Qwest

Google, Yahoo, and IAC, big pushers of net neutrality corporate welfare, have expanded their effort to eat at the public trough again. See the Wall Street Journal article of today "SEC reviewing Its Data Fee Ruling". 

The super profitable online giants actually have the gall of claiming that paying fees for real-time stock exchange quotes is "beyond the economic reach of an advertising medium like the Internet." Unbelievable! Google is basically printing money with the advertising medium on the Internet! Shouldn't we all throw some coins in Google's platinum "tin cup" to show our concern?

They continue their poor man charade by whining that: "many millions of public investors who access their web sites daily will be injured by the unreasonable fees permitted by the staff's approval of the rule change." Please. These dotcom billionaires can afford to pay normal cost of doinh interstate commerce without passing on the cost to consumers. If they had more competition they wouldn't even consider trying to claim they can pass this on to consumers. But like net neutrality, anytime there is a chance of the online giants costs going up and reducing the online giants huge profits, they run to Washington and ask for corporate welfare. Doesn't everyone understand, its Google's inalienable right for the government to protect Google's extraordinary profitability!

In due time, people will see through the online giants self-serving Washington behavior and have no sympathy for this outrageous behavior. What's really funny is that these people are so clueless to be lobbying for this corporate welfare just when the Democrats are taking over the House and making lobbying reform and ethics a top agenda priority. Doesn't anyone else see the irony?

Net neutrality proponents are trying to claim that the net neutrality conditions that they extorted from AT&T represent a template for net neutrality legislation. Ridiculous!

First, these conditions were extorted because of a procedural and political anomoly, not because of any consensus for them. On the contrary, Chairman Martin said the net neutrality conditions were "unnecessary" and "discriminatory." And a majority of the FCC opposes broadening these conditions to the industry at large.

Second, the merger conditions only apply to one of several U.S. broadband competitors, and the conditions are company specific and are not useful or accurate in applying to other technologies or companies. Moreover, it does not apply to AT&T's business customers, to its unique IPTV video service or its wireless service. It supposedly applies to WiMax, but AT&T is being forced to divest WiMax spectrum that the condition will not apply to. And is WiMax WiFi? Which alphabet version of WiMax does this condition supposedly apply to? There is no useful definition here. This is the blogilantes' "frankenstein definition" which is of no use to any fair legislative or judicial process.   

Third, the supreme irony here is that these conditions were alleged to promote non-discrimination but were applied in a highly discriminatory way to only one company in a perversion of the normal democratic process. 

Finally, those proponents that expect other companies to abide by the conditions that their competitor had to abide to because of an anomolous merger situation, are in dreamland. This is still a free country, there is still rule of law, it still takes a majority of the House, 60 votes in the Senate and the President's signature to change the law. The net neutrality blogilantes "will run into the buzzsaw" of the American constitutional process. 

The FCC conditions imposed on the AT&T-Bell-South merger are among the most regulatory government micro-management that I have observed in my fifteen years covering the industry.  The FCC minority leveraged a procedural and political anomolous circumstance to extort merger concessions that never would have survived an open democratic process. This was the functional equivalent of a back alley shake-down, where the companies had to give into unconscionable extortion in order to secure their commercial freedom.    

That being said, it is clear that AT&T had to give up a lot of regulatory concessions in the areas of special access and divestiture of 2.5 MHz spectrum in order to fend off the worst of the net neutrality extortion.

• AT&T agreed to continue to abide by the FCC's net neutrality principles for another couple of years which simply extends the agreement they had already made on the SBC-AT&T merger last year for roughly a year longer.
• They also agreed to not degrade or prioritize traffic, like they had already publicly agreed not to do, with exceptions for their IPTV business, enterprise business and their wireless business.
• Bottom-line on net neutrality -- No big change here from what AT&T was already doing and pledging to do. AT&T appropriately resisted the worst of the net neutrality concessions.

I fully expect that net neutrality will remain the biggest regulatory issue going forward. The online giants will continue to manipulate the political process for competitive advantage, seeking to prevent non-neutral behavior from their biggest potential competitors when they are not neutral themselves and when they have more gatekeeper influence over the Internet than any broadband company. 

Microsoft is not neutral. Microsoft's new anti-phishing feature of its Internet Explorer 7 web browser blatantly discriminates against the 20.6 million sole proprietorships in the U.S.A in favor of their net neutrality allies: Google, Amazon, eBay and Yahoo and IAC.

• Microsoft's new Explorer browser will be one of the most blatant non-neutral forms of Internet discrimination in the history of the Web, because when Microsoft rolls out this new browser with its Vista upgrade in 2007, the overwhelming majority of Americans will be using this new discriminatory Microsoft browser to supposedly gain "free and open" access the Internet.

The 12-19-06 Wall Street Journal article "Software to spot "Phishers" irks small concerns" is a must read to understand this problem. Kudos to the reporter, Riva

I remain disturbed at the hypocrisy and blatant double standard of net neutrality proponents. It is classic case of "do what I say, not what I do." Their "ends-justify-the-means" MO is glaringly obvious to anyone with an ethical compass or an appreciation of the "democratic process" in our country.

Hiding behind the words and sanctimony of "ethics" and "democracy" net neutrality proponents appear to have no ethical qualms about perverting the democratic and ethical process that they claim to support in order to extort net neutrality conditions on the AT&T-Bell South merger that they know they could not get in an open, democratic or ethical process.

Now that net neutrality proponents have won a tactical victory in successfully intimidating FCC Commissioner McDowell from not participating in the AT&T-Bell South merger (by threatening to hound him to the ends of the earth on trumped-up ethics allegations if he did not stay out of the merger) lets see if they hold themselves to the same ethical high standard.

Lets see if they really care about true ethics, which are about respect for process, the rule of law, and basic fairness. How is it ethical and fair to extort rule changes in the happenstance situation of a merger process rather than the normal open and fair deliberative rulemaking process which fairly applies to all parties? How is extortion due process? How is it ethical to say the ends justify the means? If ethics were truly important to net neutrality proponents they would seek to use the process in only an ethical and open way, not as a way to extort concessions that the normal policymaking process could not generate.

Net neutrality is the ultimate unprincipled double standard. It is clear that ethics and fairness are expected of others but not of themselves. Net neutrality proponents should think long and hard about justifying the "means" of unethical extortion in order to achieve the "ends" of net neutrality. Do they really want to win dirty? To soil our public process with win-at-all-costs, take-no-prisoners, ethically-challenged tactics? How will they expect others to respect process, rule of law and ethical standards if they do not abide by them themselves?

Ethics are about doing something the right way for the right reasons. Extorting out-of-process concessions in the AT&T-Bell South merger is not doing it the right way for the right reasons.

Now that net neutrality proponents have claimed to stand for high ethical standards, lets hold them to their word.

One of the comments my able debate opponent, Gigi Sohn, President of Public Knowledge, made last Friday stuck with me over the weekend as very much an "ostrich-head-in-the-sand" point of view.

After I pointed out that prices were falling, consumer choice and speed were increasing, broadband investment and deployment are healthy, and that there was an explosion of innovation and new products... Gigi replied that ~98% of people access the Internet through their phone or cable company. (she ignored my comment that 8 sort years ago we had a monopoly) Then she sarcastically dismissed the possibility that wireless or other technologies could ever compete with phone or cable -- or that it would be a long time coming.

I debated Gigi Sohn of Public Knowlege today on net neutrality at the annual PLI conference here in Washington.

Here is the essence of my opening remarks -- a concise case against net neutrality.

Three main points:

1. Net neutrality is a bogus issue.
2. Net neutrality would set America back.
3. The burden of proof is on those who want to change the law and change the Internet. 

1. Net neutrality is a bogus issue -- there is no problem to solve.

• There is no consumer harm. Prices are falling. Choice and speeds are increasing. Broadband investment and deployment is healthy. There is an explosion of new products and innovation.
• Net neutrality is based on hypothetical and unsubstantiated allegations. There is only one documented example of blocking -- Madison River which the FCC dealt with swiftly. Net neutrality would punish over 2000 broadband companies for the sin of one.
• Existing laws are more than sufficient to address any potential net neutrality problem. FCC, FTC and DOJ all have existing authority and have stated they are vigilantly watching for any potential problems. The FTC Chairman said there have been no complaints and that no one has been able to explain the problem.

2. Net neutrality would set America back.

Google did a good job of "spinning" the good aspects of its new plan to create a private market for valuing Google employee's stock options. This blog intends to shed some light on whether it is such a good idea. I think not. The New York times coverage was the most comprehensive of the six papers I read on the topic.

I am writing about this because as a former leading independent investment researcher, I understand conflicts of interest and capital markets intimately. As the first congressional witness explaining what went wrong with Enron, and the first to see through the spin with WorldCom, I can tell you there is a whole lot for Google shareholders and investors to be worried about in Google's latest example of "innovating without permission." It is especially troublesome when people chime in with the inane insight "if Google does it, it validates it as a smart idea." Hold onto your wallets when that kind of idiocy gets quoted and unchallenged.

During the bubble, stock price routinely was correlated to "smarts" and we all know how that ended. I acutely remember being Bernie Ebbers whipping boy and being derided by him as the "idiot washington analyst" for having the audacity to challenge the WorldCom story at its apex when it was owned by more funds than any other telecom stock. When WorldCom was worth $150b, like Google is now, there were tons of people fawning over Ebbers and others who simply rode momentum of the bubble up. They weren't geniuses becuase their stock prices were high, people just assumed that stock market success equated to brilliance.

Ugh. Internet regulation creep continues. The Federal Trade Commission (FTC) said yesterday that companies that engage in word-of-mouth product endorsements must disclose if recommenders are being paid to recommend the product or service. The Washington Post had a good story on it today.

Since this is all about forthright disclosure, let me reiterate that I openly and regularly disclose that I represent broadband interests in the net neutrality debate. And as a strong believer in law enforcement, I have no sympathy for those engaging in deceptive or fraudulent business practices.  That said, I also dread Internet regulation creep, because it will ultimately slow economic growth, job creation and innovation.