Broadband & Neutrality Regulation

Apple, Spotify & the Threat of FCC High-Tech Regulation

by on September 23, 2009 · 16 comments

Over at TechDirt, Mike Masnick has an interesting post asking “Why Did Apple Approve Spotify?” which builds on an AdAge column asking a similar question: “Did Apple Sacrifice ITunes With Latest Apps?”  As the title of that AdAge piece suggests, some folks are wondering if Apple shot itself in the foot by approving Spotify, a music streaming app that some regard as a potential iTunes killer.  I don’t really have any comment on the business angle here, rather, I wanted to just comment on Mike’s suggestion that one possible explanation for Apple’s approval of the app is that:

As we noted when the app was approved, Apple appears to be somewhat gunshy, following the FCC inquiry into why it “blocked” Google Voice on the iPhone (and, yes, Apple still insists it didn’t actually block the app, but Google says otherwise). Given the scrutiny, Apple probably realized that it was in for some serious political trouble if it blocked an app like Spotify, which would have received a lot of press attention. Oddly, the AdAge article doesn’t mention this at all.

Indeed, it is odd that AdAge didn’t bother mentioning that fact.  But what I find doubly odd here is that nobody is even blinking an eye at the prospect of such political meddling with — or even possible FCC regulation of — Apple, iTunes, or music streaming market in general!  Seriously, have we gotten to the point now in our Bold New World of Neutrality Regulation that innovative high-tech companies must live in fear of constant regulatory intervention even when they completely lack any statutory authority to play these games?  Moreover, does anyone think that the a bunch of Beltway bureaucrats can micro-manage music and high-tech application markets and give us more options than we have today?

I know the prospect of such meddling makes some academics and regulatory activists groups happy, but I can’t see how this ends well for consumers or high-tech markets more generally.  Regardless, for those of you who laugh when we suggest that the slippery slope of regulation is real, consider this case to be Exhibit A.  Or perhaps it’s Exhibit B since the Google Voice spat with Apple was already moving the FCC in the direction of becoming a device regulator and applying “handset neutrality” principles that have no basis in law.  It’s your anything-goes government at work.

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The Day Real Internet Freedom Died: Our Forbes Op-Ed on Net Neutrality Regulation

by on September 22, 2009 · 158 comments

Forbes.com has just published an editorial that Berin Szoka and I penned about yesterday’s net neutrality announcement from the FCC.

The Day Internet Freedom Died

by Adam Thierer & Berin Szoka

There was a time, not so long ago, when the term “Internet Freedom” actually meant what it implied: a cyberspace free from over-zealous legislators and bureaucrats. For a few brief, beautiful moments in the Internet’s history (from the mid-90s to the early 2000s), a majority of Netizens and cyber-policy pundits alike all rallied around the flag of “Hands Off the Net!” From censorship efforts, encryption controls, online taxes, privacy mandates and infrastructure regulations, there was a general consensus as to how much authority government should have over cyber-life and our cyber-liberties. Simply put, there was a “presumption of liberty” in all cyber-matters.

Those days are now gone; the presumption of online liberty is giving way to a presumption of regulation. A massive assault on real Internet freedom has been gathering steam for years and has finally come to a head. Ironically, victory for those who carry the banner of “Internet Freedom” would mean nothing less than the death of that freedom.

We refer to the gradual but certain movement to have the federal government impose “neutrality” regulation for all Internet actors and activities—and in particular, to yesterday’s announcement by Federal Communications Commission (FCC) Chairman Julius Genachowski that new rules will be floated shortly. “But wait,” you say, “You’re mixing things up! All that’s being talked about right now is the application of ‘simple net neutrality,’ regulations for the infrastructure layer of the net.” You might even claim regulations are not really regulation but pro-freedom principles to keep the net “free and open.”

Such thinking is terribly short-sighted. Here is the reality: Because of the steps being taken in Washington right now, real Internet Freedom—for all Internet operators and consumers, and for economic and speech rights alike—is about to start dying a death by a thousand regulatory cuts. Policymakers and activists groups are ramping up the FCC’s regulatory machine for a massive assault on cyber-liberty. This assault rests on the supposed superiority of common carriage regulation and “public interest” mandates over not just free markets and property rights, but over general individual liberties and freedom of speech in particular. Stated differently, cyber-collectivism is back in vogue—and it’s coming very soon to a computer near you! Continue reading →

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Net Neutrality and Architecture Avoidance

by on September 22, 2009 · 7 comments

If I can amplify a bit on a post at the Cato blog earlier today, I want to clarify that I fully agree some of the ISP behaviors that net neutrality proponents have identified as demanding a regulatory response really are seriously problematic. My point of departure is that I’d rather see if there are narrower grounds for addressing the objectionable behaviors than making sweeping rules about network architecture. So in the case of Comcast’s throttling of BitTorrent, which is the big one that seems to confirm the fears of the neutralists, I think it’s significant that for a long while the company was—”lying about” assumes intent, so  I’ll charitably go with “misrepresenting”—their practices. And I don’t think you need any controversial premises about optimal network management to think that it’s impermissible for a company to charge a fee for a service, and then secretly cripple that service. So without even having to hit the more controversial “nondiscrimination” principle Julius Genachoswki proposed on Monday, you can point to this as a failure of the “transparency” principle, about which I think there’s a good deal more consensus. Now, there are bigger guns out there looking for dodgy filtering practices these days, so I’d expect the next attempt at this sort of thing to get caught more quickly, but by all means, enforce transparency about business practices too. Consumers have a right to get the service they’ve bought without having to be 1337 haxx0rz to discover how they’re being shortchanged. But before we get the feds involve in writing code for ISP routers, I’d like to see whether that proves sufficient to limit genuinely objectionable deviations from neutrality. There’s a hoary rule of jurisprudence called the canon of constitutional avoidance. It means, very crudely, that judges don’t decide broad constitutional questions—they don’t go mucking with the basic architecture of the legal system—when they have some narrower grounds on which to rule. So if, for instance, there are two reasonable interpretations of a statute, one of which avoids a potential conflict with a constitutional rule, judges are supposed to prefer that interpretation. It’s not always possible, of course: Sometime judges have to tackle the big, broad questions. But it’s supposed to be something of a last resort. Lawyers and civil liberties advocates, of course, tend to get more animated by those broad principles, whether the First Amendment or end-to-end. But there’s often good reason to start small—to look to the specific fact patterns of problem cases and see whether there are narrower bases for resolution. It may turn out that in the kinds of cases that neutralists rightly warn could harm innovation, it’s not one big principle, but a diverse array of responses or fixes that will resolve the different issues. In a case like this one, perhaps a mix of mandated transparency, consumer demand, and user adaptation (e.g. encrypting traffic) will get you the same (or a better) result than an architectural mandate. Continue reading →

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Government thinks it can “preserve” Internet

by on September 21, 2009 · 8 comments

Julius Genachowski, the new FCC chairman, announced that the commission will begin a rulemaking process to formalize and supplement existing network neutrality policy. According to Genachowski,

This is not about government regulation of the Internet. It’s about fair rules of the road for companies that control access to the Internet. We will do as much as we need to, and no more, to ensure that the Internet remains an unfettered platform for competition, creativity, and entrepreneurial activity.

Of course it is about regulation. The formal rulemaking process Genachowski is planning is for the avowed purpose of enshrining network neutrality principles in the Code of Federal Regulations.

Regulation always starts out small, before it grows really big. It has to: Loopholes and other unintended consequences (and opportunities) are always discovered after the “product” launches.

Genachowski unfairly and innaccurately implies that network neutrality opponents want to “abandon the underlying values fostered by an open network, [and] the important goal of setting rules of the road to protect the free and open Internet.” In fact, the existing Internet Policy Statement that would serve as the foundation of a new network neutrality regulatory regime received 2 Republican votes and 2 Democrat votes.

Genachowski is attempting to present a false choice between letting minimally trained politicians and myopic bureaucrats get their hands all over the Internet to remake it as they see fit versus “doing nothing.”

Saying nothing — and doing nothing — would impose its own form of unacceptable cost. It would deprive innovators and investors of confidence that the free and open Internet we depend upon today will still be here tomorrow. It would deny the benefits of predictable rules of the road to all players in the Internet ecosystem. And it would be a dangerous retreat from the core principle of openness — the freedom to innovate without permission — that has been a hallmark of the Internet since its inception, and has made it so stunningly successful as a platform for innovation, opportunity, and prosperity.

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BroadbandCensus.com’s Contribution to the Transparency Debate

by on September 21, 2009 · 7 comments

Blogger’s Note: I posted this blog entry over at BroadbandCensus.com earlier in the day. It’s the first of series this week — One Web Week — in which I’m taking a step back to look at the issue of broadband data and broadband transparency from a bit of a longer time frame. And today couldn’t be a more timely day to do so, with Genachowski’s speech highlighting a new sixth principle of Network Neutrality: broadband transparency! -Drew Clark

WASHINGTON, September 21, 2009 – Broadband data is important for the future of our country – and public and transparent broadband data is even more important.

Today, at this moment, new Federal Communications Commission Chairman Julius Genachowski is making a speech in which he is highlighting the vital principle of public and transparent broadband data.

For three years now, this principle has been the core belief animating my efforts as a journalist, and as the entrepreneur founding BroadbandCensus.com. Now, as we enter the fourth year since this saga began, it’s time to take stock and reflect on what BroadbandCensus.com has accomplished.

And with One Web Week having arrived, I’d like to lay out this history from a personal perspective. In this series of blog posts, I’m going to speak about what we’ve been through, who we have worked with to advance the principles of public and transparent broadband data, and what we ultimately aim to achieve at BroadbandCensus.com.

  • Today’s topic: The debate begins, with the Freedom of Information Act lawsuit in 2006.
  • Tomorrow’s topic, on One Web Day: The founding of BroadbandCensus.com in the fall of 2007.
  • Wednesday topic: The Broadband Census for America Conference in September 2008, and our work with the academic community to foster public and transparent broadband data-collection efforts.
  • Thursday’s topic, in advance of the U.S. Broadband Coalition’s report to the Federal Communications Commission: BroadbandCensus.com’s involvement with the National Broadband Plan in 2009.
  • The concluding topic, on Friday morning: The role BroadbandCensus.com and broadband users have to play in the creation of a robust and reliable National Broadband Data Warehouse.

The Beginnings: Why I Sued Kevin Martin’s Federal Communications Commission

BroadbandCensus.com was founded in October 2007 after I spent nearly a year and a half with the Center for Public Integrity, a non-profit investigative journalism organization based here in Washington. But the quest for public and transparent broadband data goes back further.

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Genachowski: Internet principles aren’t rules

by on September 21, 2009 · 13 comments

The FCC announced today that it will consider adopting net neutrality rules. The announcement comes in a speech by Chairman Julies Genachowski, which you can read here and watch here. Genachowski says,

To date, the Federal Communications Commission has addressed these issues by announcing four Internet principles that guide our case-by-case enforcement of the communications laws. … The principles were initially articulated by Chairman Michael Powell in 2004 as the “Four Freedoms,” and later endorsed in a unanimous 2005 policy statement[.] … Today, I propose that the FCC adopt the existing principles as Commission rules, along with two additional principles that reflect the evolution of the Internet and that are essential to ensuring its continued openness.

By suggesting that they must be codified, Genachowski is implicitly (if not explicitly) conceding that the FCC’s Internet principles are a mere policy statement and not a binding and enforceable rule. I’ve explained why this is the case previously. So, someone should call the D.C. Circuit, considering the Comcast case, and let them know their job just got a lot easier.

Second, Genachowski gives “limited competition” as a reason to consider regulation. However, the best available data from the FCC show that 98% of zip codes have 2 or more broadband providers, 88% of zip codes have 4 or more broadband providers, and 77% of zip codes have 5 or more broadband providers. That said, some have questioned whether the FCC’s data are accurate, and the FCC’s next broadband report is supposed to have data gathered at the census tract level for a more detailed set of speed categories. So, the FCC is proposing a regulation before it has completed an ongoing study to discover whether there is a real problem. It’s almost as if Kevin Martin is still running the place.

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You’d Have to Be Smoking Dope to Believe the Zittrain-Lessig Thesis

by on September 15, 2009 · 19 comments

Up in SmokeOver the past couple of years here, I have relentlessly hammered Harvard’s dynamic duo of digital doom, Jonathan Zittrain (see 1, 2, 3, 4, 5, 6) and Lawrence Lessig (see 1, 2, 3), for their extraordinarily gloomy predictions about the Internet creating a world of “perfect control.”  In the hyper-pessimistic Lessig-Zittrain view of things, cyberspace is perpetually haunted by the specter of nefarious corporate schemers out to suffocate innovation, screw consumers, and quash dissent.  In the 1990s, Lessig’s big-bad-bogeyman was AOL.  Today, Zittrain casts Apple in the lead role of Cyber-Big Brother.  The problem with their thesis? In a word: Reality.  As Tim Lee has pointed out before, “Lessig’s specific predictions in Code turned out to be… spectacularly wrong”:

Lessig was absolutely convinced that a system of robust user authentication would put an end to the Internet’s free-wheeling, decentralized nature. Not only has that not happened, but I suspect that few would seriously defend Lessig’s specific prediction will come to pass.

Absolutely correct, and the same is true of the fears and predictions Zittrain tosses around in The Future of the Internet.  And yet, as we saw most recently during my debate with Lessig and Zittrain over at Cato Unbound upon the occasion of the 10th anniversary of the publication Code, neither of them have relented one bit. Indeed, they have actually been escalating their morose rhetoric recently.

The fact that Zittrain casts Apple as the central villain in his drama is particularly interesting because millions upon millions of people absolutely love the company and its amazingly innovative products — even if I’m not one of them.  And there is absolutely no way Zittrain can continue to sell us this story of Apple quashing innovation when, in just one year’s time, there were 1.5 Billion iPhone Store downloads of over 65,000 free and paid apps by consumers in 77 countries.  I mean, seriously, is there any application you cannot get for the iPhone these days?

Apparently not, because over at the Wall Street Journal “Digits” blog,  Andrew LaVallee writes of the latest innovative application to pop up in the Apple iPhone Store, iPot — a tool to help you find dope shops in California!!

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The Fiction of Forced Access “Competition” Revisited

by on September 13, 2009 · 8 comments

In a past life — that is, from roughly 1994-2004 — I spent an enormous amount of time countering the proponents of “open access” regulation for communications and high-tech networks.  My work in that field culminated in the publication of a 2003 book with my old Cato colleague Wayne Crews entitled, What’s Yours is Mine: Open Access & the Rise of Infrastructure Socialism. We aimed to counter the efforts of bureaucrats and central planners to command technology companies and industry sectors to share networks, facilities, or specific technologies with rivals in the name of “competition.”  Simply stated, sharing is not competing, and competition in the creation of networks is just as important as competition in the goods, services, and information that move across those networks.  Moreover, there are property right considerations that come into play when governments seek to commandeer networks or take over network management decisions.

But let’s just stick to the economic issue here regarding the incentives created by the network-sharing mentality of the “forced access” movement and the fiction associated with the belief that network sharing can create competition.  My old PFF colleague Randy May, who currently serves as President of the Free State Foundation, continues to cover developments in this field far closer than I do, and has always done much better work on the subject than me.  Recently, Randy addressed some new fictions put forth by the radical Leftist activity group, the (Un-)Free Press who are, once again, spinning a revisionist history of telecom and media policy.  Specifically, Free Press has recently suggested that in the late 1990s we lived in a veritable communications nirvana, with thousands of Internet Service Providers and/or “competitive exchange carriers” hotly “competing” for our business.  Here’s how Randy May addresses this:

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ECFS: The FCC’s Comedo-Tragedy of E-Government & Transparency

by on September 11, 2009 · 24 comments

Read Part II here

In February, Congress passed the Obama Administration’s “(Five Year) National Broadband Plan,” part of the so-called “Stimulus.” (As economist Russ Roberts put it, government “stimulus” is “like taking a bucket of water from the deep end of a pool and dumping it into the shallow end.”) The Plan transfers $7.2 billion from taxpayers to broadband providers in subsides to promote broadband build-out. More than 10,000 comments have been filed on the plan. Once you get past the constitutional nicety of whether Congress has the power to subsidize “internal improvements” like broadband (it doesn’t), you might wonder just how well your money will be spent by all these techno-supplicants for the latest craze in corporate welfare.

The good news is that these comments are available online. Hurray for transparency! The bad news is that… they’re available online—specifically on the FCC’s Electronic Comments Filing System (ECFS). Anyone who’s used the web more recently than 1998 will cringe the first time they try to use ECFS to find anything, as Jerry has noted. Apart from the cumbersome, highly unintuitive interface, the problem is that there’s no way to search the text of comments ! You can only search pre-defined fields like like “law firm,” and if you don’t enter a value in precisely the right way, you get nada.

Bill Cline, the Chief of the Reference Information Center for the FCC’s Consumer & Governmental Affairs Bureau tries hard to put the best face on this farce of e-government, explaining: Continue reading →

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iProvo: More Problems in Public Utility Paradise

by on September 10, 2009 · 22 comments

[This is part of an ongoing series about “Problems in Public Utility Paradise.”]

According to this recent article by Donald Meyers of the Salt Lake City Tribune, five candidates for mayor of Provo, Utah are falling all over themselves to declare their support for continuing the public utility fiasco that is iProvo, the city’s fiber-to-the-home network. According to Wikipedia, it is the largest municipally-owned Fiber to the Home network in the United States.” Steve Titch of the Reason Foundation, who has been following iProvo for many years, has documented its millions of dollars of losses and risk to taxpayers, saying “iProvo is a dismal financial failure by any standard.”  But that isn’t stopping city officials and mayoral candidates from proposing to throw more money at this massive “if-you-build-it-they-will-come” fantasy. “One thing most of the candidates running for mayor agree on: iProvo is too important to fail, even if it means bailing out the company that bought it,” Meyers reports. Here’s the relevant passages from his article, with the key bits of bad info highlighted:

The city sold the troubled fiber-optic network to Broadweave Networks in 2008 in a deal in which Broadweave would take over the payments on the city’s $39.6 million bond. Since November, Broadweave has had the city draw on its $6 million surety deposit to make its bond payments in a bid to build up cash to pay for growth. In August, Veracity Communications merged with Broadweave, becoming Veracity Networks. The company’s leaders, Drew Peterson and David Moon, have asked the city to restructure the payment schedule to allow the company to cut back on its payments for 18 months while it strengthens its coffers. It later would pay extra money over a seven-year period and reimburse the city with interest. Provo would draw on its Energy Department’s reserves to make up the shortfall in bond payments — $1.4 million.

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