Google’s Policy Blog today makes a succinct argument for why its purchase of DoubleClick should be approved. While I find their reasoning compelling and logical–in fact, I don’t think any justification should be necessary–I find it hard to be sympathetic to a plea for fairness when Google is asking DC to stack the deck in its favor on other issues.
Example: Google has issued an ultimatum to the FCC, asking it to offer up the 700 Mhz spectrum–the radio waves that will be free when TVs switch over to digital in 2009–with conditions attached. These conditions would make all potential bidders conform to Google’s business model.
What other example in history do we have of a company actually demanding strings be attached to an FCC auction such as this? If anyone can think of such an example I encourage you to comment. As far as I know, this is totally unprecedented.
And why ask the FCC to place limits on something you plan to buy? That seems a little odd. Unless you want to reduce the value of the spectrum to competitors that operate under different models.
What about these other models? More on that later when I discuss the idea of ‘openess’ in a post later today.
These types of restrictions are just political games, which Google doesn’t like when they prevent Larry and Sergey from making an aquisition or collecting different kinds of data. Yet the same political maneuvering is just fine when the men of Moutain View can use hapless regulators to make a mint at the public’s expense.
Hat Tip: John Battelle’s Searchblog
Tom Lee says I’m missing the point about the iPhone:
But the point Ars is making is that the iPhone actually isn’t being subsidized by the contract fees. Consumers are buying the hardware at full retail price and being locked into a contract. This puts the lie to the carriers’ argument that early termination fees are in place to avoid losses over hardware subsidies — they charge the fees whether there’s a subsidy or not (and only one carrier will prorate this fee).
To paraphrase Yglesias, terms like “full retail price” and “subsidized” are a kind of accounting fiction. What matters is how many dollars come out of your pocket and how many end up in the pockets of AT&T and Apple. The label on the credit card bill, and exactly when the charge is made, just isn’t that important. Consider the following four scenarios:
Scenario 1:
- Apple charges $500 for an iPhone
- AT&T service costs $60/month
- Apple gets $5/month from AT&T for every iPhone customer.
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This has to be one of the sillier critiques of the wireless industry I’ve seen:
Murray suggests that termination fees make competition between wireless carriers virtually nonexistent, as people are often unwilling to switch from one carrier to another until their contracts are fully expired. Worse still, the long lock-ins don’t always provide any proper consideration for consumers entering those contracts.
“We want lower consumer prices,” Murray said when referring to the $600 price of the iPhone. “Consumers don’t get a single dime of subsidy on the new iPhone, but it’ll still get them locked into a two-year deal or penalty to leave the carrier.”
It’s nonsensical to say there’s no competition because consumers only choose a wireless carrier once a year (or even once every two years). Most people don’t buy computers, cars, or major appliances more often than that, yet no one claims that makes those industries uncompetitive. If consumers get crappy service during their contracts, they remember this fact and switch to a different carrier at the end of the contract period. And consumers comparison shop before they sign a contract, so phone companies have as much incentive to keep their prices low in a contract-based system as they would in a system without contracts.
Moreover, the major carriers all give consumers the option to take a risk-free 14-day trial period on their phone. So I don’t see how you can possibly say consumers don’t know what they’re getting into. If they want to, consumers can get cell phones from all four national carriers, play with all of them for a week, and return the three they like least. Consumers aren’t being railroaded into anything.
The iPhone point also strikes me as especially silly. The iPhone is expensive because it’s a cutting-edge gadget that’s been on the market less than a month. The fact that some of the cost comes in the form of a 2-year contract, as opposed to an up-front sticker price, is beside the point. If you think the iPhone, 2-year contract and all, is too expensive, buy a different phone. There are plenty to choose from.
By Drew Clark
The National Association of Broadcasters likes to think of itself as the king of Capitol Hill. It carefully cultivates an invincible image. And some in the mainstream media buy it. The New York Times describes NAB as “the powerful trade lobby.” But in truth, right now television and radio broadcasters have never been weaker than in 1982, when Sen. Bob Packwood, R-Ore., uttered these famous words: “The NAB can’t lobby its way out of a paper bag.”
Over the last 10 years, the NAB spent $55 million in lobbying expenditures – more than any other association – to disprove Packwood’s hypothesis. But still, the association is now getting hit on all sides. On radio, this year NAB is battling the proposed merger of XM Satellite Radio and Sirius Satellite Radio. Besting such a merger would normally be easy – if NAB hadn’t been arguing for the opposite of what it now seeks. And last month an alliance of performers and recording companies called MusicFirst decided to strike for a performance royalty from over-the-air radio stations. American copyright law exempts terrestrial broadcasters from paying for performances.
But the biggest deal is now heading into the spotlight: vacant television channels known as “white spaces.” Everyone covets them: technology companies like Dell, Google, Intel and Microsoft, wireless carriers like Sprint-Nextel, advocates for rural broadband, and non-profit spectrum utopians who look at white spaces and see decentralized community networks.
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Over on Verizon’s PolicyBlog, Link Hoewing, VZ’s Assistant Vice President – Internet and Technology Issues, has posted an interesting comparison of the US and European mobile markets. He’s put together a side-by-side chart comparing contracts, competition, coverage, prices, new services, and more. He’s asked for input from others, so take a look.
Today, the Well Connected Project of the Center for Public Integrity is excited to launch an issue portal jointly with Congresspedia. This issue portal is a wiki, like Wikipedia, creating a collection of articles on telecom, media and technology policy, in a single location. Anyone can read, write and edit these articles.
This issue portal builds on the great telecom and technology reporting done by the members of the Well Connected Project staff. This venture into collaborative journalism is a first for our project. It adds a new element to our investigative journalism endeavor. First of all, we have the Media Tracker, a free database of more than five million records that tells you who owns the media where you live by typing in you ZIP code. If we win our lawsuit against the FCC, we’ll also include company-specific broadband information in the Media Tracker.
Second, our blog features dozens of quick-turnaround stories on the hottest topics in telecom and media policy. Recent stories have broken news on the battle over 700 Megahertz, on the lobbying over the proposed XM-Sirius satellite radio merger, and also over copyright controls on electronic devices. We also do investigative reports – like this one about Sam Zell, the new owner of Tribune Co. – that build on the data that is freely available in Media Tracker.
Now, with the addition of this Congresspedia wiki, our project aims to incorporate citizen-journalism on key public policy issues near and dear to the blogosphere. These are issues like Broadband availability, Digital copyright, Digital television, Regulating media content, and Spectrum are at the core of what techies care about in Washington. We hope you will add others articles, too. In fact, I’ve already started my own wish list: articles about Patent overhaul legislation, Media ownership, the Universal Service Fund, and Video franchising. Our reporters can summarize these issues and debates, but so can you.
Take a crack at them!
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Everything in the digital world moves fast, but this has to be a record. Apple’s new iPhone has gone from cool new innovation to a new form of slavery in less than two weeks. Just released on June 29, Rep. Ed Markey (D-MA) seems to consider it already a “must-have” — complaining yesterday about restrictions placed by Apple and AT&T on its availability. Speaking yesterday at a Commerce Committee hearing, he lambasted the fact that the iPhone is only available with AT&T service, as well as the $175 early termination fee on its 2-year contract.
The iPhone is like the Hotel California, he said — “you can check out any time you like, but you can never leave.”
Some critics go even farther. On CNBC’s “On the Money” show last night, I debated the issue with Gary Goodman, of Customersatisfaction.com, who (and I’m not making this up) argued that “what we have here today is the equivalent of consumer slavery.”
Slavery? I’ve heard people say they are slaves to their cellphone, but are they slaves to their provider because they signed a contract? Is there perhaps a Thirteenth Amendment problem here that should be examined?
The idea is of course ludricrous. If this is slavery, it is a strangely popular kind.
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Google wants the Federal Communications Commisison to make net neutrality a licensing requirement in the Upper 700 MHz spectrum band – “(1) open applications, (2) open devices, (3) open services, and (4) open access.” According to media reports, FCC Chairman Kevin Martin is circulating draft rules which would impose such a requirement (see: this, this and this).
What’s Martin’s agenda? I suspect he thinks he’s come up with a brilliant strategic maneuver – give Google the chance to acquire a nationwide broadband wireless footprint on the cheap and maybe the company will give up funding the advocates of net neutrality regulation. AOL ended its support for open access the minute it merged with Time Warner, didn’t it?
But as we learned from the 1996 Telecommunications Act, procompetition policy is tricky and unpredictable. That debacle proved Thomas Sowell’s observation that a self-equilibrating system like the market economy means a reduced role for intellectuals and politicians. Unfortunately, as Sowell added in an interview with Jason Riley, “even today many still haven’t accepted that their superior wisdom might be superfluous, if not damaging.” Nowhere is this more true than in communications policy.
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Over at Ars, Ken, Jacqui, and Clint have written their magnum opus on the iPhone. On page 9 (yes, the review is more than 10 pages long), we get an interesting tidbit about the visual voicemail feature:
Visual voicemail is a new feature introduced by AT&T and Apple with the iPhone that currently only “works” over AT&T’s network. Instead of requiring the user to dial up the carrier’s voicemail number and listen to his or her voicemails in the order that they were received, visual voicemail lists each message out in visual format on the iPhone, almost like e-mail. It displays who the voicemail is from (and if it doesn’t recognize the number, it will analyze the area code and tell you what geographical area it’s from, which is helpful), and the user can tap whichever one in the list that he or she wants, no matter its position in the list. When the voicemail is playing, the user can pause it, scrub back and forth in the message, or skip.
The way it works is actually not as magical as AT&T might like you to believe, although the technology is still AT&T-specific. The iPhone actually downloads sound clips of the voicemail messages off of AT&T’s server, presumably over EDGE, and stores them in temporary files on the iPhone’s flash storage. This allows the iPhone user to select messages to listen to out of order, because all he or she is doing is listening to an audio file. This is also what enables the user to scrub with the touchscreen and listen to different parts of the message. It’s a nifty bit of technology, but really only required AT&T’s voicemail servers to tell the iPhone when to download a new message, and then the iPhone takes care of the rest. In our tests, visual voicemail worked as advertised, and we had no trouble with it. It is, however, a feature that we would be more than willing to sacrifice if we had the opportunity to use an unlocked iPhone on another network. That said, Ken believes that this is a very significant development in the world of voicemail, and he hopes and prays that this becomes standard everywhere.
This is a question we’ve discussed several times here: how much special support is required on the network side to make visual voicemail work? The answer seems to be “some, but not as much as you might think.” That is, the network does have to notify the phone of when new messages are available, provide them for download to the phone, and accept status change notifications from the phone when the user has listened to or deleted them. But there doesn’t need to be tight integration between the phone and the network when the user is actually listening to the messages.
Come to think of it, another advantage this approach presumably has is that you shouldn’t have to be connected to the network to listen to your voicemail messages. Once they’re downloaded to your phone, you should be able to listen to them anywhere, even if you’re in a location that doesn’t get good reception.
Ed Felten and Tim Wu both have interesting posts on the release of the iPhone. In a sense, they make precisely the same technical observation—that more open wireless networks would be good for innovation—but Felten is an optimist about it, while Wu is a pessimist. First, here’s Wu:
the iPhone is locked, as is de rigueur in the wireless world. It will work only with one carrier, AT&T. Judged by the standards of a personal computer or electronics, that’s odd: Imagine buying a Dell that worked only with Comcast Internet access or a VCR that worked only with NBC. Despite the fact that the iPhone costs $500 or so, it cannot yet be brought over to T-Mobile or Verizon or Sprint. AT&T sees this as a feature, not a bug, as every new iPhone customer must commit to a two-year, $1,400 to $2,400 contract.
If Apple wanted to be “revolutionary,” it would sell an unlocked version of the iPhone that, like a computer, you could bring to the carrier of your choice. An even more radical device would be the “X Phone”—a phone on permanent roam that chose whatever network was providing the best service. Imagine, for example, using your iPhone to talk on Sprint because it had the best voice coverage in Alaska, while at the same time using Verizon’s 3G network for Internet access. Of course, getting that phone to market would be difficult, and Apple hasn’t tried.
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