Blog - Page 56

This week’s hearing on local franchising in the Senate Commerce Committee was breathtaking. Senator after senator expressed doubts about the wisdom of subjecting new entrants to the cable franchise process. Consumer advocates generally supported the phone companies. The same day, a group of 6 Republicans and Democrats on the committee signed a letter stating that Congress should reform the franchise process. “I think the stars are aligned,” noted Senator Jay Rockefeller (D-WV). One gets the impression that the cable industry hasn’t been paying attention for the past 25 years, as they take positions and employ arguments that monopolists have used in the past with little-to-no success (see, e.g., Deal of the Century: The Breakup of AT&T [1987], by Steve Coll). Read More ›

On deregulation: “It is ironic that cellphone service is widely available at low cost [in India] because it was regarded as a luxury and therefore left to the market, while electricity is hard to obtain because it has been regarded as a necessity and therefore managed by the government.” –Former Council of Economic Advisors Chairman Martin Feldstein, writing in the Wall Street Journal, Feb. 16, 2006. * * * On net neutrality: “with or without a new law, the FCC will affect the future in a major way by its approach to the question of broadband’s openness. Sometimes called net neutrality, the question of openness is multidimensional. It is hard to define and harder to answer. Chairman Martin and his Read More ›

Nobel prize winner and China expert Robert Mundell continues to be optimistic about the Chinese economy but now also believes the U.S. has stepped down its intense pressure to appreciate the Chinese yuan. Good news all around. -Bret Swanson

Maybe Google should look to old-economy providers of rich content to find actual examples of content degradation. It seems Netflix, the popular postal purveyor of DVDs, has been using “fairness algorithms” to slow the mailing of DVDs to its most voracious customers. High volume customers impose higher postal costs on Netflix, which charges a flat fee for all users. Low volume customers are more profitable. Netflix now spells out this policy in its service agreement so customers know what they’re getting. Seems reasonable enough. Google and other online content companies have been fretting over the figment of online service blockages and degradation, though no one can seem to find any actual examples. Here’s an example of a content company degrading Read More ›

Yesterday the head of the trade association representing most of the nation’s telephone companies testified that telephone companies will not block, impair or degrade what consumers and vendors can do on the Internet. “Today, I make the same commitment to you that our member companies make to their Internet customers: We will not block, impair, or degrade content, applications, or services. That is the plainest and most direct way I know to address concerns that have been raised about net neutrality.” –Walter B. McCormick, Jr. President and Chief Executive Officer United States Telecom Association February 7, 2006 As a practical matter, a voluntary commitment is significant because it is a de facto standard by which the actions of individual companies Read More ›

Sebastian Mallaby’s argument today that we face a “Fake China Threat” contains a number of true and important observations but in its overall effect is, I think, wrong. Mallaby correctly observes: – The rise of Chinese science is positive-sum. – Science tends to spread across the world, yielding new innovations and economic growth wherever the science is embraced and allowed to transform into commercial success. – The U.S. has the world’s best universities and has a big lead. But Mallaby complacently writes that “the world’s top researchers flock here; provided enough visas are available, it’s hard to see why this would change.” First of all, it’s not automatic that we will indeed execute a sane visa policy. Second, with universities Read More ›

The U.S. Conference of Mayors have written a letter to the chairman and ranking member of the House and Senate commerce committees opposing franchise reform. One sentence (“Congress may ensure our citizens and businesses benefit from the rewrite of the Communications Act through preserving local franchising authority”) may have been unintended or may reveal profound ignorance and profound arrogance. Many local officials see the primary value of the franchise process as an opportunity to extract noncash concessions from new entrants. That’s understandable. Although local revenues are increasing, Medicaid and education continue to devour city budgets. What are local politicians to do? In the late 1990s, local officials and their consultants at Miller & Van Eaton took broadband deployment for granted Read More ›

Here are Mike Darda and Steve Forbes with the two best debriefings of the Greenspan era. Both are from The Wall Street Journal where a subscription is required. Mr. Greenspan probably made his most interesting contributions to economics in the fields of trade and productivity, where he recognized the power of the information age and helped beat back ever-present protectionist sentiment with eloquent explanations of globalization and its benefits. He surely was a savvy politician and inspired confidence on Wall Street. Yet for all his many virtues, monetary policy remains poorly understood by average Americans and even most financial and economic experts. Mr. Greenspan’s opaque and shifting rationales and methodologies leave many wondering what he actually thinks and what comes Read More ›

Here’s James DeLong, with the most sophisticated take on the Google-China dilemma. He not only gets the technology right but also offers intriguing thoughts on the geopolitical landscape and the very state of democracy in the West. It’s provacative, but I think he’s right. Tom Hazlett also understands what’s going on. -Bret Swanson

I think its an open secret that Congress is highly unlikely to make significant progress toward comprehensive telecom reform in 2006. That’s probably a good thing. While many people, including many members of Congress, recognize that telecom law badly needs an update, there is an astounding lack of awareness that the basic problem is too much regulation. Most of the proposals so far would create more new regulation than they would eliminate. The supporters of net neutrality sense that a window of opportunity is closing, and they are trying to do something about it. Douglas Van Houweling, the CEO of Internet2, gave an interview to National Journal’s Technology Daily, (subscription required) in which he claimed: “If you have enough bandwidth Read More ›