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Regulation

More un-economics nonsense from FreePress: Regulation does not discourage private investment

Does anyone else see the irony of a staunchly anti-business and anti-property activist organization like FreePress -- which openly advocates for an information commons and a broadband public utility model -- attempting to be credible doing private investment analysis for the FCC? 

  • Mr. Derek Turner of Free Press wrote  "Finding the Bottom Line: The truth about network neutrality & investment." 
  • The last time FreePress attempted economics in a public forum, FreePress asked in a letter to Congress "whether above-cost... pricing for broadband constitutes an unfair business practice." 
    • Given that FreePress was not aware that "above cost... pricing" is called profit and has always been legal in America, despite FreePress' views to the contrary, call me skeptical about FreePress' competence and genuineness in attempting private investment analysis.

If FreePress does not believe in free enterprise or private property, and does not understand concepts like profit, I am doubtful they can accurately or objectively analyze the economics or the business case for private long-term capital investments. 

Mr. Turner tries desperately and unsuccessfully to assemble "evidence" to prove the ridiculous assertion that regulation does not deter private investment.

Will FCC Exempt Googleopoly from Anti-Competitive Behavior Enforcement?

The litmus test of whether the FCC's proposed net neutrality rules are really endeavoring to prevent anti-competitive behavior on the Internet (and not about turning private broadband networks into a public utility), will be whether the rules apply to all Internet competitors, which could be anti-competitive, like the existing consensus FCC Broadband Policy Statement already does. 

  • If reports prove correct, the FCC will propose to remove the existing FCC net neutrality principle #4 that "consumers are entitled to competition among network providers, application and service providers and content providers," and that new net neutrality regulations apply only to broadband ISPs.
    • Such a change would be new anti-competition policy and completely contrary to existing U.S. pro-competition law/policy, and FCC precedents.
    • Such a change would also not be neutral or fair, but arbitrary and capricious.

Why an FCC Googleopoly exemption from Net neutrality would be transparently capricious.

First, there is more evidence of violations against net neutrality by one company, Google, in one year, than there is evidence against the entire broadband sector over the last five years! 

72 House Democrats' Letter Urges FCC "to avoid tentative conclusions which favor government regulation"

72 House Democrats wrote the FCC pushing back on the direction the FCC apparently is headed in its proposed Open Internet/net neutrality regulations to be voted on October 22nd. From the letter:

  • "... it is out strong belief that continued progress in expanding the reach and capabilities of broadband networks will require the Commission to reiterate, not repudiate its historic committment to competition, private investment, and a restrained regulatory approach."
  • "We are confident that an objective review of the facts will reveal the critical role that competition and private investment have played -- and of necessity will continue to play -- in building robust broadband networks that are safe, secure and open."
  • "In light of the growth and innovation in new applications that the current regime has enabled, as compared to the limited evidence demonstrating any tangible harm, we would urge you to avoid tentative conclusions which favor government regulation."
  • "...we remain suspicious of conclusions based on slogans rather than substance and of policies that restrict and inhibit the very innovation and growth that we all seek to achieve." 

It was signed by the 72 House Democrats listed below:

72 Signers: 

FCC Is Already Chilling Smart Network Innovation

The most basic smart network innovation and obviously reasonable network management is already being chilled by the FCC's expected absolute ban on any Internet traffic prioritization.

  • Light Reading reports: "Cox shuts down Net Congestion Tests"
    • "Cox launched the trials in February, testing out a system developed internally that puts traffic into "time-sensitive" (e.g., Web pages, voice calls, streaming video), and "non-time-sensitive" (e.g., file uploads, peer-to-peer, and Usenet) buckets. As designed, the congestion management system temporarily delays upstream, non-time-sensitive traffic whenever network congestion is detected. Cox, which limited the test to residential high-speed Internet subs, insisted that any delays were on the order of seconds or subseconds -- not enough for customers to really notice."  
  • Multichannel News reports: "Cox Wraps Internet Congestion Management Test -- Operator Plans to Submit findings to FCC as Part of Network Neutrality Rulemaking Process"
    • "...the operator is no longer managing traffic based on application type in Kansas/Arkansas and has no plans to deploy the congestion-management system right now."

Who thinks it is not "smart" or "reasonable" to prioritize time-sensitive traffic over non-time-sensitive traffic? 

10 questions for those questioning if competition policy works

Both the FCC and FTC Chairmen appear to be suggesting that the current fifteen-year competition policy experiment in law to promote competition and reduce regulation in communications will ultimately fail -- requiring new preemptive common-carrier-like nondiscrimination regulation of ISPs to preserve a free and open Internet.     

  • In his September 21st speech, FCC Chairman Julius Genachowski's first reason justifying the need for preemptive new FCC net neutrality regulations was limited ISP competition:
    • "One reason has to do with limited competition among service providers. As American consumers make the shift from dial-up to broadband, their choice of providers has narrowed substantially. I don’t intend that remark as a policy conclusion or criticism -- it is simply a fact about today’s marketplace that we must acknowledge and incorporate into our policymaking." 
  • FTC Chairman Jon Leibowitz, in a 10-4-09 letter to the editor of the Washington Post in response to the Post's editorial, "The FCC's Heavy Hand," said:

Read Swanson's great WSJ op-ed: "Google and the problem with net neutrality"

Bret Swanson of Entropy Economics penned another great op-ed on net neutrality today entitled: "Google and the problem with net neutrality: Broadband has been a rare bright spot in the economy. Why discourage investment?" 

My favorite point Bret made was pointing out all of the investment, innovation and competitive benefits that have occured since net neutrality supporters have said there was a problem requiring regulation circa 2004. 

  • Not only have net neutrality supporters not been able to find credible evidence of an industry pattern of anti-competitive problems over the last five years, they also are ignoring all the competitive gains and benefits that have occurred over the last five years as well. 

Facts matter and facts are not the friends of net neutrality proponents.    

Great pearls of wisdom from the Internet's "grandfather" -- Farber-Faulhaber paper on wireless innovation

If you are interested in learning great "pearls of wisdom" based on expansive experience and clarity-of-thought on the question of wireless innovation, and proposed Internet regulation of wireless innovation, please read the Farber-Faulhaber white paper; at a minimum, please read the many wonderful highlights that I have pulled out of the paper for you below.

Professor Dave Farber, a widely respected Internet pioneer who has been called the "grandfather of the Internet" for his contributions to computer science, and a former Chief Technologist for the FCC, co-authored an important white paper with Professor Faulhaber for the FCC's Wireless innovation Notice of Inquiry.

Highlights from this outstanding paper:

Broadband competition is not "limited"

The leading justification offered by FCC Chairman Genachowski in his "Open Internet" speech announcing his intention to pursue formal net neutrality regulations was that "limited competition" was "simply a fact."

A fair review of the facts shows that broadband competition is anything but limited, it is actually robust, dynamic, and increasing in intensity.

  • The problem comes from a choice to assume a static and pessimistic view the competition glass as half empty, because it is not perfect.
  • This is not a fair representation of the broadband competitive situation because the core markets involved were originally price regulated monopolies but now are increasingly-dynamic, fiercely competitive markets where literally many tens of millions of Americans have taken advantage of available competitive choices.

I would like to highlight some important and illuminating competitive facts presented in an outstanding post by Link Hoewing over at Verizon's Policyblog:  

The Many Vulnerabilities of an Open Internet

What an "Open Internet" does not mean is as important as what it does mean.



  • Surely an "Open Internet" is not intended to mean what it certainly can mean: un-protected, unguarded, or vulnerable to attack. 

  • Thus, it is essential for the FCC to be explicit in defining what the terms -- "Open Internet," "net neutrality," and Internet non-discrimination -- don't mean, as well as what they do mean.

The word "open" has 88 different definitions per Dictionary.com and the word "open" has even more different connotations depending on the context. While the term "open" generally has a positive connotation to mean un-restricted, accessible and available, it can also have a negative or problematic connotation if it means unprotected, unguarded or vulnerable to attack.  


    Kudos to an Insightful Post on Innovation/Internet's Evolution

    Kudos to Link Hoewing's insightful post on "The Internet's Evolution and Network Management" on Verizon's Policy Blog.  

    • Its an important analysis and perspective for anyone wanting to understand how FCC regulation of the Internet and network management could negatively and seriously harm innovation and the Internet's natural evolution.

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    Q&A One Pager Debunking Net Neutrality Myths