SEC

Today is a big day in the history of blogging because the SEC Chairman Cox has gone on record effectivley encouraging companies to blog -- see the original AP story that highlights the SEC's Chairman's comment on Sun Microsystem's blog.

Corporations to date have been reluctant to embrace blogging technology in part I believe out of the fear of the unknown. One of those unknowns was clearly what the SEC and markets would think.

http://www.ft.com/cms/s/fd88803c-6232-11db-af3e-0000779e2340.html

Legislation would favour socialism over capitalism

 By Scott Cleland

Published: October 23 2006 03:00 | Last updated: October 23 2006 03:00

From Mr Scott Cleland.

Sir, I have to challenge Lawrence Lessig's gross misrepresentation of net neutrality legislation in his article "Congress must keep broadband competition alive" (October 19).

Prof Lessig asserts that net neutrality legislation is "not a massive programme of regulation. Itis instead a very thin rule for broadband providers that forbids business models that favour scarcity over abundance".

First, the most draconian form of regulation possible is a ban. Second, Prof Lessig's vision of net neutrality is a "socialised internet" that would effectively outlaw capitalism for broadband in America. A fundamental incentive of capitalism is competitive differentiation and innovation which creates "scarcity" but also stimulates demand and growth. Under Prof Lessig's theory and logic, patents and trademarks should be outlawed because they "favour scarcity over abundance". That is their purpose, in order to encourage innovation, commerce and economic growth.

In sum, Prof Lessig's "very best network neutrality legislation" favours socialism over capitalism.

Scott Cleland,Chairman, NetCompetition.org(an e-forum on net neutrality funded by broadband companies),

McLean, VA 22102, US

After seeing how unabashedly one-sided and biased the preview of Moyer's show was on Net Neutrality which I described in my Blog last week -- I can't say I was surprised that the actual show proved to be equally unabashedly one-sided and biased. Â 

So what's the objective basis of my assessment of bias?

• If you listen to the program, you will find that they devoted just under 37 minutes to Net Neutrality (excluding the segments on fiber, municipal wireless and media consolidation) and out of that time only two opponents of net neutrality regulation Mike McCurry of Hands of the Internet and Chariman Fred Upton of the House Commerce Subcommittee) got less that three minutes of air time.
• To be fair to Mr. Moyers even though he was not fair in his program,  Mr. Moyers would sometimes say in his leading questions... Opponents of Net neutrality say... however, those bones were hardly enough for a fair airing of this important topic.

This was not journalism, but basically a paid advertisement that was not fully disclosed.

Its highly instructive to see the bright line where consensus behind net neutrality breaks down and why.

There is very strong consensus behind the non-binding net neutrality principles enuciated in the August 5, 2005 FCC Policy Statement. In short, the commission unanimously agreed that the FCC has the jurisdiction necessary to ensure that "IP-enabled services are operated in a neutral manner." 

Specifically, the Commission adopted the following four principles:

The Financial Times' recent video interview with Google CEO Eric Schmidt about Youtube was very instructive in how transformative Google believes the purchase of Youtube is for Google's identity.

By far the most interesting and important thing Google CEO Schmidt said was: "We see ourselves as a technology provider and a distribution network."

Whoa! Did anyone else catch the huge significance of Google's new self-description of its identity as a "distribution NETWORK?" This is very new just since the purchase of Youtube. To drive home this point I have copied below Google's quick profile from its website of what Google says Google is -- and there is no mention of being a "distribution NETWORK." To date, Google has represented itself as the "world's best search engine," a company focused on "search services" and its mission as "organizing the world's information and making it universally accessible and useful." 

Why I find this so interesting is what type of "distribution NETWORK" does Google see itself becoming? And as a new "distribution NETWORK" with 50+% share and rising of the search business, will Google agree to the same "NETWORK neutrality" principles that they believe all other NETWORKs should abide by?

Does Google still truly believe in NETWORK neutrality now that they have transformed themselves into a self-described "distribution NETWORK" company?

Isn't what's "good for the google good for the gander"?

Quick Profile

Lost in the debate over net neutrality is the inexorability of convergence and the futility of trying outlaw convergence by the government fiat. Net neutrality proponents intuitively understand that digital/IP convergence means more change, competition, and vertical-integration of products and services -- and they have a kneejerk fear and opposition to it.  Their bias lets them see only problems and blinds them to the many consumer benefits of convergence.

My big aha! moment was realizing why net neutrality proponents are so stubborn in denying the reality of inter-modal competition. To accept the reality of inter-modal competition -- they would have to accept the reality of Â "INTER-LAYER COMPETITION" -- what I have long called "techcom," the convergence of the technology and communications sectors -- but what they call "vertical-integration." 

Tech companies routinely vertically integrate. Google loves to vertically integrate and compete accross the layers of the technology "stack" with Gmail, Google talk, youtube, as does eBay with Skype and PayPal, Microsoft with MSN and XBox and Intel with WiFi to name just a few of the many instances of tech vertical integration. Inter-layer competition/vertical integration has been a hallmark of innovation and value creation for consumers in the tech sector. Inter-layer competition fuels innovation and benefits consumers Big Time!

I had a friendly and informative debate last night with Ben Scott of Free Press on a National Public Radio show Digital Spin hosted by Mario Armstrong out of Baltimore on WEAA.

What I found interesting in Ben Scott of Freepress' account of the debate was how this debate has become more about the activists themselves and their self-congratulating grass roots movement than the issue of net neutrality or the benefit of the consumers they allege to represent. 

When asked to describe how the net neutrality debate was going, I recounted the facts of winning 269-151 in the House, 11-11 and 15-7 in the Senate and that it was uncertain what the fate of the overall telecom bill would be. What I found fascinating was how Mr. Scott chose to explain it. In wrapping up his position last night Mr. Scott basically described in self congratulatory terms how a ragtag group of underfunded grass roots movement has fought to a standstill the heavy lobbying of the communications giants.

As often happens in battle combattants get so caught up in the fight that they can forget what they are fighting for. Liberal Free Press and its Moveon.org activists are so focused on the tactics of blocking the Telecom Bill that they have lost sight of what they say they are all about -- supposedly protecting consumers. They are obviously more interested in promoting themselves and their organizations' prowess than they are in delivering actual tangible results and protections for consumers.

Net neutrality proponents like Free Press seem to have totally forgotten that there is no net neutrality now and that THEY need to pass legislation to get the protections they claim are needed so direly. How comical it is that they have taken themselves hostage and they don't even get it!

Google's $1.6 billion purchase of youtube dramatically affects Google's leadership position in the net neutrality debate.

First, Google can't continue to claim its business "neutral" in the debate -- it now has its own dog in the fight -- its now a vertically integrated media company. Before Google liked to wax eloquently that their motives on net neutrality were "purely altruistic;" they said they were fighting, not for their own gain, but for the little Internet entrepreneurs toiling away in garages that needed protection from capitalists and market forces.

Now it is clear that Google is simply using the public policy process to leverage commercial negotiations for Google's commercial advantage with youtube. People need to remember that key to Google's exceptional finanical success is their abilty to dump most all their normal distribution costs on the consumer. Its by shifting their biggest cost to the consumer, that they enjoy 80+% gross profit margins, have ten billion dollars in cash, a hundred billion plus market capitalization, and can afford to pay $1.6 billion for a company that has no profits and little revenue. Remember these numbers when Google is publicly indignant about having to pay more for new innovative Internet bandwidth that can better carry video.