Tuesday, February 7, 2006 - The Progress & Freedom Foundation Blog

Kyle and the Senators

Hope you had a chance to see PFF Senior Fellow Kyle Dixon this morning before the Senate Commerce Committee. He made as good a case as I've heard for why it makes no sense to move forward now with proscriptive legislation to force broadband networks to become dumb pipes. His testimony can be found here. The committee web site has more information, including other witness testimony and opening statements of Senators Stevens and Inouye (the latter couldn't attend in person). The hearing was two hours people talking past each other, with one well-known witness -- arguing that we should all go back to the safe regulatory past -- getting caught in his game of using select information to make a point that seems less valid when the complete picture is given.

First of all, let me say I was dismayed by the apparent partisan breakdown on this issue. In all, nine senators attended (eight from the committee as well as Senator Wyden, no longer on the committee but permitted to give a statement). Senator Lott was fairly quiet, but the rest, through opening statements and questions, gave pretty good indication of their position. Bottom line? The Democrats fear the end of the Internet is here -- Senator Boxer seized on Google "evangalist" Vint Cerf's apocalyptic language -- and favored quick congressional action. (Actually Senator Pryor was hard to read; he just wanted to talk about USF). The Republicans made it clear that they were in no way in favor of network discrimination -- Senator Ensign said "I don't trust the Bell companies, I don't trust any of them" -- but in general said it was premature to act, and that instead competition at the network layer should be encouraged so as to reduce any risk of market power abuse. That, by the way, was a central element of Kyle's testimony.

I've seen so many bipartisan approaches to tech policy, from Internet taxes to spam to spyware. The Telecom Act of 1996, flawed as it was, passed nearly unanimously. It seems the split here involved whether Congress should regulate now on the possibility something bad might happen, or wait and act only if something bad happened. Democrats liked the former, Republicans the latter. That fits the stereotypes of the two parties, but as a longtime independent I was struck by that, because it's been awhile since I thought of the GOP as an advocate of small government.

Anyhow, the policy discussion was fairly gripping, with strong arguments made on both sides. When Cerf said there isn't enough competition in the broadband world, it was hard to argue with him. But it also resonated when USTelecom President Walter McCormick said "we will not block, impair or degrade," and said more than 100 years of customer voice service backed that up: "If a customer wants to call Sears, we don't connect them to Macy's." Cerf chuckled at that.

More alarming was when Vonage CEO Jeff Citron said broadband should be more like our power lines today, agnostic deliverers of service to everyone equally. In many municipalities, power is delivered by the government, and in almost all it is heavily regulated. In the vast majority of cases there is only one provider. So are network neutrality advocates calling for a natural monopoly heavily regulated under a common carrier regime with heavy unbundling obligations? That sounds like a frightening step into the past, but that's exactly what Stanford Law Professor Lawrence Lessig advocated.

Congress should "look to the past," Lessig lectured in a freewheeling, authoritative voice. (Someone unfamiliar with the topic or with Lessig would have thought that Congress had brought the oracle all the way from Delphi, so all-encompassing was his self-confidence). Network neutrality was part of telecom law for over 40 years, and "under these principles the Internet was born." His great concern was that broadband has been categorized as an information service under Title I rather than a telecom service under Title II.

It's funny how Lessig sometimes forgets to mention things. For example, his birth of the Internet story leaves out the fact that cable got its broadband act together before the Bells, and is under Title VI, where it's never had common carriage obligations (he should remember that from the open access debate and Brand X). Cable modem providers dominate the US broadband market, so they've prospered by not being under Title II. And yet all that time they've never blocked a web site or Internet application. Hmm.

Lessig wasn't called on this oversight, but he was on another. Cerf in the first panel had said the US was 16th in broadband penetration (Stevens, to his credit, noted density was a key issue in that area, and he knows, because Alaska is a lot harder to wire than Seoul). Cerf attributed the success of these other nations this way: "My understanding is their networks are open." He failed to note that the same is true in the US. Lessig picked up the slow penetration argument and ran with it. We need to be more like the French, he said. (Immediately, I thought this might not be the way to go with flag-waving US senators.) The French offer lots of broadband at just over $1 per megabit, a better rate than the US.

Ensign was the first to question this, noting that France operated in a monopoly environment. Georgetown Law Professor Greg Sidak took it further. He noted he had just come out with a book last year co-written by 3 economists on broadband in Europe. One, he noted that France Telecom is still significantly owned by the French government, so it was difficult to compare that to the US market (nor would I think we'd want a government-owned telecom in the US market). Plus, he said his survey of the EU countries found that broadband penetration growth was attributed to competition at the platform layer, not unbundling obligations.

Of course, Lessig isn't dissuaded by others pointing out his use of selective evidence, as we've seen here and here. And the notion of the French benefiting from a regulated monopoly actually fits quite well with his testimony, which harkened back 40 years, conveniently prior to the dismantling of Ma Bell. His words still seemed to charm Boxer, despite Sidak dismantling his arguments economically and Kyle bringing his FCC background to make a strong case about the dangers of creating regulations that aren't easily enforced and aren't necessarily needed.

The rhetoric, as always, is on the side of the Lessig camp. Lessig managed to slip in during his testimony that people attribute the phrase "network neutrality" to him (am I the only one who thinks it would have actually been less boastful to just come out and say he coined it and avoid the false modesty?). And it's a good phrase. Hard to be against network neutrality. And who wants to be against open access or open source software? Open is good. Still, open source software is coexisting but is no replacement threat to proprietary software, and the open access debate died at the US Supreme Court. Eventually network neutrality will pass on too, as Congress talks on and on about it while broadband deployment continues, making the subject moot. (This is my hope, anyway; I don't speak with the same confidence about the future that Lessig does.) In the meantime, Kyle, myself and others who want platform competition and incentives to invest will be on the wrong end of the "network neutrality" language debate, but we do have one language issue on our side. After all, you aren't against Progress or Freedom, are you?

posted by Patrick Ross @ 2:30 PM | Net Neutrality