The intrepid Genachowski FCC brings yet another industry stooge on board

by Ken

As Howie and I have had all too frequent occasion to report, not many Obama appointments have been as disapointing as FCC Chair Julius Genachowski, who came to the job with what most observers familiar with the turf thought were pretty good credentials, but who has established himself almost without exception as a trusty servant of Big Media and the telecom industries.

While we've all been preoccupied with the fiscal-cliff follies and our normal holiday preoccupations, the other day Karl Bode of the blog Broadband Reports passed along news of another fine development at Genachowski's FCC (links onsite):

FCC Hires New Cap Loving Chief Economist - New Employee Steven Wildman Paid by Industry to Defend Caps
Steven Wildman Previously Used by ISPs to Justify Caps
by Karl Bode

The FCC has hired a new chief economist with a history of cheerleading broadband usage caps for the cable industry. According to the FCC, they've hired Steven Wildman, an economist and professor at Michigan State University, as the agency's new chief economist. In a statement, FCC boss Julius Genachowski insists that Wildman will help the agency by applying "his deep economic expertise and problem solving abilities daily to our most challenging initiatives."

Except Wildman just got done penning a National Cable & Telecommunications Association paper supporting the industry's use of punitive caps and costly per-byte overages. "...The effects of well-designed [usage-based pricing] plans on consumers are likely to be beneficial, as are the effects of UBP on investments in the broadband infrastructure," insisted Wildman in the cable industry sponsored paper (pdf).

That claim runs contrary to the facts on the ground. Wildman only has to ask Canadian broadband customers in our forums, who suffer from the most egregious caps and overages in the world, just how much the pricing model has "benefited" them.

Like with most of these industry-funded studies, Wildman ignores the fact that the lack of competition drives the creation of punitive caps and overages in the first place, and that few if any of these plans are "well designed." Most of what we've seen implemented by carriers so far isn't really usage-based pricing, it's flat rate pricing with caps and per-byte penalties layered on top, resulting in higher prices for everybody.

Without real competition, there's nothing preventing caps from squeezing tighter or overage penalties from soaring, but industry-paid economists avoid that problem by simply not mentioning it. In fact, Wildman's paper only even uses the word "competition" once, and not in any meaningful context. Wildman and other academics paid to use their academic credibility as a blunt weapon against consumers have been trotted out by the cable industry at several industry round tables recently to justify what the cap and overage model really is: price gouging.

Wildman's hiring is troubling for an agency that has already utterly refused to seriously address the anti-competitive impact of usage caps and high overage pricing. Genachowski's positions on caps have waffled depending on what lobbyists or industry leaders he's talking to, and that's just part of a larger FCC problem with failing to address competition. Worse perhaps, is the agency's refusal to seriously address the growing problem of usage meters simply not being inaccurate, a result of carriers wanting to bill like utilities, but refusing to be regulated like them.

So, as the U.S. slips farther and farther behind the rest of the developed world in ease and affordability of high-speed broadband access, the FCC is . . . well, gearing up to move us farther backward.

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