Pundits are foaming at the mouth about AT&T’s just-announced end to unlimited data packages for smartphones. Here is Jeff Jarvis calling the move “cynical,” “retrograde,” and “evil.” However, he provides no evidence that this is anything but AT&T facing economic reality. The iPhone was a revolution, and how much data people consume given an awesome device turned out to be much more than AT&T was ready for. Now they’re asking their customers who use the most data to pay more, and this is evil?
Not only is it not evil, it’s incredibly fair. Most people will probably pay less for service. The cheapest of AT&T’s new plans is $15 for 200 MB of data. That’s $15 cheaper than their current $30 for unlimited iPhone use. According to AT&T, 65 percent of their customers use less than 200 MB of data a month. I consider myself a heavy iPhone user, and I just came back from a trip to NYC on which my iPhone was the only device I took with me, and yet with 2 days left in my billing cycle, I’ve used 154 MB of data. So, AT&T’s change will actually be a price-cut for me and the majority of AT&T customers.
Yup, real evil.
by Berin Szoka & Adam Thierer, Progress Snapshot 5.11 (PDF)
Ten years ago, Nobel Prize-winning economist Milton Friedman lamented the “Business Community’s Suicidal Impulse:” the persistent propensity to persecute one’s competitors through regulation or the threat thereof. Friedman asked: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft?” After yesterday’s FCC vote’s to open a formal “Net Neutrality” rule-making, we must ask whether the high-tech industry—or consumers—will benefit from inviting government regulation of the Internet under the mantra of “neutrality.”
The hatred directed at Microsoft in the 1990s has more recently been focused on the industry that has brought broadband to Americans’ homes (Internet Service Providers) and the company that has done more than any other to make the web useful (Google). Both have been attacked for exercising supposed “gatekeeper” control over the Internet in one fashion or another. They are now turning their guns on each other—the first strikes in what threatens to become an all-out, thermonuclear war in the tech industry over increasingly broad neutrality mandates. Unless we find a way to achieve “Digital Détente,” the consequences of this increasing regulatory brinkmanship will be “mutually assured destruction” (MAD) for industry and consumers.
New Fronts in the Neutrality Wars
The FCC’s proposed rules would apply to all broadband providers, including wireless, but not to Google or many other players operating in other layers of the Net who favor such broadband-specific rules. With this rulemaking looming, AT&T came after Google with letters to the FCC in late September and then another last week accusing the company of violating neutrality principles in their business practices and arguing that any neutrality rules that apply to ISPs should apply equally to Google’s panoply of popular services. In particular, AT&T accused Google of “search engine bias,” suggesting that only government-enforced neutrality mandates could protect consumers from Google’s supposed “monopolist” control.
The promise made yesterday by the FCC—to only apply neutrality principles to the infrastructure layer of the Net—is hollow and will ultimately prove unenforceable. Continue reading →
The smell of high-tech regulation is increasingly in the air these days and many lawmakers and some activist groups now have the mobile marketplace in their regulatory cross-hairs. Critics make a variety of claims about the wireless market supposedly lacking competition, choice, innovation, or reasonable pricing. Consequently, they want to wrap America’s wireless sector in a sea of red tape. Two important new studies thoroughly debunk these assertions and set the record straight regarding the state of wireless competition and innovation in the U.S. today. These reports are must-reading for Washington policymakers and FCC officials who are currently contemplating regulatory action.
First, Gerald Faulhaber and Dave Farber have a new report out entitled “Innovation in the Wireless Ecosystem: A Customer-Centric Framework.” Here’s what Faulhaber and Farber find:
the three segments of the wireless marketplace (applications, devices, and core network) have exhibited very substantial innovation and investment since its inception. Perhaps more interesting, innovation in each segment is highly dependent upon innovation in the other segments. For example, new applications depend upon both advances in device hardware capabilities and advances in spectral efficiency of the core network to provide the network capacity to serve those applications. Further, we find that the three segments of the industry are also highly competitive. There are many players in each segment, each of which aggressively seeks out customers through new technology and new business methods. The results of this competition are manifest: (i) firms are driven to innovate and invest in order to win in the competitive marketplace; (ii) new business models have emerged that give customers more choice; and (iii) firms have opened new areas such as wireless broadband and laptop wireless in order to expand their strategic options.
They continue on to address the policy issues in play here and discuss the “consumer-centric” approach they recommend that the FCC adopt: Continue reading →
Interesting piece here from Slate’s Farhad Manjoo on why AT&T should dump unlimited data plans and end what he calls the “iPhone all-you-can-eat buffet.” He notes that: “The typical smartphone customer consumes about 40 to 80 megabytes of wireless capacity a month. The typical iPhone customer uses 400 MB a month. AT&T’s network is getting crushed by that demand.” Because “some iPhone owners are hogging the network” and causing “a slowed-down wireless network,” Manjoo recommends a congestion pricing model as a method of balancing supply and demand:
How would my plan work? I propose charging $10 a month for each 100 MB you upload or download on your phone, with a maximum of $40 per month. In other words, people who use 400 MB or more per month will pay $40 for their plan, or $10 more than they pay now. Everybody else will pay their current rate—or less, as little as $10 a month. To summarize: If you don’t use your iPhone very much, your current monthly rates will go down; if you use it a lot, your rates will increase. (Of course, only your usage of AT&T’s cellular network would count toward your plan; what you do on Wi-Fi wouldn’t matter.)
To understand the advantages of tiered pricing, let’s look at AT&T’s current strategy of spending billions to build more network space. Why won’t this work? For the same reason building more roads doesn’t reduce traffic—more capacity increases the attractiveness of driving, which brings a lot more cars to the road, which leads to more gridlock.
Congestion pricing and metering is something I’ve written quite a bit about here in the context of wireline broadband (1, 2, 3), but Manjoo is equally correct that it could be applied for wireless data plans. It has the added value of taking pressure off lawmakers to impose Net neutrality regulation since pricing of the pipe becomes an effective substitute for most other forms of network management. In other words, price, don’t block bandwidth-hogging customers and applications. The problem, Manjoo explains: Continue reading →
Last Wednesday, Holman Jenkins penned a column in The Wall Street Journal about net neutrality (Adam discussed it here). In response, I have a letter to the editor in today’s The Wall Street Journal:
To the Editor:
Mr. Jenkins suggests that Google would likely “shriek” if a startup were to mount its servers inside the network of a telecom provider. Google already does just that. It is called “edge caching,” and it is employed by many content companies to keep costs down.
It is puzzling, then, why Google continues to support net neutrality. As long as Google produces content that consumers value, they will demand an unfettered Internet pipe. Political battles aside, content and infrastructure companies have an inherently symbiotic relationship.
Fears that Internet providers will, absent new rules, stifle user access to content are overblown. If a provider were to, say, block or degrade YouTube videos, its customers would likely revolt and go elsewhere. Or they would adopt encrypted network tunnels, which route around Internet roadblocks.
Not every market dispute warrants a government response. Battling giants like Google and AT&T can resolve network tensions by themselves.
Ryan Radia
Competitive Enterprise Institute
Washington
To be sure, the market for residential Internet service is not all that competitive in some parts of the country — Rochester, New York, for instance — so a provider might in some cases be able to get away with unsavory practices for a sustained period without suffering the consequences. Yet ISP competition is on the rise, and a growing number of Americans have access to three or more providers. This is especially true in big cities like Chicago, Baltimore, and Washington D.C.
Instead of trying to put a band-aid on problems that stem from insufficient ISP competition, the FCC should focus on reforming obsolete government rules that prevent ISP competition from emerging. Massive swaths of valuable spectrum remain unavailable to would-be ISP entrants, and municipal franchising rules make it incredibly difficult to lay new wire in public rights-of-way for the purpose of delivering bundled data and video services.
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.
Continue reading →
Gilder explains the true meaning of the microcosm with his uniquely poetic prose:
As Peter Drucker said. “What one man can do, another can do again.” Distilling discoveries of science, a set of technologies, and a Philosophy of enterprise, the microcosm is far too big for any one country. Even its products are mostly made of ideas—waves that suffuse the mindscape of the world. (p.127)
The vital importance of ideas in all aspects of the microcosm, including hardware, is a central theme of the book:
Computer hardware thus is another form of information technology like books, films, and disks. The value resides in the ideas rather than in their material embodiment. The chip design is itself a software program. Even the design of the computer’s plastic chassis and keyboard may well have begun as a software program. Like a book, a spreadsheet financial package, even a film on a videocassette, a microchip design is conceived and developed on a computer screen and takes form in a storage device that costs between 80 cents and $2 to manufacture. The current dominance of such products in the world economy signifies the end of the industrial era and the onset of the age of the microcosm. (p. 159)
Consider debate over handset exclusivity: Those who insist that AT&T be forced to relinquish its exclusive rights to the iPhone ignore the fact that the iPhone is not so much a device as a brilliant idea—actually, a cluster of innovations made possible because AT&T was willing to partner with Apple on the risky venture of developing the expensive device and bringing it to market. Speaking of ideas made reality, I can’t wait to get my hands on a Microsoft Surface!
http://www.youtube.com/v/rP5y7yp06n0
Despite my frequent disagreements with his policy conclusions, Farhad Manjooo of Slate is one of the most gifted tech policy pundits around today and everything he writes is worth reading (and I whole-heartedly agreed with his recent article on the high-tech and antitrust). Alas, I find myself again disagreeing with him again today.
In his latest column, “The Great iPhone Lockdown: Should the FCC force Apple to sell Google’s apps?” Manjoo responds to a recent essay by TLF contributor Ryan Radia (“Newsflash to FCC: The iPhone is a Closed Platform, and Consumers Love It“). In that essay, Ryan generally argued that: (a) a lot of people own and love the iPhone despite some silly restrictions on certain apps; and (b) if they don’t like that, there are plenty of other options from which they can choose. Consequently, regulation seems unwarranted and likely highly misguided in light of the potential unitended consequences in might yield. It’s an argument I very much agree with, of course. Anyway, Manjoo responds:
Radia’s argument isn’t crazy. Just the other day, I argued that the government shouldn’t go after Google for antitrust violations because the tech industry is fluid; companies that are on top today can fall tomorrow. So what if Apple rejects apps capriciously? If its actions are so terrible, consumers will eventually abandon it.
But then Manjoo counters that argument and goes completely off-the-rails with several assertions that I find quite perplexing: Continue reading →
The iPhone-obsessed blogosphere is atwitter about the Apple”s exclusion of the Google voice application from the iPhone app store. On Friday, the FCC sent letters of inquiry to the two companies as well as AT&T.
Whatever one thinks about whether Apple and AT&T should be able to operate their own networks as they see fit, this cat-fight should at least demonstrate the pointlessness of the investigation opened by the FTC in May as to whether Apple and Google are violating the antitrust laws by having two members of their boards of directors in common: Google CEO Eric Schmidt and former Genentech CEO Art Levinson. If the two companies were, in fact, trying to collude in an anti-competitive manner, they don’t seem to be doing a very good job of it!
Meanwhile, if you don’t like how Apple runs its app store, don’t get an iPhone! If you already have one, you could follow the lead of TechCrunch’s Michael Arrington and simply cancel your existing iPhone contract to get a more “open” phone—such as one powered by Google’s Android operating system.
Me, I’m just waiting for Google Voice to offer number portability so I can start using the service without having to change the number I’ve had for the last five years—and plan to take to my ashen grave (somewhere beyond low Earth orbit).
Last summer, my PFF colleague Barbara Esbin and I explained that, while many consumers dislike not being able to get popular smartphones like the iPhone on the wireless network of their choice, such exclusive deals actually benefit consumers. Barbara summarizes her testimony (PDF) as follows:
the dynamic created by the exclusive arrangement between Apple and AT&T that produced the iPhone allowed the two companies to bridge the gap between the technologies of today and the disruptive innovations of tomorrow. Moreover, it is undeniable that the breakthrough success of the iPhone has spurred a wave of competitors. If every wireless carrier had been able to sell the iPhone when it was initially released, I noted, it seems unlikely there would have been as much carrier support for developing competing products like the Google G1, RIM Blackberry Storm, Samsung Instinct or Palm Pre.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.