FTC

Be sure to read my commentary today in the Washington Times "America's Unique Internet Success."

• It is particularly timely today given that House Telecom Subcommittee Chairman Markey is starting his series of net regulation hearings today by hearing from the inventor of the World Wide Web, a leading supporter of NN.
• It is also timely because CPAC, the Conservative Political Action Conference starts today in Washington DC; I will be speaking on their Internet panel on Saturday morning.

The purpose of this commentary is to challenge head on Congressional Democrats' attempt to revise Internet history for political purposes and manufacture a "broadband crisis" where none exists.

According to Comm Daily today, it appears as if Google is doing some major "bobbing and weaving" on its net neutrality stance. Google's top policy executive, Andrew Mclaughlin, at the Tech Policy Summit in San Jose, appeared to soften Google's hardline stance on net neutrality legislation, but did he really?

Let's examine what he is reported to have said that's new, and also what they have not said, which is important to seeing if they are just doing PR spin or have truly changed their position on net neutrality legislation.

First, what Mr. McLaughlin was reported to have said by Comm Daily today:

• (Quotes are Comm Daily and italics are McLaughlin's direct quotes.) 
• "...an authority other than the FCC should enforce a simple net neutrality rule barring broadband providers from discriminating in favor of their own companies or applications providers in quality of service."
• "Google favors a simple rule against bias, not 'heavy regulation or price tarriffing' for the FTC, DOJ or other enforcer to interpret."
• "'Cutting the FCC out of the picture would be a good idea' since agency network regulation wouldn't be suitable."
• Hooray! It sounds as if Google is getting more reasonable and is beginning to see the error of their "don't be evil" ways.
• But Google cuts against this newfound reasonableness, by saying "the regulation is justified by 'market failure" of 'inadequate competition' in the last mile." And that "wireless  technologies aren't 'meaningful alternatives'."
• So what are they really saying here, its not clear.

What they have not said is the most telling.

House Telecom Subcommittee Chairman Ed Markey (D-MA) said in the Boston Globe today  that Sir Tim Berners-Lee, inventor of the World Wide Web, will testify on "the future of the Internet" on Thursday.

• Sir Berners-Lee is a strong supporter of Chairman Markey's highly-regulatory approach to Net Neutrality.
• It also sounds like Sir Berners-Lee will be the only witness at this important initial hearing on this important issue.

The open question is: will Chairman Markey allow free and open "competition" of views on what is best for "the future of the Internet" in the best of the "open democratic tradition of the Internet?" 

I had to flag Professor Lessig's curious February 14th  post and video lecture on "Internet Policy -- Spectrum Deregulation."

• Professor Lessig makes the case for NOT selling valuable spectrum to the highest bidder (like the law requires to lessen the budget deficit and reward taxpayers) and argues that our government should "set off large swaths of spectrum for unlicensed use."
• Professor Lessig very curiously tries to use "hot dog rights" as an analogy to make his cerebral point:
• "Imagine the government nationalized the hotdog market, and then sold to the highest bidder the “right to sell hotdogsâ€? at in a particular place for a particular period of time. These rights — the right to sell hotdogs — could be structured to be a kind of property. The market would thus allocate them to the highest valued use. And the initial sale would raise lots of money for the federal treasury. Are you in favor of that? And if not, then why are you in favor of spectrum auctions?"
• Excuse me Professor Lessig. I have my hand up in the back with a puzzled look on my face. I am in favor of analogies that make some sense.
• What do "hot dogs" have to do wth spectrum?
• Are hot dogs able to be used to communicate, to broadcast, or to access the Internet?
• Would businesses pay billions for the right to sell hot dogs when they could sell other food?
• Could you not sell other food or services, if you did not have the national rights to sell hot dogs?
• Would Congress and a regulatory body care to sell rights to sell hot dogs?
• Can you put catsup, mustard, chili, cheese or onions on spectrum?

I'm sorry but I have been racking my brain to "imagine the government nationalized the hot dog market" like Professor Lessig asked me to. I could only think of Chavez in Venezuela.  As hard as I tried, I couldn't seem to "get" the Professor's "hot dog" analogy.

Hal Singer of Criterion Economics has some very cogent arguements against NN in his speech at the University of Pittsburgh last week.

Hal cuts to the quick in explaining "Under a net neutrality regime, if a broadband service provider offers prioritized delivery to one content provider, then it must offer the same level of service to all content providers free of charge."

• Hal is right. Net neutrality would discourage anyone from improving or innovating or trying to meet the unique needs of different sets of users.

While at first glance it may not be obvious how the public policy debate over "net neutrality" affects the advertising sector -- it does -- and big time. 

Let me explain "net neutrality" in the context of advertiser interests. 

• In simple terms, net neutrality is the politics of convergence.
• As "convergence" makes the tech and communications sectors collide, and creates more direct competition between the sectors than ever before, the big question is: will this new techcom sector be sorted out by: 
• Competition/market forces? or
• A new law where Congress dictates which sector is competitively advantaged over the other?  
• In "brand" terms, the main opposing "brand" players in this public policy fight are:
• The online giants like: Google, Yahoo, Ebay, Amazon, and IAC -- that want net neutrality regulation of broadband companies; versus
• The broadband companies like: AT&T, Verizon, Comcast, Time Warner,  Sprint, which obviously don't want to be regulated.

So why should advertisers care who wins? There are three big reasons why that cut right to the advertising sector's bottom-line and future.

First, companies that advertise very little want to regulate some of the advertising sector's absolutely best corporate clients.

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.

I had to flag for folks a seminal quote on net neutrality in the Washington Post article today "Neutrality on the Net gets high '08 Profile."

• "A veteran Democratic consultant who spoke on condition of anonymity was more blunt. Among Democratic candidates, "if you are not for net neutrality, then the blogs will kick your" rear. The grass roots groups that strongly favor it are relatively small but very noisy, she said "and you just don't want to have to deal with that."

This obviously very sharp Democratic operative understands what's really going on. 

The common theme of net neutrality supporters is that there is not enough competition or competitive forces to prevent discrimination.

They assert a broadband duopoly even though the evidence and data don't support their assertions. This is one of the main reasons net neutrality has had so little success in forums where substance, evidence and proof matter.  

Last week at the FTC workshop, Amazon and eBay took this competitive discussion to a whole new level of la la land.

• Both Paul Misener of Amazon and Tod Cohen of eBay agreed on their second day panel that competition won't solve this potential problem.
• Tod Cohen of eBay said that even if their were 4-5 competitors in the broadband market there would still be an incentive to discriminate. 
• Wow. Now we really know what we are up against.
• Supposed capitalists, Amazon and eBay don't believe in or trust free markets any more!
• They are saying that Congress should pass a law regardless of how much broadband competition there is or will be. 
• This is classic industrial policy think, which is defeat your future competitors in Washington, while they are still in the crib.  
• It is also more predatory than anything any broadband provider has done.
• Under their logic all duopolies should be regulated preemptively before they do the things that all businesses have deep lurking in their hearts -- make profits...
• Then the government should rugulate the Intel-AMD chip duopoly, the Microsoft operating system monopoly, the Cisco-Juniper router duopoly, the Google-Yahoo search duopoly, the Giant Foods- Safeway grocery duopoly and while they are at it they could preemptively regulate the eBay-Amazon retail ecommerce duopoly!

Amazon and eBay are no longer for free markets, but for Big Government industrial policy and European style socialism with them as the designated online national champions.  

It looks like some national net neutrality proponents groups have suckered some well-intentioned, but unsuspecting Maryland delegates into sacraficing Maryland consumers as pawns in their national chess strategy over net neutrality. Maryland consumers deserve much better.

• Twenty three Maryland delegates have proposed bill HB 1069, a bill which would regulate the Internet access of DSL, cable modems, wireless broadband, and BPL; would impose net neutrality only in Maryland; and would require detailed quarterly reporting of broadband deployment in Maryland.  

I'll bet the national activists that sold this fraudulent bill of goods to the unsuspecting state delegates, only told their unsubstantiated side of the story -- ill serving Maryland consumers and lawmakers in the process.