Award Winning Blog

Wednesday, October 14, 2009

WSJ’s Misinformation Agenda

Year after year I read Wall Street Journal editorials and op eds on telecommunications with wonder. How can seemingly intelligent people—who generally write with great confidence bordering on arrogance—make such bold and wrong assertions nearly every time? Is there a News Corp./Murdoch agenda? Do these writers reflectively rail against any governmental intrusion? Are they leading the blocking for major advertisers?

The latest investment in telecom snark, The Coming Mobile Meltdown, Oct. 14, 2009 at A21, tries to blame network neutrality advocacy as cause for anticipated bandwidth shortages. Author Holman W. Jenkins, Jr. warns of upcoming usage sensitive pricing, and suggests that the FCC abandon wireless network neutrality policies in favor of allocating more bandwidth for wireless companies whose numbers should drop through mergers.

Let’s get this straight allow the Big 4, which already control 90% of the national market, to become the Biger 3 with 95% of the market. Abandon common carrier regulation of their telecommunications services and refrain from applying network neutrality principles or rules to their information services, including Internet access. Allow the Big 3 to consolidate control further by acquiring most of any new spectrum allocations. Sounds like a recipe for a powerful oligopoly with the incentive and power to operate non neutral networks in discriminatory and anticompetitive ways.

Mr. Jenkins is correct on one issue: wireless carriers will abandon “All You Can Eat” unmetered service and impose incrementally higher rates based on baskets of throughput downloads. But get this Mr. Jenkins and friends: no credible advocate of network neutrality has contended that carriers cannot lawfully do this. Usage based pricing forces more rational consumption of a resources without favoring one content source or application. Network neutrality addresses tactics where a carrier deliberately drops packets of a disfavored and unaffiliated content source ostensibly to achieve network management objectives, but in reality aiming to discipline competitors, including content creators that offer alternatives to what the carrier offers.

Comcast can claim network management objectives, if not obligations, “forced” it to obstruct peer-to-peer traffic (“P2P”), but an ulterior motive cannot be ignored. Might Comcast want to prevent P2P traffic that offers high quality video via Comcast lines, but creates incentives for consumers to abandon cable television subscriptions?

I thought the Wall Street Journal stood for competitive markets, not for cronyism and accommodative government policies that favor less competition and reduced consumer welfare.


Justin Davis said...

I like your thoughts. Can you send me a link to your other posts?

Justin Davis
Disclaimer: Author does not represent the legal position of
Lightspeed Systems Inc. which solely provides an internet filter to K-12 schools.

weedtort said...

Nice comments, but you are so naive. You really think that the Wall Street Journal does not favor government regulation vs. "free market"? My poor, poor young man. You have listened to Rush Limbaugh and Sean Hannity far too long . .. your parents must have played them in your formative years for you. They all want government regulation so long as it favors them and cuts out their competition, or at least limits it! We do not have real capitalism in this country. We just have government protected businesses and those that have to fend for themselves in the wild.

bcohen said...

Whatever you think of the WSJ generally, don't assume that Holman Jenkins speaks for the publication. While most of what they publish is at least defensible, his views tend to be so far off the reservation that I don't even bother reading them. In his world, big business can do no wrong. He's still offended by the passage of the Sherman Act in the 1890s.

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