Showdowns are likely in the Senate and House of Representatives later this month on legislation combating online piracy. The House Judiciary Committee is expected to vote on the Stop Online Privacy Act, H.R. 3261 (SOPA), and the full Senate on the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act, S. 968 (Protect IP Act). These measures have generated some overheated rhetoric.
A recent column in Roll Call by Stephen DeMaura and David Segal, entitled "All Candidates Should Be Concerned About SOPA," for example, suggests that SOPA could be exploited by political opponents to restrict free speech.
Here's a plausible campaign scenario under SOPA. Imagine you are running for Congress in a competitive House district. You give a strong interview to a local morning news show and your campaign posts the clip on your website. When your opponent's campaign sees the video, it decides to play hardball and sends a notice to your Internet service provider alerting them to what it deems "infringing content." It doesn't matter if the content is actually pirated. The ISP has five days to pull down your website and the offending clip or be sued. If you don't take the video down, even if you believe that the content is protected under fair use, your website goes dark.
Another recent column in Politico by Tim Mak entitled "Bloggers: SOPA's the end of us" makes a similar claim and implies a tidal wave of opposition is forming (we shall see).
The conservative and liberal blogospheres are unifying behind opposition to Congress's Stop Online Piracy Act, with right-leaning bloggers arguing their very existence could be wiped out if the anti-piracy bill passes.
There is no way these bills would permit an opposing campaign or campaign committee to pull down websites harboring "infringing content," nor would they authorize censorship of lawful speech.
Further uncertainty for universal service and intercarrier compensation reform
Hance Haney
The National Telecommunications Cooperative Association (NTCA) began the process of litigating the Federal Communications Commission's recent Connect America Fund Order on in the U.S. Court of Appeals for the Fourth Circuit Friday.
NTCA, which represents over 570 "locally owned and controlled telecommunications cooperatives and commercial companies throughout rural and small-town America," notes, among other things, that "[p]rovisions [of the Order] mandating an ultimate price of zero for all switched access and reciprocal compensation services, imposing retroactive and dynamically changing caps on USF-supported costs and blurring the lines between regulated and nonregulated operations are inconsistent with law."
What this particular dispute is ultimately about is not whether NTCA's members are entitled to recover their reasonable costs as a matter of law (they certainly are), but whether they should continue to be allowed to shift a significant portion of those costs to the urban and suburban customers of unaffiliated communications providers that are subject to intensive competition. Implemented to ensure reasonably comparable rates throughout the nation, this arrangement has become difficult to justify for many reasons, one of which is that, in many cases, urban and suburban consumers are forced to pay rates that are much higher than the rates charged by small phone companies who receive the subsidies.
According to the Order, two carriers in Iowa and one carrier in Minnesota offer local residential rates below $5 per month (¶235), and approximately 60 percent of small company service territories studied have local residential rates that are below the 2008 national average local rate of $15.62. (¶236). "While individual consumers in those areas may benefit from such low rates," the FCC commendably acknowledges, "when a carrier uses universal service support to subsidize local rates well below those required by the Act, the carrier is spending universal service funds that could potentially be better deployed to the benefit of consumers elsewhere." (fn. 378)
The FCC, to its credit, has acted decisively in adopting a long-overdue "bill-and-keep" framework for both inter- and intrastate telecommunications. "Under bill-and-keep," the commission has explained, "carriers look first to their subscribers to cover the costs of the network, then to explicit universal service support where necessary." (¶34) In other words, providers will no longer charge originating and terminating access fees for inter-exchange (toll) traffic. Bill-and-keep is just like an Internet peering agreement. Telecommunications providers will transition to bill-and-keep within six years for larger (price cap) carriers and nine years for smaller (rate-of-return) carriers.
There are many other wonderful reforms in the Order; unfortunately, the treatment of VoIP traffic is not one of them. The FCC has hesitated for years to rule whether VoIP is a "telecommunications" service that should bear a full measure of the burden of subsidizing legacy networks throughout rural and small-town America. Almost everyone recognizes that taxing a more efficient new technology to subsidize a less efficient legacy technology does not tend to promote innovation.
The commission has imposed subsidy obligations on some VoIP services, but not others. The resulting "lack of clarity," by the FCC's own admission, has led to "significant billing disputes and litigation," including pending disputes in a number of courts and state commissions. (¶937) I recently noted one of these, the case of Southwestern Bell Telephone Company et al. v. IDT Telecom, Inc., et al., here. The FCC further acknowledges that "the current uncertainty and associated disputes are likely deterring innovation and introduction of new IP services to consumers." (¶939)
Here, the FCC has decided to subject "toll" VoIP traffic to interstate switched access fees and local VoIP traffic to lower "reciprocal compensation" fees (note: it is still up in the air whether the VoIP services at issue in IDT Telecom are toll or local; the FCC refuses to say). Although some VoIP services may not currently be fully taxed as if they are telecommunications services (which they are not, since the FCC has declined to rule), and although all traffic, including VoIP, will ultimately be subject to a bill-and-keep framework, the commission has decided to treat VoIP as a telecommunications service for billing purposes during the 6-9 year transition. Why? Politics are politics.
By declining to apply the entire preexisting intercarrier compensation regime to VoIP-PSTN traffic prospectively, we recognize the shortcomings of that regime. At the same time, we are mindful of the need for a measured transition for carriers that receive substantial revenues from intercarrier compensation. (¶935)
Since some VoIP services currently generate less taxes than others, the FCC could have lowered taxes for all VoIP services to the lowest current level (a bill-and-keep framework is the goal, after all). Nope. The commission has resolved some uncertainty (although it has not resolved the IDT Telecom issue), in favor of more interim taxation, not less. This is a politically-driven decision which attempts to generate payoffs for politically-influential "stakeholder" groups for 6-9 years. Tributes for trolls is another way of looking at this.
The FCC's treatment of VoIP services is unsatisfactory. It does not tend to promote innovation; rather, it tends to penalize innovative new approaches for promoting consumer welfare. We now face a new round of litigation. The NTCA lawsuit is the first major challenge, and there may be others.
An item in the Wall Street Journal by Emily Steel notes how software application developers could radically alter the online advertising business that has allowed firms like Google and Facebook to prosper. Consumers are downloading independently-produced apps which allow them to customize their Facebook page or optimize their Google search results. In the process, these consumers begin to see ads that do not originate from Facebook or Google.
On Facebook, for instance, big splashy ads appear along the border and in the middle of the pages, pushing content--and the advertising actually sold by Facebook-- further down the page. The applications can similarly interfere with search results, placing new sets of ads above the ones bought, say, by Google advertisers.
This is the beginning of a major trend, in my opinion. Here is another example: I just downloaded an iPhone app from Harris Teeter, my neighborhood food market, which will allow me to receive offer notifications directly from HT without the need for an intermediary like Google. This retailer already keeps track of all my purchases, the frequency of my visits, the time of day I typically shop, etc. It knows far more about my grocery preferences than Facebook or Google -- like which specials I fall for every time, and also the high-margin staples I tend to pick up while I am there.
Imagine what will happen when consumers like me download similar apps from all of our favorite retailers? If retailers do not need Facebook or Google to serve targeted ads to their best customers, Facebook and Google could be up against some serious competition. This is what happens when firms become exceptionally profitable. Highly profitable industries attract new entrants, who are frequently indirect competitors. This is an example of creative destruction, which frequently tends to escape the notice of antitrust enforcers.
AT&T and T-Mobile withdrew their merger application from the Federal Communications Commission Nov. 29 after it became clear that rigid ideologues at the FCC with no idea how to promote economic growth were determined to create as much trouble as possible.
The companies will continue to battle the U.S. Department of Justice on behalf of their deal. They can contend with the FCC later, perhaps after the next election. The conflict with DOJ will take place in a court of law, where usually there is scrupulous regard for facts, law and procedure. By comparison, the FCC is a playground for politicians, bureaucrats and lobbyists that tends to do whatever it wants.
In an unusual move, the agency released an analysis by the staff that is critical of the merger. Although the analysis has no legal significance whatsoever, publishing it is one way the zealots hope to influence the course of events given that they may no longer be in a position to judge the merger, eventually, as a result of the 2012 election.
This is not about promoting good government; this is about ideological preferences and a determination to obtain results by hook or crook.
The staff analysis makes it painfully clear that the people in charge have learned very little from the failure of government to reboot the nation's economy. For starters, the analysis notes points out that "there will be fewer total direct jobs across the business," notwithstanding various commitments the companies have made to protect many existing jobs and add many new ones. The staff should have checked with the chairman of President Obama's jobs council, for one. CEO Jeff Immelt drives growth at GE through productivity and innovation, not by subsidizing inefficiency (see this). He realizes that when government tries to preserve wasteful methods, firms become uncompetitive and lose market share. That's a recipe for unemployment. The FCC staff analysis has got it completely backwards. When politicians set out to "create" jobs, it is often at the expense of productivity. We don't need that kind of "help" from Washington. In a wonderful column I am fond of citing, Russell Roberts recounts a story that bears repeating here.
The story goes that Milton Friedman was once taken to see a massive government project somewhere in Asia. Thousands of workers using shovels were building a canal. Friedman was puzzled. Why weren't there any excavators or any mechanized earth-moving equipment? A government official explained that using shovels created more jobs. Friedman's response: "Then why not use spoons instead of shovels?"
FCC Chairman Julius Genachowski got it essentially correct when he remarked in a recent speech that, "Our country faces tremendous economic challenges. Millions of Americans are struggling. And new technologies and a hyper-connected, flat world mean unprecedented competition for American businesses and workers." Sadly, he does not realize that a merger between AT&T and T-Mobile provides a vehicle for that.
The combined company would have the "necessary scale, scope, resources and spectrum" to deploy fourth generation wireless services to more than 97% percent of Americans (instead of 80%), according to a filing they made in April. That would make our nation more productive and improve our competitiveness, which is we want. An analysis by Ethan Pollack at the Economic Policy Institute predicts that every $1 billion invested in wireless infrastructure will create the equivalent of approximately 12,000 jobs held for one year throughout the economy, and that if the combined company's net investment were to increase by $8 billion, the total impact would be between 55,000 and 96,000 job-years. The FCC staff thinks this is an irrelevant consideration, because it might happen anyway.
Several commenters respond that even absent the proposed transaction, AT&T would likely upgrade its full footprint to LTE in response to competition from Verizon Wireless and other mobile and other mobile wireless providers * * * * Nothing in this record suggests that AT&T is likely to depart from its historical practice of footprint-wide technological upgrades with respect to LTE even absent this transaction.
They may be right, but this is wishful thinking at a time when millions of Americans are struggling. The best course of action at this point is to improve incentives for corporations to increase capital investment, improve productivity, capture market share and create more jobs. The Feds should obviously approve this merger, because the record clearly shows that the companies are willing to undertake a massive net increase in capital investment, now.
What about the counter-argument that if there are fewer wireless providers, that may lead to consumer price increases down the road? We can worry about that later. Right now, we need to worry about the unemployed. Incidentally, increasing supply in wireless is very simple. The FCC can simply award additional spectrum for mobile communications. Almost everyone agrees that this is the best tool the government has to promote competition in wireless.
The FCC committed another unforgivable error when it tried to blow up this merger. This is not the first time the commission has recklessly put entire sectors of our nation's economy at risk while it conducts idealistic experiments for attaining consumer savings through rate regulation or regulatory mischief in pursuit perfectly competitive markets. The FCC's cable rate regulation experiment in the early 1990s and its local telephone competition experiment in the late 1990s were both total failures and complete disasters.
This agency could use some humility, or some adult oversight.
What is the FCC's jurisdiction to subsidize broadband?
Hance Haney
The Federal Communications Commission issued its Connect America Fund Order to ensure ubiquitous broadband Internet access services on Friday.
When Congress debated the Telecommunications Act of 1996, the section concerning Universal Service (Section 254) was somewhat controversial. Broadly speaking, there seemed to be considerable support in the House of Representatives for limiting Universal Service, and there were some influential senators who wanted to expand it (the House is somewhat more representative of urban areas that contribute subsidies, and the Senate is somewhat more representative of rural areas that receive subsidies). The result was a compromise in which Universal Service is defined (in Sec. 254(c)(1)) as "an evolving level of telecommunications services that the Commission shall establish periodically ... taking into account advances in telecommunications and information technologies and services." Notice how information services are missing in the first half of that sentence. Although the FCC is allowed to take notice of information services, Universal Service has to support telecommunications services only.
This is relevant because the FCC subsequently ruled that broadband Internet access is an information, not a telecommunications service (Order at paragraph 71). The commission also subsequently ruled that a service has to be one or the other, and that it cannot be both ("hybrid services are information services, and are not telecommunications services," ruled the FCC in a 1998 Report to Congress at paragraph #57).
Testifying today before the Judiciary Committee of the House of Representatives, Google's copyright counsel, Katherine Oyama, made a number of useful observations about the proposed Stop Online Piracy Act (H.R. 3261). For example, she claimed that the bill could require U.S. Internet and technology companies to monitor Web sites and social media for infringing content.
It would make no sense to make companies like AOL, eBay, Facebook, Google, LinkedIn, Mozilla, Twitter, Yahoo! and Zynga responsible for the content that their customers link to or post on the Web. On the other hand, it would also not make sense for these companies to remain free to ignore obvious copyright infringement. Say the owner of a copyright notifies these companies about infringing material, and the companies remove it but then it is immediately re-posted by a user? Can't a copyright owner get some help at that point? Some reasonable "best efforts" help, not strict liability. In fairness, this type of help is probably already available on a voluntary basis, to some extent.
These companies provide valuable services that are primarily used for non-infringing purposes. They do not need pirates. They support SOPA's stated goal of providing additional enforcement tools to combat foreign rogue websites that are dedicated to copyright infringement and counterfeiting, according to Oyama. These companies have awesome capabilities, but obviously they cannot single-handedly prevent their customers from violating intellectual property laws. Nor have they sought to evade any responsibility for doing so, for the most part.
But we have a real problem here, as I have discussed here and here. House Judiciary Chairman Lamar Smith (R-TX) has cited estimates that IP theft costs the U.S. economy more than $100 billion annually and results in the loss of thousands of American jobs. We have got to do something about this.
By all means let's debate the wording of the proposed Stop Online Piracy Act. Let us establish realistic and practicable obligations and liabilities. But the basic idea that all of the key players in the Internet ecosystem -- including advertising services, domain name servers, search engines, payment network providers, etc. -- have a legitimate and necessary role to play seems beyond dispute. And as technology advances, so do the reasonable capabilities of each of these players.
GPS tracking devices do not have power to rewrite Fourth Amendment
Hance Haney
Futurists have been predicting for years that there will be diminished privacy in the future, and we will just have to adapt. In 1999, for example, Sun Mcrosystems CEO Scott McNealy posited that we have "zero privacy." Now, Wall Street Journal columnist Gordon Crovitz is suggesting that technology has the "power to rewrite constitutional protections." He is referring to GPS tracking devices, of all things.
The Supreme Court is considering whether it was unreasonable for police to hide a GPS tracing device on a vehicle belonging to a suspected drug dealer. The Bill of Rights protects each of us against unreasonable searches and seizures. According to the Fourth Amendment,
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
In the case before the Supreme Court, U.S. v. Antoine Jones, the requirement to obtain a warrant was not problematic. In fact, the police established probable cause to suspect Jones of a crime and obtained a warrant. The problem is, the police violated the terms of the warrant, which had expired and which was never valid in the jurisdiction where the tracking occurred. Therefore, first and foremost, this is a case about police misconduct.
Tomorrow the United States Senate will vote on S.J.Res. 6, a joint resolution disapproving the rule submitted by the Federal Communications Commission with respect to regulating the Internet and broadband industry practices. An identical resolution (H.J.Res. 37) has already passed the House of Representatives by a vote of 240-179. Today Sen. Marco Rubio (R-FL) explained why Congress should protect the Internet from unnecessary government regulation -- because regulation inhibits investment and innovation.
If the Senate adopts the resolution, the President will use his veto to block the will of the people as expressed through their Congressional representatives, according to reports.
Is the proposed Stop Online Piracy Act, H.R. 3261 (SOPA) a "massive piece of job-killing Internet regulation," as our friends at the Electronic Frontier Foundation claim?
According to the sponsor of the proposal, House Judiciary Chairman Lamar Smith (R-TX), there is an urgent need to protect American innovators from foreign theft via the Internet.
Rogue websites that steal and sell American innovations have operated with impunity. The online thieves who run these foreign websites are out of the reach of U.S. law enforcement agencies and profit from selling pirated goods without any legal consequences. According to estimates, IP theft costs the U.S. economy more than $100 billion annually and results in the loss of thousands of American jobs.
The Stop Online Piracy Act helps stop the flow of revenue to rogue websites and ensures that the profits from American innovations go to American innovators. The bill prevents online thieves from selling counterfeit goods in the U.S., expands international protections for intellectual property, and protects American consumers from dangerous counterfeit products.
American IP industries provide 19 million high-paying jobs to the U.S. economy and account for more than 60% of U.S. exports. It's time to stop online piracy and start protecting American jobs and innovations.
EFF makes some potentially useful points about the drafting of the bill. In lawmaking, as a general matter, the first draft of a bill sometimes uses language that is perhaps overly broad. Sometimes consequences for reckless, negligent or malicious enforcement, litigation or prosecution should be added to ensure fairness. To the extent that these are legitimate issues, they are normally resolved during a properly-functioning legislative process.
Presumably we can all agree that theft is bad, and that we would all like to prevent theft to the extent possible. Opponents such as EFF can provide a valuable service by making specific recommendations; unfortunately, EFF is not playing ball. "This bill cannot be fixed," according to EFF, "it must be killed."
With all due respect to EFF, the numbers cited by Chairman Smith are staggering. Foreigners are robbing American innovators blind. And their losses are ultimately our losses. It is time for us to come together and search for new approaches for combating intellectual property theft.
No one wants to strangle "Twitter, Tumblr, and the next innovative social network, cloud computing, or web hosting service that some smart kid is designing in her garage right now," to use EFF's colorful example. But let's be real, innovation is about creating, not stealing. Pirated content is not primarily responsible for the success of Twitter, Tumblr, Facebook, iTunes or YouTube. Although piracy may provide some limited help for imitators, it is not necessary for creators, and it does not promote innovation.
So, if there is a better approach for combating foreign piracy than SOPA, let's hear it.
At next week's administrative session, the Georgia Public Service Commission will consider a proposed order from the Public Interest Advocacy Staff concerning the applications of three small telecom service providers for subsidies from Georgia's Universal Access Fund. The companies are: Chickamauga Telephone Corp., Public Service Telephone Co. and Ringgold Telephone Co.
According to Kristi E. Swartz, writing in the Atlanta Journal-Constitution in August,
The Public Service Commission held two days of hearings this week on three requests of more than $1 million each. Opponents took particular aim at executive and owner compensation.
Ringgold Telephone, which serves northeast Georgia, paid five executives more than $950,000, according to testimony and documents filed with the PSC. Public Service Telephone, which operates in Middle Georgia, doled out $2 million in dividends to its three private owners, according to testimony and documents filed with the PSC.
We are talking about government-mandated subsidies, which force urban and suburban telecom consumers in Georgia, without regard to individual economic circumstances, to pay inflated prices for wireline telephone service for the purpose of subsidizing telephone service in rural communities. Will rural consumers really be cut off from the rest of the World without these subsidies, or do the subsidies mainly benefit richly compensated executives and owners of legally-privileged telecom service providers? It is hard to tell. "Because the rural companies are private," notes Swartz, "much of their financial information is undisclosed."
States must reform rates for intrastate switched access
Hance Haney
Federal Communications Commission Chairman Julius Genachowski's criticism of intercarrier compensation in extensive remarks on telephone subsidies last week is a reminder for many states of the need to reform intrastate switched access rates.
Although Congress mandated the elimination of implicit subsidies embedded in the rates for both interstate and intrastate telecommunications services in the Telecommunications Act of 1996, it did not set a deadline. The FCC has substantially reduced interstate switched access rates in recent years, but a considerable amount of hidden subsidies remain in intrastate switched access fees.
In Florida, for example, one telecom service provider charges 5.64 cents per conversation minute for intrastate long distance versus only 1.65 cents for interstate long distance. The difference represents a hidden subsidy component that operates as a form of tax that only residents of Florida pay, since the lower interstate fees apply to calls which cross state lines.
Reforming Universal Service is Plan C for broadband regulation
Hance Haney
Chairman Julius Genachowski of the Federal Communications Commission spoke of the need to reduce subsidies for traditional wireline telephone service last week, as well as a perceived need for his agency to use the savings to subsidize broadband services (see the press release and the text of the speech).
Genachowski is absolutely correct about the need for reforming universal service and intercarrier compensation. Unfortunately, his determination to reform telephone subsidies is not for the purpose of generating consumer savings, but about redirecting resources currently at his disposal for the purpose of gaining some measure of control over unregulated broadband networks. Though cleverly disguised, this is actually a third major attempt to (slowly) impose public utility regulation on broadband service providers.
You gotta love this guy. Or do you? Referring to the Department of Justice's challenge to the AT&T + T-Mobile USA merger, Sprint CEO Dan Hesse (mug shot to the right} claims,
I don't believe that what the DOJ said in any way, not even a little bit, should be viewed as we want to keep four [major telecom carriers] .... My view is [the DOJ] would look at other consolidation very differently.
What is he saying? According to another report, Hesse believes,
[Y]ou could make a very, very strong argument, I believe, that if you have two value players that, let's say, got together, that gave them more scale and a better cost structure to compete with the twin Bells, that is an advantage that outweighs having a smaller three and four.
This report notes that Sprint and T-Mobile did discuss a merger earlier this year before the AT&T deal was announced.
Does Hesse speak for the Department of Justice? Is the DOJ trying to help Sprint acquire T-Mobile at less than AT&T is willing to pay? Has Sprint bought the DOJ? What is going on here?
We know that T-Mobile faces a bleak future on its own. According to Verizon CEO Lowell McAdam,
I have taken the position that the AT&T merger with T-Mobile was kind of like gravity. It had to occur, because you had a company with a T-Mobile that had the spectrum but didn't have the capital to build it out. AT&T needed the spectrum, they didn't have it in order to take care of their customers, and so that match had to occur.
An AT&T + T-Mobile merger makes sense because both networks rely on compatible technology. Sprint utilizies an incompatible technology. You would think Sprint's management would grasp the challenges incorporating incompatible networks. After all, Sprint's merger with Nextel -- which had an incompatible network -- was a disaster. Maybe Sprint's executive team is simply desperate. Out of ideas. Willing to try anything. Bet the company on the lobbyists, why not? Maybe this is a Hail Mary pass.
Well, Sprint has a lot of potential, even if it is not currently generating increasing quarter-over-quarter returns that justify rich paydays for its executives. This is not the fault of T-Mobile of AT&T. Sprint has simply not discovered a winning business formula yet.
Maybe Sprint's executives are blind. But its Board of Directors should understand that inviting government intervention is a double-edged sword. Government intervention may be temporarily helpful if you are a struggling underdog, But it could kill you once you become successful. Who do we want to run businesses, politicians or MBAs?
Government should protect our liberties, not try to promote superior social and economic outcomes. Those efforts usually result in failure. Government usually is not the solution. Usually it is the problem.
Sprint's reliance on government indicates that the company bereft of vision. It has no clue how to compete.
Are Reps. Terry and Ross protecting corporate welfare?
Hance Haney
Congressman Lee Terry (R-NE) and Congressman Mike Ross (D-AR) are encouraging their colleages to co-sign a letter urging Federal Communications Commission Chairman Julius Genachowski to reinvent the Universal Service Fund that subsidizes telephone service in rural areas served by small telecommunications common carriers.
The USF is an inefficient subsidy mechanism that may no longer be necessary. The Government Accountability Office made a similar observation in a 2008 report to Congress.
While considering legislation codifying universal service, the Senate Committee on Commerce, Science, and Transportation anticipated that competition and new technologies would reduce or eliminate the need for universal service support mechanisms. However, rather than decreasing, the cost of the high-cost program has grown substantially to $4.3 billion in 2007, increasing nearly 153 percent between calendar years 1998 and 2007. This significant growth has raised concerns about what the program is accomplishing, whether it has clear objectives, and whether it has effective controls over expenditures. (footnote omitted.)
Corporate entities that receive these subsidies have successfully resisted necessary reforms for years. Now they are alleging that rural areas will be left behind if the USF is not re-purposed to subsidize broadband. This is an alarmist prediction.
Broadband service providers have built terrestrial networks capable of serving 96% of U.S. households in the past 10 years or so. These networks continue to expand as technology continues to improve. FCC Commissioner Robert M. McDowell has noted, for example, that "the number of unserved households dropped almost in half from 8.8 million to 4.6 million" between December 2008 and June 2010.
If subsidies are no longer necessary for voice or broadband services as a result of technological innovation, then they are nothing but corporate welfare.
Congress ought to conduct hearings for the purpose of determining whether subsidies for broadband are necessary at all, or whether USF is a candidate for elimination. Is this what Terry and Ross want to avoid? The Terry-Ross letter urges the FCC to act "swiftly yet carefully." Other than the fact there will be an election in 2012, what's the urgency? Good public policy does not seek to avoid scrutiny.
Former President Ronald Reagan warned that the "nearest thing to eternal life we will ever see on this earth is a government program." Whether Congressman Terry and Congressman Ross realize it or not, they are helping a government program that has been widely criticized for years as both wasteful and obsolete achieve immortality.
Does Google present Google products at the top of search result lists? That was the question Senator Mike Lee (R-UT) asked at a congressional hearing this week. Senator Al Franken (D-MN) complained that Schmidt's response was "fuzzy." See, e.g., this.
If the Google algorithm does favor Google products, is the implication that consumers are so stupid that they will not compare search results, but rather home in on the top search result? That's absurd. Most consumers use the Internet in search or value, looking for the best products at the most reasonable prices. Consumers who want to save money are accustomed to hunting and searching. Google makes it easier than ever to hunt for bargains. Consumers can access the offerings of suppliers from all over the planet.
Is there anything inherently wrong with a firm showcasing its products and services? Imagine if retailers could not arrange their aisles and display areas to highlight popular products at competitive prices. Don't forget that a retailer that occupies a key street corner or other location can, in effect, possess a monopoly. Of course, Google diminishes local monopolies by making it possible to search and compare nearby product and service offerings.
Does this mean that Google is ordained to control the relationship between consumers and suppliers? Of course not. For one thing, many people are relying on social networking sites for suggestions from friends and acquaintances that will influence their future purchasing decisions. Google could be doomed, for all we know.
Google is pioneering a world in which people can be smart as opposed to dumb consumers. We should be encouraging this trend.
Who would fear this model? The only people who would fear this model are competitors who seek the ability to charge excessive prices. This is the dirty secret of antitrust law - it isn't about consumers, its about competitors.
What if we required Google to give equal placement to competitors in its search results? This idea is not as brilliant as it seems. The enforcement mechanism would be exceedingly wasteful and inefficient. They would impose enormous, unnecessary costs on consumers. We have a precedent from the telephone industry. This is a subject for a future blog post.
Antitrust is a fascinating area of law that delivers enormous fees for lawyers. It is also a playground for competitors seeking to hobble their rivals so they can charge higher prices. Antitrust is rarely the solution. It is frequently the problem.
Illinois' outdated rules hurt the very competition and consumer protection needed to provide greater broadband access and to make it affordable, said Hance Haney, director and senior fellow for the Discovery Institute's Technology and Democracy Project.
Legacy utility regulation threatens new technological opportunities and economic efficiencies which, according to others, promise a direct economic stimulus of at least $3.3 billion in Georgia over the next five years in the form of lower prices for voice services, plus an additional $3.9 billion in economic impact annually from increased broadband availability and use – including over 70,000 new jobs per year.
