American Enterprise Institute

[Commentary] The European Union Digital Single Market initiative is a set of 7 goals (interoperability, security, broadband, research, innovation, digital literacy, etc.), with an associated 101 actions to be realized by 2020.

The EU tracks its progress on a Digital Scoreboard. From time to time, the EU Commission makes rules intended to expedite these goals. In in the EU has the courage to take on the root causes of its competitiveness problem because it requires a fundamental change to the status quo. Instead politicians rely on feel good proposals without substance, giving voters a placebo which they hope will make them feel better.

With EU Parliamentary elections in May, politicians have reached a new low in pandering to voters, as a recent Industry, Research and Energy Committee vote on mobile roaming demonstrates.

The only way an operator can be competitive is to own its own network across as large a distance as possible. The tortured EU approach of managed access means that an operator has to lease its network at a regulated rate. Whatever investment it makes must be shared with resellers. It is difficult, if not impossible, to earn a profit under this scenario. A single, low tax rate across Europe would do more for consumers and the ailing economy than any of the EU’s sugar-coated placebos. It would make the whole EU competitive, increase employment, and create a level playing field for goods and services. But don’t expect any bitter medicine in the EU, especially before an election.

[Layton studies Internet economics at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark]

[Commentary] Content delivery networks (CDNs) are essentially digital libraries, allowing multiple copies of content to be placed strategically around the world. A request for Netflix’s House of Cards from Miami doesn’t need to go all the way to Mountain View (CA); it can be served closer to the user. In addition to caching, CDNs enable website acceleration, enterprise applications, peer to peer communications, and live video. The next stage in the evolution of CDNs may involve adaptation to individual users and self-organizing content delivery with associated quality of service levels.

So if the definition of net neutrality is that all traffic is treated the same and that all traffic moves at the same speed, then CDNs are already upsetting the balance. In any case, CDNs were specifically exempted in the 2010 Open Internet ruling. However those rules were struck down and the Federal Communications Commission is now going back to the drawing board. Thus CDNs are back on the table, along with all the other service providers.

If net neutrality morphs into regulation of interconnection, not just the last mile, as some net neutrality theorists suggest it should, it could bring this bustling connected TV affair to a grinding halt. Content providers, applications, and websites operate in a competitive environment. Using a CDN is a way to leverage technology to improve user experience and enhance market share. To say that this is unfair or discriminatory is to rebuke the market system itself. It is precisely because firms compete, whether by leveraging technology or creating partnerships, that consumers benefit.

[Layton studies Internet economics at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark]

[Commentary] The National Telecommunications and Information Administration (NTIA) announced that it plans to end its formal relationship with the Internet Corporation for Assigned Names and Numbers (ICANN) by not renewing the Internet Assigned Numbers Authority (IANA) contract in 2015.

Now, as this technical function of the Internet enters a highly politicized environment, new challenges arise. Chief among those challenges are the lack of a public plan regarding whom to transfer the root zone management function to in the absence of the NTIA and how to protect this function from political desires by foreign countries or here in the US to limit freedom of speech.

For instance, the Chairman of the Senate Commerce Committee, Senator Jay Rockefeller (D-WV), issued a statement praising NTIA for its move on the IANA function a day after he sent a letter to the Obama Administration suggesting “.sucks” should not be added to the root zone as a new Top Level Domain. If the first amendment protects “.sucks,” it should also protect .wtf, .god, .dog, or .shabaka. Similar letters have arrived at the Department of Commerce from multiple foreign governments for years, but no one worried that the suggestion of censoring the Internet via the root zone was truly a possibility.

Now, censorship is a live question thanks to the NTIA’s announcement. Those of us who care about the future of the Internet have it in our best interest to make sure ICANN keeps the free and open Internet as its top priority.

[Tews is the Chief Policy Officer at 463 Communications]

[Commentary] The story of the transition from the telephone to the pervasive, broadband Internet as the primary means of electronic communication is one of conflict.

The principal means by which the Federal Communications Commission stands in the way of history is through its insistence that it has discovered a “Network Compact” consisting of “enduring values” embedded in the corpus of telecom law that magically pertain not just to the particular historical circumstances around the formation of America’s telephone network, but to all future networks as well.

Effectively, the FCC wants the terms of the Kingsbury Commitment of 1913 to constrain the growth of the Internet, lest something bad might happen. This posture necessarily prevents any number of good things from happening as well, or at least postpones them indefinitely.

The telephone network has been replaced by a multitude of options: the mobile network, wireline broadband networks, satellite services, and public Wi-Fi networks that are often free to use. While Americans have largely abandoned the telephone network, regulators who have invested careers in learning, interpreting, and applying telecommunications law are reluctant to let it go. Hidebound regulators and holdout citizens are the primary obstacles to the complete phase-out of the telephone network and the reallocation of its operational expense in more worthwhile alternatives.

While the Commission is clearly doing its best to serve the public interest as it sees it, it must do better. Preserving the technologies of the past has sentimental appeal, but it’s ultimately counter-productive to delay new technologies that are already broadly accepted and widely used. The expense of maintaining the old networks only retards the construction and use of new ones that are better in every dimension.

[Bennett is a visiting fellow at AEI, has a 30-year background in network engineering and standards]

[Commentary] When a court struck down the Federal Communications Commission’s network neutrality rules, many consumer advocates argued that the result would be less online innovation. But a glance at international markets suggests that the FCC’s one-size-fits-all approach to broadband service may actually have left American consumers with fewer choices and denied them the potential benefits of more innovative broadband pricing models.

This all-or-nothing homogenization of the broadband product placed America increasingly at odds with the rest of the world. This is especially true with regard to mobile broadband. In various parts of the world, customers are offered a variety of alternatives to the unlimited Internet model, many of which are explored at length in the paper. These include: Social Media Plans; Facebook and Google “Free Zones”; and TELUS VoIP partnership.

[Lyons is an assistant professor at Boston College Law School]

[Commentary] “Over the Top” (OTT) technologies cannot exist without a network. While the providers of these services invest in servers and data centers for their own operations, their operating model does not include the cost of the underlying infrastructure investment, namely the expensive last mile infrastructure.

As OTTs grow their user base and revenue, it becomes increasingly clear that there’s a double standard in regulation. Why should antidiscrimination and data protections rules apply only to telecommunications and cable companies when an increasing part of communication s goes on in unregulated platforms? Indeed placing rules on some part of the value chain but not others is itself discriminatory.

Additionally it grows increasingly untenable for European governments to allow profitable OTTs not to pay tax, especially when the telco sector is laying off 10% of its workforce for lack of profitability. The same antidiscrimination and taxation rules should be applied across the board. Fortunately some of these discrepancies may be righted through the process to update America’s Communication Act, as the siloes created in 1934 to apply to different communications networks are now obsolete. Fair competition and a level playing field means that all competitors need to play by the same rules.

[Layton studies Internet economics at the Center for Communication, Media, and Information Technologies (CMI) at Aalborg University in Copenhagen, Denmark]

[Commentary] Following news of the proposed Comcast/Time Warner Cable merger and the Comcast/Netflix interconnection agreement, the tone of telecom and tech policy discussions has fallen precipitously.

Most commentary about these deals has been immediate and reflexively hostile -- based in emotion and fear rather than in facts. At its core, the response to these deals reflects popular anti-market, pro-regulatory, sentiment.

Perhaps surprisingly, I find these attitudes quite sympathetic -- the pro-regulatory view is intuitively appealing and at some level a reasonable one to hold. While I disagree with it, it is important to understand why this view is so durable. Market-oriented advocates generally view the market as respecting and promoting individual autonomy and dignity -- and they fear that regulation robs individuals of this dignity, denying them their basic freedoms of association and conscience.

Advocates for stronger regulation generally have the opposite perspective, distrusting markets and fearing that they treat individuals as commodities, robbing them of same dignity that market-oriented thinkers seek to protect. The pro-regulatory view sees regulation as a way preserve individuals’ dignity against a hostile market.

Which view is right? The answer, of course, is both -- for reasons that I believe are particularly important for free-market advocates to understand. If the free-market view is to be internally consistent, its advocates need not only to focus on why they are right, but also to respect why its detractors are not wrong. The winning appeal to the public is that of dignity, of the market’s power to protect and promote the interests of the individual -- of all individuals -- and of the counter-intuitive dangers that regulation poses to it.

[Hurwitz is an assistant professor at the University of Nebraska College of Law]

[Commentary] Nineteen-ninety eight called. It wants its shiny new copyright law back. I agree that in the age of the cloud-based Internet, at least one part of our copyright system has outlived its usefulness.

That’s the Digital Millennium Copyright Act of 1998’s notice and takedown system, which is codified in Section 512 of the Copyright Act. On March 13th, the House of Representatives is holding a hearing on Section 512. The US Patent and Trademark Office will also consider the topic in a forum on March 20th.

This reconsideration is long overdue. Like many things designed for the Internet in 1998, the Notice and Takedown system belongs to a bygone era. In 2014, the DMCA’s file-based quarantine and containment strategy is hopelessly outdated. The creative industries aren’t worried about particular files. The problem is the pervasive and persistent uploading of creative works. Infringing versions are created or duplicated frequently, and finding a particular point of origin of a particular file is usually worthless.

In short, the presence of infringing content on both legitimate and rogue websites has become a chronic condition, rather than an infectious outbreak. We are no longer dealing with an outbreak that can be quarantined -- for a chronic condition like infringement, that strategy is mostly irrelevant. However, we are stuck with the DMCA’s outdated file-based, quarantine and containment system.

[Schultz serves as a Senior Scholar and Co-Director of Academic Programs at George Mason University School of Law's Center for the Protection of Intellectual Property]

[Commentary] The chairman of Sprint is putting on a blitz to sway skeptical regulators to approve his acquisition of T-Mobile US.

There are good reasons to approve Sprint’s acquisition of T-Mobile, but an allegedly lousy US mobile broadband market is not one of them. Son, the CEO of Sofbank, seems caught in a Japanese mindset where government supervision and intervention is required to be sure everything turns out the way the state wants it to. He embarrasses himself making such an argument at the US Chamber of Commerce, the bastion of capitalism.

The truth is that the US mobile broadband system is outstripping the world. It’s one of the reasons that the six most visited websites in the world are US firms and that seven of the ten largest Internet companies are US-based and just one is Japanese. The robust and competitive mobile broadband market has ignited major capital spending -- according to CTIA, the Wireless Association, six times more per subscriber than global counterparts. Meanwhile, data prices per megabyte have dropped 93% in five years.

As for a price war, T-Mobile has also started one. Who says there is no competition? Claims that the US mobile market is “not good,” that we have “terrible connections” (as Son said in a press conference) and that the US has “one of the world’s highest mobile fees” (as he also said) -- those claims are myths, perpetrated by interested parties, like Son himself, that are grinding their own axes.

[Commentary] There are strong arguments in favor of allowing the third largest US wireless carrier, Sprint, to acquire the fourth, T-Mobile, but Sprint Chairman (and Softbank CEO) Masayoshi Son's assertion that current performance of the US mobile market is "terrible" isn't among them.

Perhaps he should visit more often -- or try using a different provider. The reality is that the US mobile broadband market is one of the most competitive, and best performing, in the world. More than 90 percent of US households have coverage from next generation LTE wireless networks, which are now being deployed by all the major US carriers, including Sprint and T-Mobile. That puts the US in a virtual tie with Japan and South Korea for the most widely available mobile broadband coverage in the world. The US is also tied with Japan for the highest LTE penetration, with 20 percent of subscribers using LTE connections. Only South Korea, at 46 percent, has more.

International pricing comparisons for mobile broadband services are notoriously difficult, thanks to variations in business models (some countries rely more heavily on handset subsidies than others) and usage (Americans use twice as much mobile data as Europeans). But according to the OECD, which surveys prices for a variety of different bundles and service, US prices are lower than those in Japan for nearly every basket, and lower on average by 35 percent.

[Eisenach is director of the American Enterprise Institute's Center for Internet, Telecommunications, and Technology Policy]

[March 11]