Series of Tubes

Net Neutrality, ICANN, and other issued related to internet infrastructure

Great Paper on NN Out of University of Florida

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I’m back from a vacation in Israel to discover an amazing economic analysis of network neutrality posted by my good buddies at Consumers Union on hearusnow.org. Written by University of Florida Economists Hsing Cheng, Subhajoyti Bhandyopadhya and Hong Guo, Net Neutrality: A Policy Perspective applies game theory to the network neutrality debate. They conclude that abandoning network neutrality would create a disincentive for broadband network providers to build fatter pipes.

If this analysis seems familiar, it’s because I wrote something similar (but without the fancy math) about a year ago. As always, I get warm fuzzies whenever economists confirm my Econ 101 “gut check.”

Of course, these guys being real economists (as opposed to undergrad posseurs like yours truly) have a bit more to say on the subject and use lots of fancy math that I will not try to reproduce. But I offer some brief plain language explanation (including what I think are the brilliant points in the analysis) below….

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Wireless Broadband As Information Service: Brand X Is Not Enough

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According to this story, FCC Chairman Kevin Martin told the Senate he has circulated a Notice of Proposed Rulemaking to classify broadband via wireless as an “information service.”

This might at first seem no big deal. After all, in the wake of the Brand X decision, the FCC has moved to declare broadband an “information service” for DSL and cable and, more recently, for broadband over power lines (BPL). So, while I may not be happy with using regulatory classifications to achieve back-door deregulation, what makes wireless services different?

The answer has to do with the peculiar way the Communiations Act works, and the physical reality that use of the electromagnetic spectrum really is different than laying a fiber line. True, “technological neutrality” is one of the great regulatory shibboleths these days, even if it does to reality what Yiphtach (Jeptha) did to the people of Ephriam. But the law and reality do matter sometimes. Like here.

I must give fair warning that the analysis below hinges on what will appear to non-lawyers an incredibly bizzare and artificial distinction with no apparent difference in immediate outcome. But among lawyers, this is like mistaking a Satmar Chassid for a Hesder bachur.

Some analysis below.

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Telcos Find Link Between Google, Net Neutrality, and Al Qeda

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As others have chronicled, the people who brought you “Net Neutrality Is In Its Last Throes” and “Deregulated Telecoms Will Be Greeted As Liberators” have now launched a new campaign based on the highly successful tools of this administration and the conservative noise machine generally. This is perhaps unsurprising given the paucity of arguments the anti-net neutrality folks have at this point.

The fear of Google is attractive. Any huge entity attracts concern, and rightly so. I’m pleased that Google has “don’t be evil” as a credo, and that by and large it has done a good job sticking to that. But they are a large corporation like any other, and if they become convinced that something contrary to the public interest is in their best financial interest, I know which way to bet. For this reason, you find a number of perfectly reasonable folks, such as industry observer Robert Cringley (whose push for local ownership of infrastructure hardly makes him a telco or cable enthusiast) is now worried that Google has accumulated a sufficient mass of resources to take over the internet the same way Microsoft took over the desk top.

Please note that this has nothing to do with network neutrality. In fact, if Google really did have an evil plan to leverage its network assets and services to dminate the internet, thelast they would want would be network neutrality. Network neutrality means treating everyone equal, so if Google became the uber-Tier 1 carrier — what Cringley alleges is Google’s ultimate plan — the last thing Google would want would be a requirement to carry everyone’s traffic equally. It would be like Microsoft fighting to keep its monopoly by making the GNU GPL mandatory for all desktop operating systems.

But, as the current Administration has discovered, we don’t need logic. We just need a big old cloud of anxiety and the power of repetition. If you fear Iran and its nuclear ambitions, you must support a surge in Iraq , because Iran supports U.S. withdrawal from Iraq, and Iran has nuclear ambitions. If you fear Google invading your privacy or dominating net applications, you must fear network neutrality, because Google supports network neutrality and they’re big and scary. Network neutrality is a plot by Google to take over the internet, because Google wants to take over the internet and they like network neutrality. And did we mention they’re big and scary? Biiiiiiiiiiiiiiiigggggggg and scaaaaarrrrrrryyyyy!!!! And they like network neutrality. So Network neutrality is scary and bad, like Google, but without the “I’m feeling lucky!” button.

Mind you, you can find plenty of examples of this kind of logic in the mainstream media. You can see this amazing (as always) clip of Stephen Colbert demonstrating how the mainstream media uses this technique on Barack Obama. In a world where the mainstream media apparently believes that voters will make their decision on whether his middle name is Hossein or whether his “business casual look” is too much like Iranian President and fashion plate Mahmoud Ahmadinejad, we can expect the cable cos and telcos to push the link between Google, net neutrality, and Al Qeda

I’ve been at Media Access Project snce 1999. Long enough to remember when America Online and the telcos supported not just network neutrality, but “open access” (letting ISP resell broadband capacity). A fair number of folks accused open access supporters of being AOL shills or tools of the telcos. But after AOL merged with Time Warner, and Michael “deregulate them all and God will know his own” Powell took over the FCC, the companies that had backed open access switched sides. But the public interest community, including MAP, kept fighting the same fight (which has now morphed into the ‘net neutrality’ fight) long after the industry folks switched sides or dropped out.

As I have said many times before, citizen movements must stay citizen driven. Corporations will act in their best interest. They will spend money if they think it will help them earn more money. But that’s as far as they go.

You can’t get a million people or more in this overworked, busy 24/7 world to fight for something — in the face of a continued barrage of advertising, push-polling and the pervasive corrosive cynicism that you can never hope to win in our corrupt political system against the corporate powers that be — unless they believe in it. And you can’t get people to believe in it — especially in the face of the barrage of misinformation — unless there is really something to it. Especially when we are talking about a geeky technical policy issue that no one outside Washington ever heard of a year ago.

So yeah, Google supports network neutrality, and for their own reasons. But chosing to support or not support a cause because Google does is about as stupid as deciding whether or not to vote for Obama because both he and Ahmadinejad hate ties.

For the record, I hate ties too, and I support network neutrality. Just like Obama supports network neutrality. So I guess I must have links to Ahmadinejad. Hopefully, this will not scare away too many readers. But for those unafraid of the frightenng link between network neutrality, me, Barack Obama, and Ahmadinejad,

Stay tuned . . . .

GAO Report: Believing in Competition Doesn’t Make It Happen

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Sometimes I think that the D.C. Circuit and the Republicans running the various Commerce Committees are the Arch Priests of Kiplings Gods of the Market, and it has brow-beaten the poor FCC through repeated reversals accompanied by tongue lashings into embracing this nonsense. The chief tenant of the Gods of the Market Place is that by deregulating the industry, competition emerges and consumers enjoy all the happiness that comes from a competitive environment. If this fails to happen as expected, adherents of the Gods of the Market practice a discipline called “Denial of Reality.” Practitioners of Denial of Reality believe that if you sufficiently discredit people who tell you about actual reality, and keep repeating that the reality you want actually exists, then Actual Reality will eventually by browbeaten into conforming to the reality promised by the Gods of the Market Place. And the FCC, like a good little penitent, keeps trying to produce reports that give the D.C. Circuit and the Republicans in Congress the world they want to see rather than actual reality.

Sadly, as GAO studies keep demonstrating, wishing for competition doesn’t make it so. This latest GAO Report on the lack of competition for business customers in major urban areas (and nicely explained in this piece here) is but the latest in a series of real world reports demonstrating that you can only ignore reality for so long before it bites you in the tender places. Sadly, however, it chomps down hard on the just and the unjust alike.

My analysis below . . .

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Latest AT&T/BS Merger Twist, and Why Bill Kennard Case is Different from Robert McDowell’s

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In the latest chapter of the FCC’s most gripping “telecomnovella” Death Star Reborn: The AT&T/BellSouth Merger, FCC Chairman Kevin Martin has set in motion the process to get 3rd Republican Commissioner Robert McDowell “unrecused”. The FCC has been deadlocked 2-2 because Commissioner McDowell used to represent CompTel, one of the groups opposing the merger, creating a conflict of interest. (You can see my previous coverage explaining all this here.)

McDowell, while not champing at the bit to be unrecused, has announced he’s ready to serve if the FCC’s General Counsel tells him he has to vote to break the deadlock. So it becomes possible to get this done before the new Congress takes over. Although why this should be such a big deal is beyond me, since it’s not like Congress can directly interfere with FCC merger review, and the indirect threats for payback are already on the table.

Martin, conscious of the controversial nature of the move, wrote a letter to the Chairs and ranking members of the Senate and House Commerce Committees explaining the need for such extraordinary action. In doing so, Martin observed that the FCC General Counsel had previously authorized former FCC Chairman William E. Kennard to break a 2-2 deadlock despite Kennard’s previous recusal.

Now some months back, when folks first started wondering about the “McDowell Option,” I opined that while the FCC General Counsel could force McDowell to vote, such a move would be “extraordinary” and “To the best of my knowledge, it has never happened.” So what’s all this about Kennard then?

Art Brodsky does an excellent job explaining why the Kennard situation was radically different. But, my honor being involved and all, I decided to dig a bit deeper. As explained below, the facts on the Kennard case were so bizzare and different (starting with the fact that Kennard had not been legally required to recuse himself in the first place but had done so, in his own words “out of an abundance of caution”), that I still think my original statement stands and that, if the FCC unrecuses McDowell, and requires him to vote, it’s really breaking new ground.

More detail than you could possibly want (including a timeline and relevant quotes from Kennard’s public statement in 2000 on unrecusing himself) below….

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A Network Neutrality Primer

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For those just tuning in, Network Neutrality (aka “NN”, becuase every public policy deserves its own acronym) has gone from sleepy tech issue to major policy fight. So I have prepared a rather lengthy primer below for folks who want a deeper understanding of what’s happening (at least as of today, May 3, 2006).

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COPE-ing nicely, thank you

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Throughout the public interest community, one can find much wailing an gnashing of teeth over today’s Commerce Committee mark up of the Communications Opportunity Enhancement Act of 2006 (COPE). “A Bad Day for Media Democracy” reads the headline at Save Access.

Well, I’m not happy with COPE so far, but I think it turned into a good day for democracy, with better days to come. Because if you thought today was grim, you weren’t here for the absolute spanking net neutrality got in subcommittee in the beginning of April. In the week since the SavetheInternet campaign got underway, four democrats switched their votes on Net Neutrality from “anti” to “pro.” The day before mark up, the Republican chair of the House Subcommittee on Antitrust in the Judiciary Committee and their new task force on telecom declared all out war against the Commerce Committee effort to eliminate a free and open internet. The telcos, who earlier this month boasted they could get the bill past both houses and signed into law before the election recess, don’t sound nearly as confident despite today’s win.

What changed? Until the Subcommittee Spanking, folks let the tech companies do the heavy lifting and fought by the standard lobbying play book. Hill meetings, inside the beltway briefings, insider baseball, blah blah blah. Google v. Verizon, people said, and tuned out. And while the tech lobbyist worked with us public interest folks, one could not help but detect a certain — how shall I put it? — condescension and cluelessness as to how this “public interest” stuff really works. It kinda felt like posing for photo ops, while the “real” decisions about spending money on messaging and what strategies to persue and the ever-important smoke filled room meetings never involved anything as messy as the public.

And, as usual, the tech folks got spanked. Spanked real good. The kinda spanking you usually have to pay good money for if you fancy that kind of thing. Because despite having more money than the telcos and cable cos combined, the tech cos can never win using telco and cable co rules. Because the telcos and cable cos wrote the goddam rules and have played this game by this rulebook for a longer than most tech CEOs have been alive. As a result, the telcos and cable cos are very, very good at it. Meanwhile, as my friend and fellow traveller Jeff Chester at CDD observed the tech companies still can’t figure out how to play this game, or what they want to get out of it if they could figure it out. Or maybe they just like getting spanked, and miss the days when the intellectual property mafia would toast their little bottoms for them with legislation like the Digital Millenium Copyright Act.

So, while still working with the tech lobbyists etc., the folks in the public interest community finally said “Screw this. You guys may be into getting spanked, but we prefer winning. And the way you win in democracy is by busting open the process, getting people to see what’s at stake, and reminding elected officials that their job is to do what’s best for their constituents not to referee industry food fights.” And thus, through the work of Free Press, Common Cause, Moveon and a host of others, was the SavetheInternet campaign born. And when the mainstream media refused to cover the story as too technical or boring or against the interest of their parent mega-companies, 500 bloggers took up the cry. And all this free speech stuff, that the telcos and the cable cos and the memebrs of Congress ignored because it doesn’t have a trade group and you can’t quantify it in dollar terms, really worked. And more and more people are writing letters and calling members and reminding them that there’s an election this fall.

There’s a lesson here; one backed up by the utter triumph of the pro-munibroadband forces against proposed amendments to outlaw munibroadband, or even to grandfather existing state-level bans. YOU CAN’T OUTSOURCE CITIZENSHIP. You can’t let “the tech companies” or even “the consumer advocates” or anyone speak for you. Citizenship carries responsibilities that go beyond the ritual of voting every two years. But when citizens wake up and speak up, and speak to each other, they find — to their surprise — they are strong. They find they have power. And they find that being a citizen may take hard work, but it is so, so, SO much better and more satisfying than being a couch potato. As the great Jewish sage Hillel said: “If I am not for myself, who will be for me? If I am only for myself, who am I? If not me then who? If not now, when?”

Don’t get me wrong. I’m glad the tech companies are on our side. They have a lot to offer, lots of resources, and, if they decide they are tired of of playing by the old rules and getting spanked, can really help push this effort over the top. But if we as citizens let this degenerate to a fight with Google, Microsoft and Silicon Valley venture capitalists who like tech start ups on one side v. AT&T, Comcast and Wall Street analysts who like monopolies on the other, with Congress brokering a deal between the two, then we citizens lose no matter which side wins. We can, we must, speak for ourselves.

When Ben Franklin left the Constitutional Convention someone shouted to him from the crowd “Mr. Franklin, what have you given us?” He answered “A republic — IF YOU CAN KEEP IT.” The Sausage Factory of democracy is a messy business, but it’s worth it. We can either let other folks make the sausage and eat whatever shit they put in, or we can wade in and make sure it comes out alright. We lost today’s battle. But we are turning the tide in the war. And if we keep growing and going like we have in the last week, we will win.

Stay tuned . . . .

An Examination of the Economics of Whitacre Tiering

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Today’s lecture in my occassional “Economics of Market Power” series comes from the hot policy debate over whether we should let dsl (and cable) providers charge third parties for “premium” speeds to reach their customers. I call this behavior “Whitacre Tiering” (as distinguished from other sorts of tiering traffic or bandwidth) in honor of AT&T CEO Ed Whitacre, a chief proponent of the concept.

Last time, I explained why permitting Whitacre tiering would be a disaster for democracy. This time, I’ll explain why Whitacre tiering produces really, really awful results from an economic perspective. It gives actors all the wrong incentives, adds new layers of uncertainty and inefficiency to the market generally, and discourages investment in bandwidth capacity at every stage of the network (thus aggravating the broadband incentives problem you may have read about recently, rather than solving it, as some defenders of Whitacre tiering maintain).

But hey, don’t blame me, I’m just the messenger! Go do the math yourselves. All you need is a basic knowledge of Econ 101. OTOH, if you have a religious belief, possibly supported by self-interest or fueled by PAC money, that all deregulation is good and all regulation is bad, mmmkay (not that Senator Enisgn is likely to ever read this), I expect you will remain unpersuaded. Rather like passionate believers in Ptolemy’s geocentric model of the cosmos, I expect the true believer neo-cons, the companies whose self-interests are implicated, and their wholly owned subsidiaries in state and Federal legislatures, to devise theoretical models and epicycles to explain away all the nasty empirical problems and assure me I live in the delightful world of competition and frictionless switching to competitors.

It moves, it moves . . . .

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What the $#@! is the “Public” Internet

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So here I am, at one of these DC discussion fests between “stakeholders” on “network neutrality.” Net neutrality is what we talk about post Brand X . It means the provider can’t mess with the packets (other than to screen malware or engage in network management). Needless to say, the incumbent wireline providers are not happy with this thought, while all the time proclaiming they will never, ever mess with content.

So what incumbents float instead is the concept of providing “enhanced service” to those with content who will pay extra to be given “priority” to the broadband provider’s subscribers. (“Hey, nice packets you got there. Be a shame if anything . . . happened to them on the way to the customer. But good news. We’re here to offer you a ‘premium’ service that gaurantees you speedy delivery! I suppose I shouldn’t mention this, but your competitor has already signed up . . .”)

This is being justified, in part, as offering premium service on the “private internet” as opposed to the “public interent.”

What the #$@! is a “public internet?” Unless there is some remnant of the NSF backbone out there, or we’re talking about the government funded root servers, there is no such thing as a “public” internet and never was. “The Internet” (back when everyone always used to capitalize it) is a “network of networks” which, since the mid-1990s, have been private networks.

So why are wireline incumbents pushing the “public internet” meme? See below . . .

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My Take on WSIS and DNS

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I will be the first to acknowledge that some good came out of World Summit on Information Society (WSIS) last week in bringing together a lot of people to talk about important issues. On the key item in the news, what would happen to ICANN and management of the domain name system, the U.S. won hands down. And while I have no desire whatsoever to see the DNS run by some UN-type organization, I understand why the U.S. is not exactly popular in other countries.

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