FOR IMMEDIATE RELEASE

December 1, 2010

NetCompetition Statement on FCC Proposed Open Internet Proceeding

WASHINGTON – Scott Cleland, Chairman of Netcompetition.org, released the following statement regarding the FCC’s proposed December 21^st net neutrality proceeding.

· “The absence of any market failure or any proven problem to solve, the U.S.’ world leadership in facilities-based broadband competition, and the fragility of an economy not creating net job growth, calls for ongoing regulatory restraint and humility.”

FreePress' latest unfounded accusations that the Level-3 peering dispute with Comcast is somehow a net neutrality violation exposes how embarrassingly ignorant the extreme left is about how the current Internet came to be and actually works.

The EU's decision to launch a formal antitrust investigation into Google's business practices has many highly significant implications going forward.

Takeaways:

First, it is obvious that the EU antitrust authorities have concluded informally that Google is a monopoly.

• That conclusion is implicit because the Google behavior the EU is now formally investigating would only be anti-competitive, if Google was indeed a monopoly.
• Also implicit in this action is that monopolies, or companies which have dominant share, cannot behave in the same way that competitors without market power do.
• Simply, because monopolies inherently have the market power to anti-competitively disadvantage competitors, they have a implicit legal obligation to not do so.

Second, this is a sweeping investigation, looking into multiple ways that the EU suspects Google has operated anti-competitively:

• Discriminating against competitors in unpaid and paid search results;
• Self-dealing in favor of Google's products, services and content;
• Imposing "exclusivity obligations on advertising partners;" and
• "Restrictions on the portability of online advertising campaign data."

What this means is that the EU apparently has deep and wide concerns about multiple patterns of alleged anti-competitive behavior.

It appears the FCC has lost sight of the essential fact that legitimate policy must come from a legitimate process.

Currently, the FCC is reportedly preparing to mandate net neutrality regulations December 21st, ostensibly to ensure an open and transparent Internet.

• Unfortunately, the FCC has not been open or transparent at all in its process of late, giving the public or markets no public justification, rationale, or explanation why what they are planning to force is legitimate.
• How does not following or respecting the spirit or principle of "openness" in FCC "open" Internet policy making -- engender legitimacy?

How does the FCC seriously threatening to impose the "nuclear option" of Title II telephone regulation of the Internet behind closed doors, in order to coerce assent for, and compliance to, unnecessary, unjustified, and unwarranted permanent net neutrality regulations under Title I -- engender legitimacy?

How does the FCC deciding its most controversial rule making exactly in between the seam of the current Congress, where ~300 members asked the FCC to defer to Congress, and the future Congress, which has made it clear they want the FCC to defer to Congress -- engender legitimacy?

Only FreePress would hold a press conference to release essentially a longer-version of its previously-debunked legal analysis calling for the FCC to regulate competitive broadband providers as Title II telephone public utilities.

The essence of the call, which made no news, was FreePress reiterated that the FCC should ignore:

• The Appeals Court's decision that the FCC does not have direct authority to regulate the Internet;
• Congress' constitutional authority and intent to address this issue; and
• Basically everything that has happened in the last 100 years -- (because FreePress Chairman Wu says the answer to the FCC's policy conundrum can be found in the policy established in 1910 -- before the FCC, TV, computers or the Internet existed.)

For anyone that wants to examine in depth why FreePress' legal and policy analysis remains fatally-flawed and would cause an unmitigated disaster click: HERE...

The FCC's latest apparent attempt to justify mandating Internet regulation is:

• "Net neutrality is about preventing anyone from regulating the Internet."
• "There are some phone and cable companies out there that want to decide which apps you should get on your phone, which Internet sites you should look at, and what online videos you can download." "That's regulating the Internet -- and that's what the FCC is trying to stop." -- per a senior commission official in the 11-22 Communications Daily and Politico.com's Morning Tech.

To begin, if the FCC actually wanted to prevent "anyone from regulating the Internet," would that not logically include preventing the FCC itself from regulating the Internet?

It is supremely ironic that the entity that describes itself as the lead U.S. "regulator" per law, is accusing companies of being the real "regulators" when the law, FCC "regulation," common knowledge and common sense all consider companies to be "competitors" and not "regulators."

Competitive broadband companies compete by offering differentiated products, services, features, prices, bandwidth, quality of service, security protections, etc., because consumers' needs, wants and means are very different.

If the FCC is proposing open Internet/net neutrality regulations soon for decision in December, it is ironic that the FCC, which is poised to mandate openness and transparency for competitive broadband providers, is not leading by example in being open or transparent themselves.

If the FCC Chairman intended to decide net neutrality regulations imminently, why did the Chairman not openly mention his plan, rationale, and justification to his fellow regulators in his annual major policy vision speech to NARUC this past Monday?

• If the FCC is now confident its new Internet regulations are indeed the right and defensible thing to do, why not openly and transparently defend them, why schedule them right before a big holiday recess, when the FCC knows most everyone interested will be traveling or on vacation and not be able to read them or respond to them?
  • Would the FCC consider it open or transparent, if competitive broadband providers fulfilled their openness and transparency obligations, at a time, and in a manner, when its obvious most all consumers would not hear them or benefit from them?

If there is a possibility that new net neutrality regulation could be on the December agenda, why isn't the FCC's spokesperson not open and transparent that it is a possibility rather than denying it as "uninformed" and "pure speculation at best."

After not mentioning net neutrality at all in his annual speech Monday to NARUC, FCC Chairman Genachowski appeared to signal to a Silicon Valley Web 2.0 audience on Wednesday that new net neutrality rules are indeed on the way from the FCC.

• If recent rumblings are true, the FCC could propose new net neutrality rules next week that then could be voted on at the FCC's December 15th meeting.
• The highly uncharacteristic silence from FreePress and its allies suggests they may expect FCC net neutrality rules favorable to them soon.

If the FCC Chairman is to be taken at his word, in saying Monday that "At the FCC our primary focus is simple: the economy and jobs" -- it is hard to imagine how the FCC could spin that new unnecessary, unwarranted regulation of the Internet could somehow help grow the economy or create jobs.

FCC net neutrality regulation of the Internet is a no-brainer jobs killer.

First, according to research by Bret Swanson of Entropy Economics, companies skeptical of, and at risk from, net neutrality regulation employ ten times more people than those companies that support net neutrality regulation of the Internet.

FCC Chairman Julius Genachowski signaled a major FCC policy pivot Monday, from a fourteen-month focus on regulating net neutrality to apparently a new singular focus on "the economy and jobs" -- in his annual speech before NARUC, the association of state utility regulators.

• (Kudos to Randy May of the Free State Foundation for flagging this very significant policy shift in his outstanding post.)

Takeaways from the FCC Chairman's speech.

First, this is a very significant speech to pay attention to, because the FCC is laying out what the states can expect from the FCC in the year ahead.

Comcast's EVP David Cohen spoke at Brookings today on "Who should Govern the Internet."

• His thesis was dead on and well worth spotlighting -- the Internet is an engineering creation and the Internet flourishes because it lives in the collaborative and capable hands of engineers dedicated to making the Internet work for everyone.
• The speech explained how engineers working together in forums like the IETF and BITAG can solve, and solve quickly, issues that others try to unnecessarily involve lawyers and regulators in.

My big takeaway from the event, was that the FCC should declare victory -- that we have a free and open Internet -- and then get back to the real pressing work facing the FCC -- the National Broadband Plan.

There are no existing net neutrality problems, and no technical issues that the industry engineering bodies, IETF and BITAG have not been able to resolve.

There is simply no need for the FCC to fix an Internet that is already operating as the FCC and most everyone expects it to operate.