more on FCC adopts rules for broadband over power lines

[David Farber <dave () farber net>]

9last of tread djf)

Begin forwarded message:

From: Gerry Faulhaber <gerry-faulhaber () mchsi com>
Date: October 16, 2004 5:53:26 PM GMT+01:00
To: dave () farber net
Subject: Re: [IP] more on FCC adopts rules for broadband over power 
lines

Dave [for IP, if you wish to continue this thread]--

Well, cable/RBOCs/power firms are certainly monopolies in their core 
business, but not in BB, which is the market under discussion.  Mr. 
Glass has shifted the argument to cross-subsidy, suggesting that firms 
with monopolies in one market will cross-subsidize their new 
competitive businesses with their old monopoly ones (something that 
virtually  all firms do, funding new ventures from existing cash flow). 
 Lots of economic theory suggesting this is worse for regulated firms 
(like power distribution companies and ILECs) and, big surprise, 
regulators have known this for years and have safeguards to protect 
against this (imperfect, of course) . Microsoft has the freedom to do 
this (as does any other unregulated firm), so what's the beef (the case 
against MS, incidentally, was *not* based on cross-subsidy?  This is 
business as usual, except that regulators forbid it for regulated 
firms.

"The FCC clearly did this [get spectrum out] for broadcasters..."  
Whoa! This was done in the '30s and '40s (although there was the huge 
DTV spectrum giveaway in the mid-'90s), but let's be clear: it was 
Congress, not the FCC, who gave away spectrum to the broadcasters, and 
most of us in the spectrum debate view this as the bad old days that we 
want to change.  Yes, Congress was the broadcasters' Mommy, and you 
don't have to be a genius to figure out why.  But don't blame the FCC 
for a Congressional action.

The idea that it's big firms buying spectrum to foreclose competition 
cries out for evidence of this.  You state that cable and DSL 
competition has driven prices so low that wireless BB can't compete 
(remember "monopolies"? They drive prices up, not down) .  Well, that's 
wonderful for me.  What are you proposing?  To push BB prices back up 
so that you can profitably offer wireless BB?  No thank you.  I'll take 
the (alleged) low prices (tho I really don't agree with that premise: 
in Japan, 10 Mb/s DSL costs $20/mo).

Yes, I think they are "running with the Big Dogs"; Mr. Glass reminds us 
of MS v Netscape, and how they couldn't keep up, and was that fair?  
Well, when you enter the market, it doesn't say "fair" on your 
admission ticket.  When MS went after Netscape, Netscape was frozen 
like a deer in the headlights. It's most effective weapon were 
legal/political maneuvers which failed.  How come we never talk about 
firms that compete successfully against MS, such as Adobe and Intuit 
(to name just two).  Bottom line: if you can't purchase your inputs 
(i..e., spectrum license) at a price at which you can compete, then 
this is not a good market for you (re: Harry Truman: "if you can't 
stand the heat, get out of the kitchen").  But somehow, I think others 
will make wireless BB work, even if Mr. Glass does not.

Excellent point that you can't repeal the laws of physics (any more 
than you can repeal the laws of economics).  Commons advocates have 
been pushing for more commons, alleging that new technology will make 
old ideas about interference obsolete.  Well, maybe.  Perhaps you 
should speak with them directly.  I've long suspected that this might 
well be smoke-and-mirrors.

Incidentally, there are only a few economists advocating commons, and 
none of them are those "who tend to take positions that favor large 
businesses." Quite the opposite, in fact.

----- Original Message ----- From: "David Farber" <dave () farber net>
To: "Ip" <ip () v2 listbox com>
Sent: Saturday, October 16, 2004 11:58 AM
Subject: [IP] more on FCC adopts rules for broadband over power lines


> Begin forwarded message:
>
> From: Brett Glass <brett () lariat org>
> Date: October 16, 2004 4:34:57 PM GMT+01:00
> To: dave () farber net, Ip <ip () v2 listbox com>
> Subject: Re: [IP] more on FCC adopts rules for broadband over power 
> lines
>
> Dave:
>
> For IP; it's important to respond to and correct some of the assertions
> made in responses to my original posting.
>
> Gerry Faulhaber writes:
>
> > "...three large, entrenched monopolies"?  Just a reminder: monopoly 
> > means one firm, not three.
>
> Exactly. They are each already monopolies in a different product area.
> Which means that each can use its respecive monopoly to subsidize 
> expansion
> into others -- in exactly the same way that Microsoft leveraged an
> operating system monopoly to dominate other markets. It will be the
> rare and lucky customer, however, who can obtain broadband from any
> of the three. In the vast majority of cases, there will be only one
> or two. And where more than one exist, there is more likely to be a
> comfortable oligarchy than competition.
>
> > Not getting spectrum out at prices ISPs can afford for wireless BB?  
> > Is the FCC supposed to be the ISPs mommy?
>
> The FCC clearly did this (and still does it) in the case of broadcast
> radio and television. Those businesses would simply not be feasible if
> it did not. Is the FCC being THEIR "mommy?"
>
> > The licensed spectrum will go at auction and those who value it most 
> > will get it.
>
> It would be more accurate to say that those large corporations which 
> most
> value foreclosing competition from wireless broadband, or who want to 
> use
> it for things which are more profitable than wireless broadband (cable 
> and
> DSL have pushed prices for broadband so far down the learning curve 
> that
> even cell phones are far more profitable) will get it.
>
> > If ISPs think it's valuable for wireless BB that will be reflected in 
> > their bids.  If they don't, they won't, and they'll be out of the 
> > game. They are running with the Big Dogs; if they can't keep up, 
> > tough.
>
> Should the same have been said for Netscape? Other companies which 
> Microsoft
> destroyed by leveraging its other existing monopolies?
>
> > And complaining that WiFi is in Part 15 spectrum so that there is 
> > potential interference from cordless phones?  Good God, the tech 
> > community has been championing commons spectrum, telling us how 
> > technology will solve the interference problem.
>
> A few outspoken individuals have been making this claim without either
> scientific proof or real life experience, and many economists -- 
> especially
> those who tend to take positions that favor large businesses -- have 
> swallowed
> it. I wish it were true; however, as an electrical engineer who has 
> been
> working on real life wireless broadband since 1983, I believe that I am
> eminently qualified to state that it is unsupported demagoguery. Real 
> life
> wireless broadband providers, who are out there in the trenches, know 
> this.
> The simple fact is that, under the current regime, wireless broadband
> providers cannot offer service which comes anywhere near the 
> reliability of
> a wired or fiber connection at a cost that is competitive with them. 
> (They
> could at extremely high cost -- if they were to outbid the cell phone
> companies for spectrum. However, due to the low geographical 
> granularity of
> the auctions and the absurdly high amounts bid, no WISP can buy 
> spectrum at
> a cost that allows it to compete.)
>
> > And now we are whining that there's interference at 2.4 GHz?  No 
> > kidding; what do you think happens in a commons?
>
> To state this fact isn't "whining;" it is recognizing that the FCC is
> precluding competition by not doing for wireless broadband the same
> things it has been doing for decades for over-the-air broadcasters.
>
> > Rather than whining that ISPs don't have dedicated spectrum for BB, 
> > why not actually implement the tech community's claim to be able to 
> > solve interference with appropriate hardware/software protocols so we 
> > can use commons/Part 15 spectrum?
>
> Because this claim is provably false. As James Doohan famously quipped,
> "Ya canna change the laws of physics, Captain." Any increase in
> robustness, given the same limits on bandwidth and power, MUST come at
> the expense of a decrease in throughput. Which is exactly what is now
> happening on the various Part 15 bands. We now see systems like 
> Motorola's
> Canopy, which offer less throughput than others (and, hence, make less
> efficient use of spectrum) but are designed to be the "last system 
> standing"
> when multiple providers compete for the use of the Part 15 spectrum.
> The only way to compete with this strategy is to design a system which
> is more robust but slower and more inefficient still! This is what
> happens in a commons where there are no holds barred: everyone loses.
>
> Real life commons that work have sensible rules. Highways are divided 
> so
> that traffic traveling in opposite directions is in different lanes. 
> Lanes
> are reserved for emergency vehicles and carpools. It isn't legal to
> knock someone else's car off the road and take over. Part 15 has
> no such rules, which is why there is currently bedlam on the airwaves
> in the unlicensed bands. I know; as a wireless ISP, I deal with it 
> every
> day. I've developed one of the most reliable systems in existence, and
> it's still nowhere near reliable enough. The FCC rules preclude it.
>
> --Brett Glass
>
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