Updated on January 18th, 2010
“We’ve analyzed their attack, sir, and there is a danger. Should I have your ship standing by?” Commander #1, Star Wars (1977).
Consumers love the Kindle. And what’s not to love? It reads like paper and lets consumers download books using 3G wireless networks with no monthly fees, no annual contracts, and no hunting for free Wi-Fi hotspots. The consumer doesn’t have a billing relationship with the wireless carriers at all; the 3G network costs are instead borne by Amazon, who presumably builds this cost into the price of its e-books. From the consumer perspective, use of the 3G wireless networks is “free.” Consumers love free, which likely explains in part why the Kindle was the “most wished for” and “most popular” holiday gift at Amazon this season. Read the rest of this entry »
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3G Amazon FCC Kindle Net Neutrality NPRM
Updated on January 11th, 2010
“The Force is what gives a Jedi his power.” Obi-Wan Kenobi, Star Wars (1977).
The FCC derives its power from Congress. For an FCC rule to have the force of law, it must fall within the scope of the authority Congress has delegated to the FCC. (See American Library Ass’n v. FCC, 406 F.3d 689, 691 (D.C. Cir. 2005).) One problem with the FCC’s proposed net neutrality rules is that they attempt to exercise more power than Congress has given the agency. Although it’s been a long time since I’ve indulged in a jurisdictional analysis, I’ll do my best below to explain why the FCC lacks jurisdiction to enact its proposed rules.
In the net neutrality NPRM, the FCC indicates its intention to rely on its “ancillary jurisdiction” to impose net neutrality rules on broadband Internet access service providers. (NPRM at paragraphs 83-87.) To exercise ancillary jurisdiction, the subject of the regulation must be reasonably ancillary to the effective performance of the Commission’s various responsibilities for “something.” (See Comcast Network Management Practices Order at paragraph 15.) In the Comcast Network Management Practices Order, the FCC found jurisdictional “somethings” in sections 1, 201, 230(b), 256, 257, and 601(4) of the Communications Act as well as section 706 of the Telecommunications Act of 1996. In the NPRM, the Commission adds Title III generally to the mix of potential statutory “somethings” underpinning its ancillary authority. Read the rest of this entry »
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broadband Comcast FCC Net Neutrality Network Management NPRM Wireless Mobile Broadband
Updated on January 8th, 2010
“I’m Luke Skywalker, I’m here to rescue you.” Luke Skywalker, Star Wars (1977).
What’s the difference between innovation and investment? I find myself pondering this question frequently these days. Over the past ten years or so, the FCC focused on encouraging “investment” in “infrastructure” based on the previously fashionable view that the United States needed to build more broadband infrastructure. Lately, however, the FCC seems more concerned about “innovation” than the other two little “i” words, investment and infrastructure. So the FCC has decided to rescue “innovation” through prescriptive net neutrality rules.
But, what is “innovation” (and is it really in trouble)? The dictionary included with OS X says innovation is “a new method, idea, product, etc.” In other words, an “innovation” is anything that is “new.” For the pro-net neutrality folks, however, innovation isn’t defined nearly so broadly. No, for the pro-net neutrality folks, innovation means new Internet applications. In their way of thinking, the billions of dollars of investment being made to develop and deploy new OFDM-based (WiMAX and LTE) wireless broadband infrastructure is not innovative. Let me show you what I mean.
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FCC Infrastructure Innovation Internet Applications Investment Net Neutrality NPRM
Updated on January 5th, 2010
“You don’t know how hard I found it, signing the order to terminate your life.” Governor Tarkin, Star Wars (1977).
With all of the emphasis on technology innovation in the net neutrality NPRM, it hardly mentions innovation in business models. Perhaps business model innovation is simply underappreciated in an era in which shiny new technologies are introduced so frequently. Knowledge@Wharton has said that “[o]ne of the most common misconceptions is that innovation is primarily, if not exclusively, about changing technology.” As the FCC recognized in its Wireless Innovation NOI, however, companies innovate with their business models as well as with their products and services, and use business model innovation (“BMI”) to achieve and sustain competitive advantage. Indeed, a majority of executives now believe that BMI is even more important to creating new and differentiated value than product or service innovation. According to Samuel Palmisano, “with product [or service] innovation, it’s a certainty that your competition is shortly going to copy what you have done. . . . With business-model innovation, though, if you can come up with a unique way of doing things, it’s much tougher to react to.” Technology alone is not the fundamental engine of innovation.
Technology and business model innovation typically occur together. This can be seen in the mobile wireless broadband market, where the technological transition to next generation mobile wireless broadband is driving tremendous business model innovation and experimentation. As a result, mobile wireless broadband platform providers are experimenting with many different business models as they try to determine how to best leverage new mobile wireless broadband technologies and differentiate their services from competitors. The (non-exhaustive) mobile wireless broadband business models outlined below demonstrate the diversity in innovative business approaches to this market. Read the rest of this entry »
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Updated on January 3rd, 2010
“These aren’t the droids you’re looking for.” Obi-Wan Kenobi, Star Wars (1977).
Here begins an analysis of the FCC’s proposed net neutrality rules. Because the topic is so large, I’m breaking this analysis into a series (although I haven’t yet decided how many parts there will be). I won’t promise that the analysis will be comprehensive, as I intend to focus on the points I find most interesting, but I will try my best to keep using some of my favorite Star Wars quotes as bookends.
I begin with the scope of the proposed rules. According to the NPRM, the proposed rules are merely a “codification of the existing Internet policy principles,” albeit with two additions. But the rules as proposed are vastly more limited than the existing Internet principles. The existing principles are broad and consumer-centric. They say that “consumers are entitled” to (1) access lawful content of their choice, (2) use the applications and services of their choice, (3) connect their choice of legal devices, and (4) competition among network providers, application and service providers, and content providers.
The proposed net neutrality rules don’t mention consumers. Instead of focusing on what consumers can do, the proposed rules focus on what providers of “broadband Internet access service” can’t do. The FCC says this “would make clear precisely who must comply and in what way.” What the FCC doesn’t say is that the rules would also make clear that all of the other essential participants in the Internet ecosystem would have no obligations at all.
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