Wireless plan innovation benefits consumers & competition

Scott Cleland Contributor
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The purpose of competition policy is providing choices to meet the diverse means, needs and wants of consumers and businesses.

Competition, not government regulation, is the best way to generate diverse choices for consumers and businesses via differentiated products, services, prices, features, usage tiers, packages, bundles, and affinity brands.

The purpose of competition policy is not to provide redundant alternatives to buy the same commodity. It is not to seek one-size-fits-all broadband. Nor is it about preventing experimentation that leads to new and better communications and content choices for consumers and businesses.

Apparently, some Washington-elites — who seek to impose a public one-size-fits-all Internet on everyone under the banner of “net neutrality” and “Internet openness” — are deeply threatened by the prospect of consumers getting more content delivery choices.

Ironically, Public Knowledge, a non-profit ostensibly dedicated to “Internet openness,” is  not open to a reported  new content and wireless usage-pricing business experiment contemplated by ESPN and some wireless providers.

Far from being open-minded, Public Knowledge has convicted a mere idea — as net neutrality apostasy -– solely on the basis of a WSJ article. Apparently, Public Knowledge has no need for facts or evidence to decide what’s best for everyone. In less than a day, Public Knowledge declared to the “data-driven” FCC: “This is what a net neutrality violation looks like.”

How are we to believe that net neutrality proponents genuinely support free speech and oppose censorship for everyone, when they have such a hair-trigger intolerance for broadband pricing experimentation or different ways of doing business on the Internet?

At bottom, there is no public policy problem here.

On the contrary, there potentially are great benefits to consumers and businesses, to experimenting with, and offering, specialized wireless-content services like the one contemplated in the WSJ article.

Combining the business of advertising content with the business of subscription distribution is a time-honored two-sided business model used by newspapers, magazines, cable, satellite, and other industries.

Google Fiber is the highest-profile new example of such a two-sided business arrangement. Google can offer a discounted ultra-fast broadband subscription service, because Google subsidizes the subscription price via its online advertising business.

Offering consumers a lower-priced or better service by having another business pay for some or all of the cost of the service is a time-honored business practice, because it benefits consumers and businesses alike.

A potential ESPN wireless arrangement that essentially forgives the consumer’ cost of consumer’s connectivity is just like toll-free 1-800 business calls in the past, or Amazon’s current payment of a consumer’s Kindle connectivity costs to deliver e-books wirelessly.

All sorts of businesses offer special cross-industry arrangements, inducements, or discounts, to new customers or their highest-use/value customers. Some of the best-known cross-industry arrangements like these are credit card frequent-flyer points and grocery stores that offer per-gallon gas discounts from a particular energy company.

The travel, hospitality, entertainment, media, gaming, and restaurant industries commonly have one industry pay some of the consumers’ costs of using another company’s service because it makes economic and marketing sense for them, and for the consumer.

There is also no consumer harm from a potential new ESPN-wireless offering.

If say a Verizon or AT&T wireless consumer does not want limits on their data usage, they can freely choose Sprint or T-Mobile’s national unlimited data usage plans.

And if consumers are concerned about their data caps, they have the freedom to largely avoid exceeding their data usage cap by flipping their mobile device to WiFi which is available at many of the most-frequented locations, especially via one’s cable company.

If a content company wants to pay for some of a consumers’ data usage costs as an inducement for them to consume more of their content, what’s the problem? The user gets a better deal. Those consumers who don’t want the better deal, don’t have to take it, and they are unaffected by others who do.

The competitive wireless market already offers consumers choices to get unlimited data usage. What the elites are essentially saying here is that government should force Verizon and AT&T to offer what Sprint and T-Mobile offer.

The beauty of competition is that if consumers truly want something above all else, competitive forces quickly will pressure all providers to provide it – with no government involvement needed.

In sum, this Public Knowledge hair-trigger objection to a reported potential ESPN-wireless marketing arrangement is a classic example of a net neutrality solution in search of a problem.

Scott Cleland is Chairman of NetCompetition a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies. Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration.