FCC Chairman Kevin Martin's desire to impose a la carte mandates on cable operators is well-known. But his advocacy has always lacked specifics regarding how such regulation of the multi-channel video world would work in practice.

Ted Hearn of Multichannel News points to this fact in his article today, "FCC Chairman Vague On Capping A La Carte Prices: Martin Has Yet To Spell Out How Mandate Would Work." Ted notes that, "At least in theory, programmers could set a la carte prices so high that the only rational option would be the purchase of the bundle." Thus, Ted wants to know "how so-called wholesale a la carte mandates would be effective if the FCC won’t police the per-channel rates being sought"?

Excellent question, Ted, and one that all analysts who follow this issue want the Chairman to answer. After all, almost all the serious economists and Wall Street analysts who have studied this issue have reached a consistent conclusion: Unless you only subscribe to a few channels, your bill will likely go UP, not down, under a la carte regulation. [Here's a concise explanation of why that will be the case.] So, what's the FCC going to do if those prices start going up once their plan backfires?

Back in 2005, I released a report entitled "Risky Business" about Philadelphia's muni wi-fi plan, which was then in the planning stages. In that report and some subsequent blogs, I laid out a few possible scenarios for what might unfold as problems developed with the municipalization plan, as they always do. I predicted that, as those problems developed and costs grew, it wouldn't be surprising to find the city proposing a bailout for the plan, or look to selling it off to some other established provider at fire sale prices.

At the time, I got a bunch of grief from pro-muni wi-fi advocates for that prediction. They tried to paint me as some sort of enemy of the people and anti-progress, but I just explained to them that the government's track-record on the municipalization front was consistent; consistently disappointing that is. That's usually because the best laid government plans can't keep pace with marketplace / technological developments in this fast-moving field.

Anyway, I felt strangely vindicated today after I read this blurb from Broadband Reports under the title, "Philadelphia Makes Back-Up Plan In Case Earthlink Bails: The city is prepared to take over if need be":

Terry Phillis, Chief Information Officer for Philadelphia’s Mayor’s Office, has stated that the city expects EarthLink to bail on its construction of a citywide wireless system. He says that more will be known within the next sixty days but the city is making back-up plans for municipal Wi-Fi based on the belief that EarthLink will sell (or entirely abandon) the system. They would prefer if EarthLink sold the system to another provider but are prepared to take it over themselves if need be. Phillis was vague about the city's plans but stated that the city sees the network as a valuable asset for residents as well as for their tourist economy.

Valuable for the tourist economy? Yeah, I know I make all my travel plans according to which government's offer muni wi-fi systems. Please.

“How many old media companies would you need to stack on top of one another to equal the value of Google?” That question was put to me last year by a reporter who was interviewing me for a story he was doing about the future of traditional media operators. I was explaining to him how many traditional media operators faced three ominous developments / threats that raised serious questions about their long-term viability: (1) Loss of consumer confidence / allegiance; (2) loss of advertiser confidence / allegiance; and, (3) loss of investor confidence / allegiance as a result of trends (1) & (2).

That first threat or trend was discussed in installments #1 and #2 of my ongoing “Media Metrics” series. Those essays documented the explosion of choices in the media marketplace and showed how many consumers are opting for new media and technology options over older media outlets and options. Installment #3 in the series documented the seismic shifts underway in the advertising marketplace, with ad dollars rapidly flowing away traditional media operators and toward new media and technology providers. Here in installment #4, I will discuss how traditional media operators and new media / technology operators are trading places in terms of investor confidence.

Exhibit 1

This morning George Gilder and I released a paper called "Estimating the Exaflood: The Impact of Video and Rich Media on the Internet."

We examine a range of new network technologies and software applications that are driving innovation -- and, crucially, traffic -- on the Internet.

We find that the U.S. Internet will grow at least 50-fold by 2015. Broken down by application, we project:

-- movie downloads and P2P file sharing could be 100 exabytes
-- video calling and virtual windows could generate 400 exabytes
-- “cloud” computing and remote backup could total 50 exabytes
-- Internet video, gaming, and virtual worlds could produce 200 exabytes
-- non-Internet “IPTV” could reach 100 exabytes, and possibly much more
-- business IP traffic will generate some 100 exabytes
-- other applications (phone, Web, e-mail, photos, music) could be 50 exabytes

Total U.S. IP traffic in 2015 will therefore reach 1,000 exabytes, or one zettabyte, which is equal to one million million billion bytes, or 50 million Libraries of Congress.

Driving and accommodating this surge will be huge investments in new fiber-optic networks. Global Internet investment over the next three years could total $137 billion, and U.S. investment by 2012 could reach $100 billion.

Good piece in FT.com today by Tom Hazlett of George Mason University. In the essay, Tom takes stock of what the Microsoft antitrust case did and did not accomplish over the past decade. After pointing out that the case fell short of the mark in terms of injecting Java-based competition into the marketplace as some had hoped, Tom notes:

But the decade has hardly been a bust for competition. It flourishes on margins unimagined by those who were professing to protect its path. Rivalry has come not from Java, but from a resurgent Apple and the open-source Linux. One is a vertically integrated firm with proprietary innovation; the other a geekdom of code-sharers seeking karma and human capital. Meanwhile, Microsoft’s Internet Explorer is coughing up market share to Mozilla, Netscape and Opera, browsers that ride comfortably on Windows.

But operating systems and browsers turned out to be a side show. The profits of the decade have been stolen by entrepreneurs who saw what was unfolding over a distant horizon. And then traversed that distance in a flash.While the DoJ was filing against Microsoft, two youngsters at Stanford were crawling the web. With a search engine that could catalogue and rank the world’s web sites, matching key words while filtering out mish mash, their start-up quickly entered the language as a verb -- a really popular verb. You can Google it.

Meanwhile, Apple has been making its own fortune under the shadow of the beast. It is crushing Microsoft in media players, finding its salvation in the holy i-trinity of Pod, Tunes and Phone. Domination of this digital consumer space was right there for the dreaming.

Looks like an interesting new book comparing China and India:

Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours

Following similar mistakes by high-profile commentators, Robert Mitchell's got the broadband Internet story utterly backwards.

"Deregulation of telecommunications has been nothing less than an unmitigated disaster for U.S. businesses," Mitchell writes. He notes, correctly, that broadband around the world is flourishing.

Truly high-speed Internet services of 100Mbit/sec. to 1Gbit/sec. are opening up new business opportunities that could create the next Google.

But not in the U.S. Here, the Internet is being throttled at its endpoints by telecommunications carriers and cable companies with a record of spotty service quality, a broadband rollout that has left more than half the nation behind, and overpriced, overprovisioned “high-speed” broadband services that are still widely unavailable.

But wait. Broadband access wasn't deregulated in 1996, as Mitchell contends. We didn't get real deregulation until 2005. And this merciful relief is just now bearing fruit.

The 1996 Telecom Act relaxed rules on long-haul communications and long-distance voice service but re-regulated most last-mile services and broadband technologies. The result was a dramatic expansion of inter-city national and international capacity but a relative slowdown in broadband access investment. Thus the misallocation of capital that led to the "fiber glut," where pathetically thin last-mile tributaries -- artificially constrained by stifling regulation -- could not generate enough data to fill the newly deregulated, capacious core of the network.

But that was the story five to seven years ago, when the lack of last-mile broadband crashed the telecom and technology sectors. In many ways the ten years following the 1996 Act was a wasted decade. Today just the opposite is true. Freed from the old restrictions, broadband buildouts in the U.S. are booming.

Long overdue decisions by the FCC and the courts in 2003, 2005, and 2006 relaxed or eliminated most last-mile broadband regulation. Some work remains at the state utility commission level. But today Verizon is in the midst of a $23 billion investment in new fiber-to-the-home links. AT&T is spending billions more to build fiber-to-the-neighborhood and FTTH for new houses. These networks, which are coming on line right now and will continue to spread to tens of millions of American homes over the next few years, will offer broadband services between 10 and 50 megabits per second. Exactly Mitchell's wish.

The cable companies -- whose broadband services have always been mostly unregulated and who thus gained the broadband lead versus telecom -- will now have to respond in kind. As Verizon and AT&T leapfrog cable's broadband speeds of around 6 megabits-per-second, cable will have to transition more and more of its already capacious networks from TV programming to broadband service. Already we are seeing cable systems offer 15 or even 30 megabit services. Within a year or two, many millions of Americans will have access to broadband every bit as good as world leaders Korea or Hong Kong.

We are -- right now -- in the midst of the broadband buildout we've all been waiting for. The prescriptions advocated by Robert Mitchell would not lead to more broadband but could bring the new broadband buildout to a screeching halt.

Last week on the Google Public Policy Blog, Peter Greenberger of Google's Elections and Issue Advocacy Team posted Google's new guidelines for political advertising on the site. Most of the guidelines seem fairly straightforward and sensible to me since they relate to general principles of fairness and transparency. But sandwiched in between those principles is the following guideline:

No attacks on an individual's personal life. Stating disagreement with or campaigning against a candidate for public office, a political party, or public administration is generally permissible. However, political ads must not include accusations or attacks relating to an individual's personal life, nor can they advocate against a protected group. So, "Crime rates are up under Police Commissioner Gordon" is okay, but "Police Commissioner Gordon had an affair" is not.

I understand what Google is trying to do here in terms of making the Net a more civil place to engage in deliberative democracy without all the mud-slinging and name-calling. In one sense, I applaud them for that. On the other hand, the world is not a perfect place and candidates are not perfect people. And, candidates for office are not just like any other citizen in our society. They are people who will be given power over other people. Power over our lives, our liberties and fate of the nation.

Roy Mark, a reporter with eWeek, was kind enough to call me last week to get some comments for a story he was putting together about the upcoming State of the Union Address and where technology policy fits in.. or rather, doesn't. "When President Bush delivers his final State of the Union speech Jan. 28, don't expect to hear much, if any, discussion of technology," Roy argues in his piece. "In his previous seven addresses to the nation--adding up to almost 34,000 words--the president has never uttered the words "Internet," "broadband" or "digital." Wireless? Not a word. Spectrum? Not a single mention. Network neutrality? Forget it."

Here's a few sections from Roy's article that include my comments agreeing with his thesis:

None of this is surprising to Adam Thierer, director of the Center for Digital Media Freedom and a senior fellow at Washington's Progress & Freedom Foundation. When it comes to tech issues, "This has been an administration that has been largely missing in action," Thierer told eWEEK. "It obsesses more about analog-era issues, steel over silicon, even as the service and technology sectors are the driving factors in the new economy." [...] And, Thierer is quick to point out, there's plenty of blame to spread around in Washington for the current muddled state of technology policy on Capitol Hill. Even though Bush enjoyed the support of a Republican-controlled Congress for the first six years of his administration for his free-market, deregulatory, hands-off approach to technology, Democrats have barely moved the tech agenda forward in their first year controlling both the House and the Senate. "It's hard to find clear and principled positions [on either side of the aisle]," Thierer said. "There seems to be a tendency to curry favor with constituents rather than [pursue legislation] that can pass constitutional muster."

Thierer said he finds that tendency particularly prevalent in the Bush administration's social agenda. With generous support from Democrats, Bush has aggressively pursued a policy of "cleaning up" the Internet, where, in direct contrast to the president's hands-off economic philosophy, he supports direct government action. Bush's Department of Justice has relentlessly tracked down and prosecuted Web gambling operations, particularly after Congress approved legislation designed to keep Americans from placing online wagers, although it remains legal to buy lottery tickets and to place a bet on horse races online.

In what Thierer calls a "social and moral war" that began with online child pornography, the Bush administration has expanded that effort to all Web pornography, raising free speech and privacy issues. "A lot of time and energy has been expended on becoming a national nanny," Thierer said. While that approach is problematic, Thierer remains most concerned about the Bush administration's digital economic policies, he said: "The president does not seem to pay much attention to new economy issues. He takes a pass on a lot of those issues."

Again, Roy's entire eWeek article can be found online here.

Key to America's preeminence in global innovation is our ability to attract capital of all types -- physical, financial, human, and what I call innovation capital, or entrepreneurial risk-taking. For most of America's existence we treated capital more hospitably than almost any nation or region. We enjoyed a massive capital surplus for 350 of those 400 years as investments and immigrants streamed to our shores. Simply put, over the last few hundred years the world gave us its money and its smartest people.

Although many factors govern capital hospitality, a chief measure is marginal tax rates. Low tax rates have long been a key global advantage for America. It is true that over the last 90 years U.S. tax rates rose dramatically from historical levels, albeit with healthy and successful reductions in the 20s, 60s, 80s, and 00s. But what critics of tax rate cuts so often miss is that during much of this period two-thirds or more of the world was either Communist (China, USSR), heavily socialist (India), quasi-socialist (Western Europe), or part of the "developing world." Even high U.S. tax rates were far lower than ROW -- rest of world. We vacuumed up capital -- and thus tax receipts -- from every corner of the globe. The twentieth century was an economic debacle in most of the world, except for the West, Japan, Hong Kong, and a few other islands of relative low-tax prosperity. The low-tax, capital-friendly West won both the economic battle and the Cold War.

The U.S., however, is no longer a low-tax nation.