Peter Thiel at AEI, September 2014

The breeze from Silicon Valley: What real-life entrepreneurs can teach Washington

Over the past month, I’ve had the good luck to sit up on a stage at AEI and spend an hour having discussions with, first, Peter Thiel and then, just last week, Jeff Pulver. Thiel is the co-founder of PayPal and Palantir and the first outside investor in Facebook. Pulver is the Voice over Internet Protocol (VoIP) pioneer who co-founded Vonage. Both have become important venture capitalists.

Talking to people like Thiel and...

InternetGovernanceConf by Shutterstock

Commerce Secretary Pritzker reaffirms US commitment to the multi-stakeholder process at ICANN

This week’s ICANN meeting is setting the tone for other upcoming Internet governance conferences dealing with strategies for managing the Internet infrastructure as a global asset. Keeping the Internet free and open to content, communications, and commerce on a global scale requires a commitment by all participants in the decision making processes that make up the Internet governance forums. During yesterday’s ICANN opening ceremony, US Commerce Secretary Penny Pritzker delivered a strong message...

Jean Tirole by Reuters

What Nobel to Tirole means for FCC net neutrality rulemaking: Heed the wisdom and experience of two-sided markets

Yesterday, the Nobel Prize in Economics was awarded to Frenchman Jean Tirole "for his analysis of market power and regulation." At 61, Tirole is young among winners of the Economics Noble Prize; however there is no doubt that his work in industrial economics and game theory has revolutionized the understanding of many industries, including Internet-based businesses, telecommunications, advertising, banking, and finance. In their explanation of the award, the Nobel Committee observed, “no other scholar has done more to enhance our understanding of industrial organizations in general, and of optimal policy interventions in particular.” Generally, as long as traffic flows are fairly symmetrical, parties exchange traffic on a settlement-free basis. However, when this traffic exchange is no longer balanced, it is common (and reasonable) for the sending party to pay a fee to offset the incremental cost of the traffic. Netflix is one such content provider with an outsized amount of traffic; it offers a streaming service that consumes one-third of the network’s capacity and frequently impinges on other, non-Netflix users’ ability to enjoy the network. Because Netflix subscribers are a small portion of any one network’s user base, the ISP would like Netflix to participate in the cost of delivering the service, so that the ISP does not have to impose the cost across all its subscribers, especially those that do not want or need to binge-watch the latest season of “House of Cards.”
OTTNPRM by Shutterstock

The FCC’s OTT NPRM: Is Aereo cable by nature? OTT, yeah MVPD

News broke late last month that the FCC is working on a notice of proposed rulemaking (NPRM) that would classify some types of Internet-based video distributors as multichannel video programming distributors (MVPDs). This is a big deal. MVPD classification would place these Internet-based video distributors on similar regulatory footing as traditional MVPDs like cable and satellite, with both the benefits and obligations that such footing entails. At the same time, there are substantial limitations, both on the MVPD classification and on the types of Internet-based video distributors to which the classification would apply. This is the first in a series of posts that will discuss the regulatory treatment of online video. Today, I’ll provide some background and look at what the NPRM likely would (or could) do, as well as the links between the NPRM and Aereo. In future posts I’ll get into more of the challenges about how specific rules may apply to OTT, the (statutory, if not logical) importance of “linear” vs. other video, and whether this is likely to be a step into the future or further tie the industry to the past.