Like the FCC’s National Broadband Plan task force identified seven critical gaps in the path to the future of universal broadband, the FCC should resolve six identified “critical gaps” in the FCC’s proposed Open Internet regulations before moving forward to regulate the Internet for the first time — by dictating Internet access pricing, terms and conditions or dictating what services which businesses can and cannot offer on the Internet.

  • Here are six critical gaps in the FCC’s proposed open Internet regulations:

 

Credibility Gap: The FCC isn’t “preserving,” but changing the Internet by regulating it for the first time.

  • Are there no real problems for the FCC to address, other than “preserving” the Internet status quo?
  • How does severely restricting broadband supply or investment incentives increase consumer choice?
  • How can the FCC regulate its way to opportunity and prosperity?
  • How can FCC regulatory red tape spur innovation?
  • With no experience, how can the FCC design, deploy and manage networks better than companies?

 

Justification Gap: The FCC proposes a solution without presenting any record of a real problem.

  • Two isolated and quickly-resolved mistakes in five years don’t warrant sweeping preemptive Internet regulations.
  • The FCC presents no evidence or case of market failure to justify its proposed preemptive permanent business bans.
  • There’s zero explanation of why or how the FCC’s proposed regs would be better than current policy.
  • The FCC is proposing all cost-no benefit change; big new costs, risks, regulation for no upside, only status quo.

 

Legitimacy Gap: The FCC lacks the congressional/constitutional authority to regulate the Internet.

  • The FCC is over-reaching its narrow ancillary authority by granting itself near limitless virtual jurisdiction.
  • The FCC’s proposed first-ever absolute non-discrimination standard has never been authorized by Congress.
  • The FCC is arbitrarily reversing precedent and recent official FCC assessments of sufficient competition.
  • The FCC is proposing an unconstitutional ban of companies’ free speech and property-takings without just compensation.

 

Neutrality Gap: The FCC is putting Google/eBay/Amazon’s interests ahead of consumers’ interests.

  • The FCC is endorsing price discrimination for consumers, but is opposing price discrimination for companies!
  • The FCC is supporting de facto structural separation of distribution/content for broadband companies, but not for applications providers.
  • Surprisingly, users would no longer be entitled to competition among application or content providers!
  • The FCC regulations would unfairly tilt the competitive playing field towards applications providers, so much so that it would foster evetntual application monopolization by effectiverly blocking key competitive entry into cloud computing and other Internet services.

 

Political Gap: The FCC’s proposal abandons seventeen years of strong bipartisan Internet success.

  • It reverses Clinton Administration policy to privatize the Internet and keep ecommerce free of regulation.
  • It overturns the Clinton Administration’s Kennard-FCC precedent to not apply open access regulations to broadband.
  • It upends multiple 5-0 FCC broadband decisions to not price regulate broadband services.
  • The FCC’s proposed regulations of the Internet also do not have majority support in either the House or Senate.

 

Responsibility Gap: The FCC is ignoring obvious risks, costs, and unintended consequences.

  • The FCC is risking Internet outages by prioritizing the goal of no edge limits over the goal of core network reliability.
  • The FCC is gambling unnecessarily with one of the only healthy and stable sectors of the economy.
  • The FCC is tampering with a finely-tuned engine of economic growth, job creation and competitiveness.
  • The FCC is introducing poorly understood systemic risk into an essential well-functioning ecosystem.

In sum, the FCC should devote similar attention to understanding the “critical gaps” in the proposed open Internet regulations as the FCC has devoted to understanding the “critical gaps in the path to the future of universal broadband.”

  • The FCC’s National Broadband Plan cannot succeed if the FCC, in another highly-related proceeding, torpedoes:
    • Bipartisan consensus;
    • Private broadband market momentum/incentives; and
    • Private facilites-based broadband competition, investment and deployment.
  • The single biggest “gap” that the FCC missed in reviewing the future of universal broadband, is the big disconnect between the consensus behind universal broadband and the non-consensus behind the FCC’s controversial and counter-productive proposed open Internet regulations.

Google is now blocking the Internet content of users’ choice in two different Google services, meaning that Google has assumed the mantle as the Internet’s only net neutrality repeat offender.

  • Google’s non-neutral behavior pattern indicates that they are confident that they don’t need to respect net neutrality because the FCC will exempt Google from any net neutrality obligations when the FCC’s proposed Open Internet regulations are formalized next year.

So what are the two different Google services that are blocking users access to the Internet content of their choice?

  • The first Google net neutrality violation has been Google’s insistence that its IP Google Voice service can block completion of phone calls to numbers that cost Google more than other calls do.
    • Google admitted in its recent FCC filing that it was indeed blocking calls to a wide variety of entities and that it still intends to continue blocking Google Voice calls to about a hundred entities that it has blackballed for charging too much.
  • The second Google net neutrality violation is Google is blocking device manufacturer Syabas’ devices from playing YouTube videos because Syabas won’t commit to an upfront multi-million advertising agreement with Google-YouTube, per Wired’s article: “YouTube Blocks Non-Partner Device Syabas as Allegations Fly.

Google-YouTube’s latest Internet blocking business practice is particularly ironic because Google-YouTube is now engaging in the exact type of behavior that Google claims got them incensed enough to pursue net neutrality legislation and regulation in the first place.

  • Google objected to ISPs expecting Google to pay more for Internet transport and to the prospect of a two-sided market. Their full throated defense was any differential treatment was discriminatory and anti-competitive because new young innovators could not afford to pay any extra to get on and benefit from the Internet.
    • Well how is that different from Google pursuing a two sided market and insisting that little manufacturers “pay to play” to the tune of several million dollars up front?
    • How are these new young innovators — that Google always claims to be protecting — going to be able to afford to innovate if they have to pay Google millions of dollars to gain access to the Internet’s increasingly dominant video service — YouTube — which has ~20 times more market share than its nearest competitor per ComScore?

The ultimate irony here is that the FCC is insisting on regulating companies which are not violating net neutrality, while insisting on exempting from regulation the Internet’s only net neutrality repeat offender.


I commend The American Consumer Institute for their excellent new book of scholar essays, “The Consequences of Net Neutrality Regulations on Broadband Investment and Consumer Welfare.”

  • It’s refreshing and very useful to have a bipartisan collection of of 13 essays authored by 11 senior economists and public policy experts, both Republican and Democrat.
    • The book provides insight about consequences Net Neutrality regulations have on two economic concepts that affect broadband consumers: “price and demand” and “cost and supply.”

       

The net neutrality/open Internet debate needs more of this kind and quality of substantive professional analysis.

For anyone that seeks substance over sloganeering on this important topic, this book is a very useful and thought-provoking read.

Google The Totalitarian?

November 20, 2009

Connecting the dots of several recent important developments, Google increasingly is acting autocratically like it has unlimited power and is answerable to no one.

  • More and more it appears to operate like a centralized, sovereign, virtual-State exercising control over the world’s information, info-commerce and Internet users.
Consider these several Google public actions over just the last month or so:

Search:

  • Editing Search Titles: Google’s Matt Cutts announced exercise of a new autocratic power: Google can “change the titles of your pages in your search results” per WebProNews. Google’s Cutts: “We reserve the right to figure out what’s a better title, what’s a more descriptive title or snippet to show to users.”
  • Search Ranking by Speed: Google’s Matt Cutts has signaled that how fast a page loads may become a ranking factor for search results in 2010. This forces all websites that want to be discoverable via search to spend money to upgrade and tailor their sites to Google’s moving-goal-post, page-load standards. Since page-load speed has little to do with search relevance, this appears to be an unilateral action by Google to move “the faceless scribes of drivel” “to the back row of the arena” as a Google Sr. VP wrote in an official Google blogpost earlier this year.

Unaccountability:

  • Sinking Competitors’ Search Rankings: The Register has a must-read and very thorough analysis of how Google sent search competitor Foundem “to the back of the arena.” The article is entitled “When Algorithms Attack, Does Google Hear You Scream? — Inside Google’s search penalties gulag.” The article tells the story of Foundem and other sites that have autocratically had their Google page rank reduced dramatically, and how unresponsive and unaccountable Google is to those who believe they have been aggrieved by Google’s autocratic exercise of its monopoly power.
  • No Due Process: Per Advertising Age, Google has now deputized its crawler-bots to ban suspected ad scammers; “It’s now guilty until proven innocent, a fundamental shift for ‘Don’t be evil’ Google.” “Google now has a harsh new penalty for advertisers placing scam and malware ads: a lifetime ban.” Moreover, Google “has technology to determine who is connected to what account, which will make it very hard for a banned user to create another account.” Interestingly this is in direct contradiction to Google’s Vint Cerf’s insistence to the Wall Street Journal that Google does “not know who you are.”

Competition:

  • Book Settlement: In Google’s revision of its proposed Book Settlement this month, Google basically stiff-armed the Department of Justice in not addressing the Government’s serious objections that the settlement would preclude competition by excluding competitors equal access to the digital books covered in the settlement. Apparently, Google only stops anti-competitive behavior when the Government threatens an actual antitrust suit like what blocked the Google-Yahoo Ad Agreement.
  • Acquiring AdMob: Even though DOJ has concluded Google is dominant in search advertising, Google is brazenly attempting to extend its monopoly in PC search advertising to mobile advertising via acquisition of AdMob, “the world’s largest mobile advertising marketplace” and a direct competitor to Google’s AdSense Mobile and Google-DoubleClick. Combining AdMob mobile advertising leadership with Google’s dominance would result in “game over,” much like combining YouTube’s online video leadership with Google’s dominance made YouTube dominant with fourteen times the market share of its nearest competitor.

Privacy:

  • Google Voice: Google is violating its own privacy policy per Techcrunch, in that it is — autocratically and without permission — changing the phone numbers in users’ contact list to their Google Voice numbers. This forces acceleration of the transition to phone numbers Google controls, but it can also cause users confusion in identifying incoming calls and it can result in undelivered text messages.
  • Privacy Dashboard: In discussing Google’s new “Privacy Dashboard,” Fox Business’ Neil Cavuto asked Google CEO Eric Schmidt how a user knows if their information has been deleted per their request. Mr. Cavuto: “How do I know you are deleting it? Mr. Schmidt: “Because we say so.”
  • Swiss Suing over StreetView: The Swiss privacy czar is currently having to sue Google to get Google to protect the privacy of Swiss citizens.

In sum, these are not isolated incidents they represent consistent Google points-of-view and patterns of behavior. Actions speak louder than words. The clear takeaway here is that Google is increasingly acting autocratically, because they can.

  • Google’s “black box” model and secret mode of operation increasingly functions like a hidden, non-transparent code of laws and regulations, where no one knows they are in violation of one of Google’s secret edicts until Google tells them so or punishes them.
  • Google’s rapidly increasing power over the world’s information, info-commerce, and Internet users, combined with its no-permission-required cultural ethos, appears to be morphing into a pseudo-totalitarian world view where Google will always push the envelope to be the ultimate authority, until some other authority forcefully pushes back.

Per Advertising Age, Google has now deputized its crawler-bots to be judge, jury, and executioner when it finds a suspected ad scammer; “It’s now guilty until proven innocent, a fundamental shift for ‘Don’t be evil’ Google.” “Google now has a harsh new penalty for advertisers placing scam and malware ads: a lifetime ban.”

I have some questions about Google’s new found seriousness to standing up to bad actors on the Net.

If Google’s all-in-one crawler-bots are fully automated to detect, decide, and do in for life a suspected ad scammer, would that make the Googler that the accused can appeal to — Google’s new Supreme Court?

  • Does the accused have the right to face their crawler bot-accuser in Google’s court — i.e. transparently see what the evidence is against them?
  • Is there no further appeal to Google’s online advertising death sentence in the sovereign GoogleNation?

If the ad scamming fraud abuse is serious enough to warrant the equivalent of a Google online advertising death sentence, why doesn’t Google turn over those they have found guilty to authorities so they can prosecute them for criminal fraud? Or would that be an unfair form of double jeopardy?

  • In other words, is the new automated GoogleNation Department of Justice sufficient to police the Internet or is their still a role for sovereign law enforcement?

Lastly, and most troubling, is that Google “has technology to determine who is connected to what account, which will make it very hard for a banned user to create another account.”

  • Does this mean Google does indeed know exactly who we all are and can track us for our lifetime?
  • How else could they enforce a lifetime ban without global online tracking and permission-less profiling?
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