Tuesday, February 15, 2005 - The Progress & Freedom Foundation Blog

Silicon Flatirons Blogstravanganza

While much of the PFF man- and womanpower spread the PFF seed in Europe, Kyle and I attended the Silicon Flatirons' symposium on "The Digital Broadband Migration: Rewriting the Telecom Act," which concluded yesterday in Boulder. With a terrific lineup including Alfred Kahn, Chairman Powell, Larry Lessig and Vint Cerf, Phil Weiser and the students who run Silicon Flats and the JTHTL have once again raised the bar for substantive and balanced communications conferences.

In no particular order, here are some themes, thoughts and highlights from the conference, leaving to Kyle another installment:

ICE vs. ICK - Larry Lessig, aka Christopher Lloyd, introduced ICK to the acronymia during his keynote on Sunday morning. ICK, as opposed to the internalization of complementary externalities, stands for "Idea, Competitors, Killed." Put differently, the alleged port blocking of Vonage, which made the news yesterday, is potentially "Icky" behavior. Building off of recent work by Tim Wu in a paper seeking to find common ground between "deregulationists" and "openists," Lessig stated the the extremes of both positions are not worth considering. Instead, the middle elements of the two "schools" do share common ground in economic faith, and progress has been made in the debate, but differ on the preferred "end-state" of the 'Net. Openists want to retain its start-state, while deregulationists think that maintaining the status quo is very unlikely. Lessig also explained that market forces may either act as a butcher or a jockey, with the exception of "PUMA" (another new acronym, meaning "positive externalities unrealized by the market alone, which underlies the debate over muni buildouts in Lessig's view). The butcher/cow theme continued throughout the day, with panelists making a number of jokes and references to livestock. Ahhh those crazy academians.

Howard Shelanski's comments on Lessig's presentation emphasized the importance of incenting investment in infrastructure - which, to my mind, was not raised enough throughout the conference - and noted the conceptual difficulty of the deregulationist vs. openist debate because innovation lies on both sides of the equation.

New Skepticism on Open Access - Both Lessig and Vint Cerf indicated that the recent history of unbundling made them skeptical of forced access to physical platforms as being sufficient in ensuring net neutrality. Which leads to...

The Rhetoric and Reality of Chairman Powell's 'Net Freedoms - While advocating 'Net Freedom as net neutrality, Lessig did admit that formulating an effective regulatory regime around the 'Net Freedoms would be very difficult. As an initial matter, it would seem that a "pure" 'Net Freedom regime, if it is deemed to be necessary at all, would proscribe any number of ways to price discriminate. Not a good thing for consumers.

The Rhetoric and Reality of the Layers Model
- the Sunday afternoon panel on broadband focused on the layers model - not MCI's version thereof, per se, but whether it could be used as the basis for a rewrite of the Act. The majority of panelists expressed a great deal of skepticism about the model's practicality. The FCC's Scott Marcus argued that the model does not "tell us what to do," which is absolutely correct. The generic layers model, as we have pointed out here before, is sedulously neutral on questions of regulation. Versions of the model, Marcus added, focus on the market power of bottleneck facilities, but this analysis can be performed without the aid of the model. Doug Sicker, who co-authored a seminal paper proposing the model in 1999, explained that the model may not adequately delineate interfaces in the logical layer, as engineers design for cross-layer optimization all the time. On the other hand, Kevin Werbach and Tim Wu defended the model, with Wu proposing a two-layer approach between physical and applications layers based on the FCC's Part 68 rules.

A Broad Rewrite will be a Public Choice Orgy
- Enough said.

A Broad Rewrite May or May not be Necessary - While many speakers presented proposals for reform if there is a broad rewrite, a number hedged by adding that much can be done by the FCC to accomplish the same ends. Barring the Supreme Court upholding the Ninth Circuit in the Brand X case, there may not be enough of a perceived "crisis" on Capitol Hill, at least this year, save for "piecemeal" actions on IP-based services and universal service reform.

Buy this Book - The conference coincided with the release of Digital Crossroads, by Phil Weiser and Jon Nuechterlein. I would claim that it is a must-read, but Alfred Kahn and Dale Hatfield already have. Note that I am not being compensated for this plug, as Phil once again had a cash bar at dinner Sunday night.

A Note on Notebaert - I write this sitting in a Denver hotel room with a view of Qwest's big blue sign, which looks noticeably lonely in the skyline given all of the corporate lovemaking of late. Perhaps this is why Qwest CEO Dick Notebaert did a V-Day double-take by saying that he didn't want to "whine" about the '96 Act, but then went on to complain (albeit correctly) about asymmetrical regulatory treatment between cable and telco providers. (This was still a far cry from a previous Silicon Flats polemic by Joe Nacchio, where I was left wondering whether the guy was going to pop a gasket on the spot.)

In Awe of Alfred Kahn - a few tidbits from the master:
- "You're all the victims of a hoax" - in introducing the dissimilarities (and similarities) between telecom and airline deregulation.
- The prospect of having to rely on a Congressional rewrite is "horrendous."
- "A cartel is worse than a monopoly, and a government-enforced cartel is the worst of all."
- "Where competition is feasible, the government should get the hell out of the way."
- "The asinine UNE-P..." (with far more generous views on loops and line sharing).
- "I'm probably the only one in the room who studied under Schumpeter (to laughter)...and I did."

posted by @ 10:21 PM | Communications