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Thanks to thedoomreport for bringing this article to my attention
Get ready for the Department of Broadband. On Monday, President Obama called on the Federal Communications Commission to reclassify the Internet as a public utilityâlike water or electricityâunder Title II of the Communications Act of 1934. The goal: âto protect net neutrality,â Mr. Obama said in a White House YouTube video, an ironic venue for announcing a monumentally bad idea that could strangle the Internet.
For years the FCC has been inching toward imposing net-neutrality rules, which are sold as a way to ban Internet service providers from discriminating against content providers. In reality such rules would dictate what ISPs like Comcast and Verizon can charge for their services. The Silicon Valley crowd particularly likes the net-neut idea, because it would mean cheaper access for companies like Google and Netflix, who are heavy bandwidth users. President Obamaâs announcement is likely to delight themâand liberal groups supporting supposed Internet âfairnessââbecause now FCC Chairman Tom Wheeler will be under enormous pressure to do the White Houseâs bidding.
But the Internet cannot function as a public utility. First, public utilities donât serve the public; they serve themselves, usually by maneuvering through Byzantine regulations that they helped craft. Utilities are about tariffs, rate bases, price caps and other chokeholds that kill real price discovery and almost guarantee the misallocation of resources. I would know; I used to work for AT&T in the early 1980s when it was a phone utility. Its past may offer a glimpse of the broadband future. Innovation gets strangled.
Bell Laboratoriesâowned by AT&Tâinvented the transistor in 1947, the basic building block of todayâs telecommunications and computing. But AT&T was one of the last businesses to use the innovation. Why? Because the company had a 10-year supply of the old technologyâvacuum tubesâand waited until they ran out before converting to using AT&Tâs own invention.
It was much the same with touch-tone dialing, which was invented in 1941 but not rolled out until the 1970s. Though touch-tone was easier to use than rotary-dial phones, and cheaper, AT&T charged $10 a month extra for the serviceâbecause the company could. Bell Labs funded a study to decide the size, color and coding of the touch-tone buttons. The studyâs director received a report with hundreds of ideas but didnât like any of them. Instead, he insisted on gray buttons, and just 12 of them.
More utility follies? The first cellphone call was made in St. Louis in 1946 with AT&Tâs Mobile Telephone Service, but the company let the innovation wither. It took until 1983 for Motorola to introduce the now comically unwieldy DynaTAC, a cellphone that weighed more than 2 poundsâbut that private-sector effort is what ultimately led to todayâs 4-ounce iPhone.
Oh, and data. I worked in a group at Bell Labs that developed the early 300 and 1200 bit-per-second modems. We wanted to test them by sending data from our Western Electric factory in Illinois to our site in New Jersey. But no luck, because Illinois Bell hadnât set tariffs for data. We had the technology, but regulators lagged far behind.
A boss at Bell Labs in those days explained what he called the Big Lie, using water utilities as an example. Delivering water involves mostly fixed costs. So every decade or so, water companies engineer a shortage. Less water over the same infrastructure meant that they needed to raise rates per gallon to generate returns. When the shortage ends, they spend the extra money coming in on fancy facilities, thus locking in the higher rates for another decade.
If the Internet is reclassified as a utility, online innovation will slow to the same glacial pace that beset AT&T and other utilities, with all the same bad incentives. Research will focus on ways to bill youâas wireless companies do with calling and data plansârather than new services. Imagine if Uber had to petition the FCC to ask for your location.
The presidentâs statement Monday was not the first time he has promoted net neutrality, just the most emphatic. At an Oct. 9 town-hall meeting in Los Angeles, he said: âI made a commitment very early on that I am unequivocally committed to net neutrality. I think ⊠itâs what has unleashed the power of the Internet, and we donât want to lose that or clog up the pipes.â Then he, however awkwardly, implored the FCC to act: âMy appointee, Tom Wheeler, knows my position. Now that heâs there, I canât just call him up and tell him exactly what to do. But what Iâve been clear about, what the White House has been clear about, is that we expect whatever final rules to emerge to make sure that weâre not creating two or three or four tiers of Internet.â
Maybe Mr. Wheeler didnât get the message last month and the White House thought he needed some public hectoring. Or maybe he has been only sidling up to the idea because he knows deep down that network neutrality is a fuzzy concept that canât possibly exist in nature. Comcast might want to charge Netflix customers $5 a month for a fast lane, but if Google Fiber is in town and offers Netflix with no extra charges, thatâs what customers will choose.
The beauty of competition is that you get network neutrality for free. AT&T cut long-distance rates in the 1980s when MCI and Sprint started competing fiercely. Calling from San Francisco to New York became cheaper than calling from San Francisco to San Jose, because California tariff prices were still highly regulated. The same thing happened to international rates once Skype offered voice and video connections free online. And it is no surprise that AT&T hurried to offer its own gigabit Internet connection in Austin, Texas, as soon as Google Fiber showed up. Now everyone in Austin has access to a fast lane.
And the rest of us? âAt 25Â Mbps, there is simply no competitive choice for most Americans,â Mr. Wheeler said in a September speech. Treating the Internet like a utility would ensure things stay that way.
The president might think heâs doing a favor for Americans, but utilities are utopias only on paper. With no competition to stimulate investment, capabilities will wither. Eventually a federal bureaucracy will be needed to help allocate the scarce broadband resources. In that vaguely neutral world, everybody gets access to the same resources. Well, except for the governmentâit of course will need special, superfast access. You want cheap, ubiquitous and naturally neutral broadband? Promote competition and outlaw utilities.
This is absolutely disgusting. You should all care about this. Do you research as to why utilities are so dismal when it comes to innovation and quality. This is a major threat to the internet, and as such, information technology as we know it.
So President Obama has announced that the Internet should effectively be regulated as a public utility along the lines of the old-time Ma Bell phone system. Heâs asking the Federal Communications Commission (FCC) to reclassify internet traffic from information services (or Title I services under current Communications Act rules) to telecommunication services (or Title II services).
Obama is old enough to know better. If you think cable companies and internet service providers (ISPs) absolutely suck at customer service (and they pretty much do), theyâre simply faint echoes of the old Bell system, which set the standard for awfulness. âWe donât care. We donât have to. Weâre the phone company,â joked the comedian Lily Tomlin back in the late â60s and early â70s. Public utilities and government-granted monopolies â the only sort that actually stick around for very long â are rarely famous for their customer service and innovative practices. âThe Phone Companyâ was enough of a cultural shorthand for all that was bad, rotten, and bureaucratic in American life that it was the super-villain in the 1967 black comedy The Presidentâs Analyst. As bad as Comcast or Verizon might be, things can always get worse â and likely will if federal regulators gain more control.
Obama is acting in the name of âNet Neutrality,â keeping the Internet free and open, ensuring that user access to legal content and sites isnât blocked, and protecting against a long parade of potential horribles that have failed to materialize in the absence of the new regulations he is championing. He and other proponents of Title II reclassification such as video-streaming juggernaut Netflix are particularly exorcised at the possibility of Internet âfast lanesâ through which ISPs would charge companies fees to deliver their content to users. All data should be treated equally is the rallying cry of Title II proponents. Anything less, they charge, is a form of censorship.
Letâs leave aside the inconvenient fact that reclassification under Title II wouldnât actually prevent âpaid prioritizationâ deals, that ISPs are constantly managing online traffic in all sorts of ways to keep users happy, and that the FCCâs legal standing to regulate the internet is far from a settled matter. The real question is whether experiments in delivering content and services would necessarily be bad for the rest of us (I write as a Netflix subscriber, the editor of web and video sites, and an Internet junkie).
The answer is no. Clemson University economic historian Thomas W. Hazlett defines Net Neutrality as âa set of rulesâŠregulating the business model of your local ISP.â The definition gets to the heart of the matter. There are specific interests who are doing well by the current system and they want to maintain the status quo via government regulations. Thatâs understandable but the idea that the government will do a good job of regulating the Internet (whether by blanket decrees or on a case-by-case basis) is unconvincing, to say the least. The most likely outcome is that regulators will freeze in place todayâs business models, thereby slowing innovation and change.
Thatâs never a good idea, especially in an area where new ways of bundling and delivering content are constantly being tried. Itâs a historical accident that cable companies, who back in the day benefited from monopoly contracts with local governments, have morphed into ISPs. That will not always be the case, as the rise of Verizon (originally a phone company) and Googleâs rollout of its own fiber system, attest. Just a few years ago, the FCC frowned on the cell-phone company MetroPCSâs discount plan that allowed access to the World Wide Web but denied users multimedia streaming. The FCC and Net Neutrality proponents thought that was a bad thing. Customers on a budget had a different opinion.
According to the FCCâs own findings, the speed and variety of American Internet connections are growing substantially every year. Despite claims that monopolistic ISPs donât have to listen to customers, 80% of households have at least two providers that can deliver the internet at 10Mbps or faster, which is FCCâs top rating. Itâs in the increasingly intense battle over customers that a thousand flowers will bloom; all sorts of interesting, stupid, and dumb innovations will be tried; users will be empowered; and tomorrowâs Internet will look radically different from todayâs.
And maybe, just maybe, customer service will be light years better than what was offered by the phone company of Obamaâs youth
This person is the CEO of a (female-only) domestic violence shelter and winner of the 2014 National Diversity Awards for being a âpositive role modelâ. (
First, Sharyl Attkisson claimed that it was true. Now lefty publication The New Republic confirms it. The Obama administration has an enemies list.
Content Warning
Like the Nixon administration before it, President Barack Obamaâs White House apparently keeps â or at least at one time kept â an enemies list.
In a profile in the New Republic of Valerie Jarrett, who is considered Obamaâs most influential White House adviser, Noam Scheiber writes of the existence of an enemies list â or as he termed it, âa shit list.â
âValerie Jarrett is not above keeping a shit listâor as hers was titled, a âleast constructiveâ list,â the article reveals. âOne progressive activist recalls Jarrett holding the document during a meeting and noticing her own name on it, along with the names of others in the room. âIt was kind of an honor,â the activist told me. This was not out of character for Jarrett. The woman who once resisted [Rahm] Emanuelâs commandment against rewarding bad behavior has often gone out of her way to suppress dissent among ideological allies and others who question the president.â
American taxpayers are on the hook for the Ivanpah solar project out in the California Mojave Desert close to the border of Nevada. The massive plant received $1.6 billion in loan guarantees from the Department of Energy to build it, out of a total cost of about $2.2 billion. Â
The plant went online in December of last year. After operating for most of 2014, the plant seems to have hit a significant problem. Itâs only producing about a quarter of the power it has promised. That could present a bit of a challenge paying back its loan. So what are they doing? Why theyâre asking for a federal grant, of course. That is to say, they are asking for taxpayer dollars to pay back the loan that they got from the federal government that is guaranteed to be paid back with taxpayer dollars should the project fail. Fox news has the details, with some contributing analysis by Reason Foundation Vice President of Research Julian Morris:
After already receiving a controversial $1.6 billion construction loan from U.S. taxpayers, the wealthy investors of a California solar power plant now want a $539 million federal grant to pay off their federal loan.
"This is an attempt by very large cash generating companies that have billions on their balance sheet to get a federal bailout, i.e. a bailout from us - the taxpayer for their pet project," said Reason Foundation VP of Research Julian Morris. "Itâs actually rather obscene."
The Ivanpah solar electric generating plant is owned by Google and renewable energy giant NRG, which are responsible for paying off their federal loan. If approved by the U.S. Treasury, the two corporations will not use their own money, but taxpayer cash to pay off 30 percent of the cost of their plant, but taxpayers will receive none of the millions in revenues the plant will generate over the next 30 years.
Indeed, given that these guys are selling electricity to power companies, we donât even get the electricity! Taxpayers were obligated to gamble their money with the loan, may possibly have to give money to pay back the loan, and then Californians have to pay for the electricity the company produces.
Fox contacted Morris for their story because the Reason Foundation (publishers of this website and Reason magazine) produced a report at the end of 2013 detailing all the cronyism of the Department of Energyâs renewable energy loan guarantee project. Read more of their research here.
The plant blames the weather for the underperformance of the solar plant. It just wasnât sunny enough in the middle of the desert, in California, amidst a severe, record-breaking drought. Okay, perhaps thatâs not quite fair. As a former desert-dweller, I know you could see cloud cover frequently in the desert without ever getting rain. But as a former desert-dweller newspaper editor, I also actually met with representatives of the plantâs developers prior to its construction years ago. They made no bones about it: This solar project would not be built without that big federal loan. It would not have happened. Perhaps private investors suspected their output predictions were a bit too sunny?
And one final, somewhat amusing note: How is the plant making up for problems with collecting sunlight to produce energy? It has gotten permission from the government to use more natural gas than it had originally planned, potentially meaning that the biggest solar thermal power station in the world may depend on fracking to supplement part of its operations. Â
Oh, and it murders birds by the hundreds, possibly thousands. Maybe they can supplement their losses by opening a barbecue shack next to Interstate 15?
little known fact: this piece is incomplete, before writing the final words banksy became consumed by hubris and jacked off so hard to his artistic genius that he died. the intense blood splatter is what was left upon climax, suggesting that banksy was going to mold this piece into his magnum opus before his great fall. in mourning of this tragic event, residents of nyc suggested that banksy now be referred to as Banksy, The Big Jerk Off.
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