Re: PFF Agenda [cr-95/9/4]


Sender: "Craig A. Johnson" <•••@••.•••>

Kurt Guntheroth wrote:
> There are people on this list who are so afraid that a monopoly
> might dominate cyberspace that they are unwilling even to consider
> market pricing of content or service.  I don't know what these
> people propose instead, or even if they have a plan.  If their plan
> involves running into the arms (jaws?) of government, I cannot
> recommend it as an improvement.

I do not advocate "running into the arms (jaws?) of government,"
with the exception of a few areas.  I think the Senate bill's
universal service provisions were far better than those in the House,
with which we will probably saddled.

If you've read my articles posted to this list from The
American Reporter, and other postings, you will know that I try to
work with specifics rather than bleary-eyed  abstractions.

> I want to see the following principles in whatever system keeps my
> net feed alive.
>  1  Common carriage; all data of a given class moves for the same
>  price and service cannot be denied on the basis of content

This does not exist now for data.  Information and data
services are not regulated by the Commission.  There are however
present controls on pricing of basic services, so-called "rate of
return" regulation.  That will be eradicated in the new act.  As for
content, it's still a game that can't be called.

>  2  Symmetrical connection; any node may be the source of any data
>  stream

These interconnection and access requirements are part of the new
legislation with some exceptions.  The Senate bill for example, does
not guarantee the same access for "information service providers" as
it does for "telecommunications service providers."

 3  Privacy; choice of encryption left up to endpoint nodes

Of course, as we know, the government doesn't swallow this, and is in
the process of cramming Clipper II down our throats.

> 4  Authors (and other owners) deserve compensation for their works

I'm not sure of the referent for this statement, but intellectual
property rights are the thrust of the new report on Intellectual
Property and the NII being distributed by the Patent and Trademark

5  Authors (not carrier, not viewer) are liable for illegal content

This depends on what is adopted in the conference bill, and the
evolution (or devolution) after that.  As it stands, either Exon or
Mr. Hyde's item no. 41 of the Manager's Amendment or even Cox-Wyden
could criminalize carriers and users.

> Guess what, much valuable content is owned by the people who created
> it.  Much other valuable content is purchased so that a revenue
> stream can be derived from it.  I will presume Mr Johnson believes
> that people who create valuable content ought to be compensated for
> their labors. So it is inevitable that if we are to have much
> valuable content, we'll have people including big corporations,
> making decisions about pricing. I cannot look on this as inherently
> evil, even if it means I have to pay for certain bits that I in my
> greed wish would be given me for free.

This is largely a non sequiter.  I did not imply anything other than that people
should be
compensated.  My statement was in response to what I saw as your
pollyanish portrayal of how the market works.  I am not saying it is
"inherently evil."

You wrote:

> "Free market" capitalism has the same advantage as the internet;
> distributed control.  Nobody makes central decisions about load or
> content on the internet.  Nobody makes central decisions about price
> in the market.

I was pointing out that "central decisions" are, and increasingly,
will be made by large corporate conglomerates.

> >Internet founding father and MCI Net wizard Vint Cert is talking
> >about "differential charges for...different classes of service,"
> >while still trying to hang on to a "best efforts" model which is
> >"rather flat while showing more sensitivity for the high resource
> >services."
> >While Cerf opposes pricing by the packet, there is no question,
> >according to Cook and others that an Internet world where charging
> >for resources consumed, the type of process used, and the size of
> >the pipe is in the offing.
> And guess what, transmission of usenet groups costs differently than
> transmission of live video feeds (if you want high fidelity).  If we
> are not to charge different rates for different classes of service,
> then we will have usenet readers subsidizing the cable company, or
> vice versa.  I want to hear Mr Johnson or other readers explain in
> what way this is fair.

I did not argue against differential pricing, in fact I think I agree
with Cerf that it is necessary, if not entirely desirable.  He
thinks relatively flat rates for Internet services will probably

I absolutely agree that a TCI providing Usenet services should not
price these to subsidize their cable operations.  This is an
important point and one that bears more investigation.  This is very hazy in the
proposed legislation.

> What we can't have is a situation where the 500 channels of Lucy
> reruns we've been promised are transmitted for one fee structure,
> and my home video feed is transmitted for another, higher fee
> structure.  All bits of a given class must be alike.

I'm a little unclear what you mean by your "home video feed."

But this will in general depend on the companies competing to offer the
feeds.  They can charge any price they want, which is the
meaning of competition.

 > >Gee Kurt, have you read any of the proposed telecom
 > >deregulationlegislation lately?  I think Exon, Coats, Dole, Grassley,
 > >Hyde, and a host of others would heartily agree with you on your
 > >free market riff but they don't seem to apply that to content.
 > >Hmm, wonderwhy.

> I an not so naive as to believe that a free market is likely to
> exist without maintenance.  I'll challenge you to answer these
> questions:  1 What principles do *you* think ought to control
> the way bits are  priced  on the net?  Can you outline means
> to achieve them in the real  world you think is so hard on
> free markets.  Can you make your principles palatable to
> authors, viewers, and service providers?  Otherwise they will
> not come to the party and your dream net will never exist.

I don't have any answers to the bit-pricing problems yet, but there
are experts working on the issue.   As I said, I think Vint Cerf's
idea is probably reasonable and would not destroy the Net as we know
it.  In general, for consumers, I most definitely do not think we
should advocate pricing by the bit or packet.  For corporations which
use large quantities of bit space or forwarding resources, then, as I
understand Cerf, he is calling for a more usage-sensitive pricing

>2  What safeguards could be put in place that would make market
>pricing  in cyberspace palatable?  Limits on ownership of
>information or  transmission?  Limits on cross-ownership of both?
>Enforcement of anti-trust law?  Definition in law of
anticompetitive actions or situations?  (I hate the telecom bill
>too.  How do we deal  with the reality of capitalism without
>succumbing to its more obvious dangers?)

These are good questions.  As it now stands, there are virtually no
"safeguards" in place on pricing of "information services."   I'm not
sure what you mean by "limits on ownership of information or
transmission."  Anti-trust laws have not been de-fanged; the recent
DOJ investigation of Microsoft is a case in point.  Microsoft is
still subject to scrutiny with regard to its Microsoft Network.



Sender: •••@••.••• (Allan Bradley)

>Glen Rapheal Sept. 20 wrote:
>The phone company was a perfect example of a regulated, government-created
>monopoly. This is basically the worst of both worlds; in such a situation
>you get lousy service and high prices and it's ILLEGAL to start a competing
>service! Free market advocates think that the government should never
>prevent people from entering an industry, whether that industry be the
>national phone company, a local phone company, a local taxi franchise, a
>local cable franchise, or first-class mail delivery. The country started
>out with multiple competing phone services, but the biggest player was able
>to convince the government to lock out competition in that market. That was
>the first mistake. Breaking it up was an attempt to rectify the mistake.
>Most of the monopolies that really are abusive have been
>government-protected monopolies, not the result of free competition. This
>is exactly what we don't want to have happen in telecommunications, and
>that is why I want to remove the current governmental barriers to entry in
>that market. We need to let anybody who wants to start a phone or cable
>company, do so. Yes, this will allow big players to compete. It will also
>allow small players to compete. Either is better than the status quo in
>which NOBODY is allowed to compete!

I agree with the general content of this statement. However, I think the
thing to keep in mind is that there are fundamental property elements to a
"free market" and what is perceived as competition is extremely subjective
in this case - Based on one fundamental aspect and that is:  taking a free
market - turning it into a government monopoly - and then turning it into a
free market again; Is it the same as it was initially? I don't think so,
because the fundamental base playing field is so imbalanced.

If I am, hypothetically speaking, ABC company and I know that I have to
modernize and multi-media is the manna needed in order to for me to grow
and get my message across to my market - I see information services as a
mechanism for survival.  I also see that I need communications pipes and
the bigger the better and the more distributed the better.  So who do I
need to partner with in order for me to get the most market advantage and
effort. Who has the perceived communications power? Is it that new start-up
local loop phone company? Is it a Long Distance Company which may not be as
intimate to my needs as I would like and going through changes? Is it the
Internet which does not really have the pipes to give me that advantage?

It will be the phone company who has the perceived distribution power,
whether it is real or not.  I want the local phone company to be my
partner, because their advantage is my advantage and they seem to own most
all of the pipes and they know who I am.

So maybe all is not equal in the world of supply and demand, thats the
nature of the beast and I don't really think anything can be done or
necessarily should be done.  Some will die some will live and life goes on.

Now let's take that local government, healthcare system, school system,
etc. struggling to define its future in the information world and apply
this model.  Do I need to partner with the player with most dynamic
advantage in a new and confusing market.  I don't have money, but I do have
property rights.  I have a pathway to students, healthcare, local community
constituents and since they have no choice but to use our social services
they are a closed focused demographic. Do I barter their interests or
perceived interests in order to relieve my budget issues and survive either
for political or social reasons? Or maybe I want to run for office.

There two different issues.  One is the model of free enterprise the other
is the model of a free democracy.  There is a conflict that de-regulation
in the communications industry will not solve.  The public trust needs to be

ConsulMetrix, Inc.
Setting the Standards in Technology Consulting

 Posted by --  Andrew Oram  --  •••@••.••• --  Cambridge, Mass., USA
                 Moderator:  CYBER-RIGHTS (CPSR)

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