The core regulatory work of the European Commission revolves around the creation of a working single market across the 25 member states of the European Union. The EU has developed a lot of other areas of interest but the economic issues have been a prime concern since its inception.A discussion I was involved in last week highlighted for me the challenges of trying to do this against a backdrop of a rapidly evolving global information society. This was on proposals to revise something called the Television Without Frontiers Directive. The Commission is seeking to impose a basic tier of regulation on all audiovisual services, including those delivered over the internet or mobile phones. Their rationale for this is that it is necessary to ensure that suppliers of these services can sell across the single market without further regulation. The regulatory process will take a while to complete so any new rules may come into force from around 2008-9. This is against a backdrop of Google launching the beta of video.google.com which we can expect to develop significantly, along with a host of other competing services, between now and the new regulations being completed. When the new regulations come into effect these video services will presumably be told that they must comply with the EU-wide regulations or be subject to 25 different sets of national regulation or cease operating in the EU. If, as is likely, there are by then mature global services that are popular with European customers then we can anticipate an interesting power-play between regulators and service providers.The current situation in respect of online gambling may offer pointers as to how this could play out for audio-visual services, with an element of role-reversal between EU and US. UK-based gambling companies offer their services globally and say that it is up to local regulators in countries like the US to enforce their gambling rules on their own citizens. The stock market has expressed its view of the likelihood of gambling regulators effectively controlling behaviour by pouring hundreds of millions of pounds into gambling companies that draw revenue from a sizeable US user base. Investors in US-based audio-visual content services may make a similar judgement about the ability of EU regulators to impose rules on how their content is delivered or presented.
The Congressional Human Rights Caucus had a meeting in Washington, DC today and Cisco offered the following handout to the attendees of the meeting:Cisco Systems Information Sheet for House Human Rights Caucus MeetingOn China and Access to InformationFebruary 1, 2006Cisco Technology and ChinaCisco products (primarily routers and switches) enable the transfer of Internet traffic from point A to point B. Our main customers are enterprises of all sizes, from large corporations to small businesses. We also sell products to telecommunication service providers, including government owned telephone companies, and government end users. Cisco does not configure, operate or manage customers’ networks. The equipment we sell in China is the same equipment we sell worldwide -it is not altered in any way. The router features that the Chinese government may use or insist that Chinese companies use to limit accessibility to some web content are the same features that are currently used by companies, libraries, and schools around the world to block certain sites they decide it is not productive or proper for their employees, clients or students to access. These features are inherent in routers and also function as a security feature to protect against sites that may contain viruses or foster denial of service (DOS) hacker attacks. Similar router functionality is widely available around the world from both hardware and software vendors. The functionality can be used for many purposes -but it should be clear that it is content neutral.We comply with all U.S. Government regulations prohibiting the sale of products to certain destinations or to users who misuse products or resell to prohibited users. Cisco has been and hopes to continue to be a key driver of Internet growth worldwide. House International Relations Committee, Subcommittee on Africa, Global Human Rights and International Operations: Hearing on February 15, 2006We intend to have a Cisco representative at this hearing.More information on this subject is publicly available at:News@Cisco: http://newsroom.cisco.com/dlls/2005/hd_072505.htmlCisco Government Affairs Website: http://www.cisco.com/en/US/about/gov/people/network_management.htmlCisco Investors Relations”Investors’ Corner”:http://investor.cisco.com/phoenix.zhtml?c=81192&p=irol-governancecorner
As always, this is just me talking, but I have to agree with Google on their recent positions with regards to their China site as well as not complying with the subpoena from the U.S. Justice Department for search information, even though it calls their corporate mantra of “Do No Evil” into question. Here’s why: Agree or disagree with China’s censorship policies, some internet in China is definitely better than no internet. They are a sovereign nation and while I may disagree with them keeping information from their citizens, that is their right under their own laws. We cannot place our U.S. or French or German or British sensibilities or values on them. Further, Google (any other company) has to comply with the local laws where they want to do business. I would also argue that in order to change a situation you disagree with (if that is your goal) it certainly helps to have a seat at the table so that your voice can be heard.The reason I don’t think they should comply with the Justice Department subpoena is because it could ultimately end up harming the very thing that generates revenue for them…eyeballs. In my view, this subpoena business is a slippery slope. If I as a user of Google (they, who are clearly moving to more and more personalization so they can further target ads at me) rightly or wrongly feel that they might give up any of my personal information to the government if asked, I might be a little less confident in using their sites and services…I might even leave altogether if I felt that I couldn’t trust them to protect my e-mail, my pictures, my searches, etc. If they are made to comply with the subpoena, I’m sure they will and they should, but since they aren’t even a party to the underlying investigation that Justice is conducting in the first place, it makes it a little easier for them to respectfully not comply. (Disclaimer: I am not an attorney and don’t know the law in this area, but that clearly is not stopping me from having an opinion).So, those are my two cents on this. I understand the unenviable bumper sticker position that this puts Google in (“Google complies with Chinese Law, but not U.S.”), but I believe they are doing the right thing. Google CEO Eric Schmidt said at the World Economic Forum today that they felt that offering a censored version of their search engine would be “less evil” than boycotting the country altogether. With internet users in China having grown from 80,000 in 1995 to over 130,000,000 in 2005 it looks like the insatiable appetite for information continues and also helps validates his point. A seat at the table is better than not having one at all.
Lost in all the debate over whether Verizon will charge Google to use FiOS or AT&T will charge eBay for selling goods over Project Lightspeed is the fundamental change in the nature of the broadband market over the past year. Competition has broken out. Maybe not perfect competition. But real competition nonetheless. Competition that will benefit the consumer and the country.If we go back just a couple of years, the cable and telephone companies were treating the broadband markets much like their traditional markets. They were mostly focused on signing up new customers at relatively high prices. They weren’t competing with each other so much as they were just trying to occupy the space in an unserved market. Their prices, features and services were not terribly distinguishable. A classic duopoly.But then a couple of things happened to upset the balance — and induce stronger competition. First, the maturity of VoIP technology allowed the cable companies (and other providers like Vonage) to enter the voice market in a strong way. The Bells were faced with losing significant revenues from voice without anything to replace them. Second, the FCC changed the rules to end most unbundling of new facilities deployed by the Bells. That gave them the ability to make large long term investments without worrying that regulatory rules would make it unprofitable.We’re just starting to see the fruits of this competition today. Verizon is rolling out fiber to the home services to millions of homes. AT&T and BellSouth plan to upgrade much of their networks to offer 25 Mbps video and data connections. These are major qualitative improvements in the broadband access market, offering consumers speeds and services not thought of before.This new investment by the telephone companies has spurred major upgrades to the cable networks. Most of the cable operators have increased the speed of their offerings from 3 Mbps to 6 Mbps without increasing the cost of the service. Several cable operators are starting to offer even higher speeds, from 10-15 Mbps. So while the spotlight has moved on to issues like Net Neutrality and the DTV transition, I thought it was worth noting that some good regulatory policy combined with technological innovation is leading to the roll out of the second generation of broadband services in an increasingly competitive market. And that is a very good thing indeed.
With apologies to Billy Shakespeare…what’s going on with the goal of making the US #1 in the world in broadband penetration? It was on June 24, 2004 that President Bush reiterated his national goal of making broadband available to all Americans by 2007 and added an additional goal of making America #1 in broadband penetration in the world, up from its current #10 international ranking (at the time)…we are currently #16. The FCC, under the able leadership of Chairman Kevin Martin (a fellow North Carolinian and it is rumored a possible future candidate for Governor of the state of my birth), has done a lot with respect to the treatment of communications services, but it is unclear to me what is being done to meet the President’s goals. I may be talking out of school here (please, please read the disclaimer on this page) and admittedly tracking broadband in the U.S. is not my #1 (or #30th) job, but in my gut check of gut checks there just doesn’t seem too be much energy around this issue. Broadband has been proven to add to productivity as well as contribute to quality of life (education, healthcare, etc.), so I just thought I’d give a shout out to those more immersed than I and see what people are hearing on the focus of broadband in the U.S. Penetration in the U.S. IS growing by the way, under the current measurements. (See previous blog entry on the definition of broadband…current FCC definition is still 200Kpbs).