxpayers (SMART Act) would cap payments to incumbents at $6 billion and provide a paltry $1 billion in incentive payments for rapid relocation out of the band. Lawmakers have yet to fully consider this proposal as it currently waits in committee. Another piece of proposed legislation, the 5G Spectrum Act, would require that 50% of the auction proceeds be deposited in the treasury, but otherwise would not limit payments to incumbents. The 5G Spectrum Act cleared the Senate Commerce Committee, yet lacked bipartisan support.

Pai’s Plan

Pai’s plan proposes to auction off the lower 280 megahertz of the C-band for mobile use, while preserving a 20 megahertz guard band to prevent interference between mobile and satellite users. The lower 120 megahertz would be cleared for mobile use as soon as September, 2021, while the remaining 180 megahertz would be cleared by September 2023. Incumbents would be offered incentive payments, potentially totaling up to $9.7 billion, if they hit these accelerated goals for relocation. In total, the payments to satellite incumbents could be up to $14.7 billion to cover the costs of relocating their services out of the band. This would include potentially launching new satellites, installing filters on existing earth stations to prevent interference, or investing in other infrastructure such as fiber connections as an alternative to satellite service.

In an Auction, Trust the Market

While Congress certainly has the authority to restrict the FCC’s jurisdiction or auction authority, the proposed bills are simply bad policy. By capping payments to incumbents, the SMART Act risks under-compensating incumbents for their reasonable costs, and ultimately substitutes the market’s judgment for Congress’s in determining the value of the spectrum. The 5G Spectrum Act remedies this problem by removing the cap, but ultimately amounts to rent-seeking behavior by regulators. Requiring that 50% of the auction proceeds go to the treasury risks: (1) driving up the price of critical spectrum for 5G, eventually passing these costs on to consumers; or (2) restricting the financial recovery for incumbents, deterring future investment in telecommunications infrastructure. While this rent could theoretically be used to fund efforts to close the digital divide by funding rural broadband, there is no requirement that this money would be used for this specific, or any related purpose. Technically, there is nothing preventing these funds from being used to pay the Secret Service’s tab for golf cart rentals at Mar-a-Lago instead of broadband deployment.

Pai’s proposal, on the other hand, allows the market to better determine the appropriate level of compensation for relocating incumbents and avoids the incentives for rent-seeking. This approach also avoids the potential legal pitfalls of the CBA proposal by conducting a public, rather than private auction. While the CBA’s proposal is theoretically faster, the novel exercise of the Commission’s authority could invite legal challenges that would delay the transition to mobile use in the C-band. This undermines the entire premise of the private auction, eliminating the collective action problem to enable a faster transition to 5G. Pai’s proposal, on the other hand, relies on a tried-and-tested auction procedure that is unlikely to be litigated, and allows for a more efficient transition to mobile services in the C-band. The FCC’s transition to spectrum auctions reflects an understanding that market forces, not regulators, should determine the most efficient use of a particular band to promote the public interest. Recognizing this, Pai’s proposal will ultimately ensure that the C-band is put towards the most beneficial use for consumers while also fairly compensating incumbents for their relocation costs.

Wilson Scarbeary is a second-year law student at the University of Colorado, focusing on technology, telecommunications, and competition policy. He spent his summer working on federal regulatory policy at AT&T, and currently works as a Policy Fellow for the Colorado Technology Association, an advocacy group that supports the Colorado technology ecosystem. Wilson is a Digital Content Editor for the Colorado Technology Law Journal, and a member of Barristers Council.

Wilson graduated from the University of Colorado with a bachelor’s in political science. In his free time, he is an avid skier and rock climber.

It’s 1964. President Lyndon Johnson, hard at work whipping votes to pass the Civil Rights Act, enjoys a cigarette on his Texas ranch. Between puffs, he lobbies segregationist colleague Senator J. William Fulbright on the bill through his infamously intimidating Johnson Treatment, an imposing, loud, in-your-face posture. But this time, he delivered it via high-tech AT&T 2G mobile connection.

That’s not how the story went. Despite early mobile telephony and blueprints for cellular networks existing by the 1940s and 50s, regulators at the Federal Communications Commission (FCC) wouldn’t free spectrum channels for wireless phones until the 1980s. It’s fun to speculate how soon within last century our parents and grandparents would’ve sent their first texts if the FCC bureaucrats hadn’t held this spectrum ransom for the broadcast industry. But avoiding the senseless delay in tech development they experienced is more important.

Thankfully, today’s FCC clears spectrum and cuts red tape for next generation “5G” mobile networks. Despite contrary arguments made by this journal’s Digital Content Team, 5G-friendly changes can’t happen fast enough. Upgraded mobile networks will benefit all Americans through improved service and faster innovation.

The 5G Network – And How We’re Getting There

Generally, the wireless industry defines 5G as a new mobile network structure that enables faster speeds, lower latency, and higher capacity for connected devices. Faster speeds mean faster downloads and uploads. Lower latency means nearly zero signal delay, enabling technologies that depend on immediate reactivity, such as virtual reality or autonomous vehicles. Capacity for more connected devices means integrating Internet functionalities further into life. Connection already seeps deeper with devices such as Alexa, smartwatches, and browser-enabled refrigerators. These upgrades will make mobile networks more useful than ever.

High-Band Spectrum

Achieving 5G’s promise requires smarter spectrum allocations and infrastructure for mobile broadband. In 5G networks, carriers for the first time will deploy high-band spectrum, which has greater capacity than frequencies used by 4G LTE. The FCC recently auctioned high-band spectrum in the 24 GHz and 28 GHz frequencies with pending moves for the 37 GHz, 39 GHz, and 47 GHz bands that will transmit the fastest, highest capacity mobile speeds available. High-band frequencies are dubbed “millimeter waves,” since they repeat wave cycles within mere millimeters – providing unprecedented space for data. Carriers will deploy hundreds of “small cell” antennas in densely populated areas to make use of high-band spectrum. These antennas sit closer to customers than the large, distant towers currently delivering 4G to your phone. Shorter distance between phone and antenna reduces latency. Thankfully, the FCC streamlined rules, blocked extortion by local governments, and cut red tape for small cell deployment in 2018, a move largely upheld by the D.C. Circuit.

Critics wrongly assume that 5G will leave rural America behind because millimeter waves only travel a few hundred yards and don’t penetrate buildings, making it an urban fixture. But 5G and high-band aren’t synonyms – high-band spectrum is only one piece of the 5G puzzle. Speeds will improve for all mobile customers because carriers will deliver 5G with an all-band strategy that increases mobile bandwidth by transmitting data over a wider spectrum range than 4G LTE networks. An all-band strategy reduces congestion for existing spectrum by splitting data transmission over more spectrum, regardless of whether you have a high band antenna nearby.

Yes, areas dotted with small cells and enmeshed with millimeter waves – like large urban centers – will have the fastest speeds. But it’d be senseless to kill innovation just because some people benefit less than others. The point is that everyone benefits from 5G, and 5G benefits rural America by exceeding existing rural options. Disregarding 5G due to disparate, positive impact is like riding horses instead of driving cars because some cars are faster than others. Even if some people get Ferraris, there’s nothing wrong with a Lexus.

Low-Band & Mid-Band Spectrum:

An all-band strategy wouldn’t be possible without FCC Chairman Pai’s action to free-up largely unused mid-band spectrum. The FCC set a June 2020 auction for mid-band spectrum in the 3.5 GHz band, will soon set a 2.5 GHz auction, and will hopefully resolve a heated proceeding over the C-Band. Freeing mid-band spectrum is critical for 5G because these frequencies travel farther than higher frequencies while still bearing high capacity. Currently, Sprint is the only mobile carrier with mid-band holdings and many of its licenses remain unused. Additionally, the FCC’s auction of 600 MHz and changes to the 800 MHz and 900 MHz bands will ensure signals blanket the country and penetrate buildings.

Speaking of Sprint, its approved merger with T-Mobile will ensure a third carrier has adequate spectrum for a nationwide 5G network. The “new T-Mobile” will combine Sprint’s strong mid-band holdings with T-Mobile’s stronger position in low-band and high-band spectrum. While the Department of Justice required T-Mobile to relinquish some of its 800 MHz licenses, the company still maintains strong 600 MHz holdings that deployed on its commercial 5G network in December. With a strong spectrum portfolio, more customers, and greater capacity to draw investment, T-Mobile will be well situated vs. Verizon and AT&T in every market. Without the merger, Sprint would continue bleeding customers to the three networks with better service & spouting bad finances.

Thanks to spectrum reallocation, infrastructure reform, and the Sprint-T-Mobile merger, mobile networks will be better than ever before.

5G Benefits

Competition

The obvious benefit from 5G networks will be better broadband competition. With improved speeds, wireless broadband will become a real cable substitute. Currently, mean mobile speeds are 33.88 mbps down and 9.75 mbps up. Mean fixed broadband speeds were 96.25 mbps down and 32.88 mbps up in 2018. Tests from earlier this year show 5G networks achieving speeds substantially above one gigabit on high-band spectrum, around 450 mbps on mid-band. Carriers estimate that 5G boosts speeds twenty-fold over 4G LTE networks in perfect conditions, With wireless speeds finally catching up to cable, there will be greater head-to-head competitive pressures.

Customers will have two 5G broadband options: mobile and fixed wireless. Mobile wireless broadband is cellphone service. Improved speeds, latency, and capacity from 5G networks could accelerate the trend of “smartphone only” Internet users who only subscribe to mobile broadband. Smartphone only users doubled from eight percent to seventeen percent of the US population over the past decade and forty-five percent of those shirking home broadband say their smartphone meets their needs. Mobile improvements from 5G could reduce duplicative home broadband subscriptions, or at the very least, pressure cable operators into reducing prices.

Verizon and T-Mobile also offer 5G fixed wireless service that competes with cable. Fixed wireless provides home broadband through rooftop antennas on homes and apartments. The antennas hook to routers that blanket home interiors with 5G-powered Wi-Fi. Since mobile networks avoid costs of stringing and trenching cables, 5G fixed wireless plans are often cheaper than home broadband, although they need line-of-sight to operate. For example, Verizon offers its mobile customers 5G fixed wireless with 900 mbps speeds for $50 per month, while its FiOS cable service costs between $70-80 per month. Faster-than-ever fixed wireless offers new options for low-cost connection in rural America and certain urban settings.

Tech Innovation

But most importantly, 5G offers a new platform for innovation. Having Internet on the go with workable connections brought us the $820 billion app economy. With 5G, we’ll see the “Internet of Things” come to life. Mobile networks will have greater capacity to handle more devices. Right now, the Internet of Things relies mostly on indoor Wi-Fi connections since 4G signals suffer from latency and interference.

This could change with 5G – its faster, low-latency, high-capacity connections will improve the business case for mobile devices beyond cellphones. This is especially true for technologies dependent on instantaneous reaction, such as autonomous vehicles and virtual reality. Cars need to react to their surrounding in real time and any latency could cost lives. Virtual reality devices that augment our sight and haptics need uninterrupted connection to be useful – otherwise your real-world actions won’t sync with the tech. It’s easy to see how other time-sensitive services like medicine and healthcare might improve. With 5G networks, these techs will become more commonplace and there are likely thousands of uses we can’t predict.

Anybody who thinks 5G is about doing today’s activities with faster speeds or watching Netflix with less buffering misses the point. Business and government have no reason to hold back 5G. When the FCC failed to respond to mobile telephony developments for decades, it crushed generations of economic growth. Similarly, FCC Commissioner Brendan Carr noted in a recent speech slamming telecom experts from last decade who shrugged at mobile broadband’s value: “These digital deniers didn’t imagine how Venmo would transform banking… predict what Uber would do for mobility… didn’t foresee that Tinder would disrupt dating.”

If you love your cell phone, think of how much people that never lived to see one could’ve loved theirs. Sure, LBJ’s Johnson Treatment might not have worked over text, but civil rights activists may have enjoyed encrypted texting’s protections against J. Edgar Hoover.

There is no reason to delay the future for today’s people. We are, and should be, hurtling towards 5G.

Baseless Claims about 5G

Understanding the benefits of 5G, I have to touch on two ridiculous claims made by this journal’s Digital Content Team – that 5G will harm weather predictions and that the US policy for 5G networks mirrors communism. Neither are true.

First, stories about 5G ruining weather signals are complete fabrications. The National Oceanic and Atmospheric Administration (NOAA) claimed that 5G deployments in the 24 GHz band would interfere with tools used to detect water vapor in air. NOAA backed its claims with a study showing interference with the weather censor technology called “conical microwave image/sounder.” Weather forecasters no longer use this technology – and its replacement is not susceptible to interference. Currently, 40,000 fixed and microwave links coexist with weather forecasting in the 24 GHz band.

Next, the Digital Content Team analogizes China’s communist central planning with deregulation and best-use spectrum practices in the United States. China’s network is built by state-controlled telecom companies and massive government subsidies. These subsidies hurt Chinese 5G by nursing profligate spending that reduces profitability and consumer-focused service. In contrast, the FCC auctions flexible-use spectrum licenses to highest-bidder mobile carriers. These carriers bid the most because they generate large returns on investment by deploying efficient, quality, profitable 5G mobile service based on market forces. Carrier investment in the United States 5G networks mirrors consumer demand for 5G – deploying it where profitable. This is a focused, efficient approach that empowers customer and carrier control over networks while China’s approach is more like throwing darts while blindfolded.

There is no central control over 5G in the United States. Private companies building investor-funded infrastructure is nothing like communism – which involves blessings from the Politburo, family connections, and a hefty dose of mass starvation, cannibalism, and murder. Joseph Stalin wasn’t 5G ready. Government planners micromanage China’s networks in every single local government jurisdiction. The FCC does the opposite. It eliminates costly requirements for deployment so carriers can plan and deploy their own networks quickly.

If these are the drawbacks of 5G, then there are none.

2019 was a breakthrough year for digital health. While media coverage has focused primarily on Google’s $2.1 billion acquisition of Fitbit, in the first half of the year alone the digital health sector saw more than 40 acquisitions, 4 public offerings, and more than $4.2 billion in venture capital invested in digital health companies. As a PhD student in cultural anthropology studying how Silicon Valley is transforming the American medical system, I have followed these headlines with great interest. Behind the scenes of these deals are technologies that promise to detect disease earlier, speed the development of new therapeutics, and provide individuals with treatment plans personalized to their unique biologies and life circumstances. These developments, which have substantial implications for our everyday experiences of health and health care, pose serious challenges for regulatory bodies.

The U.S. Food and Drug Administration (FDA), the agency tasked with protecting public health by ensuring the safety, efficacy, and security of drugs and medical devices, has found itself on the front lines of this ‘digital revolution’ in health care. “These are no longer far-fetched ideas,” former FDA Commissioner Scott Gottlieb said in a 2018 speech. “We know that to keep pace with innovation in these fast-moving fields, the FDA itself must do more to leverage digital health tools and analytics internally to help the agency develop new regulatory tools and advance its own work.”

In response to the increasing volume of digital health products and the accelerating pace of product development, the FDA formed the Division of Digital Health which, under the leadership of director Bakul Patel, has since proposed substantial changes to the FDA’s review processes. These changes are intended to address one of the major challenges facing this area of the FDA: adapting processes designed for hardware to adequately review software. Historically, hardware products have been built using a fundamentally different approach to development than software. Take, for example, an intrauterine device (IUD)—to sell an IUD, the product developer would first need to prove to the FDA that the IUD is safe and effective for humans to use. To prove safety and efficacy, the developer would conduct studies of the product to generate the kinds of data required by the FDA for review. Once the product was reviewed and approved by the FDA, the developer would be able to market and sell the IUD. In this standard model of FDA review, the bulk of the review process happens up front during the product’s pre-market phase in an effort to predict and prevent potential harm.

This regulatory model is based on assumptions about the stability and durability of hardware—in this case, that the IUD will stay more or less the same throughout the review process and following commercialization. In other words, the hardware-based model assumes that the risk of using a product once it is made commercially available should be about the same as the risk of using the product at the time it was submitted for review. In the case of software, however, the assumption of a relatively stable and unchanging product like an IUD does not hold up. Unlike a hardware-based medical device, which can take years to build and test, software can be built quickly and involves constant iteration and modification. The speed of software development will only increase as machine learning techniques grow in popularity. In this new paradigm of digital health technologies, how is the FDA supposed to keep up?

Pre✓® Your FDA Submission

In response to the high volume of digital health submissions and the rapid pace of software modification, the FDA has proposed the Digital Health Software Precertification (“Pre-Cert”) Program. I first learned about the Pre-Cert program while working for a startup incubator for digital health companies. The entrepreneurs I worked with were enthusiastic about the Pre-Cert program, which they interpreted as a sign of the FDA’s growing friendliness toward industry. As a startup with limited “runway” (i.e., funding to continue building the company), the time and capital required to achieve FDA approval can be a daunting prospect. Many of my entrepreneurial colleagues welcomed the Pre-Cert program as a process better suited to the unique challenges they face as companies attempting to bridge the divergent worlds of technology and health care.

Patel, the director of the FDA’s digital health division, likens the program to TSA Pre✓®  at the airport, which allows travelers who have applied and passed a background check to speed through the security protocols. Modeled after this concept, the Pre-Cert program makes it possible for product developers to undergo an “Excellence Appraisal,” which, like the TSA’s background check, enables the developer to skip the line of the normal review process and speed their products through FDA approval.

What are we to make of the Pre-Cert program? In some ways, this is a big shift in the agency’s approach. Historically, the agency has taken a product-by-product strategy for conducting regulatory reviews, meaning that each product is evaluated on its own terms prior to becoming commercially available. Under the Pre-Cert model, the FDA evaluates product developers, usually companies, in addition to products. If a developer is deemed “excellent,” then that company’s products—at least those deemed to be “lower-risk”— can participate in a faster regulatory process than those products made by companies without precertification. While pre-certified developers have an expedited experience, like travelers with TSA Pre✓® they do not avoid security checks altogether.

In other ways, this shift is consistent with the FDA’s broader trend toward sharing oversight activity with private industry. Pre-certified companies collaborate with the FDA to determine “Key Performance Indicators”, types of data used in this case to evaluate a company’s classification as excellent, and agree to provide the FDA with regular reports of “real-world performance analytics” that measure the product’s safety as it is used by people in their daily lives. The Pre-Cert process is currently being tested through a program pilot. Initial pilot participants include Apple, Fitbit, and Alphabet’s Verily, among others.

What is Safe Enough?

 While industry has enthusiastically welcomed the Pre-Cert program as a positive development, not everyone is convinced by the proposed changes. In October, Senator Elizabeth Warren (D-Mass), Senator Patty Murray (D-Wash), and Senator Tina Smith (D-Minn) sent a letter to the FDA outlining their concerns about the program. Whereas my former entrepreneurial colleagues expressed approval of the agency’s “common sense” approach, the senators have been less convinced about the judiciousness of the changes. Their letter voiced concern about the flexibility the new program extends to companies to help determine how a product’s safety should be measured and monitored. Amid growing public concerns about the technology industry’s activities in health care and in society more broadly, the senators asked why the FDA would grant each developer the flexibility, for example, to determine which Key Performance Indicators should be used to evaluate whether they qualify as “excellent” under the Pre-Cert model. The senators further questioned the program’s use of real world performance analytics, asking how the agency could trust the data provided by participants: “[How can the agency] ensure that the [real world performance analytics] it receives from organizations are accurate, timely, and based on all available information?” The senators are not alone in asking these questions. Can big tech companies really be trusted to measure their own ‘excellence’ and effectively monitor the safety of their own products?

If Silicon Valley has done little to gain public trust in recent years, industry involvement in FDA product evaluations is not new. As anthropologist Linda Hogle has pointed out, the passage of the FDA Modernization Act (FDAMA) in 1997 enabled private sector contractors to review products in areas where the FDA lacked sufficient expertise, and thus opened the door to industry helping set standards and review products. There are also precedents for the use of observational data—what the FDA is now calling real world performance analytics. When the FDA was founded in 1938, it took a reactive approach, regulating products already on the market based on observational reports of abuses that had already occurred. In fact, it wasn’t until the 1970s—an era that saw widespread debates about corporate abuses and the dangers of technological development—that the agency shifted to the more familiar proactive model where certain categories of products like medical devices are reviewed for safety before they can be sold to the public. In some ways, the use of real world performance analytics, a form of observational data, seems to be a return to the FDA’s original reactive regulatory model.

However, if the novelty of the FDA Pre-Cert initiative can be debated, we should pay close attention to the concerns raised by the senators and other critical voices. In her ethnographic research on the FDA’s regulation of pharmaceutical products, Hogle has shown how studying regulatory processes reveal insights into social processes that carry implications for how we view risk and responsibility for health. From this perspective, debates about the Pre-Cert program are revealed as debates about fundamental social values: health, safety, and individual autonomy. What risks are acceptable, and what is the responsibility of government? The conversations that are taking place right now about the regulation of digital health touch on the deepest questions of human health and social life. What kinds of data can help us determine safety? What does it mean for a medical product to be safe enough?

If we take a step back from the galvanized debates, the specialized vocabulary, and the hope and hype of digital health, we might begin to get at some of these deeper questions about what we value as a society. Anthropological research has the potential to help us imagine how a more productive conversation might unfold. What might an anthropological approach look like?

First of all, anthropologists ask questions. If the goal is to ensure that people developing new technologies act in accordance with broader values about health and safety, we might ask how people in different contexts—developers, regulators, patients, and physicians—would answer the questions posed by the senators’ letter. What does safety mean to them? How do they think about risk? We might also study those developing digital health technologies: How do they make decisions about product safety in their everyday work? To bring the daily realities of digital health development into closer alignment with the goals of public health and safety, we ought to start by first understanding the day-to-day experiences of the people ‘on the ground’ and how these experiences intersect with and impact others. How do the practical challenges of developing a software product and building a business intersect with the expectations of patients, physicians, and others?

Anthropologists observe the present in order to see what might be possible in the future.  That is to say, studying how people understand and act in the world has the potential to help us imagine something different: different development practices, different regulatory processes, and different futures. In the words of anthropologist Kim Fortun, this kind of research has the potential to be “productively creative, creating space for something new to emerge, engineering imaginations and idioms for different futures, mindful of how very hard it is to think outside and beyond what we know presently.”

In an effort to solve a real and pressing problem, the FDA has drawn from the familiar, not only finding inspiration in analogous programs like TSA Pre✓® but also returning to old regulatory models premised on reactive responses over proactive intervention. I think it’s worth asking: Has starting from a place of familiarity limited the possibilities of the program? In an age of substantial technological change, perhaps what we need from regulators is something altogether new—something that attends to the practical challenges of the present while simultaneously opening up new and different possibilities for the future.

Paige Edmiston is a PhD Student in Cultural Anthropology at the University of Colorado Boulder. Her research focuses on how digital technology is changing the American medical system, and how these changes are impacting humans and society. 

How Legal Traditions and Licensing Procedures Impact Telecommunications Industries Around the World

One would expect that lawmakers rely on economic, social, and technical analysis to support their decisions. However, in reality lawmakers’ decisions are often influenced by subjective considerations and politics. When economic, social, and technical analysis is referred to, it is often presented by parties with a vested interest. This is particularly problematic in the telecommunications industry where those without political capital historically remain left out of the decision-making process.

To address the need for reliable analysis, a group of researchers and policymakers convened at the first Telecommunications Policy Research Conference (TPRC) in 1971. Continuing this tradition, the 47^th annual TPRC brought together industry players, academics, and regulators from around the world. Staying true the conference’s roots, many speakers presented research on the various ways radio spectrum could be better allocated in order to address economic, educational, and other social disparities – like political participation and housing.

I had the pleasure of presenting my research at this year’s conference. Over the past two years, I built a database of the telecommunications industry’s critical points of analysis, and then used those points to support the arguments put forward in my paper ­– Expanding Telecommunications Services in a New Age: How Legal Traditions and Licensing Procedures Impact Telecommunications Industries Around the World. The paper was selected as a Finalist for the conference’s Student Paper Competition and was featured in the “International” panel.

I first became interested in the digital divide while working on infrastructure improvement projects in Latin America throughout high school and as an undergraduate. My hometown, Gettysburg, Pennsylvania, also struggled to address the digital divide, but not nearly to the same extent as what I saw on those trips. While the work I did generally aimed at improving essential infrastructure and economic opportunity, I noticed that many communities I worked in also lacked any recognizable form of telecommunications infrastructure.

When I started travelling outside of Pennsylvania and Latin America, I realized the digital divide was a common issue that practically all countries share. This is demonstrated by the efforts of members of international organizations, such as the Global Systems Mobile Communications Associations (GSMA) and the International Telecommunication Institute (ITU).  It was not until I began work as a Research Assistant for Professor Dale Hatfield that I understood how the level of economic and social development in each country, at least as it relates to telecommunications industries, is heavily influenced by decisions about how to manage and regulate radio spectrum use.

Two issues influence the telecommunications industry the most – the balance of power between government branches and radio spectrum licensing. So, Professor Hatfield and I agreed it would be worthwhile to research how legal traditions, like common law and civil law, and licensing procedures, like auctions and comparative hearings, influence the quality of services and prices of telecommunications providers in each country. To do this, I created two separate regression analyses. This allowed me to measure the relative legal advantages for a civil law country as opposed to a common law country, and of using auctions as opposed to comparative hearing to assign spectrum.

One of the regression analyses indicated that civil law countries’ legal traditions give them a major advantage over common law countries. This may be explained by the differences between countries in respect to how power is shared between branches of government. In civil law countries, decision-making authority is traditionally concentrated in the hands of the executive branch and agencies, often at the expense of the judiciary and legislature. Alternatively, in common law countries the balance of power is more evenly shared between branches. This is observed in the exercise of judicial review and some legislatures’ ability to limit the scope of agencies’ authority.

Civil law countries do have at least one major advantage built into their legal systems: they have been able to achieve much higher Internet access, subscription rates, and broadband speeds – all without significantly increasing consumer prices. This ought to provide encouragement for regulators in countries that are struggling to keep up with telecommunications development to experiment with policies that have proven successful in civil law countries. It also indicates that perhaps they should place more faith in their agencies to make effective radio spectrum management decisions.

Licensing procedures also strongly influence outcomes in the telecommunications industry. The second regression analysis indicated that countries that use auctions to assign radio spectrum have delivered cellular and internet services to more people, and at lower costs, than countries that rely on comparative hearings. Interestingly, many countries still use comparative hearings to assign radio spectrum. This may be because comparative hearings, at least in theory, give the regulators conducting the hearing greater discretion in selecting the licensee.

It seems that auctions commonly lead to positive outcomes for consumers, faster broadband speeds, and, when conducted properly, can even help introduce competition by reducing the amount of market share in the hands of the leading operators. Again, this should encourage regulators to experiment with more dynamic approaches to spectrum regulation. In the paper, I concluded that a best practice has already been established – auctions with minimum criteria for participation and/or buildout requirements – and I encourage regulators to pursue that approach in the future.

My research also helps to confirm something I suspected while travelling abroad and throughout the rural U.S. The digital divide is influenced by both physical and political barriers. Indeed, the regression analyses indicated that political factors play an even greater role than several factors others have relied on to explain the observed disparities. I know this to be true because I controlled for several traditional explanations, including rural population, population density, GDP per Capita, and Corruption Indices. Yet, when compared to legal tradition and licensing procedure, these factors have only a slight, if not insignificant, impact on telecommunications outcomes. Therefore, politicians and telecommunications providers can no longer point to economic and physical variables to explain their shortcomings.

Taken together, the research on legal tradition and licensing procedure helps to explain why there are often large disparities between countries. I understand this marks a major departure from much previous thinking on the subject. My hope is that my research will help others to understand how legal tradition and licensing procedure can be used as mechanisms to better develop telecommunications markets.

Freddy is Managing Editor of CTLJ, Volume 18 and a Research Assistant for the University of Colorado’s Silicon Flatirons Center for Law, Technology, and Entrepreneurship. His study and research focus on identifying legal solutions for the issues that arise out of emerging technologies and increasing access to critical technology infrastructure in underdeveloped communities.

For years, lack of access to modern infrastructure threatened to leave rural communities across the United States behind in the race for economic development. The large investor-owned companies that were responsible for deploying the necessities of modern economic life to cities and densely-populated areas proved reluctant to make significant investments outside population centers. Lower population density and higher deployment costs limited critical connections for rural America, and only one-in-ten households had access to reliable modern infrastructure.

This story may sound familiar to rural residents who lack access to reliable broadband internet in 2019. However, this isn’t a new story – it mirrors the snail’s pace of electrification in the 1930s. As rural electrification inched along in the early 20th century, rural electric cooperatives (RECs), proved critical to solving the crisis, and these same entities may be able to address the modern broadband divide as well. Until recently, the largest obstacles to RECs providing broadband was lack of federal support and restrictive state law. In the last two years, a wave of state bills and new federal interest have begun to remove these obstacles. RECs are poised to benefit local economies not only by closing the digital divide, but also by folding energy-saving technology and renewable assets into their services.

In the 1930s, rural populations struggled in part due to a lack of the electricity that lit up the rest of America. As the New Deal picked up steam, the federal government sought new solutions to rural electrification. Congress and the White House created the Rural Electrification Administration (REA), which in turn wrote model “Rural Electric Cooperative Corporation” legislation for states. This widely adopted legislative blueprint enabled rural residents to form cooperatives to take advantage of REA funding and build out their own electric grids. These cooperatives combined democratic and corporate structures into a mixed model in which leadership boards are elected by all rate-paying residents, rather than investor-shareholders. They purchased power from large power companies who handled generation and transmission, and then distributed it to their customers. The REA also provided loans and loan guarantees to seed RECs with capital, which would be paid back by member-owners through their monthly electric bills. Hundreds of rural electric co-ops formed across the country and increased electrification rates from ten percent to ninety percent in a span of about eighteen years.

Today, broadband internet access faces similar challenges. The Federal Communications Commission describes broadband as “critical to economic opportunity, job creation, education, and civic engagement.” Deficient broadband access is recognized as a major barrier to effective rural entrepreneurship and economic growth. Sixty percent of American farmers report that they do not have good enough internet to run their businesses. The FCC’s Connect America Fund (CAF), has poured billions into rural development, just last month authorizing another $112 million for the latest auction of CAF project grants. However, the Commission also acknowledges that access to broadband remains twenty to thirty percent lower in rural areas than in population centers. New research from the Purdue Center for Regional Development finds that a large percentage of advertised broadband comes from a DSL connection, which often does not meet the FCC’s modest 25 Mbps download speed and 3 Mbps upload speed definition for broadband. Yet, many urban residents enjoy access to “gigabit” speeds of 1 Gbps or faster, and many believe the FCC should be pushing development by defining 100 Mpbs download speeds as the minimum for “broadband” service. The Purdue research also highlights that upload speed is often as important as download speed for economic development because businesses are producing data as much as they are consuming it from outside sources. However, for “symmetrical 25/25 speeds, the share of rural housing units with no access more than doubles from 26.9 to 64.7 percent.”  While incumbent corporations, states, and the federal government have proposed various remedies, RECs have also begun stepping up to provide access to broadband in these high-cost rural areas.

RECs are well-suited for the task. They have nearly a century of experience managing local infrastructure in difficult, high-cost rural areas. Indeed, REC electric infrastructure connects many of the most distant and rugged parts of the country. This infrastructure and experience enables them to provide fiber to the home at relatively low cost, enabling gigabit speeds in areas where such connectivity would normally be unthinkable. Ownership by their members means that they are only required to break even, enabling RECs to charge more affordable rates than investor-owned companies driven by profitability concerns. Additionally, RECs map well onto many of the areas that could gain the most economic benefit from broadband connectivity. The National Rural Electric Cooperative Association reports that overall 6.3 million households in co-op territory could gain a collective $12 billion in economic benefits if they received reliable access. 

Access to funding is an important piece of the puzzle for any rural broadband project. RECs have applied for and received funding from federal sources like the FCC, the National Telecommunications and Information Administration, and the Department of Agriculture. However, when applications have been denied, they have also proven effective at self-funding. Indeed, RECs can leverage existing electrical assets in order to pay for broadband deployment, without having to hike rates for their electric customers.

As member-owned collectives, RECs tend to be highly trusted and responsive local institutions, allaying possible mistrust and conflict with local residents and stakeholders. The American Consumer Satisfaction Index reports that these inherently localized institutions enjoy the highest consumer satisfaction of any of the different players in the electricity industry. Their structure provides transparency and voice to their consumers, who are also their owners.

Finally, deploying fiber can enhance an REC’s electric service and expand distributed renewable energy generation. Combining fiber with electric service provides reliability and redundancy for the grid managers. It can also improve efficient energy usage by allowing for load-management devices like smart thermostats and smart appliances. Perhaps most importantly, as RECs are looking to increase their renewable generation portfolios, building connectivity can improve their “ability to host these generation assets, monitor power sources, and improve forecasting capabilities to integrate the intermittent nature of their production onto the grid.” While many investor-owned monopoly utilities remain reluctant to move away from centralized power plants, REC’s member-owner structure gives them enormous potential as renewable energy providers. Producing energy on land owned by members in turn boosts economic development by increasing the land’s productivity while developing new sources of rural capital. (For more on the benefits of smart grids and the disruptive potential of distributed generation, see the National Rural Electric Cooperative Association’s “The Value of a Broadband Backbone” and “The Energy Prosumer” by Colorado Law Professor Sharon Jacobs, respectively.)

It may come as a surprise, then, that despite the 1996 Telecommunications Act authorizing grants to multiple types of providers, the FCC has been reluctant to provide Connect America Fund money to RECs, instead reserving grants for telephone companies. Even more surprisingly,  in many states RECs faced long-standing legal barriers to getting into the broadband game. For example, North Carolina prevents their RECs from accessing federal grant funding for broadband deployment. Similarly, Georgia began 2019 in a legal limbo, unclear whether RECs were even allowed to provide broadband service at all. The Institute for Local Self-Reliance points out that many direct state barriers are preempted by the 1996 Telecommunications Act. However, RECs often lack the resources, knowledge, and political will to engage in lengthy legal battles with their own state capitols. Of course, major national telecom companies are known to lobby fervently against letting any new providers into the market, even in poorly-served areas. For small cooperatives, this creates a daunting political landscape. 

Meanwhile, major incumbent electric utilities are equally leery of landowners developing their own renewable energy resources, which injects more competition into electricity generation market. RECs have typically purchased power from these wholesale power generators, and distributed it to their customers. The ability for REC member-owners to produce their own power keeps more money local, but also creates supply competition for regional power providers. RECs trying to empower distributed generation and build broadband connectivity thus face fights on multiple regulatory fronts against incumbent electricity providers as well as telecommunications companies.

But in the last two years, spurred by an increasing demand to close the digital divide, both states and the FCC have been making changes. The 2017 Connect America Fund Auction finally opened a relatively small portion of the bidding to non-incumbent carriers like RECs In 2017. In this same vein, Tennessee cleared out legal barriers for co-ops and simultaneously provided a pot of money to incentivize build-out. Georgia and Mississippi both passed laws this year allowing its co-ops to get in the game. In a reflection of the bipartisan consensus around removing regulatory obstacles to rural economic development, both pieces of legislation cleared state houses with overwhelming support. In 2016, notably earlier than many of the recent developments in state law, 87 RECs across the country were already advertising fiber networks providing gigabit speeds. Some of these take the form of partnerships with ISPs while others may offer open-access networks to encourage competition. These success stories have no doubt spurred states and the FCC to reconsider RECs more as partners, and less as competitors.

Until 2018, Colorado had its own obstacle for RECs. By law, incumbent telecommunications providers had the right of first refusal whenever a new broadband expansion project was proposed. This restriction enabled telecommunications companies operating in the area to provide a minimum level of service while foreclosing other competitors. The 2018 Broadband Deployment Level Playing Field Act kept this right of first refusal in place, but with an important change. Under the amended law, incumbents that wish to exercise their right of first refusal must match the upstream and downstream rates of a potential competitor’s proposed project, and do so at the same or lower cost. 

In 2016, the Delta-Montrose Electric Association (DMEA), on the western edge Colorado was among the first to move forward with a fiber program to stimulate economic growth in the region. Their Elevate program offers a 100 Mbps option and 1 Gbps option. Similarly, the La Plata Electric Association and Yampa Valley Electric Association, in southern and northern Colorado respectively, are also in the process of expanding broadband subsidiaries. DMEA has also been a leader in the fight to allow for more local electricity generation. The co-op recently followed the example of New Mexico’s Kit Carson Cooperative and reached a settlement to buy out of its contract with incumbent electricity producers, which limited local generation potential. La Plata Electric Association is considering doing the same.

Closing the rural digital divide has been described as an “all hands on deck” effort by the FCC. Increasingly, that means opening the door to RECs as broadband providers. Their community-centered model and time-tested experience with rural infrastructure gives them a natural affinity for the task at hand. As the cost of distributed renewable energy generation continues to plummet, the advantages of integrating energy and data infrastructure grow. RECs not only enable data-driven entrepreneurs, they also open the door for struggling farmers and landowners to build profitable, renewable energy resources. However, both our data infrastructure and power generation infrastructure are struggling to grow past the restrictive legacy of a top-down approach. This top-down approach relied on regulation and planned economic development, rather than market competition and entrepreneurial innovation. In a time when American public sentiment is distrustful of corporate interests and intrigued by cooperative ownership models, lawmakers and regulators should empower RECs. They should have the chance to duplicate the success of the 1930s, compete with incumbent broadband providers in a free market, and participate in competitive power markets. Rural Americans underserved by the existing broadband market should consider if the groups that proved so successful at electrifying their communities could also be the most reliable bridge across the digital divide.

Conor May is a member of the Colorado Law & Technology Journal and serves on the executive boards of the Environmental Law Society as well as the Silicon Flatirons Student Group. He studies antitrust law, tech policy, and environmental law, with a focus on energy regulation.