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Must read Broadband industry letter to FCC: Title II reclassification would do incalcuable harm

In one of the best, most strongly-worded and serious letters to the FCC that I have read in my 18 years following FCC issues closely, the united broadband industry's letter to FCC Chairman Genachowski is simply a must-read; it explains why the FCC's serious interest in reclassifying unregulated broadband information services as regulated telecom services is among the worst and most destructive ideas the FCC has ever seriously considered.

The letter characterized Title II reclassification as:

  • "a radical new direction,"
  • "regulating the Internet,"
  • "a profound mistake,"
  • "betraying decades of bipartisan support for keeping the Internet unregulated,"
  • "misguided regulatory overreach," and a
  • "Pandora's Box."

A particularly strong summary statement was:

FCC Reclassification is Eminent Domain, but with No Just Compensation or Authority

At core the FCC's contemplation of reclassifying, or effectively treating, unregulated broadband info services as regulated telecom services, would be tantamount to the FCC declaring "eminent domain" over private broadband providers, i.e. justifying a government takings of private property for public uses, but doing so "without just compensation" or any statutory authority. 

  • The U.S. Constitution's Fifth Amendment requires: "nor shall private property be taken for public use, without just compensation."

A gaping missing element in all the FCC's discussions of all the new "public uses" it envisions for broadband in its pending National Broadband Plan and its proposed preemptive Open Internet regulations is any consideration at all of the potential hundreds of billions of dollars of un-budgeted liability to the U.S. Treasury that could result from the takings of private network property without just compensation -- at a time of skyrocketing trillion dollar Federal budget deficits and rapidly mounting public debt.   

Anti-competition FreePress mocks antitrust, feigning support of video competition

FreePress, which philosophically opposes competition policy, effectively is mocking antitrust law and authorities by cynically feigning to care about antitrust and competition in calling for an antitrust investigation of "TV Everywhere" efforts to enable authenticated paying video customers the additional convenience of accessing their paid-for content on any device at no extra cost. 

  • FreePress is misrepresenting its latest report -- "TV Competition Nowhere" -- as antitrust analysis when it is standard FreePress villain-ization of broadband and media businesses.   

In their own words, FreePress is anti-competition, anti-property, and anti-business. 

Why/how did Google outbid Apple for AdMob? Schmidt: Google Apple not "primary competitors"

Recent revelations indicate that the seriousness of the FTC's antitrust investigation of Google's proposed acquisition of AdMob will be ramping up.

Only eight months ago, Google CEO Eric Schmidt claimed Google and Apple were not "primary competitors" when a shareholder asked Mr. Schmidt to step down from Apple's board, because of an FTC antitrust investigation of Google for engaging in anti-competitive interlocking directorates per an AP story.

  • Only four months ago did Mr. Schmidt actually resign from the Apple board under pressure from the FTC.

While everyone is distracted by the front-page news of Google launching its own Google-manufactured smartphone called Nexus One, what I find most  interesting is that Google outbid Apple for AdMob by paying an exceptionally-high "multiple of up to ~16.7 times sales, the sort of price rarely seen in takeover deals since the heady days of the dot-com boom" per Reuters reports.

The Wall Street Journal also reported some very interesting new information/insights relevant to the FTC's Google-AdMob investigation:

Net Neutrality is a Made-Up Issue: The Smoking Gun

To see "smoking gun" proof that "net neutrality" is a made-up issue and argument, read the short but telling excerpt below from George Lakoff's Book: "Thinking Points" published October 3, 2006, when the only net neutrality incident at that time was the FCC's Consent Decree with rural telco, Madison River Communications in February 2005.  

From Thinking Points, Chapter 8, The Art of Arguments:

"Thus, the argument for Net neutrality becomes an argument for government regulation in this form by the FCC.

Google Voice's Plea for Special FCC Treatment

Google responded to the FCC's questions that effectively address whether or not Google Voice should be subject to the FCC's proposed net neutrality regulations.

In a nutshell, Google basically asserted that it is acceptable for a benevolent provider of free services like Google Claus to discriminate and block calls as an information service voice provider, but it is unaccceptable for profit-seeking broadband voice and information service providers to discriminate or block calls.

Open Un-Neutrality – Will FCC Re-Distribute Internet Opportunity? For Consumers? Businesses? Investors?

In effectively reversing fifteen-year bipartisan U.S. communications policy from promoting competition and reducing regulation to promoting regulation and reducing competition, the FCC’s coming “Open Internet” regulations are anything but neutral; they pick sides and strongly skew outcomes.

  • First, the FCC is proposing new preemptive business bans mid-game, the harshest most disruptive form of economic regulation possible.
  • Second, the FCC is arbitrarily discriminating among increasingly similar and converging businesses resulting in the arbitrary punishment of some businesses for what they allegedly might do, while rewarding others with protection from competition for what they allegedly might not do.
  • Third, the FCC is arbitrarily mandating one-way technology convergence without any supportable justification, i.e. banning distribution convergence into applications/content, while encouraging application/content convergence into distribution.

 

FCC's concluding market power in the wrong place; See great ACI analysis: Broadband vs Internet profits

Given that the apparent justification for new formal net neutrality rules is that fifteen-year policy has failed and that the market is unable to ensure consumer choice, the FCC will need to justify with facts that broadband providers indeed have market power to exercise anti-competitively.

Kudos to Larry Darby of the American Consumer Institute for his excellent and illuminating comparative financial analysis of the market power and profits of broadband companies vs. Internet companies. From his post

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.  


    Wireless Innovation Regulation -- "Believe it or Not!"

    With due to credit to "Ripley's Believe it or Not!®," so much odd and bizarre is happening in Washington in the "name" of "wireless innovation" and competition that the topic calls for its own collection of: "Believe it or Not!®" oddities.

    Skype co-founder Niklas Zennstom, the co-founder of illegal-music-downloading site Kazaa, who had to avoid entering the U.S. because of copyright-infringement liability... is now seeking a U.S. court injunction to shut down eBay's Skype for alleged copyright violations!

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    Q&A One Pager Debunking Net Neutrality Myths