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It's surprising that in the three months since Chairman Markey introduced his new net neutrality bill HR 5353, only nine members joined the original co-sponsors of Chairman Markey, and Rep. Pickering, who is a retiring Republican from Mississippi. And all of the new nine are Democrats. (see the list at Thomas.gov) 

• Given that the SaveTheInternet site has long advertised "100 co-sponsors needed" for the Markey bill, and that ~159 members voted for Chairman Markey's last net neutrality bill, and given that their are now 234 fellow Democrats in the House for Chairman Markey to draw upon, most observers were anticipating Chairman Markey to assemble at least 100-150 co-sponsors to the Markey Net neutrality bill. 
  • I know of no one that would have predicted only 11. 
• Interestingly, what the nine co-sponsors have in common is that they all are traditional supporters of Moveon.org.

What is one to conclude that only 11 of 435 members of the House, only 10 of 234 House Democrats only 1 of 199 House Republicans have signed onto the latest net neutrality legislation three months after its introduction and almost two years after the issue burst onto Congress' radar?

Dominant #1 Google, in calling #2 Yahoo to discuss a slow competitive search surrender by Yahoo to Google, in order to thwart a purchase of Yahoo by #3 Microsoft, apparently succeeded.

Interested observers in the Microsoft-Yahoo-Google-AOL-Ask.com-MySpace incestuous soap opera called search advertising, would be wise to bone up on the fine line between acceptable industry collaboration and illegal collusion, if recent reports prove true.

• The Wall Street Journal reports that Yahoo may be days away from announcing "an agreement to carry search advertisements from Google.." and that Google feels "that the upside is much greater than the potential downside" from the arrangement."  
• The Financial Times broke the story that the Department of Justice was investigating Google's interaction with Yahoo and that "the prosecution of collusion is a top priority."     

The fine line between collaboration and collusion. 

First, while many may be aware that a Google-Yahoo outsourcing deal "would likely attract intense antitrust scrutiny" there is precious little analysis on this linchpin issue -- hence the genesis of this piece.

I believe the pattern of Google becoming the outsourced search engine for most all of the Internet -- save for a few properties -- is one of the most important and least understood competitive Internet issues.  

The buzz is that House Subcommittee Chairman Markey is planning a hearing on net neutrality for Tuesday May 6th (probably AM) -- if they can line up their witnesses, which are still TBD.

• It is not on the Committee website and until it is, its not official.

I wouldn't be surprised if Professor Lessig is asked to testify yet again, after testifying before the Senate last week and the FCC the week before.

Kudos to Timothy Lee of Cato, for his post in Techdirt: "Changing the Internet's architecture isn't so easy." 

Mr. Lee challenged Professor Lessig's assertion at the Stanford FCC hearing that network owners have the power to change the Internet's architecture.

Why his insightful analysis is so devastating to Professor Lessig's core assertion underlying the need for net neutrality legislation is that it exposes some "inconvenient truths" about the reality of trying to change the Internet's architecture:

• First, Mr. Lee brilliantly points out that to control which devices got what content like Professor Lessig posits, would require instituting some type of handshake protocol that would be extremely difficult to get adopted by device manufacturers.
• Second, he points out how difficult it has been to change the Internet's architecture to IPv6, something there is a lot of consensus around to do.
• Third, he explains that these changes in architecture Lessig posits would be extremely expensive and take a long time.

I recommend you read his full post, it's brief, well-reasoned and fresh.  

The big surprise of the hearing was that Chairman Martin was a last minute witness. The Committee created a new first panel for just Chairman Martin, which ended up consuming about 60% of the allotted time for the whole hearing, and which was also the prime time when most of the Senators and press were in attendance. This surprise testimony practically relegated the other panel, which was expected to be the main event, to more of sideshow status.

Overall, this hearing was slightly more balanced than its House counterparts. Chairman Innouye continued his very measured and balanced approach, in that he said things that each side wanted to hear.

• Given that the Senate Commerce Committee is historically quite bipartisan, and that this committee remains split largely down the middle, I doubt if we will see much real movement on Dorgan-Snowe's net neutrality bill this session.
• If Chairman Inouye actually thought net neutrality legislation should make progress, he wouldn't have waited fifteen months since the introduction of the Dorgan-Snowe bill to hold the first hearing on it.
• It appears the real purpose of this hearing was basically to let off steam and throw the net neutrality activists a bone. 

The real import of the hearing was two-fold: 

Be sure to read Dick Armey's succinct analysis and perspective on net neutrality in his op ed: "Spare the Net."

• I am a big fan of Former House Majority Leader Dick Armey -- he is one of the true free-marketeer giants of our era.

Below is the full text of the letter I sent to all members of the Senate Commerce Committee and the Senate leadership questioning why of all times -- now -- for pushing net neutrality?

• Tuesday is the Senate Commerce Committee hearing on net neutrality entitled: "The Future of the Internet."  
• The attachment to the letter was my one-pager: "Why net neutrality is not a mainstream issue."  
• The link to the PDF of the letter with attachment is here.

April 22, 2008

The Honorable Daniel K. Inouye

722 Hart Senate Office Building

Washington, DC 20510-1102

ATTN: Telecom Legislative Assistant

Dear Chairman Inouye:

The wisdom and clarity of thought prize at the FCC's enbanc hearing at Stanford goes to --- FCC Commissioner Robert McDowell!

I urge you to take a few moments and read the following excerpt from Commissioner McDowell's statement yesterday -- it really gets to the heart of the matter of what the appropriate role is for the FCC in broadband network management issues.

"...In their joint press announcement, Comcast and BitTorrent expressed the view that “these technical issues can be worked out through private business discussions without the need for government intervention.”

Clearly the market badly under-estimated Google's strength and resilience in a slowing economy given the ~17% leap in Google's stock price in after hours trading.  

• Google's notorious lack of openness with investors helped make the market inefficiently, way-over-cautious.

42% revenue growth for an $18b a year company is amazing.

• It is also amazing for there to be a business of this size and global scope that strongly asserts to have a business model that is unaffected by the turmoil in the macro-economy.
• It certainly suggests some market power and network effects at work here, because this strong performance and guidance on the effect of the macro-economy -- is not "normal."

What I find most interesting is I don't think that the market yet understands what a growth kicker the DoubleClick acquisition will be for Google going forward. Google was coy about it and did not connect-the-dots for investors -- that they clearly see.