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March 2011

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.

FCC on Retrans: Will it Miss the Forest for the Trees?

It will be telling to see if the FCC's proposed rule making Thursday on retransmission consent addresses the glaring issue of why prices ONLY go up in this obviously dysfunctional regulated, and out-of-date retrans marketplace, because the FCC's rules have never been updated to reflect the competitive entry, and great success of, strong DBS and telco competitors into the pay TV market.

  • Embarrassingly, the FCC's current retrans rules are fossilized in a 1992 cable monopoly era that is long extinct.
  • The pay TV market is obviously competitive, and the FCC's current retrans rules are obviously based on an out-of-date cable monopoly market assumption.
  • It also will be telling to learn if the FCC is open to updating their retrans rules for the 21st century competitive Internet era.

In most every other FCC proceeding involving competition matters over the last fifteen years, the FCC has examined where industry pricing trends have gone directionally over time as a proxy for how competitive the market is and/or to learn if market power is at work.

It will be telling to learn if the FCC cares about competition policy and the state of competition in the pay TV market that the FCC has the direct statutory authority to oversee... given how focused the FCC has been over the last year to impose preemptive restrictions on broadband providers to address speculative harms to competition in the Open Internet Order based on questionable ancillary authority.

Google's 'Algorithmic Hand' Proves an Unstable Market Mechanism

Google's biggest-ever reordering of its search results this past week to reward what Google believes is high quality content and punish low quality content prompted an public epiphany this week that Google has the market power to effectively pick winners and losers in the online content market.

 

 

There are two big takeaways from this public epiphany that "Google is the de facto web content market:"

 

  • First, Google's "algorithmic hand" largely has supplanted Adam Smith's "invisible hand" market mechanism to pick web content winners and losers; and
  • Second, Google has proven to be a highly unstable, unpredictable and capricious economic platform/mechanism for online content entrepreneurs and businesses to try and build a successful and sustainable business on top of.

 

Hypocrisy = NY Times Net Neutrality Editorial

In a fit of hypocrisy and total lack of self awareness, the New York Times ran an editorial today that criticized the fairness and appropriateness of the very Internet business model, a "walled garden," that the New York Times is adopting "very shortly" in order to survive.

 

  • Today, the New York Times editorial board expressed support for the FCC's net neutrality economic regulations, and against "a walled garden somewhat like cable TV, where providers can decide what we can see, and at what price."
  • Last week, Bloomberg reported that the Chairman and Publisher of the New York Times, Arthur O. Sulzberger Jr., said: the NY Times would "start charging readers for online access 'very shortly.'''
    • Mr. Sulzberger went on to say: "We can no longer afford to have iPhone and iPad apps for free..."

 

Simply, the New York Times hypocritical editorial position is that the New York Times Co., which owns newspaper and broadcast distribution infrastructure, has the business freedom to erect pay walls and adopt a walled garden business model in order to earn a profit off their property and to fund their expensive business infrastructure, but competitive broadband providers should be banned by the FCC from having the same business freedom as the New York Times.

NetCompetition vs. FreePress Op-Eds in Network World

Network World hosts a techdebate: "Net Neutrality: Needed or Not?" with dueling op-eds from NetCompetition and FreePress. Click here for the op-eds.

  • I argue for NetCompetition.org that: "net neutrality regulation is unnecessary, unjustified, unwarranted, unproductive, unwise, unpopular, and unlawful."
  • FreePress' Chris Riley argues that: "Net neutrality, a founding principle of the Internet, guarantees that no ISP can dictate where you go and what you do online. Without net neutrality, AT&T, Comcast and Verizon would be free to favor Hulu, but block Netflix. Or prioritize YouTube over Vimeo."

 

 

 

Leona Googley: "Only little people follow rules"

Brandy Sparkles, Google's roving PR crisis manager parachuted into London last night to snuff out any dissent or questions about Google's purchase of BeatThatQuote.com, a UK price comparison site Google is buying for a reported $37m.

  • Google's Brandy Sparkles, known in Google circles as the "Red Adair" of corporate PR crisis management, was called in to snuff out coverage of an impertinent, "little" SEO Book blogpost:  "Google buys BeatThatQuote, A UK comparison site violating Google's rules."
  • That post chronicles how Google bought a site that employs lots of the "low quality" "cheating" SEO tactics that Google ruled are unacceptable SEO practices just last month.

After sizing up the SEOBook's charge that Google was being hypocritical in not following its own rules, Brandy Sparkles released the following statement:

"We are the Goog. We make the rules for others on the Internet and we can change them any time we want. That's the way this world works. Life is not fair and Google does not try to be.

Google's Deep Aversion to Permission -- "Security is Google's Achilles Heel" -- Part XI

Google's deep aversion to securing the permission of others before doing something that affects them is central to Google's famed "innovation without permission" ethos. Sadly, it is also the wellspring of Google's infamous privacy and security problems.

Where does Google's deep aversion to permission come from? From Google's founders, Larry Page and Sergey Brin, according to their mentor Terry Winograd, in Ken Auletta's book "Googled."

  • "Winograd describes his former students as impatient: 'Larry and Sergey believe if you try and get everybody on board, it will prevent things from happening. If you just do it, others will come around to realize they were attached to the old ways that were not as good.' The attitude, he said 'is a form of arrogance.'"

 

This week we witnessed the latest high profile example of Google's deep aversion to getting the permission of others.

A few days ago, Google announced that it remotely disabled malware-infected Android applications without the permission of 260,000 Android users who bought or downloaded infected applications from Google's app store.

 

If Google Explained Its Branding of Social as: "Circles"

Google's imaginary spokesmodel Brandi Sparkles explained the logic and thinking behind Google considering branding its new Social media effort and "Facebook Killer" service -- "Circles" -- in the following statement.

"After analyzing everything that everyone has ever said privately or publicly about the word "circles" in digital recorded history, Google's skynet computer decided that Google should name its secret "Facebook-killer" social media service -- drum roll please -- "Circles!!!" (Cue: The digital crowd and the media Googlerati should now roar with approval and delirium at witnessing branding perfection by artificial intelligence. Pretty cool! Pretty cool!)

Google's skynet computer liked the many connotations that spring to mind when one hears the words: "Google Circles."

 

FCC is Losing the Wireless Future

It will be surprising if the Republican FCC Commissioners and a bipartisan majority of Congress do not oppose the FCC's unwarranted war on wireless competition policy.

 

  • The FCC appears to be itching to start another political battle over competition policy with its upcoming fifteenth wireless competition report to Congress, by making another political decision devoid of supporting evidence or merit, that the wireless market does not have "effective competition."
    • Such a fantastical political finding, helps the FCC to ignore Congress and the law yet again, and also to unilaterally impose new sweeping economic regulations on wireless, including net neutrality.

 

The linchpin of the FCC's de-competition policy to restore the FCC to its pre-1996 monopoly regulation glory days, and to put the FCC in more control of the communications sector going forward, is to politically define away the existence of "effective competition," in order to justify FCC regulation of the mobile Internet.

 

Google's No Privacy by Design Business Model

Popular bipartisan interest in safeguarding consumers privacy in the U.S. and Europe confronts Google with a core strategic problem because Google's targeted advertising business model is no "privacy by design" and no "privacy by default."

 

  • Google bet wrong and big in assuming that since technology made it so much easier to track and profile users for targeted advertising, users would just accept the new loss of privacy and users and governments would never enforce user demand for choice to protect their privacy.
  • Google's all-in company bet on openness, transparency, and sharing, was also a strategic bet against robust privacy, security, and property protections.
  • In choosing to brand itself as the penultimate "White Hat" player promoting "openness," Google has effectively designed its business, architecture, and brand to be the main "Black Hat" player on privacy.

 

Google's No Privacy By Design model is unique.

 

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Q&A One Pager Debunking Net Neutrality Myths