Competition

The Federal Communications Commission is facing another deadline at the end of this month to accept or reject a petition for regulatory forbearance. The petition would relieve AT&T of several unnecessary, burdensome and anticompetitive accounting requirements. The accounting rules at issue were designed to restrain telephone prices when AT&T was a monopoly entitled to recover its costs plus a reasonable profit. Rate-of-return or cost-plus regulation, as it was known, was a complete failure. It gave companies like AT&T an incentive to inflate, misallocate and manipulate costs. The companies responded, according to critics, by gold-plating their operations. AT&T hasn’t been subject to rate-of-return regulation at the FCC or in any of the states in which it operates for 10 years. And Read More ›

Communications Daily ($) cited my recent post comparing Google’s limited objectives for the 700 MHz auction with the expansive objectives it outlined to the Federal Communications Commission last summer, and it included the following reaction to my comments from Richard Whitt of Google: Whitt said in response that Haney had misread his company’s comments from last summer. “We consistently have argued that the open access license conditions adopted by the FCC would inject much-needed competition into the wireless apps and handset sectors, but would not by themselves lead to new wireless networks,” he said Monday. “Only if the commission had adopted the interconnection and resale license conditions we also had suggested — which the agency ultimately did not do — Read More ›

In 1993 Congress substituted auctions for the deplorable practice of giving away valuable spectrum to well-connected commercial entities. Lawmakers who think spectrum is a valuable public resource for which the taxpayers should be compensated need to wake up for a minute. FCC rulemaking could render the remaining assets worthless, distort wireless competition and contribute to the unfortunate perception of the FCC as a candy store. Google has made it clear that it plans to weigh in at the FCC as it determines how to re-auction the D-block from the recent 700 MHz auction, and that it wants to open the white spaces between channels 2 and 51 on the TV dial for unlicensed broadband services. Anna-Maria Kovacs, a regulatory analyst, Read More ›

Comcast and BitTorrent are working together to improve the delivery of video files on Comcast’s broadband network. Rather than slow traffic by certain types of applications — such as file-sharing software or companies like BitTorrent — Comcast will slow traffic for those users who consume the most bandwidth, said Comcast’s [Chief Technology Officer, Tony] Warner. Comcast hopes to be able to switch to a new policy based on this model as soon as the end of the year, he added. The company’s push to add additional data capacity to its network also will play a role, he said. Comcast will start with lab tests to determine if the model is feasible. Over at Public Knowledge, Jef Pearlman argues that the Read More ›

John Conyers, Jr. If broadband providers turn the Internet into a “world where those who pay can play, but those who don’t are simply out of luck,” current antitrust law can solve the problem says House Judiciary Chairman John Conyers, Jr. (D-MI). I believe that antitrust law is the most appropriate way to deal with this problem — and antitrust law is not regulation. It exists to correct distortions of the free market, where monopolies or cartels have cornered the market, and competition is not being allowed to work. The antitrust laws can help maintain a free and open Internet. The comment came at a Congressional hearing yesterday. Of course the broadband market isn’t characterized by monopoly or cartel, so Read More ›

Bret Swanson and George Gilder have a column in today’s Wall Street Journal in which they argue that more Internet capacity will be necessary to keep up with movie downloads, gaming, virtual worlds and other fast-growing applications. They explain that Internet capacity will have to increase 50 times in the next couple years in their recent report “Estimating the Exaflood: The Impact of Video and Rich Media on the Internet — A ‘zettabyte’ by 2015?,” which I discuss here. In their column, Gilder and Swanson warn this won’t happen if politicians re-regulate network providers: The petitions under consideration at the FCC and in the Markey net neutrality bill would set an entirely new course for U.S. broadband policy, marking every Read More ›

The FCC voted today to allow a single entity to own a newspaper as well as a broadcast TV or radio station in the same market under certain conditions, and some people seem truly alarmed. Democratic FCC commissioner Jonathan Adelstein worried that the FCC “has never attempted such a brazen act of defiance against Congress. Like the Titanic, we are steaming at full speed despite repeated warnings of danger ahead. It might yet sink. We should have slowed down rather than put everything at risk,” according to Broadcasting & Cable. Many people were similarly horrified in 1987 when the FCC repealed the Fairness Doctrine, which required broadcasters to air contrasting viewpoints on “vitally important controversial issues of interest in the Read More ›

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 ›

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 ›

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 ›