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eBay's radical industrial policy petition to FCC for Wireless net neutrality

eBay-Skype's recent petition to the FCC to impose a form of wireless net neutrality on the competitive wireless carriers is radical, outrageous and incredibly self serving.

  • Skype is petitioning the FCC to mandate 1968 Carterfone rules for wireless proposed in Professor Tim Wu's vacuous FTC white paper on the topic. Simply, eBay-Skype doesn't want cell-phones and cell service to be sold together as a bundle.

Why is this a radical, out-of-the-mainstream idea?

  • First, the government regulates NO competitive industry like eBay-Skype is proposing. What eBay-Skype is proposing the FCC mandate is unprecedented in the digital communications era throughout the U.S. economy.
    • eBay-Skype and its NN supporters try to maintain the charade that their requests are "normal" or  "status quo" requests.
    • There is nothing status quo in this proposal. While most everyone else is looking to see how competition policy is working and how it might be improved, eBay-Skype said in FTC testimony last week, by eBay-Skype official Tod Cohen, that even a competitive market of 4-5 providers won't solve the problems of limitations on wireless devices by wireless carriers.
  • Second, eBay-Skype is directly repudiating bipartisan, consensus, U.S. policy to promote competition and proposing a old-school industrial policy where the government picks which technologies consumers can choose from and which companies/industries will win and which will lose. 
    • To be very specific, eBay-Skype's petition in essence asks the FCC to effectively choose:
      • eBay-Skype as the government-chosen wireless technology and business model;
      • to proactively kneecap eBay-Skype's current wireless carriers so they can't effectively compete; and
      • completely disrupt and radically restructure a extremely competitive industry that serves the safety, convenience and necessity of 230 million Americans -- simply to make it easier and more convenient for eBay-Skype to offer its competitive service.
    • This may be the economic legacy and market mindset of Skype's founders who come from the former Soviet Socialist Republic of Estonia, but it is not modern American capitalism where we believe free markets of supply and demand are vastly better at meeting the needs of the nation and consumers that a bureaucrat-managed economy. 
      • Make no mistake about it.
        • The eBay-Skype-Tim Wu vision is an old-style, industrial policy, like was done in the early 1900's until it was largely repudiated as an abject failure by the 1980's.
        • This is classic elitist thinking that the"intelligentsia" and Big Government know what technologies and services are best for Americans and that we should bypass the inefficiency of letting consumers experiment and choose for themselves, and be more efficient and have government choose what consumers will get.
        • The mindset underlying this proposal is really scary, because they are not up-front or straight-forward about what they are really asking for. They know if they did, they would be laughed out of the room.  
  • Third, this forced-unbundling approach of Carterfone is completely outrageous in a competitive context.
    • The 1968 Carterfone decision was based on the legal premise that their was a monopoly (i.e. no choice) stalled innovation, anti-competitive behavior. 
    • The exact opposite conditions exist today: vibrant competition, choice and innovation.
    • Professor Wu's and eBay-Skypes callous disregard for the facts underlying their proposal are irresponsible and outrageous.
      • It cuts against the very underpinnings of our society, that you don't lose freedoms if you are not doing anything wrong or are not a threat to society.  
  • Fourth, Professor Wu and eBay-Skype are trying to use the term "locking" as a perjorative phrase in this context.
    • Locks are not a bad thing but a good thing.
    • Everyone of us "locks" our home, our cars, our PC with password protection.
    • Why is it OK to "lock" everything else we value but not a cell-phone?
  • Finally, to better appreciate how outrageous and out of the mainstream this proposal is think of analogies.
    • Its like telling WalMart, KMart, Giant, or Safeway that they must become "free" malls where they have to give floor space and shelf space to competitors who want to reach their customers!   
Q&A One Pager Debunking Net Neutrality Myths