Monday, October 1, 2007

Nomination for the Worst in Sponsored Research

With so much unsponsored, under-read research in telecommunications policy, I marvel how sponsored research finds its way into hard copy journals. Having read so much solid, thoughful work generated for the Telecommunications Policy Research Conference (see tprc.org) I thought I would nominate the worst in sponsored research I recently discovered.

My nominee: Hal J. Singer's THE COMPETITIVE EFFECTS OF A CABLE TELEVISION OPERATOR'S REFUSAL TO CARRY DSL ADVERTISING, Journal of Competition Law and Economics 2006 2(2):301-33; available at: http://jcle.oxfordjournals.org/cgi/content/abstract/2/2/301?ck=nck.

First of all I know that Dr. Singer can and does generate solid work. However, this piece simply does not match what he can produce and I infer that he may not have come up with this topic on his own accord. In any event the piece suggests that notwithstanding nearly constant efforts by consulting economists to justify the largest possible relevant market to support mega-mergers in the telecom sphere, Dr. Singer concludes that refusals by cable operators to sell advertising space to competiting DSL providers impairs rivals' efficiency and harms consumers by raising the cost of Internet access.

Dr. Singer reaches this conclusion by defining the relevant market as an incredibly small sliver of the information, communications and entertainment marketplace: local television advertising on cable networks. Dr. Singer concludes that DSL providers cannot compete as effectively as they would in the absence of the "ban."

Even if Dr. Singer provided empirical evidence that DSL providers faced an actual boycott of cable television advertising, he could not prove foreclosure of advertising access by companies such as Verizon, AT&T and his benefactor Qwest. Cable television company advertising represents a tiny sliver of the total broadcast and cable television advertising for which no bar on DSL advertising exists. Surely Dr. Singer knows that cable television operators' must carry obligations require them to carry without blockage any and all advertising contained in broadcast television signals.

Practically speaking is there anyone who believes that Verizon, AT&T, and Qwest lack the ability and resources to advertise their DSL product? Does anyone buy Dr. Singer's assertion that "local television advertising on cable networks is the most efficient form of advertising for DSL providers." On my cable system the local advertising inserts made by Comcast--State College include car dealers, restaurants and furniture stores. Even if Dr. Singer were to claim that Comcast forecloses all of its franchise holders from accepting DSL advertising, does anyone think this makes DSL competitively disadvantaged vis a vis cable modem service?

My nomination for first runner up is: J. Gregory Sidak and Hal J. Singer, Ɯberregulation Without Economics: The World Trade Organization’s Decision In The U.S.-Mexico Arbitration On Telecommunications Services, available at: http://law.indiana.edu/fclj/pubs/v57/no1/Sidak.pdf.
In this piece the authors attempt to prove that the World Trade Organization, a treaty-level multilateral organization, illegally regulates telecommunications carriers' rates and practices. Acting on a complaint filed by the United States, the WTO determined that TelMex, the dominant telecommunications service provider in Mexico, imposed impermissibly high interconnection charges. These rates bordered on extortionate and well exceeded benchmarks suggested by the International Telecommunication Union, another one of those runaway multilateral organizations.

Global Best Practices in Telecom Policy

Papers presented at the 35th annual Telecommunications Policy Research Conference http://www.tprc.org/ held last weekend offered more evidence that the United States no longer offers other nations forward looking policy and regulatory models. I dare say the preoccupation with lobbying and litigation has generated an unanticipated extra liability: loss of best practices leadership.

My proof:

Rather than acknowledge that the U.S. lags many other nations in broadband penetration and affordability (see http://www.speedmatters.org/; http://www.benton.org/), representatives of the U.S. government quibble over the veracity of the statistics.

The dominant incumbent telecomms service provider in the U.K., Italy and Australia volunteered to create an access subsidiary to simplify and largely eliminate regulation of corporate activity at higher layers. U.S. carriers and the FCC summarily reject this approach as eliminating synergies, mandating "dumb" pipes and relegating any physical connection operator to perpetually regulated status.

Korea joins the EU in embracing layers/horizontal regulation in lieu of silo-based, media specific vertical regulation. U.SA. carrier reject this model for the same reasonas above.

Canada has largely solved its universal service challenge while U.S. consumers subsidize carriers with most of an annual $7 billion windfall.

Some day soon we in the United States will begin to recognize that expensive, lackluster broadband access and a highly politicized regulator and policy making process knocks off a few tenths of a percent in national productivity.