Regulation

One argument against the FCC’s recently announced “AllVid” plan to regulate and “open up” the video set-top box is that set-top boxes are NOT a natural monopolistic platform that must be regulated by government in order to allow competition – in fact, set-top boxes are on the verge of being phased out and replaced by a variety of innovative new options. Apple TV, for instance, is an example of innovative new hardware for video access. But even a look at Apple TV lets you quickly see the real future of video access – apps. Put simply, in the normal course of innovation responding to consumer demands, set-top boxes are being replaced by apps on smart TVs, mobile and streaming devices. There may never be a better example of government regulation being behind the pace of innovation.

And today, Comcast announced its Xfinity Partners Program, which will allow Comcast customers to access their Xfinity content through a variety of devices and platforms using an Xfinity TV Partner app. Samsung and Roku have already joined the program, which means Comcast customers simply won’t need a set-top box if they own one of the new Samsung or Roku devices featuring the Xfinity TV app.

Seeing Comcast join the impressive number of over-the-top video providers who allow access to their content through apps demonstrates that the FCC’s AllVid rulemaking is not a response to a problem in the marketplace. The FCC has also done no economic analysis whatsoever to justify its scheme. Nevertheless, the FCC is pushing the Allvid scheme very aggressively with shortened timeframes for comments and public input.  One has to wonder what, exactly, is the FCC trying to accomplish? And why the rush?

Meanwhile, industry continues at the speed of innovation while the FCC regulates looking backward.

The Consumer Electronics Show, hosted by CTA, is appropriately lauded for being a showcase of technology and innovation.  As they tout themselves, “For 50 years, CES has been the launch pad for new innovation and technology that has changed the world. Held in Las Vegas every year, it is the world’s gathering place for all who thrive on the business of consumer technologies and where next-generation innovations are introduced to the marketplace.”

This year the buzz around the show was even greater than usual, largely because of the promise of a connected life becoming real in so many ways—from cars, to wearables, to thermostats and home alarm systems.  Sharper pictures, bendable screens, virtual reality and the reality that your “phone” is rapidly becoming your personal “smart hub” all fought for attention inside the show.  But the most accessible innovation may have been happening off of the show floor.

This year Uber, the ride hailing app provider, was operating in Las Vegas during the show.  The impact was obvious.  The infamous hours-long taxi lines for those trying to leave the convention center were cut by half or more. This year show attendees were able to make productive use of their time instead of waiting thirty minutes or more for a cab from the hotel to the show.  As a further customer service, Uber partnered with a Dallas start-up company, Vinli, to provide riders with a Wi-Fi connection while they rode.  The entire experience of attending a trade show that attracts 180,000 visitors to Las Vegas changed for the better

Could it be that the connected life that we have seen and heard about since the Jetsons might actually be becoming a reality?  The AT&T Developers Summit (https://devsummit.att.com/) painted a picture of just how close we are to that future, and in some cases how we are already there.

The opening session featured Robert Scoble (http://scobleizer.com/), a recognized technology evangelist, interviewed by Andrew Keen (http://www.ajkeen.com/).  Scoble delivered an optimistic message about connected technologies now becoming increasingly commonplace and discussed several technologies coming soon.  He noted that, despite years of discussion and promise, the “Internet of Things” wave is just now entering homes via Nest thermostats and security systems.  He remarked that those technologies essentially establish a beachhead for connected machines, making them more commonplace and understandable for consumers.  He also pointed out that the cars in many garages already are or soon will be connected and that an increasing number of appliances will be also.

So, perhaps a bit under the radar, we have moved decisively into a connected world, a world where machines work more for us than ever before.  And the advances will continue.  Whether in everyday applications of virtual reality, putting the volumes of data we produce to use for own benefit, or through whole cities enabled by connectivity, technological advances that will make our lives even easier and more productive are beginning now.  The benefits to society will continue to grow as the trend continues.

But all of this is but a dream if the chaos of invention and the disorder of innovation falls victim to legislation or regulation.  As we saw repeatedly in 2015 both in the states and from the feds (with the FCC being the most prominent offender), government cannot seem to keep itself from meddling in innovation. 

Almost by definition, the less regulation or legislation, the more experimentation will result.  Government has its role but it is not to play nanny attempting to guide the development of technologies and markets as a group of lawyers and bureaucrats would like, with prophylactic measures that as often as not miss the mark and cause unintended consequences.  Instead, regulators should sit back and enjoy the wonder of innovation, acting to clear the way rather than obstruct and delay.

I thought we were finally finished with this.

And then, last Wednesday on the Diane Rehm Show, with another of her typical three vs. one panels, it all came back.

Not only did Texas learn from the Denton Disaster and take steps to prevent it from happening again, but so did Oklahoma, passing a clear ban on cities attempting to regulate below-the-surface issues such as drilling techniques and either blatant or de facto bans on fracking.

During Diane’s show, several called from Denton, and at least one of them repeated the lie that is at the core of the Denton fracking ban, or more specifically, the lie they keep repeating.

What is that lie? “We tried to regulate drilling activity, and it didn’t work. The fracking companies just ignored the regulations.”

Extended dance remix version of the lie: “We passed restrictions in Denton on the gas companies, but they still found ways to skirt the regulations and do whatever they wanted to do.”

IPI president Tom Giovanetti joins NBC's Kristi Nelson and Todd Robberson of the Dallas Morning News on Lone Star Politics to discuss a bill moving through the Texas Legislature that would halt cities from outright bans on hydraulic fracking, discussing how rule of law should govern local rulemaking, not simply majority rule. Video begins at 10:34. 

I'm delighted that the Texas Legislature is considering legislation designed to address a concern I described in an op/ed in the Dallas Morning News a few weeks ago: That of municipalities taking away rights and protections of their citizens by majority vote on referenda.

My favorite line from my op/ed:

If I may be permitted a bit of hyperbole, tyranny isn’t OK just because it is approved by a majority of your fellow townsfolk.

This morning the Federal Communications Commission (FCC) voted to eliminate its sports blackout rule, which helped the NFL justify blacking out the broadcast of NFL games that were not sold out.

The blackout rule was always a case of the FCC getting government involved in the business model of a company/league, which is always a mistake. Policy and business models should never be confused. Government sets policy, and then people go out and create business models. Government should not be creating or distorting or assisting anyone's business model.

There has been a lot of rhetoric around the phrase "permissionless innovation" in the last couple of years. I'm not myself comfortable with the phrase, because I think a hallmark of civilization is respect for the property of others, and thus the West has developed an entire permission-based legal culture around property rights.

But others ARE enamored of the idea of permissionless innovation, especially the Internet and tech community.

That's why I am struck in reading through FCC Chairman Wheeler's new 100 page net neutrality NPRM document. Apparently, one of the many things net neutrality means is permissionless innovation for edge companies but NOT for network providers.

Because network providers are going to need permission for a whole lot of things they do. Any new thing they want to try with regard to their business model is going to be subject to some absurd and undefined "commercially reasonable" standard.

How do we determine whether a practice is "commercially reasonable?" Apparently permission will be required of the FCC.

So I will take great joy in the next few months in pointing out they hypocrisy of net neutrality proponents who think permissionless innovation is a virtue—just apparently not for broadband companies.

'Cause it's not as if we want rapid innovation in broadband networks. No, of course not. That would be silly.

This past week I filmed an episode of the McCuistion program, a public affairs TV show that airs around the country, and the topic was net neutrality. It should air in a couple of months.

The program began with Tim Wu's definition of net neutrality, which is essentially the principle of non-discrimination: All bits have to be treated the same, with no discrimination. Essentially, the "dumb pipes" argument all over again.

This emphasis on non-discrimination reminded me of the first op/ed I wrote against net neutrality way back in 2006, in the early days of the net neutrality debate, entitled "Welcome to the Stupid Internet."

The piece is no longer archived on the San Jose Mercury News site, so we keep it archived here.

It's interesting to me that we are still at non-discrimination after all these years.

Of course, David Isenberg didn't like it. But Richard Bennett did, as did Scott Cleland. 

Here's what I think is interesting: For those eight years, we did not have net neutrality regulations, and the Internet blossomed. So . . . doesn't that mean that net neutrality proponents were wrong, and that the Internet was just fine without net neutrality regulations?

Oldie but goodie.

One or two guys oops, people can write a great app, or a great algorithm, and that's a great thing. Our economy is benefitting and consumers are reaping the benefits of such innovation and creativity that comes as the fruit of the minds and labor of a few.

But some things are really, really expensive and capital intensive to do, like building out and maintaining a 21st Century broadband and rich content network that is constantly innovating new products and services for its customers.

That's one of the reasons why I've never been big on municipal broadband networks, and it's a big reason why, as Marguerite Reardon wrote in CNET, the Comcast merger could be good for TimeWarner Cable customers. In fact, it almost certainly will be.

Lots of stories in the news about prices for Super Bowl tickets dropping for various reasons. Here's one.

Believe it or not, there's a policy angle to this: For those of who believe that markets create efficiencies and are the best way to allocate scarce resources, it's important for us to maintain secondary markets for things like event tickets, and to make sure when you buy a ticket, you have the right to resell it.

We wrote a paper on this topic a few months back, which can be found here.