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Random thoughts on consumer choice of content

Progressives have expressed concerns about consumer access to content of their choice; that decisions to access lawful content not be undermined by the end-user’s broadband access provider.   Consumer choice implies that the consumer has placed some value on the content he or she wants to receive.  One consumer may place a greater value on using their bandwidth to reading up-to-the-minute press releases on PR Newswire and business news content.  Another consumer in Florida may place greater value on gaming with his friends in Wisconsin.  Should net neutrality proponents be concerned about a consumer’s value-maximizing decision where the very small websites that net neutrality proponents claim to advocate for are not accessed as a result of consumer versus broadband provider “blocking?”

Utility or value maximization is nary mentioned by net neutrality proponents.  They have beaten around the bush by discussing it indirectly in the guise of non-discrimination or non-blocking principles.  Saying non-blocking or non-discrimination provides a false sense of speaking truth to power by putting the “bad guy” taint on broadband providers.  It also helps to embolden their status with their constituency, the consumers who believe that a handful of documented net neutrality violations is indicative of how broadband providers will behave even when millions if not billions of transactions occur every day without a net neutrality hitch.

But highlighting actual consumer choice, a consumer’s ability to place higher priority of certain websites over other content doesn’t seem to be the progressives’ cup of tea.  An enhanced analysis of the content markets should have as an issue whether consumers can make this type of choice and whether public policy should encourage it.  My bet is that progressives prefer consumer choice light versus strong, robust consumer choice.

The reason why this proper market analysis won’t be entertained by net neutrality proponents goes back to the “V” word; value.  Small content providers don’t have much in capital or time to garner the traction and eyeballs that larger, more entrenched content providers have.  It’s the economics of net neutrality.  Larger content providers have sunk millions into the marketing necessary to gain traffic.  Some are merely leveraging their legacy infrastructure.  For example, I’m a fan of The Economist.  Not only do I subscribe online, but I also get the print version so that I can read it on the plane or MARTA rail.  The Economist leverages its print reputation to attract readers online.  Online magazines that can establish pay walls and maintain loyalty with superior content will make revenues, hopefully have profits, and maintain barriers to entry.

Unfortunately for the smaller content providers progressives are so concerned about, energy is being directed toward a public policy initiative that won’t do anything for their marketing or their profit.  It’s also unfortunate that nary one of the grass roots advocacy groups pushing net neutrality have made a cogent economic argument that could give the Commission any proper guidance.

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Time to stop coddling social media consumers

Posted January 7th, 2014 in social media, social network and tagged , , by Alton Drew

Author Bernard Marr today posted an article on Linkedin (NYSE: LNKD)discussing a class action suit filed against social media giant Facebook (NASDAQ: FB).  The plaintiffs allegedly have taken issue with, you guessed it, Facebook’s privacy policy, specifically, Facebook’s practice of reviewing content posted or shared by users in order to create user profiles that can then be provided to advertisers.  The plaintiffs want the social media giant to provide consumers with more transparency as to how their content is being used.

We’ve heard this song and seen this dance before.  Social media consumers believe that they “own” these companies simply because they use the companies’ services.  Profiling a social media consumer based on content they post or write is an important part of a social media company’s business model. Expanding a consumer’s ability to say yes or no to how they are profiled increases operational expense and reduces the firm’s revenues.  If the consumer doesn’t like the firm’s management practice, then the consumer should step.

Breaking up with a social media platform can be hard to do for some consumers.  Deleting photos, the names of friends, addresses, etc., is time consuming.  What social media companies should do to make the consumer’s exit as pain free as possible is totally and completely erase the exiting consumer’s profile, including any data stored on the consumer and ensuring that nothing on the exiting consumer is shared with entities that want to purchase consumer data.

Forcing more transparency, increasing the amount of consumer coddling, however, is not the answer.  Such an approach tramples on entrepreneurial freedom and a firm’s business judgment.  Let the check on a firm’s behavior occur on its bottom line with an organic reduction in demand for its services.

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Failure to adopt broadband could keep us out of online deal space

Posted September 17th, 2012 in Broadband, digital divide, FCC, Government Regulation, spectrum and tagged , , , , , by Alton Drew

BIA/Kelsey today issued a press release stating that consumer spending on online deals is expected to reach $3.6 billion in 2012. This, according to the online deal adviser, should represent a 86.9% increase over 2011. BIA/Kelsey also expects consumer online deal spending to increase 23% in 2013, with spending hitting $5.5 billion.

Online deals offer discounts on consumer items, such as clothing, electronics, toys, and travel.

In addition, a BIA/Kelsey survey of small businesses found that 26% of small businesses are likely to participate in an online deal over the next six months, while 24.3% of small businesses are somewhat likely to participate in a deal.

Affordable broadband, especially affordable wireless broadband can keep millions of minority and low income consumers connected to such deal offerings. Making necessary resources like spectrum available to carriers willing to service these markets puts the FCC in an indirect position to positively impact consumer welfare.

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Back to the Future on Broadband Regulation

Bruce Mehlman, co-chairman of the Internet Innovation Alliance, shared some insightful thoughts yesterday prior to a discussion on Capitol Hill about the future of broadband and the Internet:

“Pro-Internet policy successes came when government removed barriers, rather than adding new ones,” said IIA Co-Chairman Bruce Mehlman. “Unfortunately those days may be ending. While there is rare bipartisan agreement that the biggest challenge to broadband-enabled growth is lack of private investment and available spectrum, there is growing disagreement on how to fix it.”

I remember 1992 vividly (which means I’m getting old if I can remember anything from 20 years ago vividly). Local telephone companies were facing competition, serious competition, for the first time. There were up to 400 long distance companies in Florida, though most were resellers. Cable companies, who were providing ILEC by-pass services, were testing technology that would allow them to challenge the local phone companies. Regulators were asking BellSouth what the hold-up was in introducing …hold your breath … here it comes …ISDN! The calls for deregulation were growing. Everyone wanted to see truly robust, innovative, and fierce competition in the telecom and advanced services markets.

Yes, there was a time that regulators backed off, and that tactic worked. You didn’t have grass roots organizations hankering to know every minute detail of how a cable company, ALEC, or ILEC ran its business. They were truly consumer oriented, concerned not only about rates, but about the delivery of services to the underserved. Even they wanted to bet on innovation delivering services.

Not today, as Mr. Mehlman correctly surmises. Today with have innovation-hindering net neutrality rules. We have grass roots organizations like Public Knowledge and Free Press actually criticizing minority groups for supporting efficiency of service delivery. These groups have prodded and cajoled the current FCC into an apparent preference for a command and control regulatory scheme. While the FCC talks “robustness” and “innovation”, its actions, supported by grass roots groups that put its consumer ancestors to shame, speak another narrative; a narrative that says that markets are inherently no good.

Bubba and 1992. Along with my slimmer figure, we miss you.

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Americans are into output not throughput

I saw some of an interesting piece on shoplifting last night on CNBC. The reporter made the point that Americans, when unknowingly buying stolen razor blades at their local five and dime, don’t care about where the product comes from. They care about the price.

Wal-Mart acknowledges this type of consumer perspective when it provides head-to-head price comparisons with local and regional grocery stores. In these economic times, family budgets take a higher priority to whether the grocery store went to the most exotic island to find bananas and cocoa beans.

Consumers also feel the same way about their internet service providers and their broadband service.

In a speech delivered yesterday at the Federal Communications Bar Association spring luncheon, Federal Communications Commission member Mignon Clyburn said that,

“The FCC set forth basic rules of the road, so that consumers can have unfettered access to the lawful content, applications, and services offered over the Internet, in addition to the information they need to understand how their ISPs manage their networks.”

Access to lawful content, applications, and services I can roll with. Understanding how ISPs manage their networks? I don’t think so.

Consumers care about output not throughput. Americans have always been output oriented, whether the issue is politics or having a report generated at work by 4:45p. Unless the way a service provider is going to unleash an environmental hazard on my backyard, I don’t care what management techniques the provider uses to manage the process.

It’s disingenuous to say consumers care about this. Either that or the FCC is totally out of touch and more focused on appeasing the small group of activists who believe that Kafka the Bogeyman lurks around every corner and do a Tebow in front of a Don Quixote poster.

I prefer to say that they are out of touch.