Out of Control

The Web is abuzz today with reports and analysis of the latest network neutrality bill to be introduced this year. The as-of-yet unnamed bill, sponsored by Reps. John Conyers (D-MI) and Rep. Zoe Lofgren (D-CA) seeks to amend the Clayton antitrust act to specifically prohibit Internet service providers from prioritizing or managing any data traffic as it crosses the network and offering any sort of price tiering that would say allow a major applications provider, say Apple, Google or Disney, from paying for better quality for services, such as video or gaming, that require special treatment.

If enacted, it will mean, at the very least, conventional broadband users will be forced to subsidize the bandwidth-intensive entertainment applications used by a small percentage of the population. This, Conyers and Logren assure us, is fairness.

The new bill, which would put Internet price regulation in the courts, stands alongside a net neutrality bill introduced last month by Rep. Ed Markey (D-MA), which aims to make the FCC the final arbiter of Internet business models. Sadly it seems that the debate is no longer whether to regulate, but who will regulate.

The Senate held hearings on network neutrality yesterday, gathering testimony from FCC Chairman Kevin Martin as well as a few minor Hollywood celebrities.

Martin, who with the FCC has hosted two of its own hearings on Web-based network and applications management so far this year, prudently argued against regulation of the Internet.

Hollywood-types showed up to call for federal prohibitions on the use of network management techniques. Simply put, they don’t want to pay extra for the management services that would be required to make their commercial entertainment services work properly while alleviating the congestion their applications place on more pedestrian Web users.

Patric Verrone, the president of the Writers Guild of America-West, which recently ended a 100-day strike, was among those calling for more Internet regulation. “When your employers are the same companies that control the media, it’s hard to get your message out,” Verrone said. Lost on him, apparently, was the simple fact that the Internet, in all its non-neutral glory, did allow him to get the message out. He testified mostly to the success the guild had with blog postings, e-mail and videos.

Also lost on him was the irony that the writers strike centered on compensation for the added value their work gives studios when it’s used on the Web. Verrone, on the other hand, seeks rules that would coerce service providers to offer Web-based management services--that themselves would add measurable value to the work of his fellow guild members as well as the studios--for free.

It is ironic that with the market doing a crackerjack job of punishing the excesses of the mortgage markets, cries for bailouts, handouts, and major new regulations. A recent USA Today article did a great job pointing out many of the ironies that abound.

* In Vermont lender tend to be more cautious and mortgage delinquency rates are below 3%, in contrast to Nevada, where 30% of Las Vegas homebuyers used subprime loans, and now the state has a mortgage delinquency rate above 7%.
* Home prices have only fallen in 77 of 150 cities tracked by the National Association of Realtors, but prices were up in 73 markets.
* California and Florida alone accounted for 30% of recent U.S. foreclosure starts, according to the Mortgage Bankers Association.

Think about what those stats mean. First, Nevada’s 7% delinquency rate is the poster child for the problem, but that means 93% of mortgages are OK. A 7% problem is not the crisis that is portrayed. Moreover, even a small percentage of sub-prime borrowers are in trouble. This is a fairly small scale, geographically concentrated phenomenon, not a sweeping nationwide problem. Does it makes sense for the people in Vermont, who avoided trouble, to bail out all the housing gamblers in Las Vegas?

Yet, there seems little chance of calm at the national policy level. Election year politics will pander—hell they don’t really need an election as an excuse. My favorite quote from the USA Today article—a woman who bought a house a few years ago with no money down and an adjustable-rate mortgage that started at 5.9% and now faces an 11% interest rate she can't afford says “I think (a bailout) is a good thing for working Americans who are trying to pay their bills and do the right thing. I'm not asking for a handout.” Excuse me? I think you just did as for a handout.

I know some people are in pain, but it hurts us all if we don’t allow people to bear the consequences of the choices they make. You buy a too expensive home with a high-risk mortgage in order to squeeze down the payments, and things go wrong, it really is your fault, not America’s.

The Long Island Business News talks about the Drew Carey Project videos at Reason.tv. As it says, "When it comes to Drew Carey, the price, and message, is right."

Today's New York Times has an interesting article on airline deregulation. It's a hodgepodge of disconnected ideas, but the tone and approach probably reflects today's confused thinking about markets and regulation.

Thirty years ago, airline deregulation was supposed to fulfill two main goals: spurring competition and bringing down airfares.

Now the number of airlines may be shrinking, as the planned merger between Delta and Northwest is likely to encourage other big airlines to pair off. Reduced competition will probably mean higher fares, particularly as the airlines shrink their fleets and cut flights to reduce costs.

All of which raises anew the question: Has deregulation really worked out?

By some measures, it has. By others, not so much.

The principal idea behind deregulation is to create a more competitive market to provide better services to consumers. By virtually every measure, deregulation has worked--fliers have many more destinations than during regulation when only 10 carriers dominated 90 percent of the market, hundreds of cities have regular air service, and fares are lower after adjusting for inflation.

So, what are the measures showing that it hasn't worked? Airline profits have been squeezed and there's more "churn" in the market as new airlines enter, some leave, and others go bankrupt. In other words, the very fact a dynamic market exists is evidence that deregulation hasn't worked.

In a true market, airlines will come and go, profits will be squeezed, and services to consumers will improve. That happened, and the NYT article provides the evidence.

The confusion comes in when some believe its the government's job to protect the profits of business. The ironic twist in all this is that it's the Democrats now in charge that are willing to use the levers of government to protect business, not the Republicans. Note the comments of Congressman James Oberstar.

Beyond that, the next phase of deregulation will take place when airlines are truly globalized, flying freely inside other countries’ borders as well as their own, Mr. Garfinkle said. The merger between Delta and Northwest would be a major step toward that end, given their broad American network and extensive list of cities in Asia, Europe and elsewhere, he said.

However, the prospect of American carriers trying to compete against healthier foreign airlines, some of them still government-owned, is daunting to James L. Oberstar, Democrat of Minnesota, who heads the House Committee on Transportation and Infrastructure.

“It’s a very bad idea,” said Mr. Oberstar, whose state is home to Northwest’s headquarters. He said he expected “a cascade of carriers finding partners” if the Delta-Northwest combination is allowed to go forward, leading to fewer choices and higher prices for consumers.

The FCC-mandated conversion to digital TV broadcasting next February is touching off a battle among cable TV and telephone companies to hook-up so-called “nevers,” consumers, who for whatever reason, have been content to watch over-the-air TV and have never been interested in purchasing cable, so reports cable industry trade Multichannel News.

When the DTV conversion becomes effective Feb. 17, 2009, consumers who have older analog models will have a choice of purchasing a new TV, using a government-provided $40 voucher to purchase a digital signal converter, or sign up with a cable, telco or satellite TV provider.

Naturally, multichannel video service providers are hoping to entice consumers to embrace the last option. AT&T reportedly will offer a bundled package at $44 a month. Comcast is prepping a basic cable tier, with less frills, priced at $15 to $20 a month. Their target: people like Andrew King, a 45-year-old airplane mechanic who watches off-air television in Culpeper, Va., 70 miles from Washington, D.C.

King is satisfied with his free TV experience. He picks up broadcast stations from two markets, Charlottesville, Va., and the nation’s capital. He is unenthusiastic about the prospect of paying a cable, satellite or telephone company for television.

“I’m kind of a cheapskate,” he said wryly, adding he’d sign up for subscription television and then the “rates will shoot sky high.”

King’s objections echo responses cable researchers have long heard from TV viewers they classify as “nevers” or “formers.” This audience of 14 million to 19 million households are viewers who have steadfastly refused to take, or keep, pay television programming. Winning the hearts, minds and pocketbooks of such consumers is a top priority for cable, satellite and telco TV providers during the next year.

“Frankly, this may be the last big chance to gain market share,” said Cox Communications vice president of product marketing David Pugliese.

Regulators and legislators should note, that despite accusations that cable TV is a stagnant duopoly and needs competition from local government to meet all consumer needs, the article lays out four important facts, backed up by market research:

1) There is heated competition for cable customers.
2) Consumers are aware of service provider choices.
3) Video service providers are interested in attracting budget-conscious customers, even those who might pay only $15 to $30 a month.
4) That even when prices drop, there is still a segment of the population who does not desire cable service.

This Forbes article is a must read.

In what is becoming an all-to-regular development, another U.S. government agency suffered a breach of confidential information. This time, a laptop containing sensitive medical information on 2,500 patients enrolled in a National Institutes of Health clinical trial was stolen in February. As is par for the course, NIH is only getting around to reporting it now.

In a letter to affected individuals, Andrew Arai, a laboratory chief at the National Heart, Lung and Blood Institute (NHLBI), said the laptop was stolen from the trunk of his car. He told the patients that some personally identifiable information was on the stolen computer, including names, birth dates, hospital medical record numbers and MRI information reports, such as measurements and diagnoses. Social Security numbers, phone numbers, addresses and financial information were not on the laptop, officials said.

We're supposed to find this last part reassuring.

You can almost set you watch by it. Once again, members of Congress is calling for regulation of marketing and customer service rules in the wireless industry.

Here’s a report from Friday’s Chicago Tribune:

The latest draft legislation is a wireless consumer protection act from Rep. Edward Markey (D-Mass.) who proposes, among other items, requiring operators to offer a service plan with no early termination fee and letting consumers cancel their contracts within 30 days without penalty.

Sen. Mark Pryor (D-Ark.) has also floated legislation to set up uniform requirements for wireless customer service.

The cell phone industry, a category that includes service and equipment, generates the most complaints out of the roughly 3,800 industries tracked by the Council of Better Business Bureaus. However, according to BBB data, the wireless industry has a higher rate of resolving consumer complaints than the overall rate for all businesses.

The industry says it's open to light national regulation, though it emphasizes that operators already respond to consumer and competitive pressures.

Regulations should protect customers from false or intentionally misleading service offers and pricing plans, but legislators should of careful of sweeping rules that address anecdotal problems. With millions of people using their cell phones on daily, sometimes hourly basis, it’s no surprise that service, pricing and quality problems occur. Yet overall, usage continues to grow, prices have declined measurably, companies that have failed to meet competitive standards have been punished by loss of market share. Many Americans are comfortable enough with the reliability of wireless service that it’s the only phone service they use.

The problem with large-scale customer service regulations, such as a “Wireless User’s Bill of Rights,” however well-intended, is that government, not the marketplace, ends up setting the customer service standard. If the law mandates cell phone companies offer a 30-day service cancellation window, or reduce on-hold waiting time to no more than five minutes, that’s the requirement every service provider will meet. Go light on regulation, and competition will force service providers to make quality a differentiator. Pro-rated service contracts, pre-paid phone accounts and more flexible service bundling all emerged due to competition, not regulation, as service providers sought more ways to one-up the other.

You get these kind of unitended consequences when you have a centralized system, even from policies with good intentions and mostly good results.

More than 43,000 patients had to wait outside in ambulances for at least an hour last year before they could be seen in Britain's National Health Service emergency rooms. Standards require that patients must been seen within four hours when they arrive at an emergency room, so when busy, patients must wait outside so the clock doesn't start ticking. A Department of Health spokesman shrugged off the report. "These figures must be seen in the ontext of the 4.3 million patient journeys undertaken by emergency vehicles," he said.

Whole story here. Synopsis and hat tip thanks to This is True.

The U.S. Supreme Court, taking its first major case of broadcast indecency in 30 years, will hear an FCC appeal of a Second U.S. Circuit Court of Appeals ruling that nullified the agency’s enforcement regime regarding “fleeting expletives,” AP is reporting.

The case stems from an FCC claim that broadcasts of entertainment awards shows in 2002 and 2003 were indecent because of profanity uttered by U2 Lead singer Bono, Cher and Nicole Richie. Although no fines were issued, the FCC’s policy reserves the right to levy financial penalties in the future.

At issue is whether the passing use of language that might be objectionable to some viewers constitutes indecency under FCC guidelines. The Second Circuit Court sidestepped the content issue by citing procedural irregularities, namely that the FCC policy was invalid because the agency had changed it without adequate explanation. The case stemmed from Bono’s ad-libbed, apparently unscripted, exclamation, “f***ing brilliant!” during the NBC broadcast of the 2003 Golden Globes Awards show. The same FCC case also cited the Fox network over similar language by Cher and Richie during the 2002 and 2003 Billboard Music Awards.

Despite the FCC’s contention that it received hundreds of thousands of complaints over the language, the Second Circuit “was skeptical that the commission can provide a reasoned explanation for its fleeting expletive regime that would pass constitutional muster,” AP reporter Mark Sherman wrote.

Although the Supreme Court won’t hear the case until the fall, it will be interesting to see how it plays out. When it comes to regulating content, the FCC is fighting for relevance. FCC Chairman Kevin Martin has made no secret of his desire to police premium cable content (think The Sopranos, The Wire and The L Word) for “indecency,” not to mention Web content, and he might try to leverage a court decision in this regard (assuming he keeps his post in 2009). Yet Martin has often been subjective. In the past he has given an official past to broadcast airings of Saving Private Ryan, the Steven Spielberg war film that contains a fair amount of (scripted) profanity.

That tendency to pick-and-chose has reduced Martin’s legal arguments to the notion that the government needs to be watching out for public taste. At the same time, he did a fine job bolstering the First Amendment argument against banning profanity speech by choosing to use examples of it—mostly for shock effect—in his official comment on the Second Court’s decision.

Stating, as Solicitor General Paul Clement did, that the Second Circuit put the FCC “in an untenable position,” powerless to stop the airing of expletives even when children are watching, presupposes that it’s the FCC’s business to decide what children should be watching. Hence, the Second Court did at least address the correct constitutional questions the FCC action raised, and, for my part came, down on the right side—rules can’t be vague and subjective.

In this LA Times commentary, a female anthropologist explains what she learned spending a year with a mexican brothel, and how that reflects on Elliot Spitzer's fall.

Rep. Edward Markey (D-MA) introduced yesterday what many say is a “watered down” version of his network neutrality legislation from last year. Apparently some of the more sweeping calls for regulation are toned down, but there is still a lot in the bill subject to interpretation.

Telecom journalist Carol Wilson’s expresses some concerns at Telephony OnLine:

Finally, Markey wants to protect free speech and the “open marketplace of ideas” by “adopting and enforcing baseline protections to guard against unreasonable discriminatory favoritism for, or degradation of, content by network operators based upon its source, ownership, or destination on the Internet.”

Again, on the surface, this seems hard to protest -- unless offering a premium service is defined as discriminatory.

The fundamental freedom that network operators need to have going forward is the right to package and deliver their services in a way that meets market demands. We are all being bombarded by data that shows video traffic is driving up demand for bandwidth, a reality that will require both investment in infrastructure and a new service structure.

If what Markey is proposed can be used to prohibit network operators from offering premium services to both content delivery networks and to end users, then this latest Net neutrality push is no better than previous efforts. The difficulty for service providers is determining how best to interpret the “Mom and apple pie” nature of the bill’s language and how best to explain the technical challenges of their own future.

After waking up to the news of Microsoft’s $44.6-billion bid for Yahoo!, our morning cappuccino had barely cooled when Sen. Herb Kohl (D-WI) announced the Senate Antitrust Committee he chairs would scrutinize the proposed buy.

Regulator interest is to be expected. And while any undue government interference in the deal would be unwelcome, I think we’re due for a debate about which companies, in 2008, are the most influential players in the digital economy and what their relative strengths and weaknesses might be.

The first fact that will rock many in the government regulatory establishment is that, unlike the past, Microsoft approaches the deal from a position of weakness. However strong the Redmond, Wash., giant might be in PC operating systems, this deal is an attempt to shore up its sagging on-line and search engine businesses, which are second to Google. Yahoo, its target, ranks third.

I am hopeful that, as the merger proceeds over the course of the next few months, lawmakers and public gets a better understanding of the changes the search engine industry is bringing to media, advertising and what in the past has been called audience research, but now involves crunching data correlating Internet usage, search keywords, online purchases and downloads.

For starters, see Adam Thierer’s research at Technology Liberation Front.

Last Saturday night’s game between the New England Patriots and the New York Giants, which saw the Pats battle back from a 12-point deficit to achieve a perfect 16-0 season record, drew 34.5 million viewers, according to Nielson estimates, making it the most watched regular season pro football contest since 1995.

Viewership got its biggest boost from a late decision by the NFL to allow CBS and NBC to simulcast its feed from the NFL Network.

Those following the issue recall that the NFL originally had reserved this game for exclusive broadcast on the league-owned NFL Network. Problem was the league hit negotiation snags with the two of the largest U.S. cable companies, Comcast and Time Warner Cable, over how the channel would be carried on their systems. Comcast placed the channel on a higher-priced tier of all-sports channels, not on its “expanded basic” tier as the NFL wanted. Expanded basic is the standard 80-to-100 channel line-up that includes ESPN, Discovery Channel, Turner Classic Movies, History Channel and such. A similar dispute kept the NFL and Time Warner from reaching any deal. Therefore the NFL Network was not available to Time Warner customers.

New York Gov. Eliot Spitzer, who’s been all worked up about violence in video games, and his friends in the New York Department of Criminal Justice are wiping the egg off their faces after a 20-minute presentation cited a well-known Internet hoax and parody site, Mothers Against Videogame Addiction and Violence (www.mavav.org) as an important “parental resource.” The site, in truth, does a terrific job of spotlighting and lampooning the very type of moral panic Spitzer’s fomenting.

The MAVAV citation caps a sensationalized presentation filled with errors, inaccuracies and misinformation about the so-called dangers of violent video game content, including the since-discredited report that the Virginia Tech shooter was an avid player of Counter-Strike.

With the ominous title “Video Games and Children: Virtual Playground vs. Danger Zone,” the slide show was designed to drum up support for state new laws restricting the sale of video games.

For more see Cord Blomquist’s post at Technology Liberation Front and this entry at Gamepolitics.com. Note also that all of New York State's links to the presentation are currently down.

I find it hard to get as worked up as the opposition over yesterday's FCC’s decision to allow a company to have common ownership of a newspaper, TV and radio station in any one of the top 20 U.S. markets, amending a 32-year old rule.

As I said yesterday on Larry Mantle’s AirTalk program on KPCC, the Los Angeles public radio station, it amounts to a half-baby step toward liberalization of media ownership. My opposite number in the discussion, Josh Silver, executive director of the Free Press, was apoplectic over a ravenous quest for “profits” ending diversity in media. The segment is available at the KPCC site here.

The trouble is, there’s no sign of the great blanding of media content that Silver rails against. To be sure, local newspapers and radio stations have cut their staffs, but that reflect changing market conditions – a shift on the part of readers, viewers and listeners to other sources of news, the Web, cable TV and satellite radio, to name three. And if local alternative journalism is the goal, in this day and age owning a newspaper or TV station is a terribly inefficient way to accomplish it. Why take on all this overhead when, with far less resources, a motivated individual can accomplish much more with a video camera, a PC and a connection to YouTube.

Bottom line, however, the FCC’s decision did not amount to much. Through past waivers, the FCC has permitted cross-ownership in many of the major markets covered by the new blanket ruling, including New York, Chicago and Los Angeles. Under the new rules, a newspaper still cannot acquire one of the market's top four broadcast properties and at least eight independent voices must remain. So despite the outcry from anti-business corners, from a regulatory perspective, there isn’t much that’s going to change.

Despite a lack of general sympathy, the NFL is attempting to apply pressure at the state level to force cable companies to carry the NFL Network on its larger tier of “expanded basic” channels.

NFL Commissioner Roger Goodell and Dallas Cowboys owner Jerry Jones addressed the Texas House of Representatives’ Regulated Industries Committee in Austin yesterday, and although they said they were not seeking legislation or aribtration that would require cable companies to carry NFL Network on expanded basic, that’s more or less exactly what they wanted.

In its Texas markets, Comcast makes the NFL Network part of an add-on package of sports channels for $7.95 a month. Time Warner Cable has not come to terms with the NFL for carriage. DirecTV, Dish Network and AT&T all carry the network as part of an expanded basic-like line-up.

The NFL Network aired the first of eight scheduled games Thanksgiving night. They will continue through the end of the season. Despite NFL Network's marquee match-up between the Green Bay Packers and the Dallas Cowboys Nov. 29, league attempts to sway the Federal Communications Commission to press the cable industry generated little interest. Even several media outlets, including USA Today, never champions of the cable industry, thought the NFL was overreaching.

And it is. Government should not be arbitrating business decisions at all. In fact, the NFL should be careful about what it wishes for.

“As America’s team, the Dallas Cowboys have millions of fans outside the home market who are being kept in the dark by Big Cable,” said Jones.

“This is about fans and consumers having access to the programming they want,” Goodell asserted.

Oh, really?

If, as Goodell and Jones protest, cable companies are doing fans a disservice by making out-of-market games inaccessible, why allow Monday Night Football to move to ESPN? Why extend DirecTV’s exclusivity on the “NFL Sunday Ticket” package? Why not allow “Big Cable,” with its 60 percent market share, to offer the season game package, too. Why acquiesce to CBS and Fox’s demands that they rotate “doubleheader” Sundays, a deal that essentially guarantees each network, on alternating weekends, the higher-rated 4:15 p.m. kickoff slot free of a competing telecast? Better still, why not open all out-of-market games to a la carte pay-per-view?

The NFL clearly has the power to do so, but it will mean less revenue from the networks, who are willing to pay handsomely for exclusivity.

So what’s good for the goose is good for the gander. If the cable companies feel the NFL Network rates placement on a special tier, it’s their right to make the call, Packers-Cowboys showdown not withstanding. By the way, this Thursday, the NFL Network serves up Denver and Houston in a battle of 6-7 teams. That’s followed Saturday night by an utter meaningless game between Cincinnati (5-8) and San Francisco (3-10).

Must-see TV!

FCC Chairman Kevin Martin’s plan to impose greater regulation on the cable industry may have hit a snag as members of Congress, along with Martin’s fellow commissioners, have questioned the chairman’s rationale and methodology for the new regulatory proposals, the Wall Street Journal reports.

The FCC is scheduled to meet today (11/27) to vote on a number of proposals aimed at greater FCC regulation, but as of this morning, it had become questionable whether the commission would indeed take up the issue.

The Wall Street Journal reports that four Republican Senators and 23 Republican House members have expressed “deep concern” about the new regulatory plans in a letter to Martin. A particular point of dispute is a new data in a report from Martin’s staff that found that 71.4 percent of households with access to cable subscribe. Under a 23-year-old law, the FCC has the right to impose greater regulations if cable adoption goes above 70 percent. Martin is using the findings in the staff report as justification to exert broader authority over the cable industry.

Trouble is, this 71 percent finding by Martin’s staff runs counter to all other current market research. The new FCC report says cable TV is available to 94.2 million U.S. homes, of which 67.2 million subscribe. These numbers are risible. To find anything close you have go back almost eight years to 2000, when Cable World magazine reported that cable TV passed 101.1 million homes, of which 67.3 million subscribed, Even then, this was still less than the 70 percent threshold.

Expect the contrived controversy over cable carriage of the NFL Network to intensify this week as the FCC meets to push for greater regulation of cable.

As pro football fans know, the Dallas Cowboys and the Green Bay Packers, who share National Football Conference-best records of 10-1, will play Thursday night. The game will be nationally televised over the fledgling NFL Network, a cable channel owned by the National Football League itself, and ratings of which the NFL is trying to boost by using it to air a slate of eight Thursday and Saturday night games this season. (Games will be available on free TV in their local markets.)

Trouble is, the major cable companies, including Comcast and Time Warner, have elected to make the NFL Network available only as part of a higher priced sports tier, not part of the “expanded basic” packages that generally include CNN, ESPN, TNT, Nickelodeon and dozens of other cable channels.

In a case that could only happen because of the legacy of telecommunications as a regulated industry, the NFL has complained about this choice to the FCC. Worse, FCC Chairman Kevin Martin seems willing to give the league a hearing.

Timothy Wu, the Columbia University law professor who is one of the leading voices for network neutrality, has crafted an interesting piece in Slate on what he sees as a coming competitive clash between Google on one side and AT&T and Verizon on the other.

Wu’s article is a sound analysis of the two business models each group seeks to employ. Google is pursuing a network neutral approach of which its Android operating system for mobile devices is the cornerstone. Among its many allies, Google has attracted incumbents T-Mobile and Sprint to the Android concept, showing that the current wireless industry is not as monolithic as Wu’s editors’ use of the inclusive “Ma Bell” in the subhead suggests.

But Wu has a problem. As speculation intensifies as to whether Google will bid several billion dollars for a chunk of the 700 MHz spectrum the FCC plans to auction in January, he must answer the question that network neutrality proponents are finding more difficult to dodge each day – will network neutrality do little more than just give Google, which is, despite its perception as an underdog among some lawmakers, a huge, deep-pocketed company, a government-provided advantage in the market for Internet access and applications.

At a town hall meeting scheduled for today (Nov. 14), Democratic presidential contender Barack Obama was to touch on the standard set of network neutrality talking points, no doubt missing the irony that he was going to make his remarks at the headquarters of Google, the one company that stands to gain the biggest sort-term windfall if network neutrality becomes law.

Prepared statements were released in advance and they add up to the standard campaign pabulum. After all, everyone’s for an “open network” just like everyone’s for “quality health care” and a “sound energy policy.” Yet aside from being a friendly host to the Obama camp, the more Google talks about their so-called neutrality model for wireless, the less I see them supporting the broad language of Snowe-Dorgan in the end. Simply because it applies to wireless devices, Google's so-called "open" Android operating system is going to need some network management capabilities to work. And its no secret that when pressed about the operation efficiency of a totally neutral Internet, Google has been hedging all year.

Nonetheless, by getting all gushy about Google, Obama risks the same danger as many of his colleagues – equating Google’s interest with the public interest.

“The Google story is about what can be achieved when we cultivate new ideas and keep the playing field level for new businesses,” his script reads. Of course, Google hardly has a level playing field. First of all, although it designs to compete in the provision of services (local WiFi and 700 MHz wireless) it is completely unregulated. No carrier of last resort obligations, no universal service mandate, and no need to incur the extra cost to collect taxes, surcharges and franchise fees state and local governments assess on its prospective competitors.

Then there’s the enormous break from the FCC with the auction rules, which probably did more than anything to spearhead interest in Android. Google's stock price is about $640 and its market cap is $200 billion. By comparison, AT&T’s is $237 billion, Verizon’s is $126 billion and IBM’s is $143 billion.

Google’s big advantage in Washington has been its ability to hoodwink Congress that its still a small company—("a smaller voice" being "squeezed out," in Obama's words) hence appealing to the Democrats’ instinct to protect small players from large.

The principled position however stems from respect for private property and curtailing the power of big government to regulate business models. In the end, even Google’s going to finesse its way out of supporting net neutrality. Posturing for "open networks" suits the company today, but not in the long run. That’s why Obama, and others, should be careful. Politicians who buy into the idea that network neutrality as political issue will find themselves out on a limb.

Efforts to resuscitate network neutrality legislation seem to be gaining some momentum on Capitol Hill. Reports from inside the Beltway say that Rep. Ed Markey (D-MA), chairman of the House Subcommittee on Telecommunications and Finance, is close to reintroducing his net neutrality bill. Readers may recall Markey’s bill was voted down last year when offered as an amendment to the House’s sweeping telecom reform bill. Hearings may begin as early as this month.

Meanwhile, over in the Senate, the Snowe-Dorgan net neutrality bill, another 2006 loser that was re-introduced and tabled in January, may be coming up for debate in the Senate Commerce Committee.

The latest moves come after some rather sensationalized reports of Internet blocking by Comcast and AT&T.

First, AP accused Comcast of blocking traffic headed for certain peer-to-peer sites. The truth turned out to be that Comcast merely was slowing down isolated P2P uploads by reducing the number of simultaneous connections the user could have to the file-sharing site. As George Ou, an IT blogger for ZDNet explained Nov. 6, “We can think of it as a freeway onramp that has lights on it to rate limit the number of cars that may enter a freeway… If you didn’t have the lights and everyone tries to pile on to the freeway at the same time, everyone ends up with worse traffic.”

(The facts did not stop Free Press.org from going into full blather about discrimination, demanding the FCC impose up to $2.3 billion in fines on Comcast.)

Another fire season has resulted in tragedy in Southern California and, once again, the federal, state, and local governments have shown that they still haven't learned how to deal with the threat. By now, you have probably heard about a lot of the bureaucratic bungling and red tape that impeded response efforts. As a San Diego resident, I had a front-row seat to the ineptitude. For example, despite the fact that the city is surrounded by three military bases, military assets went unutilized or underutilized. State rules require each federal helicopter to carry a licensed "fire spotter" from the California Department of Forestry and Fire Protection (Cal Fire). Unfortunately, Cal Fire didn't have spotters available, so nearly two dozen Marine, Navy, and California National Guard helicopters remained on the ground. In addition, two of the National Guard's C-130 cargo planes were unable to help because they still have not been fitted with tanks to carry thousands of gallons of water or fire retardant, despite promises to do so four years ago after the Cedar and Paradise fires ravaged the area. (For more details, see this Associated Press story.) Meanwhile, government officials from the president to the governor to the mayor to the County Board of Supervisors to spokesman from various government agencies constantly held press conferences where they stood around and congratulated each other on what a great job they were doing.

Some may say that the problems in responding to the fires in San Diego and elsewhere were just a matter of poor leadership. While this is true to some extent, I think there are problems with allowing government to handle such issues in the first place, problems that no change in leadership can fully address. The problem can be illustrated in the difference between public and private property and the different incentives of public land managers and private property owners. Government land management tends to be reactive, while private property management is proactive. Why is it that we never hear about the government clearing overgrown brush, creating fire breaks, or conducting controlled burns throughout the year, rather than responding only after there is a crisis and throwing money at the problem when it is too late?

Fire prevention is essentially about risk management and property protection, two of the things that free markets handle best! Author and columnist Lew Rockwell recently wrote an article on this issue. According to Rockwell,

Are we under the impression that private markets can't handle risk management? Private markets specialize in protection of property, particularly against natural risks. If the land were privately owned, it would be protected against burning through better management. If it had to be burned, the burning would be controlled. Unexpected events like droughts and winds would be calculated into management decisions.

What's more, there would be serious liability issues. Any owner of property who let fires rage would be directly responsible for imposing fires on others. This is the way markets work. If my bathtub overflows, floods my house, and then the waters flood my neighbor's house, I am responsible via my insurance policy. So, yes, there would be a price to pay for fires on your land that harm others' property.

What do we have today? We have fires that are no one's responsibility.

Perhaps it is time to rethink allowing government to manage our fire prevention efforts.

On Sept 27th PRI will be hosting an event that looks pretty fun. Full info here.

SiCKO and Its Malcontents: Health Care on Film
*Michael Moore's Sicko shows the U.S. system leaving millions of Americans behind and allowing insurance companies to profit by denying care to patients, while people in Canada, Cuba, and Britain receive quality care free of charge.

*American film-maker Stuart Browning interviews Canadian patients for his Free Market Cure video series and comes to the opposite conclusion: Canadian patients wait in long lines for care and have poor access to the latest technology and medicines.

*Les Invasion Barbares, Oscar winner for Best Foreign Language Film in 2004, documents the struggles of a cancer patient fighting bureaucracy and union power in a Montreal hospital.

Do these films provide an accurate or complete picture? Clips from SiCKO and the Moving Picture lnstitute will serve as a launching pad for a discussion of health care system failures, domestic and foreign, by a panel of three experts from Canada, Britain, and the U.S.

A light regulatory hand will be critically important to ensuring landline telephony alternatives remain available, so says Eli Lehrer, a senior fellow at the Competitive Enterprise Institute, in a new paper, “Keeping the Voices Alive,” that looks at changing wireline technology.

The copper platform is dying, says Lehrer, and it's critical that regulators allow new technologies, including voice over Internet Protocol (VoIP) and “device-based” telephony, such as Ooma’s $399 device which, once purchased, the manufacturer claims, allows consumers to make unlimited calls without incurring service fees, to grow without hobbling them with regulatory mandates heldover from a past era.

But to truly open this environment, regulators must get past the notion that copper-based service is the standard by which all service should be measured, he says. This attitude, says Lehrer, risks creating mandates for calling technologies that do not fit their inherent nature.

CNET’s Declan McCullagh thinks so. Here he blogs on 10 reasons why the issue has faded from the tech agenda.

Still, count me among the skeptics. I agree that the Bush administration, the 700 MHz auction set-aside and the reticent Congress, contributed to the issue's cooling from feverish pitch from just a few months ago, but a Democrat in the White House may embolden Congressional members like Rep. Edward Market (D-Mass.) and Sen. Byron Dorgan (D.-N.D.), who have so far seen one of their pet issues beaten back.

Surfin’ on a Sunday afternoon.

The Progress & Freedom Foundation’s Adam Thierer has an excellent op-ed in
The City Journal that answers a recent cri-de-coeur from the Parents Television Council as to “Who Killed Family Hour?”, long regarded as the 8 to 9 p.m. time slot for TV broadcasters (although, as Thierer points out, it was more of a broadcaster convention and was never mandated by the government).

“The answer: parents like me! Armed with all these new viewing options and technologies, parents, not broadcasters, now determine the content of the family hour and when it will take place. We no longer have to sit down at 8:00 each night to be spoon-fed our daily dose of family-friendly fare. For example, in our home, my wife and I have designated one television for most of our children’s video consumption, and we use a DVR to amass a large library of programming that we believe is educational, enriching, and appropriate. We can catalog and archive dozens of programs and supplement them with VHS tapes, DVDs, and computer software. When we allow our children some TV time, we know that they’ll be able to watch our preferred episodes of Dora the Explorer, Go Diego Go, Blue’s Clues, and The Wiggles.”

I had to chuckle when I read that, because at the time my 4-1/2 year old son was watching a DVD of an episode from Gerry Anderson’s great Thunderbirds series, which he chose as a reward for good behavior. And as in Adam’s household, I can probably count the hours of actual TV that my son has watched “live” off the cable box, as in being transmitted that very minute, on two hands. Earlier, I had remarked that I used to watch the Thunderbirds when I was his age. “Did you have a lot of episodes to choose from?” he asked. “No,” I said. “We didn’t have DVDs. You had to watch the Thunderbirds on a certain day at a certain time or else you missed your chance to see it.” His only response was a pained look of what appeared to be incomprehension, incredulity and a trace of abject pity.

I get it. That's the way I look when I read PTC complaints about the scarcity of choices parents have for children’s viewing.

The FCC is considering banning agreements between cable companies and owners of condominiums and apartment buildings, according to USA Today.

This looks like another attempt by the commission to “manage” competition, rather than let the free market play out.

Leaving aside the question as to whether cable service agreements even fall within the FCC’s regulatory purview, the FCC needs to decide on what set of principles its going regulate the business.

The 700 MHz auction rules notwithstanding (more on that later), from what we know, Chairman Kevin Martin is part of a majority of the commissioners who agree with the what free-marketers have said about network neutrality—that the government should use caution because network neutrality would prohibit business agreements that have as much a chance as benefiting consumers as harming them. Point being that consumer “harm” is purely speculative and we have yet to see a concrete example of blatant abuse of market power grow out of the not-quite-neutral nature of the current Internet access business.

Yet the FCC is disregarding this principle when it seeks to dictate the way how a property owners, associations and representatives of large groups of cable consumers can purchase services. Contrary to what the U.S. Telecom Association is telling the commission, the fact that owners of multi-dwelling housing (read apartments and condos) can enter into a multi-year exclusive arrangement with one service provider is not anti-competitive. It’s just the opposite. A condo or rental building, because they deliver so many customers, is an attractive target for all service providers. As such, owners have enormous leverage. This is exactly the environment competition and deregulation is supposed to create!

A new study from the AEI-Brookings Joint Center for Regulatory Studies finds:

Once we correct for the endogeneity of usage, our models predict no statistically significant increase in accidents from mobile phone usage, whether hand-held or hands-free. Our results call into question previous cost-benefit analyses of bans on mobile phone usage while driving, which typically assume that such bans will have a salutary effect.

The New York City Council, which drew national headlines when it passed a symbolic citywide ban earlier this year on the use of the so-called n-word, has turned its linguistic (and legislative) lance toward a different slur: bitch.

The term is hateful and deeply sexist, said Councilwoman Darlene Mealy of Brooklyn, who has introduced a measure against the word, saying it creates “a paradigm of shame and indignity” for all women.

Nineteen of 59 council members have signed onto the law, which would also "ban" the use of "ho." But would this affect dog show aficionados (or those who just like to snicker when refined announcers talk about female dogs)?

“We’d be grandfathered in, I would think,” said David Frei, who has been a host of the Westminster Kennel Club dog show in New York since 1990. The word is a formal canine label that appears on the competition’s official materials. But Mr. Frei said he worried about the word’s impact on some viewers, especially younger ones.

Much of the article discusses how these naughty words have become quite prevalent, even in some unexpected circles. No surprise to hear them from hip hoppers, but council members?

And Ms. Mealy admitted that the city’s political ruling class can be guilty of its use. As she circulated her proposal, she said, “even council members are saying that they use it to their wives.”

Sort of interesting that that line hangs there in the NYT article, without further exploration.

Could also file this under the ongoing Singaporization of New York. (You know, Councilwoman Mealy, gum-chewing has plenty of antisocial consequences.)

Related: Ban Wagon--trans fat edition; national pastime edition; royal family edition; distracted driving--and walking--editions; and of course smoking.

All sorts of groups claim to be "the last socially acceptable target of discrimination." How is the social tide turning when it comes to two groups vying for this distinction?

Slate's Michael Saletan sees an erosion in social norms that frown on fatness. Case in point:

In a 1985 survey by the NPD group, 55 percent of U.S. adults agreed that "[a] person who is not overweight is a lot more attractive." By 2005, only 24 percent agreed. The firm concluded, "Perhaps Americans have found that the easiest way to deal with their weight is to change their attitude."

Meanwhile, Michael Siegel points to a new Gallup survey, which finds that nearly half of smokers (47%) feel unjustly discriminated against as a result of public smoking restrictions. That's up from 32% in 2001. But there's also this wrinkle:

The majority of Americans (58%) continue to feel sympathetic toward smokers, which represents no change from 2001.

Check out "the rest of the story" from Siegel, which includes some interesting musings on whether anti-smoking groups might be stepping out of line with public sentiment.

Related: LA Bans Puffing in Parks

Related: They would never--wait, they already have

I can’t imagine anyone being happy with ambiguous rules the Federal Communications Commission announced today for next year’s auction of spectrum for wireless services.

As expected, FCC Chairman Kevin Martin decided to dabble in market experimentation, requiring the winner of a 22-MHz block of the coveted spectrum to allow any phone, device or application to work within that group of frequencies. Even then, Martin hedged, stating that this wireless network neutrality requirement is “subject to certain reasonable network management conditions that allow the licensee to protect the network from harm.”

Huh?

Those two great words “network management” always seem to show up when network neutrality is on the table. Combine that with Martin’s allowance of “reasonable” safeguards on the network and you have a loophole that you could fit Google’s market cap through.

In other words, the FCC rules allow the licensee, on its own and at any time, to start restricting devices and apps if it feels that they threaten the stability of the network, by themselves or when used by large numbers of customers. One assumes then that the licensee would then fall back on established bundled business models, which today assure that the device, the network and the application work properly. So much for wireless net neutrality.

Despite the fervent calls for network neutrality by lawmakers and some industry leaders, when the rubber hits the road, they readily allow wiggle room, which to me reveals a startling lack of faith that net neutrality is correct policy. Even Alan Davidson, Google’s Washington policy counsel, has said that not all network management is anticompetitive.

Martin’s allowance of “certain reasonable network management conditions” recalls the out he built into the network neutrality condition he placed on AT&T in return for approving its acquisition of BellSouth. There, he specially exempted video and wireless—the two services that network neutrality opponents say would be the worst affected by a ban on use of any network quality or reliability tools.

Adding in the fact that Martin stopped short of setting aside spectrum for wholesale only (a decision that has the Consumers Union and Free Press apoplectic), it’s hard to understand whether, in the long term, these auction rules change anything. Still, as Randy May notes, the FCC’s lip service to wireless network neutrality gives credibility and momentum to those who seek to impose greater government regulation on the Internet, and who seek to impose these egregious and self-defeating rules, which address no real problem, on all Internet service providers.

It would have been better for all if Martin had just opened the spectrum bidding to all-comers and allowed the winners to chart their own business course.

Well, the fireworks came as promised. The American Legislative Exchange Council’s Telecommunications and IT Task Force approved model legislation for state deregulation of Voice over Internet Protocol (VoIP) calling, battling back a controversial amendment that would have applied the current carrier-to-carrier access charge scheme to VoIP calls.

The model “Advanced Voice Services Availability Act of 2007,” intended for use by state legislators, enjoins state public utility commissions from regulating rates, terms or conditions on interconnected VoIP services.

While the measure had strong support among ALEC public and private sector members, rural telephone companies feared the legislation would result in their loss of payments from other carriers for the completion of calls on their network. Groups such as the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), the Independent Telephone & Telecommunications Alliance (IT&TA) and the Pennsylvania Telephone Association all asked task force members to oppose the model bill on grounds it would raise rates for rural users.

During Thursday’s Task Force meeting at ALEC’s annual meeting in Philadelphia, David Bonsick, director of government and public affairs for Embarq, a telecommunications service provider with primarily rural operations areas, said, “flash-cutting to deregulation would likely cause irreparable harm to hundreds of rural telephone companies.”

Bonsick touched off some emphatic give-and-take between task force members over VoIP deregulation. An amendment that acknowledged the access charge issue but remained neutral on mandating or prohibiting payments was offered, then withdrawn. In the end, Bonsick proposed a stronger amendment that would have mandated payment of access charges for completion of VoIP calls, but it failed when his motion to vote was not seconded.

While rural companies do depend on access charges and intercarrier compensation for a substantial portion of their revenues, access rates are regulated by both federal and state mechanisms. Rates are not set by the market, but by complex formulas that, result in different carriers paying different access fees to the same rural company for the same connection. Some task force members argued that access payments thwart the development of competition from other technologies by keeping rural rates for conventional dial tone artificially low.

State Rep. Phil Montgomery of Wisconsin, the author of the model bill, said it was his wish to keep the access charge issue separate.

Say what you will about FCC Chairman Kevin Martin, at least he’s consistent. After making clear his plans to be the nation’s TV nanny by extending broadcast content restrictions to cable TV, Martin now shows he has no misgivings about meddling in functional, competitive markets.

Martin is leaning in favor of using the upcoming 700 MHz spectrum auction to impose network neutrality regulation thus far rejected by the FTC, Congress (last year) and several state legislatures, not to mention Martin’s bosses at the White House. And Martin is embracing neutrality for wireless, the most competitive telecom sector right now. Tacitly, he is endorsing Frontline’s bizarre and self-serving perspective that the wireless market is somehow monopolistic and exploitive. Martin apparently agrees with Frontline in that the U.S. does not have any “open” wireless networks (What’s WiFi then?).

Over at Precursor.com Scott Cleland writes:

FCC Chairman Martin's surprising proposed open access/net neutrality regulations for the 700 MHz auction, threaten to broadly chill the broadband investment necessary to deliver broadband deployment to all Americans.

• Chairman Martin apparently has chosen to abandon over a decade of bipartisan free-market Internet policy and adopt a new more regulatory "managed competition" broadband policy advocated by new House Chairman Ed Markey, who has strongly praised Chairman Martin for his support for net neutrality regulation/open access.
• The real world effect of this unwarranted core policy flip flop is to introduce new and very substantial policy, legal and investment uncertainty into what had been a very stable economic growth environment.
o Chairman Martin is making the heroic assumption that he can massively interfere with market forces and heavily subsidize untested and likely uneconomic business models with no unintended consequences on investment or economic growth in the critical broadband sector.

Chairman Martin has now emphatically embraced the core economic principle of former FCC Chairman Reed Hundt's Frontline Proposal (and Frontline's Google gaggle of investors), which is that market forces will not and cannot promote sufficient "competition" so the government must regulate and "manage competition" (i.e. mandate prices, terms and conditions -- either directly or indirectly) to ensure consumer welfare.

The move is yet another instance of Martin reversing earlier statements and policies. Cleland points out that only last year Martin praised wireless competition. “The competitive marketplace for wireless services is continuing to bring consumers more choice, better services and lower prices.” This is reminiscent of Martin’s sudden call for a la carte cable pricing, when, a year earlier, he endorsed an FCC finding that said a la carte cable was not always economically feasible.

Martin is taking