August 2004

An interesting contrast to Tom Hazlett’s excellent article on Korean broadband (see Adam’s post below), comes from this week’s Economist magazine. “Europe’s coming leader in broadband is France,” the article proclaims, pointing out that French broadband growth was the highest in Europe last year. The piece credits France’s extensive unbundling regime (it has the second-largest number of unbundled loops in Europe). It doesn’t mention however, that France’s penetration rates have been well below most others in Europe, never mind Korea. Despite the Economist’s breathless support of French policy (unusual for this London-based magazine), I still wouldn’t bet on the land of the Minitel becoming the broadband leader anytime soon.

Tom Hazlett has a nice piece on page A12 of the Wall Street Journal today explaining why South Korea is kicking everyone else’s butt when it comes to broadband connectivity and speed. Surprise, surprise, it comes down to their reliance on facilities-based competition instead of regulatory micromanagement. Hazlett notes that “Korea’s policy has proved a smashing success… (because) the government ended regulation of advanced telecom applications. The result: While competitors largely avoided (regulated) voice services, they invested billions to create new (unregulated) high-speed Internet networks. The broadband technologies unleashed by telecom rivals forced (Korea Telecom) to modernize its network, which now serves just half of the high-speed market.”

As a result, 78 percent of Koreans now have broadband access, the highest penetration rate in the world and double that of the U.S.

The bottom line: “forced access” infrastructure sharing regulation cannot deliver the goods. Only true, facilities-based competition, brought on by comprehensive market liberalization, will bring about the investment and innovation this country so desperately needs. John Wohlstetter of the Discovery Institute has come to the same conclusion in a recent piece.

More on New Old Rules

by on August 25, 2004

There’s a whiff of the bizarre in the FCC’s new unbundling decision (see Wayne’s excellent post below). Let’s recap: in 1999, the Supreme Court threw out the FCC’s first stab at unbundling rules. The Commission changed them slightly, but the DC Circuit threw these out in 2002. The FCC’s third try was also thrown out in March. A clearly agitated court gave the FCC a deadline: 60 days to fix the problems, or the rules are gone. That seemed pretty clear. But the process goes on!

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CNet News is reporting that the another chapter has been added to the ongoing saga between Yahoo and French regulators over what can be viewed or sold over online networks. You may remember that several years ago the French got angry because some knuckleheads were selling Nazi memorabilia over the Net via Yahoo’s site.

Consequently, a French court ordered Yahoo to find a way to prevent French citizens from accessing auctions of Nazi memorabilia. Yahoo asked a U.S. federal judge to block the French court’s ruling – - citing not only its free speech rights both also the impossible hassle associated with trying to quarantine French citizens from the rest of the world – - and the company eventually prevailed.

But, on procedural grounds, the Ninth Circuit Court of Appeals overturned that decision yesterday. Basically the court said that the California judge who issued the previous ruling didn’t have the right to hear the case.

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New Old Rules

by on August 24, 2004 · 2 comments

Last Friday the FCC quietly released the interim rule on unbundling and UNE-P pricing, claiming that if they failed to act, the $127 billion local telecommunications market would be placed at risk. Yet it’s not clear how the interim rule calms this market. The rule extends the current UNE-P price freeze for six months, which is longer than the local phone companies would like (they had agreed to freeze rates through the end of the year). It also provides for an additional six-month transition period, should a final rule not be ready. USTA and two local phone companies have already asked the court to intervene and force the FCC to comply with previous decisions. They are requesting permanent rules from the FCC by the end of the year. It seems this latest effort does little to resolve the uncertainties surrounding this market. On a positive note, the FCC does reiterate support for facilities-based competition, a goal that will be pursued in the final rule (whenever that happens).

Today at a conference in Aspen, FCC Chairman Michael Powell made some thoughtful comments including this one: “VOIP is the killer app for legal policy change.” What he meant is that the technology forces regulators to see “telephone service” in an entirely new light. Let’s just hope policymakers are smart enough to see that convergence of technologies means changing regulations to fit tech rather than trying to force tech into an old, outdated, and harmful framework.

Along with William Landes, the stunningly prolific Richard Posner is the author of a marvelous new book on “The Economic Structure of Intellectual Property Law.”

Posner, who is guest blogging this week over on the Lessig Blog is one of the great legal minds of our generation and everything he has to say is worth listening to. That is certainly true of this timely new book he has written on IP issues with Landes.

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That’s the question one online casino (Casino City, Inc.) is asking a federal district court to answer. Page C3 of today’s New York Times features an interesting story about the case, which Casino City filed in response to Department of Justice threats against publishers and broadcasters warning them to not print or display ads for online casinos. Casino City is seeking a declaratory judgment that Internet gambling advertising is constitutionally protected commercial free speech under the First Amendment.

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Hard to believe that there are still so many regimes on this planet trying to clamp down on freedom of speech, especially in an age of ubiquitous electronic communications. But this editorial by Nir Boms and Erick Stakelbeck reminds us that some countries will stop at nothing to restrict the flow of information.

In particular, they note just how repressive some Middle Eastern regimes have been in recent years, including our “allies” in Saudi Arabia (who have banned 400,000 Web sites since 1999). And the authors also report of Iran’s jailing of a popular journalist for posting stories and cartoons on his blog that the regime didn’t like.

By the way, I edited a collection of essays on these issues two years ago entitled, “Who Rules the Net: Internet Jurisdiction and Governance.”

State Public Utilities Commission meetings are usually fairly boring affairs, but at last Thursday’s CPUC meeting, I was surprised to see a packed room and grand theatrics over UNE-P rates in California. I know what you’re thinking–didn’t a DC Appeals Court invalidate the UNE-P regs? Well, yes, but California is going ahead anyway as everyone is still waiting for new FCC rules and California is two years late in setting them in any case. The CPUC’s administrative law judge suggested allowing SBC to raise rates only $0.25–enough to cause the labor unions to get wound up. And, let me tell you, labor leaders are really good at getting their message across LOUD and clear. If telecom wasn’t such a mess, the theatrics might have been more fun. If you want to learn more about this issue, see my weekly column here.