Antitrust & Competition Policy

What Was the Gore Commission on Digital Television Broadcasting All About?

by on October 2, 2008 · 18 comments

Note: Here’s a second post I just put live at DrewClark.com. It refers to an upcoming conference, on Friday, October 3, sponsored by the Information Economy Project at George Mason University School of Law. It will be held at 8:30 a.m. at the National Press Club. Registration details are below.

In the United States, the regulation of broadcast radio and television has always been done under a different standard than the regulation of the print medium.

As Secretary of Commerce in the administration of President Calvin Coolidge, Herbert Hoover declared: “The ether is a public medium, and its use must be for a public benefit,” he said at the Fourth National Radio Conference, in 1925. “The dominant element for consideration in the radio field is, and always will be, the great body of the listening public, millions in number, country-wide in distribution.”

When Congress created the Federal Radio Commission in 1927, it decreed that broadcasting was to serve the “public interest, convenience and necessity,” and this standard was re-affirmed in the Communications Act of 1934. Several Supreme Court decisions — albeit decisions that have been much criticized — affirmed that broadcasting could and should be treated differently than the traditional “press.”

This differential treatment for broadcasting — versus the print medium, and also cable television — was underscored by the decisions in Red Lion Broadcasting Co. v. FCC (1969), which upheld the “Fairness Doctrine,” and also FCC v. Pacifica Foundation (1978), which upheld indecency rules for over-the-air broadcast television. The Fairness Doctrine required broadcasters to grant reply time to those who said their views were criticized.

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All Kinds of Competition for Google Is in Development

by on October 2, 2008 · 9 comments

Information Week has an article in its September 29th issue that illustrates why regulatory interventions to temper Google’s dominance are folly – things like antitrust scrutiny of the Yahoo! deal. But it takes a little understanding of how markets work.

The article lists all kinds of innovative startups that plan to challenge Google and take the field of search in all kinds of new directions. “The burst of activity over the past 12 months is more befitting a land rush than a market dominated by one powerhouse,” it says. Read it. There’s lots of interesting stuff going on.

But it’s not going just because. It’s going on because there’s a dominant player in the market. It’s going on because venture capitalists, innovators, and entrepreneurs can see the large profit that Google is making, and they want a piece of it. Excess profits act as an invitation and a spur to others, bringing new businesses and business ideas to that market.

If profits are “managed” and “brought under control” by curtailing a company’s ability to make deals (like Google would make with Yahoo!), that signal – that there is money to be made here – dissipates. Fewer innovators come to the market.

A second signal also goes out: “If you come up with something truly revolutionary in this field, we’re going to reward you with a haircut.” That dissuades investors – telling them that high profits will not come to them if they produce something great.

It’s a shame that the federal government is working to stanch the flow of innovation coming to search by going after Google.

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Do TV Broadcasters Have Obligations to the Public? Forum TOMORROW, 10/3

by on October 2, 2008 · 8 comments

Note: Here’s a post I just put live at DrewClark.com. It refers to an upcoming conference that might be of interest to Tech Liberation readers. Make sure to follow the link to the bottom of the post for registration information for this FREE conference, to be held tomorrow, Friday, October 3, at 8:30 a.m.

If all goes according to plan, on February 17, 2009, television broadcasters will power down their analog transmitters. They will be broadcasting their signal only digitally.

After more than 20 years in the long transition to digital television, this might be considered progress. Now, millions of Americans are collecting vouchers from the Commerce Department to subsidize their purchase of converter boxes. These are the electronic devices that take the digital signals — and convert them back to analog — so that viewers without high-definition televisions can watch broadcast TV on their old sets.

What about the bigger questions? Is there any benefit to the public, or to consumers, from the transition to digital television? What about the vaunted visions of hundreds of broadcast channels, through multi-casting? What would be the new public-interest obligations, if any, of broadcasters? This question has definitely not been resolved.

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Problems in Muni Wi-fi Paradise, Part 9 (amazing article about Philly failure)

by on September 29, 2008 · 10 comments

In my nearly 17 years of public policy work, I have never felt so vindicated about something as I did this weekend when I read Dan P. Lee’s Philadelphia magazine feature on “Whiffing on Wi-Fi.” It is a spectacularly well-written piece about the spectacular failure of Philadelphia’s short-lived experiment with municipally-subsidized wi-fi, which was called Wireless Philadelphia.  You see, back in April 2005, I wrote a white paper entitled “Risky Business: Philadelphia’s Plan for Providing Wi-Fi Service,” and it began with the following question: “Should taxpayers finance government entry into an increasingly competitive , but technologically volatile, business market?”  In the report, I highlighted the significant risks involved here in light of how rapidly broadband technology and the marketplace was evolving. Moreover, I pointed to the dismal track record of previous municipal experiments in this field, which almost without exception ended in failure. I went on to argue:

Keeping these facts in mind, it hardly makes sense for municipal governments to assume the significant risks involved in becoming a player in the broadband marketplace. Even an investment in wi-fi along the lines of what Philadelphia is proposing, is a risky roll of the dice. [… ]  the nagging “problem” of technological change is especially acute for municipal entities operating in a dynamic marketplace like broadband. Their unwillingness or inability to adapt to technological change could leave their communities with rapidly outmoded networks, and leave taxpayers footing the bill.

I got a stunning amount of hate mail and cranky calls from people after I released this paper.  Everyone accused me of being a sock puppet for incumbent broadband providers or just not understanding the importance of the endevour.  But as I told everyone at the time, I wasn’t out to block Philadelphia from conducting this experiment, I just didn’t think it had any chance of being successful.  And, again, I tried to point out what a shame it would be if taxpayers were somehow stuck picking up the tab, or if other providers decided not to invest in the market because they were “crowded-out” by government investment in the field.

But even I could have never imagined how quickly the whole house of cards would come crumbling down in Philadelphia.  It really was an astonishing meltdown.  Dan Lee’s article makes that abundantly clear:

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California Telecom Regulator Rachelle Chong, Former FCC Commissioner, to Keynote ‘Broadband Census for America’

by on September 25, 2008 · 4 comments

Our conference, “Broadband Census for America,” is fast approaching…. The event is tomorrow. If you want to attend, follow the instructions in the press release below:

FOR IMMEDIATE RELEASE

WASHINGTON, September 25, 2008 – California Public Utilities Commissioner Rachelle Chong, a member of the Federal Communications Commission from 1994 to 1997, will kick off the Broadband Census for America Conference with a keynote speech on Friday, September 26, at 8:30 a.m.

Eamonn Confrey, the first secretary for information and communications policy at the Embassy of Ireland, will present the luncheon keynote at noon. Confrey will overview Ireland’s efforts to collect data on broadband service through a comprehensive web site with availability, pricing and speed data about carriers.

Following Chong’s keynote address, the Broadband Census for America Conference – the first of its kind to unite academics, state regulators, and entities collecting broadband data – will hear from two distinguished panels.

One panel, “Does America Need a Broadband Census?” will contrast competing approaches to broadband mapping. Art Brodsky, communication director of the advocacy group Public Knowledge, will appear at the first public forum with Mark McElroy, the chief operating officer of Connected Nation, a Bell- and cable-industry funded organization involved in broadband mapping.

Also participating on the panel will be Drew Clark, executive director of BroadbandCensus.com, a consumer-focused effort at broadband data collection; and Debbie Goldman, the coordinator of Speed Matters, which is run by the Communications Workers of America.

The second panel, “How Should America Conduct a Broadband Census?” will feature state experts, including Jane Smith Patterson, executive director of the e-NC authority; and Jeffrey Campbell, director of technology and communications policy for Cisco Systems. Campbell was actively involved in the California Broadband Task Force.

Others scheduled to speak include Professor Kenneth Flamm of the University of Texas at Austin; Dr. William Lehr of the Massachusetts Institute of Technology; Indiana Utility Regulatory Commissioner Larry Landis; and Jean Plymale of Virginia Tech’s eCorridors Program.

Keynote speaker Rachelle Chong has been engaged in broadband data collection as a federal regulator, as a telecommunications attorney, and since 2006 as a state official.

Chong was instrumental to the California Broadband Task Force, which mapped broadband availability in California. She will speak about broadband data collection from the mid-1990s to today.

The event will be held at the American Association for the Advancement of Sciences’ headquarters at 12th and H Streets NW (near Metro Center) in Washington.

For more information:
Drew Bennett, 202-580-8196
Bennett@broadbandcensus.com
Conference web site: http://broadbandcensus.com/conference/
Registration: http://broadbandcensus.eventbrite.com/


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Advising Google on Antitrust

by on September 18, 2008 · 3 comments

Over the past week there’s been a lot of Google blogging (here, here, here…) on TLF, so now it’s my turn.  And I’ll defer to the post of my colleague Mark Blafkin on the ACT blog, provocatively titled Why is Google Pointing that Gun at its Foot?

Here’s a snippet:

Google has not yet learned that when you’re under antitrust scrutiny, EVERYTHING YOU DO is going to be analyzed through that lens.  Every move your company makes will communicate something to the regulators, partners, customers, and competitors that are now watching you more closely.  The last thing you want to do is give regulators more ammunition. At times, this may require changing decision making processes throughout the company, even in seemingly unrelated aspects of business.

ACT was engaged in the Microsoft antitrust case. Google can learn a lot from Microsoft’s battle, and by the way governments characterized what’s “anti-competitive.”

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Googlephobia: Part 5 – Google at Ten & Its Competition

by on September 11, 2008 · 0 comments

By Berin Szoka & Adam Thierer

As we noted in our intro to this ongoing series, Google’s tenth anniversary has passed with Googlephobia reaching new heights of hysteria.

But is Google really too big and dangerous, or are people just too lazy to find other alternatives to each of the wonderful services that Google offers?  If one is truly paranoid about the firm’s supposed dominance, it doesn’t take much effort to live a Google-free life. To prove it, we set out to find alternatives to each of the services that Google provides.  After awhile, we got a little tired of compiling alternatives in each category and just provided links for the additional choices at your disposal.  It’s tough to see what the fuss is about with the cornucopia of choices at our disposal.  If you don’t like Google, then just don’t use it or any of its services.  The choice is yours.

In each case, we’ve listed Google first, even though Google may not be the market leader (e.g., Google’s relatively unknown social network Orkut).

Search Engines

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Googlephobia: The Series

by on September 11, 2008 · 9 comments

By Berin Szoka & Adam Thierer as part of an ongoing series

With Google celebrating its 10th anniversary this week, many panicky pundits are using the occasion to claim that Google has become the Great “Satan” of the Internet.  Nick Carr wonders what the future holds for “The OmniGoogle.” The normally level-headed Mike Malone worries that Google is “turning into Big Brother.”  And Washington Post’s Rob Dubbin says that he can’t escape Google’s “tentacles,” even for just 24 hours.  Meanwhile, speculation abounds that the Justice Department is preparing a major antitrust lawsuit against Google concerning its advertising partnership with Yahoo! or perhaps even a broader suit concerning Google’s “dominance” of online advertising generally.

Carr quotes Google co-founder Sergey Brin’s now-famous 2003 interview:

I think people tend to exaggerate Google’s significance in both directions.  Some say Google is God.  Others say Google is Satan.  But if they think Google is too powerful, remember that with search engines, unlike other companies, all it takes is a single click to go to another search engine. People come to Google because they choose to.  We don’t trick them.

In the last five years, Google has become far more than just a search engine.  As Google’s suite of suite of complementary products continues to grow, so too does the specter of Google as an all-knowing and therefore all-powerful economic colossus.  Yet Google isn’t even close to being the sort of nefarious monopolist out to destroy user privacy at every turn, as some seem to imply—if not exclaim.  Indeed, in our view, the Net is overall a far better place because of the existence of Google and the many free services it provides consumers.

Our point is not that Google should be immune from criticism.  Indeed, healthy criticism of corporate actions plays a vital role in the free market by disciplining corporate policies and behavior—often thus providing an effective alternative to government regulation.  This is particularly important in the area of consumer privacy protection, as demonstrated by Google’s quick response to public concern about its Chrome EULA. Continue reading →

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DoJ Trustbusters to Attack Google?

by on September 11, 2008 · 9 comments

C|Net’s Charles Cooper reports today that Department of Justice trustbusters are considering a comprehensive antitrust attack on Google.

Sources who have provided testimony to the government say a departmental debate revolves around whether antitrust regulators should challenge Google’s proposed revenue-sharing deal with Yahoo, or go for the whole enchilada–and haul Google into court on broader charges related to its dominance in search advertising.

C|Net’s Declan McCullagh speculated earlier this week about how Google would fare under an Obama administration:

[Obama’s] technology campaign platform pledges to “reinvigorate antitrust enforcement” and “step up review of merger activity.” He complained to the American Antitrust Institute that “the current administration has what may be the weakest record of antitrust enforcement of any administration in the last half century.” If the Bush administration’s current antitrust probe of Google, coupled with this week’s apparent threat of a federal lawsuit, amounts to a “weak” record, imagine what antitrust true believers in an Obama administration might do. (A three-way split of Google into search, applications, and display ads, anyone?)

I’m not sure whether structural separation is on Google’s near-term horizon, but Washington, D.C.’s parasite economy will make its move.

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Forget Duopoly – Fear the Quadropoly!

by on September 10, 2008 · 6 comments

Scott Cleland has an unusually even-keeled post today (Where are the bullets and bolding, Scott?!) about how Google undermines its own policy arguments on net neutrality regulation by promoting more sources of broadband – in this case, satellite.

What has always mattered, of course, is getting more broadband platforms up and running. The debate over net neutrality regulation is a sideshow, and probably a detriment to communications progress as it casts a cloud of regulatory uncertainty over the industry. Higher costs, slower rollouts, and lower profits from uncertain regulations probably chills investment in any potential new broadband platform.

But I’m here to tell you, Scott, that even if Google helps put a couple more broadband platforms in place, the goalposts will move.

Today, I came across a letter sent by Senate Antitrust Subcommittee Chairman Herb Kohl (D-WI) asking the four major wireless providers why the price of text messaging has gone up. He says that the price has gone from 10 cents per message sent or received in 2005 to 20 cents on all four carriers.
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