American Enterprise Institute

[Commentary] The debate over international broadband comparisons goes on. There’s lots of evidence the US is doing well.

Those who want more government control of the Internet, however, aren’t always happy about this success. Good news makes a big change in policy -- from a relatively unregulated market to one of their preferred big government models -- less likely. Thus the increasingly creative attempts to characterize the US as a broadband backwater.

The unmistakable takeaway from a glance at a chart, “Countries with high-speed broadband,” which recently appeared on Twitter is that the US trails the world. Except the chart doesn’t say that at all. It took a lot of work to create such a misleading chart.

[Swanson is president of Entropy Economics LLC]

[Commentary] The WhatsApp story is a great one -- almost too good to be true. In 2009, Brian Acton, one of two WhatsApp co-founders, was turned down for a job by Facebook, the firm that just bought his company for billions.

Jan Koum, the other co-founder and a Ukrainian immigrant, signed the $19 billion deal on the door of the Mountain View (CA) welfare office where his mother used to get food stamps. Facebook is not paying for revenue or technology. Facebook is paying for scale. In large part because of its own vulnerabilities.

When firms, products, and user bases have the ability to grow (or shrink) this fast, they can completely change the nature of industries in no time at all. And this has profound implications for policy. Messaging, chat, Skype, Facetime, Xbox conversations -- these apps have completely changed the worlds of voice, email, and mobile. With further disruptions to come. This is what we call “dynamic competition.” And it’s this idea of very rapid change, unpredictability, and overlapping technologies and business models that policymakers need to keep in mind as they consider regulatory efforts like “net neutrality,” the IP Transition, and a possible update to the Communications Act.
[Swanson is president of Entropy Economics LLC, a strategic research firm]

[Commentary] Should regulators condemn potential mergers before they are even proposed? That’s the question being raised by statements coming out of the Department of Justice and the Federal Communications Commission about the rumored Sprint/T-Mobile deal.

These rumors have piqued the interest of regulators, who have made unusually public comments apparently designed to discourage the merger. Conversations between companies and regulators about proposed deals are not uncommon. Markets abhor uncertainty, so investors crave early feedback regarding how a hypothetical deal will be greeted by regulators and what may be done to reduce the risk of an unfavorable response. If regulators identify anticompetitive concerns that can be cured by concessions, it’s better for agency officials to pinpoint the problem and propose a tailored solution during the merger approval process, rather than have the parties guess what might be a problem and what concessions might fix it. Unquestionably, regulators should scrutinize this deal closely. But both due process and the public interest demand that they be given the opportunity to do so, without regulators placing a thumb on the scale. It may be that without a merger, neither company has the scale to compete effectively against Verizon and AT&T. If this is true, then the regulators’ quixotic quest to preserve four national carriers will deprive consumers of the benefits of a more efficient market structure and the more robust competition it would bring.

It is far too early to determine that a Sprint/T-Mobile merger would be good for consumers. But it is also far too early to unequivocally decide otherwise.

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