Level 3, Public Knowledge can’t have it both ways

Looks like the net neutrality posse thinks it has a Trojan horse it can use to penetrate the walls of Troy. According to an article in The New York Times, Level 3 Communications is whining about recurring fees it is being “forced” to pay to Comcast for delivering traffic from Netflix.

Netflix, known for delivering DVDs of your favorite movies to your home for cheap, is also in the streaming movie business. Because of its emerging business model, Netflix considers itself a competitor of Comcast’s on demand video delivery service.

Now, the last time I checked, Level 3 Communications was also a telecommunications company. Level 3 enters into interconnection agreements with other communications companies for the delivery of traffic. Given the other portion of its business model, ie., delivering media traffic, audio/video feeds, dedicated Internet access, Level 3 has to interconnect with other networks to bring its clients like Netflix any value. Level 3 also provides long distance and local service and as such it also receives interconnection fees from the termination of traffic on its network.

The other irony is that Public Knowledge has jumped into the fray, describing this incident as another example for why we need net neutrality. Public Knowledge can’t have it both ways. If the network neutrality posse wants the broadband Internet access ecosystem regulated under Title II, it means that there will be recurring fees for inter carrier compensation. As demand for video streaming increases, the cost for congestion caused by these services will be recovered in these fees and these fees will increase.

Level 3 knows this. Netflix knows this. So why is Level 3 whining? Well, have you seen their stock prices lately? They are practically a penny stock and definitely not the darling of the street. Level 3’s return on equity is -257%. Its return on assets is -0.90. Earnings per share is also negative, at -$0.46. In Street parlance, the company is a dog. The last thing they need are increased costs that may lead to further questioning of their company’s value.

So, rather than hide behind the bogus net neutrality argument, maybe Level 3 needs to focus more on operating efficiently and getting that bogus stock price up. Time to find a new Trojan horse because this dog don’t hunt.

In response to James Rucker‘s HuffPost piece, “Congressman Rush avoids the real issue”

On the contrary, Mr. Rucker. Congressman Rush has directly addressed the issue of the FCC’s inappropriate attempts to circumvent both Congress and the courts in reclassifying Internet broadband access services as telephone service. The FCC cannot draft and implement rules that have no basis in statute. The U.S. Court of Appeals-DC Circuit has made that clear. If anyone is avoiding the issue, it is the Federal Communications Commission.

Given that the Republicans now control the House of Representatives and have increased their level of influence in the Senate, it is now more imperative that the FCC abandon its go it alone approach to net neutrality. Will the FCC recognize its proper place in our constitutional scheme or does it prefer its credibility neutralized?

In response to David Honig’s HuffPost piece, “Civility …”

Posted November 24th, 2010 in African Americans, net neutrality and tagged , , , by Alton Drew

Mr. Honig rightly points out Representative Rush’s street cred when it comes to advocating for issues in the minority community. Mr. Rush has not dismissed the fundamental idea of an open network. No one who understands the Internet as well as he does would.

What Mr. Honig appropriately describes is Mr. Rush’s commitment to optimizing minority inclusion at the table of opportunities the Internet presents us both as consumers and entrepreneurs. Mr. Rucker and his fellow advocates have yet to tout any consumer or entrepreneurial benefits from the overly burdensome net neutrality regulations that they press for. All Color of Change leaves us with are personal attacks and a serious lack nof civility.

FCC should defer to the autonomy of contract making

Recently, Federal Communications Commission chairman Julius Genachowski voiced his concern that Google and Verizon’s efforts to broker a deal on the transmission of traffic over Verizon’s networks has hampered the FCC’s efforts at coming up with a mechanism for instituting net neutrality. I would beg to differ.

First, I don’t see how an agreement entered into willingly between two non-coerced parties somehow is at fault for a regulatory agency’s failure to address a regulatory matter. While Google and Verizon play highly important roles in content production and content access, both companies are not too big to cause regulatory efforts to fail.

Second, the FCC is still in a position to create an environment of force majeure, where its properly promulgated regulations could nullify an unfavorable agreement.

What would be the best way for the FCC to get to properly crafted rules? Instead of signaling to Congress an ill-advised intent to circumvent Congress by reclassifying broadband access as a telephone service, the FCC should take into account the rightward shift in the House and limit its attempts at net neutrality by proposing legislation that merely codifies the first four net neutrality principles.

Those principles have been abided by the industry for twenty years without fail. Pursuing this true middle of the road third way would lay a foundation for continued cooperation between not only industry and government, but between the two branches of government as well. This approach would also signal a high level of regulatory certainty in the financial markets.

Color of Change does a bum rush on Bobby Rush

Posted November 20th, 2010 in African Americans, Internet, net neutrality and tagged , by Alton Drew

Politico.com yesterday provided the following report on Color of Change’s alleged attack on Representative Bobby Rush, Democrat of Illinois:Color of Change.org, which describes itself as “an online community of more than 800,000 people working to strengthen Black America’s political voice,” is petitioning Nancy Pelosi against Bobby Rush’s bid for the tech subcommittee. Executive Director James Rucker said he had “deep misgivings” about the congressman because he “has repeatedly supported the interests of the telecommunications industry over the interests of regular people, and has been a fierce opponent of network neutrality.” Rucker also said he had “grave doubts” about Rush’s ability to be an “honest broker” on telecom issues, in part because AT&T and others have donated repeatedly to the congressman.Mr. Rush put out this response:

“My position on those issues as well as my sources of contributions are a matter of public record. I will not allow the Silicon Valley funded Color of Change.Org group, which purports to ‘strengthen Black America’s political voice’ through the Internet, to call into question my integrity and honesty to lead the Subcommittee on Communications, Technology and the Internet as its Ranking Member. The notion that this Silicon Valley controlled group should have the only word on what is in the best interests of people of color is foolish. When an organization rents a Silicon Valley glass house, they ought to be careful about throwing stones.”

On the contrary, Mr. Rucker. Mr. Rush’s positions on net neutrality and reclassification of broadband access as a Title II service have always been on the side of us “regular people.” Mr. Rush understands that regulation, while having its place when appropriate, is severely misplaced when applied to an industry that is growing as well as producing jobs.

Given Mr. Rucker’s obvious disdain for good old fashioned economics and good business judgment, any first semester economics student or “regular person” who runs their own business will tell you that costs added to day-to-day operations of any business will be passed on to consumers. In addition, additional regulations mean that the regulatory barriers for entering into a market will go up as well.

Communities of color are not ready for the change in Internet access they will encounter if net neutrality tainted statutes are implemented. Minority adoption rates are below national average and if Color of Change and its cohorts get their way, net neutrality will mean that the costs for wireless access to the Internet, the primary way blacks and Hispanics access the web, will increase as well.

Mr. Rush’s experience in telecommunications combined with his status as a veteran legislator is a feather in the cap that Mrs. Pelosi cannot ignore.