Deregulation

Please read FCC Commissioner Robert McDowell's outstanding op-ed in the Wall Street Journal today. It eviscerates the sloppy thinking and weak evidence of net neutrality/open access proponents that are trying to manufacture a national broadband problem/crisis to justify their  new Big Government "National Broadband Policy."

This op-ed is particularly timely given the current  and tightly coordinated attempts by liberal House and Senate Democrats to establish the groundwork for an abandonment of competition and free market policies in communications and replace it with a new "National Broadband Policy" which is the liberal codeword for a Big Government-managed broadband sector.

What's wrong with this picture?

• Broadband is being adopted faster nationally in the US than most any analogous product in modern U.S. history.  
• The U.S. has more facility-based broadband competition than any country in the world.
• The Bush Administration goal of making broadband available to all Americans has been achieved.
• The recent FTC report on Broadband Connectivity said:  "To date we are unaware of any significant market failure or demonstrated consumer harm from conduct by broadband providers."
• "Nearly half of all Americans have broadband Internet connections in their homes, largely because of increasing use among minorities and the poor, according to an annual survey by the Pew Internet & American Life Project. ... Four out of 10 African-American adults have broadband access at home, compared to 15% two years ago."

What's wrong with this picture? Nothing! 

FCC Chairman Martin's surprising proposed open access/net neutrality regulations for the 700 MHz auction, threaten to broadly chill the broadband investment necessary to deliver broadband deployment to all Americans.

• Chairman Martin apparently has chosen to abandon over a decade of bipartisan free-market Internet policy and adopt a new more regulatory "managed competition" broadband policy advocated by new House Chairman Ed Markey, who has strongly praised Chairman Martin for his support for net neutrality regulation/open access.
• The real world effect of this unwarranted core policy flip flop is to introduce new and very substantial policy, legal and investment uncertainty into what had been a very stable economic growth environment. 
• Chairman Martin is making the heroic assumption that he can massively interfere with market forces and heavily subsidize untested and likely uneconomic business models with no unintended consequences on investment or economic growth in the critical broadband sector.    

Chairman Martin has now emphatically embraced the core economic principle of former FCC Chairman Reed Hundt's Frontline Proposal (and Frontline's Google gaggle of investors), which is that market forces will not and cannot promote sufficient "competition" so the government must regulate and "manage competition" (i.e. mandate prices, terms and conditions -- either directly or indirectly) to ensure consumer welfare.

A core purpose of NetCompetition.org is to promote a debate of Net neutrality regulation on the merits. SaveTheInternet.com had a recent blog post "Painting over broadband failures with pretty pictures" that prompted me to comment on their blog -- which I have included below:

"If SaveTheInternet followers are truly "open" to diverse points of view that may be different from theirs, I recommend that you consider the mounting evidence that the US is in fact not falling behind but is actually a unique success in promoting facilities-based broadband competition in the world. Please see this link for the four best alternative views on this question:
http://www.precursorblog.com/node/451 .

Given the ongoing reporting of claims by net neutrality proponents that US broadband deployment is falling behind our international competitors (like the USA Today article in this link suggests), it is helpful to pull together some of the best analyses I have seen that debunk these claims by the OECD/CWA.  

For those who care to more substantively review the facts, evidence and merits of this very important public policy question, I highly recommend reading the following four sources linked in this blog, which all effectively and differently debunk the claim the US is falling behind on broadband:

I strongly recommend the FTC staff report on "Broadband Connectivity Competition Policy" to anyone wanting an objective, well-reasoned, fair, and comprehensive review of the facts and evidence of the net neutrality regulation debate.

I believe the most important sentence in the whole 170 page staff report, which covered an enormous and comprehensive public record on the subject, was on page 11 and again on page 160:

•  "To date we are unaware of any siginificant market failure or demonstrated consumer harm from conduct by broadband providers." [Bold emphasis added]
• I believe that's the best bottomline summary conclusion of the report.

The FTC report can be further well summarized by the following four sentences found on pages 10, 11, 155 and 11 respectively:

• "We recommend policymakers proceed with caution in evaluating proposals to enact regulations in the area of broadband Internet access."
• "Policymakers also should carefully consider the potentially adverse and unintended effects of regulation in the area of broadband Internet accesss before enacting any such regulation."
• "Over time, competition produces the best results for consumers, providing them the lowest prices, the highest quality products and services, and the most choice."
• "The FTC will continue to devote substantial resources to maintaining competition and protecting consumers in the area of broadband Internet access, using a variety of tools."

In closing, I was very impressed with the FTC staff's knowledge, sophistication, and fair representation of both sides' views.

Learning that potential Republican Presidential candidate Fred Thompson loves blogging and understands the medium's growing and significant political influence, I encourage the emerging Thompson campaign to do a little homework on the Net neutrality issue so they are not blindsided and hoodwinked by this liberal Moveon.org issue masquerading in conservative "Internet freedom" rhetoric like fellow Republican candidate Mike Huckabee was a few weeks ago. 

You gotta love how the free market works when left alone by the Government!

Just as Frontline and others are demanding that the government has to intervene in the 700 MHz auction to "create" a third broadband pipe, the free market finds another way to solve these market problems without the Government.

One of the most significant developments in the spectrum world today was not the hot air at the Senate Commerce Committee hearing, but what happened in the free market -- DirecTV and Echostar signing agreements with Clearwire to sell their WiMax broadband service.

The cover story in the Wall Street Journal today "A fight over what you  can do with your cellphone; Handset makers push free features for which carriers pay for" was obviously perfectly-timed and placed by open access/net neutrality proponents trying to influence the Senate Commerce Committee hearing today on the FCC's 700 MHz auction.

• The article offers a list of complaints for net neutrality supportive Senators to browbeat competitive wireless carriers with.

What the article ignores is the broader and essential context of this issue and debate.

Public interest groups supportive of net neutrality like Common Cause and The Maine Civil Liberties Union are trying to "spin" the press that the non-binding net neutrality resolution passed by the Maine Senate is somehow an important first for a state.

• The reality is that supporters of net neutrality thought that the support of net neutrality by Dorgan-Snowe co-sponsor and Maine Senator Olympia Snowe would somehow increase the chances of passing net neutrality legislation for the first time in the state of Maine.
• They were wrong. 
• This legislative effort in Maine failed just like it did in Michigan and Maryland, and just like it did in every Federal forum it was raised in.   
• This Maine Senate "non-binding resolution" is simply hortatory puffery, akin to naming a state insect or a state weed.  
• The reality is that the Maine legislature did not pass legislation and that it clearly acknowledged in its resolution its understanding that the Internet is exclusively Federal jurisdiction.
• There is nothing that could be more Federal or "interstate" than the "INTERnet!"

This episode in Maine really is emblematic of the whole net neutrality movement.