In some of the worst sophistry I have seen in a long time, several pro-regulation groups, who obviously oppose competition policy for communications, petitioned the FCC with a classic straw man argument that essentially asserts that because wireless competition is imperfect, its “demonstrably uncompetitive” “and “produces active and ongoing consumer harms.”

  • Any open, transparent, balanced and fair-minded review of the real competitive facts in the U.S. wireless industry will expose these assertions as un-true and un-supported by the balance of available evidence.
  • The sophistic comments, which can be found at the bottom of this Media Access Project press release are an obvious “stalking horse” for those who advocate abandoning private enterprise competition policy in favor of common carrier regulated public infrastructure policy.

The comments consistently present fallacious “black or white” arguments that if a competitive imperfection can be asserted, however thin, unsupported, irrelevant or out-of-context, one must conclude that the market is anti-competitive requiring ongoing government regulation of prices, terms, conditions, operations and network management.

  • If this is the best they can do to try and misrepresent the state of wireless competition to justify common carrier regulation of wireless, it is ironically a powerful argument for the actual competitiveness of the U.S. wireless market.

Let me debunk their straw man arguments using the best industry data available filed with the FCC.

First, they falsely assert that the market “structure shows the market is not competitive.”

  • The group only asserts that the HHI market concentration index is high without sharing the highly relevant fact that the U.S. has the lowest HHI index in the OECD!
  • They also ignore the fact that the largest U.S. wireless carrier has less market share than all but one OECD market leader, and that the lead U.S. carrier has 50% less market share than the top wireless provider in Japan, Korea, France, or the Netherlands, all countries the groups filing comments tout as broadband leaders to emulate.
  • They also fail to note that the U.S. is leading the world in getting DTV 700 MHz spectrum into the wireless marketplace soonest.
  • They also fail to note that the U.S. leads the world in deploying an additional WiMax based national network, Clearwire, and is ahead in transitioning toward LTE 4G technology.
  • They also ignored the April 2008 assessment of former Vice President Al Gore that the U.S. has the “most competitive wireless industry in the world.”

Second, they falsely assert that market “conduct shows the market is not competitive.”

  • Anyone with eyes and ears experiences the barrage of wireless advertising for customers. If the industry were not competitive why would the industry spend more on marketing and advertising than any other industry in the U.S.?
    • They market so much because customers can and do switch — so U.S. wireless carriers bend over backwards to keep them with lower prices, more value, new devices, new features, new innovations, etc.
  • The commenters also ignore essential competitive facts about the U.S. market:
    • American consumers pay among the lowest wireless prices in the OECD and ~60% less than the average OECD country. How is that anti-competitive?!
    • American consumers also use 2-6 times more minutes of use than any other OECD country. How is a market with that core attribute “demonstrably anti-competitive?”
Third, they falsely assert that “Behavior shows the market is not competitive.”

Once again the commenters omit exceptionally important competitive facts. In classic straw man technique, they only say what can’t be done, without putting it into context about what can be done.

  • According to the CTIA, consumers have the choice of 630 different handsets from 33 companies and 29 of those handsets are WiFi enabled — i.e. providing free wireless access.
  • They only complain about the lack of perfection and ignore the fact that American consumers have the choice of over 40,000 different applications, with 20,000 more in the pipeline for this year alone!

It is inherently misleading for the commenters to talk about what a consumer cannot do, outside of the context of what they can do. There are a wide variety of legitimate economic and pro-competitive reasons why competitive choice is not perfect.

  • Markets certainly are never perfect, and that is equally true for regulation.

Fourth, the commenters falsely assert that “performance shows the market is not competitive.”

  • The performance that the U.S. has the lowest prices, most usage, most choice, most investment, most progress towards 4G networks shows that the U.S. wireless market is the most competitive world — not that it is anti-competitive!

Lastly, the commenters falsely assert that “barriers to entry and growth further limit competition.”

  • The complaint here is that wireless competition is a capital intensive, high fixed cost business, which is true, but what the commenters fail to consider is that high fixed-cost businesses like wireless naturally create intense competition to please and retain existing customers — via a wide array of benefits and goodies that all greatly benefit the consumer.

In short, this set of comments is very thin gruel.

  • The commenters obviously must not think the FCC expects much analytical rigor or logic, because the commenter assertions don’t prove their argument, they only expose that the commenters don’t believe in competition as a policy at all.

 

In another example of how many have overstated that the U.S. is falling behind the world in broadband, the OECD ranks the U.S. #1 in broadband Internet access to schools, with 97% of all American primary and secondary schools having broadband Internet access per the latest OECD data.

This data suggests that lack of broadband access may not a major reason why American students test lower than students in many OECD countries.

For more data and studies on why the U.S. is not falling behind the world on broadband click here.

 

 

 

A scan of the major comments just delivered to the FCC on the National Broadband Plan (which is due to Congress February 2010), spotlighted the big broadband policy “fork-in-the-road” decision that the FCC now has before it.

  • One road of the fork-in-the-road, continues down the road of:
    • Promoting facilities-based competition;
    • Encouraging private investment in a wide diversity of technologies; and
    • Facilitating a cooperative public-private partnership to address unserved broadband areas and lagging adoption of widely available broadband.
  • This road:
    • Involves no loss of the substantial competitive momentum that exists in the American broadband market;
    • Facilitates public-private cooperation to accelerate, uninterupted, the shared goal of achieving universal broadband access as soon as practicable; and
    • Produces the most and broadest economic growth and job creation.
  • Simply, this road is all about moving forward together towards a worthy and achievable goal that can bring the economy and society great benefits.  

The other road in the fork-in-the-road was best encapsulated by FreePress’ comments to the FCC 6-8-09. Many view FreePress as the leading voice calling for a complete overhaul of U.S. broadband policy; they are the operator of SaveTheInternet.com and a driving force behind InternetforEveryone.org.

FreePress believes “The FCC’s broadband plan must chart a new direction for technology policy for this country.”

  • That “new direction” is the functional equivalent of a “U-turn” and moving backward about a decade. That “new direction would be a de facto “do-over” and reversal of the broadband policy set by the Kennard-FCC near the end of the Clinton-Gore Adminstration.
  • Specifically, FreePress recommends in its public comments that the FCC:
    • Turn around, go back and “revisit” …”every major regulatory decision since the 1996 Act...” (p. 5); and
    • Go back all the way to 1999 and do-over FCC Chairman Kennard’s decision to encourage facilities-based broadband competition, i.e. “reverse the foundational mistake of its broadband policy framework by reclassifying broadband as a telecommunications service,” (p.5) (A “telecommunications services” classification would mean common carrier regulation of broadband prices, terms and conditions).
 

 

In addition, to advising that the FCC move backwards a decade, Free Press also advises that the FCC and Congress put the proverbial “cart before the horse” in recommending that extremely controversial net neutrality rules should receive equal policy priority with the achievement of the high-consensus, Congressional goal of universal broadband:

  • Congress should concurrently pass a law to place these nondiscrimination protections in the Communications Act.” (p. 6)
  • Why FreePress’ advice puts the “cart before the horse” is that it insists on implementing its version of perfect broadband access before much of the country gets any broadband access at all.

Finally, despite some net neutrality proponents claims that an “‘extreme’ version of net neutrality is never what advocates have sought” — i.e. zero tolerance for any bit management or prioritization at all — FreePress, the leading advocate for net neutrality via its operation of SaveTheInternet.com, is still strongly advocating the “extreme net neutrality” of no bit interference in its FCC comments on the National Broadband Plan:

  • No Internet packets should be given priority over others — whether the priority comes in the form of access, latency, or bandwidth.” (p. 163)
    • (This extreme net neutrality position would overturn FCC policy allowing for “reasonable network management” and it would totally prohibit any network cybersecurity to protect consumers, businesses, the economy or the Nation from cyber-attack or cyber-crime.)
  • Second, nondiscrimination rules must prohibit network operators from selling or offering any capacity to prioritize some Internet packets over others, whether to a third party or to an affiliate.” (p.164)
    • (This extreme net neutrality would effectively outlaw the existing diversity of products, services, tiers, prices, speeds and features in the marketplace that meet consumers’ wide diversity of needs, wants and means. Moreover, it would disincent any private broadband investment, because it would offer no opportunity for competition, innovation or return on investment.)
  • Finally, nondiscrimination rules must prohibit Internet access providers from charging additional fees to allow specific types of Internet content, applications or services to be used.”
    • (This extreme net neutrality position would be grossly unfair, requiring the vast majority of light to average broadband users to heavily subsidize the high cost of serving the 5% of bandwidth hogs.)

In closing, the real big decision for the FCC in devising its National Broadband Plan for Congress is choosing which road to take at the fork-in-the-road ahead.

  • Does the FCC choose the consensus broadband road that is proven to move most everyone forward — together and most quickly?
  • Or does the FCC choose FreePress’ “extreme” road which explicitly would require the FCC to move backwards ten years to “do-over” the last ten years of FCC/court broadband policy decisions?

 

The President’s Cybersecurity announcement 5-29 was a game changer for the Internet. For the first time the U.S. Government officially declared the lack of cybersecurity as the Internet’s biggest problem.

  • It is interesting to note there was instant disagreement with the President’s assessment from some in the Web 2.0 world. Speakers at the Computers, Freedom, and Privacy conference in Washington this week said (per Washington Internet Daily) that:
    • Cybersecurity threats in general are wildly overstated or portrayed as malevolent acts when some of the best known incidents have come through accidents or simple security holes.”
  • I have been writing this now twelve-part series: “The open Internet’s growing security problem” since the beginning of the year, precisely because many continue to deny the growing mountain of evidence from mainstream sources that the Internet security problem is getting worse not better.
  • Fortunately, President Obama gets it.

Here is the latest mainstream evidence of the open Internet’s growing security problem.

“Mysterious virus strikes FBI” ZDNet

  • The FBI and the U.S. Marshals Service were forced to shut down parts of their computer networks after a mystery virus struck the law-enforcement agencies Thursday, according to an Associated Press report.. 

    “The Web’s most dangerous keywords to search for” ZDNet

    Cybercrime Time

    • “We want to avoid a cyber Pearl Harbor.”

    “Spammers harvesting emails from Twitter in real time” ZDNet

    • “…a new crafty search technique can provide spammers with fresh and valid emails harvested from Twitter’s users in real-time.”

    “The hacks are troubling in that they appear to have rendered useless supposedly sophisticated Defense Department tools and procedures designed to prevent such breaches. The department and its branches spend millions of dollars each year on pricey security and antivirus software and employ legions of experts to deploy and manage the tools.”

     

    “Anti-U.S. hackers infiltrate Army servers” Information Week

     

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    “Nuclear sites posted on the Internet” AP

    “Scammers infest YouTube comments, Google search results” USA Today

    • You really can’t completely trust Google search query results, nor interact safely with comments on popular YouTube videos. Why? Because purveyors of scareware — those obnoxious promotions that try to entice you to spend $39 to $59 for worthless antivirus cleanup and protection — have corrupted these popular services.”

    “Facebook users warned on security” Broadband Finder

    • “…the fact that Facebook was subject to certain weaknesses made it susceptible to periodical abuse. …It was recently revealed that Facebook had fallen victim to a new online phishing scam that saw around 200 million of its users targeted by hackers.”

    “The scrap value of a hacked PC” Washington Post

    • “…please refer the misguided person to this blog post, which attempts to examine some of the more common — yet often overlooked — ways that cyber crooks can put your PC to criminal use.”

     

     

    See previous parts of this series here: I, II, III, IV, V, VI, VII, VIII, IX, X, & XI.

     

     

     

     

     

     

     

     

     

     

     

     

     

 

“Security is a top concern with a smart electrical grid” NextGov

  • The threat against the nation’s power grid was first widely realized in March 2007, when researchers at the Idaho National Laboratory demonstrated to the Homeland Security Department how they could go online to hack into the programs that control a generator and manipulate settings so it would self-destruct.” 
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I filed comments today on the FCC’s Notice of Inquiry on the FCC’s National Broadband Plan, which is required to be delivered to Congress by February 2010.

  • I made three main points about the National Broadband Plan; it should:
    • Build upon America’s strong foundation of success in developing facilities-based broadband competition in the vast majority of the U.S.;
    • Factor in the latest data which indicates the U.S. is not falling behind in broadband or economic competitiveness; and
    • Elevate cybersecurity as a national priority per the President’s recent cybersecurity review.

My two-page comments, with links to several of my research pieces, can be found here.

The press release about my comments can be found here.

 

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