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FreePress Concedes Broadband Is Not A Duopoly

FreePress in petitioning the FCC to apply its Broadband Principles to wireless (because they currently do not apply to wireless) effectively has conceded that broadband is not the duopoly market they have long alleged, but is a competitive marketplace.

Skype's Anti-competitive Uneconomics

There are two primary problems with eBay-Skype's attempt to get the Government to force competitive wireless providers to carry Skype's free communications app under the guise of wireless net neutrality and Internet openness; first, it is wildly uneconomic, and second, it is anti-competitive.  

  • The issue has surfaced in the news (USAToday, WSJ) as Apple enabled a Skype app on the iphone for use on free public WiFi networks, but not on the iphone's commercial network provided by AT&T; and again when Google's Android banned a tethering app because it violated T-Mobile's terms of service as reported by CNET.  

I.  Skype's .2% Uneconomics

What is uneconomics? Just what the term implies, not economic, unsustainable... arbitrage.

Must read piece: "The Wireless Way Out" by Tom Wheeler

Tom Wheeler, of Core Capital partners, has a must read piece today: "The Wireless Way Out" on TMCNet. It highlights:

  • How U.S. wireless broadband competitors are heavily investing in infrastructure despite the recession; 
  • That U.S. private wireless infrastructure investments dwarf the public investment in broadband in the stimulus pakage; and
  • That wireless broadband produces huge productivity benefits for the economy.

The big takeaway from this piece is that the fastest growing part of the U.S. broadband market, wireless, is strong, competitive and investing heavily -- which is very different than the state of non-communications industries in this economy. 

For those who don't know Tom's impressive background... he most recently was one of the most senior advisors for Technology on President Obama's Transition Team, and he also is a past head of both the CTIA and the NCTA.

 

 

 

The Flawed Economics of Broadband Open Access in the U.S.

A post by a Google policy analyst yesterday attempted to make the economic case for open access in the U.S. and suggested reasons why American infrastructure providers should embrace a mandated open network model. This proposed theory warrants a strong practical rebuttal. This proposed case for the economics of open access does not hold up to close scrutiny, because it has fatal flaws in both logic and economics.

 

I.                   The fatal flaw in logic in the case for the economics of open access:

 

Since the post assumes broadband markets everywhere are basically the same, it concludes that the open access experience in some European countries is relevant and applicable to the U.S. situation. The fatal flaw in logic here is the core assumption that European and U.S. markets are factually analogous. They are not. They are substantially different factually and structurally as I will explain in detail.

Exposing the Biases in the Broadband Policy Debate -- My new white paper

Invited to speak at the ITIF forum on ITIF's white paper: "It's Time to End the Broadband Policy Wars" -- I so strongly disagreed with the framing bias of that white paper and the broadband policy debate in general that I decided I needed to counter it by writing my own white paper:


  • Don’t be Fooled by the National Broadband Policy “Straw Man”

     

    Exposing Three Hidden Policy Biases of Broadband Policy Proponents

The abstract of my six page paper is below:

Chavez 2.0 -- Tim Wu's Inane NY Times Op ed

Tim Wu's "OPEC 2.0" Op ed in the New York Times employs an embarrassingly inane analogy/metaphor. It also happens to be a factually bankrupt piece.  

Why is Professor Wu's political analogy comparing bandwidth to energy, and a "bandwidth cartel" to OPEC -- embarrassingly inane?

  • The vast majority of people understand that the price of gas has increased dramatically in part because the U.S. government has severely restricted supply by banning a variety of energy supply alternatives.
  • The vast majority of people also understand that the price of bandwidth usage continues to plummet in large part because the U.S. Government has NOT restricted supply; on the contrary, it has encouraged free market competition, broadband investment and innovation that in turn -- has spurred vastly more supply of bandwidth.

In his op ed Professor Wu said:  "In an information economy, the supply and price of bandwidth matters, in the way that oil prices matter: not just for gas stations, but for the whole economy."

More evidence no broadband industrial policy is needed

A recent study by the Leichtman Group found 70% of American broadband subscribers are very satisfied with their service, and relatively few are actually seeking faster Internet access.

  • This suggests the drumbeat for a national broadband industrial policy, because America's Internet is too slow and falling behind the rest of the world, is just empty rhetoric and wishful assertions by Big Government types.
  • As I have blogged before, the facts are not the friends of those screaming for de facto nationalizing the Internet.  

Bottom line:  The more one learns about the facts about what benefits American broadband consumers actually enjoy, and what they demand in the future, it is not what the Big Government folks claim.  

FCC: Network Managers Guilty Until Proven Innocent?

The FCC is reportedly considering putting "the burden on the network operator to prove that its network practices are reasonable" in its net neutrality proceeding on Comcast's network management, according to today's top story in Washington Internet Daily.

  • Assuming that this report is accurate, and assuming that an FCC majority would approve such a shift of the burden of proof, let me explain why such an FCC ruling would be a profound assault on the freedoms that Americans hold most dear.   

It would be supreme irony, if in the supposed name of "Internet Freedom," the FCC somehow ruled that network operators had no freedom to manage their private property, enter into contracts or pursue business without prior permission from the FCC.

  • Freedom from Government is central to the U.S. Declaration of Independence which declares "certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." 
  • The Fifth Amendment of the U.S. Constitution guarantees the presumption of innocence: No person shall "be deprived of life, liberty, or property, without due process of law."   

Why would it be bad to put "the burden on the network operator to prove that its network practices are reasonable"?

Nielsen: US leading in Mobile Internet Penetration -- More evidence the US is not falling behind

New facts from independent sources continue to undermine the political charge that the U.S. is falling behind in broadband, the thinly-veiled charge that Big Government proponents use to justify the need for a national broadband industrial policy to replace the current free-market national Internet policy.

  • A new report by Nielsen, the independent market research firm: "Critical Mass: The worldwide state of the mobile web"
    • Ranks the U.S. #1 out of the 16 countries they measure in mobile Internet usage penetration -- ahead of the UK, Germany, France and Italy and others. 
    • The report also concludes that penetration of 3G-broadband-capable handsets is greater in the U.S. than in the EU (28% vs 25% of consumers respectively.)

Why are these new independent findings important?

First, broadband mobility is as important to Americans as stationary broadband speed.

Opposing views on Net Neutrality for American Bankruptcy Institute Newsletter

I wrote the anti-net neutrality argument and Professor Lowell Feldman wrote the pro-net neutrality argument for the ABI Telecom Technology Committee newsletter this month for the American Bankruptcy Institute:

Both articles are copied below, mine followed by Professor Feldman's:

Why Net Neutrality is Unnecessary and Bad Policy

Written by:

Scott Cleland

Chairman, NetCompetition.org -- a net neutrality forum funded by broadband companies Washington D.C.

Pages

Q&A One Pager Debunking Net Neutrality Myths