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Harms of a Potential New FCC De-Competition Policy -- Reply comments to FCC Open Internet NPRM

The FCC's proposed Open Internet Regulations and/or the oft-rumored potential re-classification of broadband as a Title II telephone service effectively would create a new FCC "de-competition policy." (For the one-page PDF submitted to the FCC click here)


A new FCC "de-competition policy" would:

Why is New America's wireless research so terrible?

The New America Foundation and Slate Magazine is presenting a forum on Friday April 2nd in D.C. entitled: "Why your cell phone is so terrible" featuring:

Read Downes' CNET Column on Title II reclassification: a great overview why its such a bad idea

Kudos to Larry Downes for his excellent guest column on CNET: "What's in a Title? For broadband its Oz vs. Kansas." I recommend reading it.

It is a very readable, informative overview of the great folly it would be for the FCC to reclassify broadband services from unregulated information services to regulated common carrier telecommunications services.

Mr. Downes' piece makes it abundantly clear that any Title II reclassification by the FCC would be a monumentally bad idea.




FCC's non-technology-neutral proposals perversely promote discrimination -- per Phoenix Center report

George Ford of the Phoenix Center has penned another incisive analysis about the real world impact of net neutrality and the FCC's Proposed Open Internet regulations.

  • "Sabotaging Content Competition: Do Proposed Net Neutrality Regulations Promote Exclusion?" is an important read for anyone seeking a substantitve understanding of the impact of the FCC's proposed rules.
    • George Ford and Michael Stern's core conclusion: "...the proposed net neutrality rules of both the FCC and Congress... can actually promote such exclusionary behavior. That is, the incentive to monopolize is greater under net neutrality."

    The Phoenix Center's profound insight here got me thinking, (which is always my highest compliment) so let me share my takeaways building on their conclusion; takeaways that show why net neutrality is such an intellectually and economically bankrupt concept.

    • First, not only is net neutrality "a solution in search of a problem," but the FCC's proposed "solution" would make the net neutrality "problem" they allege worse than the status quo!

Title II reclassification: FCC can't redefine competition as monopoly without being arbitrary/capricious

The discussion at the Federalist Society about former U.S. Solicitor General Greg Garre's excellent legal analysis  (that the FCC does not have the legal authority to promulgate Internet traffic rules), surfaced what I believe to be yet another insurmountable barrier for the FCC to overcome -- beyond the litany of legal barriers outlined by Mr. Garre.

  • FCC reclassification of broadband as Title II common carriage would practically force the FCC to redefine competition in a way that would be arbitrary and capricious. 

Let me explain. 

Public Knowledge's Gigi Sohn laid out  the counter argument to Mr. Garre's analysis that the FCC could reclassify broadband as Title II by simply revisiting the basis for the FCC's 2002 decision and overturning it as wrong on three counts:

  1. Information services and telecommunications services are no longer necessarily intertwined;
  2. Facilities based competition has not arrived;
  3. Consumers are no longer protected. 

Ms. Sohn added this about what the FCC could do: "They just have to give a reasoned explanation. They don't actually have to show that the new decision was better than the old decision." -- per Washington Internet Daily.

Key ACI study shows regulation is anti-innovation

Kudos to Larry Darby of the American Consumer Institute for his outstanding new study on the destructive effect of regulation on innovation. Please read it if you are at all interested in innovation.

The study debunks the views of some that government, regulation and regulators are somehow a font of innovation. 

After reviewing the relevant literature and evidence on the subject, Dr. Darby concluded that:

  • innovation is naturally flourishing without government involvement or micromanagement;
  • burdening broadband providers with new common carrier burdens would severely discourage innovation; and 
  • limiting innovation in one part of the ecosystem would ultimately diminish innovation in the entire Internet ecosystem.

At core, the new notion floated by some that more FCC regulation would encourage innovation is nonsensical and unsupported by any literature or evidence.

The big takeaway here is that new "Mother may I" regulations, which effectively require some market participants to get FCC approval for their innovations, in order to protect or advantage others' innovations, is not innovation policy. It is old-fashioned industrial policy where government picks market winners and losers. This is a policy approach long proven to grossly underperform market-based policies.









Must read Broadband industry letter to FCC: Title II reclassification would do incalcuable harm

In one of the best, most strongly-worded and serious letters to the FCC that I have read in my 18 years following FCC issues closely, the united broadband industry's letter to FCC Chairman Genachowski is simply a must-read; it explains why the FCC's serious interest in reclassifying unregulated broadband information services as regulated telecom services is among the worst and most destructive ideas the FCC has ever seriously considered.

The letter characterized Title II reclassification as:

  • "a radical new direction,"
  • "regulating the Internet,"
  • "a profound mistake,"
  • "betraying decades of bipartisan support for keeping the Internet unregulated,"
  • "misguided regulatory overreach," and a
  • "Pandora's Box."

A particularly strong summary statement was:

How much should Google be subsidized?

Pending FCC policy proposals in the National Broadband Plan and the Open Internet regulation proceeding would vastly expand the implicit multi-billion dollar subisidies Google already enjoys, as by far the largest user of Internet bandwidth and the smallest contributor to the Internet's cost relative to its use.

Interestingly, the FCC's largely Google-driven policy proposals effectively would:

  • Promote Google's gold-plated, 1 Gigabit broadband vision for the National Broadband Plan at a time of trillion dollar Federal budget deficits;
  • Recommend a substantial expansion of public subisidies for broadband that would commercially benefit Google most without requiring Google to contribute its fair share to universal broadband service; and
  • Regulate the Internet for the first time in a way that would result in heavily subsidizing Google's out-of-control bandwidth usage. 

I.   Does Google need more subsidies?

Google is one of the most-profitable, fastest-growing, cash-rich companies in the world, with over $10b in annual free cash flow, 17% revenue growth, and ~$25b in cash on hand.

FCC Chairman's "broadband engine" speech raises big questions

FCC Chairman Genachowski's speech to NARUC: "Broadband: Our Enduring Engine for Prosperity and Opportunity" raises some big open questions.

The biggest open question is whether Chairman Genachowski believes the titular "broadband engine" of his speech should remain a private sector "engine" that is private property and fueled by profit and investment returns, or whether the "broadband engine" should somehow become quasi public property, heavily regulated like a public utility, and more government funded and controlled.

Another big open question arises out of Chairman Genchowski's adoption of electricity as his new guiding metaphor in place of interstate highways.

  • "Some compare high-speed Internet to building the interstate highway system in the 1950s. It’s a tempting comparison, but imperfect.
  • In terms of transformative power, broadband is more akin to the advent of electricity. Both broadband and electricity are what some call “general purpose technologies” -- technologies that are a means to a great many ends, enabling innovations in a wide array of human endeavors.
  • Electricity reshaped the world -- extending day into night, kicking the Industrial Revolution into overdrive, and enabling the invention of a countless number of devices and equipment that today we can’t imagine being without.

Irresponsible Talk of Reversing Info Services Precedents

It is irresponsible for the FCC to consider self-creating new legal authority to impose net neutrality on ISPs by re-classifying currently unregulated information services as regulated telecom services (in the event that the D.C. Circuit Court of Appeals rules that the FCC does not have the legal authority to regulate the Internet in the FCC-Comcast case). 

First, claims of justifying such a hyper-regulatory potential FCC reclassification based on "the pro-competitive 1996 Telecommunications Act" is upside-down logic, given that the well-known purpose of that act was "To reduce regulation and promote competition...".  [bold added]

  • After over a decade of successful experience and legal precedents promoting competition by reducing monopoly-era regulation, it would be a big lift indeed to try and justify re-imposition of the monopoly-era regulation that the Congress and the FCC have spent so much time and effort reducing.     

    Second, if the Appeals Court overseeing the FCC concludes in the Comcast case that the FCC does not have the authority to regulate the Internet under current law, does the FCC really think that that same court won't see through, and overturn, an elaborate FCC political ruse to manufacture legal authority all by itself without new congressional authorization?