Competition

To see the first free-market legal argument explaining how Google's market behavior systematically harms consumers under antitrust law, read my Forbes op-ed: "Google's Deceptive Practices Harm Consumers."

• This is important because Google and its defenders believe the benefits Google provides consumers are the bedrock of a winning antitrust defense.

Few have grasped the huge significance that it is the FTC (with its unique supplemental Section 5 authority) and not the DOJ, that is investigating Google for antitrust.

Most also have missed how vulnerable Google is to the charge that many of its marketing practices are illegal deceptive misrepresentations of its business.

My Forbes op-ed link is here.

Netflix's General Counsel, David Hyman, hypocritically and deceptively blasted the broadband industry for its natural migration to usage-based bandwidth pricing in his fact-challenged WSJ op-ed: "Why Bandwidth Pricing is Anti-competitive."

First, it is both ironic and hypocritical that the largest subscription video provider in the United States by subscribers, Netflix,  criticizes the normal economic practice of usage-based pricing as anti-competitive when other companies do it, when Netflix has long priced and capped its business offering based on consumer usage.

Mr. Hyman must have known Netflix would look self-serving and hypocritical if people knew:

In another blow to its competition policy credibility and objectivity, the FCC's 308 page, 15th Wireless Competition Report, amazingly reached no conclusion about whether the wireless market was effectively competitive, despite overwhelming evidence of effective competition throughout the report and a dearth of evidence in the report of any discernible anti-competitive issues that would suggest the wireless market was somehow not effectively competitive.

• The stark incongruity between the overwhelming evidence in the report, and the absence of what should have been an easy report conclusion that the wireless market is effectively competitive, is certainly not "data-driven policy making at work.
• It appears to be politics at work to support and provide political cover for the FCC's maverick policy desire to promote de-competition policy and more expansive FCC economic regulation and common carrier-like duties a la net neutrality and data roaming -- in the face of strong opposition from Congress and the Courts that the FCC is over-reaching its statutory authority.

If only the FCC absorbed the significance of the data compiled in their own report, the FCC would conclude that the wireless market was effectively competitive.

Find an FTC-Google Antitrust Primer here that asks and answers the Top Ten Questions about:

• Google's admission it has received a subpoena and is under formal investigation by the Federal Trade Commission for antitrust violations; and
• What the FTC is likely investigating and thinking, given that the FTC cannot comment on an ongoing investigation.

This primer is based on a combination of new analysis and an update of the best of four years of Google antitrust research, which can be found at: www.Googleopoly.net.

The Top Ten Q&A are:

While the big Google antitrust news is that the FTC is about to launch a formal sweeping antitrust investigation of Google, which will play out over time almost entirely behind the scenes, the big public-facing news for Google antitrust is that Google's current CEO Larry Page and former CEO Eric Schmidt are refusing to publicly testify before the Senate Judiciary Antitrust Subcommittee per reports.

There are several reasons this refusal to publicly testify is exceptionally problematic for Google.

First, Google loudly proclaims that they have done nothing wrong, that everything they do benefits users and promotes innovation, that competition is one click away, and that they have free speech rights to edit their search results as they see fit.

One of the simplest and most important FCC reforms Congress could make would be to modernize and streamline the FCC competition report process to stay current with the Internet competition era.

• Simply, Congress should eliminate and consolidate all legacy analog technology-specific "silo" competition reports (e.g. reports on wireless, video, or satellite competition, etc., including the 706 report) and replace them with one periodic Internet Competition Report that is forward-looking, flexible and dynamic so that the FCC and Congress can adapt and keep pace with the ever-evolving Internet competitive landscape.
  • Since the sector is competitively converging, the FCC's competition reporting process logically needs to converge as well.
  • This common sense best practice of replacing and consolidating outdated and redundant reporting efforts would not only save money in tight fiscal times, but also result in a more accurately informed FCC and Congress.
  • The FCC cannot stay current or help "win the future" by relying on fossilized competition reporting processes based on outdated technology and competitive assumptions.

Problems with FCC Silo Competition Reports

FreePress' latest trumped up net neutrality charge alleges in a complaint to the FCC that Verizon violated net neutrality in limiting access to third-party tethering applications on Google's Android platform, (like other carriers have) -- applications that effectively would enable Android users to bypass standard Verizon data usage plans and improperly consolidate usage of multiple devices onto one device data usage plan.

• Specifically, FreePress is singling out Verizon by alleging that Verizon has violated its unique net neutrality obligation, because Verizon is using the spectrum of a special 700 Mhz "C" Block license that came with some special obligations (see para 223) concerning offering reasonable open standards to devices and applications.
• Simply why FreePress' charge is bogus here is FreePress is essentially claiming that when one person pays for an all-you-can eat buffet, that one person should be entitled to feed others off of the their refillable plate; anyone with an ounce of propriety knows that is cheating.

This analysis will:

If reports are true that the FCC is planning on claiming in its upcoming wireless competition report that the FCC cannot conclude that the U.S. wireless market is effectively competitive, then the FCC is neither "data-driven" as it claims, nor in touch with market reality.

• Don't miss the latest CTIA assessment of U.S. wireless competition and innovation HERE.
• The facts and evidence are overwhelmingly indicative of vibrant competition.

If the FCC is a wireless competition denier in the upcoming wireless competition report, despite the overwhelming factual evidence to the contrary, the FCC seriously risks its going-forward credibility with Congress, the Courts, industry and the public.

The Rural Cellular Association’s opposition to the AT&T/T-Mobile acquisition puts a spotlight on the un-sustainability of the analog rural cellular model that is on the wrong side of broadband change.

• The clear but unspoken subtext of the RCA’s opposition is their recognition that their current subsidized model of rural cellular providers is fundamentally ill-equipped for the competitive broadband era.
• Simply, the RCA is quixotically trying to drag the anchor of an inefficiently and unsustainably subsidized analog business model into the efficient and competitive broadband Internet future – a recipe for losing the future.

Importantly, most of the RCA’s problems exist completely separate from this transaction.

As a regular reader of Steve Pearlstein's Washington Post's business column, I was dismayed at the consistent pro-regulation frame of Sunday's piece on the AT&T-T-Mobile acquisition: "The Revenge of the Baby Bells."

The hallmark of longstanding bipartisan competition policy has been that if market players have the freedom to succeed or fail at differentiating, innovating and investing to meet consumers' rapidly evolving needs, market forces can maximize consumer welfare much better than FCC regulators can.

• Current fierce communications sector competition on multiple levels, vibrant innovation and massive private sector investment have proven Congress' wisdom in instituting competition policy to replace economic regulation as the best framework to maximize consumer welfare in communications.
• Without the 1996 Telecom Act replacing economic regulation with competition policy, the Internet would be a fraction of the phenomenon it it today.

Thus it is dismaying that Mr. Pearlstein crafted a false choice in his column: "...stick with the competitive, lightly-regulated model and... block a merger... or it could acknowledge... the "telephone" market is a natural oligopoly... and... requires much stronger government regulation."