Joho the Blog » FCC Fail — Providing incentives for scarcity

FCC Fail — Providing incentives for scarcity

There are many ways to boil down today’s upcoming FCC rejection of Net neutrality (which they did in the guise of supporting Net neutrality). Here’s one:

The end of Net neutrality means that those who provide access to the Internet — to our Internet, for it is ours, not theirs — have every economic incentive to keep access scarce. By not providing enough bandwidth, they can claim justification for charging users per bit (or per page, service, download, etc.), and justification for charging Net application/data providers for the right to cut ahead in line.

This is ironic — in the not-funny sense — since the access providers’ stated justification for opposing Net neutrality is because to do otherwise would discourage investment. But, why are they going to invest in providing more bits when they make more money by throttling access? (Competition? Sure, that’d be great. Let’s require them to rent out their lines. Oh, I forgot.) Abundance would turn access provision into a profitable commodity business, which is exactly what users want, and what would stimulate innovation and economic growth.

So, now that Net neutrality is going to be overturned, the access providers will make money by preventing access. Anyone want to bet that the U.S. is now going to climb the charts of average national broadband rates and of lowest average cost? Does anyone think that we haven’t just moved back by decades when we’ll have, say, gigabit access common across the country?

For shame, FCC.


[Later that day] The FCC has clarified some of what it means. For example, they are not going to allow access providers to charge companies for fast lane access. It seems that Commissioners Copps and Mignon nudged the regulations in the right direction. Thank you for that. (Also, see Harold Feld’s take.)

25 Responses to “FCC Fail — Providing incentives for scarcity”

  1. You’re not serious. The FCC did EXACTLY what Google wanted. To the letter. That’s why Google lobbyist resigned his post in the Obama White House the day after the regulations were passed at the FCC. Mission Accomplished!

    We can only hope that the courts or Congress will nullify these illegal and unconstitutional regulations posthaste.

  2. Oops…. The above should have said “Google lobbyist Andrew McLaughlin.” Who, not surprisingly, used to be at Berkman.

  3. David, to connect back to a criticism you made of me earlier, I am far more interested in the reasoning and social process that leads you to think it politic (pun intended) to make statements like “… to our Internet, for it is ours, not theirs …”, than I am in the actual content of a phrase such as that. I don’t believe I’m wrong for having that interest.

  4. Seth, first, I believe the statement to be factually true: The Internet is a set of protocols; the physical devices that implement it are not the Internet.

    Second, I believe there are good political/rhetorical reasons for phrasing it that way. (I’ve written before about preferring “our Internet” to “the Internet.”) I think some of the behavior of the access providers can be explained by assuming they honestly believe that the Internet is their property, at least to the extent that they should be allowed to decide which packets get priority, etc. Also, I think it is good politics to remind people (well, those who agree with the sentiment and the idea) that the Net is not primarily a business opportunity for those who provide access, but has value because of the human creativity and connectedness it enables.

    That’s the reasoning, although, I use the phrase because it feels right and because I think it says something unexpectedly true, not because I plotted out the reasons ahead of time.

  5. David, there’s many statements I believe to be factually true, e.g. regarding the Berkman Center, that even I know also would be impolitic to say. However, for many years, the catechism was that the Internet is a “network of networks”, and those were PRIVATE BUSINESSES, which were sacrosanct. And anyone who said otherwise was denounced as basically a Communist. I’m not saying that’s my own view. But arguing against it was very unrewarding. Snide lawyers were likely to sneeringly tell someone who said “they honestly believe that the Internet is their property,” that indeed, the Internet *IS* their property, and this is basic law that only a fool would not understand.

    There’s still some of that around (Hi Brett! :-)). But, now there is a social structure which will reward you for writing “ours, not theirs”, that leads you to say “there are good political/rhetorical reasons for phrasing it that way”. It’s good politics to deride ISPs (“the Net is not primarily a business opportunity for those who provide access”). This profound change interests me orders of magnitude more than whatever semantic justification is made for the nominal statement. For example, after the Google/Verizon Non-Aggression Pact, how does someone figure out whether or not to denounce Google as a traitor to the net-working class?

    It’s as if you wrote “The Moon is made of green cheese”. And rather than debate the defining of “Moon”, “green”, and “cheese” in order to claim it’s true, my interest is in how one determines to ally with the dairy industry.

  6. Seth, you have a framework for this that assumes certain vectors as primary movers. It does not accord with my way of understanding human motivation. And the discussion of our frameworks is (as you and I have learned after many rounds of this) not itself amenable to evidence-based debate.

    That said, my attitude toward, say, Google (which seems to be your idee fixe) is more complex than you’d like it to be for fixing me within your framework. (I’d post links, but, as I said, choice of frameworks seems to be non-evidential.)

  7. Sigh. David, as I’ve said, I know the philosophical problems involved. Pointing out nothing can ever be determined absolutely is not really a rebuttal, because such issues apply in the other direction too – it’s well known that in politics, people actually outright lie, at the bidding of their funders (not that I’m saying you’re doing that, of course). I’m very interested in testing and refining my models and understanding. But any claim along the lines of there’s no validity whatsoever to follow-the-money is what strikes me as the denial of evidence.

    You’ve also knocked down a straw man – I’ve said nothing about “your attitude toward … Google” in total – I think you’re constructing a trivial model, about to knock it down, and use that as a way of attempting to invalidate everything else.

    FYI, phrases like “Google (which seems to be your idee fixe)” are exactly the sort derision which would have been visited on your post above in the pre-Google politics I’d seen – i.e. like “ISPs (which seems to be Weinberger’s idee fixe)”.

  8. I didn’t say “follow the money” never has any relevance, btw. It just doesn’t here. If you disagree about this case, please tell me your evidence.

    Seth, I guess I don’t know what would be a truthful response that wouldn’t elicit a “sigh” from you. I explained as clearly and honestly as I could the “reasoning and social process” that led me to write “our Internet.” If my self-explanation doesn’t satisfy you, then you’ll have to just go with your own, regardless of my own best introspection. Nothing I can do about that. Sigh.

    Happy holidays, and have a good new year, Seth.

  9. Give me a break, David. The notion that Google is the prime mover behind the regulations isn’t an “idee fixe;” it’s simply the truth. Google has achieved regulatory capture of the FCC via campaign contributions and lobbying. For example, it’s given lots of money, as well as free labor, to Public Knowledge – a boutique DC lobbying shop whose head and founder is an intimate personal friend of Julius Genachowski. It’s not stupid; it knows that if it hires the right people it will have a direct line to the Chairman. It’s also no coincidence that Google funds the Berkman Center, which just happens to be at Genachowski’s and Obama’s alma mater. Or that it owns the New America Foundation (another DC lobbying outfit) lock, stock, and barrel. Or that it supports radical lobbying group Free Press’s “Save the Internet Coalition” with free ads. And on and on. Along with the paid lobbyists, there are also a number of “useful idiots” who have swallowed the propaganda and fearmongering put forth by the lobbyists.

    To my knowledge, no company has never dug in quite so deep to attempt complete regulatory capture of an industry. But those of us who are in that industry will not go quietly. We’ll engage in civil disobedience. We’ll go to Congress. We’ll go to court. No corporation should be allowed to harm us or our communities by buying influence.

  10. Brett, a few corrections – the Berkman Center is not the alma mater of either Genachowski or Obama (just Harvard). Also, I wouldn’t put forth a knowledge of regulatory capture, there’s likely been far worse in other industries (I’m thinking pharmaceuticals, which makes the Berkman Center look like a bunch of choirboys, and is what I use as comparison for times when I wonder can-they-do-that). I like your line “No corporation should be allowed to harm us or our communities …”, though. That’s rhetoric almost up to the skill level of David Weinberger :-).

    David, I had a longer reply to your points, but I decided it wasn’t helpful overall. Happy holidays/new year to you also.

  11. Seth, you will note that I said that the Berkman center is AT Harvard. It’s affiliated with the Harvard Law School, which both Barack Obama and Julius Genachowski attended.

    As for Big Pharma: while it has huge influence, it has never completely controlled the FDA the way Google now controls the FCC. Why? Because the FDA still has scientists. As two of its former chief technologists have told me ruefully, the FCC has nearly no engineers left. What was intended to be an apolitical expert agency is now a politicized regulatory agency consisting mostly of lawyers.

    As for what the Internet actually is: see my comments at http://www.brettglass.com/reclassification.pdf. I was there at its inception, at Stanford, helping to manage the computers that were being converted to the TCP/IP protocol, so I know whereof I speak.

    My network belongs to me. I paid for it, I built it, and I can show you the many scars on my hands to prove it. The government will take control of it when it wrests my keyboard from my cold, dead fingers.

  12. Brett, you’re right, you did say “AT Harvard”. That’s such a tenuous connection I thought you meant more. Washington is full of lawyers, lobbyists, bureaucrats, etc. with some connection to Harvard. Regarding agencies, in case you haven’t noticed, there’s been an extensive right-wing war on scientists as government advisers – burden of proof is on you to show the FCC has the worst of it.

    Regarding “The government will take control of it when it wrests my keyboard from my cold, dead fingers.”, I was just thinking of dropping you an email about old slogans, so I’ll put it here. Nothing but curiosity, but offhand, do you know of any mid-90′s citations for “My Server, My Rules”? I was checking an old “Commercialization & Privatization of the Internet ” list archive I found, and to my surprise, couldn’t find the phrase there (though it did confirm my memory isn’t playing tricks on me regarding attitude in general). Google Groups doesn’t have it until 2000, though I think that’s because the early USENET archive is very incomplete. Doesn’t even appear in Google Books. It seem surprising hard to document for what I recall as such a common net.saying.

  13. Seth, the first place I encountered the saying, “My server, my rules” was on NANAE (the infamous Usenet anti-spam Usenet group). I’d recommend looking there for early instances of it.

  14. Oh, and David: the Internet is not a “set of protocols.” If it were, then any network that was set up to use TCP/IP would be part of the Internet, which is obviously not the case.

    The Internet is a set of independent, autonomous networks that have agreed to exchange data packets. They are independently owned, independently operated, independently managed, and each subject to the owner’s acceptable use policy. The government has no right to control them any more than it has the right to come into your house and control your home network.

  15. Brett, Google Groups only has instances of “My server, my rules” on NANAE dating from 2002. There’s a few scattered earlier. But I could have sworn that the phrase was widely used beforehand, in the ISP context when discussing various disputes. It’s significant that you recall it first from NANAE, which is fairly late in the commercial evolution of the Net (as you know, once upon a time, there was no spam).

    By the way, it’s settled US Constitutional law that the government has a right to control interstate commerce, so Comcast and Verizon are NOT like a home network.

  16. Seth, if that logic were to hold water, then the government could claim that because your home network is part of the Internet (which it is when it attaches to it), government has the right to control your home network, tax it, or even burst into your home and commandeer it.

    The FCC’s arguments that it can regulate the Internet are about as sensible as that.

  17. Brett, do you disagree with the following statement: Under US Constitutional law (even pre-New Deal understanding) the government has the right to regulate companies such as Comcast or Verizon, as they are unquestionably engaged in interstate commerce.

    Agree or Disagree?

    Note what I didn’t say there – “your home network”. Even “your small-business WISP”. I said “companies such as Comcast or Verizon”.

    [Note to David, if still reading the thread - see my point? The difference between then and now, is that there wouldn't have been the amazing amount of support for the ISP regulation side, plus social status for bashing it. That's all not fashion trends.]

  18. The only difference between my network and Comcast’s or Verizon’s is size. They are run pretty much the same way (though I daresay mine is run a bit better). It is not legal for the FCC to regulate ANY ISP of ANY size.

  19. Brett, you didn’t answer the question – repeat: “Do you disagree with the following statement: Under US Constitutional law (even pre-New Deal understanding) the government has the right to regulate companies such as Comcast or Verizon, as they are unquestionably engaged in interstate commerce.”

    To be tedious – under US law, the Federal government may regulate private businesses, with everything from hiring decisions to safety standards to product requirements, if those businesses are within the interstate commerce power. This is not a controversial statement outside of net.libertarian ideology.

    Whether the FCC, an agency, has the authority delegated to it by Congress, or the regulation would have to come from Congress itself, is a complicated legal matter, and not germane to the question above.

  20. Congress does not have blanket power to regulate business. The first, fourth, and fifth amendments limit those powers. Congress cannot pass a law that constitutes a regulatory taking of my network.

  21. Sigh. Brett, that whole line of argument has been flogged to death. Do you think Comcast’s and Verizon’s lawyers never heard about it?

    [Note to David again - imagine going through this with half a dozen posters all flaming you personally, instead of the current context of high-level support / social reward for statements like "our Internet, for it is ours, not theirs".].

  22. Oft-repeated or not, Seth, that point is 100% valid and tested in court. Sorry if you do not like the fact that I own my network. You have no right to take it from me.

  23. Double sigh. From the FCC:

    2. Fifth Amendment Takings
    149. Contrary to the claims of some broadband providers,471 open Internet rules pose
    no issue under the Fifth Amendment’s Takings Clause. Our rules do not compel new services or
    limit broadband providers’ flexibility in setting prices for their broadband Internet access
    services, but simply require transparency and prevent broadband providers–when they
    voluntarily carry Internet traffic–from blocking or unreasonably discriminating in their treatment
    of that traffic. Moreover, this Order involves setting policies for communications networks, an
    activity that has been one of this Commission’s central duties since it was established in 1934.
    150. Absent compelled permanent physical occupations of property,472 takings
    analysis involves “essentially ad hoc, factual inquiries” regarding such factors as the degree of
    interference with “investment-backed expectations,” the “economic impact of the regulation” and
    “the character of the government action.”473 In this regard, takings law makes clear that property
    owners cannot, as a general matter, expect that existing legal requirements regarding their
    property will remain entirely unchanged.474 As discussed in Part II, the history of broadband
    Internet access services offers no basis for reasonable reliance on a policy regime in which
    providers are free to conceal or discriminate without limit, and the rules we adopt today should
    not impose substantial new costs on broadband providers.475 Accordingly, our Order does not
    raise constitutional concerns under regulatory takings analysis.

  24. Funny how you quote a screed about “takings” by a regulatory agency that wants to perform them.

  25. I summed up a lot of what you said here, just in layman’s terms on my net neutrality post (http://nerdnewsforjocks.blogspot.com/2011/01/what-f-is-net-neutrality.html)

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