August 30, 2010

The Internet and Its Two Kinds of Monopoly


The whole net neutrality issue boils down to racketeering. How can the public interest co-exist with rackets, is this even possible? We know it’s not possible. Net neutrality and equitable broadband access wouldn’t even be issues, let alone bitter bones of contention, if the publicly built Internet infrastructure remained a public utility as it legitimately must be. Only a rogue government’s illegitimate alienation of this public property created this monopoly mess in the first place.
Thus we’ve been driven into this impasse where horizontal integration has throttled all competition among Internet providers. Contrary to the lies of the rackets and government, in most parts of the country the customer for Internet access has two options, tops: the phone company and the cable company. (Let the “libertarian” spew his let-them-eat-cake lies about taking one’s business elsewhere or starting one’s own company on this one.)
So as we approach the FCC’s upcoming meeting where it’s expected to announce (or fail to announce, thereby caving in) net neutrality regulations, we must remember that underlying all the obfuscations and lies are two simple, moral facts.
1. We the people paid for and built the pipes. They belong to us. What subsequent investment the telecom rackets have undertaken has been heavily subsidized by the public. We continue to pay for it all. So why were the pipes privatized at all? Simple gangsterism, corporatism, with the veneer of neoliberal ideology. (Neoliberalism is nothing but ideologically dressed-up gangsterism.)
So the real debate here must be over the scope of the restitution required.
2. Beyond the legitimate ownership of the pipes, we know that oligopolies in any necessary sector are contrary to the public interest as well as to textbook capitalism. So anyone who claims fidelity to either of those must support the breakup of such monopolies. Therefore the very existence of the telecom rackets is odious and shouldn’t be conceded. By definition they are not “stakeholders” (to use the enemy’s own ideologically loaded term), from any public interest or even capitalist point of view. Whatever they argue is on its face invalid.
So the real debate here should be over the scope of the anti-trust action required.
Meanwhile, the fact that what are obviously communications providers who should therefore always have been regulated under Title I of the Communications Act were able to scam their way into Title II “information” classification by cobbling together some rump e-mail and similar services nobody cared about in signing up for access, proves that vertical integration is also at least a major political threat, before it becomes an economic one.
But we can see both threats in the monopoly antics of Intel, whose latest gambit is to gobble up Infineon’s wireless outfit. (This is also a commentary on how the consensus seems to be that wireless is the real future of the Internet, not fixed line. Therefore this acquisition seems to be on the same wavelength as the Google-Verizon deal to gut net neutrality for wireless. Everyone who has the muscle is staking a monopoly claim on this pre-enclosed frontier.)
We see the level of “entrepreneurship” and “innovation” and “competition” involved here:

Intel’s own efforts to build a wireless chip business through its Atom processors have faltered, analysts say. Intel has deals with LG and Nokia to provide wireless chips. Mr. Otellini has been seeking ways to get into this market and diversify the company beyond PC chips.

Unable to innovate or compete, Intel uses congealed wealth to buy, i.e. destroy, the competition.
What might our heroic public servants do about this?

Intel expects the deal to close in the first quarter of next year, pending regulatory approvals…..

Intel has also faced antitrust scrutiny in its primary chip business. This month, it reached a settlement with the U.S. Federal Trade Commission to resolve regulators’ complaints that the company had thwarted the efforts of competitors like Advanced Micro Devices and Nvidia.

Under that settlement, Intel agreed to refrain from a variety of business practices in an effort to resolve accusations of anticompetitive behavior in the market for computer processor and graphics chips.

We see indeed how much this brush with the law has deterred them. But of course the “reformists” will continue to call for better, sleeker, shinier “regulation”, looking for that magic formula which will get the gangsters to behave.
The same which has worked so well with the finance gangsters, agriculture gangsters, oil gangsters (BP sure has cleaned up its act over the years, hasn’t it?), and which they all assure us will work so well with the health insurance gangsters.
Yes, if we do get a good announcement from the FCC, I’m sure everyone will play nice from then on. The “Third Way” will be sufficient, and we can all go home.


  1. http://www.wcnc.com/news/local/Salisbury-to-test-fiber-optic-cable-system.html

    In the last legislative session Sen. Hoyle tried to put a moratorium on any more local governments expanding into municipal broadband.

    When the I-Team asked him if the cable industry drew up the bill, Senator Hoyle responded, “Yes, along with my help.”

    Comment by Karl — September 2, 2010 @ 4:24 am

    • Thanks for the small piece of good news. We need lots more of that. That’s a great example of how our political efforts, generally wasted at the national level, can be more pivotal at the state and municipal level.

      Comment by Russ — September 2, 2010 @ 7:18 am

  2. […] as true here as everywhere else. Anti-trust would be a good tool for this and should be applied to both the horizontal and vertical monopolies that afflict us.   Then with any luck a parasite like Nocera would lose his paid liar gig and have to get a real […]

    Pingback by The NYT’s Nocera Lies About Net Neutrality « Volatility — September 4, 2010 @ 7:04 am

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