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Verizon-Cable: Opponents Need FCC to Overreach its Authority

The March 21st Senate Judiciary Subcommittee hearing reviewing the Verizon-cable agreements provides Congress with an opportunity to learn:

  • How the metamorphosis of communications competition is increasing competition;
  • How the Government has created artificial and temporary spectrum scarcity in failing to free up more spectrum for broadband use in a timely fashion; and
  • How unfair, arbitrary and capricious the FCC review process has become in reviewing market transactions.

Given that the DOJ has such weak grounds and facts under antitrust law to challenge the Verizon-cable commercial agreements, and given that the spectrum transfer is in the public interest in multiple dimensions, opponents appear to be pushing the FCC to do whatever necessary to try and block Verizon-cable under the FCC's make-it-up-as-they-go-along public interest standard.

Mobile Payments Ignite New Competitive Free-for-All

Mobile technology advances are dramatically increasing the intensity of competition broadly online and offline. The technological convenience of using a smart phone, tablet etc. rather than a card or cash to pay for goods and services, wherever one may be, is igniting a competitive free-for-all.

  • That's because the technological shift to devices rather than cards creates a huge potential competitive opportunity for most everyone in the competitive ecosystem to potentially disintermediate other industries -- i.e. Wrest control of the customer relationship, customers' private information, interests and metadata, and also the bundling of marketing coupons and promotions, in markets with transactions in the trillions of dollars annually.

Activists and regulators who fear a potential new communications "opoly" lurking around every corner -- in need of preemptive government intervention to protect consumers from the convenience, savings and benefits of a highly-competitive marketplace -- need to take a breath, enjoy, and get out of the way of this amazing technological convergence and innovation over mobile payments.

Debunking the Carping over Broadband Usage-Pricing

Activist carping about the commercial Internet being commercial is revving up again, this time with the carping focused on framing new broadband usage-pricing innovations by Time Warner Cable and AT&T, as somehow a violation of the "open web."

To cut to the quick and translate what is really going on politically here, this activist carping is the latest attempt to revive and re-fight the manufactured net neutrality debate between:

Why the Verizon-Cable Agreement is in the Public Interest

 

The evidence below shows the Verizon-Cable agreement is clearly in the public interest, if the FCC fairly reviews the agreement and all of the relevant facts, in the full context of the highly competitive wireless ecosystem.

Top Reasons Why Verizon-Cable Agreement is in the Public Interest

Increases competition: The agreement increases competition because it enables:

 

Spotlighting Threat of UN Regulation of Internet at CPAC Today

I will  be on the CPAC Digital Liberty panel today with FCC Commissioner Robert McDowell, Kelly Cobb of ATR and Ryan Radia of CEI.

The very important sleeper issue I expect we will spotlight for the CPAC audience is the imminent threat to the Internet from a China/Russia-led effort to get the United Nations' International Telecommunications Union to regulate the Internet similar to the way they regulate telephony and postal service, via a renegotiation of the treaty that affects telecommunications in Dubai in December 2012.

UN regulation of the Internet would kill the proverbial goose that laid the golden egg, by locking in the past and making innovation difficult in the future.

This is a not so subtle effort to undermine and slow America's high tech innovation leadership in the world by miring U.S. Internet companies in the ITU regulatory swamp.

UN regulation of the Internet is a big, under-appreciated, looming threat to freedom and economic growth.

Spectrum: To Auction or Not to Auction?

The FCC's recent call for unbounded spectrum auction authority spotlights an important debate over whether some of this scarce and extremely valuable wireless spectrum should be auctioned or not.

  • Ironically the FCC is asking Congress to give it spectrum auction authority to not auction spectrum.
  • In other words, the FCC is asking to be unilaterally empowered to decide not to auction some spectrum so it can deem it "unlicensed spectrum," like that used for WiFi and garage door openers.

There are huge fiscal problems with the FCC's position, given our nation's severe fiscal situation: a trillion dollar Federal budget deficit and a ballooning multi-trillion dollar public debt.

First, the real world effect of the FCC's gambit here is to try and get revenue-raising legislation to not raise many billions of dollars.

Why the Verizon-Cable Agreement Increases Competition

 

Reports that the Senate Antitrust Subcommittee will hold a hearing on the Verizon Wireless-Cable agreement spotlights an old truism: What one looks for, one sees. What the Government ultimately sees here largely will depend on whether the Government looks backward through an analog competitive lens or looks forward through an Internet competitive convergence lens. In a nutshell, if they look backwards with 1996 cable-telco Silo-Vision lenses, they will see an agreement not predicted in 1996; however if they look forward with 2012 Internet-Vision lenses that see 4G LTE wireless, iPhones/Android, VoIP, DBS, video streaming, Netflix, cable modems, DSL, FIOS, Skype voice/video file-sharing, cloud-computing etc. – they will see an agreement that is not at all surprising or problematic given the competitive context of today and the future.

Where's the Market for Online Privacy?

Why are market forces so weak in protecting users’ online privacy?

The main reason is that the online marketplace is economically structured around users being a commodity, data, to be aggregated and mined, not customers to be served and protected in a competitive marketplace. That’s because the overriding economic force that created the free and open commercial Internet – the predominant Silicon Valley venture capital/IPO value creation model – was and remains largely antithetical to protecting online privacy.

The Silicon Valley venture capital/IPO driven model is laser-focused on achieving Internet audience/user scale fastest in order to gain first-mover advantage and then rapid dominance of a new product or service segment. This predominant Internet economic model is predicated on a precious few investments achieving such rapid user scale that it: warrants a buy-out at an enormous premium multiple; enables fast and exceptionally-profitable liquidity (via the new secondary derivative market for private venture shares or employee options); or broad liquidity via a public IPO.

What is the essential critical element of achieving audience/user scale fastest? Free. No direct cost to the user fuels fastest, frictionless, viral adoption. This free economic model presupposes online advertising as an eventual monetization mechanism and shuns products and services directly paid for by the user because their inherent time-to-market is too slow and their upfront sunk cost of sales and customer service is too high for this predominant value creation model.

FCC Seeks Unbounded Spectrum Auction Authority

At CES, the FCC signaled that it opposed any effort by Congress to give the FCC policy direction or to establish any checks and balances on the FCC in authorizing incentive auctions of prime TV broadcast spectrum.

See my Forbes Tech Capitalist post "FCC Seeks Unbounded Spectrum Auction Authority" to see why the the FCC's lack of regulatory humility here is so stunning.

Seven Ways the World is Changing the Internet

Since most people focus on how the Internet is changing the world, few focus on the reverse -- how much the world is changing the Internet.

See My Forbes Tech Capitalist blog post to learn the "Seven Ways the World is Changing the Internet."

 

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Q&A One Pager Debunking Net Neutrality Myths