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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. 

eBay & Amazon don't believe 4-5 broadband competitors are enough competition!

The common theme of net neutrality supporters is that there is not enough competition or competitive forces to prevent discrimination.

They assert a broadband duopoly even though the evidence and data don't support their assertions. This is one of the main reasons net neutrality has had so little success in forums where substance, evidence and proof matter.  

Last week at the FTC workshop, Amazon and eBay took this competitive discussion to a whole new level of la la land.

  • Both Paul Misener of Amazon and Tod Cohen of eBay agreed on their second day panel that competition won't solve this potential problem.
    • Tod Cohen of eBay said that even if their were 4-5 competitors in the broadband market there would still be an incentive to discriminate. 
  • Wow. Now we really know what we are up against.
  • Supposed capitalists, Amazon and eBay don't believe in or trust free markets any more!
  • They are saying that Congress should pass a law regardless of how much broadband competition there is or will be. 
    • This is classic industrial policy think, which is defeat your future competitors in Washington, while they are still in the crib.  
    • It is also more predatory than anything any broadband provider has done.
  • Under their logic all duopolies should be regulated preemptively before they do the things that all businesses have deep lurking in their hearts -- make profits...
    • Then the government should rugulate the Intel-AMD chip duopoly, the Microsoft operating system monopoly, the Cisco-Juniper router duopoly, the Google-Yahoo search duopoly, the Giant Foods- Safeway grocery duopoly and while they are at it they could preemptively regulate the eBay-Amazon retail ecommerce duopoly!

Amazon and eBay are no longer for free markets, but for Big Government industrial policy and European style socialism with them as the designated online national champions.  

Why leading the Nation in regulating the Internet harms Maryland's consumers

It looks like some national net neutrality proponents groups have suckered some well-intentioned, but unsuspecting Maryland delegates into sacraficing Maryland consumers as pawns in their national chess strategy over net neutrality. Maryland consumers deserve much better.

  • Twenty three Maryland delegates have proposed bill HB 1069, a bill which would regulate the Internet access of DSL, cable modems, wireless broadband, and BPL; would impose net neutrality only in Maryland; and would require detailed quarterly reporting of broadband deployment in Maryland.  

I'll bet the national activists that sold this fraudulent bill of goods to the unsuspecting state delegates, only told their unsubstantiated side of the story -- ill serving Maryland consumers and lawmakers in the process.

Needed innovation that net neutrality would ban

Qualcomm's MediaFlo subsidiary has a network innovation and will soon have a commercial offering that will make it  easier to broadcast TV content to mobile phones.

Qualcomm reportedly is spending about $800m in risk capital to gain spectrum and build a mobile broadcast network for cellphones that will be able to reach about 100 million potential users in the U.S. by mid-year.

WSJ lead editorial highlights the success of broadband competition/deregulation

The Wall Street Journal's lead editorial today: "Broadband Breakout" once again proves that they have a very knowlegable and sophisitcated understanding of the successes of broadband competition, deregulation, and competition and of the risks of "net neutrality" or Internet regulation 

The Journal also picked up the point I made here in a previous blog that you have to look at the trajectory of competition, is it increasing?

Responding to SaveTheInternet's personal attack on me

Tim Karr, the campaign director of Free Press that runs much of the SaveTheInternet effort, blogged a personal attack on me today, that I responded to on his blog.

  • I include the full text of my response below in case Mr. Karr is not willing to post my comment on his blog.

Tim,

It's not the first time I've been called names by people who wanted to discredit me and my analysis. Among others, you share the august company of the now-imprisoned Bernie Ebbers, who routinely derided me as the "idiot analyst" because I had his number in calling WorldCom "dead model walking" before anyone else in the country figured it out. He too was mistaken that name calling and intimidation could muzzle my views.

George Ford's Smackdown of Tim Wu's Datatopian Wireless Net Neutrality White Paper

The highlight of the FTC Broadband connectivity workshop was Phoenix' George Ford's evisceration of Tim Wu's Wireless net neutralty paper.

  • George ably cut through the abject nonsense of Mr. Wu's paper by pointing out:
    • The fact that you don't like the result, and can't get whatever product you want at whatever price you want, isn't market failure.
  • Kudos to George for clarity of thought and seeing through Mr. Wu's vacuous logic.
    • Mr. Wu's paper was essentially a datatopian wishlist of how Mr. Wu thinks business, markets and capitalism "should" work, not as they do in the real world or as FTC competition experts all understand it to be.
    • Mr Ford was appropriately very tough on Mr. Wu's total lack of economic intellectual rigor in his paper which I called intellectual rigor mortis is my blog a couple of days ago.

Mr. Ford also eviscerated Mr. Wu's recommendation to apply the monopoly Carterfone decision to the competitive wireless industry.

  • Mr. Ford said it was ridiculous to apply a concept to such a non-analogous situation.
  • He pointed out how they were completely different factual circumstances:
    • AT&T was a vertically regulated vertical monopoly, wireless is competitive and not vertically integrated.
    • Consumers had no phone choice with AT&T monopoly, consumers have over 800 choices of cellphones today from competing wireless carriers.
    • There was very little innovation vibrancy in phones in the AT&T monopoly while there is vibrant innovation in cellphones of today used by 230 million Americans.

Mr. Wu's biggest mistake was submitting this paper before the FTC an organization well-known for its analytical rigor and expertise in the subject of competition.

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Q&A One Pager Debunking Net Neutrality Myths