Blog - Page 61

Some people think we can protect shareowners, prevent corporate malfeasance and rein in lavish compensation of corporate CEOs by requiring companies to expense the value of employee stock options. Of course, the issue is a surrogate for many of the more fundamental problems of corporate governance. Burton Malkiel, professor of economics at Princeton, and William Baumol, professor of economics at New York University, wrote in the Wall Street Journal in April 2002 that “there is no way to measure the ‘cost’ – the value of the options at the time they are granted – with reasonable precision.” But bad policy is not a compliance problem for public companies, who can easily assign a value to the options they issue because Read More ›

A first-rate report describing the shortcomings of Universal Service and suggesting several options for reform has been issued by the Progress & Freedom Foundation. The report is timely because a lot of service providers support a “numbers-based” contribution mechanism designed to spread the cost of Universal Service to include any service that connects to the telephone network and uses an assigned number. Overall, the report confirmed by own impression that Universal Service is a classic example of “regulatory capture,” the theory that regulation can be manipulated by regulated firms to bring them unwarranted profits and thus actually harm the consumers (through artificially higher prices) that it purports to serve. The report doesn’t state this conclusion quite so candidly, though. It Read More ›

At a Congressional staff briefing this week, the Chief Technology Officer of BellSouth referenced an agreement between BellSouth and Movielink in which BellSouth receives a fee to ensure that Movielink’s customers can download movies quickly — even if they have a slow Internet connection. In today’s Washington Post, Gigi Sohn — an advocate of “network neutrality” — ridiculed the arrangement with this clever comment: “If we want to ruin the Internet, we’ll turn it into a cable TV system.” I would actually hate to see the Internet turn into either a cable TV system or a telephone network. That’s the problem with Sohn’s proposal. Sohn’s proposal would turn the Internet into a wasteland where transport providers can’t make any money. Read More ›

I agree, as usual, with my colleague Bret Swanson that regulating cable pricing is an awful idea and that the debate over à la carte is moot in any event. Chairman Kevin Martin isn’t proposing to require à la carte programming, but he is impatient with the cable industry for not doing enough, as he put it, to give parents more tools to navigate coarse programming. Re-regulating cable would be a disaster. Just remember back to 1992 when Congress and the FCC tried to regulate cable rates and almost bankrupted the industry. There are many smart people at the FCC, but the effort to protect consumers from cable rate hikes proved to be too complicated and Congress had to repeal Read More ›

Yesterday at a Senate hearing on media decency FCC Chairman Kevin Martin announced his support for “a la carte” cable TV pricing. In other words, pay for and receive only those channels you watch. Don’t waste money on unwatched content. Choose only family-friendly channels and block violence and sex. Or vice versa, for some, I suppose. Who could oppose such common sense? Martin’s a la carte endorsement reverses former chairman Michael Powell’s view that a la carte pricing economics wouldn’t work for cable TV companies and that it might actually hurt consumers by raising their cable bills. Martin, previewing a new, revised FCC study, offers some compelling evidence that last year’s FCC study was wrong about the economics and the Read More ›

The Senate Commerce Committee has announced an ambitious set of hearings which will delve into every imaginable aspect of telecom reform — beginning in January with Internet porn and ending in mid March assuming everything goes as planned. Let’s see. 2006 is an election year, so there will be a desire to adjourn early and to focus on a limited number of issues with voter appeal. Uh oh. There will be new members in 2007 and a need to get organized and to refresh the record. Assuming there is agreement that telecom reform should be on the short list of major action items for the new Congress and considering that telecom reform usually has to be bipartisan (since, amazingly, Republicans Read More ›

My friend Rich Karlgaard’s latest post at his Forbes Digital Rules blog reminded me of another major debate consuming the U.S. and China right now: energy. Karlgaard laments the disease of zero-sum thinking, which presumes one party’s gain is necessarily another party’s loss. Zero-sum thinking, more than anything else, is history’s chief culprit leading to war and depression. For some reason, it has infected untold generations of economists and politicians, and now it infects the debate over U.S.-China trade and the supposed world-wide race for the globe’s supposedly finite supply of energy. First the U.S. this summer blocked China CNOOC’s attempted acquisition of Unocal, an American company with mostly Asian petroleum assets, and now it seems that Beijing is resisting Read More ›

When the biggest two news items during President Bush’s China trip were his bike ride and his attempt to exit a locked door, it’s clear any contentious conversations happened, well, behind that locked door. This is good news, especially on China’s currency, the yuan. Both the U.S. and China reiterated their basic views, without directly contradicting the other side. President Bush said in his press conference with President Hu Jintao that “We’ll continue to work with China to help implement its July commitment to a flexible, market-based currency.” But Yi Gang, an assistant central bank governor, said that “China would keep the yuan basically stable….” The status quo of stable exchange rates is good for now, though at some point Read More ›

Like my colleague, Hance Haney, I find Google’s support of “net neutrality” regulation surprising. Or if not surprising, at least disappointing. Google is not a search engine company or a dot-com. Google is an Internet infrastructure company. A networked computer company. It is a general purpose platform of processors, bandwidth, and software. It does search, yes, but every few months now Google introduces another array of new Net products and services: GoogleVideo, GoogleBase, GoogleMaps, GoogleDesktop to organize my PC. Read this column by Robert Cringely, who explains Google’s infrastructure buildout and says Google is about to monopolize the Net, leaving no room for competitors or even mid-sized companies, only small guys and entrepreneurs. I don’t believe Google will monopolize the Read More ›

Internet pioneer Vint Cerf penned a letter expressing his fear that legislation before the House Energy & Commerce Committee “would do great damage to the Internet as we know it.” Cerf is now an employee of Google, a great company that unfortunately strongly supports the legislation’s net neutrality provisions.

Read More ›