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Wu: Watch Out for OPEC 2.0

Calls on feds to open up spectrum

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All the big newspapers have an editorial about Net Neutrality today, and the New York Times seems to be the only one running anything on the pro-side. Net Neutrality visionary (he coined the phrase) Tim Wu’s editorial, entitled OPEC 2.0, compares bandwidth to oil—a necessary good tightly controlled by a few powerful entities.

Wu’s thesis:

"Just as the industrial revolution depended on oil and other energy sources, the information revolution is fueled by bandwidth. If we aren’t careful, we’re going to repeat the history of the oil industry by creating a bandwidth cartel."

Surprisingly, Wu’s new tack on the bandwidth issue wasn’t a call for more regulation, as critics have often assailed, but less. Wu proposes the federal government open up spectrum to create wireless broadband competition. Wu criticizes the government’s "Soviet-style rules" that result in a lot of wasted spectrum. Up to 90 percent goes unused at any given moment.

The idea, then, is decidedly anti-regulatory in that it removes tight government controls of spectrum and encourages broadband competition. The current environment favors a few powerful, bandwidth-controlling companies who stand to profit immensely from doling the bandwidth out. Few alternatives aside from wireless ones have presented themselves as a solution.

Detractors predictably seized Wu’s analogy from the start, excitedly noting OPEC is a government-run cartel, not a free-market cartel. One could argue the current group of ISPs don’t really operate in a free market, especially with the government’s own forced scarcity model regarding bandwidth.

Regardless of whether Wu’s analogy was apt, and it’s likely it’s not as apt as it is eye-catching, the Progress and Freedom Foundation went on the attack against Wu’s proposal and subsequently destroyed previous anti-neutrality arguments put forth in the process. ISPs have argued that aggressive network management is necessary for distributing scarce bandwidth. Hence Comcast’s need to throttle p2p, and all those insanely high data and voice plans for wireless devices.

The PFF goes after Wu’s analogy by pointing out that bandwidth hasn’t gotten scarcer or more expensive. Instead, the opposite has occurred. Bandwidth is infinite and getting cheaper all the time because of it.

"Unlike natural resources such as oil," writes Bret Swanson, "which, while abundant, are at some point finite, bandwidth is potentially infinite. The miraculous microcosmic spectrum reuse capabilities of optical fiber and even wireless radiation improve at a rate far faster than any of our macrocosmic machines and minerals. It is far more efficient to move electrons than atoms, and yet more efficient to move photons. Left unfettered, these technologies will continue delivering bandwidth abundance."

So what he’s saying is bandwidth scarcity is a notion invented by internet service providers and wireless providers to jack up prices and provide excuses for interfering with competing services on their networks. Nice. In a weird way, Swanson focuses so hard on disproving Wu’s analogy one way, he misses how the analogy is proved in another: a few organizations (government or not) controlling an important resource and forcing artificial scarcity in order to control the market for that resource is called a cartel.

In this case, there is a government cartel and a non-government cartel scratching each other’s backs. Don’t think so? How does the US rank in broadband access again?      
 

Wu: Watch Out for OPEC 2.0
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