First Coffee for June 28, 2005

David Sims : First Coffee
David Sims
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First Coffee for June 28, 2005

By David Sims
david@firstcoffee.biz

The news as of the first coffee this morning, and the music is Bruce Cockburn’s 1987 collection Waiting For A Miracle:

First CoffeeSM likes to follow arcane topics – Ivy League football, the history of New Zealand, Al Stewart’s recording career – and burrowing deep into the minutiae of the news has run across an obscure Supreme Court ruling on Brand X which no doubt you’ve missed, as First CoffeeSM is hard-pressed to find any commentary on it…

You’d think with the blizzard of words swirling around on the Internet this morning on this highly-expected, completely unsurprising to anyone ruling they’d put Michael Jackson back on trial or something.

Okay, leaving aside Grokster with the comment that if it’s legal to sue Grokster what’s to stop anyone from suing assault gun manufacturers for murders… huh? Oh, the NRA, right. Sorry, Grokster, you need an NRA on your side, then you can be protected from the legal consequences of people using your product for the exact, specific purpose for which you manufactured and marketed it.

Justice Clarence Thomas, writing for the majority in the Brand X case, ruled that the Supreme Court must defer to the expertise of the Federal Communications Commission in regulatory issues. The FCC had already issued a 2002 ruling that cable companies did not have to share their line networks with competitors, the way telecommunications providers must share their lines with their competitors.

“The Commission is in a far better position to address these questions than we are,” Thomas wrote. First CoffeeSM applauds the practice of judicial restraint in the rare instances it appears, and does so again. Some things are simply not the Supreme Court’s business, such as state rulings on medical marijuana, Terry Schiavo, etc.

So basically we’re left with the 2002 FCC ruling as the last word on the topic, and that word is, according to a good summary by Jennifer C. Kerr, that “cable companies were exempt from the same regulations requiring phone companies to offer access to independent providers.” At the time, Kerr reports, “the FCC said it wanted to encourage cable companies to build their networks to offer broadband services.”

The cable industry is ecstatic – the FCC is too, mainly because it wasn’t emasculated live on national TV. The ruling “removes the regulatory uncertainty, and for all of us who want to offer high-speed Internet access, it gives us every incentive now to continue investing and continue innovating,” said Kyle McSlarrow, president of the National Cable & Telecommunications Association, the main industry lobbying group as quoted by Kerr.

Two of First CoffeeSM’s default beliefs crash head-on into each other here. Well, three – any time anybody in any industry claims that not allowing competition will further “innovation” you can stop listening right there, because you’re not listening to someone who’s telling you the truth. Raise your hands everybody who believes that without MCI back in the ‘80s we’d be paying five cents a minute for a long-distance call today.

By the way, you can safely disregard anything following “For your protection…” as well. Substitute “For our profit” and whatever follows reads coherently.

One of First CoffeeSM’s default beliefs is in open competition. Essential monopolies do not innovate, and they never invest for the good of the consumer – why should they go to the trouble of researching and trial-and-erroring and finding efficiencies to lower costs unless they can keep the money for themselves? Competition uses efficiencies to offer lower costs to consumers, which has the nasty side effect of attracting away monopolists’ customers.

So any industry claims that the ruling will do anything positive for innovation or the good of the customer is complete crap. The industry spokespeople know it’s crap, they know you know it’s crap but hey, with the FCC on their side what do they care? You don’t like it? Tough beans, pal. Go find a different country.

But there’s another default belief more responsible for the progress America’s made and the benefits we enjoy today – ownership of private property.

Let’s not forget these cable companies accepted the entrepreneurial risk of laying all this cable, they pay for its upkeep, they did the work, they invested the money, it’s theirs as much as your house is yours and just as you think you get to say who rents a room in your house they think they get to say who uses their cable networks.

As usual the anticapitalist lobby was in high dudgeon and full cry. “If [the phone companies] are successful, Brand X will stand as the trigger that reverses a century of communications policy and undermines the bedrock principle of democratic media, which is nondiscriminatory access for all,” said Ben Scott, policy director of Free Press, identified as a “nonpartisan media policy group” as Mr. Scott is quoted in the Washington Post.

Right, “nonpartisan” in that, like the “nonpartisan” Washington Post, only 97% of them voted for John Kerry. If Mr. Scott believed what he just said he’d be arguing that Brand X’s competitors should be allowed “nondiscriminatory access” to Brand X’s servers, customer list and office space, as well as other newspapers be allowed “nondiscriminatory access” to the Post’s print facilities, trucks and distribution routes.

The United States Conference of Mayors, the National League of Cities, the National Association of Counties, The National Association of Telecommunications Officers, and the International Municipal Lawyers Association have formed ALOAP – the Alliance of Local Organizations Against Preemption to “pursue legal and regulatory actions as a result of the FCC’s ruling that Internet connectivity provided by cable operators through a cable modem is not a ‘cable service,’” according to a press release this morning.

“We are prepared to use our ownership and management of public rights-of-way, as well as our general police powers to protect our constituents,” ALOAP says. What stupidity – if they think access to cable is a vital civic right let ‘em lay their own network for the use of a bunch of recent college grads who think it’d be really cool to be an ISP.

First CoffeeSM believes everyone should be able to live in a house. But if somebody’s not doing what they need to do to achieve that goal, it’s wrong to go knock on the door of someone who’s worked hard, saved his money and has invested in a good house and say “Hey, nice place you got here. Look, Madison would really like to live in a place like this but she can’t afford to, so she’ll use your house, and here’s the rent she’ll pay.”

Or in any other business – Billy Bob wants to sell coffee but he can’t afford to rent a location, so he gets the government to force Starbucks to let him set up a stand in a Starbucks outlet to sell his coffee in exchange for paying minimal rent to Starbucks. Maybe Starbucks’ prices’d come down or their quality go up, but there’s no reason why Starbucks should have to subsidize competition that lowers their profit margins.

Take Brand X president Jim Pickrell’s comments on the ruling – please: “This is just terrible and the real losers in this decision are consumers, because consumers benefit from choice and competition.” He told Kerr his company may be forced out of business.

First CoffeeSM says he’s right – consumers do benefit from choice and competition. They also benefit from companies with the wherewithal to afford to lay cable networks instead of relying for service on companies who can’t afford their own infrastructure. If you can offer better cable service go find investors who agree with you and start laying cable. Compete honestly.

You can as easily argue that if Billy Bob can sell better coffee more cheaply than Starbucks the government should force Starbucks to let him set up a stand on their property. If it’s that good he should be able to find investors to build a shop for him. Again, if government thinks access to cable should be a public right let them lay their own cable the way they back up their belief in affordable housing for all by building homes for people who can’t afford them instead of forcing private homeowners to rent them living space.

There’s a lot of money to be made in broadband, sure. Lots of companies would like to be able to grab a slice of it. How do we decide who gets to? How about those who have done the work and investment and taken the risk to open up homes to cable in the first place? If you want to eat someone’s lunch you should be capable of taking it away from him in the first place without his having to help you.

If read off-site hit http://blog.tmcnet.com/telecom-crm/ for the fully-linked version. First CoffeeSM accepts no sponsored content – and never drinks decaf, either.



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