Bob Pepper, the senior managing director of global advanced technology policy at Cisco Systems, has penned an outstanding editorial on Net neutrality regulation in TechNewsWorld.com. When Bob served as the FCC’s chief of policy development he was, in my opinion, the most brilliant and thoughtful regulator I ever had the chance to work with in my life. He had an appreciation of the benefits of markets that is still on display in this excellent editorial:
Looking ahead, Internet users and content/applications providers will continue to require more choice and flexibility in terms of service selection, service quality and price points. In contrast, new net neutrality regulation could have the perverse effect of degrading all levels of service or freezing in place the current state of providers and services. Companies would find it more difficult to differentiate themselves, offer new services, and enter new markets, a situation that would be anti-competitive and counterproductive for consumers.
Perhaps even worse, greater regulation would almost certainly squelch risk-taking, investment and inventiveness over the long term, as companies would lose incentives to form new ventures, alliances and services and explore new ways to create value consumers would want. Indeed, net neutrality regulation takes us down the wrong path of reduced competition, less consumer choice and greater government involvement and oversight.
To a large extent, the Internet has become so popular, successful and useful because it enriches and empowers people at the individual level. That spirit must not be jeopardized by ill-advised, untimely government regulations. Instead, it must be preserved as we go ever deeper into a new era of high-bandwidth applications and exciting new broadband services.
I hope Bob’s old colleagues over at the FCC are listening!
An insightful post by Don Marti on the economics of peer production:
Linux started as a peer production project in 1991, and got its first vendor-supported device driver in 1994 and its first full-time paid contributor (Leonard Zubkoff, VA Research) in 1997. Leonard started off writing SCSI drivers in his spare time, then got a job doing RAID support — so that VA could sell high-margin boxes with RAID, not just the commodity one-processor, one-drive machines they started with.
Today, there’s a flexible and socially connected interface between the kernel team and the hardware companies. A driver developer has to be part of both organizations. The payoffs for plugging into both your company’s management structure and a peer production project include that you get to eliminate a lot of duplication of effort by having other people help with the infrastructure that supports your driver, and you get free code reviews and developer training. Greg says that at one company, one person maintains the Linux driver, and 150 are needed to maintain the driver for a common proprietary OS.
Drew Clark is hard to beat to the punch on anything. By the time I had finished reading Google’s lastest explanation of its position on net neutrality, he was up and posted with an excellent commentary on its meaning. Now that’s competition.
As Drew reported, Google’s new Washington Telecom and Media Counsel Rick Whitt, tried to clarify Google’s net neutrality position yesterday, which had been muddled after comments by his Google colleague Andy McLaughlin. Whitt explained that nothing had changed. Yes, the issue will ultimately be solved by competition, but that’s a long-run solution, maybe 20 years out. Until then, strong rules are needed.
But Google’s support of net neutrality rules was never in doubt. What I find more interesting is what Whitt did not address: Andy McLaughlin’s statement that the FCC should not be have a role in enforcing any such regulations, and that this should be seen as “an attorney general or FTC problem.” That would be a significant shift, putting Google at odds with most of its colleagues on the net neutrality bandwagon, as well as the leading bills on the subject.
I have some sympathy for Rick Whitt’s complaint that it’s hard to have a debate when anything that’s slightly off-message becomes an ad in the Wall Street Journal. (If there’s any concern on this point, I’ll promise not to run a Wall Street Journal ad on any this). But Whitt’s statement still leaves open more questions than answers. And nothing has been heard of late from McLaughlin himself to explain all this.
In any case, welcome to Google, Rick. You’ve joined the company at an interesting time.
A few weeks ago, I was discussing “Campaign Finance Laws in the You Tube Age” and was wondering aloud whether current campaign finance regulations were sustainable in an age of user-generated content and viral videos. The Washington Postponders that same question today in highlighting the impact of clever mock campaign ad mash-ups like this one about “Big Sister” Hillary Clinton, which already has roughly 1.5 million hits:
The Post story notes that “this ad’s reach really blows up any notion that candidates and mainstream media outlets can control the campaign dialogue. Especially online.” That’s exactly right, but they don’t go on to ask the next logical question about how Congress and the FEC are going to deal with the growing flood of online campaign ads and commentary during coming election cycles. Remember, stuff like this can be regulated when aired on traditional television and radio outlets in the days leading up to an election. I just don’t see how current campaign finance regs and the Internet can co-exist in the long run. There’s just no way regulators are going to be able to keep pace with all the activity out there.
In section 7.3, the EC FLOSS Report tells us that firms working on FLOSS are not only faster, they’re also richer. Geez, faster and richer? Are they better looking too? Yet despite the authors’ assertions, I’m not sure we should be green with FLOSS envy just yet.
The authors are trying to erect a foundation upon which to rest the report’s main argument: to grow European economies, the EU should bolster the European ICT sector by betting big on FLOSS. In 7.1 and 7.2 they claimed that FLOSSers work faster (are more productive). As I discussed in my last blog post, FLOSS: The Software Hare that Beats the Proprietary Turtle?, the data didn’t really support the claim. But we were willing to give the authors the benefit of the doubt because FLOSSers should work faster, given the often imitative nature of most FLOSS projects. In this section, however, they are starting to knowingly fill the foundation with hollow claims.
Friend-of-a-friend Tom Lee offers another example of the evils of the unregulated cell phone market. Apparently, AT&T, Sprint, and Qwest are all blocking a free conference call service he uses, in order (Tom speculates) to twist his arm into switching to a paid conferencing service—the idea, presumably, to get them to sign up for one of those companies’ products.
Instead of punishing the companies that have screwed up, we’ll be forced to switch conferencing providers. Which, if the freeconference.com people are to be believed, is exactly what the networks are conspiring to accomplish.
Now compare the situation to my VoIP vendor. If I’m using an open protocol (and, since my home Asterisk server speaks SIP, I am), the decision to switch vendors is as simple as googling for a new provider, filling out a web form and altering a configuration file to match the credentials that will have been emailed to me. That’s how it ought to be: if Cingular starts screwing you over, forward your calls to the T-Mobile trial account you just set up — all it’d take is changing a few settings on your handset. If you like it, switch for good for whatever the current, reasonable number-portability fee is.
I find this a little bit puzzling because I would think that the FCC would already have some authority to deal with this sort of thing, since the PSTN is firmly under the commission’s control. I would think this would be a case where the FCC would have full authority to step in, as they did in the Madison River case, and tell them to knock it off. I wonder if one of the actions in the email is to call the relevant FCC commissioners’ offices.
But let me address Tom’s more general point about our collective skepticism about government regulation.
Do television sets have rights? Apparently so, according to the National Association of Broadcasters. Communications Daily, reporting today on the planned subsidy for analog televisions, quotes a broadcast industry spokesman as saying” [O]ur priority is that no TV set and no consumer gets disenfranchised.” Let’s read that again. “[O]ur priority is that no TV set and no consumer gets disenfranchised.”
It’s odd enough to say to talk about consumers being “disenfranchised” due to the digital transition. But TV sets? Can TV sets be “disenfranchised”? Somehow I missed the provision in the Constitution granting rights to televisions, or any electronic appliances for that matter. I’m not even sure how such rights would be defined. Would only analog televisions be protected? Perhaps any device with a cathode ray tube? What about computer monitors? Are they entitled to equal protection under the law?
I’ve got a review of Wikinomics up over at The American. Here’s the meat of it:
If Wikinomics has one weakness, it’s that the authors fail to fully appreciate the extent to which market mechanisms lose their salience in the context of peer production. For example, they urge Yahoo! to set up a profit-sharing scheme within its Flickr photo-sharing site and its del.icio.us social bookmarking site, in which the creators of the most popular content would get paid for their contributions. This seems entirely unnecessary. The sites must already be offering users sufficient incentives to participate, or they never would have signed up in the first place.
Moreover, introducing payments could create new problems. Paying a handful of the most popular contributors could create feelings of envy and resentment among the vast majority of users who would continue to be unpaid. The lure of cash payments might also induce some users to attempt to game the system. Paying contributors would be highly inefficient, as there would be substantial overhead in locating, authenticating, and mailing (fairly small) checks to thousands of people. The money would be far better spent hiring more programmers to further improve the site, making it more valuable for all users.
This points to a more general principle: peer production succeeds largely because it eliminates the frictions that accompany commercial activities. Proprietary software companies face a variety of costs, including finding and hiring programmers, finding and hiring sales and support personnel, supervising and evaluating employees, negotiating contracts with other software companies, filing patent applications, renting office space, and so forth. Peer production eliminates most of these costs, as contributors self-select the parts of a project that interest them most (which will, more often than not, be the parts to which they’ll have the most to contribute) and contribute their changes directly to the project, without the substantial overhead that would be required to keep track of who contributed what and how much each contributor was owed. Introducing financial payments into the equation can often undermine the very efficiencies that make the system work in the first place.
Also, don’t miss the latest edition of The American’s new podcast, which features yours truly discussing the basics of peer production with managing editor David Robinson.
Herb Vest, CEO of the online dating service True.com, is still working hard to get the government to push background checks for those seeking love on the ‘net. The New York Timesreports:
True, which conducts criminal background checks on its subscribers, is the primary force behind a two-year-old campaign to get state legislatures to require that social Web sites prominently disclose whether or not they perform such checks….
The company then tried to have laws passed in several states that would require other sites to conduct background checks or disclose that they do not…. True has had little political success so far, but is backing bills that legislators are considering in Florida, Texas and Michigan.
As the Times reports, Vest is no newcomer to lobbying government to gain an advantage over competitors.
As I noted two years ago, Vest’s preferred legislation would require matchmaking sites not conducting background checks “stamp this stark warning atop every e-mail and personal ad, in no less than 12-point type: ‘WARNING: WE HAVE NOT CONDUCTED A FELONY-CONVICTION SEARCH OR FBI SEARCH ON THIS INDIVIDUAL.'”
Is this really necessary? When I want to know for sure whether my online date is a felon, I just visit this site.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology. Learn more about TLF →
Bob Pepper, the senior managing director of global advanced technology policy at Cisco Systems, has penned an outstanding editorial on Net neutrality regulation in TechNewsWorld.com. When Bob served as the FCC’s chief of policy development he was, in my opinion, the most brilliant and thoughtful regulator I ever had the chance to work with in my life. He had an appreciation of the benefits of markets that is still on display in this excellent editorial:
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.