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David Farber

Economists Say Network Neutrality Regulation Would Harm Consumers

in Broadband Updates/Broadband's Impact/FCC/Net Neutrality by

WASHINGTON, April 12, 2010 – A group of well-known economists has determined that the Federal Communications Commission’s proposed network neutrality regulations would harm consumer welfare.

The group of 21 economists includes Jerry Brito of George Mason University’s Mercatus Center, Robert Crandall of the Brookings Institution, David Farber with Carnegie Mellon University, and Jeffrey Eisenach and Hal Singer of Navigant Economics.

They say the government should not attempt to regulate the networks of high-speed Internet service providers to ensure that those companies give all consumers equal service.

“The economic evidence provides no support for the existence of market failure sufficient to warrant” the type of regulation proposed by the FCC, according to a statement from the group promoting the report “Network Neutrality: The Economic Evidence.”

The economists believe that “to the extent the types of conduct addressed in the [notice of proposed rulemaking] may, in isolated circumstances, have the potential to harm competition or consumers, the commission has and other regulatory bodies have the ability to deter or prohibit such conduct on a case-by-case basis, through the application of existing doctrines and procedures.”

Not Everyone is Neutral on Neutrality

in Broadband Updates/Net Neutrality by

The Federal Communication Commission’s proposed net neutrality rules could hamper innovation on the Web, said David Farber, as guest on a panel held Friday at the Information Technology & Innovation Foundation. Farber is a professor of computer science and policy at Carnegie Mellon University and a former chief technology officer for the FCC.

Farber said that Internet networks have always prioritized certain traffic and that the new rules proposed by the Commission to try to stop discrimination on cable, DSL and wireless networks could constrain operators and tech companies from properly managing their networks. “There are too many lawyers talking about net neutrality and not enough engineers,” he said.

Other computer experts on the panel also warned against the potential constraints that net neutrality rules would have on network engineering, emphasizing the need for an environment where innovation is possible. “The marketplace determines what is acceptable or not, and so far that has gotten us a long way,” asserted Farber.

Such concerns are expected to be part of the FCC’s review of network management practices, Colin Crowell, a senior adviser at the FCC, has said. When FCC Chairman Julius Genachowski introduces the new proposal on Oct. 22, a process will begin to explore these complicated questions and to decide what kinds of practices are reasonable.

AT&T Lobbyist Says Telecom Company to Alter High-Speed Advertising

in Broadband Data by

By William G. Korver, Reporter, BroadbandCensus.com

July 22 – A senior AT&T lobbyist said that his company would alter the way that it advertises its high-speed internet tiers, and hinted that the telecommunication giant would soon move to usage-based billing.

Senior Vice President Robert Quinn made the comments on Monday at a Federal Communications Commission field hearing in Pittsburgh, Penn., during the second of two panels at a hearing on “The Broadband of Tomorrow.”

According to Quinn, beginning in October AT&T will no longer guarantee their Internet customers with speeds “up to” a subscribed amount. He said that AT&T cannot vouch for speeds over shared portions of the network beyond its control.

Quinn said AT&T “will take action either to bring the customer’s service within the ordered tier or give the customer an option to move to a different tier” if AT&T discovers it is “not providing service within the ordered speed tier.”

AT&T announced last month that the arrival of usage-based pricing is “inevitable.”

Quinn also said his company would “clearly identify” in customer contracts and disclosures “any limitations on the amount of usage that may apply to a customer’s service plan.”

After lamenting the cost of building internet pipes, Quinn stated that companies must be able to manage its network in order to lower the costs for end users.

Replying to a question from FCC Commissioner Michael Copps about network management, Quinn said that AT&T supports FCC policies, and that AT&T allows its customers to go anywhere and say anything on the Web.

Quinn ended his response to Copps by asking the FCC to give AT&T “all the tools in the toolbox” in order that the company may “stay ahead of the bandwidth curve.”

Scott Wallsten of Technology Policy Institute said that the figures of the Organization for Economic Co-operation and Development (OECD) on broadband incorrectly calculate the correct measure of broadband penetration because OECD ranks its connections on a per capita, rather than a per household basis.

Per capita rankings neglect the fact that households share a connection, said Wallsten. If the OECD were to alter its measurements to reflect connections per households, the U.S. would climb from 15th to somewhere between seventh and ninth, globally.

Wallsten also decried the OECD’s failure to count businesses using broadband in their rankings. According to Wallsten, the U.S. has the largest amount of uncounted businesses using broadband in the world.

Wallsten also cited a study by Nielsen to support his claim that the U.S. is not falling behind. That study found that U.S. citizens were the most “intense users of broadband,” out of 16 countries studied.

Wallsten did acknowledged that if Japan had been included in the study, the Japanese would likely have been ranked as more intense users than are Americans.

Wallsten urged U.S. broadband policy to focus on collecting more data, removing additional barriers of entry, focusing increased attention to the success and/or failure of state broadband programs, and extending broadband to low-income — rather than rural – areas.

After Commissioner Michael Copps reminded the audience that no one was “castigating” the methodology of the OECD in 2001 when the U.S. was ranked fourth, Wallsten replied that the FCC was “making policy on rankings and that’s it.”

Wallsten added that he believed more mapping and surveys would provide the FCC with data that could determine what policies are cost-efficient.

Warning of the potential dangers of the broadband “digital divide” were Rahul Tongia, senior systems scientist at Carnegie Mellon University, and Marge Krueger, administrative director for Communications Workers of America District 13.

Tongia said that while the cost of exclusion becomes increasingly higher, those that are among the “included,” or those that have broadband, attain an enormous competitive advantage.

The price of exclusion affects the individual as well as society as a whole, Tongia said. Just as insured Americans are adversely affected by the medical costs incurred by non-insured Americans, those with broadband will be harmed by those who continue to be without broadband.

Tongia said awareness, availability, accessibility, and affordability are the keys to expanding the deployment of broadband in America.

Krueger, meanwhile, appeared to back Wallsten’s statement that the FCC should focus on deployment of broadband to low-income citizens rather than rural areas when she noted that Americans with low-income are half as likely to be broadband subscribers.

Krueger also said average download speed in America is less than 2 megabytes, or 30 times slower than average speeds in Japan.

Rendall Harper, a board member of the organization Wireless Neighborhoods, also emphasized the need for low-income individuals to obtain broadband as a tool for better education. With better education and adequate training for post-secondary education, deaths, drug sales, addictions, and crimes shold fall in low-income areas, Harper said.

Rebecca Bagley, deputy secretary for technology investment of the Pennsylvania Department of Community and Economic Development, said the commonwealth hoped to deploy broadband in every part of the state by 2015. By the end of 2008, the majority of Pennsylvania should have broadband available, she said.

To other states and nations leery of investing money into broadband infrastructure because of the “who needs it” question, David Farber, an emeritus professor of Carnegie Mellon University, said that with broadband, if you build it people will come.

Farber also emphasized the importance of privacy protections, and said that peer-to-peer traffic is not inherently illegal. The amount of information that internet service providers can obtain about an individual through technologies known as “deep packet inspection” — and their sale to third parties – was “obscene,” he said.

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