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Be sure to read Dick Armey's succinct analysis and perspective on net neutrality in his op ed: "Spare the Net."

• I am a big fan of Former House Majority Leader Dick Armey -- he is one of the true free-marketeer giants of our era.

Below is the full text of the letter I sent to all members of the Senate Commerce Committee and the Senate leadership questioning why of all times -- now -- for pushing net neutrality?

• Tuesday is the Senate Commerce Committee hearing on net neutrality entitled: "The Future of the Internet."  
• The attachment to the letter was my one-pager: "Why net neutrality is not a mainstream issue."  
• The link to the PDF of the letter with attachment is here.

April 22, 2008

The Honorable Daniel K. Inouye

722 Hart Senate Office Building

Washington, DC 20510-1102

ATTN: Telecom Legislative Assistant

Dear Chairman Inouye:

The wisdom and clarity of thought prize at the FCC's enbanc hearing at Stanford goes to --- FCC Commissioner Robert McDowell!

I urge you to take a few moments and read the following excerpt from Commissioner McDowell's statement yesterday -- it really gets to the heart of the matter of what the appropriate role is for the FCC in broadband network management issues.

"...In their joint press announcement, Comcast and BitTorrent expressed the view that “these technical issues can be worked out through private business discussions without the need for government intervention.”

Clearly the market badly under-estimated Google's strength and resilience in a slowing economy given the ~17% leap in Google's stock price in after hours trading.  

• Google's notorious lack of openness with investors helped make the market inefficiently, way-over-cautious.

42% revenue growth for an $18b a year company is amazing.

• It is also amazing for there to be a business of this size and global scope that strongly asserts to have a business model that is unaffected by the turmoil in the macro-economy.
• It certainly suggests some market power and network effects at work here, because this strong performance and guidance on the effect of the macro-economy -- is not "normal."

What I find most interesting is I don't think that the market yet understands what a growth kicker the DoubleClick acquisition will be for Google going forward. Google was coy about it and did not connect-the-dots for investors -- that they clearly see.

Google co-founder Sergy Brin, one of Google's most avid net neutrality proponents, candidly admitted today in Google's 1Q08 earnings call with investors, that Google "improved" its international search quality by "demoting non-country search results" on Google's improved country home pages.

This is interesting for a few reasons.

The more we learn about Google's behavior in the FCC's 700 Mhz auction the more clear it is Google acted improperly and "gamed" the auction and Fleeced the American taxpayer as I explained in my original post on this subject.

In a breakthrough agreement and announcement (see copy below), Comcast and Pando Networks, (the leading managed p-2-p content delivery service) agreed to:

• Lead creation of a "P2P Bill of Rights and Responsibilities" for P2p users and ISPs; and
• Create a process to better "share test methodologies and results" among all P2P providers and ISPs so everyone can:
  • Learn how P2P providers can optimize their applications for all types of networks; and
  • "More efficiently deliver legal content."

This is a profoundly significant development because it solves multiple thorny problems:

First, it breaks through and resolves the polarized net neutrality discussion where proponents only talk about ones own Internet "rights" but don't acknowledge the "responsibilities" that accompany any "rights" or acknowledge the effect those "rights" can have on the "rights" of others.

Kudos to John Markoff of the New York Times for a excellent, informative, and balanced article about the ongoing debate over where the U.S. really ranks in the world on Internet/broadband infrastructure.   

• The article, "Study Gives High Marks to U.S. Internet," does a good job of letting both sides of this fierce and ongoing debate get in their best points.

First, the article shares the news of the seventh annual World Economic Forum report produced by a French Business School which shows that the U.S. ranks 4th up from 7th last year and which contrasts with the more narrow OECD study that focuses on broadband penetration and shows the U.S. ranking lower and falling.

Second, what I most appreciated was that the article candidly explored that there are two opposing world views at work trying to use statistics and studies to promote their world views.

My eyebrows raised when I read the FT's article: "Google loses talent that turned chos into capital."

What attracted my attention is that Google is reacting to the ~37% drop in Google's stock price by spending shareholders money on giving restricted stock to employees who are no longer satisfied with stock options.

I wonder what the price tag will be for this, it could be significant....

Many have broadly swallowed Google's "spin" that Google really "won" by losing the 700Mhz auction -- without digesting the serious implications of Google's public admission.   

• So needy to convince everyone that Googlers, yet again, proved themselves to be the smartest people alive, Google hasn't realized that they have unabashedly admitted to de facto gaming and manipulating an official Government auction statutorily-created to fully reward taxpayers for commercial use of public airwaves. 
• Miguel Helft of The New York Times has the best coverage of Google's actions in the auction in his article: "An Auction That Google Was Content to Lose." 
  • “Our primary goal was to trigger the openness conditions,” said Richard Whitt, Google’s Washington telecommunications and media counsel."
  • The article goes on to explain its nonsensical bidding strategy of bidding against itself: "For much of the first week, Google gradually topped its own bids. With no competitors emerging, anxiety grew."  

So what's wrong with what Google did?  

First and foremost, Google's flagrant manipulation of the auction rules and process fleeced the American taxpayer out of at least $7 billion, by my estimate.