Text messages may cost you and me $.20 per, but they cost the carriers almost nothing to send, says Srinivasan Keshav, a professor of computer science at the University of Waterloo, in Ontario. Here’s a chunk from the article:

Perhaps the costs for the wireless portion at either end are high — spectrum is finite, after all, and carriers pay dearly for the rights to use it. But text messages are not just tiny; they are also free riders, tucked into what’s called a control channel, space reserved for operation of the wireless network.

That’s why a message is so limited in length: it must not exceed the length of the message used for internal communication between tower and handset to set up a call. The channel uses space whether or not a text message is inserted.

Professor Keshav said that once a carrier invests in the centralized storage equipment — storing a terabyte now costs only $100 and is dropping — and the staff to maintain it, its costs are basically covered. “Operating costs are relatively insensitive to volume,” he said. “It doesn’t cost the carrier much more to transmit a hundred million messages than a million.”

Keshav is no radical with an agenda, either; his research has been funded by one of the four major carriers.

Senator Herb Kohl, Democrat of Wisconsin and the chairman of the Senate antitrust subcommittee, has begun an investigation, only to be effectively stonewalled by carriers.

That texting is radically overpriced relative to carrier costs has been an open secret for years. I’m glad to see Congress looking into it.

The company’s recent discrimination against peer-to-peer traffic is the cause of the hearing. Last August, Comcast denied the charges (which were first documented on… drumroll please… a blog), but now the company has stopped fighting the clear and convincing evidence, instead changing the Terms of Service to reflect the fact that they are willfully throttling BitTorrent traffic.

Now, they claim:

Network Management is best left to the sound, good-faith judgment of the engineers and proprietors who run and own the networks and who are best able to remedy customer service issues promptly, rather than to regulation. The self-policing marketplace and blogosphere, combined with vigilant scrutiny from policymakers, provides an ample check on the reasonableness of such judgments.

There’s only one problem: whatever market pressure and public criticism can be leveled has already come to pass, and Comcast still has not changed direction. Could this have something to do with the market failure in the broadband market? After all, a duopoly is rarely the sign of a healthy market.

At least one prominent blogger and vocal Comcast critic finds the argument laughable.

On DRM-related sidenote, somebody (presumably Comcast) put a password on the PDF, preventing the wholesale one-step copying of text. Yet further evidence that the company is deeply committed to an open dialogue on net neutrality.

(Link from Lok)

I put Supercapitalism on my wish list after Prof. Lawrence Lessig’s glowing recommendation. While I make no pretense of being such a gifted writer as either of these scholars, here I attempt to summarize the book and follow with a few minor points.

Reich, the former Labor Secretary and current Professor of Public Policy at Berkeley, describes us all as being of two minds. On one hand, we are all consumers and (most of us are also) investors. As such, we’re always seeking to minimize our costs and maximize our profits. This leads to lower costs and higher profits; companies that cannot deliver lose customers and investors.

On the other hand, we are also all citizens and employees. In that capacity, we are generally frustrated by the effects of our growing collective power as consumers and investors. Those low prices and high profits squeeze employees, main street family-run stores, and the environment.

Our civic selves object to these negative effects, but we know that our individual purchasing and investing power cannot reverse these trends. Even were we to make the sacrifices of paying higher prices and earning lower returns by supporting more “socially responsible” businesses, we cannot make a difference with our dollars alone. Even social movements calling for corporate responsibility fail because, even if the companies comply, they leave an economic vacuum to be filled by other companies; otherwise, companies just revert to their old ways once the heat is off.

In the “Not Quite Golden Age” of postwar America, companies could pay high wages and CEOs could act on what they saw as the public interest. Most major industries were composed of cozy oligopolies with little product variation. The high cost of industrial production set high barriers to entry, leaving companies with plenty of room to negotiate relatively good deals for employees and the public.

Thanks in large part to new information technologies, as well as the growth of worldwide shipping infrastructure, we have entered what Reich calls supercapitalism over the past 30 years. Companies can design a product on a computer in Denver, buy parts from Brazil, Egypt, and Hungary, and subcontract with a factory in Korea to follow the computerized assembly instructions.

The increasingly fierce competition between companies has led to the squeezing along every part of the supply chain. Main Street retailers can’t sell refrigerators for $1200 when the same icebox is $799 at the big box store 2 miles away. Ford can’t stay profitable by paying its workers $70 per hour in salary and benefits when comparably skilled Koreans will do the same job for half. Suppliers get squeezed, too; ask any of WalMart’s suppliers about this process.

In the era of supercapitalism, companies have little choice but to minimize prices and maximize profits. In the Not Quite Golden Age, a system of cozy oligopolies gave consumers and investors little choice; both groups had mediocre but predictable deals all around. Now, consumers and investors who do not get the best possible deals will take their money elsewhere. Companies that do not ruthlessly squeeze their costs go bankrupt or get bought out.

This process has also led to the corruption of the democratic process. In the ever-accelerating contest for strategic advantage within and between industries, companies have begun to game the system to a degree that was generally not necessary 30 to 50 years ago. Reich’s own experience in government illustrates the impact of the rapid influx of money into the DC area:

Even by the mid-1970s, when I worked there as a political appointee at the Federal Trade Commission, much of the downtown was still run-down. I’d take any lobbyist who insisted on a lunch to a cockroach-infested sandwich shop on the other side of Pennsylvania Avenue, after which I would never see the lobbyist again. But when I returned to Washington in the 1990s, the town had been transformed. … The flow of money had inflated everything in its path. (p. 132)

Corporations are the primary folks funding this influx of capital. NGOs and labor make just a drop in this rapidly growing bucket of lobbyists, PR firms, campaign donations, “expert” consultants, hotels, and fancy restaurants with leather menus and $75 steaks.

Corporations spend this cash in the search for competitive advantages within or between industries. They may not even want to play, but they have to in an attempt to counterbalance other companies’ or industries’ efforts. Competition for customers and investors is too fierce, and one bill can kill a company’s bottom line.

The result is the increasingly impenetrable Beltway we all know and love. Corporate cash has purchased such a cacophany that citizens’ voices are drowned out.

Reich does offer some hope for a cure. Some of the usual suspects are here, from policy changes such as stronger labor protections to procedural reforms such as publicly funded campaigns. The really interesting recommendations, though, center on Reich’s argument against the anthropomorphic view of corporations as people.

Corporations are nothing more than bundles of contracts, so he insists we should neither give them standing to sue to overturn duly enacted laws nor find them criminally liable nor tax their income as though it is the company that owes. Their shareholders and employees would still retain all their rights and responsibilities, which is proper, since a corporation is just a collection of shareholders and employees.

He makes a compelling case for the feasibility and benefits of taxing shareholders instead of companies; corporations would withhold taxes on shareholders’ behalf and give them something like a W-2 form at the end of the year. This would be feasible in the era of computer-processed financial transactions, and it would be progressive, since the wealthiest would pay a higher rate on this income. It would also eliminate corporate inefficiencies caused by some wrinkles in the tax code.

The jaded may initially blow these off as politically impossible (I certainly did), but Reich points out that most companies would rather not be shaken down. A coalition of likeminded corporations helped leverage McCain-Feingold into law, and combined with public pressure, a similar coalition could create even greater reforms.

The prospect for procedural reform in particular is not impossible, but it is quite optimistic. A few industries with a history of winning backdoor negotiations with little effective opposition would fight tooth-and-nail against anything that would reduce their unique power position: oil, telecom, and the entertainment industry all come to mind.

For instance, he perpetuates the mistaken notion that the net neutrality debate was just another contest between corporate interests. In fact, tech companies were seriously outmatched on The Hill, and it was only due to the outstanding work by NGOs such as Free Press and the mobilization of over 1 million citizens that Sen. Ted Stevens’ (R-AK) 2006 telecom bill died as a net neutrality hostage.

Additionally, Reich regrettably fails to consider the potentially obstructionist role of the corporate media in blocking political reforms. The media have an obvious economic incentive to keep campaign funding the way it is: teeming with corporate cash that winds up buying tons of ads for several months every two years.

Any attempt to tie campaigns’ spending to taxpayers’ willingness to pay would generate substantial media opposition, and a bill mandating free airtime would drive media companies to break out every political tool they have. Congress speaks to its constituents through the media; these same media will turn on them (even if not as overtly as, say, Fox) in a heartbeat, and politicians know that.

Finally, Supercapitalism could better integrate theory generally and political economy more specifically. This is ironic; the book is itself an excellent introduction to political economic analysis. But theories about the flow of political information (such as Oscar Gandy’s theory of information subsidies) and the policymaking process (perhaps Baumgartner and Jones’ theory of punctuated equilibriums) could add some heft to Reich’s analysis. This is clearly a trade press book, but it is not impossible to drag a little theory into a book with wide appeal. Paul Krugman’s highly readable book, The Age of Diminished Expectations, is a fine example, and he was using economic theory.

All told, though, Reich’s book is nothing less than a beacon of hope in a world of dark political realities. This should be on your must-read list, and I’m already thinking about how I could use it in the classroom.

Why spend the money? As explained on the Consumers Union blog, Hear Us Now, there are two obvious incentives. First, consumers can’t go back. Unhappy with FiOS? Want to go back to Ma Bell? Too late now!

Second, they’re required to lease their copper lines. Thus, some cities have a (nominal) choice in local phone service, and everyone can choose their long distance provider. Those regulatory schemes only apply to copper line telephone service, so pulling the copper cuts Verizon’s obligations as a common carrier.

The database provides a total of how many times he’s used a word in each speech, and you can see each use of a word in its context. Play with it for a minute; it’s fun.

In seven speeches, Bush has often mentioned the countries he has invaded (e.g., “Iraq/Iraqi(s)” 124 times), but he has mentioned “diplomacy” or “diplomatic” just 8 times. Here’s a choice use in context:

Americans can have confidence in the outcome of this struggle, because we’re not in this struggle alone. We have a diplomatic strategy that is rallying the world to join in the fight against extremism.

He’s used “terror” and its derivatives 145 times, but he’s used “bipartisan” just 6 times, including a goose egg this year. “Tax”? 101 times. “Uninsured”? Twice. “Opportunity”? 24. “Equality”? Once (2001). He’s used “business” 27 times, but he’s only used the word “labor” once (2004), and here it is in context:

As long as the Middle East remains a place of tyranny and anger, it will continue to produce men and movements that threaten the safety of America and our friends. … I will send you a proposal to double the budget of the National Endowment for Democracy, and to focus its new work on the development of free elections, and free markets, free press, and free labor unions in the Middle East.

Here are some other words that Bush has simply not used in any of the seven addresses:

minimum wage
affirmative action
contraceptive/contraception
Enron
fraud/defraud/stockholder
antitrust
privacy
copyright
bilingual (Spanish: once, in 2001, referring to a Spanish teacher)
Canada/Canadian
Mexico/Mexican

Anyway, yeah, fun toy. Give it a try.

UPDATE: Forgot to mention; thanks to Annenberg librarian Sharon Black for the tip. If only it were on her blog, CommPilings.

UPDATE TWO: One more big set of zeroes in this year’s address: hurricane/katrina/new orleans/louisiana. And folks who are helping clean up are hopping mad, according to NPR. (Follow the link to see a picture of a VERY angry man at the podium.)

The merger likely would have sailed through on the strength of the FCC’s 3-2 Republican majority, but the newest Republican commissioner, Robert McDowell, recused himself from the decision upon his appointment in June. Commissioner McDowell recently worked as a lobbyist for companies opposed to the merger and has remained on the sidelines to avoid the appearance of a conflict of interest.

To make the merger more palatable to the likes of Jonathan Adelstein and Michael Copps, the Commission’s Democratic members, AT&T finally proposed several voluntary conditions on the merger. As CNet explains:

The conditions of the merger proposed by AT&T and agreed to by the FCC included the sale of certain wireless airwaves in the 2.5 gigahertz band, a special $19.95 per month price tag for stand-alone basic high-speed Internet service and a promise for the next two years to adhere to specific Network neutrality rules. …

Specifically, it agreed “not to provide or to sell to Internet content, application, or service providers, including those affiliated with AT&T/BellSouth, any service that privileges, degrades or prioritizes any packet transmitted over AT&T/BellSouth’s wireline broadband Internet access service based on its source, ownership or destination.”

On PublicKnowledge.org, Herald Feld calls the conditions a “huge victory” for network neutrality; all the same, the NN debate is far from over. These merger conditions are only temporary and will not apply to other companies, so network neutrality proponents will still be calling for legislation in 2007.

Just 40 million households will be able to see the Broncos-Chiefs game on Thanksgiving. As an NFL fan generally and a diasporic Broncos fan in particular, I find this arrangement particularly objectionable.

Living out of market, I already miss most of their games because I refuse to spend (insert ridiculous sum here) per month for a dish so that I can get NFL Sunday Ticket. I loathe 99% of what’s on TV, so I’m not getting cable or a dish any time soon. I just settle for the games that are broadcast in my local market. I was excited to see that the Broncs will play on Thanksgiving again this year, but then I was disappointed to learn that economics (okay, greed) will keep me from seeing it.

I’m glad that Congress has taken up this issue as an antitrust concern. Personally, I will go out of my way to avoid any product advertised during any NFL games until the NFL reverses this anti-competitive behavior.

The new OS, Vista, will now feature less lock-in for its search, file formatting, and security features, the company has announced. So far, security firms are skeptical; the company has promised but not yet produced the technical means to facilitate interoperability.

Unfortunately, there are as yet no antitrust concerns that can leverage MS away from their excessively anti-consumer End-User License Agreement.

Let’s hear it for OS X, produced by a company that treats its customers like customers–and not thieves.

The spectrum, which falls below 900 megahertz, is generally viewed as the Park Avenue of the airwaves. It carries transmissions through walls and other obstructions much more easily than the slices of spectrum that are currently set aside for unlicensed uses–including wifi.

Wifi currently operates in the 2.4 GHz range, a much higher frequency than an unused VHF TV channel. If you’re old or poor enough to have actually used rabbit ears to watch TV, you’re probably well aware of the quality gap between lower-spectrum VHF and higher-spectrum UHF. VHF operates in 3 slots, ranging from 54 to 216 MHz. (See this spectrum map (pdf) for more.) UHF bumps up against the 900 MHz spectrum on which your cordless phone might operate. It’s fine for short-distance transmission, but the TV channels in the high double-digits show that there’s already a big loss of quality relative to the VHF sweet spot.

2.4 GHz spectrum is even less useful. It carries data for shorter distances and requires more power. It is also a rather narrow slice of spectrum that is overcrowded. Wifi, which is unlicensed, must accept interference from but not interfere with amateur radio users, who are the licensed, “primary” users of the spectrum. Many cordless phones also use this spectrum. This makes the current wifi spectrum rather crowded in many urban areas.

Permitting experimentation in the TV spectrum range will ease these problems, allowing people with more geek cred than me to create devices that carry data farther with less power consumption on less crowded airwaves. New devices will still need to avoid causing interference with TV stations, but a flip through the channels will tell you that, even in the NYC area, there are many unused TV channels in any city.

This opens the door for better wireless internet transmission, potentially so much better that it might provide a viable third pipe to compete with DSL and cable. Other unlicensed wireless transmissions will also be possible; as yet untold innovations may result.

While this is exciting, don’t go to Best Buy just yet. The FCC won’t finalize technical requirements for new devices until October, 2007, and devices won’t be for sale until the transition to digital TV happens in February, 2009.

P.S. This again helps illustrate two tangential points I’ve been pushing since this summer. First, policy ideas matter. The Republican Commissioners believe in deregulation, and this policy move fits nicely with that idea. The Democratic Commissioners believe in public interest media policy, and this policy fits nicely with that idea as well. In contrast, when the Democrats view a deregulatory or free-market move as against the public interest, e.g. the slow rebuilding of the old AT&T empire, the FCC gets into a partisan logjam–so much so that AT&T has voluntarily offered as-yet unnamed public-interest concessions to the Dems.

It also helps disprove the simplistic iron-triangle characterization of the agency. There is no group that has more power with the FCC than broadcasters, and they oppose the unlicensed use of TV spectrum. The next most-connected group is the big telecom firms, who want nothing resembling third pipe architecture to succeed. But the FCC went ahead anyway, in spite of concerns from those who “should” be able to dictate policy. For more on how the lack of a perfect iron triangle impacts the network neutrality debate, see this post.