Category Archives: Competition

Internet Robber Barons

krugman_paul.jpg Paul Krugman examines how far behind the U.S. is in every metric of Internet speed and broadband uptake, and why:
What happened to America’s Internet lead? Bad policy. Specifically, the United States made the same mistake in Internet policy that California made in energy policy: it forgot — or was persuaded by special interests to ignore — the reality that sometimes you can’t have effective market competition without effective regulation.

You see, the world may look flat once you’re in cyberspace — but to get there you need to go through a narrow passageway, down your phone line or down your TV cable. And if the companies controlling these passageways can behave like the robber barons of yore, levying whatever tolls they like on those who pass by, commerce suffers.

— The French Connections, Paul Krugman, New York Times, 22 July 2007

Krugman reminds us that as recently as 2001 the U.S. was far ahead. And then he gets specific. Continue reading →

The Internet As a Market: Al Gore and Reasoned Discourse

al-gore.jpg So I’ve been wondering what to say about Al Gore’s book, The Assault on Reason. A story in The Economist helped me out. After lauding Gore for calling Mr. Bush’s risky schemes well before most people, for denouncing the invasion of Iraq back in 2002, for his Oscar, and for being “the man who changed the climate of opinion climate change”, it then ridicules the book’s core thesis:
But he does not stop there. He worries about America’s money-saturated politics. He lambasts television for infantilising the electorate.

…

He sometimes comes across as eccentric—as when he lambasts television for killing public discourse, then celebrates the internet as its potential saviour. A few minutes online, reading the zealots on either the right or the left, should have been enough to explode that illusion.

— Gore in the balance, From The Economist print edition, May 31st 2007

That last would appear to be the sort of trivialized, perhaps even infantilized, reaction Gore is lamenting. The big advantage of the Internet is you get not just a few zealots at extreme ends of an arbitrary spectrum: you get all the shadings and colors and depth you can absorb. And you can weave your own strands in this home-made tapestry. Continue reading →

Internet Radio: DRM Air

wexelblat.jpg Previously we saw a last-minute reprieve for Internet Radio. I read SoundExchange’s press release, but I didn’t catch this:
Under the new proposal, to be implemented by remand to the CRJs, SoundExchange has offered to cap the $500 per channel minimum fee at $50,000 per year for webcasters who agree to provide more detailed reporting of the music that they play and work to stop users from engaging in “streamripping” ­ turning Internet radio performances into a digital music library.

— SoundExchange Confirms Minimum Fee Offer: Reminds Commercial Webcasters of Obligations to Pay New Royalty Rates, Press Release, SoundExchange, 13 July 2007

Alan Wexelblat explains that part about “streamripping”:
So it’s that simple. Become our agents in preventing people from recording Web radio streams or face the financial axe.

— When is a Reprieve Not a Reprieve, by Alan Wexelblat , Copyfight, July 19, 2007

Continue reading →

Apple vs. AT&T

balsillie.jpg Apple has a reputation for “using its partners to its benefit”:
Blackberry Co-CEO Jim Balsillie sees the same thing happening with the recent launch of the iPhone.

Balsillie recently criticized Apple’s seeming willingness to commoditize the iPhone as an Apple product, rather than bringing AT&T Wireless in as an equal partner.

He also has issues with the iPhone being free of AT&T’s logo and with activation having to go through Apple’s iTunes music store rather than the AT&T Mobility site.“It’s a dangerous strategy,” says Balsillie.

“It’s a tremendous amount of control. And the more control of the platform that goes out of the carrier, the more they shift into a commodity pipe.”

— Blackberry CEO Says Steve Jobs & Apple Screwing Over AT&T. CEOSmack 7 July 2007

Meanwhile, AT&T is still locking the customer into a 2 year contract, even though the customer is paying full price for the iPhone, unlike most other phones AT&T sells. So it would appear AT&T is using Apple to gain AT&T customers.

And maybe Apple didn’t want AT&T as a full partner because Apple perhaps is preparing to have iPhone work on other networks, as well? That would be a good thing.

-jsq

700Mhz and Competition

markey.jpg Positions on future uses of the 700Mhz spectrum formerly occupied by analog TV aren’t just for presidential candidates anymore. Congress is hearing arguments:
Rep. Edward J. Markey (D-Mass.), who chairs the subcommittee that handles telecommunications and Internet issues, urged the FCC to “seize this opportunity to create an open-access opportunity for wireless service in this auction.” He added that wireless carriers are “exerting far too much control over the features, functions and applications that wireless gadget makers and content entrepreneurs can offer directly to consumers.”

— FCC Auction Should Allow for Open Wireless Network, Say Lawmakers, By Kim Hart, Washington Post Staff Writer, Thursday, July 12, 2007; Page D08

Some search, VoIP, and computer companies say auctioning off some of that spectrum with open access requirements would promote competition, while telcos claim it would hurt their investments, stifle competition, and reduce revenues to the government from the auction. I think it may well reduce direct government auction revenues, but the economic benefits of real competition should be worth it. You’d think the nominally free market supporting telcos would agree with that. Continue reading →

Internet Radio: Live Air?

header_mic.gif Sunday was when Internet radio was supposed to turn into dead air, after even an emergency court hearing had failed. However, during a Congressional hearing Friday,
…Jon Simson, director of SoundExchange – the label-affiliated organization responsible for setting royalty rates – told Congress that the group would not enforce the new royalty rates and would continue to work on negotiating new rates with the Digital Media Association (DiMA), who are acting on behalf of webcasters. “This is definitely a step in the right direction,” Pandora founder Tim Westergren, told us this morning. “At this point, provided there’s good-faith negotiations, they’re not going to go after people.”

— Public Outcry Staves Off Destruction of Internet Radio, Evan Serpick, Rock & Roll Daily, Rolling Stone, 7/13/07, 12:54 pm EST

Is this any way to run a regulatorium? All the regulatory bodies stonewalling, the courts not listening, and only one man deciding not to proceed? Continue reading →

TV4U? Not Me!

soglin.gif Franchise reform, if you don’t have enough supporters, apparently you can just write their names in anyway:
At a Capitol press conference, several others leading the fight against the bill — including former Madison Mayor Paul Soglin and communications professor Cynthia Laitman — said their names also falsely showed up as supporters of the deregulation bill on petitions given lawmakers by TV4Us, the private group leading the ad and public relations push for the bill.

“I don’t know how it happened,” said Soglin, who said he has pushed for tight municipal controls and consumer protections over the cable TV industry since 1971. “AT&T gets very confused.”

— Legislators seek probe of misuse of names, By Steven Walters, Milwaukee Journal Sentinel, WEDNESDAY, July 11, 2007, 11:15 a.m.

How confused? Continue reading →

A Cisco Way

bio_100x125_jeff_campbell.jpg Cisco has a policy blog, in which they back no regulation before market failure:
In other words, there is no reason to rush to impose burdensome Net Neutrality regulations in the broadband market. If there is one thing that we have learned from 70+ years of communications regulation, it is that regulation has significant costs and unintended consequences. The FTC clearly recognizes that government should react to actual problems, not hypothetical ones.
It’s funny how the Internet grew up with net neutrality, but now it’s “burdensome.” Maybe innovation and competition are burdensome to incumbents.

-jsq

Market Failure?

bruegel_babel2_grt.jpg Here’s an interesting directive from the White House:
The order requires federal officials to show that private companies, people or institutions failed to address a problem before agencies can write regulations to tackle it. It also gives political appointees greater authority over how the regulations are written.

— House Balks at Bush Order for New Powers, By Jim Abrams, The Associated Press Tuesday, July 3, 2007; 8:16 PM

How does this work?

Continue reading →

Broadband Produces Employment

crandall.jpg
lehr.jpg
Litan.jpg
Many have assumed that broadband is good for the economy; now here’s a study with rivets:
More specifically, for every one percentage point increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3 percent per year.

— The Effects of Broadband Deployment on Output and Employment: A Cross-sectional Analysis of U.S. Data, By Robert Crandall, William Lehr and Robert Litan, Brookings Institution, 2007

Of course, this is like saying every state in medieval Germany that had a printing press produced employment in the printing industry. There are economic and social effects far beyond mere employment. What should be done?

The paper has a few recommendations:

The surest route to lower prices is provided by increasing competition in the delivery of broadband services.
Continue reading →