I'm back from a vacation in Israel to discover an amazing economic analysis of network neutrality posted by my good buddies at Consumers Union on hearusnow.org. Written by University of Florida Economists Hsing Cheng, Subhajoyti Bhandyopadhya and Hong Guo, Net Neutrality: A Policy Perspective applies game theory to the network neutrality debate. They conclude that abandoning network neutrality would create a disincentive for broadband network providers to build fatter pipes.

If this analysis seems familiar, it's because I wrote something similar (but without the fancy math) about a year ago. As always, I get warm fuzzies whenever economists confirm my Econ 101 “gut check.”

Of course, these guys being real economists (as opposed to undergrad posseurs like yours truly) have a bit more to say on the subject and use lots of fancy math that I will not try to reproduce. But I offer some brief plain language explanation (including what I think are the brilliant points in the analysis) below....
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According to this story, FCC Chairman Kevin Martin told the Senate he has circulated a Notice of Proposed Rulemaking to classify broadband via wireless as an “information service.”

This might at first seem no big deal. After all, in the wake of the Brand X decision, the FCC has moved to declare broadband an “information service” for DSL and cable and, more recently, for broadband over power lines (BPL). So, while I may not be happy with using regulatory classifications to achieve back-door deregulation, what makes wireless services different?

The answer has to do with the peculiar way the Communiations Act works, and the physical reality that use of the electromagnetic spectrum really is different than laying a fiber line. True, “technological neutrality” is one of the great regulatory shibboleths these days, even if it does to reality what Yiphtach (Jeptha) did to the people of Ephriam. But the law and reality do matter sometimes. Like here.

I must give fair warning that the analysis below hinges on what will appear to non-lawyers an incredibly bizzare and artificial distinction with no apparent difference in immediate outcome. But among lawyers, this is like mistaking a Satmar Chassid for a Hesder bachur.

Some analysis below.
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As others have chronicled, the people who brought you “Net Neutrality Is In Its Last Throes” and “Deregulated Telecoms Will Be Greeted As Liberators” have now launched a new campaign based on the highly successful tools of this administration and the conservative noise machine generally. This is perhaps unsurprising given the paucity of arguments the anti-net neutrality folks have at this point.

The fear of Google is attractive. Any huge entity attracts concern, and rightly so. I'm pleased that Google has “don't be evil” as a credo, and that by and large it has done a good job sticking to that. But they are a large corporation like any other, and if they become convinced that something contrary to the public interest is in their best financial interest, I know which way to bet. For this reason, you find a number of perfectly reasonable folks, such as industry observer Robert Cringley (whose push for local ownership of infrastructure hardly makes him a telco or cable enthusiast) is now worried that Google has accumulated a sufficient mass of resources to take over the internet the same way Microsoft took over the desk top.

Please note that this has nothing to do with network neutrality. In fact, if Google really did have an evil plan to leverage its network assets and services to dminate the internet, thelast they would want would be network neutrality. Network neutrality means treating everyone equal, so if Google became the uber-Tier 1 carrier — what Cringley alleges is Google's ultimate plan — the last thing Google would want would be a requirement to carry everyone's traffic equally. It would be like Microsoft fighting to keep its monopoly by making the GNU GPL mandatory for all desktop operating systems.

But, as the current Administration has discovered, we don't need logic. We just need a big old cloud of anxiety and the power of repetition. If you fear Iran and its nuclear ambitions, you must support a surge in Iraq , because Iran supports U.S. withdrawal from Iraq, and Iran has nuclear ambitions. If you fear Google invading your privacy or dominating net applications, you must fear network neutrality, because Google supports network neutrality and they're big and scary. Network neutrality is a plot by Google to take over the internet, because Google wants to take over the internet and they like network neutrality. And did we mention they're big and scary? Biiiiiiiiiiiiiiiigggggggg and scaaaaarrrrrrryyyyy!!!! And they like network neutrality. So Network neutrality is scary and bad, like Google, but without the “I'm feeling lucky!” button.

Mind you, you can find plenty of examples of this kind of logic in the mainstream media. You can see this amazing (as always) clip of Stephen Colbert demonstrating how the mainstream media uses this technique on Barack Obama. In a world where the mainstream media apparently believes that voters will make their decision on whether his middle name is Hossein or whether his “business casual look” is too much like Iranian President and fashion plate Mahmoud Ahmadinejad, we can expect the cable cos and telcos to push the link between Google, net neutrality, and Al Qeda

I've been at Media Access Project snce 1999. Long enough to remember when America Online and the telcos supported not just network neutrality, but “open access” (letting ISP resell broadband capacity). A fair number of folks accused open access supporters of being AOL shills or tools of the telcos. But after AOL merged with Time Warner, and Michael “deregulate them all and God will know his own” Powell took over the FCC, the companies that had backed open access switched sides. But the public interest community, including MAP, kept fighting the same fight (which has now morphed into the 'net neutrality' fight) long after the industry folks switched sides or dropped out.

As I have said many times before, citizen movements must stay citizen driven. Corporations will act in their best interest. They will spend money if they think it will help them earn more money. But that's as far as they go.

You can't get a million people or more in this overworked, busy 24/7 world to fight for something — in the face of a continued barrage of advertising, push-polling and the pervasive corrosive cynicism that you can never hope to win in our corrupt political system against the corporate powers that be — unless they believe in it. And you can't get people to believe in it — especially in the face of the barrage of misinformation — unless there is really something to it. Especially when we are talking about a geeky technical policy issue that no one outside Washington ever heard of a year ago.

So yeah, Google supports network neutrality, and for their own reasons. But chosing to support or not support a cause because Google does is about as stupid as deciding whether or not to vote for Obama because both he and Ahmadinejad hate ties.

For the record, I hate ties too, and I support network neutrality. Just like Obama supports network neutrality. So I guess I must have links to Ahmadinejad. Hopefully, this will not scare away too many readers. But for those unafraid of the frightenng link between network neutrality, me, Barack Obama, and Ahmadinejad,

Stay tuned . . . .

Unsurprisingly, in an area as complex as this, opinion has split on what the merger conditions mean. Some, like Tim Karr and Columbia Law Professor Tim Wu, and Matt Stoller hail the conditions as an important victory. Others, such as Cardozo Law Professor and ICANN Director Susan Crawford, Jeff Pulver, and Dave Burstein think AT&T has cleverly played us for dupes by giving us conditions with loopholes that render the conditions meaningless. While others, like Dave Isenberg, strike a middle ground. Others, pointing out that the conditions only last two years,

What do I think? As I observed in July, when we got got some conditions out of the Adelphia transaction, evaluating wether you won or not in opposing a merger is a tricky business. But I reject the idea we got taken for a ride. To the contrary, anybody who thought this merger was going to provide the answer to the net neutrality issue, or eliminate the need for national legislation, does ot understand what was going on or what we were trying to accomplish.

And no, this doesn't make a bad merger good. I certainly would have preferred seeing the FCC reject the merger. But given broad hints from Dingell that he never wanted the Ds to go that far, and given the fact that McDowell could have decided to come off the bench in June if the merger was still pending (since the Ds could not get a majority to vote to refer the matter to an Admin Law Judge), I don't think a rejection was realistic to expect.

More detailed analysis below.
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