

The FCC puts broadband under political control - miked
http://online.wsj.com/article/SB10001424052748704370704575228152292941636.html

======
mwsherman
Increased regulation means that would-be network providers need lawyers and
lobbyists to compete.

I can't get FIOS on my block in Manhattan even though I can see Verizon HQ
from my window. I'd like to give them my money and they'd like to take it, but
they haven't gotten over the regulatory hurdles to run a fiber.

I am sure a small guy would love to do the same but there's no way they can
get over those hurdles, if even Verizon struggles to do so. So yes,
competition is de facto illegal.

Regulation is good for incumbents. Or, more accurately, it prevents them from
having to work harder.

[http://clipperhouse.com/blog/post/Net-neutrality-and-
preserv...](http://clipperhouse.com/blog/post/Net-neutrality-and-preserving-
the-dinosaurs.aspx)

~~~
JamieEi
I'm in the same situation with FIOS in the heart of Seattle, but the mayor has
personally told me that it has nothing to do with regulatory hurdles. The city
would love to have Verizon compete with Comcast and has tried to work with
them on making it happen. They aren't interested though.

~~~
mwsherman
Could be, but this says otherwise:
<http://seattlest.com/2009/05/07/fios_con_dios.php>

~~~
JamieEi
I specifically asked him about those reports and he says it's BS. Dunno who is
telling the truth.

------
aditya
_For the past decade, broadband has been classified as an "information
service" and thus more lightly regulated than traditional telephone services.
This has led to an explosion of new investment and Web innovation_

I'm sorry - but, what?! There's been innovation on the web because the telecom
industry was deregulated?! All I can see is that the current telcos have no
incentive to innovate in any way, and are gouging consumers as much as they
can while the US lags behind the rest of the world in broadband speed and
availability!

What this is, is a thinly veiled attempt at trying to blame the left-leaning
administration for an evil communist plot - while all it's trying to do is
force telcos to catch up with the rest of the world...

~~~
yummyfajitas
It's a relative comparison. Compare the gains in internet to the gains in
plain old telephone service.

Incidentally, much of the rest of the world has less regulation than us. In
Korea, for example, you have _competition_ between multiple internet providers
(i.e., more than just Verizon and Cable). In the US, such competition is
illegal.

~~~
hga
_De facto_ illegal. In theory other companies can run wires or fiber, and most
certainly they can and many do it with radio, it's just that the legal
monopoly incumbents have too many advantages. Plus backhaul is very expensive
in lots of places.

~~~
tbrownaw
> In theory other companies can run wires or fiber, and most certainly they
> can and many do it with radio

I thought there tended to be monopolies on wires/fiber granted by local
governments (supposedly to limit the number of companies tearing up roads and
the like to install new infrastructure, but more likely to create a scarce
privilege they can sell)?

Radio tends to be much lower bandwidth, and can be susceptible to bad weather.

~~~
hga
In theory I think you can go to Federal court and get these overturned, but I
could of course be wrong. We're not likely to find out since the other side
(ILECs, cablecos and local and state government) has so much power it's just
not worth it. Who has the budget and time to play this game?

------
NathanKP
It is interesting that this article doesn't mention how the United States
broadband companies, despite their trillions of investments still can't offer
decent speeds at decent prices. When compared to other countries it is clear
that the United States needs some sort of regulation on these internet
providers for the good of everyone. Hopefully this doesn't come at the expense
of openess.

~~~
tbrownaw
Well, what we really need is a competitive last mile. But the states and
municipalities like selling local monopolies and Congress doesn't seem to want
to smack them down (the internet is used in interstate/global commerce; it's
much less of a stretch than say growing your own weed having an effect on the
interstate black market), so limiting what can be done with those monopolies
is a decent second choice.

------
rwl
"Mr. Genachowski has provided no evidence that the current regulatory approach
is failing." Like the fact that ISPs are throttling the traffic of their
customers, inspecting packets and giving preferential treatment to some in the
name of "reasonable network management"? Like the fact that virtually everyone
who has access to broadband at all has at most two provider choices, despite
investment of "$576 billion in communications equipment and structures"? Like
the fact that we lag behind other industrial nations in both speed and access
to broadband, despite the "explosion of investment and Web innovation" this
article attributes to light regulation?

Regulation isn't perfect. As others have pointed out, it tends to benefit the
big guys, and raise barriers to entry for competition. But given that we
_have_ big guys, that's going to happen anyway: oligopolies are very good at
pushing out or buying up competition, entrenching the need for their services,
and bullying consumers. They do so all the more aggressively if no one is
watching them.

If we accept that Internet access should be provided by the Verizons,
Comcasts, and AT&T's of the world, then we should accept that they should be
regulated, as effectively as possible and as heavily as necessary so that this
compromise doesn't give the public the short end of the stick. Whether we
should accept these companies as Internet gatekeepers at all is another
matter.

~~~
Calamitous
> If we accept that Internet access should be provided by the Verizons,
> Comcasts, and AT&T's of the world

Why on Earth _would_ we ever "accept" that?

~~~
rwl
Frankly, I don't know. But it seems that we _have_ accepted that. Someone has,
anyway, if the public debate is about how heavily to regulate ISPs, and not
about whether we should have ISPs so big that they need a Federal-level
regulator.

------
mikedmiked
Oh man this submission confused me - I use "miked" as my username on tonnes of
sites, but not this one, and did a double take when I saw the name.

Good article too.

~~~
pbz
What exactly is good about it?

~~~
DanielBMarkham
Because 10 years from now when there is another administration that you don't
agree with and they decide to impose something like fairness rule, impose
content decency restrictions, dictate which sites may be accessed from the U.S
or any one of a dozen other awful things, you'll know that this week the
foundation was laid for that authority.

I am in favor of the result, but this is a Faustian bargain. Broadband
providers brought it on themselves by not getting their act together enough to
create standards of service and instead were trying to milk the cash cow as
much and as quickly as possible.

~~~
pbz
That claim is thrown out in the article, but as far I can see there's nothing
to back it up. If anything it's the opposite. ISPs want to control and meter
based on whatever rules they come up with (i.e. whatever increases their
profits) while the government argues for neutrality. If we use the telephone
industry as blueprint of what may happen, what aspects of the current policies
worry you?

~~~
hga
In other words the ends justify the means, and you are 100% sure those you
like will _always_ be controlling the means.

~~~
pbz
I can't be sure of what will happen, but I can tell you that ISPs want to
control it now. There's something we can do about government, but very little
about corporations (when they have a monopoly).

~~~
hga
And what gives them a monopoly? The government(s, local, state and less
directly Federal).

You're saying the answer to bad government is more government....

~~~
pbz
In cases where a monopoly was given to them is because ISPs demanded it;
otherwise they would not have entered the market and lot of folks would've had
to go without Internet. So who's the bad guy again?

~~~
Calamitous
> In cases where a monopoly was given to them is because ISPs demanded it

Sweet, we can just demand things from the gov't? Who knew? BRB, need to stock
up on unicorns...

------
marcamillion
Wow...the WSJ has sunk to a new low for me.

'Autos, health care, energy, Wall Street and now telecom. Is there any
American industry this Administration doesn't want to run?'

Are they joking? I know they profess to be 'free marketeers', but are you
telling me that they really thought the Obama Administration should NOT have
bailed out the Auto industry and forced them through pre-packaged
bankruptcies? They should NOT fix the broken health care system? They should
not tackle the looming energy crisis and allow wall street to run wild doing
anything they want?

Sometimes, I would prefer some amount of editorial integrity. The editors at
WSJ need to say no Ailes & Murdoch at least some of the time.

~~~
hga
" _[...] are you telling me that they really thought the Obama Administration
should NOT have bailed out the Auto industry and forced them through pre-
packaged bankruptcies?_ "

Yes, that's _exactly_ what the editorial board of _The Wall Street Journal_
thought. Not to mention it being the first example of Obama's style of
"gangster government" as Micheal Barone puts it
([http://www.washingtonexaminer.com/politics/Gangster-
Governme...](http://www.washingtonexaminer.com/politics/Gangster-Government-
becomes-a-long-running-series-91656284.html))

Do you seriously think Government Motors will survive without endless bailouts
(or suppression of its competitors like Toyota (which has its problems, but
the piling on is more than unseemly))?

The editorial board thinks ObamaCare will make the system worse and won't fix
much if anything (heck, after all this fuss, _it still isn't going to cover
every American citizen and legal resident_ ). That's rather different than the
straw man of "should NOT fix the broken health care system".

The energy crisis has been "looming" since the early '70s. History pretty
convincingly shows that the free market, e.g. Reagan removing oil and gas
price controls, beats central planning hands down. I was there; if you
weren't, you might want to read up on it.

I will agree that they go too far in the promotion of allowing "wall street to
run wild doing anything they want", e.g. essays in support of insider trading
(excepting those based on the nasty problem of it having no statutory
definition) and the backdating of stock options.

But they also have all sorts of good points that are backed by evidence (we've
accumulated a lot by now).

Let's put it this way: given that we're on HN and likely interested in
startups: did the government's suppression of IPOs (expensing and SARBOX) help
any of us? The game of venture capital that ran from the late '50s to the
dot.com bust is _over_.

I've been reading the editorial page of the Journal since 1970 (sic) and I
haven't noticed any significant change due to Murdoch. (Where does Alies fit
into this???)

~~~
marcamillion
Ok...I will look past the politicking tone of the response and address the
content.

Regardless of how GM turns out, the fact remains that the actions taken by the
administration so far have been very beneficial to the car maker and have set
it on the right course for correction. Not only has GM been able to
successfully wind down or spin off ailing brands, renegotiate/get out of
ridiculous labor contracts, cut down the size of the dealer network,
consolidate their supply chain, but they have done so at unprecedented speed -
[http://www.foxnews.com/story/0,2933,531022,00.html?FORM=ZZNR...](http://www.foxnews.com/story/0,2933,531022,00.html?FORM=ZZNR3)

So much so that it's CFO said it might post a profit this year -
<http://www.nytimes.com/2010/03/18/business/18auto.html> \- Yes, I know there
is probably a lot of financial shenanigans going on here...but 24 months ago,
this would never have been the case (even with financial shenanigans). I would
say that this is the best thing that ever happened to GM. If mgmt can revive
the brand and focus on good products, in 5 - 10 years we might not even
remember that GM went through this period.

Not to mention the hundreds of millions (if not billions) in highly subsidized
loans and VC money the administration has given to 'electric/hybrid' companies
in the auto industry - from Tesla to Fisker
(<http://online.wsj.com/article/SB125383160812639013.html>) to many others in
between, I would be willing to bet that the auto industry in 10 years is going
to be radically different than the last 10 years, and I would probably bet
that America leads the way in innovation again (after ceding it to Japan and
Asia for the last 10 years).

Ok...the health care argument, yes the bill wasn't perfect...but guess
what..at least he did something. The reality is the current system couldn't
stay, and something had to be done. We will see what the final implementation
looks like, but I am pretty sure it won't have any death panels.

I am not advocating oil & gas price controls, but the fact remains that
America (and the West in general) is highly dependent on oil from relatively
volatile areas of the world. Yes, people have cried wolf many times and it
hasn't always borne out in 'rations', but as a result of the market doing it's
thing, we have seen massive price run ups in those commodities (to almost
unprecedented levels) right before major economic downturns. From the 70s, to
2000, to last year. One thing that was consistent with all recessions in those
times are sky-high energy prices -
[http://en.wikipedia.org/wiki/List_of_recessions_in_the_Unite...](http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States)
The most recent recession was coupled with financial mayhem, so that eclipsed
the high energy prices...but it doesn't take away from the fact that the US
economy is highly dependent on foreign oil.

As far as I know, regulators and the government (both this one and previous
ones) never tolerate/promote insider trading or the backdating of stock
options. There are some economists that argue that both shouldn't matter in an
'efficient market', because it would only make the market more efficient by
pricing in more information more quickly. I am not sure I agree with that, due
to misaligned incentives of executives and shareholders, but that's another
argument for another thread.

Re: the gov't suppressing IPOs...there are so many things wrong with this
statement I don't even know where to start. For starters, a startup shouldn't
be a 'vehicle' to an IPO. So the mere fact that you think the gov't 'didn't
help us any' because they made the road to IPOs a bit more bumpy, I would
suggest that perhaps you need to rethink why you are doing a startup in the
first place. Even in 'rosier boom boom' times, driving towards an IPO without
solid fundamentals is like gambling. If you have solid fundamentals (i.e.
strong revenues, gross & net margins + high ROE + high growth potential) then
SARBOX won't have too much of a negative impact on your IPO. Don't believe me?
Look at Google. SARBOX implemented in 2002
(<http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act>), Google IPOd in 2004
(<http://www.google-ipo.com/>). If you aren't familiar with the success of
Google's IPO, you should probably review it. If anything, SARBOX made the
industry healthier, because it weeded out the crappy startups that were
relying on hype and fluff (i.e. quite frankly fraud).

Ailes is his sidekick @ News Corp and tends to have more extreme views than
Murdoch does. e.g. he strongly supports Glenn Beck. Regardless of your
political affiliation, I think that explains itself.

~~~
hga
WRT Government Motors, well, of course it's beneficial in the short term at
least to those two companies, but Obama is the President of the US, he's
supposed to take a wider view of things. Massive global overcapacity does not
suggest that propping up the worse losers is an ideal solution and the
thuggish cram-downs of senior debt holders in favor of the unions sends a
_terrible_ signal.

But the bottom line is how this is going to play out the in long term. It's
way too early to declare success, let's see if Government Motors really
recovers or instead will need more cash bailouts. If Obama's actions were a
bad bet he's only delayed and worsened the pain.

On health care " _at least he did something_ " just doesn't cut it as an
argument, not with the dog's breakfast the Congress passed. And death panels
are inherent in government takeovers of health care. _Somebody_ , _some_
mechanism is going to determine who gets treatments and who doesn't. The U.K.
has it's NICE plus the various units of the NHS make their own resource
allocations.

My bottom line is that we're rich enough that the obsession with decreasing
our health care outlays ("bending the cost curve") to European levels is not
an imperative. We pay a lot more and we get a lot more (like clean hospital
wards).

And then there's all the knock on effects, like the inevitable suppression of
new drugs and therapies. But at least here there's some justice in the world,
for a whole bunch of ObamaCare supporters will some day needlessly die because
the program they support will abort something that would have saved them.

Anyway, again we'll see; assuming it isn't repealed wholesale in 2013 or
defunded before then by a Republican Congress we'll find out if it makes
things better soon enough.

As for oil and gas, when left along (i.e. not in the '70s) the market does
it's thing by signaling the relative current scarcity of oil, which prompts
all the players concerned to automatically adjust. And I'm much less concerned
about the recent gyrations, for you can't expect to add 2.5 billion or so
people to free market (PRC and India) without short and medium term
discontinuities. Also don't forget about how many of those price shocks were
prompted by devaluations of the US dollar, in which oil is denominated.
Nixon's closing of the gold window in 1971 was after all what started the
mess.

I.e. it's an issue, even a problem, but not a crisis.

And I think we'll just have to agree to disagree on "startups as a vehicle for
IPOs". If you think the VC game is legitimate, if you think there are ventures
that can't organically grow from an angel start (e.g. serious hardware ones),
then IPO exits are necessary for healthy VC investing.

Just think of all the companies we probably wouldn't have with out VCs: Apple,
Sun, any number of chip and hard disk vendors. Some worthwhile things require
a _lot_ of upfront money.

Pointing out the one post SARBOX blockbuster high tech successful IPO isn't
germane; I'm more concerned that there will be no future Googles because the
money to build such capital expensive ventures is gone due to the termination
with extreme prejudice of the potential of a high payoff at the end of private
financing. VCs aren't charities.

WRT to Ailes, if you can point out how Murdoch is warping the Journal's
editorial board then _maybe_ he's relevant, alhtough I gather he has bigger
fish to fry, like the massive growth of Fox News. I just don't see Murdoch
doing that, in practice (I read the editorial page every day) or in theory,
since his objective is to have the Journal muscle in on the NYT, which is much
more of a front page thing.

------
dantheman
Hopefully a judge will throw this out too.

~~~
tbrownaw
Why, so we can have the _only_ ISP that's allowed to serve an area filter out
bittorrent and maybe charge a premium to access certain sites?

~~~
yummyfajitas
Now that the internet is under political control, the FCC might be the one
banning bittorrent. Joe Biden is, after all, in the pockets of big content.

~~~
tbrownaw
See, that doesn't make any sense. "The Internet" is _not_ being placed under
any form of "political control". The _ISPs_ , the people with the last-mile
pipes are becoming regulated in the same manner as the phone companies
_already are_. There's no more danger of the FCC banning bittorrent than there
is of them banning phone sex operators; this reclassification _DOES NOT_ give
the FCC the power to ban sites/protocols/etc.

~~~
dantheman
Throughout history innovation and technology progressed and then became
regulated, once regulated entrenched powers used regulation to stifle
competition and cement their positions. This has happened again and again.
Look at the history of the ICC for a brief example.

If this was in reaction to a serious problem some might say it's justified,
but as of right now we don't have any problems so lets let things progress
naturally.

------
tbrownaw
Wow that's messed up, I guess some people don't want to comprehend the
difference between "you can't say/do certain things" and "you can't interfere
with people saying/doing certain things".

------
rortian
I was glad to see this announced, but please never try to convey news via the
wsj opinion section.

