February, 2007

Evidence continues to mount that the broadband sector is increasingly competitive and that it is not the permanent cable/DSL "duopoly" that net neutrality supporters claim. The FCC just released its biannual report on high speed of broadband adoption and the new evidence showing more competition is powerful.

The most important takeaway from the FCC's report is that 58% or 7.9m of the 11.0m total broadband adds over the first six months of 2006 were wireless broadband -- NOT DSL or cable modem.  That's not how a "permanent DSL/Cable duopoly" behaves -- is it?

As expected proponents of net neutrality ignore facts that don't push their anti-business, big government point of view. When the FCC broadband report is replete with powerful evidence that broadband competition and penetration are increasing impressively, NN proponents don't like the message so they shoot the messenger.

Comm Daily today quoted a Public Knowledge spokesperson who said:  the FCC numbers were "invalid" and that he wouldn't even "go there" what trends or developments the group sees in the report because it is "measuring a world that does not comport with reality."

I was pleasantly surprised and very pleased that FCC Chairman Martin proactively released a proposed order that would reclassify wireless broadband as a Title I information service, as reported in today's Comm Daily. This order, which looks to have the support of the Republican majority, would continue to harmonize the regulatory treatment of all the major modes of broadband.

• The FCC has already classified cable modems, DSL and BPL as unregulated info services.
• Given the robustness of wireless competition in the U.S., reclassifying wireless broadband as an info service should be a no-brainer.
• The FCC should also do another order to classify satellite broadband as an info service as well.

Why this is relevant to NN is that the expert agency overseeing competition in this market segment is concluding that there is sufficient competition to not require common carrier-like regulation.

It seems asking the U.S. Congress for a huge corporate welfare gift in net neutrality legislation is not enough to satisfy Google's insatiable appetite for special interest gifts from the government.

• According to the Charlotte Observer, as picked up by Google Blog, Google, one of the most profitable and fast-growing companies in U.S. history, won't bless the state of North Carolina with their presence unless the State would give Google "secret" tax breaks to the tune of $89 million.

Seems like this is a real pattern for Google. 

The evidence continues to pile up that Google is well on its way to achieving a 50% share of the search market, a significant antitrust threshold where a company is considered "dominant" and subject to "stricter scrutiny" for potential anti-competitive practices.

• Google's ~50% market share is highly relevant to the Net neutrality issue because:
• Search is now the leading Internet access technology, and
• Google's national and international scale and market share dwarf the potential gatekeeper role of any U.S. broadband player.

Microsoft's recent earnings call showed how badly Microsoft is doing in search.

Wired has an interesting article on how Microsoft's new Vista operating system has had to make some tough and restrictive design calls that some could misread as "discriminatory".

• The Wired article by Michael Calore, explains how Microsoft restricts or "cripples" users ability to use virtualization technologies to get certain content and how Microsoft's Defender will search for spyware and in some cases automatically delete applications.
• it looks as if Microsoft has legitimate business reasons for this blocking, degrading and impairing of certain content and applications.  

Why this is relevant to net neutrality and Microsoft is that:

I have attached the link to Esther Dyson's important interview on net neutrality.

• Her real life experience and leadership in dealing with ICANN and government regulators is worth paying attention to.
• Esther is very widely respected in the Internet community and always thoughtful in her approach to problems.
• She has even been dubbed the "Internet High Priestess".

I really enjoyed the Washington Post article today "Google still searching for recognition in DC."

• The Post article was some humble pie for Google:
• It opened by mentioning noone recognized the supposed celebrity Google CEO at the location of his one public speech;
• Then went on to retell the story of how Google founder Sergey Brin showed up in DC in jeans and tennies and couldn't get meetings on the Hill;
• And finally it concluded with a zinger of how a third of Schmidt's audience left during his talk.
  

Today's WSJ article: "MySace pact with Google hits a snag" is a helpful reminder of the competition double standard and hypocrisy of net neutrality proponents Google and eBay.

Google the dominant search gatekeeper with 47% share and rising is the world's leading Internet access technology. They have a pact with Myspace, one of the fastest growing sites on the planet that would pay MySpace's News Corp. $900m for placing Google's search on MySpace.

• While this business practice is perfectly legal and above board, it is precisely the type of business arrangement that Google has outrageously mischaracterized as "discrimination" and is seeking to make illegal for its broadband competitors.

 Meanwhile, the pact is supposedly hung up because MySpace would still like to have a "discrimnation" deal with eBay too, where MySpace users could use post eBay auctions on their MySpace page. But Google only likes "discrimination" that is in its favor.

       "GOOGLE'S HYPOCRITIC OATH"

As a 'Googler", I swear to fulfill to the best of my ability and judgement this covenant:

I will do harm to competitors while claiming to be their victim.

I will use double negatives like "don't be evil" to simulate sincerity and maintain 'plausible deniability.'

I will defend Google's legendary secrecy and lack of transparency by explaining secrecy is what keeps the Internet 'open'.

I will claim Google works for consumers even though all of Google's revenues come from advertisers.