I wanted to follow up on Eli Dourado’s excellent previous post (“Real Talk on Net Neutrality“) to reiterate the importance of a few points he made and add some additional thoughts about the issues raised in that New York Times article on Net neutrality and forced access regulation that lots of people are talking about today.
What Eli’s post makes clear is that there are those of us who think about Net neutrality and infrastructure regulation in economic terms (a rapidly shrinking group, unfortunately) and those who think it about in quasi-religious terms. The problem with the latter ideology of
neutrality uber alles, however, is that at some point it must confront real-world economics. This is Eli’s core point: Something must pay the bills. In this case, something must cover the significant fixed costs associated with broadband investments if you hope to sustain those networks. Unless you are ready to make the plunge and suggest that the government should cover those costs through massive infrastructure expenditures and even potential nationalization or municipalization of broadband networks — and some clearly would be — then you have to get serious about how those costs will be covered by private operators.
Thus, we come back to the importance of business model experimentation and pricing flexibility to this debate. I have been harping on this point for a long time now, going all the way back to this 2005 essay, “The Real Net Neutrality Debate: Pricing Flexibility Versus Pricing Regulation.” And there’s a litany of other things I’ve penned on the same point, many of which I have cited at the end of this essay.
Here are the core points I have tried to get across in those earlier essays: Continue reading →
The folks at the Concurring Opinions blog were kind enough to invite me to participate in a 2-day symposium they are holding about Brett Frischmann’s new book, Infrastructure: The Social Value of Shared Resources. In my review, I noted that it’s an important book that offers a comprehensive and highly accessible survey of the key issues and concepts, and outlines much of the relevant literature in the field of infrastructure policy. Frischmann’s book deserves a spot on your shelf whether you are just beginning your investigation of these issues or if you have covered them your entire life. Importantly, readers of this blog will also be interested in the separate chapters Frischmann devotes to communications policy and Net neutrality regulation, as well as his chapter on intellectual property issues.
However, my review focused on a different matter: the book’s almost complete absence of “public choice” insights and Frischmann’s general disregard for thorny “supply-side” questions. Frischmann is so focused on making the “demand-side” case for better appreciating how open infrastructures “generate spillovers that benefit society as a whole” and facilitate various “downstream productive activities,” that he short-changes the supply-side considerations regarding how infrastructure gets funded and managed. I argue that: Continue reading →
After three years of politicking, it now looks like Congress may actually give the FCC authority to conduct incentive auctions for mobile spectrum, and soon. That, at least, is what the FCC seems to think.
At CES last week, FCC Chairman Julius Genachowski largely repeated the speech he has now given three years in a row. But there was a subtle twist this time, one echoed by comments from Wireless Bureau Chief Rick Kaplan at a separate panel.
Instead of simply warning of a spectrum crunch and touting the benefits of the incentive auction idea, the Chairman took aim at a House Republican bill that would authorize the auctions but limit the agency’s “flexibility” in designing and conducting them. “My message on incentive auctions today is simple,” he said, “we need to get it done now, and we need to get it done right.” Continue reading →
I’ve written several articles in the last few weeks critical of the dangerously unprincipled turn at the Federal Communications Commission toward a quixotic, political agenda. But as I reflect more broadly on the agency’s behavior over the last few years, I find something deeper and even more disturbing is at work. The agency’s unreconstructed view of communications, embedded deep in the Communications Act and codified in every one of hundreds of color changes on the spectrum map, has become dangerously anachronistic.
The FCC is required by law to see separate communications technologies delivering specific kinds of content over incompatible channels requiring distinct bands of protected spectrum. But that world ceased to exist, and it’s not coming back. It is as if regulators from the Victorian Age were deciding the future of communications in the 21
st century. The FCC is moving from rogue to steampunk.
With the unprecedented release of the staff’s draft report on the AT&T/T-Mobile merger, a turning point seems to have been reached. I wrote on
CNET (see “FCC: Ready for Reform Yet?”) that the clumsy decision to release the draft report without the Commissioners having reviewed or voted on it, for a deal that had been withdrawn, was at the very least ill-timed, coming in the midst of Congressional debate on reforming the agency. Pending bills in the House and Senate, for example, are especially critical of how the agency has recently handled its reports, records, and merger reviews. And each new draft of a spectrum auction bill expresses increased concern about giving the agency “flexibility” to define conditions and terms for the auctions.
The release of the draft report, which edges the independent agency that much closer to doing the unconstitutional bidding not of Congress but the White House, won’t help the agency convince anyone that it can be trusted with any new powers. Let alone the novel authority to hold voluntary incentive auctions to free up underutilized broadcast spectrum.
Continue reading →
The Senate might vote this week on Sen. Hutchison’s resolution of disapproval for the FCC’s net neutrality rules. If ever there was a regulation that showed why independent regulatory agencies ought to be required to conduct solid regulatory analysis before writing a regulation, net neutrality is it.
For more than three decades, executive orders have required executive branch agencies to prepare a Regulatory Impact Analysis accompanying major regulations. One of the first things the agency is supposed to do is identify the market failure, government failure, or other systemic problem the regulation is supposed to solve. The agency ought to demonstrate a problem actually exists to show that a regulation is actually necessary.
But the net neutrality rules have virtually no analysis of a systemic problem that actually exists, and no data demonstrating that the problem is real. Instead, the FCC’s order outlines the incentives Internet providers might face to treat some traffic differently from other traffic, in a discussion heavily freighted with “could’s” and “may’s”. Then it offers up just four familiar anecdotes that have been used repeatedly to support the claim that non-neutrality is a significant threat (all four fit in paragraph 35 of the order). The FCC asserts without support that Internet providers have incentives to do these things even if they lack market power, and indeed in a footnote it dispenses with the need to consider market power: “Because broadband providers have the ability to act as gatekeepers even in the absence of market power with respect to end users, we need not conduct a market power analysis.” (footnote 87)
Thus far, no administration of either party has sought to apply Regulatory Impact Analysis requirements to independent agencies. If administrations won’t, Congress should.
On NPR’s Marketplace this morning, I talk about net neutrality litigation with host John Moe.
Nearly a year after the FCC passed controversial new “Open Internet” rules by a 3-2 vote, the White House finally gave approval for the rules to be published last week, unleashing lawsuits from both supporters and detractors.
The supporters don’t have any hope or expectation of getting a court to make the rules more comprehensive. So why sue? When lawsuits challenging federal regulations are filed in multiple appellate courts, a lottery determines which court hears a consolidated appeal.
So lawsuits by net neutrality supporters are a procedural gimmick, an effort to take cases challenging the FCC’s authority out of the D.C. Circuit Court of Appeals, which has already made clear the FCC has no legal basis here.
Continue reading →
For Forbes this morning, I reflect on the publication late last week of the FCC’s “Open Internet” or net neutrality rules and their impact on spectrum auctions past and future. Hint: not good.
An important study last year by Prof. Faulhaber and Prof. Farber, former chief economist and chief technologist, respectively, for the FCC, found that the last-minute imposition of net neutrality limits on the 700 MHz “C” block in the FCC’s 2008 auction reduced the winning bid by 60%–a few billion dollars for the Treasury.
Yet the FCC maintained in the December Report and Order approving similar rules for all broadband providers that the cost impact of these “prophylactic” rules would be minimal, because, after all, they simply endorse practices most providers already follow. (And the need for the new rules, then, came from where?)
Continue reading →
On CNET this morning, I argue that delay in approving FCC authority for voluntary incentive auctions is largely the fault of last year’s embarrassing net neutrality rulemaking.
While most of the public advocates and many of the industry participants have moved on to other proxy battles (which for most was all net neutrality ever was), Congress has remained steadfast in expressing its great displeasure with the Commission and how it conducted itself for most of 2010.
In the teeth of strong and often bi-partisan opposition, the Commission granted itself new jurisdiction over broadband Internet on Christmas Eve last year. Understandably, many in Congress are outraged by Chairman Julius Genachowski’s chutzpah.
So now the equation is simple: while the Open Internet rules remain on the books, Congress is unlikely to give the Chairman any new powers.
House Oversight Committee Chairman Darrell Issa has made the connection explicit, telling reporters in April that incentive auction authority will not come while net neutrality hangs in the air. There’s plenty of indirect evidence as well.
Continue reading →
Over
on his Google+ page, cyber-guru Andrew McLaughlin posted a bit of a rant about libertarians and Net neutrality arguing, among other things, that “the pro-freedom position is to enforce net neutrality.” Needless to say, I disagree and posted a long comment explaining why and trying to help him and others on the Left understand the way libertarians generally look at this issue. For what it’s worth, I thought I would just repost my response to him here:
________
Andrew… I’m happy, as always, to engage in friendly debate with you about this, although I suspect from the tone of some of the others here that nothing I will say will convince them that opposition to Net neutrality regulation can be based on anything other than pure corporate whoring!
I’m always mystified by the highly selective nature of this rhetorical device when employed by some on the Left against libertarians. After all, as Tim Lee already alluded to in his comments above, we never seem to hear our Lefty friends trot out those arguments when they agree with us. For example, Berin Szoka and I filed an amicus brief in the Supreme Court last year in the BROWN v. EMA video game case along with Lee Tien and Cindy Cohn of EFF. Why is it that I did not hear one peep from any Lefties about my obvious corporate whoring in that matter! I mean, clearly, there’s no possible way that a libertarian could support First Amendment rights. I must have just been in it for video game industry money, right?
OK, I’m being snarky here. And I know this is not your position because I’ve known you a long time and know that you do not adopt such tactics even when we do, on occasion, disagree heatedly over a major policy issue. But, even if I am wasting my breath, let me just say this to others: We libertarians in the academic and think tank world aren’t exactly living “Lifestyles of the Rich and Famous.” If we all just in it for the money than I can tell you that we are doing a tremendously shitty job at it! (In fact, most libertarian think tanks or organizations only have something like 5 to 10% corporate funding. The organization I work for has even less.) Seriously folks, we libertarians believe in our ideas and fight for them with the same passion that you fight for yours because of a heart-felt belief in the inherent rightness of our core principles. Continue reading →
John Perry Barlow famously said that in cyberspace, the First Amendment is just a local ordinance. That’s still true, of course, and worth remembering. But at least today there is good news in the shire. The local ordinance still applies with full force, if only locally.
As I write in CNET this evening (see “Video Games Given Full First Amendment Protection“), the U.S. Supreme Court issued a strong and clear opinion today nullifying California’s 2005 law prohibiting the sale or rental to minors of what the state deemed “violent video games.” Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.