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Corporate Welfare

FCC Out-Europes Europe on Net Neutrality -- Why?

"The Net Neutrality Debate in Europe is Over" per an excellent commentary by Ben Rooney in WSJ TechEurope.

  • Mr. Rooney chronicles the evolving public position of EU Digital Commissioner Neelie Kroes from an original pro net neutrality regulation mindset, to now the opposite -- a more pro-competition mindset where "the commissoner's position now [is] that a competitive market should be able to deliver an Internet to which everyone has access."

For those who follow history, it is truly ironic, surprising, and just plain bizarre that Europe is more pro-competition on Internet policy than the U.S. FCC.

How can this be? To understand this wierdness, look at this remarkable development through the lens of industrial policy.

I posit the reason for this European policy outcome is the fact that Europe does not have a Silicon Valley lobby -- with an aggressive corporate welfare agenda seeking government special treatment, regulation of their competitors, and implicit bandwidth subsidies -- like the U.S. does. 

The stark and ironic contrast between the FCC's European-style, interventionist, regulatory approach, and Europe's more American, non-interventionist, competitive approach can only be explained by the presence of the potent lobbying force of U.S. industrial policy national champions (Silicon Valley -- Google, eBay, Amazon, IAC) in the U.S. -- and the absence of European national champions seeking net neutrality in Europe.

NetFlix' Open Internet Entitlement Hubris

It appears as if Netflix' rocket stock and nosebleed market valuation has infected Netflix' CEO, Reed Hastings, with a bad bout of dot.com hubris fever complete with hallucinations that Netflix is somehow a needy online video provider entitled to new massive subsidies under the FCC's Open Internet order.

  • In his recent letter to shareholders (see p. 9 under "Challenges)" Mr. Hastings  launches a grandiose diatribe on what prices and pricing models competitive broadband ISPs should and should not be able to charge Netflix in the competitive market place.
    • Mr. Hastings dreams Netflix is entitled to "no-charges" from ISPs for dumping more concentrated asymmetric Internet traffic on them than any entity has ever before generated, despite the fact that Netflix' proposed approach is completely contrary to the way that the Internet backbone peering marketplace has operated for over fifteen years.
    • Mr. Hastings also dreams about what pricing models and prices competitive broadband ISPs should be allowed to charge their customers.

Alarm bells should be going off among Netflix' sophisticated shareholders.

Level 3 Seeks Title II Internet Reg Conditions on Comcast-NBCU

In requesting the FCC and DOJ condition the Comcast-NBCU merger with Title II telephone regulation of Comcast's Internet backbone, Level 3 seeks to achieve through the back door of the FCC what they could not achieve through the front door.

Paid Prioritization: The Demonization of Market Economics

Now we know what "real net neutrality" and "openness" are, and that they are the antithesis of free market economics or competition.

As the FreePress-led letter to the FCC made clear on Friday: "Paid prioritization is the antithesis of openness. Any framework that does not prohibit such economic discrimination arrangements is not real net neutrality."

What is "paid prioritization?"

  • It is quality of service guarantees, market economics, supply and demand, market-based pricing, investment incentives, competitive differentiation, and reasonable network management.
  • Now we know "real network neutrality" and "openness" is more uneconomics from FreePress and the extreme left.

 

Remember FreePress' last Uneconomics 101 lesson was that "above-cost pricing" was an "unfair business practice."

Sinking Level 3 Seeking FCC Internet Regulation Bailout

The extent to which Level 3's business is underwater is the untold story behind Level 3's regulatory "hail Mary" claim that its Internet peering dispute with Comcast is somehow a net neutrality violation.

  • Apparently Level 3 has concluded that since it hasn't found a straight-up way to compete successfully in the Internet marketplace on its own, it wants an Internet regulation bailout from the FCC, in which the FCC would: deem Level 3 a market winner; price regulate the Internet for the first time; and force its competitors to implicitly subsidize Level 3 with mandated Internet peering price subsidies.
    • (To appreciate how bogus Level 3's claims are, click here for a complete rebuttal.)

Why is Level 3 seeking a de facto Internet regulation bailout from the FCC?

First, Level 3 is a financially-sinking business with no legitimate growth prospects.

10 Questions for Google's Tax Dodge

Top Ten: 

We learned today that Google has the lowest foreign tax rate of the top five U.S. tech companies, an eyebrow-raising 2.4%, and that Google "cut its taxes by $3.1b in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda," per an outstanding investigative expose by Jesse Drucker of Bloomberg.

This exceptional tax dodging feat, while reportedly technically legal, nonetheless raises some important questions that no one has yet asked Google.

 

Google Fiber Lottery Preying on Distressed Communities

The Google Fiber for Communities pledge to offer one or more U.S. communities ultra-fast Internet access at one gigabit speeds, is Google's latest stealth manipulation of the public.

  • In essence, Google's fiber effort is a cynical national lottery that will result in just one or a few big winners and leave everyone else losers, with nothing to show for all their court jester efforts to entertain and get the attention of Google, the self-described "biggest kingmaker on this earth."
  • Apparently operating under Circus promoter P.T. Barnum's cynical "a sucker is born every minute" world view, Google is preying on the severe economic hardship and unemployment of over 1100 communities, by teasing Google fiber riches for one (or a few).
    • (This isn't the first time Google has preyed on distressed communities to extract the maximum gain for Google, see the sordid tale of how Google took advantage of the job-loss-ravaged town of Lenoir North Carolina -- here.)
  • Google is cynically urging cities to "dream big" when they know they will crush most all of their Google-generated dreams in the end.

How do we know this Google fiber lottery is stealth manipulation?

NetCompetition Statement on FCC's Broadband Legal Framework NOI

FOR IMMEDIATE RELEASE

June, 17 2010

Contact:  Scott Cleland

703-217-2407

 

 

“FCC Regulating the Internet like a Phone Company Would Enthrone “Ma Google”

“FCC’s Broadband De-competition Policy Would Accelerate Google-opolization of the Net”

 

FCC's non-technology-neutral proposals perversely promote discrimination -- per Phoenix Center report

George Ford of the Phoenix Center has penned another incisive analysis about the real world impact of net neutrality and the FCC's Proposed Open Internet regulations.

  • "Sabotaging Content Competition: Do Proposed Net Neutrality Regulations Promote Exclusion?" is an important read for anyone seeking a substantitve understanding of the impact of the FCC's proposed rules.
    • George Ford and Michael Stern's core conclusion: "...the proposed net neutrality rules of both the FCC and Congress... can actually promote such exclusionary behavior. That is, the incentive to monopolize is greater under net neutrality."

    The Phoenix Center's profound insight here got me thinking, (which is always my highest compliment) so let me share my takeaways building on their conclusion; takeaways that show why net neutrality is such an intellectually and economically bankrupt concept.

    • First, not only is net neutrality "a solution in search of a problem," but the FCC's proposed "solution" would make the net neutrality "problem" they allege worse than the status quo!

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Q&A One Pager Debunking Net Neutrality Myths