Author Archives: George Ford

Art Laffer and the Effect of Government Stimulus on Jobs and Investment…

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This week, noted economist Arthur Laffer wrote an interesting piece in the Wall Street Journal entitled The Real “Stimulus” Record.  In this piece, Dr. Laffer argues that before policymakers in Washington again try yet another round of stimulus spending in an ostensible attempt to mitigate high unemployment and poor growth rates, they should remember that President Obama’s first stimulus package did not exactly meet with great success.  As support for his argument, Dr. Laffer cites the facts that while stimulus spending over the past five years totaled more than $4 trillion, increasing  U.S. Federal government spending from 21.4% to 27.3% Continue Reading »

When in Doubt, Regulate…

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In 1999, the FCC began to grant incumbent LECs pricing flexibility on special access services in some Metropolitan Statistical Areas (“MSAs”) when specific evidence of competitive alternatives were proven to be present.  Ever since, whether or not the Commission was justified in following the path toward deregulation of special access services has been disputed.  A proceeding initiated in 2002 on the topic of special access pricing flexibility remains open today. Recent press reports indicate that FCC Chairman Julius Genachowski is now circulating a proposal that would transform the way the FCC regulates such high capacity services.  Among other things, this Continue Reading »

Julius Genachowski’s Speech at CTIA…

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In his recent keynote speech at the CTIA show in New Orleans, Federal Communications Commission Chairman Julius Genachowski reiterated his (and the industry’s) concern that the “demand for mobile services is on pace to exceed the capacity of our mobile networks” and, therefore, we must “tackle the capacity challenge.” The Chairman has previously foretold of a future where spectrum exhaust could make “consumers […] face slower speeds, more dropped connections, and higher prices.” Plainly, spectrum exhaust remains a key challenge for both mobile service providers and policymakers. The Chairman also took the chance in his CTIA speech to challenge what Continue Reading »

What is the Effect of Regulation on Investment?

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What is the effect of regulation on investment?  At a high level of abstraction, it is impossible to say.  Rate-of-return regulation, for example, is criticized by economists for possibly encouraging too much investment—a principle known as the Averch-Johnson Effect.  On the other hand, if a firm fears that the regulator will alter the rules in a way that reduces the ability to earn profits on large, long-term capital investments, then the incentive to make such investments is reduced.  Importantly, the issue is not, as some claim, just about “regulatory uncertainty.”  There could be great uncertainty about future rule changes, but Continue Reading »

A Response to Steven Crowley at GigaOm…

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This past February, we released a paper entitled Wireless Competition After Spectrum Exhaust.  As far as we can tell, this paper was the first serious attempt to model the effect of spectrum exhaust on mobile wireless competition.  We found that the addition of a binding capacity constraint (i.e., spectrum exhaust) to the standard Cournot model of competition reveals that that fewer—not more—firms would lead to lower price, more investment, and more jobs.  Our paper, not unexpectedly, raised a few eyebrows.  (For a CliffsNotes summary of our paper, see my February 8, 2012 blog post.) This weekend, Steven Crowley at GigaOm, Continue Reading »

Should Content Providers be Allowed to Contribute to the Cost of Mobile Bandwidth?

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A recent article in the Wall Street Journal caught my attention, and I’m sure the attention of many others.  The article—AT&T May Try Billing App Makers (February 28, 2012)—reported that AT&T and content providers were discussing ways in which the providers of mobile content, like video streaming, could pay for (in whole or part) the cost of the data traffic on behalf of the end user.  According to the article, the interest in a content-payer system is being encouraged by content developers that “could use the feature to drum up new business from customers wary of using data-heavy services like Continue Reading »

Wireless Competition Under Spectrum Exhaust (CliffsNotes Edition)…

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As noted in our earlier blog posts, FCC Chairman Julius Genachowski seems to be of two minds when it comes to spectrum policy.  On one hand, he has taken great pains throughout his tenure to warn about the crucial issue of spectrum exhaust for commercial spectrum.  As also noted in our earlier blog posts, the FCC under Chairman Genachowski has at the same time expressed grave concerns about the concentrated nature of the U.S. wireless market in its CMRS Reports and, as such, has condemned large transactions such as AT&T/T-Mobile and imposed a de facto spectrum cap when it approved Continue Reading »

The Effect of Spectrum Exhaust on Mobile Market Structure and Performance…

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In an effort to address the current spectrum crunch for commercial spectrum, Congress is working on legislation to empower the FCC to hold voluntary incentive auctions to facilitate the transfer spectrum from broadcasters to mobile carriers.  FCC Chairman Julius Genachowski, among others, are complaining loudly that the House version of the bill unduly constricts the FCC’s ability to manipulate the mobile industry by excluding some bidders from the auction (primarily the nation’s two most successful wireless firms that a little more than half of all Americans have chosen as their wireless carrier).  As Larry explained in a post dated January Continue Reading »

What is the Effect of the Mobile Internet on the Economy?

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What is the effect of the mobile Internet on the economy?  This question is an important one, and one that has drawn significant attention by researchers, policymakers, and even the President.  What makes answers to this question difficult to come by is that while the Internet may influence things like income, education, depression, and so forth, Internet use may in turn be influenced by income, education, depression, and so forth.  Establishing the causal direction of the relationship, and its magnitude, can be challenging. Due to the present economic woes, the effect of the Internet on job creation is an empirical Continue Reading »

Final Thoughts on CES: The Rise of the Network Agnostic Device…

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While attending the Consumer Electronics Show last week, FCC Chairman Julius Genachowski observed in his speech to the assembled technology glitterati that “… virtually every new product on the CES floor is fueled by broadband Internet—by connectivity and bandwidth, wired and wireless.  If you shut off the Internet, virtually nothing on the CES floor would work.”  Certainly, the rapid innovation in edge devices is a wonderful thing.  But, such innovation may not be traveling alone.   That is, economic theory suggests this rapid increase in the number and sophistication of edge devices may be accompanied by an increase in the intensity Continue Reading »