Why Google Is Not Neutral

-By Scott Cleland

After discussing whether Google should buy The New York Times, Google decided against it because it “would damage its ‘neutral’ identity,” per Ken Auletta’s just-published book “Googled: The End of The World as We know It.”

Google has long claimed to be neutral. Their corporate philosophy statement claims: “We never manipulate rankings to put our partners higher in our search results and no one can buy better PageRank. Our users trust our objectivity and no short-term gain could ever justify breaching that trust.”

As the world-leading corporate proponent of an industrial policy to mandate net neutrality for all its potential broadband competitors in cloud computing, and as the beneficiary of “The Google Loophole” in the FCC’s proposed open Internet regulations (para 104), it is fair to stress test whether Google’s claim of a “neutral’ identity is true or just cleverly-executed PR.

Is Google Neutral?
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Why Google Is Not Neutral”


How FCC Regulation Would Change the Internet

-By Scott Cleland

The FCC’s claims that their proposed net neutrality regulations would just “preserve” the open Internet are simply not true. The facts clearly state that the FCC’s proposed regulations would: Be a big change in FCC Internet policy; Implement big Internet policy changes without Congressional authorization; and Change the Internet in big ways. (The one-page PDF version of this post is here)

The FCC’s proposed net neutrality regs are a big change in FCC Internet policy; they would:

  • Replace the FCC’s voluntary net neutrality guidelines with mandated net neutrality regulations;
  • Selectively apply net neutrality regulations to only broadband and not to applications/content providers like the current principles do;
  • Add two completely new net neutrality principles that are not found in law or congressional policy:
  • Mandate the strictest non-discrimination requirement in the last 75 years;
  • Mandate public disclosure of detailed proprietary network management techniques for the first time;
  • Expand application of net neutrality to wireless and satellite broadband for the very first time;
  • Expand consumers access to content entitlement by adding entitlement to send/distribute content as well;
  • Redefine entitlement to competition in the current fourth principle, to favor resale competition over facilities-based competition;
  • Subject broadband companies to a new “Mother-may-I” FCC approval process for offering new managed services and for experimenting with new business models; and
  • Subordinate private standard-setting bodies, like the IETF, to new FCC omni-technical oversight/approval.

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How FCC Regulation Would Change the Internet”


Takeaways from FCC’s Proposed Open Internet Regs

-By Scott Cleland

The FCC’s proposed Open Internet regulations (NPRM) are sweeping and audacious.

First, the FCC proposed rules are audaciously attempting to implement the introduced-but-never-passed Markey bill (HR 3458) entitled: the “Internet Freedom Preservation Act of 2009.” The purpose, premises, language and core positions are nearly identical for anyone willing to forensically compare the NPRM and HR 3458.

This presents a substantial legal problem for the FCC in that the premises and justifications undergirding their current NPRM can be found nowhere in existing law as the FCC’s own thin 28 line legal justification confirms (paras 83-87).
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Takeaways from FCC’s Proposed Open Internet Regs”


Open Un-Neutrality – Will FCC Re-Distribute Internet Opportunity? For Consumers? Businesses? Investors?

-By Scott Cleland

In effectively reversing fifteen years of bipartisan U.S. communications policy from promoting competition and reducing regulation to promoting regulation and reducing competition, the FCC’s coming “Open Internet” regulations are anything but neutral; they pick sides and strongly skew outcomes.

  • First, the FCC is proposing new preemptive business bans mid-game, the harshest, most disruptive form of economic regulation possible.
  • Second, the FCC is arbitrarily discriminating among increasingly similar and converging businesses, resulting in the arbitrary punishment of some businesses for what they allegedly might do, while rewarding others with protection from competition for what they allegedly might not do.
  • Third, the FCC is arbitrarily mandating one-way technology convergence without any supportable justification, i.e., banning distribution convergence into applications/content, while encouraging application/content convergence into distribution.

The chaotic result of this “open un-neutrality” will be regulation that is increasingly at war with inexorable technological convergence and economic efficiency — requiring ever-increasing FCC regulatory artifices to keep the Internet’s original technological layers, market segments and business models from naturally converging, evolving and competing.
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Open Un-Neutrality – Will FCC Re-Distribute Internet Opportunity? For Consumers? Businesses? Investors?”


The Internet as the Post Office?

-By Scott Cleland

I produced a new, brief, and different op-ed against the FCC’s proposed net neutrality rules that ran on BigGovernment.com today. It employs a new “delivery” metaphor that I believe most people will easily grasp and find compelling.

The Internet as the Post Office?

by Scott Cleland

Why force the private Internet to be as inefficient as the old public post office? For the first time, the Federal Communications Commission (FCC) plans to regulate how private companies can deliver the quadrillions of broadband Internet packets that are sent over the Internet every day.

Americans know from experience that private companies competing for customers deliver better service than Government. Who thinks the Government can do a better job than private companies in designing, building, and managing broadband Internet networks? Who thinks the Government can run the Internet better, faster, cheaper, and more innovatively than private networks do now?
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The Internet as the Post Office?”


Why FCC proposed net neutrality regs are unconstitutional

-By Scott Cleland

My NPR Online op-ed, “Net Neutrality Regulations Compromise Freedoms” makes the case why the FCC Chairman’s proposed net neutrality regulations are likely unconstitutional in multiple dimensions.

If you like the op-ed, please click on the “Recommend” check button above the title or at the end of the piece because that will keep the op-ed posted longer than otherwise:
http://www.npr.org/templates/story/story.php?storyId=113297709

My proposed title, which was supplanted for space concerns, was: “Taking Freedom From Some Takes Freedom From All.”

Below is the text of my NPR Online op-ed:
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Why FCC proposed net neutrality regs are unconstitutional”


Wireless Innovation Regulation — ‘Believe it or Not!’

-By Scott Cleland

With due to credit to “Ripley’s Believe it or Not!®,” so much odd and bizarre is happening in Washington in the “name” of “wireless innovation” and competition that the topic calls for its own collection of “Believe it or Not!®” oddities.

Skype co-founder Niklas Zennstom, also the co-founder of illegal-music-downloading site Kazaa, who had to avoid entering the U.S. because of copyright-infringement liability… is now seeking a U.S. court injunction to shut down eBay’s Skype for alleged copyright violations!

Amazon, a leading proponent of net neutrality legislation to ban Internet providers from blocking any content, abruptly removed without permission thousands of copies of George Orwell’s books from Kindle reading devices… just like “Big Brother” would have done in “Nineteen Eighty Four“!
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Wireless Innovation Regulation — ‘Believe it or Not!’”


Googleopoly IV: Monopsony Control over Digital Info Competition — New White Paper

-By Scott Cleland

My latest Google antitrust white paper, “Googleopoly IV: The Googleopsony Case,” is the first antitrust analysis which connects-the-dots between Google’s search advertising selling monopoly and Google’s information access buying monopoly or “monopsony” by explaining and documenting how Google is harming competition in digital: news, books, broadcasting, artwork, documents and analytics; and harming consumers seeking quality digital information that is not free.

(Googleopoly I was the first public analysis of why Google ultimately would emerge as a monopoly and Googleopoly II & III were the first public antitrust analyses why the DOJ should block the Google-Yahoo ad agreement, which the DOJ did block 11-5-08.)

Anyone trying to see-the-world-whole and and understand how the Internet’s digital information ecosystem fits together and is devolving– needs to read this white paper.
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Googleopoly IV: Monopsony Control over Digital Info Competition — New White Paper”


“Systemic Risk Laundering” — Financial Crisis Root Causes — Part II

-By Scott Cleland

How could American taxpayers get stuck with a multi-trillion dollar tab that they weren’t even aware that they were running up? How could that huge tab still be allowed to run up unchecked today? For the Financial Crisis Inquiry Commission, the sad answer is one of the biggest root causes of last fall’s devastating financial crisis and one of the biggest continuing systemic risks to the financial system and the economic recovery.

A decade ago, in what may prove to be the most expensive bipartisan legislative mistake in U.S. history, a bipartisan policy became law that effectively ensured that no Federal regulator had oversight or enforcement jurisdiction over derivative financial instruments. The Commodity Futures Modernization Act of 2000 (CFMA) created “legal certainty for excluded derivative transactions.” That law allowed a shadow derivative overlay system to be built literally on top of the public financial system, with none of the inherent accountability of the underlying financial system. In other words, a deliberate bipartisan U.S. government policy change a decade ago unwittingly created an unaccountable “black hole” market that sucked enormous value out of public markets (Bear Stearns, Lehman, AIG, Fannie, Freddie, securitized sub-prime mortgages, etc.), while laundering the risk to the U.S. taxpayer.

Simply, in fostering an unaccountable marketplace that derived all its real value from public markets, the Government fostered systemic risk laundering from the unaccountable to the accountable, which ultimately left the U.S. taxpayer holding the bag. More specifically, with no accountability to fairly represent or disclose risk, too many did not. Too many figured out that they could launder huge financial risk with impunity, because most public investors assumed someone somewhere was ensuring that these derivative instruments were fairly represented, disclosed and accountable. Oops!
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“Systemic Risk Laundering” — Financial Crisis Root Causes — Part II”


Top Ten Pitfalls of Wireless Innovation Regulation

-By Scott Cleland

Analysis of the potential pitfalls of wireless innovation regulation is a necessary complement to the FCC’s upcoming Notice of Inquiries into wireless competition/innovation and the DOJ’s review of wireless competition in order to ensure policymakers get a balanced view of the big picture.

What are the Top 10 Pitfalls of Wireless Innovation Regulation?

#1 Pitfall: Losing focus on universal broadband access

“Wireless innovation” appears to be the latest rebranding iteration of “net neutrality” and “open Internet” as the net neutrality movement searches for more mainstream support of their views.
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Top Ten Pitfalls of Wireless Innovation Regulation”


Why Broadband is Not a Public Utility

-By Scott Cleland

The data and evidence show that broadband is not a public utility warranting economic regulation of prices, terms and conditions; this is contrary to the assertions of net neutrality proponents: the Markey-Eshoo Bill, FreePress, the Open Internet Coalition and Google’s Internet Evangelist Vint Cerf, among others.

Why is broadband not a public utility?

First, it is a competitive service, not a natural monopoly service.

A public utility presumes “natural monopoly” economics where economies of scale and scope preclude the possibility of competitive facilities/services.

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Why Broadband is Not a Public Utility”


Why proposed net neutrality bill is the most extreme yet

-By Scott Cleland

While the latest net neutrality bill introduced in Congress has no chance of passage as drafted, it is a bay window view into how extreme the net neutrality movement has become and what they are seeking from the FCC via backdoor regulation.

The proposed Markey-Eshoo bill, HR 3458, which was drafted in close coordination with FreePress and the Open Internet Coalition, is much more extreme than previous bills in 2008 and 2006.

Why is this bill the most extreme version of net neutrality yet?

First, it is a completely unworkable framework.
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Why proposed net neutrality bill is the most extreme yet”


A Maslow “Hierarchy of Internet Needs”? — Will there be

-By Scott ClelandInternet priorities or a priority-less Internet?

A central policy question concerning the future of the Internet, cloud computing and the National Broadband Plan is whether there should be Internet priorities or a priority-less Internet?

The crux of the grand conflict over the direction of Internet policy is that proponents of a mandated neutral/open Internet insist that only users can prioritize Internet traffic, not any other entity.

To grasp the inherent problem and impracticality with a mandated neutral or priority-less Internet, it is helpful to ask if the Internet, which is comprised of hundreds of millions of individual users, has a mutual “hierarchy of needs,” just like individuals have a “hierarchy of needs,” per Maslow’s famed, common sense “Hierarchy of Needs” theory.

Briefly, renowned psychologist, Abraham Maslow, devised his common sense “Hierarchy of Needs” to explain inherent human priorities, i.e. that some human needs are more important or urgent than others.
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A Maslow “Hierarchy of Internet Needs”? — Will there be”


Defining the Problem(s) is the Crux of the National Broadband Plan

-By Scott Cleland

FCC Broadband Coordinator Blair Levin described the crux of the National Broadband Plan in testifying before the Commission 7-02 as “identifying where there are currently ‘demonstrable public interest harms.'” That central task is essentially defining the problem(s) and is necessary to complete the last task of the plan: “identifying ways to lessen those public interest harms,” or recommending solutions. Defining the problem largely defines the range of recommended solutions.

The plural use of “harms” here suggests that the Plan could end up “identifying” more problems than the obvious core problem prompting the Plan — that not “all people of the United States have access to broadband capability.”

Levin’s choice of a classic organizational structure, background-problem-solution, is a wise, useful and simplifying approach for such an exceedingly complex endeavor.
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Defining the Problem(s) is the Crux of the National Broadband Plan”


What’s the Broadband Plan Implementation Vision? Affirming Competition Policy? or The “Retro-genda?”

-By Scott Cleland

At core, Congress has asked the FCC to recommend to Congress HOW “to ensure that all people of the United States have access to broadband capability.” Arguably, the FCC’s main “fork-in-the-road” decision in developing its National Broadband Plan is whether to recommend to Congress to Re-affirm the current competition vision/law/precedent for broadband policy and build upon the strong foundation and momentum of facilities-based competition in the marketplace? or Design the more Government-centered broadband ecosystem policy recommended most prominently by FreePress /Open Internet Coalition members and rebuild the common carrier regulation regime of the twentieth century?

What engine of choice will the FCC recommend to Congress: Competitive forces and private investment? or Government forces and taxpayer money?  

In other words, will the FCC: Affirm a competitive broadband ecosystem where consumers vote with their wallets about which innovations, technologies and companies succeed or fail on the merits? or Endorse a regulatory broadband ecosystem where regulators largely pre-determine which innovations, technologies and companies will be favored and, hence, win or lose?
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What’s the Broadband Plan Implementation Vision? Affirming Competition Policy? or The “Retro-genda?””


Implications of Skype’s IPO for eBay-Skype & Wireless Net Neutrality

-By Scott Cleland

Given that eBay’s announced spin-off/IPO of Skype in 2010 is a material market event, this high-profile IPO represents a potentially tectonic development in eBay-Skype’s (and FreePress‘) push for wireless net neutrality/Carterfone regulations and applying the FCC’s broadband principles to wireless providers for the first time. There are much broader implications of this market development than many appreciate.

Some brief background information is helpful to understand the broader implications:

Reports suggest that eBay’s plans for a public IPO in 2010 are a result of eBay not being able to get a high enough private market price ($1.7b) for Skype and the fact that current market conditions are not ripe for initial public offerings. (eBay originally paid $2.6b for Skype and added an additional $500m later, then subsequently wrote down $1.4b of Skype’s value.)
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Implications of Skype’s IPO for eBay-Skype & Wireless Net Neutrality”

Skewz.com Predicts Top 5 Trends for 2009

-By Warner Todd Huston

Skewz.com has put together its top 5 predictions for how political communications under the Obama presidency will be changed in 2009.

Now, in some ways, I can see where the Skewz team is coming from seeing as how they are in that Internet bubble, but I think that their assumptions of Internet domination of politics is a bit overblown. Still, I think in many ways the predictions are right if not quite as strong as presented nor as immediate.

Here are their predictions and my replies to them:

1. Blogging Gets Issue-Specific : The 2008 election re-enforced and validated the need for candidates to have a strong outreach program to the blogosphere to amplify their message. While it’s apparent that bloggers are becoming more important and tightly linked to campaigns, the increasing number of blogs is pushing many bloggers to become “issue specific” as a way to differentiate themselves. For example, rather than being just a “right” or “left” blog, specific topics such as crime, the housing crisis, government bailouts, poverty, etc. will dominate. In addition, day-to-day issues such as crime and poverty will become more relevant to larger portions of the electorate.

I think this is less a reaction to “differentiation” among bloggers, more an act of going with what one knows based on the growing legitimacy of the medium. Over the year 2008, Blogs have become a legitimate news source and this has spurred even more people with specific fields of knowledge to feel confident that they won’t merely be laughed off with their blogging efforts. Smart people with detailed knowledge and a passion to debate the issues have migrated to blogs in great numbers over the year. And with the growth of social networking sites like Twitter and FaceBook — all of which rely heavily on linking to stories on news media and blogs — the Internet has really come into its own as an “official” news source. Witness the recent survey that shows a far grater number of people than ever before saying the Internet is their news source.

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