economists – Wetmachine

Great Paper on NN Out of University of Florida

Harold March 12, 2007 March 12, 2007Series of Tubes, Tales of the Sausage Factory

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….

Susan Crawford's Five Good Question

Harold July 11, 2006 February 24, 2013Tales of the Sausage Factory

Susan Crawford, a law Professor at Cardozo and a Board Member of ICANN supportive of Net Neutrality, asks and answers five good questions about Network Neutrality. Chris Yoo, a law professor at Vanderbilt and opposed to Net Neutrality, gives his answers (along with Susan’s) here. Harold Feld, not a law professor anywhere, gives his answers below.

Cable Market Power For Dummies

Harold February 1, 2006 February 24, 2013General, Tales of the Sausage Factory

Most folks outside of Washington DC still find their cable company an obnoxious monopoly, despite the presence of competitors like DirecTV, Dish Network, and the occassional overbuilder like RCN. But, despite the fact that customers express far more satisfaction with satellite and overbuilder service, most folks remain subscribed to cable. What gives? And how does cable get away with raising prices and favoring affiliated programming in the face of this “vigorous competition.” Needless to say, the cable folks respond with a host of fancy economic papers that they file with the FCC and present to members of Congress.

My own impression, having spoken with a number of economists, is that the Cable Cos use economics the same way Creationists use intelligent design. The point isn’t to engage in real scientific inquiry. The point is to throw enough scientific sounding stuff out there to confuse the issue and make people believe there are two equally valid sides to the debate. My problem is that the FCC and Congress usually end up playing the the Dover School District Board rather than Judge Jones.

Anyway, in an attempt to cut through some of the nonesense, MAP released a white paper of my authorship yesterday: “The Switching Equation” and Its Impact on the Video Proramming Market and MVPD Pricing. As you can tell by the title, even an attempt to write a simple, plain language version of this ends up more complicated than I’d like. (Sad fact is, economics is hard.)

So here’s the short version — most people find it such a pain in the butt to switch from one service to another that they will put up with higher prices, worse programming, and worse customer service rather than kill two days futzing with unsubscribing to cable and resubscribing to someone else. As long as cable doesn’t stink too badly, they can keep enough market power to make it even harder for competitors by cutting exclusive deals for regional sports programming and jacking up the price of video on demand to competitors (Comcast and Time Warner own 78% of iN Demand, the leading supplier of VoD). If we want real competition, we need to have rules that actually address market power and make it easier for people to switch to competitors. Otherwise, we get a lot of empty rhetoric about “level playing field” and “free market” and blah blah, and we still pay ridiculously high prices for cable and broadband service that still suck.

You want proof? Go read the paper.

Stay tuned . . .

The Sustainable Economics of Open Source and Open Spectrum

Harold December 2, 2005 February 24, 2013General, Tales of the Sausage Factory

A big shout out to Mark Cooper — probably the most prolific and proficient writer on matters economic in the consumer and media reform movements — for putting together two new papers. One explains an economic theory of open spectrum, the other is a brief overview of the basic principles as applied to open source as well.

I shall attempt to translate from the econ speak for the unitiated, as well as explain why Cooper’s discovery/description of a phenomena called a “collaborative good” has such huge implications for public policy.