A Collection of Legal Advisories on the New Net Neutrality Rules

The new network neutrality rules have been out for almost a month now. Here is a short collection of legal opinions:

The Role of Competition in Network Neutrality

Alissa Cooper, formerly at CDT and now at Cisco, wrote her PhD dissertation on network neutrality practices in the US and the UK. Here is an interesting tidbit from her abstract:

Competition promotes rather than deters discrimination because it drives broadband prices down, encouraging operators to manage high-volume applications whose traffic incurs high costs. Regulatory threat can be sufficient to counteract these desires, but in its absence and without concerns vocalized by interest groups, discriminatory approaches endure.

In many European countries, unbundling has lead to competition among providers. While this has put downward pressure on consumer prices, investment in the backbone is far lower. Altogether, these industry features often lead companies pricing data since their margins are low, thus leading to very schemes that network neutrality advocates deplore. Practically speaking, this is why Europe has had far more problems with network neutrality than the US.

What’s The FCC’s Rush on New Net Neutrality Rules?

Network neutrality rules have failed to pass Congress and the courts countless times, so what’s the FCC’s rush now? Scott Cleland explores in an op-ed at the Daily Caller:

The reality is that “net neutrality,” Internet “blocking,” “throttling” or “paid prioritization” are terms and concepts not found in archaic communications law.

That is the core reason why the FCC’s attempts to effectively legislate new law and policy absent Congress were overturned by the courts in Comcast v. FCC and in Verizon v. FCC.

Someday, the FCC will need Congress to update its authority for the Internet age. Why shouldn’t the FCC start working cooperatively with Congress now?

The bottom line here is that everything that the FCC is and does ultimately comes from Congress.

The FCC is an agency that is “independent” from the executive branch, but not independent of the legislative branch, its constitutional master, or the courts, its constitutional check and balance.

What Economic Environment Will TV Unbundling Create?

The Technology Policy Institute just went live with a video of their OTT event, exploring TV unbundling. There is a lot of solid material, but Laura Martin, a Senior Analyst at Needham & Company, explained what would happen if we went to an unbundled world:

  • As soon as you unbundle, you lose advertising revenue. Immediately, you have to double the cost because of lost ad dollars.
  • 1/2 of the revenues come from ads and the other 1/2 comes from subscription.
  • Currently, the market is $150 billion a year for TV revenue with a $400 billion in market cap.
  • Remember, in order for Nielson to measure for ads and thus calculate ad dollars, you have to reach 20 million homes.
  • By her projections, only 30 channels of 500 would reach this number. So, the other 400 or so would have to double their costs to consumers.
  • Currently, everyone one of those channels reaches the homes out of the 150 million, and there is an easy way to change channels.
  • Subscriptions are 5 year terms and tend to step up over time.
  • So, advertising moves away from TV the fastest in a la carte world.
  • Currently, the cost of content is $40 per household and what we would see is about 15 channels, which is generally the average around the world.
  • Everyone does consume the major 15 channels, but households tend to have passion channels that will lose out in this world.

Bruce Owen also noted that if we force suppliers to provide services a la carte, then how do we know if they are pricing the various channels correctly? We will have to look at costs because supplying the bundle costs less than supplying the a la carte channels. So, we are in a world of rate regulation.

Of Course Free Press Authored It

From the, “Yes, of course we all knew this” file,

A letter that Rep. Jay Inslee, D-Wash., is circulating on Capitol Hill expressing gushing support for FCC Chairman Julius Genachowski’s controversial proposal to subject broadband to tougher regulation wasn’t written by the congressman.

How do we know? Digital fingerprints left by the author, Ben Scott, policy director of Free Press, a media watchdog.

It’s common knowledge that advocacy groups and corporations routinely craft letters and even legislation for lawmakers. But it’s not every day they leave behind a trail of evidence confirming the link. Such is the case with Scott, who forgot to scrub the so-called “metadata” — yeah, I’d never heard of this either — listing him as the author of the correspondence making the rounds on the Hill.

I think its great that an organization helping to solve the Internet’s problems cannot even delete the metadata. Really?

Rasmussen, the FCC and Rape Rhetoric

Adam Thierer over at Technology Liberation Front posted a Rasmussen poll that suggests,

Just 27% of Americans now believe the Federal Communications Commission should regulate the Internet like it does television and radio. That marks a 22-point drop in support for federal regulation of the Internet since June 2008.

He believes that it is due to FCC’s overreaching actions:

I mean, after all, from what my friends on the Left tell me, the American people are just dying to get Net neutrality regulations on the books and have a massive infusion of taxpayer support for Soviet-style broadband plans and media bailouts. So clearly those things just can’t be driving this sudden public skepticism about the FCC, right?

It is actually a little simpler than that. I don’t think many people know or even care about the FCC and Internet regulation. The story that broke this past week, which is probably the cause of this drop, more broadly fits into the concept of intrusion, which has been all the rage these past couple months. Think about it this way. The decision on the court case broke just as the health care bill was being signed. This is important because many of the arguments being used in opposition to the health care bill were framed as rape or intrusion*: “They’re going to shove this bill down our throats,” “They are going to slip this bill in the middle of the night,” and “They are going to ram this bill through Congress.” These ideas were primed in the minds of many leading up to the FCC decision. When FCC v. Comcast broke, the agency immediately became an intruder, echoing the health care debate. Polling provides an interesting source of information and controversy for both scholars and politicians because he reasoning behind the beliefs are never really articulated. As a result, multiple readings of the data are possible. I, for one, think we should be stepping away from the particulars and look more broadly at what kind of arguments and stories seem to be circulating at the time. To sum this up: rape is relevant. *HT to Ellen Defossez for this observation.