The U.S. Court of Appeals for the DC Circuit – the same Court that will hear Verizon’s suit against the FCC’s Net Neutrality order later this year – came out with a ruling last week which may bolster the claim that the FCC violated Verizon’s First Amendment rights through its Net Neutrality regulations.

In National Association of Manufacturers v. National Labor Relations Board, the Court tossed out a rule by the NLRB which made employers presumptively guilty of unfair labor practices simply by not displaying government posters informing workers of their rights.

Interestingly, a centerpiece of the Court’s reasoning hinges on the fact that the First Amendment protects speakers from government-compelled speech.

How does this apply to the upcoming Net Neutrality case?

Well, in operating its networks, Verizon avers it is a “speaker,” possessing editorial discretion akin to a newspaper.  In its view (one I agree with), the Order – such as its no blocking and non-discrimination requirements – compels the network provider to take all (lawful) speech all the time, even speech it does not desire to have on its network.   Moreover, it forbids the provider from favoring or differentiating its content and offerings over others’, essentially compelling a free, unlimited right of access by third-parties to speak over the company’s “modern day microphone.”

The following quotes were taken from the NLRB ruling.  True – there are a number of other factors that will affect how the Court decides the case.  That said, these excerpts provide some modest insight into how the Court might approach Verizon’s First Amendment claim:

• P. 17 – “The right to disseminate another’s speech necessarily includes the right to decide not to disseminate it. First Amendment law acknowledges this apparent truth: ‘all speech inherently involves choices of what to say and what to leave unsaid.’”

• P. 17 – “Chief Justice Roberts, writing for a unanimous Court, put it this way in Rumsfeld v. Forum for Academic & Institutional Rights, Inc.: ‘Some of [the] Court’s leading First Amendment precedents have established the principle that freedom of speech prohibits the government from telling people what they must say.’”

• P. 17 – “As the Supreme Court put it in United States v. United Foods, Inc.: ‘Just as the First Amendment may prevent government from prohibiting speech, the Amendment may prevent the government from compelling individuals to express certain views…’”

• P. 18 – “The right against compelled speech is not, and cannot be, restricted to ideological messages.”

• P. 20 – “[E]ven in cases in which the message was other than one the government had devised, a ‘compelled-speech violation’ occurred when ‘the complaining speaker’s own message was affected by the speech it was forced to accommodate.’”

If the Court reaches the constitutional claim (which is not a given, as seen at 4:30 in this video), Verizon will succeed to the extent it can show it is more than merely a mute conduit; that it is in fact a “modern day microphone” – or certainly could be more of one – which has been forbidden from speaking as it sees fit, in its own fashion and at its own direction due to an FCC rule that cannot be constitutionally justified.

Last Friday it was widely reported that ESPN was looking to work with an un-named wireless carrier to subsidize smartphone users so that they could watch more of its programming without affecting the users’ data cap limits.  Groups like Public Knowledge immediately cried foul, calling it a clear Net Neutrality violation.

Let’s get this straight – it is not a Net Neutrality violation.

To be sure, on the wired side of the equation, Net Neutrality regulations are more stringent, potentially banning an ESPN-like arrangement.  On the wireless side, however, the rules are more relaxed, allowing (or even encouraging) this type of pro-consumer “discrimination.“  Consequently, if the ESPN deal is real, it simply reflects a practice widely employed in most all other segments of our economy to enhance consumer welfare – one likely envisioned by the Net Neutrality rule itself.

This fact really gets the “consumer interest” groups all in a lather.  They wanted rules so confined that the ecosystem (other than edge provider Google) couldn’t swing a cat.  The suggestion that network providers should be allowed to operate like any other aspect of the economy – that is, as they see fit, as long as they don’t plainly harm consumers – just flips their lid.

Don’t network providers know their place?

You see, the pro-Net Neutrality groups firmly believe that America’s broadband carriers are not part of the Internet.  To them, they are mere conduits, “dumb pipes” or digital sherpas, indentured to the service of the edge, ‘cuz that’s where all the innovation happens.  Moreover, the Net Neutrality rules (for wired and wireless providers) mean they may never stray from that role, remaining conduit-only companies…

…Forever.

Anti-free market advocate, Tim Wu, describes this Net Neutrality-imposed cage as some kind of benign bargain, noting:

Think of it this way: net neutrality, which sets all these prices at zero, is effectively a grand truce between the big app firms and the infrastructure providers. It eliminates an unnecessary middleman: consumers deal directly with content vendors and app firms. That’s a much healthier market dynamic than one driven by hidden, passed-on costs…

But what it really does is not so benign.  The rules place an outright ban on otherwise legal business models, agreements and partnerships that benefit consumers.  It puts such arrangements in a category of contracts that are so “evil” that they must be banned as a matter of public policy to “protect” the public.

Nothing could be further from the truth.

FTC Commissioner, Joshua Wright, seemingly agrees.  In his view, there’s simply no evidence in the Internet space that such arrangements harm consumers.

As Wright states:

At its heart, the Net Neutrality Order seeks to prohibit broadband providers from entering into vertical contractual relationships out of fear that they have an incentive to disadvantage rivals and ultimately harm competition…[But the] fundamental failing of the Net Neutrality Order is that it creates a categorical prohibition against vertical contracts without acknowledging the vast economic literature and empirical evidence that support the view that such vertical arrangements are usually precompetitive…[Further,]  there is no evidence that sufficiently shows that vertical contracts in broadband markets…are more likely to be anticompetitive than precompetitive…

The freedom to reach ESPN-like deals – or similar “discriminatory” agreements with other content, applications, device and service providers – should be the rule, not the exception.  We should want companies with the drive and resources to innovate as far as they can, unfettered by needlessly prophylactic regulations.

Why just today it was reported that ESPN and Twitter are working on an arrangement to bring video sports clips to the 140-character medium.  Gosh, wouldn’t it be great to see that in full 1080p (or higher, when that technology arrives) in a manner that both pleases consumers and manages limited bandwidth?  Wouldn’t it be cool if YouTube came to us without all the jerking, halting and jitters in 1080p – all the time, without any of those persistent QoS concerns?  Wouldn’t it be awesome if…

…You get the point.  Wouldn’t it be pretty darn terrific if Internet companies could be treated just like regular companies, allowing them to ”discriminate” or prioritize their services as consumers demand?

Net Neutrality hogties the whole ecosystem – from the network providers on down to the content, app, service and device makers.  Man, what a waste of a policy lever based on nothing more than fear.  We pay for “discrimination” / priority in every segment of our economy, like the mail, the airlines, shopping clubs, hot lanes, etc.  It makes these services better.

The Internet should be so lucky, too.

The following statement may be attributed to Mike Wendy, Director of MediaFreedom.org:

Alexandria, VA, May 10, 2013 – The Wall Street Journal reported today that sports programmer ESPN has taken an eye to subsidizing wireless data plans so that their users can watch, surf and play in unlimited fashion on their data-guzzling smartphones without running over some carriers’ data caps.

Because network management issues are more acute for wireless carriers, the FCC’s Net Neutrality regulations for such carriers allow for and even encourage this type of reasonable business-model discrimination.  While it is true that a Federal Court might eventually strike down the controversial regulation, policymakers would be wise to let this flower bloom.  Throughout our entire economy arrangements such as these benefit consumers.  There is no reason to believe that the vibrant broadband marketplace should be treated any differently.

If Net Neutrality somehow survives Court scrutiny, agreements like ESPN’s would represent an important Net Neutrality laboratory of sorts – one which legislators and policymakers could glean real-life lessons on the pro-consumer benefits from carriers operating beyond their ostensible Net Neutrality-defined role as passive-only communications conduits.  One hopes that in seeing these benefits, legislators and policymakers might then also see the need to eliminate, or at the very least minimize, the burden imposed on the rest of the marketplace by the myopic, 19th-Century oriented rule.

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You may remember that last year activist investors sought a shareholder vote from Verizon (and others), urging the company to “publicly commit to operate its wireless broadband network consistent with network neutrality principles” in a manner that does “not privilege, degrade or prioritize any packet transmitted over its wireless infrastructure based on its source, ownership or destination.”

Though wireless companies already operate under Net Neutrality regulations, these burdens are not as stringent as wireline rules, due in large part to FCC-recognized network capacity and management issues.

Nevertheless, the activists – i.e., all the usual suspects, like Free Press – wanted more tools to further hamstring network providers into becoming (one day, they dream) government controlled, owned and operated public utilities.

Why?

Well, why do they do anything?  Because in their view capitalism is immoral.  And Verizon’s networks are assets that are just too important to society to be controlled by private actors.

Not surprisingly, Verizon’s Board thought otherwise and came out strongly against the proposal, pointing out the folly of the scolds’ less-than-wise entreaty, stating:

…The proponents appear to have no concept of the negative technical and operational ramifications of requiring purely “neutral” routing of Internet traffic. This proposal would substantially interfere with the technical operation of Verizon’s wireless broadband network and have a wide-ranging and significant impact on Verizon’s business and operations. Among other things, the proposal would prevent Verizon from engaging in reasonable network management practices designed to address potential congestion, security and other wireless network problems and make the network more efficient and more widely available to all customers…

…Verizon already complies with the FCC’s net neutrality rules and voluntarily operates its wireless broadband networks in accordance with additional openness principles published on its website. The Board believes that the rigid operational requirements of this proposal will not further the “openness” of the Internet; to the contrary, it would expose Verizon’s wireless broadband customers to reduced service quality and security.

‘Nuff said.

Anyway, last year’s votes failed miserably, being crushed by shareholders.

Not having enough of a beating then, the activists were back at it again this year, albeit with a much more watered-down version of their Net Neutrality finger-wagging, essentially asking Verizon to study the implications of its Net Neutrality stance as it works to overturn the FCC’s rules in Federal Court.

Late last week, the shareholders overwhelmingly rejected even this watered-down version.

Again, Verizon’s Board rightfully urged rejection, noting:

…As a leader in developing an open architecture for the access to and use of the Internet, the Company’s position on all aspects of the “network neutrality” debate has been consistently and publicly conveyed in the mainstream and industry-related media, through online and traditional publications, in the development of technology standards, through legislative and agency fact-finding processes and in applicable agency and court filings, to name but a few of the forums in which Verizon participates.

In view of the extensive information that Verizon makes available about its approach to the public policy issues associated with network management, the Internet and network neutrality, the Board believes that the report requested by the proposal would provide no additional meaningful information to shareholders and would be a waste of corporate resources.

I’ll say, especially since the request was never meaningful in the first place.

Progressives like Susan Crawford love to play fast and loose with the term monopoly, especially as it pertains to the provision of broadband service here in America.   As she and others of similar mind see it, America is a nation of Internet service monopolies, dominated by cable companies.

What utter nonsense.

Regardless of how loud they yell their “truth” on all the NPR shows they can appear on, no such monopoly of the broadband market exists.  In fact, most data show exactly the opposite – that is, that we have a fiercely competitive broadband marketplace, which changes (for the better) almost daily.

Heck, even the most aggressively anti-Bell regulator – the DoJ – has admitted that there are at least four “national” broadband providers when they sunk the AT&T / T-Mobile merger a year-and-a-half- ago.  The broadband market has only gotten more competitive since.

And what of the ostensible dominance of the domineering cable companies?  Well, all the action of late is in mobile broadband, not fixed broadband. The latest FCC statistics reveal that “the number of mobile Internet subscriptions grew to 142 million, up 46% from December 2010.” In contrast to this, “the number of fixed-location connections increased by only 4% year-over-year, to 88 million.”  If cable, which is a fixed line, was so “dominant,” why aren’t consumers “choosing” it with the same or greater gusto as mobile broadband?

I could stop there, but I won’t.

Late last year in a little noted filing to the FCC, the U.S. Telecom Association hinted that the idea of the monopoly-provided communications provider – the so-called “dominant” incumbent – has truly become a vestige of the past.  In its view, the 19^th Century regulations designed to ensure that dominant players didn’t use their natural advantages to harm the marketplace no longer serve consumers and should be eliminated.

Why?

Because “traditional” phone companies are no longer just “voice” companies anymore.  They’re dead or dying.  Nearly 40% (and growing) of America has cut that cord and has opted instead for mobile broadband or other Internet services to meet their diverse communications needs.  Today, incumbents face such stiff competition from facilities-based and non-facilities-based competitors that regulating incumbents like it was 1934 only punishes their investment, harming consumers by needlessly distorting the marketplace.

Importantly, the upshot of this is that no one is dominant.  No one has control.  The ability to bend a market to one’s liking is virtually impossible. For voice and for Internet services.  Incumbents are just one player among many in each market, offering their services to hungry consumers in the crowded, converged communications marketplace.

It’s easy to see how one could draw this conclusion.  Recent government and industry data show:

• There are 1,681 U.S. broadband providers;
• 99% of the U.S. can access at least one wireless broadband provider;
• 96% of the U.S. has access to at least one wired broadband provider;
• 88% of the U.S. has access to at least four mobile broadband providers;
• 87% of the U.S. can choose between at least two wired providers; and
• To access broadband, Americans can choose between an array of connection technologies, such as DSL, cable-coaxial, fiber, 3G and 4G mobile broadband, broadband over powerline, WISPs, satellite and Wi-Fi offload (not to mention what’s coming down the pike).

Contrary to the stagnation one would think would be evident in monopolistic markets, the U.S. broadband marketplace proliferates.  It continues to bring higher average and peak broadband speeds, new ways to connect to those speeds, more broadband availability to more people, increased service options and offerings, and overall better dollar value to U.S. broadband consumers with each new year.

Further, the broadband ecosystem continues on its explosive upward trajectory, too, with new content, software, applications, services and hardware developments emerging from the industry seemingly on a hourly basis, goaded in no small measure by America’s world-class broadband infrastructure (which, by the way, is even better than that of the progressive’s Big Government paradigm, Sweden).

Remember those good ole, true monopoly days?  I do.  Susan Crawford should, too.  Growing up we had a single “kids” phone lodged on a chest between all of our bedrooms – a state-regulated, yellow princess model.  We went head over heals because it was touchtone instead of rotary dialing…and it had call waiting (oooh, ahhh!).

What luxuries!

Now, I have a smartphone / mobile computer.  So does my wife.  And the kids will get their own soon enough.   If America opens NASA again, we’d probably be able to launch one of their spacecraft with our smartphones (really).

In a “nation of monopolies,” princess phones and call waiting is about as good as it gets.

Contrary to the fallacious assertions of some, in just about any U.S. market, broadband consumers have six different broadband choices from which to pick.  Last I checked, mono (as in monopoly) meant one, not six.  But, if six players is the new definition of monopoly, bring it on!

Consumers win.

Fiber to the Home (FttH) is no doubt tremendous technology, giving life to Internet-based services that need blinding speed. Some believe it is so good, in fact, that they have called it “future proof” and have thus demanded it replace most Internet transmission technologies currently used today. In their view, FttH is peerless, with all other of today’s technology holding back the Internet’s “true” potential.

The evolution of technology – as seen in the exploding growth of the broadband wireless market – offers a rebuttal to that position. In the following video, CEI’s Fred Campbell explains why FttH may not be as “future proof” as many think, and, accordingly, he urges policymakers to have more faith in the “creative destruction” of technological innovation to serve markets and society.

Last Thursday here in Washington, Senator Marco Rubio addressed the techpolicy faithful at the Free State Foundation’s annual Spring policy conference.  In the video below, Less Government’s Seton Motley provides some brief analysis, with the Senator’s excerpted remarks following.

Most Americans go about their busy day un-tethered to a desktop PC and fixed broadband line. If we need information from the Internet while on the go, a mobile device, such as a smartphone or a tablet computer, have become our go-to tools to help us out.

According to the FCC, America has 142 million mobile Internet connections compared with 88 million fixed-location connections.  Enabling these mobile connections, Pew estimates that 45% of American adults have a smartphone (at ~104 million), and 31% have tablets (at ~ 72 million).

As the FCC notes, “growth is particularly high in mobile Internet subscriptions.”  A recent PC Magazine article suggests this may be due to “mobile-focused consumers looking to fulfill their needs with a smartphone or tablet rather than a desktop computer or even a laptop.”  Desktops and laptops tend to demand a fixed-location connection to access the Internet, whereas smartphones and tablets do not.

About those mobile-focused consumers. This apparent shift should have important implications for the pro-consumer growth of U.S. broadband services.  As the market seems to be telling us – there’re substitutes to fixed broadband.  Powerful ones, with more coming down the pike all the time (such as LTE advanced).  Consequently, this dynamism will push the marketplace – all providers – toward new and competitive ways to offer broadband to consumers.

Where markets are dynamic and competition thrives, the need for regulation should remain low, giving consumer-oriented innovation a better chance of flourishing.

Or, one would think.

Enter controversial Internet activist and ex-Obama official, Susan Crawford.  Through her new writings, she has re-emerged as an outspoken advocate of outdated 19^th Century ideologies to guide the development of our 21^st Century communications infrastructure.

In her pessimistic view, our broadband marketplace is broken, with Americans getting anemic services at exorbitant prices.   That’s because cartels of “evil,” profit-minded corporations have no incentive to give us what we “truly need” for a “better,” more “fair” society.

Not surprisingly, Crawford pooh-poohs wireless broadband, believing smartphones and tablets are no substitutes to PC’s connected to fixed-location broadband services.  As a result, she stridently calls for the government-driven spread of taxpayer-supported, “future proof” wired gigabit networks as one way (among a phalanx of other 19^th Century mandates) to rectify our broadband “crisis.”

Amazingly, her anti-market suggestions haven’t just evaporated into the ether like so much other hot air.  The FCC seemingly agrees, and has itself gotten in on the gigabit “vision” thing, too.

In January, FCC Chairman, Julius Genachowski, issued a Gigabit City Challenge, calling for the creation of at least one wired, gigabit network in each state before 2015.  In February, he doubled down on that by giving a rare, perhaps even unusual, warning to state legislators, hectoring them to avoid interfering with the development of taxpayer-supported broadband networks (such as those that could be gigabit enabled) if local residents approved them.

Now, I could go on and on about how government-subsidized gigabit networks harm the marketplace and local citizens.  But I won’t.  It’s beside the point.  Rather, what’s really disturbing here is that the FCC’s Gigabit City Challenge and other pro-regulatory actions (like Net Neutrality) are emblematic of a larger problem.  They start from the assumption that the market is broken.  And worse yet, even when things are good – which they are – market control through regulation is somehow always required.

It’s a sort of heads-they-win, tails-the-marketplace-loses scenario that can only ever lead to “market fixing” mandates and proscriptions.

That’s because Crawford and our agency “leaders” now in Washington are essentially tech Eeyore’s, ceaselessly bemoaning their belief that what’s getting produced in the marketplace “will never work.”  That only their ideas of what’s “future proof” is what matters, and the market be damned!

But wait a minute! If Crawford and her ilk can’t / won’t see that wireless broadband is an important substitute to fixed-location broadband, what else can’t / won’t they see?  I mean, why should we trust their 19^th Century “vision” when the marketplace seems to show otherwise?

The answer is, we shouldn’t.

Quite simply, U.S. broadband is an American success story.  15 years of largely unabated, private investment has allowed Internet access to reach over 98% of America. In more than 85% of the U.S. we have at least two wireline, facilities-based providers of broadband.  And, there are at least four “national” facilities-based wireless carriers for consumers to choose from.  Moreover, there are numerous ways to access the Internet via broadband facilities, such as DSL, 3G, 4G, cable, cable-fiber hybrid, FiOS, broadband over powerline, WISPs, wi-fi and satellite.

This growth – fostered by less 19^th Century regulation, not more of it – continues to improve to the benefit of consumers and society.

We should ignore the sad ruminations of the tech Eeyores currently in power and heed the market’s guidance instead.  It has a far greater chance of sustainably boosting consumer and societal welfare than outdated, 19^th Century thinking, the latter of which would tether our progress to a fixed-location – the past – rather than onward.

Tech Eeyores may be fine for Winnie-the-Pooh’s world on Hundred Acre Wood.  But out in the real world, their “answers” are about as solidly attached as Eeyore’s oft-errant tail.

Such child’s fantasy should not guide U.S. broadband policy.

A lot of hype has emerged lately surrounding Google’s new head-mounted computer called Google Glass.  But, as Precursor, LLC’s Scott Cleland notes in the video below, there’s more than meets the eye with Google’s latest privacy-challenging product:

Less Government’s Seton Motley believes the President’s Cyber Security Executive Order should be undone by new law from Congress.  However, CISPA is not the answer.  Rather, Motley feels Congress should craft something simple that lets the private sector share information, and which brings the government in, consistent with 4th Amendment safeguards, primarily to investigate, bust and stop malicious hackers as identified by private-sector actors.

Check out this video: