The Progress & Freedom Foundation Blog

Over the past year or so, many market-oriented critics of Google, like Scott Cleland and Richard Bennett, have criticized the company for aligning itself with Left-leaning causes and intellectuals. Lately, however, what I find interesting is how many leading leftist intellectuals and organizations have begun turning on the company and becoming far more critical of the America's greatest capitalist success story of the past decade. The reason this concerns me is that I see a unholy Right-Left alliance slowly forming that could lead to more calls for regulation not just of Google, but the entire search marketplace. In other words, "Googlephobia" could bubble over into something truly ugly.

Consider the comments of Tim Wu and Lawrence Lessig in Jeff Rosen's huge New York Times Magazine article this weekend, "Google's Gatekeepers." Along with Yochai Benkler, Lessig and Wu form the Holy Trinity of the Digital Left; they set the intellectual agenda for the Left on information technology policy issues. Rosen quotes both Wu and Lessig in his piece going negative on Google. Wu tells Rosen that "To love Google, you have to be a little bit of a monarchist, you have to have faith in the way people traditionally felt about the king." Moreover:

Last week I discussed Barbara Esbin's new PFF paper about the FCC's absurd investigation into how the cable industry is transitioning analog customers over to digital. This is an essential transition is the cable industry is going to free up bandwidth to compete against telco-provided fiber offerings in the future. The faster the cable industry can migrate its old analog TV customers over to the digital platform, the more bandwidth they can re-deploy for high-speed Net access and services. Mark Cuban helps put things in perspective:

1. the only thing that cable companies, and satellite for that matter have to sell is bandwidth and the applications they can run on that bandwith. More bandwidth means more digital everything.

2. For Basic Cable subscribers that get say, 40 analog channels, they are consuming 40 x 38.6mbs or 1.54 Gbs. Let that sink in. 1.54 Gbs of bandwidth. Compare that to how fast your internet access is. That more bandwidth than your entire neighborhood consumes online, by a lot.

Thats also the equivalent of 500 standard def digital channels. If you convert that to revenue per bit for cable companies, or cost per bit for basic cable consumers, the basic cable customers are getting the best deal in town. By a long shot.

Digital cable customers, not so much. Digital customers are paying multiples of analog customers for bandwidth. In reality, analog customers are getting an amazing deal, and the cable companies have been hesitant to convert them only because of the potential FCC backlash.

I'm as cynical as the next guy when it comes to cable rates and motivations, but the reality is that the longer analog remains, the fewer opportunities to leverage the freed up bandwidth to create next generation bandwidth hog applications. Will the cable companies charge us an a lot for that bandwidth, probably. But when we start to see applications built on top of 250mbs per second and more, it will have far more value to society than watching USA Network on your old analog TV. And Net Neutrality? Well if everyone had that 1.54gbs available to them, net neutrality would be a non issue. We wouldn't be arguing about access or pre-emption, we would be arguing about quality of service.

Once again we are reminded that all regulations have opportunity costs and in this case the FCC's actions could cost consumers the loss (or at least delay) of higher-speed broadband offerings in the near-term.

Tim Lee has been taking some heat here from Richard Bennett and Steve Schultze about various aspects of his new Net neutrality paper. I haven't had much time this week to jump into these debates, but I did want to mention one important portion of Tim's paper that is being overlooked. Specifically, I like the way Tim took head-on some of the silly free speech arguments being put forth as a rationale for net neutrality regulation. As Tim notes in the introduction of the paper:

Concerns that network owners will undermine free speech online are particularly misguided. Network owners have neither the technology nor the manpower to effectively filter online content based on the viewpoints being expressed, nor do profit-making businesses have any real incentive to do so. Should a network owner be foolish enough to attempt large-scale censorship of its customers, it would not only fail to suppress the disfavored speech, but the network would actually increase the visibility of the content as the effort at censorship attracted additional coverage of the material being censored.

I think that's exactly right and, later in his paper (between pgs 22-3), Tim nicely elaborates about the "Herculean task" associated with any attempt by a broadband provider to "manipulate human communication." Not only is it true, as Tim argues, that "no widescale manipulation would go unnoticed for very long," but he is also correct in noting that the public and press backlash would be enormous.

Again, I agree wholeheartedly with all these sentiments, but I think Tim missed another important angle here when discussing the unfounded fears about corporate censorship and the misguided attempts to use free speech as a justification for imposing net neutrality regulations.

The day before Halloween was slated for a long-awaited "Technology Policy Smackdown" between the McCain and Obama camps. The event was hosted by the New America Foundation in recognition of the fact that although connectivity and technology are a pervasive part of our economy, these issues had been generally overlooked in the (seemingly endless) 2008 presidential campaign. Like many other Washington policy wonks, I headed over to NAF to see it for myself (and partake of the very tasty "free lunch" provided). Unfortunately, as has been widely noted, Douglas Holz-Eakin, Chief Economic Advisor to the McCain campaign had to cancel at the last minute and the campaign was unable to provide a substitute. An early Halloween trick? The absence of a McCain representative turned the putative debate into a forum for one of Senator Obama's technology policy advisers, former FCC Chairman Reed Hundt, to present an uninterrupted picture of how technology policy might proceed under an Obama administration. There were many unexpected treats.

Barbara Esbin was asked to contribute a piece on network neutrality to "La Lettre de l'Autorite," a newsletter published by the Autorité de Régulation des Communications électroniques et des Postes. The english version can be found here.

Her conclusion:

I have written elsewhere on legal and procedural flaws that may doom the Network Management Order.[1] In summary: (1) the FCC has not been granted explicit authority to regulate the provision of broadband "information services;" (2) the "ancillary jurisdiction" on which the FCC relied was not reasonably related to its other statutorily mandated responsibilities; (3) having failed to adopt enforceable rules concerning broadband network management, the FCC could not lawfully subject Comcast to an "adjudication" concerning its practices; and (4) the Complaint filed against Comcast was defective in several respects and should have been dismissed.

Over at TechDirt, Tom Lee has a sharp critique of Muayyad Al-Chalabi's much-circulated paper (via GigaOm) opposing bandwidth caps. Make sure to read Tom's entire essay, but here's the key take-away:

this whitepaper merely amounts to a complaint that a free lunch is ending. Bandwidth is clearly an increasingly limited resource. And in capitalist societies, money is how we allocate limited resources. The alternate solutions that Al-Chalabi proposes to the carriers on pages 6 and 8 -- like P2P mirrors, improved service and "leveraging... existing relationships with content providers" -- either assume that network improvements are free, would gut network neutrality, or are simply nonsense.

Indeed. But Tom generally agrees that "Comcast's bandwidth cap is a drag" and that "Instead of disconnection, there should be reasonable fees imposed for overages. They should come up with a schedule defining how the cap will increase in the future. And the paper's suggestion of loosened limits during off-peak times is a good one." Well, those are three different things but I generally agree with all of them. Let me just repeat, however, my strong endorsement of the first option -- metering at the margin -- and again highlight the optimal way to do it from an economic perspective. As I noted in one of my many previous articles about metering for bandwidth hogs:

[Not sure if someone else has mentioned this here yet, but... ] There's a terrific piece by Paul Korzeniowski in Forbes this week about the Comcast-BitTorrent debacle called, "Feds and Internet Service Providers Don't Mix." It's well worth reading the whole thing, but I particularly like this passage:

For whatever reason, some believe ISPs should not be able to put any restrictions on the volume of information that any user transmits. That's absurd. Per-bit and per-byte pricing models have long been used for data transmissions. In trying to build and sustain their businesses, carriers constantly balance their attractiveness and viability versus unlimited usage pricing models. By government decree, they no longer have that option. In effect, the FCC has decided to tell ISPs how to run their networks.

A related issue is Comcast's reluctance to disclose its network management processes. The reason seems obvious. Carriers spend literally billions of dollars installing and fine-tuning their networks each year. If they can move traffic more efficiently from one location to the next than their competitors, it translates to a more profitable bottom line. But network neutrality advocates maintain that Comcast has an obligation to open its network operation to the world. Why not have Kentucky Fried Chicken publish its original recipe or Coca-Cola tell us how it makes soft drinks?

Exactly. It gets back to a point I stressed in one of our podcasts on this issue about how "transparency" regulations are great in theory but in practice might have some rather profound implications. More generally, there's just the fact that it further puts the camel's nose in the Internet tent by inviting regulators in to meddle more in the name of "transparency."

As always, Richard Bennett has far more interesting things to say about the issue than me. Check out his essay about this same Forbes piece over at Circle ID.

The FCC's recent Network Management Order concerning Comcast's broadband network management practices purported to establish rules of "reasonable" network management in the context of an "adjudication" of an advocacy group's "formal complaint" concerning Comcast's treatment of P2P traffic on its network. I have written elsewhere about the legal and procedural defects of the Commission's approach that I believe will doom the action's chances on appeal. Here I discuss one relatively unexamined feature of the Order, which is the FCC's conclusion that "a hallmark of whether something is reasonable" is whether a provider discloses the practice to its customers. What will this mean in terms of future FCC enforcement actions?

Writing at Slate, Tim Wu tries to make Obama out to be the real Big Government candidate on media policy, who will deliver "if not a chicken in every pot, a fiber-optic cable in every home." By contrast, Wu implies that McCain is just another pro-big business lackey who doesn't understand "that the media and information industries are special--that like the transportation, energy, or financial industries, they are deeply entwined with the public interest." Wu goes on to say:

Ultimately, most of the difference in Obama's and McCain's media policies boils down to questions about whether the media is special and a dispute over how much to trust the private sector. Camp McCain would tend to leave the private sector alone, with faith that it will deliver to most Americans what they want and deserve. The Obama camp would probably administer a more frequent kick in the pants, in the belief that good behavior just isn't always natural.

First, as a factual matter, Wu is just wrong about McCain being some sort of a radical hands-off, pro-market liberalizer on media policy issues. Oh, if only that were true! But for those of us who have been in DC covering telecom and media policy for many years, it is widely understood there is no nailing down John McCain on any tech, telecom or media policy issue. He's been all over the board. While he has sponsored or supported some deregulatory initiatives on the telecom front in the past, he's also been a supporter of other regulatory causes. His battles with broadcasters and cable, for example, are well-known. Most recently, McCain has been leading the effort to impose a la carte mandates on cable and satellite operators.

Google's Chief Internet Evangelist Vint Cerf, one of the fathers of the Net, has a very thoughtful post up on the Google Public Policy Blog today asking "What's a Reasonable Approach for Managing Broadband Networks?" He runs through a variety of theoretical approaches to network load management. There's much there to ponder, but I just wanted to comment briefly on the very last thing he says in the piece:

Over the past few months, I have been talking with engineers at Comcast about some of these network management issues. I've been pleased so far with the tone and substance of these conversations, which have helped me to better understand the underlying motivation and rationale for the network management decisions facing Comcast, and the unique characteristics of cable broadband architecture. And as we said a few weeks ago, their commitment to a protocol-agnostic approach to network management is a step in the right direction.

I found this of great interest because for the last few months I have been wondering: (a) why isn't there more of that sort of inter- and intra-industry dialogue going on, and (b) what could be done to encourage more of it? With the exception of those folks at the extreme fringe of the Net neutrality movement, most rational people involved in this debate accept the fact that there will be legitimate network management issues that industry must deal with from time to time. So, how can we get people in industry -- from all quarters of it -- to sit down at a negotiating table and hammer things out voluntarily before calling in the regulators to impose ham-handed, inflexible solutions? What we are talking about here is the need for a technical dispute resolution process that doesn't involve the FCC.