You are here

Verizon-Cable Senate Hearing - Competitive Reality vs. FreePress Fiction

 

Hopefully, the March 21st Senate Judiciary Subcommittee oversight hearing on the Verizon-Cable spectrum transaction will be a fair hearing based on the competitive facts and the law, and is not allowed to be hijacked politically by FreePress' signature gamesmanship.

I. FreePress Fiction

It is disturbing that two of the three hearing witnesses opposing the Verizon-Cable agreement are from FreePress: Joel Kelsey, FreePress' Policy Advisor and Tim Wu, who was FreePress' Chairman just thirteen months ago and has been a longtime FreePress board member.

It is curious and troubling that the Senate Subcommittee specializing in "competition policy" would seek testimony from two anti-profit, anti-property-rights adherents who don't believe competition policy can work.

 

  • As recently as 2009, FreePress wrote Congress charging that "above cost metered pricing for broadband constitutes an unfair business practice."
    • Everyone else knows above cost pricing is "profit" and understands that profit is the primary purpose of every sustainable business.
    • Anti-profit groups like FreePress see any price prioritization as illegal discrimination, every company as some kind of anti-competitive "opolist," and agreements between businesses as a "cartels."
  • Another 2009 FreePress attempt at market analysis produced another preposterous claim: "The general belief that regulation deters investment by telecommunications companies is simply not supported by the data."
    • Only the tortured analysis of FreePress that disdains profit, property, and private investment could conclude that regulation, which by definition takes away the freedom to run the business optimally, and creates delay and uncertainty, would not deter private investment that seeks its highest return.

 

When evaluating FreePress' political assessment of the Verizon-Cable agreement, remember FreePress and Professor Wu are hostile to business, profit and private enterprise; they see monopoly characteristics in every business and believe that broadband should be regulated as a public utility under Title II, as if competition, or competition policy, did not exist.

 

II. Competitive Reality:

 

If one looks at the vibrant competition in the marketplace and the falling prices, abundance of choices and amazing innovation enjoyed by consumers, it is obvious there is no anti-competitive problem presented by the proposed Verizon-Cable spectrum transfer and marketing agreements.

Prices falling: Wireless broadband prices by megabyte usage are plummeting; consumers are enjoying much more and better bandwidth consumption for less money. The wireline broadband value dynamic is also consumer friendly, with substantially more speed and usage for less money over time. Handset prices are plummeting and consumers routinely get more, value, functionality and productivity for less money.

Many Choices: About a third of all U.S. consumers have switched wireless carriers. U.S. consumers enjoy the least concentrated wireless market with the most competitive choices of the 26 OECD countries. And the U.S. is the only nation in the world with a second national broadband network, cable, which can deliver 100 Mbs in most of the country, and with a major incumbent carrier in the world investing substantially in fiber to the home outside of apartment buildings. Americans also have over 600 handsets to choose from.

Vibrant Innovation: The Apple iPad has pioneered and established a new device category years faster than ever before. Apple, Facebook, Google and Microsoft-Skype offer video conferencing/chat. Various free messaging offerings are rapidly eroding paid texting. And Apple's and Google's app stores have literally hundreds of thousands of apps, with thousands of new apps coming available each month. Verizon's new 'cantenna" fixed wireless service is offering affordable high-speed broadband service to rural and harder-to reach customers for the first time. Comcast is launching a new service StreamPix to compete with Netflix and other video streamers, and even Intel has indicated it wants to enter the video business to leverage its microchip innovations.

U.S. Leading in 4G LTE Deployment: American wireless providers are investing heavily and consequently are leading the world in 4G and 4G LTE wireless broadband deployment. This is in contrast with Europe where European carriers are reluctant to invest in faster 4G wireless networks or fiber wireline networks because of a hostile regulatory situation where termination price regulation and other economic uncertainties have national incumbent providers concluding they can't afford the deployment-upgrade cost with such high downside risk and so little upside opportunity. And China is postponing its 4G rollout to focus on broader penetration with 3G.

In sum, if there is a problem in the wireless market, it is the Government's failure to make sufficient wireless spectrum available to meet exploding consumer demand. There would be near zero attention to this transaction if the Government had done its job and effectively repurposed sufficient government and other spectrum expeditiously for commercial use.

The Senate Judiciary Subcommittee should encourage the DOJ and FCC to expedite their review of this pro-consumer spectrum transaction which will get long-fallow spectrum into the market fastest, most optimally, and to the benefit of the most American consumers. In a word, this Verizon-Cable transaction will increase competition and is clearly in the public interest.

 

Q&A One Pager Debunking Net Neutrality Myths