Universal Broadband

Analysis of the potential pitfalls of wireless innovation regulation is a necessary complement to the FCC's upcoming Notice of Inquiries into wireless competition/innovation and the DOJ's review of wireless competition, in order to ensure policymakers get a balanced view of the big picture.  

What are the Top 10 Pitfalls of Wireless Innovation Regulation? 

#1 Pitfall: Losing focus on universal broadband access.

"Wireless innovation" appears to be the latest rebranding iteration of "net neutrality" and "open Internet" as the net neutrality movement searches for more mainstream support of their views. 

I love to learn and I learned a lot of new information and insights from George Ou's great new post on understanding how usage caps really affect broadband throughput.

• It is a must read for anyone that considers themselves knowledgeable about broadband.
• Some of it is counter-intuitive, but all of it is illuminating if you are interested in how broadband speeds and their relative usage limits affect international broadband comparisons. 

I certainly hope fellow broadband experts at the FCC, NTIA, RUS, OSTP and on the Hill are reading George, and this post in particular, because George's insightful and illuminating analysis can help take the National Broadband Plan analysis to another more substantive level of understanding.  

The data and evidence show that broadband is not a public utility warranting economic regulation of prices, terms and conditions; this is contrary to the assertions of net neutrality proponents: the Markey-Eshoo Bill, FreePress, the Open Internet Coalition, and Google's Internet Evangelist Vint Cerf, among others.

Why is broadband not a public utility? 

First, it is a competitive service, not a natural monopoly service.

A public utility presumes "natural monopoly" economics where economies of scale and scope preclude the possibility of competitive facilities/services. 

• The roughly $200b in private risk capital invested in financially-successful U.S. competitive broadband facilities over the last several years is incontrovertible evidence that broadband does not enjoy natural monopoly economics.

Second, users have choice of access providers.

Apparently FreePress is concerned that they may have over-reached and may have contributed to a less-than-helpful lose-lose dynamic in pushing so hard for counter-productive net neutrality regulations to be part of the guidelines for the $7.2b broadband economic stimulus grants.

FreePress is pushing their friends in media, to characterize the competitive broadband providers as bad guys for not volunteering to be subject to the new regulations/restrictions pushed by FreePress et al.

Broadband carriers have been very supportive and responsible participants in the congressional and executive processes to try and promote universal broadband access to all Americans soonest.

• Unlike the FreePress line, broadband providers did not proactively say they would not participate in this round of the broadband stimulus grants, they simply answered questions from some in the media that were pushed by FreePress to ask.

It seems the leading goal of promoting universal access for all Americans would benefit from FreePress expending more effort to promote universal broadband access and less on pushing their unnecessary and counter-productive net neutrality agenda that naturally undermines the financial and operational efforts to bring broadband to all Americans soonest.  

The lead WSJ story today, "Arrest in Epic Cyber Swindle" covering the cybercrime ring theft of over 130 million credit/debit cards, is a stark high-profile reminder of the very real and pervasive Internet problem of lack of cybersecurity. 

• In the face of overwhelming mainstream evidence that lack of cybersecurity is the Internet's #1 problem (see links below), including President Obama's declaration that cybersecurity must be a new national security priority in his 5-29 cybersecurity address, it is perplexing that none of the FCC's National Broadband Plan workshops are on cybersecurity. 
• It is hard to see how the Open Internet's growing security problem can be addressed and mitigated over time, if the U.S. Government's main big picture policy effort addressing the broadband Internet, the National Broadband Plan, does not even collect input from the public or experts on the Internet's #1 problem -- lack of cybersecurity.
• The first step in solving a big problem is acknowledging there is one. 

Vint Cerf, Google's Internet Evangelist, urged the FCC at a broadband workshop last week to regulate broadband networks as a utility like the electrical grid.

• I wonder if others spotted the irony in Google's "utility" regulation prescription for broadband.

Google's Mr. Cerf looks at the most competitive broadband market in the world, declares it inherently anti-competitive, and summarily prescribes... monopoly utility regulation for the entire broadband industry.

Meanwhile back at the Google Book Settlement ranch... Google has negotiated a de facto book search monopoly for itself in the Book Registry "utility" of the Google Book Settlement, without any regulation or Government oversight.  

While the latest net neutrality bill introduced in Congress has no chance of passage as drafted, it is a bay window view into how extreme the net neutrality movement has become and into what they are seeking from the FCC via backdoor regulation.

• The proposed Markey-Eshoo bill, HR 3458, which was drafted in close coordination with FreePress and the Open Internet Coalition, is much more extreme than previous bills in 2008 and 2006.

Why is this bill the most extreme version of net neutrality yet?

First, it is a completely unworkable framework.

• It imposes a beyond-all-reason, effective absolute ban on prioritization of data traffic, essentially eliminating current essential network management flexibility to: protect networks from attack or malware; ensure quality of service; manage congestion, latency, and jitter; and handle unforeseen or emergency situations. Sections: 12(b)(5), 12(b)(6)

• For all practical purposes, it destroys most any private sector incentive or benefit from competing or investing in broadband by outlawing any pricing/business model differentiation/innovation beyond commodity end user pricing. Section 12(b)(2)

A central policy question concerning the future of the Internet, cloud computing, and the National Broadband Plan is whether there should be Internet priorities or a priority-less Internet?

• The crux of the grand conflict over the direction of Internet policy is that proponents of a mandated a neutral/open Internet insist that only users can prioritize Internet traffic, not any other entity. 

To grasp the inherent problem and impracticality with a mandated neutral or priority-less Internet, it is helpful to ask if the Internet, which is comprised of hundreds of millions of individual users, has a mutual "hierarchy of needs" just like individuals have a "hierarchy of needs," per Maslow's famed, common sense "Hierarchy of Needs" theory.

"People are not approaching this from the perspective of helping us analyze what the trade-offs are" said FCC Broadband Coordinator Blair Levin about public comments to the National Broadband Plan -- per Multichannel News.  

• Industry's comments have attempted to be very focused on helping the FCC understand and appreciate the many explicit trade-offs involved in this very important proceeding.

A recap of the key trade-offs facing the FCC:

FOR IMMEDIATE RELEASE                                         

July 21, 2009                                                                                          

Contact:  Scott Cleland

703-217-2407

NetCompetition.org Files Reply Comments on National Broadband Plan NOI

Plan should ensure Government & private sector can work together and aren’t at cross-purposes