“A currency union is strongest without fiscal union.”
— John H. Cochrane, May 18, 2010, in a terrific commentary on the Greek crisis and the European Union
The Regulatory Threat to Web Video
See our commentary at Forbes.com, responding to Revision3 CEO Jim Louderback’s calls for Internet regulation.
What we have here is “mission creep.” First, Net Neutrality was about an “open Internet” where no websites were blocked or degraded. But as soon as the whole industry agreed to these perfectly reasonable Open Web principles, Net Neutrality became an exercise in micromanagement of network technologies and broadband business plans. Now, Louderback wants to go even further and regulate prices. But there’s still more! He also wants to regulate the products that broadband providers can offer.
Quote of the Day
“My guess is that the euro will survive, but no one will trust it like they used to. At the end of the day, it’s an entitlement problem. In Greece, the public sector makes up 40% or more of the work force, with short weeks, lots of vacation and lavish retirement benefits. All of that needs to be paid for with real income, not debt, and the markets are anticipating the day of reckoning. One can only hope European policy makers listen to the market. I wonder if California and Medicare are taking notes.”
— Andy Kessler, May 8, 2010
“In the Matter of Preserving the Open Internet”
Here were my comments in the FCC’s Notice of Proposed Rule Making on “Preserving the Open Internet” — better known as “Net Neutrality”:
A Net Neutrality regime will not make the Internet more “open.” The Internet is already very open. More people create and access more content and applications than ever before. And with the existing Four Principles in place, the Internet will remain open. In fact, a Net Neutrality regime could close off large portions of the Internet for many consumers. By intruding in technical infrastructure decisions and discouraging investment, Net Neutrality could decrease network capacity, connectivity, and robustness; it could increase prices; it could slow the cycle of innovation; and thus shut the window to the Web on millions of consumers. Net Neutrality is not about openness. It is far more accurate to say it is about closing off experimentation, innovation, and opportunity.
China won’t repeat protectionist past in digital realm
See our new CircleID commentary on the China-Google dustup and its implications for an open Internet:
China is nowhere near closing for business as it did five centuries ago. One doubts, however, that the Ming emperor knew he was dooming his people for the next couple hundred years, depriving them of the goods and ideas of the coming Industrial Revolution. China’s present day leaders know this history. They know technology. They know turning away from global trade and communication would doom them far more surely than would an open Internet.
Did Phil and Tiger lead to Akamai’s record 3.45 terabit day?
Akamai announced a record peak in traffic volume on its content delivery network on April 9.
In addition to reaching a milestone for peak traffic served this past Friday, the Akamai network also hit a new peak during the same day for video streaming, as well as a near high for total requests served.
- With online interest in major sporting events – including professional golf and baseball – helping to drive the surge in demand, Akamai delivered its largest ever traffic for high definition video streaming.
- Over the course of the day, Akamai logged over 500 billion requests for content, a sum equal to serving content to every human once every 20 minutes
- At peak, Akamai supported over 12 million requests per second – a rate roughly equivalent to serving content to the entire population of the United States every 30 seconds.
The first question that popped into my mind: Was this the work of Phil, Freddie, Tiger, and Tom? Last Friday I had noted to several friends the spectacular website of The Masters golf tournament and the high quality of its live action video streams. Looks as if lots of others noticed the compelling online video experience as well.
A Victory For the Free Web
After yesterday’s federal court ruling against the FCC’s overreaching net neutrality regulations, which we have dedicated considerable time and effort combatting for the last seven years, Holman Jenkins says it well:
Hooray. We live in a nation of laws and elected leaders, not a nation of unelected leaders making up rules for the rest of us as they go along, whether in response to besieging lobbyists or the latest bandwagon circling the block hauled by Washington’s permanent “public interest” community.
This was the reassuring message yesterday from the D.C. Circuit Court of Appeals aimed at the Federal Communications Commission. Bottom line: The FCC can abandon its ideological pursuit of the “net neutrality” bogeyman, and get on with making the world safe for the iPad.
The court ruled in considerable detail that there’s no statutory basis for the FCC’s ambition to annex the Internet, which has grown and thrived under nobody’s control.
. . .
So rather than focusing on new excuses to mess with network providers, the FCC should tackle two duties unambiguously before it: Figure out how to liberate the nation’s wireless spectrum (over which it has clear statutory authority) to flow to more market-oriented uses, whether broadband or broadcast, while also making sure taxpayers get adequately paid as the current system of licensed TV and radio spectrum inevitably evolves into something else.
Second: Under its media ownership hat, admit that such regulation, which inhibits the merger of TV stations with each other and with newspapers, is disastrously hindering our nation’s news-reporting resources and brands from reshaping themselves to meet the opportunities and challenges of the digital age. (Willy nilly, this would also help solve the spectrum problem as broadcasters voluntarily redeployed theirs to more profitable uses.)
More wireless connectivity? Or more politics?
For years we’ve been talking about the need for more wireless bandwidth, more spectrum, and a host of creative new strategies to complement our mobile phone networks — from familiar Wi-Fi to more exotic femtocells and satellites. The continuing explosion of mobile data traffic means we need these things now more than ever. In the graph below, Cisco projects 120% compound annual growth in North American mobile data from 2009 through 2013.
The Federal Communications Commission recognized these trends and needs in its new National Broadband Plan. It set the bold goal of unleashing 500 MHz of mostly dormant wireless spectrum for more productive use in new broadband Internet and media applications.
On March 29, the FCC had a chance to begin putting its Plan into action when it approved the acquisition of SkyTerra by Harbinger Capital. The result of the merger is a new wireless company that will use both MSS satellite spectrum and so-called ATC terrestrial spectrum to deliver a new hybrid mobile service. Harbinger announced it would build a nationwide, wholesale, “open access” 4G broadband wireless network at the cost of $6 billion. Although not part of the FCC’s 500 MHz push, the new Harbinger strategy aligns nicely with the goal of more, better, and broader wireless access and options throughout the country (in this case, Canada, too).
But the FCC order, which was not voted by the full commission but issued by the bureau chiefs, contains two curious provisions. The provisions restrict Harbinger’s cooperation with two important mobile service providers and could hinder the very goal of extending more wireless coverage to more Americans. (more…)
Quote of the Day
“Architects of the legislation that binds the nation’s communications infrastructure in the year 2010 were born in the 1870s and 1880s. There is talk today in Washington about categorizing technologies and platforms developed in the 21st century under different Titles of legislation written by people born in the 19th century. We don’t need to jettison all the wisdom of the ancients, but perhaps there’s a better way?”
— Nick Shulz, at the Enterprise Blog, March 25, 2010
Chronically Critical Broadband Country Comparisons
With the release of the FCC’s National Broadband Plan, we continue to hear all sorts of depressing stories about the sorry state of American broadband Internet access. But is it true?
International comparisons in such a fast-moving arena as tech and communications are tough. I don’t pretend it is easy to boil down a hugely complex topic to one right answer, but I did have some critical things to say about a major recent report that got way too many things wrong. A new article by that report’s author singled out France as especially more advanced than the U.S. To cut through all the clutter of conflicting data and competing interpretations on broadband deployment, access, adoption, prices, and speeds, however, maybe a simple chart will help.
Here we compare network usage. Not advertised speeds, which are suspect. Not prices which can be distorted by the use of purchasing power parity (PPP). Not “penetration,” which is largely a function of income, urbanization, and geography. No, just simply, how much data traffic do various regions create and consume.
If U.S. networks were so backward — too sparse, too slow, too expensive — would Americans be generating 65% more network traffic per capita than their Western European counterparts?
Is that a Goodyear or a Michelin?
Oh, wait, it’s 200 megabytes of hard “platter” storage circa 1970. You’ve got 80 of these in your iPhone.
(hat tip: Guy Kawasaki)
Quote of the Day
“If we determine that a dollar shall be our unit, we must then say with precision what a dollar is.”
— Thomas Jefferson, 1784, as quoted by Judy Shelton
China Trade Redux
With the China currency question once again in the news, I’m reposting my Wall Street Journal article from early 2009. (For a much longer treatment, see this paper.)
THE WALL STREET JOURNAL / January 26, 2009
Geithner Is Exactly Wrong on China Trade
The dollar-yuan link has been a great boon to world prosperity
by BRET SWANSON
Treasury Secretary-designate Tim Geithner’s charge that China “manipulates” its currency proves only one thing. Three decades after Deng Xiaoping’s capitalist rise, America’s misunderstanding of China remains a key source of our own crisis and socialist tilt.
The new consensus is that America failed to react to the building trade deficit with China and the global “savings glut,” which fueled our housing boom. A “passive” America allowed China to steal jobs from the U.S. while Americans binged with undervalued Chinese funny money.
This diagnosis is backwards. America did not underreact to the supposed Chinese threat. It overreacted. The problem wasn’t “global imbalances” but a purposeful dollar imbalance. Our weak-dollar policy, intended to pump up U.S. manufacturing and close the trade gap, backfired. Currency chaos led to a $30 trillion global crash, an energy shock, bank and auto failures, and possibly a new big government era. For globalization and American innovation to survive, we must first understand the Chinese story and our own monetary mistakes.
We’ve heard the refrain: China’s rapid growth was a mirage. China was stealing wealth by “manipulating” its currency. But in fact China’s rise was based on dramatic decentralization and sound money. (more…)
Climate Detective Gets His Mann
If you really want to understand the climate debate, you simply must read this book, by A.W. Montford, about a Canadian scientific detective named Steve McIntyre, who humbly but doggedly pursued the truth about the 1,000-year temperature reconstructions that generated the famed “hockey stick.”
The November 2009 email “hack” of Britain’s Climatic Research Unit that has generated so much recent news is only a brief epilogue. The real story happened day by day over the last decade as McIntyre, a retired mining engineer, and a his fellow Canadian Ross McKitrick, an economist, searched for, and then through, shabbily constructed data sets and magical algorithms, with surprising finds on almost every page.
As my friend George Gilder wrote:
The reader should know that the supposed email “scandal,” as described in the book, is in fact a rather trivial and even defensible part of the story. Few people are at their best in emails. What is shocking — and I use the word advisedly as a confirmed sceptic not easily shocked — is the so called science. I never imagined that it was quite this bad. It is shoddy beyond easy belief.
The hockey stick chart mostly reflects a defective algorithm that extends and inflates a few deceptive signals from as few as 20 cherry-picked trees in Colorado and Russia into a hockey stick chart that is replicated repeatedly through reshuffles of the same or similar defective and factitious data to capture and define two thousand years of climate history. These people simply had no plausible case and were pressed by their political sponsors to contrive a series of Potemkin charts.
Almost, but not quite, as surprising, was Montford’s narrative itself. Somehow he turned an esoteric battle over statistical methodology into a captivating “what happens next” mystery. British science writer Matt Ridley agreed:
Montford’s book is written with grace and flair. Like all the best science writers, he knows that the secret is not to leave out the details (because this just results in platitudes and leaps of faith), but rather to make the details delicious, even to the most unmathematical reader. I never thought I would find myself unable to put a book down because — sad, but true — I wanted to know what happened next in an r-squared calculation. This book deserves to win prizes.
Engrossing. Astonishing. Devastating.
Washington liabilities vs. innovative assets
Our new article at RealClearMarkets:
As Washington and the states pile up mountainous liabilities — $3 trillion for unfunded state pensions, $10 trillion in new federal deficits through 2019, and $38 trillion (or is it $50 trillion?) in unfunded Medicare promises — the U.S. needs once again to call on its chief strategic asset: radical innovation.
One laboratory of growth will continue to be the Internet. The U.S. began the 2000’s with fewer than five million residential broadband lines and zero mobile broadband. We begin the new decade with 71 million residential lines and 300 million portable and mobile broadband devices. In all, consumer bandwidth grew almost 15,000%.
Even a thriving Internet, however, cannot escape Washington’s eager eye. As the Federal Communications Commission contemplates new “network neutrality” regulation and even a return to “Title II” telephone regulation, we have to wonder where growth will come from in the 2010’s . . . .
Quote of the Day
“No moment in technology history has ever been more exciting or dangerous than now. The Internet is like a new computer running a flashy, exciting demo. We have been entranced by this demo for fifteen years. But now it is time to get to work, and make the Internet do what we want it to . . . .
“Practical business: who will win the tug of war between private machines and the Cloud? Will you store your personal information on your own personal machines, or on nameless servers far away in the Cloud, or both? Answer: in the Cloud. The Cloud (or the Internet Operating System, IOS — ‘Cloud 1.0’) will take charge of your personal machines. It will move the information you need at any given moment onto your own cellphone, laptop, pad, pod — but will always keep charge of the master copy. When you make changes to any document, the changes will be reflected immediately in the Cloud. Many parts of this service are available already.”
— David Gelernter, “Time to Start Taking the Internet Seriously”
Lawyerpalooza
Larry Downes, author of the excellent Laws of Disruption and a new colleague at the Tech Liberation Front, notes the proliferation of patent lawsuits in the mobile phone world and points toward this good graphic in the New York Times to help make his point, that “It’s both much worse and not as bad as it seems”:
Quote of the Day II
“Only someone who has Asperger’s would read a subprime-mortgage-bond prospectus.”
— Dr. Mike Burry, in an excerpt of Michael Lewis’s new book The Big Short.
This Year’s Office Pool
The Yo-Yos versus the Distavores. The HurriKeynes versus the Invisible Hands. And the team with more Monetary Madness appearances than any other — Stuff Happens. This was the scientific bracketology that determined the real cause of the Great Panic at the American Economic Association’s recent meetings:
(hat tip: David Warsh)
Quote of the Day
“…commercial real estate loans should not be marked down because the collateral value has declined. It depends on the income from the property, not the collateral value.”
— Ben Bernanke, Feb. 24, 2009, finally, if tamely, acknowledging the crucial role of mark-to-market accounting in the financial death spiral.
(via Brian Wesbury)
