Times columnist Eduardo Porter apparently believes that he has seen the future and thinks it works: The French government forced France Télécom to lease capacity on its wires to rivals for a regulated price, he reports, and now competitor Iliad offers packages that include free international calls to 70 countries and a download speed of 100 megabits per second for less than $40.

It should be noted at the outset that the percentage of French households with broadband in 2009 (57%) was less than the percentage of U.S. households (63%) according to statistics cited by the Federal Communications Commission.

There is a much stronger argument for unbundling in France - which lacks a fully-developed cable TV industry - than in the U.S. As the Berkman Center paper to which Porter's column links notes on pages 266-68, DSL subscriptions - most of which ride France Télécom's network - make up 95% of all broadband connections in France. Cable constitutes approximately only 5% of the overall broadband market. Competition among DSL providers has produced lower prices for consumers, but at the expense of private investment in fiber networks.

Just imagine trying to run a business that is utterly dependent on a single delivery network -- a gatekeeper -- that can make up the rules on the fly and knows you have nowhere else to go. To get the predictability you need to stay solvent, you'll be told to pay a "first class" premium to reach your customers. From your perspective, the whole situation will feel like you're being shaken down: It's arbitrary, unfair, and coercive.

For one thing, Crawford seems to be annoyed that the "open Internet protections" adopted by the Federal Communications Commission in 2010 do not curtail specialized services -- such as an offering from Comcast that lets Xbox 360 owners get thousands of movies and TV shows from XFINITY On Demand. As the commission explained,

"[S]pecialized services," such as some broadband providers' existing facilities-based VoIP and Internet Protocol-video offerings, differ from broadband Internet access service and may drive additional private investment in broadband networks and provide end users valued services, supplementing the benefits of the open Internet. (emphasis mine)

the telecom industry is forcing policymakers to re-examine what has long been a basic guarantee of government - that every American home should have access to a phone, along with other utilities such as water or electricity. Industry executives and state lawmakers who support this effort want to expand the definition of the phone utility beyond the century-old icon of the American home to include Web-based devices or mobile phones.

This has become a problem as more and more consumers are "cutting the cord" in favor of wireless or VoIP services. AT&T, for example, has lost nearly half of its consumer switched access lines since the end of 2006. However, most of the loops, switches, cables and other infrastructure which comprise the telephone network must be maintained if telecom providers have to furnish telephone service to anyone who wants it within days.

It was clear there is no way T-Mobile - which lost 802,000 contract customers in the fourth quarter - is capable of becoming a significant competitor in the near future. T-Mobile doesn't have the capital or rights to the necessary electromagnetic spectrum to build an advanced fourth-generation wireless broadband network of its own.

T-Mobile's parent, Deutsche Telekom AG, has been losing money in Europe and expected its American affiliate to become self-reliant. In 2008, T-Mobile sat out the last major auction for spectrum the company needs.

The company received cash and spectrum worth $4 billion from AT&T when the merger fell apart, from which T-Mobile plans to spend only $1.4 billion this year and next on the construction of a limited 4G network in the U.S. But it must acquire additional capital and spectrum to become a viable competitor.

Unfortunately, every wireless service provider requires additional spectrum. "[P]rojected growth in data traffic can be achieved only by making more spectrum available for wireless use," according to the President's Council of Economic Advisers. Congress recently gave the FCC new authority to auction more spectrum, but it failed - in the words of FCC Chairman Julius Genachowski - to "eliminate traditional FCC tools for setting terms for participation in auctions."

Everyone fears it will take the FCC years to successfully conduct the next round of auctions while it fiddles "in the public interest." That's why Verizon Wireless is seeking to acquire airwaves from a consortium of cable companies, and why T-Mobile will do anything to stop it.

Audits have uncovered serious shortcomings and the agency has resisted needed reforms for years. The time has come for lawmakers to brush aside rosy assurances from agency officials and wind the program down.

Testifying in February of last year, the Department of Agriculture's Inspector General briefly summarized a shocking set of audit findings from 2005 that included waste, fraud and abuse, and noted that most of the issues had still not been resolved satisfactorily .

Of the $895 million in grants and loans RUS issued from 2001 to 2005, we reviewed $599 million and questioned the expenditure of $340 million for reasons including loans that were approved despite incomplete applications, loans that defaulted, and grant funds used for inappropriate purposes. We further found that RUS had not maintained its focus on rural communities lacking preexisting broadband service. ****

We also questioned RUS' practice of devoting significant portions of its resources to funding competitive service in areas with preexisting broadband access rather than expanding service to communities without existing access. In 2004, we found that 159 of the 240 communities associated with the loans (66 percent) already had preexisting broadband service, despite the fact that the law establishing the broadband program made it clear that these funds were intended to be used first for "eligible rural communities in which broadband service is not available to residential customers."

The Broadband Loan Program was conceptually flawed at its inception. Broadband is not available in remote areas when the cost of building a broadband network is so high that the broadband provider does not expect to recover the investment. If it is uneconomic to provide service to a particular locale, how can a loan recipient repay the loan? This is why most of the loans are used to build redundant facilities in areas that are already served. As a general matter, a grant not a loan would be required to finance the construction of facilities in an area that is uneconomic to serve.

States including Alabama, Florida, Georgia, Indiana, Illinois, North Carolina, Ohio, Tennessee and Wisconsin have all recently revamped their telecommunications statutes, and Mississippi is in the process of considering similar legislation. SB 135 would put Kentucky in a strong position relative to these nearby states in terms of creating a favorable business climate for private investment in advanced networks.

Rates for basic local exchange service would be market-based and not subject to commission jurisdiction beginning 60 months after a telephone utility elects (or has already elected) to adopt price cap regulation. The requirement to file tariffs would be eliminated at that time.

The bill also clarifies that nothing in Title 77, Chapter 3 (Regulation of Public Utilities) of the Mississippi Code may be construed to apply to video services, voice over Internet protocol services ("VoIP"), commercial mobile services, Internet protocol ("IP") enabled services, in addition to broadband services.

The commission would continue to regulate intrastate switched access service, as well as arbitrate and enforce interconnection agreements between telecommunication providers. Providers of intrastate access and unbundled network elements would not be required to file financial, service quality or other information with the commission. Intrastate access fees would be the same as the fees for interstate access services.

Utility regulation was appropriate years ago when telephone service was furnished by monopolies. But the federal Telecommunications Act of 1996 removed legal barriers to competition, and now wireless providers, cable operators and others compete to provide voice service. Only about 16% of Mississippi voice connections were served by incumbent local exchange carriers (ILECs) subject to legacy utility regulation at the end of 2010, according to the Federal Communications Commission (see tables 9 and 17).

Continued regulation of competitive ILEC services is actually harmful to consumers, by forcing providers to maintain single-purpose voice networks when voice can be delivered over multifunctional broadband platforms at lower cost. The National Broadband Plan embraces a vision of the future in which the traditional circuit-switched telephone network will be replaced by an IP-enabled network, and the plan confirms that legacy telephone regulation is an impediment to a smooth transition (see p. 59).

As it becomes increasingly costly to maintain a legacy telephone network to serve fewer and fewer subscribers, there is a danger that telephone service providers may be forced to subsidize legacy service from wireless and broadband revenues, which is wasteful and inefficient. Forcing wireless and VoIP customers to subsidize legacy networks would penalize - and therefore diminish - investment and innovation in advanced new services.

At present, 44% of Mississippi households have a broadband connection over 200 kbps in at least one direction, and 11% have a connection at least 3 mbps downstream and 768 kbps upstream, according to the FCC (see tables 15 and 16). Nationwide, 13% of households have a broadband connection of at least 100 mbps in both directions (Table 5). Connected Nation concluded in 2008, when the FCC defined broadband as over 200 kbps in at least one direction, that a mere 7% increase in broadband adoption (similar to the household broadband adoption achieved in Kentucky, above the national average, by addressing local supply and demand issues) would create or save almost 19,000 new jobs per year in Mississippi. The jobs are not just in telecommunications equipment and services, but also in manufacturing and service industries (especially finance, education and health care).

By enacting regulatory reform so that all providers of voice services are subject to minimum regulation which does not discriminate on the basis of technology or history, just like in any competitive market, legislators will expand customer choice and ignite the broadband expansion necessary for economic growth, technological progress and ultimately lower prices.

"It's a mistake," according to Genachowski, "because it preempts an expert agency process that's fact-based, data-driven and informed by a broad range of economists, technologists and stakeholders on an open record."

Genachowski's old boss, former FCC Chairman Reed E. Hundt, reportedly criticized the proposals during a Capitol Hill briefing on Tuesday, as well.

He worried that the bill would allow the largest wireless carriers to buy up all of the spectrum at auction, expanding their dominance of the airwaves. He said the carriers might not even plan to use some of the spectrum but could buy it just to kill off competition.

He argued that Congress should rely on the FCC to use its technical expertise to set the conditions of the auction.

The FCC has a poor track record of trying to improve on the free market, and the Reed Hundt era is recent exhibit "A." Seeking to promote competition in local telephone service during Hundt's tenure in the late 1990s, the FCC required incumbent local telephone companies to provide below-cost wholesale access to their networks while preventing them from competing in the long-distance market. According to Hundt, in You Say You Want a Revolution? (2000),

The Clinton administration had the conviction that astute and sharp-edged rules could open markets to competitors ... some firms would succeed, others fail. But the competition would create choice for consumers, and the diversity of the competitors would weaken the political influence of the big, established (and typically Republican-leaning) firms. The new competitive markets would stimulate investment in new technologies and lead to fair prices for consumers. All five lanes of the information highway would converge in a race to tomorrow (which we would not stop thinking and talking about).

For the most part, these policies simply transferred billions of dollars from incumbent telephone companies to fund marketing campaigns required to sell the same services under a different name [that of an unaffiliated retail competitor].

This story, based on an infographic from MBA Online the day before, puts Apple's big quarter in prospective. GeekWire characterizes their revenue as "Three Yahoos, two Googles and a Microsoft". It's also interesting, and worth noting, that 2/3 of it is stored overseas.

Here we have a company that makes trinkets, bought voluntarily by free people, produced willingly by free people. Yet even after giving billions of dollars to the governments they labor under, they still make more money than even the most irresponsible governments can lose. Consider: Governments take money from people by threat of force, they have more resources than a corporation can dream of, they can quite literally eliminate their competition, and by-in-large, they're above the law. Yet they still can't take enough to rival what this one corporation can get people to freely hand over. There are of course many mitigating factors on both sides, but the numbers still stun. This company, with its relatively minimal staff, produces more in a year than the GDPs of 2/3 the world's countries. ...but big government is clearly the answer .

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.

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.

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.

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.

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.

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?"

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.

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.

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).

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.