Estimating the Exaflood

Bret Swanson and George Gilder predict that the U.S. Internet of 2015 will be at least 50 times larger than it was in 2006. Their report, “Estimating the Exaflood: The Impact of Video and Rich Media on the Internet — A ‘zettabyte’ by 2015?,” estimates that annual totals for various categories of U.S. IP traffic in the year 2015. It projects: Movie downloads and P2P file sharing of 100 exabytes Internet video, gaming and virtual worlds of 200 exabytes Non-internet IPTV of 100 exabytes, and possibly much more Business IP Traffic of 100 exabytes Gilder notes that an exabyte is equal to one billion gigabytes, or approximately 50,000 times the contents of the U.S. Library of Congress. This report expands Read More ›

FCC following EU precedent

The FCC has settled on an inappropriate definition of what constitutes a competitive market. A memorandum explaining why the FCC denied the Verizon’s forbearance petition seeking deregulation in Boston, New York, Philadelphia, Pittsburgh, Providence and Virginia Beach suggested it’s because Verizon’s market share has to be less than 50% AND Verizon’s competitors must have ubiquitous overlapping networks with significant excess capacity. While there is some evidence in the record here regarding cable operators’ competitive facilities deployment used in the provision of mass market telephone service in the 6 MSAs at issue, we find that it does not approach the extensive evidence of competitive networks with significant excess capacity relied upon in the AT&T Nondominance Orders … where the Commission has Read More ›

FCC no free market ally

Two commentators tried to argue that FCC Chairman Kevin J. Martin has held true to conservative principles nowithstanding recent attempts to re-regulate the cable industry. Cesar V. Conda and Lawrence J. Spiwak posited that a “pro-entry/pro-consumer-welfare mandate” is the very “hallmark of economic conservatism.” This is a bizarre statement. “Pro-entry” is a euphemism for competitor welfare, the antithesis of consumer welfare. Competitor welfare used to be the guiding principle of antitrust law — a legacy of the populist movement. The idea was that more competitors equaled stronger competition. It’s intuitively appealing, but it confuses quantity with quality and is wrong if the competitors are inefficient. Protection of inefficient competitors is a form of subsidy. For example, the Clinton FCC tried Read More ›

Forbearance: What Congress Intended?

One of the very few positive things in the Telecommunication Act of 1996 is Section 401 (codified as Sec. 10 of the Communications Act of 1934, as amended), which requires the Federal Communications Commission to forbear from applying unnecessary regulation to telecommunications carriers or services. Congress tucked the provision into the 1996 act to improve the chances that pro-competition regulation would be eliminated once fully implemented and no longer necessary to ensure competition. On Friday the FCC issued a notice of proposed rulemaking requesting public comment on whether the forbearance procedure needs more procedure. Commissioner Michael J. Copps issued a statement indicating dissatisfaction with the whole forbearance concept: Too often forbearance has resulted in industry driving the FCC’s agenda rather Read More ›

Micromanaging cable

Kevin J. Martin, politically-savvy and a highly effective chairman of the Federal Communications Commission, has a strong free-market orientation. So why would the New York Times report that the FCC may be on the verge of enacting new regulation which would: Force the largest cable networks to be offered to the rivals of the big cable companies on an individual, rather than packaged, basis; Make it easier for independent programmers, which are often small operations, to lease access to cable channels; and Set a cap on the size of the nation’s largest cable companies so that no company could control more than 30 percent of the market? Martin believes “[i]t is important that we continue to do all we can Read More ›

Let cable operators compete

I want to comment on Adam Thierer’s recent paper, “Unplugging Plug-and-Play Regulation,” which makes several excellent points. Adam briefly summarized his thesis (i.e., there is no need for government “assist” in private standard-setting) here a couple days ago and generated a couple comments. The cable industry and consumer electronics manufacturers are touting competing standards initiatives. The pros and cons of each approach, from a technology perspective, are somewhat bewildering to a non-engineer like myself. But there appears to be one clear difference that matters a lot. Adam points out that under the initiative sponsored by the consumer electronics industry, the FCC would be empowered to play a more active role in establishing interoperability standards for cable platforms in the future. Read More ›

Is the FCC losing its nerve?

This week the Federal Communications Commission failed to muster 3 votes to deregulate the broadband access services of Qwest Communications, as it has already done for Verizon in early 2006. The nature of the relief we’re talking about is analogous to the commission’s reclassification of DSL as an “information” service rather than a “telecommunications” service in 2005. In both cases, the effect is to free broadband providers from onerous common carrier regulation, allow them to tailor their offerings to customer needs and not be forced to offer their services to competitors at regulated, cost-based rates for resale. To be fair, the relief Verizon got didn’t garner 3 of 5 votes. Verizon’s petition was filed pursuant to Sec. 10 of the Read More ›

Krugman’s Depression Economics

Paul Krugman’s got it all backwards. He says the deregulatory policies of the Bush FCC have plunged the U.S. downward on the international broadband rankings. In fact, we are just starting to catch up after the long hangover from the Clinton-Gore-Hundt policies of the late-90s. The U.S. began with a lead in Internet access because we invented the Net. But the Hundt FCC quickly gave away our lead with a flurry of anti-investment price-controls and complicated mandates. The result was the telecom crash of 2000 and several more years of heavy fall-out that depressed Silicon Valley and global technology. After regrouping, the U.S. is now on the verge of a massive rebound in broadband technology and access, thanks in large Read More ›

Cable broadband success

Kyle McSlarrow, president and CEO of the National Cable and Telecommunications Association, cited the following numbers in a recent speech to the Media Institute (available here). Cable’s broadband service is already available to 94% of all American households, and more than 30 million households subscribe to the high speed service provided by their local cable operator. Using our broadband network, the cable industry now markets telephone service to more than 90 million homes and serves 10 million residential customers. [M]ore than 33 million customers — more than half of all cable subscribers — currently purchase “digital tiers” of video, which include hundreds of additional channels of video programming and CD-quality music. [T]here are already 30 cable networks transmitting in HD, Read More ›