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Kudos to new Phoenix study; shows how NN skews market against consumers

For those looking for hefty substance in understanding the economic impacts of net regulation, I strongly recommend the Phoenix Center's new Policy Paper No. 28, Network Neutrality and Foreclosing Market Exchange: a Transaction Cost Analysis."

  • It is the best serious economic analysis I have seen to date in explaining how government interference in the broadband marketplace would backfire on the consumer in many harmful ways.
  • While NN has been an effective bumper sticker campaign, it is embarassingly devoid of analysis or justification that the legislative language will actually deliver what it's proponents claim it will deliver.

Why the Phoenix paper is so useful in this debate is it substantively explains how net regulation prohibitions on commerce negatively affect consumer prices, benefits and choices.

  • In laymans terms, this policy paper explains that when the law interferes with the free market and tilts the playing field to advantage one side, the online giants, it enables the online giants to shift their costs onto the backs of the consumer, while also prohibiting the market from dynamically responding in ways that would benefit the consumer with innovation or lower prices -- a classic double whammy on consumers. 
  • The big take away from this paper is that net regulation of the type in proposed legislation, economically favors the online giants at the expense of consumers.

This paper also helps expose the biggest scam in the Net Neutrality debate, that net regulation benefits consumers.

Precursorblog shut down by a denial-of-service attack -- blocking Internet content

This morning the PrecursorBlog server of NetCompetition.org was hit and shut down for the day by a targeted and malicious denial-of-service attack.

Net neutrality proponents profess to oppose the "blocking, degrading, or impairing" of any Internet content. They also profess to cherish and want to protect the First Amendment of the Internet -- free speech.

I want to believe that Moveon.org's SaveTheInterent and FreePress had nothing to do with this attack.

I respectfully ask them to publicly denounce this malicious act as the antithesis of their vision for a free, open and democratic Internet.

Web creator's parochial bias for horizontal innovation only

Web creator Sir Timothy Berners-Lee predictably testified before the House Telecom Subcommittee yesterday.  According to Comm Daily today, he said that "the key to web growth is "separation of layers" between browser and server, requiring engineers and legislators "get out of the way" and let others devleop innovative Web Protocols." (Sir Berners-Lee quotes in italics)

  • I wholeheartedly agree legislators should get out of the way, but why engineers?
  • Don't engineers innovate and invent?

What troubles me with the net regulation proponent view is this presumption that innovation can only come from software people or code writers not engineers of people involved in networking or infrastructure.

"America's Unique Internet Success" my Washington Times commentary today

Be sure to read my commentary today in the Washington Times "America's Unique Internet Success."

  • It is particularly timely today given that House Telecom Subcommittee Chairman Markey is starting his series of net regulation hearings today by hearing from the inventor of the World Wide Web, a leading supporter of NN.
  • It is also timely because CPAC, the Conservative Political Action Conference starts today in Washington DC; I will be speaking on their Internet panel on Saturday morning.

The purpose of this commentary is to challenge head on Congressional Democrats' attempt to revise Internet history for political purposes and manufacture a "broadband crisis" where none exists.

Does Google really mean what they say? Are they now back-pedalling on NN?

According to Comm Daily today, it appears as if Google is doing some major "bobbing and weaving" on its net neutrality stance. Google's top policy executive, Andrew Mclaughlin, at the Tech Policy Summit in San Jose, appeared to soften Google's hardline stance on net neutrality legislation, but did he really?

Let's examine what he is reported to have said that's new, and also what they have not said, which is important to seeing if they are just doing PR spin or have truly changed their position on net neutrality legislation.

First, what Mr. McLaughlin was reported to have said by Comm Daily today:

  • (Quotes are Comm Daily and italics are McLaughlin's direct quotes.) 
    • "...an authority other than the FCC should enforce a simple net neutrality rule barring broadband providers from discriminating in favor of their own companies or applications providers in quality of service."
    • "Google favors a simple rule against bias, not 'heavy regulation or price tarriffing' for the FTC, DOJ or other enforcer to interpret."
    • "'Cutting the FCC out of the picture would be a good idea' since agency network regulation wouldn't be suitable."
      • Hooray! It sounds as if Google is getting more reasonable and is beginning to see the error of their "don't be evil" ways.
  • But Google cuts against this newfound reasonableness, by saying "the regulation is justified by 'market failure" of 'inadequate competition' in the last mile." And that "wireless  technologies aren't 'meaningful alternatives'."
    • So what are they really saying here, its not clear.

What they have not said is the most telling.

Will Chairman Markey allow "competition" of views on future of the Internet policy?

House Telecom Subcommittee Chairman Ed Markey (D-MA) said in the Boston Globe today  that Sir Tim Berners-Lee, inventor of the World Wide Web, will testify on "the future of the Internet" on Thursday.

  • Sir Berners-Lee is a strong supporter of Chairman Markey's highly-regulatory approach to Net Neutrality.
  • It also sounds like Sir Berners-Lee will be the only witness at this important initial hearing on this important issue.

The open question is: will Chairman Markey allow free and open "competition" of views on what is best for "the future of the Internet" in the best of the "open democratic tradition of the Internet?" 

Professor Lessig's is "hot dogging" in calling for spectrum deregulation

I had to flag Professor Lessig's curious February 14th  post and video lecture on "Internet Policy -- Spectrum Deregulation."

  • Professor Lessig makes the case for NOT selling valuable spectrum to the highest bidder (like the law requires to lessen the budget deficit and reward taxpayers) and argues that our government should "set off large swaths of spectrum for unlicensed use."
  • Professor Lessig very curiously tries to use "hot dog rights" as an analogy to make his cerebral point:
    • "Imagine the government nationalized the hotdog market, and then sold to the highest bidder the “right to sell hotdogsâ€? at in a particular place for a particular period of time. These rights — the right to sell hotdogs — could be structured to be a kind of property. The market would thus allocate them to the highest valued use. And the initial sale would raise lots of money for the federal treasury. Are you in favor of that? And if not, then why are you in favor of spectrum auctions?"
  • Excuse me Professor Lessig. I have my hand up in the back with a puzzled look on my face. I am in favor of analogies that make some sense.
  • What do "hot dogs" have to do wth spectrum?
    • Are hot dogs able to be used to communicate, to broadcast, or to access the Internet?
    • Would businesses pay billions for the right to sell hot dogs when they could sell other food?
    • Could you not sell other food or services, if you did not have the national rights to sell hot dogs?
    • Would Congress and a regulatory body care to sell rights to sell hot dogs?
    • Can you put catsup, mustard, chili, cheese or onions on spectrum?

I'm sorry but I have been racking my brain to "imagine the government nationalized the hot dog market" like Professor Lessig asked me to. I could only think of Chavez in Venezuela.  As hard as I tried, I couldn't seem to "get" the Professor's "hot dog" analogy.

NN is A radical form of Non-discrimination -- Hal Singer's clear thinking speech

Hal Singer of Criterion Economics has some very cogent arguements against NN in his speech at the University of Pittsburgh last week.

Hal cuts to the quick in explaining "Under a net neutrality regime, if a broadband service provider offers prioritized delivery to one content provider, then it must offer the same level of service to all content providers free of charge."

  • Hal is right. Net neutrality would discourage anyone from improving or innovating or trying to meet the unique needs of different sets of users.

Decoding the Net Neutrality issue for the advertising sector -- Why care?

While at first glance it may not be obvious how the public policy debate over "net neutrality" affects the advertising sector -- it does -- and big time. 

Let me explain "net neutrality" in the context of advertiser interests. 

  • In simple terms, net neutrality is the politics of convergence.
    • As "convergence" makes the tech and communications sectors collide, and creates more direct competition between the sectors than ever before, the big question is: will this new techcom sector be sorted out by: 
      • Competition/market forces? or
      • A new law where Congress dictates which sector is competitively advantaged over the other?  
  • In "brand" terms, the main opposing "brand" players in this public policy fight are:
    • The online giants like: Google, Yahoo, Ebay, Amazon, and IAC -- that want net neutrality regulation of broadband companies; versus
    • The broadband companies like: AT&T, Verizon, Comcast, Time Warner,  Sprint, which obviously don't want to be regulated.

So why should advertisers care who wins? There are three big reasons why that cut right to the advertising sector's bottom-line and future.

First, companies that advertise very little want to regulate some of the advertising sector's absolutely best corporate clients.

Wash Post quote sadly captures the essence of NN politics

I had to flag for folks a seminal quote on net neutrality in the Washington Post article today "Neutrality on the Net gets high '08 Profile."

  • "A veteran Democratic consultant who spoke on condition of anonymity was more blunt. Among Democratic candidates, "if you are not for net neutrality, then the blogs will kick your" rear. The grass roots groups that strongly favor it are relatively small but very noisy, she said "and you just don't want to have to deal with that."

This obviously very sharp Democratic operative understands what's really going on. 

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Q&A One Pager Debunking Net Neutrality Myths