DISQUS

Telecom from the big guys is cheap and getting cheaper. I just got off the phone with my wireless carrier. I was canceling my unlimited data, mobile TV, radio and navigation plan for $25. They said if I wanted to keep the plan, they would give it to me for $10/mo indefinitely (not a one month trial). 2 months ago they comped me 2000 text messages per month for free.

Fred, I don't think you can beat these guys on arbitrage anymore. Skype has some value-added features beyond voice and IM, but nothing worth $2B.

Fred, I agree an expiration is very crippling, especially for the traveler trying to catch up on several back episodes. It's a measurements problem... since they can't measure repeated or delayed viewing of ads adequately and translate it into a discounted CPM, they think there is no value. No value means "why bother." After all, the longer the product sits on a consumer hard drive the more chance it will be compromised. It's logical (in a backward thinking sort of way), but it kills the potentially most attractive feature.

Tim’s original question about the policy ramifications of using eminent domain for public or private gain is far more interesting than whether periodically trenching the first 5 feet of Adam’s lawn is more intrusive than telecom open access. The fact that a government can take or encumber property (albeit for compensation) without purchasing it in a competitive open market, carries with it a responsibility that they are acting in the public interest.

This activity removes the moral argument (for example a telco’s “property rights”) against regulation of “utilities” that use ROW (including spectrum). Now it becomes a policy question, and public interest policy goals could vary over time and by community. Too often we hear the argument that utility regulation is only morally justified by lack of competition when in fact the argument should be framed in terms of economics, social benefit, security, etc…

Put simply… what are a utility’s “private” property rights if it’s existence depends on eminent domain? Can we apply private property morality to a public property centext?

Tim, I am not sure why your question of easements and their origin. Does it matter whether it was originally government land, or a developer “donated” it to the government, or a government captured it by force via eminent domain? Now if AT&T; bought ALL their easements in the open market from the private landowners. Then I think they would have a strong moral argument for private property rights.

Excellent open exchange with well-articulated diversity of opinion. Please do more!

Tim Lee -- you may be one of the few who sense how increasingly "out of touch" Libertarians and Conservatives appear in the tech centers (SJ, SF, NY, Seattle, Dallas, ...). The funny thing is that the tech community has traditionally been very Libertarian, but the loudest policy voices have not invested the time to understand new technology, or the competitive market environment.

Not only do you need to be more precise in your scenarios, you also need to lose the ridiculous long-winded, never-could-happen hypotheticals.

Why did everyone celebrate when the iPhone or AACS were cracked? It wasn't the traditional competitive market that caused the dominant companies to open up. It was individuals struggling for what they believed were opportunities to engage in open commerce. In the end, the tech community just wants to make money, and anyone who supports open commerce is their friend. Right now Libertarians and Conservatives appears to be on the side of closed commerce.

The last paragraph is the only one that makes sense. "BY WHAT RIGHT DOES THE GOVERNMENT MANDATE ANY OF THIS?"

So which government should keep it's nose out. The federal government? Before they stepped in all the local governments were making their own (sometimes very unreasonable) demands. I had a neighbor that invested in cable systems back in the 70's and it wasn't pretty. The public clearly wants government control of television, and we are, after all, talking about public assets (ROW, broadcast and DBS spectrum, etc...). If you don't believe this, wait until we get closer to 02/09, and watch all the crazy commentary.

I either have to go with a complete private ownership model (property rights) and all government hands off, or democratic public regulation. The middle ground of some regulation is good and other is "morally" wrong seems impossible to defend without resorting to silly arguments about discriminating against special interest channels.

Adam -- Every time I hear your argue so emotionally against a la carte I end up confused about why you think it matters so much. Would anyone's life really be any different if they had to pay a little more for ESPN?

It's human nature to fall back on formula and dogma when you don't understand an issue. Networking is incredibly complicated (even through the Internet and telephones seem so simple). Libertarian thinkers need to quit being so lazy minded about the open network. At its heart, control of network services can only be accomplished through control of subscriber identity (that's why the mobile world with it's highly developed HLR is so much more closed than wired broadband). Independent control of one's identity information is a very Libertarian goal.

Hardware/service lock-in not unique to the mobile phone market. It is pervasive across most of telecom Tivo does its best to make the DVR a paper weight if you drop the service. Akimbo did make the RCA STB a paper weight when it changed its business model. Cable and Satellite STB's purchased by consumers are useless if you change technology. Cable and DSL modems purchased by consumers are also useless if you change technology.

Outside of telecom, I can't think of a consumer service that requires that customers buy locked hardware. PC's, Mac's, Game consoles, printers, dvd players all require product-specific software or ink, but they don't stop functioning if you stop paying for a service.

It is absolutely incorrect to say incoming calls are not paid for. Incoming mobile calls are paid for by the calling party (rather than by the called party) on a price per minute basis, and they are much more expensive than wireline calls. Assuming you as a consumer in Europe will be making calls to other people's mobile phones, your overall telecom bill will be much higher than in the us, where the local calls to mobile phones are free to the calling party.

Unless you only receive incoming and never make outgoing calls.... the European rules don't help you. The one exception is mobile-to-mobile, where in Europe it is just a singe charge. In the US most operators offer free mobile-to-mobile within the same operator. Bottom line is that mobile phone usage in most of Europe is more expensive than the US, except for UK which similar to the US.

Apple's approach is basically MMS, which has been in the market for 5 years now. One selling point, as you note, is being able access messages offline. The server centric approach is even older (about 15 years) as part of unified messaging. Companies have had little success selling this unified messaging in a fixed-line desktop or phone paradigm, but Apple plus mobile may be the formula. Other companies (without Apple's flair) have tried to apply unified messaging to mobile with little success (e.g., Callwave).

Good discourse on wireless. The CTIA is chartered to independently certify standard devices. Open attachment can be enforced, if America wants it. There is a worldwide problem with blocking (or charging extra for) certain features on mobile networks. I don't understand why Tim Wu needs to position it as a unique US innovation problem. South Korea is probably the most open and Japan/Italy are the most closed. The US is closer to South Korea than Italy.

Anonymous bidding is an idea that is long overdue. Open access, on the other hand, will add significant cost to whoever ends up winning the bid. The winner is pretty much gauranteed that they will not be price competitive with the integrated offerings aleady in the market. It almost looks like an attempt to poison the well, in case the wireless carriers win.

Tim & Tim, I had the opportunity to participate in both Carterfone and 629. They represent very opposite outcomes for very obvious reasons. Carterfone (and Computer II) was about the PBX industry in the 10 years. The importance to residential telephones only came later. People talk fax machines and modems for consumers to attach to the Internet, but without the open office products, including Cisco, Wellfleet, Synoptics and 3COM, the Internet would probably have been unaffordable for the masses and died with NSFNet in 1994.

The main difference between Carterfone and 629 was channel. The PBX industry quickly built an independent distribution channel, which in turn was adapted into the VAR channel for the LAN industry. This channel provided compete networks with software and support.

The equivalent channel for set-top boxes is the Cable and Satellite companies. The Satellite channel was independent in 1996, but by the time the first CableCard box arrived there was no independent channel. (If you think BestBuy would be a good channel for CableCard, you didn’t read any of the Tivo message boards on Series 3.)

Another huge difference between Carterfone and 629 was that Part 68 had an independent party define a very simple open interface, and 629 had CableLabs (even though Congress specified an independent “standards body,” the FCC let the Cable companies write interface rules). There were several proposals that were far simpler, but CableLabs chose the most cumbersome technology available at the time.

Lastly, when the idea of separation for security and navigation was conceived, it was felt that multiple providers would be offering video services to subscriber (think cable plus Video Dialtone) and that interactive TV was right around the corner. In fact, in 1994, there were higher expectations that interactive TV shopping would be far greater than Internet e-commerce.

Tim Wu, I have spent thousands of hours working with mobile operators in the US, Europe and Asia on walled garden services. 1) There is a lot of truth to accusing them of holding back features to retard competition or more often get a kick-back from the service provider. 2) VoIP and WLAN are the worst examples to make your case with, because there are so many legitimate performance and support cost reasons to block them. 3) US operators are more open to 3rd party services (without demanding kick-backs) than the Europeans and the Japanese. The Europeans may appear more open to you because they do not subsidize phones and GSM/UMTS phones use interchangeable cards.

Adam, I got to say I was shocked after reading your 2004 FCC comments. Repeating the argument that society needs to subsidize Lifetime? Really? This is definitely not my father's Cato!

I could care less about the moral arguments (turn the TV off, or spend TV time with the kids), but as long as this stuff is protected under Title VI, and with all the breaks we have been given the Cable industry since 1984, I hate seeing 70% of American families taxed $5 every month for ESPN (Disney just raised it again this year). You can keep your minority subsidies, and your violent content, if they would just make ESPN a premium service like HBO, both Kevin and I would be happy, because let's face it everyone knows that ESPN is the only real problem. (BTW we are both big sports fans, but would rather pay our own way... and maybe we cound get SAS to shut up!)

I'm dead serious, if the Cable companies would surrender ESPN, Kevin Martin would quit acting like they stole his lunch money. Multicast must carry would be history. They might even get a 629 waiver (temporary until 2009 or DCAS whichever came first).

Just google "slingbox swap" and you will see the exposure. About two years ago I was on a Basketball message board and a guy started a thread "watch out of market games for free." It was a slingbox rep (or so he said). He suggested swapping. All MLB needs to do is an exhaustive search of the sports message boards (of which there are several hundred). People aren't just slinging their own TV signals. If MLB can tie official reps to these statements, Sling's goose is cooked. Surprized you ignored this aspect.

Tim, I share your confusion on over what wireless Carterfone accomplishes. I have a lot of respect for Tim Wu and especially liked his first paper on Net Neutrality. It lacked religion and carefully laid out the economic case for harm that might occur from blocking a class of applications. I had a little problem in that he commingled Carterfone-type blocking (home networks, WLAN’s) with CI II-type blocking (VLAN’s, hosting a server, reselling access). The discussion was evenhanded, admitting that there was rationales for blocking that could provide benefit to all subscribers. For example, greedy applications like spam, viruses and perhaps P2P.

Having spent numerous hours in the late 90’s trying to convince MSO’s not to block VLAN’s, I can say with certainty that the blocking was an attempt to get enterprises to pay a premium for a telecommuter class of service that was identical to vanilla residential service. I can also say server hosting was a legitimate concern that a few greedy users would consume all of the upstream bandwidth and ruin the quality of experience for everyone.

With wireless net neutrality, it seems that Tim Wu has got religion. He picked the two worst applications (VoIP and WLAN) to make his case on. The bandwidth of even 3G networks is incredibly constrained and the cell tower backhaul is even more constrained. Unlike the wireline world where exchanging a 56kbps voice circuit for a 16kbps VoIP call actually adds economy, in wireless you are exchanging 4kbps circuit for a 16kbps session. It gets worse. The inherent inefficiencies of GPRS and 3G, as well as the overhead of Skype make the efficiency loss about 7:1. Everything the carriers say about WLAN on cell phones being unreliable is true. It is a nightmare to support.

On the other hand, the mobile operators are always trying to lock users into poor quality captive services. I have seen dozens of RFP’s for walled garden services, and contrary to Tim Wu’s assertion, the US MO’s are among the most open when it comes to allowing independent 3rd party services (DoCoMo is the worst followed by the Italian MO’s). Besides the FCC mandating that Sprint and Verizon allow open attachment of 3rd party CDMA phones, I’m not sure what other good you could accomplish. The reference to wireless “Carterfone” is completely inappropriate… there is no tariff to invalidate.

I think there is a future risk that the mobile operators will try to use their dominance in CMRS to gain dominance in the mobile television market. This is almost certain to happen with DVB in Europe. But the US broadcasters are far more aggressive. If Sinclair and others can pull off open A-VSB, a market solution will work EXTREMELY WELL. If not, we are going to probably need regulation.

Re. Wireless Carterfone. You talked about monopoly as the rationale for the FCC decision in 1968, but this was not historically acurate. Tom Carter brought an antitrust suit and the court refered it to the FCC. The FCC didn't rule on antitrust, because that wasn't its authority. The FCC ruled only that the tariff was discriminatory and invaidated the tariff. Although I agree with your conclusion that Carterfone doesn't apply to cellphones, it is for different reasons. On the subject of implementation of an open access requirement, it could be done quite easily. The GSM and CDMA standards allow for very transparent connectivity at the device level with no affect on your visual voice feature you use as an example. Those kind of widgets sit at a higher layer on the phone. Either the phone has the software or it doesn't (sort of like a downloaded game).