Regulation

Netflix's General Counsel, David Hyman, hypocritically and deceptively blasted the broadband industry for its natural migration to usage-based bandwidth pricing in his fact-challenged WSJ op-ed: "Why Bandwidth Pricing is Anti-competitive."

First, it is both ironic and hypocritical that the largest subscription video provider in the United States by subscribers, Netflix,  criticizes the normal economic practice of usage-based pricing as anti-competitive when other companies do it, when Netflix has long priced and capped its business offering based on consumer usage.

Mr. Hyman must have known Netflix would look self-serving and hypocritical if people knew:

In a Washington Post op-ed entitled "A smarter approach to cutting red tape," Cass Sunstein, the White House's Regulatory czar, laid out a laudatory plan for Federal executive agencies "to eliminate burdensome requirements that hinder economic growth and job creation," with a big loophole problem -- the plan does not apply to "independent" agencies like the FCC and its burdensome net neutrality regulations in the Open Internet order.

It makes no sense that the FCC's net neutrality regulations, the veritable poster child of "unjustified burdens and pointless red tape," have escaped:

• The fact that the President directed: "all executive agencies to cut costs, to promote predictability, to streamline paperwork requirements, to choose the least burdensome approach, to listen to those affected by the rules and, through our 'regulatory look-back' process, to eliminate rules that just don't make sense."
  • There was no net neutrality problem to fix before the FCC order, and there is still no net neutrality problem the FCC needs to address now.
  • So the FCC's Open Internet order is the worst of all worlds -- it is basically all cost and no benefit.

More problematic is that independent agencies, like the FCC, supposedly are "creatures of Congress," but this FCC ignored a majority of Congress last year that asked the FCC to defer to Congress on net neutrality.

Four recent developments signal that net neutrality proponents of the FCC's December Open Internet Order are hearing footsteps and looking over their shoulder, increasingly concerned about the ultimate legal and political survivability of the net neutrality regulations/order.

First, professor Susan Crawford, one of the most ardent proponents of net neutrality rules and Title II reclassification, penned a telling and surprisingly candid analysis of how the Supreme Court's recent decision to overturn a California ban on the sale/rental of violent video games to minors, on First Amendment free speech grounds, very likely helps broadband providers' free speech argument to overturn the FCC's net neutrality rules.

• Professor Crawford concludes: "Today's news is that the absolutist approach of the current Supreme Court to protection of speakers of all kinds -- including distributors of speech -- signals that the carriers will be likely to find a sympathetic ear there."

The irony here is that a net neutrality proponent thought leader is implicitly acknowledging that the main slogan of FreePress/Save The Internet and others -- that "net neutrality is the First Amendment of the Internet" -- is a totally bogus.

In another blow to its competition policy credibility and objectivity, the FCC's 308 page, 15th Wireless Competition Report, amazingly reached no conclusion about whether the wireless market was effectively competitive, despite overwhelming evidence of effective competition throughout the report and a dearth of evidence in the report of any discernible anti-competitive issues that would suggest the wireless market was somehow not effectively competitive.

• The stark incongruity between the overwhelming evidence in the report, and the absence of what should have been an easy report conclusion that the wireless market is effectively competitive, is certainly not "data-driven policy making at work.
• It appears to be politics at work to support and provide political cover for the FCC's maverick policy desire to promote de-competition policy and more expansive FCC economic regulation and common carrier-like duties a la net neutrality and data roaming -- in the face of strong opposition from Congress and the Courts that the FCC is over-reaching its statutory authority.

If only the FCC absorbed the significance of the data compiled in their own report, the FCC would conclude that the wireless market was effectively competitive.

FreePress co-founder and collectivist ideologue, Robert McChesney, wrote his latest Internet manifesto: "The Internet's Unholy Marriage to Capitalism," in the Monthly Review - An Independent Socialist Magazine."

McChesney's collectivist and elitist manifesto warrants attention because it is widely disseminated to:

One of the simplest and most important FCC reforms Congress could make would be to modernize and streamline the FCC competition report process to stay current with the Internet competition era.

• Simply, Congress should eliminate and consolidate all legacy analog technology-specific "silo" competition reports (e.g. reports on wireless, video, or satellite competition, etc., including the 706 report) and replace them with one periodic Internet Competition Report that is forward-looking, flexible and dynamic so that the FCC and Congress can adapt and keep pace with the ever-evolving Internet competitive landscape.
  • Since the sector is competitively converging, the FCC's competition reporting process logically needs to converge as well.
  • This common sense best practice of replacing and consolidating outdated and redundant reporting efforts would not only save money in tight fiscal times, but also result in a more accurately informed FCC and Congress.
  • The FCC cannot stay current or help "win the future" by relying on fossilized competition reporting processes based on outdated technology and competitive assumptions.

Problems with FCC Silo Competition Reports

FreePress' latest trumped up net neutrality charge alleges in a complaint to the FCC that Verizon violated net neutrality in limiting access to third-party tethering applications on Google's Android platform, (like other carriers have) -- applications that effectively would enable Android users to bypass standard Verizon data usage plans and improperly consolidate usage of multiple devices onto one device data usage plan.

• Specifically, FreePress is singling out Verizon by alleging that Verizon has violated its unique net neutrality obligation, because Verizon is using the spectrum of a special 700 Mhz "C" Block license that came with some special obligations (see para 223) concerning offering reasonable open standards to devices and applications.
• Simply why FreePress' charge is bogus here is FreePress is essentially claiming that when one person pays for an all-you-can eat buffet, that one person should be entitled to feed others off of the their refillable plate; anyone with an ounce of propriety knows that is cheating.

This analysis will:

If reports are true that the FCC is planning on claiming in its upcoming wireless competition report that the FCC cannot conclude that the U.S. wireless market is effectively competitive, then the FCC is neither "data-driven" as it claims, nor in touch with market reality.

• Don't miss the latest CTIA assessment of U.S. wireless competition and innovation HERE.
• The facts and evidence are overwhelmingly indicative of vibrant competition.

If the FCC is a wireless competition denier in the upcoming wireless competition report, despite the overwhelming factual evidence to the contrary, the FCC seriously risks its going-forward credibility with Congress, the Courts, industry and the public.

According to the FCC's own hard-to-find disclosure, the FCC does not operate its own broadband "public use wireless 'Hotspot' network" according to the FCC's Open Internet regulations that it mandated for most everyone else.

• Without this link to the policy, one would have to stumble upon the oblique reference to the 4-27-11 "VPAAC Hotspot Network" reference in the FCC newsroom, then click on "VPAAC Hotspot Network" and then click on the button "Expand," then go to the very end of the document, to find the FCC's terms-of-use policy for its public broadband network.

Ironically, the FCC's public wireless network terms-of-use policy #3 says: the FCC's broadband network "will block all inbound Internet traffic to minimize any negative impact" on the network user.

• This blocking of Internet traffic is in stark contrast to the FCC's Open Internet Order, which essentially defined Internet "openness" throughout the order as not blocking lawful Internet traffic requested by a user.

The FCC's own public network policy is also not transparent like it expects most every other broadband provider of Internet access service to be.

The Rural Cellular Association’s opposition to the AT&T/T-Mobile acquisition puts a spotlight on the un-sustainability of the analog rural cellular model that is on the wrong side of broadband change.

• The clear but unspoken subtext of the RCA’s opposition is their recognition that their current subsidized model of rural cellular providers is fundamentally ill-equipped for the competitive broadband era.
• Simply, the RCA is quixotically trying to drag the anchor of an inefficiently and unsustainably subsidized analog business model into the efficient and competitive broadband Internet future – a recipe for losing the future.

Importantly, most of the RCA’s problems exist completely separate from this transaction.