Verizon

FreePress, which philosophically opposes competition policy, effectively is mocking antitrust law and authorities by cynically feigning to care about antitrust and competition in calling for an antitrust investigation of "TV Everywhere" efforts to enable authenticated paying video customers the additional convenience of accessing their paid-for content on any device at no extra cost. 

• FreePress is misrepresenting its latest report -- "TV Competition Nowhere" -- as antitrust analysis when it is standard FreePress villain-ization of broadband and media businesses.   

In their own words, FreePress is anti-competition, anti-property, and anti-business. 

To see "smoking gun" proof that "net neutrality" is a made-up issue and argument, read the short but telling excerpt below from George Lakoff's Book: "Thinking Points" published October 3, 2006, when the only net neutrality incident at that time was the FCC's Consent Decree with rural telco, Madison River Communications in February 2005.  

From Thinking Points, Chapter 8, The Art of Arguments:

"Thus, the argument for Net neutrality becomes an argument for government regulation in this form by the FCC.

Given that the apparent justification for new formal net neutrality rules is that fifteen-year policy has failed and that the market is unable to ensure consumer choice, the FCC will need to justify with facts that broadband providers indeed have market power to exercise anti-competitively.

Kudos to Larry Darby of the American Consumer Institute for his excellent and illuminating comparative financial analysis of the market power and profits of broadband companies vs. Internet companies. From his post: 

The leading justification offered by FCC Chairman Genachowski in his "Open Internet" speech announcing his intention to pursue formal net neutrality regulations was that "limited competition" was "simply a fact."

A fair review of the facts shows that broadband competition is anything but limited, it is actually robust, dynamic, and increasing in intensity.

• The problem comes from a choice to assume a static and pessimistic view the competition glass as half empty, because it is not perfect.
• This is not a fair representation of the broadband competitive situation because the core markets involved were originally price regulated monopolies but now are increasingly-dynamic, fiercely competitive markets where literally many tens of millions of Americans have taken advantage of available competitive choices.

I would like to highlight some important and illuminating competitive facts presented in an outstanding post by Link Hoewing over at Verizon's Policyblog:  

What an "Open Internet" does not mean is as important as what it does mean.

• Surely an "Open Internet" is not intended to mean what it certainly can mean: un-protected, unguarded, or vulnerable to attack. 


• Thus, it is essential for the FCC to be explicit in defining what the terms -- "Open Internet," "net neutrality," and Internet non-discrimination -- don't mean, as well as what they do mean.

The word "open" has 88 different definitions per Dictionary.com and the word "open" has even more different connotations depending on the context. While the term "open" generally has a positive connotation to mean un-restricted, accessible and available, it can also have a negative or problematic connotation if it means unprotected, unguarded or vulnerable to attack.  

George Ou's good post yesterday on "Being Rational on Text Pricing" rightly takes to task the complaint that text messaging should be priced at marginal costs and ignore total costs, upgrade costs, or competition. It also prompts me to join in to address the issue.

Lets get to the quick here. 

The folks arguing for text pricing to be based on marginal costs are trying to politically redefine traditional economics in the datatopian Chris Anderson vision of the "economics of abundance" -- that because the marginal cost of computer processing, storage, and bandwidth are getting increasingly small -- the price should be free!

• I call this political thinking that "information wants to be free" and the "economics of abundance" school of thought -- simply -- uneconomics.
• It ignores the real world, real economics, the reality of private property, market forces of incentives and disincentives, etc.  

Does anyone think that the infrastructure that enables the instantaneous reliable delivery of roughly a billion text messages every day wherever one happens to be -- costs basically nothing to pull off and thus should be free?  

The New York Times' editorial board seems stuck in a time 1992 time warp in its "Competition in Cable TV" editorial that nonsensically disagrees with the DC Appeals Court for having the good sense to see what everyone can see -- that there is very active competition for video service in the U.S.  

The New York Times acts like it is still 1992, that since then nothing has happened, and that the 1992 Cable Act and the 1996 Telecom Act didn't succeed wildly in promoting competition.

Thank goodness the DC Court of Appeals considers facts and is in touch with the reality of "Competition in Cable TV." 

• 32 million Americans get video service from a cable competitor: DBS providers DirecTV and Echostar, telcos Verizon and AT&T, or overbuilder RCN.
• Cable has earned 38 million new broadband subscribers -- a completely new service since the 1992 or 1996 Acts.
• Cable has earned 18 million new telephony subscribers, an entirely new service for cable, since the 1992 or 1996 acts.
• Cable also has invested in Clearwire to create a fifth national wireless broadband provider.
• And America's cable industry is the only one in the world that has built out a nationwide fiber-coax infrastructure increasingly capable of 50 MBs of broadband speed.

And that's not competition?!   

It seems like The New York Times editorial board needs to get out and about more, a lot has changed since 1992 when they apparently last went outside.

Analysis of the potential pitfalls of wireless innovation regulation is a necessary complement to the FCC's upcoming Notice of Inquiries into wireless competition/innovation and the DOJ's review of wireless competition, in order to ensure policymakers get a balanced view of the big picture.  

What are the Top 10 Pitfalls of Wireless Innovation Regulation? 

#1 Pitfall: Losing focus on universal broadband access.

"Wireless innovation" appears to be the latest rebranding iteration of "net neutrality" and "open Internet" as the net neutrality movement searches for more mainstream support of their views. 

The data and evidence show that broadband is not a public utility warranting economic regulation of prices, terms and conditions; this is contrary to the assertions of net neutrality proponents: the Markey-Eshoo Bill, FreePress, the Open Internet Coalition, and Google's Internet Evangelist Vint Cerf, among others.

Why is broadband not a public utility? 

First, it is a competitive service, not a natural monopoly service.

A public utility presumes "natural monopoly" economics where economies of scale and scope preclude the possibility of competitive facilities/services. 

• The roughly $200b in private risk capital invested in financially-successful U.S. competitive broadband facilities over the last several years is incontrovertible evidence that broadband does not enjoy natural monopoly economics.

Second, users have choice of access providers.