The Precursor Blog by Scott Cleland

Little Impact on FCC Open Internet Order Appeal from SCOTUS Chevron Decision -- Part 28 FCC Open Internet Order Series

Scott Cleland — Tue, 21 May 2013 21:23:45 +0000

What’s the impact on the Verizon appeal of the Open Internet Order of the Supreme Court’s strong reaffirmation of its Chevron deference standard, in Arlington v. FCC?

I believe Verizon is still more likely than not to prevail on the merits of its appeal, because the FCC’s Open Internet Order is so unambiguously far outside the bounds of the FCC’s statutory authority, that Chevron deference is unlikely to apply.

If the SCOTUS had not strongly reaffirmed Chevron deference, the FCC would have faced an even steeper fight in the Open Internet Order. Despite the SCOTUS decision not being particularly helpful in the specific FCC Open Internet case, it undeniably was very FCC-friendly overall. That’s because it affords the FCC more latitude to exploit the many legally-ambiguous seams of communications law to advance its various regulatory agendas in highly-targeted ways.

This SCOTUS decision makes clear Chevron deference is not carte blanche. Chevron only applies when statutory authority is ambiguous; it is irrelevant if the agency has clearly strayed outside “the bounds of its statutory authority.”

Let’s consider some key guiding language from the SCOTUS Arlington v. FCC decision:

“When a court reviews an agency’s interpretation of a statute it administers, the question is always, simply, whether the agency has stayed within the bounds of its statutory authority.” P. 2
“… for Chevron deference to apply, the agency must have received congressional authority to determine the particular matter at issue in the particular manner adopted. No one disputes that.” P. 15

Let’s simplify. Verizon holds that the FCC Open Internet Order is way outside the bounds of the FCC’s statutory authority, whereas the FCC says the law in this instance is ambiguous enough that it should be due the broad Chevron deference that the SCOTUS just reaffirmed.

Now let’s review why both proponents and opponents have viewed the FCC Open Internet Order to be seriously vulnerable on appeal -- regardless of Chevron deference.

First, the FCC wants the Appeals Court to ignore Congress’ clear statement of Internet policy in the 1996 Telecom Act: “It is the policy of the United States -- … to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.”

Since the FCC Open Internet Order establishes preemptive Federal regulations of Internet Service Providers (ISPs), and since the law, the FCC and the Supreme Court have all defined ISPs’ networks as part of the Internet, the FCC is unambiguously going against Congressional policy enshrined in law.

Second, the FCC wants the Appeals Court to ignore that the FCC Open Internet order effectively changes the purpose of U.S. communications law:

From the 1996 Telecommunications Act purpose: “to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.”
To the 2010 Open Internet Order’s new purpose for the FCC: “The purpose [of the FCC’s rules] is to preserve the Internet as an open platform enabling consumer choice, freedom of expression, end-user control, competition, and the freedom to innovate without permission.” Appendix A: Substantive Rules

Simply in this Open Internet order, the FCC is claiming that it has “received congressional authority to determine” these “particular matter(s)” in these “particular manner(s).”

In effect, the FCC is effectively asserting that Congress has unambiguously granted it statutory authority to change its overall purpose as an independent regulatory agency from “promoting competition and reducing regulation” to promoting openness and increasing Internet regulation. Congress has granted the FCC no such statutory authority.

If the FCC had the expansive unambiguous statutory authority in the 1934 Communications Act as it is now claiming, the FCC would not have needed Congress to pass the 1996 Telecom Act authorizing competition, because the FCC could have just changed its purpose on its own via Chevron deference.

Third, the FCC wants the Appeals Court to ignore that the Section 706 authority -- on which the FCC relies predominantly for justifying its Open Internet Order -- was an obviously deregulatory authority in a deregulatory act “to reduce regulation.” The relevant clear language of Section 706 calls for “removing barriers to infrastructure investment,” but the FCC’s Open Internet order is about creating potential new regulatory barriers to infrastructure investment. Exact opposites are not ambiguous.

The FCC’s claim that its section 706 authority is ambiguous-enough to trigger Chevron deference, is transparently self-serving and not supported by the plain language of the provision or the well-known intent of Congress at the time. Moreover, the FCC has the additional problem that a previous FCC ruled that Section 706 does not provide the FCC statutory authority to regulate broadband.

Lastly, Chevron deference will not protect the FCC from charges of being arbitrary and capricious.

The FCC predicates its entire Open Internet order on an obviously weak and think assertion of a substantive industry problem requiring preemptive price regulation of the broadband industry.

The Appeals Court will be able to see clearly and unambiguously that the FCC conducted no market power analysis, no assessment of the state of broadband competition, and no cost-benefit analysis. This obvious lack of real work and expert analysis spotlights for the court that the FCC order is replete with unproven assertions, and largely devoid of substantive objective analysis or presentation of facts.

In short, the SCOTUS’ reaffirmation of the FCC’s broad Chevron authority is undeniably good news for the FCC in the specific areas that it has some underlying regulatory statutory authority. However, whether or not Chevron deference kicks in on a specific case depends entirely on the facts of the regulatory action and the claimed congressional statutory authority -- in that specific case.

Importantly in this specific case, the facts, precedents and lack of actual statutory authority are seriously problematic for the FCC. This means it more likely than not that Verizon will prevail in its appeal of the FCC Open Internet Order.

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FCC Open Internet Order Research Series:

Part 1:	The Many Vulnerabilities of an Open Internet
Part 2:	Why FCC proposed net neutrality regs are unconstitutional -- NPR Online op-ed
Part 3:	Takeaways from FCC's Proposed Open Internet Regs
Part 4:	How FCC Regulation Would Change the Internet
Part 5:	Is FCC Declaring 'Open Season' on Internet Freedom?
Part 6:	Critical Gaps in FCC’s Proposed Open Internet Regulations
Part 7:	Takeaways from the FCC's Open Internet Further Inquiry
Part 8:	An FCC "Data-Driven" Double Standard?
Part 9:	Election Takeaways for the FCC
Part 10:	Irony of Little Openness in FCC Open Internet Reg-making
Part 11:	FCC Regulating Internet to Prevent Companies from Regulating Internet?
Part 12:	Where is the FCC's Legitimacy?
Part 13:	Will FCC Preserve or Change the Internet?
Part 14:	FCC Internet Price Regulation & Micro-management?
Part 15:	FCC Open Internet Decision Take-aways
Part 16:	FCC Defines Broadband Service as "BIAS"-ed
Part 17:	Why FCC's Net Regs Need Administration/Congressional Regulatory Review
Part 18:	Welcome to the FCC-Centric Internet
Part 19:	FCC's Net Regs in Conflict with President's Pledges
Part 20:	Test Case: Will FCC Respect President's Call for "Least Burdensome" Regulation?
Part 21:	FCC's In Search of Relevance in 706 Report
Part 22:	The FCC's public wireless network blocks lawful Internet traffic
Part 23:	Why FCC Net Neutrality Regulations Are So Vulnerable
Part 24:	Why Verizon Wins Appeal of FCC's Net Regulations
Part 25:	Supreme Court likely to leash FCC to the law
Part 26: Part 27:	What Court Data Roaming Decision Means for FCC Open Internet Order Oops! Professor Crawford’s Model Broadband Nation, Korea, Opposes Net Neutrality

Google's Proposed EU Search Bias Remedies: a Satire -- Part 11 in Googleopoly Research Series

Scott Cleland — Fri, 17 May 2013 18:10:32 +0000

Sometimes something is so off-base that a straight analysis is wholly insufficient and warrants satire.

Google's 60-page proposed remedy document -- or "Commitments to address the EU's antitrust concerns of search bias -- warrants satire and ridicule.

Google’s proposed search bias remedy is no remedy. It would be worse than the status quo.

If accepted by the EU, it would legitimize and entrench Google’s 90+% dominance of search and search advertising in Europe, and make it much harder for any semblance of competition to ever take root.

Google’s proposed search bias remedies are so preposterous one has to use metaphors, imagery and analogies to understand what is really going on and what Google is really proposing.

Please enjoy my 15 page pictorial Power Point presentation: A Satire: Grading Google’s Search Antitrust remedies in the EU’s Market Test – here.

***

Googleopoly Research Series:

Part 1: Googleopoly I: The Google-DoubleClick Anti-competitive Case -- 2007

Part 2: Googleopoly II: Google’s Predatory Playbook to Thwart Competition -- 2008

Part 3: Googleopoly III: Dependency: The Crux of the Google-Yahoo Ad Agreement Problem -- 2008

Part 4: Googleopoly IV: How Google Extends its Search Monopoly to Monopsony Control over Digital Info-- 2009

Part 5: Googleopoly V: Why the FTC Should Block Google-AdMob -- 2009

Part 6: Googleopoly VI: Seeing the Big Picture: How Google is Monopolizing Consumer Internet Media --2010

Part 7: Googleopoly VII: Monopolizing Location Services – Why Skyhook is Google’s Netscape --2011

Part 8: Googleopoly VIII: Google’s Deceptive and Predatory Search Practices -- 2011

Part 9: Googleopoly IX: Google-Motorola’s Patents of Mass Destruction -- 2012

Part 10: Googleopoly X: Google’s Dominance is Spreading at an Accelerating Rate -- 2013

America's private video market success -- My Daily Caller Op-ed

Scott Cleland — Thu, 16 May 2013 17:32:21 +0000

Please see my latest Daily Caller op-ed: "America's private video market success" here.

It debunks Free Press' diatribe against cable to try and promote net neutrality regulation and a ban on usage-based broadband pricing.
It is Part 16 of my broadband Internet pricing freedom research series.

* * * * *
Broadband Internet Pricing Freedom Research Series

Part 1: Netflix' Glass House Temper Tantrum Over Broadband Usage Fees

Part 2: Netflix Uneconomics

Part 3: Debunking the Carping Over Broadband Usage-Pricing

Part 4: Is Netflix the AOL of Web Streaming?

Part 5: Consumer Groups Advocacy Hypocrisy

Part 6: Leaf Vision and Broadband Usage Caps

Part 7: Broadband Pricing is Naturally Evolving to Tiers

Part 8: Obsolete Analysis Will Doom DOJ's Antitrust Probe of Cable

Part 9: Video: Scott Cleland Discusses Netflix' DOJ Complaint

Part 10: SCOTUS Indecency Ruling's Effect of Net Neutrality

Part 11: U.S. Net Neutrality Movement in Retreat

Part 12: FCC Creates Abundant Uncertainty

Part 13: The Real Motive behind Opposition to Usage Based Pricing

Part 14: The Uneconomics of Data Cap Price Regulation and Legislation

Part 16: Wireless Plan Innovation Benefits Consumers & Competition

Wireless Plan Innovation Benefits Consumers & Competition -- Part 15 Broadband Internet Pricing Freedom Series

Scott Cleland — Mon, 13 May 2013 12:05:05 +0000

Please see my latest Daily Caller Op-ed "Wireless Plan Innovation Benefits Consumers & Competition -- here.

It debunks net neutrality criticism of a reported potential ESPN-wireless pricing experiment.
It is also Part 15 of my Broadband Internet Pricing Freedom research series.

* * * * *

Broadband Internet Pricing Freedom Research Series

Part 1: Netflix' Glass House Temper Tantrum Over Broadband Usage Fees

Part 2: Netflix Uneconomics

Part 3: Debunking the Carping Over Broadband Usage-Pricing

Part 4: Is Netflix the AOL of Web Streaming?

Part 5: Consumer Groups Advocacy Hypocrisy

Part 6: Leaf Vision and Broadband Usage Caps

Part 7: Broadband Pricing is Naturally Evolving to Tiers

Part 8: Obsolete Analysis Will Doom DOJ's Antitrust Probe of Cable

Part 9: Video: Scott Cleland Discusses Netflix' DOJ Complaint

Part 10: SCOTUS Indecency Ruling's Effect of Net Neutrality

Part 11: U.S. Net Neutrality Movement in Retreat

Part 12: FCC Creates Abundant Uncertainty

Part 13: The Real Motive behind Opposition to Usage Based Pricing

Part 14: The Uneconomics of Data Cap Price Regulation and Legislation

A Must Read: The Constitutional Foundations of Intellectual Property by FSF

Scott Cleland — Fri, 10 May 2013 15:40:02 +0000

For anyone interested in intellectual property rights, there is a new must read post by the Free State Foundation entitled: "The Constitutional Foundations of Intellectual Property," by Randy May and Seth Cooper.

It is simply outstanding. It has great clarity of thought, scholarship and wisdom.

It should become a succinct go-to piece that explains the philosophical and Constitutional underpinnings of property rights generally and intellectual property rights specifically.

Don't miss it, and please let others know about it.

Intellectual Property

Open Internet

Patents

Piracy

The FCC Transition? -- My Daily Caller op-ed

Scott Cleland — Tue, 07 May 2013 16:07:22 +0000

Please read my latest Daily Caller Op-ed: "The FCC Transition?" -- here.

It highlights the strategic transition challenges facing FCC Chairman nominee Tom Wheeler.
It is also Part 7 of my Modernization Consensus research series.

* * * * *

Modernization Consensus Series

(Note: This research series previews strategic developments that could encourage consensus to modernize obsolete communications law and FCC policies.)

Part 1: Supreme Court Likely to Leash FCC to Law

Part 2: Supreme Court's Likely Leashing of "Chevron Deference" Is FCC Game Changer

Part 3: Implications of Google's Broadband Plans for Competition and Regulation

Part 4: Developing Fundamental Consensus for the IP Transition

Part 5: Why Europe is Falling Behind America on Broadband

Part 6: Will the New FCC Chair Be a Modernist or Nostalgist?

Wireless competition: What’s the data say?

Scott Cleland — Thu, 02 May 2013 19:10:29 +0000

The CTIA just released its semi-annual statistics on the wireless industry’s performance, and its bad news for all those supposed data-driven, pro-regulation proponents who are in search of evidence or data to justify regulating wireless or wireless spectrum holdings.

The data are more powerful evidence of a competitive wireless industry. Hopefully, this data will nudge the FCC to begrudgingly conclude that the industry is indeed competitive, despite their blinders to the data.

Briefly, the U.S. wireless industry:

Grew five-times faster than the U.S. economy -- ~9% to ~1.8% in 2012;

Invested $17.2b in capital investment in the last half of 2012 up 37% from the year before period;

Showed real competitive losses to free broadband messaging, as paid SMS text messages were down 4.9% annually in 2012, down 7.1% for last six months of 2012, and 11.3% for the last month of 2012 (Competition works!);

The amount of data usage increased 69.3% in 2012; and

The number of smart phones in use grew 36.4% in 2012.

These are data of a vibrantly competitive and innovative industry, not one in need of preemptive net neutrality or spectrum cap regulation.

EU-Google: Too Powerful to Prosecute? The Problems with Politically Enabling Google – Part 22 Google Unaccountability Series

Scott Cleland — Wed, 01 May 2013 12:03:53 +0000

The EU blinked. It's obvious the EU does not want a high-profile political confrontation with Google over a search monopoly abuse enforcement action.

Last May, when the Competition authorities announced they had a preliminary Statement of Objections for four monopoly abuses against Google, the EU competition authority trumpeted their preference for a settlement over enforcement action in this case, i.e. ruling Google a search monopoly guilty of monopoly abuse that warranted a material fine. In extending their public deadlines for Google three times, and then tentatively accepting the immaterial search concessions Google proposed, it is obvious the EU bent over backwards to avoid politically confronting Google.

The EU economy is still reeling from the financial crisis and the resultant austerity measures. The EU needs economic growth. And the proposed U.S.-EU Free Trade Agreement offers the potential for more economic growth. Apparently the EU’s continuing economic weakness, has the EU competition authorities wary of facing Google’s potential political charges of EU protectionism and hostility to innovation, if the EU were to rule Google a monopoly guilty of monopoly abuses. Apparently the EU is also wary of getting the U.S.-EU Free Trade Agreement off on the wrong foot by angering one of the Administration’s closest corporate allies.

And evidently, Google has been throwing its exceptional political weight around behind-the-scenes to secure special treatment and exceptions from the EU.

Importantly, Google’s growing sovereign-like political power has serious implications for the EU decision-making well beyond competition policy.

So what are the problems with politically enabling Google?

First, the EU undercuts its sovereign enforcement authority to protect EU consumers by giving the world’s #1 multi-national corporate bad-actor lenient and special treatment.

Google is the world’s #1 antitrust offender. Google has been found to violate antitrust law in ten different ways in the last five years; and Google is, or has been, under antitrust investigation in nine different countries, in addition to the EU’s investigations of Google’s abuse of search/search advertising dominance, abuse of standards essential patents, and Google-Android’s anti-competitive practices.

Google is Europe’s #1 privacy problem. EU data protection authorities and the six largest EU nations are struggling with how to enforce Google’s defiance of their opposition to Google’s new privacy policy that offers no-opt-out or meaningful transparency into how Google uses private data. EU nations have had repeated privacy problems with: Google’s Street View photos without permission and no opt-out; again with Google Street View WiSpy data collections without anyone’s knowledge or consent; again when Google was found by the FCC to have not told the truth about how many Googlers were involved in the WiSpy collections; and yet again when Google did not destroy the WiSpy data as they had promised.

Google is Europe’s #1 tax evader. Google is the most aggressive multi-national tax evader in the EU, paying only a 2.4% tax rate.

Google is Europe’s #1 corporate IP infringer. Germany and France formally opposed the Google Book Settlement as mass copyright infringement and anti-competitive. Google settled a Google News infringement suit against Belgian newspapers and another with French newspapers. Other EU nations continue to call for payment for Google News use of their newspaper content. Even one of the EU-Google antitrust remedies is for Google to stop scraping others content and monetizing it as their own, but it requires no restitution for this anti-competitive infringement.

Google Android is #1 in security vulnerability for malware. With a dominant share of the mobile operating system market Google has put gaining rapid share of Android above basic security protection for EU and other consumers. This obvious consumer harm should prompt the EU to formally open a Google-Android antitrust investigation.

Second, the EU decision leaves European consumers and businesses largely at the mercy of the most powerful and economically-pervasive predatory monopoly in EU history.

All other EU antitrust investigations involved primarily one industry or sector, usually technology. The Google case is unique in that the discriminatory problem of monopoly search/search-advertising self-dealing cuts across the consumer economy from shopping to news, maps, travel, restaurants, content, social, finance, video, mobile – most of the consumer online economy.

Remarkably Google, with its ingeniously-narrowing and self-serving remedy settlement, has tricked the EU into tacitly accepting and legitimizing a consumer-wide monopoly that abuses its dominance in contravention to EU law. Simply, the EU decision benefits Google greatly by locking in the Google monopoly status quo with no admission of any wrongdoing despite the EU’s findings.

By signaling its hostility to any changes from market testing in order to protect its political settlement with Google, the EU competition authorities do not appreciate the loud signals they are sending to consumers, competitors and Google: that Google’s ill-gotten monopoly is OK; that the EU views the Google dominated market as superior to a more competitive one; and that the EU has little interest in further investigating Google monopoly search abuse.

More remarkably, the Google proposed remedies that would end the EU’s ongoing investigation of this market would leave oversight of 90+% of the consumer online economy in the hands of one Google-recommended, Google-paid monitor.

It is especially ironic that a company accused of abusing its vertical-monopoly, conflicted-roles of online ad cop, prosecutor, judge and jury, is being allowed to pick the potential pool of Google monitor-cops that the EU will choose from.

Even more remarkably, the EU competition authorities have de facto delegated to the Google monopoly to: 1) fairly organize Europe’s culture(s), commerce, news, and political information going forward, and 2) to not pick online winners and losers by being an “honest” monopoly broker for Europe’s online economy.

This is a lot of blind trust to give a digital information monopoly, with a long antitrust rap sheet and that famously bragged “Google is the biggest kingmaker on this earth.” It is an especially great amount of special trust, given that EU competition law considers monopolies and abuse of dominance to be illegal.

Third, the EU will be proactively enabling Google’s well-known “culture of unaccountability,” by proactively preferring to allow Google to avoid admitting any wrongdoing or taking any public responsibility for breaking EU law.

Apparently, the EU politically decided to mimic the FTC’s no-fault, no-deterrent enforcement approach that allows Google to settle charges of law-breaking with no admission or acceptance of corporate responsibility for illegal behavior. For a brand-dependent firm like Google, the opportunity to skirt any real brand-accountability with the public for breaking the law is a huge gift to Google.

Making matters worse, the EU politically chose to accept Google’s “labeling” remedy so it would not suffer any political criticism for regulating Google’s ever-changing search ranking algorithm or stifling Google’s innovation. As a result, the EU is only entrenching Google’s monopoly not creating the opportunity for more competition.

The bad joke here that the EU competition authorities apparently don’t get is that Google does not consider its offered remedy of adjusting its presentation of search results to be “labeling” -- they see the other side of the coin, that the adjustments are Google branding and marketing opportunities.

Google knows that its dominant brand, coupled with the natural propensity of ~a third of users to always click on the top result (usually taken by a Google-owned product) will mean that many users will view Google’s new “labels” as appealing Google branding. Google knows down to the micro-shade of blue and the exact positioning/font/display/framing of every result what presentation changes result in what change in consumer behavior.

Given the EU’s reluctance to require the Google search monopoly to treat competitors as they treat themselves, by requiring a normal monopoly non-discrimination obligation, it is hard to see how the Google’s proposed “labeling” ruse will have any material impact on Google’s dominant revenue model.

Conclusion

If the EU competition authorities accept the Google-proposed remedies to address narrow aspects of Google’s monopoly and abuses of dominance, and shut down the EU’s investigation, the settlement will de facto legalize and legitimize Google’s remaining untouched monopoly power, with only one Google-recommended/paid EU-outsourced policeman on the beat.

Is Google too powerful to prosecute? Apparently that is the current political conclusion of the EU competition authorities. Google is increasingly the de facto Internet sovereign by controlling: 87% of global search advertising; almost half of all global online advertising; nearly half of the Internet’s video viewers; and two-thirds of the world’s smart phone users.

Given Google’s 90+% market share in Europe, and given tough EU competition law, EU competition authorities could have issued a Statement of Objections, declared Google a monopoly that abused its dominance in four ways, fined Google up to 10% of revenues for monopoly abuses, and mandated much more effective sanctions to mitigate the anti-competitive effects of Google’s monopoly abuses.

The fact is that the EU made a political decision to work with Google and do what Google could accept and would not publicly criticize. Obviously EU competition authorities were much more worried about what Google would say than what anyone else would say.

Sadly, this expedient EU political decision to protect Google from EU law and the consequences of its own actions has ominous implications for future EU-Google enforcement decisions concerning: competition, data protection, property rights and consumer protection laws.

* * * * *

Google Unaccountability Research Series:

Part 0: Google's Poor and Defiant Settlement Record

Part 1: Why Google Thinks It Is Above the Law

Part 2: Top Ten Untrue Google Stories

Part 3: Google's Growing Record of Obstruction of Justice

Part 4: Why FTC's $22.5m Privacy Fine is Faux Accountability

Part 5: Google's Culture of Unaccountability: In Their Own Words

Part 6: Google Mocks the FTC's Ineffectual Privacy & Antitrust Enforcement

Part 7: An FTC Googleopoly Get Out of Jail Free Card?

Part 8: Top Lessons to Learn for Google Antitrust Enforcers

Part 9: Google Mocks EU and FTC in Courting Yahoo Again

Part 10: FTC-Google Antitrust: The Obvious Case of Consumer Harm

Part 11: Why FTC Can't Responsibly End the Google Search Bias Antitrust Investigation

Part 12: Oversight Questions for FTC's Handling of Google Antitrust Probe

Part 13: Courts Not FTC Should Decide on Google Practices (The Hill Op-ed)

Part 14: Troubling Irregularities Mount in FTC Commissioners' Handling of Google Antitrust Investigation

Part 15: Top Ten Unanswered Questions on FTC-Google Outcome

Part 16: Top Takeaways from FTC’s Google Antitrust Decisions

Part 17: Google’s Global Antitrust Rap Sheet

Part 18: Google’s Privacy Words vs. its Anti-privacy Deeds

Part 19: Google’s Privacy Rap Sheet Updated – Fact-checking Google’s Claim it Works Hard to Get Privacy Right

Part 20: DOJ & FTC Report Cards

Part 21: The Evidence Google Bamboozled EU Competition Authorities

What is The Code War?

admin — Fri, 26 Apr 2013 17:18:15 +0000

Ever wonder why there are so many never ending tech policy and political battles?

Why there are so many recurring:

Content battles over copyright and anti-piracy enforcement?
Software battles over open source versus proprietary software and the legitimacy of software patents?

Broadband battles over net neutrality, data caps, and spectrum allocations?

General battles over online privacy, surveillance, cybersecurity, and hacking?

Ever wonder why so many of the same people and entities are involved in the same tech policy and political battles over and over again?

The answer is it is an ideological struggle, but not the 20^th century kind with which most people are familiar, for example like progressive vs. conservative, or republican vs. democrat. This is a new and different kind of ideological struggle between realspace and cyberspace that is unique to the 21^st century and to the Internet Age.

Just like The Cold War was an ideological struggle for whose beliefs and values would gain global supremacy in the realspace world, “The Code War” is a 21^st century ideological struggle over whose beliefs and values will predominate in the cyberspace world where virtual cyber-societies are being built on top of the Internet’s World Wide Web.

I coined the new term “The Code War” in order to spotlight and describe this very real and increasingly fierce ideological struggle between the real world of realspace, and those who seek a very different ideology to rule cyberspace, the online or virtual world.

I also have coined the new term “Codism” as in the ideology of “free and open” computer code, to describe this nascent and burgeoning 21^st century ideology of cyberspace, which many know as the “Free Culture” movement.

While those who believe in cyberspace values are already very familiar with The Code War that they are offensively waging, those in realspace playing defense are not.

Those in realspace are well aware of the many different policy battles that they are forced to fight to protect themselves and their sovereign values, and they are also painfully aware of their persistent opponents. However, most are not aware of how all these tech policy and political fights fit together ideologically or what their opponents’ ideological end-game is.

Who should be interested in The Code War? Anyone with an interest in: proprietary content, software and broadband networks; copyright, patent and trademark law, protection and enforcement; the IP transition, modernization of obsolete communications laws, and spectrum availability and allocation; privacy and cybersecurity law, protection and enforcement; the U.S-EU Free Trade Agreement, the Trans Pacific Partnership (TPP), and the Anti Counterfeiting Trade Agreement (ACTA); and International Telecommunications Union (ITU) or United Nations actions related to the Internet and cyberspace.

If you want to learn more about ‘The Code War,” from a realspace perspective, please read this PowerPoint presentation at www.TheCodeWar.org. Click here for the "What is The Code War" presentation.

An outline of the 12-page presentation follows:

What is The Code War?

Explaining the Ideological Struggle over:

A Digital Information Commons of Free Content/Software/Bandwidth;

Realspace Rule of Law vs. Cyberspace Rule of Code; &

A Respect Culture vs. Free Culture Codism

1.    What is Code?
2.    What is Codism?
3.    Notable Codist Thought Leaders
4.    What is The Code War?
5.    Code War Ideologies Compared & Contrasted
6.    The Code War’s Many Battles (1996-2010)
7.    The Code War’s Many Battles (2011-2013)
8.    The Confusing & Deceptive Language of The Code War
9.    The Harms of Codism and the Rule of Code

If you find this perspective and information helpful, please share this www.TheCodeWar.org link and the PowerPoint presentation explaining The Code War.

Intellectual Property

What Do Dish-Sprint, Google Fiber, & T-Mobile’s No Contracts, All Mean?

Scott Cleland — Mon, 22 Apr 2013 07:34:20 +0000

Competition is alive and well in the U.S. communications market.

Market forces have produced a barrage of big competitive developments in just a few weeks. Dish’s disruptive $25b bid for Sprint could offer consumers a new choice of a lower-price, faster-speed, all-wireless platform for the first time. Google’s disruptive ongoing expansion of Google Fiber from Kansas City to Austin Texas and Provo Utah signals more and new consumers could increasingly enjoy the choice of a new, much-faster, near-comprehensively-integrated broadband offering. And T-Mobile is disrupting in yet another major way with a new maverick wireless pricing model that offers no contract plans and relatively more a la carte pricing.

These developments are proof positive why competition is so far superior to regulation. Survival is a powerful motivator to disrupt, differentiate and innovate, just as the opportunity for large profit and market leadership are powerful motivators as well.

While regulators slowly fret over how they can solve yesterday’s problems by fiat or opaque subsidy, competition is automatically devising alternative solutions to today’s problems, and inevitably is working on different solutions to tomorrow’s problems.

I. Dish-Sprint

Dish’s $25b offer for Sprint spotlights a huge relative weakness in the Softbank-Sprint deal – no synergies. In the absence of a competing bid, Softbank could get away with the bluff of a no-synergies offer: a simple debt-capital-infusion and the “special sauce” of a billionaire’s-price-cutting-acumen.

However, the Dish offer matches one billionaire’s-price-cutting-acumen with another billionaire’s-price-cutting-acumen, and matches one debt-capital infusion with another debt-capital infusion.

Then most importantly, Dish raises Softbank’s bid substantially with a higher bid reflecting: real cost and marketing synergies, valuable 4G-ready fallow spectrum, and a uniquely-differentiated, lower-priced, more-mobile-video-friendly, all-wireless platform.

Real synergies are the mother’s milk of deals. Real differentiation is the key to competing successfully. Spectrum is hugely valuable to an all-wireless platform. And combining different assets in new ways to meet new needs is innovation.

Even if Softbank raises its bid, Sprint would be foolish to not take the superior Dish offer. A Dish-Sprint offering would be much more competitively disruptive than a Softbank-Sprint deal; it’s not even a close call.

This Dish-Sprint opportunity represents a real gut check for Sprint’s board and management (and for regulators and antitrust authorities as well). Do they really want more vibrant competition in the marketplace that will increase competitive pressure on pricing, bundling, and innovation? If so, they will go with Dish and make it happen.

However, if they are more wedded to complaining about insufficient competition and pursuing industrial-policy regulatory-favoritism and subsidies, both will go with the Softbank deal, and what they think would be best for (government-managed) competition.

II. Google Fiber Expansion

Just the prospect of Google entering local broadband markets around the country quickly -- like it has with Google Fiber in Kansas City, Austin and Provo, with a much faster, more comprehensive and commoditizing competitive offering -- is highly disruptive competitively. In a fixed-cost, capital-intensive market, that traditionally requires long-lead times and substantial share to be profitable, Google knows it can compete in the provision of broadband, despite many financial naysayers, by changing the game.

Google is no traditional over-builder. Google’s comprehensively-integrated service potentially offers more ways for Google to make money than any other competitor. Apparently Google is taking the concept of an integrated offering further than the “triple” or “quadruple play” of broadband, video, voice, pay-TV, and mobile; and further than the Apple-pioneered, integrated offering of hardware, software, and a store. Google Fiber can leverage the #1 search, Internet video, mobile operating system, and location services, the #2 social media platform, and competitive mobile devices, free full-service software, cloud services, content-store, shopping, payment mechanisms, etc.

Traditional subscription broadband service is an end in itself. For Google Fiber, it is both a subscription “end” but also a “means” to another business “end” – more web services advertising.

Just because current broadband providers can’t make money from giving broadband service away for free does not mean that Google can’t. Google is offering a 5MBs broadband service for free to anyone that will pay for the installation fee. This isn’t charity, it is a shrewd investment in greatly expanding the market for Google’s advertising, just like it has done before by offering a slew of services for free that people previously paid for – gMail, YouTube, Android, Maps, Voice, etc.

With Google Fiber’s paid and free offerings, Google knows it will be identifying and developing an all-Google customer cohort based on low-cost/free connectivity, devices and services: i.e. Fiber, Chromebooks, low-cost smart phones, free software, free video, free communications, free maps, low-cost/free payments, low-cost/free cloud services/storage, etc.

Google Fiber will continue to roll-out shrewdly where it makes sense because Google Fiber enables Google to meet most all of a person’s Internet needs in a way other competitors cannot.

And the competitive disruption of Google Fiber also continues because Google drives a hard bargain. Google is shrewdly entering markets selectively where regulators allow Google to control the extent of its build-out based on pre-orders, a freedom and massive cost savings that traditional broadband players have never enjoyed.

Kansas City, Austin, and Provo all have given Google substantial regulatory advantages, subsidies and benefits that were unavailable to their competitors. Simply, Google is enjoying a special national cherry-picking strategy, ultimately focusing on the ~20% of the markets it assesses that offer ~80% of the upside for Google.

Regulators must recognize that communications competition is going through a profound metamorphosis that is rapidly making existing communications law and regulation obsolescent, and at the same time creating new competitors and forms of competition like Google Fiber.

Regulators should focus on clearing away obsolete restrictions and micromanagement of a bygone era, so that there is modern system and a level-playing field, where similarly-situated competitors are treated similarly.

III. T-Mobile No Contracts

T-Mobile has made a big marketing splash recently by boldly differentiating its service by requiring no contracts and allowing users to pay installments for just a device not bundled with the wireless service plan. This maverick competitive pricing meets and satisfies a consumer need without the need for regulation. If there is sufficient demand for this type of pricing flexibility, other competitors will be compelled to offer it.

While regulators wring their hands that T-Mobile is not a strong enough competitor for their liking, they forget that competition works because it makes competitors that aren’t fully succeeding adapt, change and disrupt the status quo in new ways. Rather than trying to stand on the scales to help smaller competitors like T-Mobile and Sprint to compete, regulators need to open their eyes and see that more motivated competitors make for more competition.

IV. Conclusion

In short, the U.S. communications marketplace is highly competitive and only becoming more so.

The big mistake that regulators can make now is imagining that competition should produce neatly-monolithic commodity price competition.

Real market competition in the communications marketplace is all about differentiation -- meeting new and old needs in innovative ways. Market forces deliver this automatically, without Government.

Proof positive is the multiple major competitive disruptions we have witnessed in the last few weeks. Dish is disruptively proposing to redraw the boundaries of broadband facilities-based competition. Google is disruptively entering a high-fixed cost business via a non-traditional hybrid revenue model, and in doing so threatens to redraw the boundaries of broadband competition in yet another way. And T-Mobile’s pricing disruptions remind us of the competitive truism: necessity is the mother of invention.

Competition is alive and well in the U.S. communications marketplace. Regulators should stay out of the way and let competitors compete on a level-playing field.