Net Neutrality

The Chairman of the Federal Trade Commission made a significant contribution to understanding the proper role of government in ensuring net neutrality. Speaking at the Progress & Freedom Foundation’s Aspen Summit this week, Deborah Platt Majoras cited the principle that, absent clear and specific evidence of market failure or consumer harm, policymakers should not enact blanket prohibitions of particular business models or conduct. Deborah Platt Majoras Second, she reminds us that broadband Internet access services are within the FTC’s jurisdiction and that the agency’s powers are proven. The FTC has successfully targeted Internet service providers who have allegedly enganged in deceptive practices and it has also required a cable system to provide open access to Internet service providers. This track Read More ›

In an essay for Business Week, Mark Gimein quotes a former industry source who says, “[The telcos] do very little fundamental research and very little advanced development.” Gimein claims that the only example of innovation he could find in San Antonio (home of AT&T) is a feature which allows Homezone (the service that combines DSL with satellite TV service) to play music on a television set. Then, he condescendingly suggests that AT&T ought to look, in this trivial feature, for “a hint of what AT&T might achieve if it spent on research and development even half of what a company like Intel does.” Wade Roush makes a similar argument in Technology Review (“compared with the computing industry, telecoms invest little Read More ›

A story by Amol Sharma in today’s Wall Street Journal illustrates the nightmare scenario that is motivating companies like Google and Yahoo! to push for self-serving net neutrality regulation under the misleading guise of protecting consumers, mom-and-pop businesses and innovators who who toil at night in their garage.

Medio Systems of Seattle and JumpTap of Cambridge, Mass. will provide web searcing services optimized for mobile devices, which the cellphone companies will integrate into their phones. Does this mean a cellphone customer won’t be able to search the net from their cellphone via Google or Yahoo! ? That’s not likely to be a problem — the FCC has declared that customers should be able to go anywhere on the web they want.
But it does mean preferential treatment for Medio or JumpTap. The cellphone carriers could design their phones so Medio or JumpTap are the home page or are only one click away. If you wan’t Google, Yahoo! or some other search engine, you’ll have to bookmark their page — meaning that it will take a couple extra steps. The majority of cellphone subscribers presumably will take the most convenient route by picking Medio or JumpTap.
Of course this is all about money. Sharma writes: “By aligning themselves with start-up search companies, the carriers believe they will keep a greater share of the generated advertising revenue, say people familiar with the matter. The wireless companies also worry that their brands will be diluted if they gave a prominent marketing slot to a major Internet brand.”
This scenario is an example of one of the ways that a portion of the billions of dollars in online advertising revenue could be diverted from content to delivery, as I talked about here.

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Senators have a lot on their minds, so its not surprising when some of the details get overlooked or confused.
Here’s the choice Senator Ron Wyden faces: He can protect the status quo, in which the cable company is still the dominant provider of video and broadband services in many markets and it isn’t illegal for the cable company to block or degrade access to the Internet. Or, he can vote for a Senate Commerce Committee bill that would remove local barriers to the telephone companies — who are ready to invest billions in competitive video and broadband services — and would make it illegal for any provider to block or degrade Internet access. Sounds like a no-brainer. But Wyden vowed again Friday to block telecom reform unless it is amended to prohibit extra fees for priority service.

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The most controverial item in the proposals to regulate net neutrality concern whether broadband providers should be allowed to practice “price discrimination.” Of course they should. And pro-consumer Senators should welcome it. Unfortunately, they have adopted an unrealistically narrow definition of consumer welfare and are missing the forest for the trees. According to Senator Barbara Boxer, Consumers will suffer if network operators are allowed to discriminate against their competitors’ use of the network by giving certain content preferential treatment (emphasis added). Senator Byron Dorgan makes a similar point: Consumers have an expectation that all websites and services will work equally well when they access the internet, just as they do when they make a phone call, but network operators have Read More ›

Roberta Combs, president of the Christain Coalition, wonders: What if a cable company with a pro-choice Board of Directors decides that it doesn’t like a pro-life organization using its high-speed network to encourage pro-life activities? Under the new rules, they could slow down the pro-life web site (emphasis added), harming their ability to communicate with other pro-lifers – and it would be legal. The legislative proposals that were passed by the House of Representatives and especially by the Senate Commerce Committee fully address the concerns of the Christian Coalition. The group should declare victory and go home. Specifically, the Advanced Telecommunications and Opportunity Reform Act, approved by the Senate Commerce Committee on June 28th, includes a provision which would indisputably Read More ›

Conservative advocacy groups are nearly unanimous in opposing net neutrality regulation. Then there is the Christian Coalition, which has inexplicably joined forces, on this issue, with groups who normally oppose its religious and social conservative goals. In a recent column, Dick Armey comments that this is not the first time leadership at the Christian Coalition has “sided with the forces of big government and against good sense and the rest of the conservative movement.” The Christian Coalition has also supported tax increases, according to Armey, and local chapters are distancing themselves from the organization’s Beltway leadership. See: “Perspective: Net ignorance of the Christian Coalition,” by Dick Armey, CNET News.com

The member of the European Commission in charge of telecom, Viviane Reding, admits that these are “times of convergence where we can access music, emails and media content using different terminals and networks and where also the borders between fixed-line and wireless are disappearing.” She has therefore initiated a review of the EU telecom rules — with a focus on opening up more spectrum, regulating less in markets “where competition is already effective” and achieving “competition and investment.” On the positive side, Reding advocates phasing out ex-ante sector-specific regulation — leaving control with competition law and authorities — and reducing the variety of regulatory approaches in recognition that “neither technology nor economic interest nor consumer behavior know national borders anymore.” Read More ›

Brian C. Anderson, who wrote about mainstream media bias in South Park Conservatives (2005), and who is Senior Editor of City Journal, weighs in on the net neutrality debate with an aricle that quotes George Gilder, Adam Thierer, James Gattuso, James DeLong and others. Among Anderson’s conclusions: The deeper agenda at work in the net neutrality debate, insufficiently noticed by most commentators, is the Left’s zeal to get a hold of the new media, which have given conservative voices powerful outlets, shattering the liberal monopoly over news and opinion outlets–and regulate those outlets out of existence, so we can all go back to the days when the New York Times and other elite liberal institutions set the agenda. See “Hands Read More ›

Intellectuals and politicians mistakenly think of telecom as a perpetual problem: a natural monopoly, an anti-trust peril, a free speech filter, and a forensic circus. Their bright idea of the moment, “net neutrality,” is a concept at once so vague and demanding that its penumbra could be litigated in fifty states and up-and-down the federal court system until all our Internet traffic has to be diverted through Seoul and Beijing merely to avoid lawyer spam. By any name, as Larry Darby points out in an important recent paper, “net neutrality” means price controls on some of the most complex many-sided markets in all industry and thus is sure to do for the rollout of broadband what Sarbox has done for Read More ›