Net Neutrality Vs. Title II – They Aren’t the Same

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Since Title II passed I’ve seen a lot of articles that either indicate buyers remorse or have always been against Title II and are gloating that it’s going to be overturned. For example, Wired had an Op-Ed yesterday that used major points from Chairman Pai’s dissent against using Title II. Title II is clearly a divisive issue, as the guys over at KBMOD, where I also write, are completely divided over the supposed benefits of Title II. I sincerely hope that when we look back at this debate that we see this discussion as a confusing bit of history, because nothing happened. Where the Internet didn’t change and remained an open platform for everyone to easily and equally use.

Net Neutrality and Title II are not the same thing. Title II is an old law originally written in 1934 to regulate a single monopoly with the hopes of create more competition. It wasn’t successful but the legacy of Title II played an important role in the creation and development of the Internet. Title II was the policy regime that APRANET was developed. Whenever a scientist at MIT wanted to use a graphically powerful computer in Utah Title II was in full effect on that data system. Furthermore, Title II was the law of the land for all of dial up Internet. Which was actually a very good thing. The fact that there was Local-Loop unbundling meant that you could have an Internet service that was different than your phone company. It was also likely, given how low the costs were, that these ISPs didn’t have to pay many of the taxes that the Phone company did that you used to buy access to the Internet. We already know that Title II has and can foster a culture of innovation.

Net Neutrality is different than Title II because it was the architectural approach the initial designers took for creating the internet. There were a few key reasons for this, it was easier, required less computing power, and the majority of the early pioneers believed in what became the Open Source movement. In many cases it was the exception rather than the norm, early on, for scientists to patent their computer research. It’s likely because most of these researchers were Mathematicians and Physicists that came from a military background (WWI and WWII and all), so they weren’t used to patenting due to their educational background and the requirement for secrecy contributing to the war effort.

To provide preferential treatment to one packet of data over another required tools that simply would have prevented the data from arriving at its destination in a timely fashion in the 70’s. Remember this was during the time when a personal computer didn’t exist and computing used mainframes and terminals to do the work (interestingly we’re going back to that a bit with the cloud). This means that the routers would have had to have been mainframes themselves to decode the data and figure out what type of data it was before sending it to it’s next location. This was seen as a waste of computing power as well as an invasion of privacy. The point of the Packets was to help keep the data save and secure as much as to maximize capacity on lines connecting the computers.

One of the largest complaints about implementing Title II is that there’s not enough economic evidence to support it. I believe that to be true to some extent. It’s hard to forecast something that’s happening as it’s happening. Especially since the FCC was unlikely to get access, legally, to the Netflix-Comcast/Verizon deals to ensure equal access (or maybe preferred) to their lines. It was clearly shown by Netflix that Comcast/Verizon were intentionally causing issues they could easily resolve and they did immediately after they got paid. With Comcast/Verizon planning to foreclose the video streaming market in this fashion and violating the spirit of Net Neutrality, some sort of regulation was needed to prevent this foreclosure.

I would have rather not had any sort of regulation go into effect. However, I believe that the actions that Comcast and Verizon are taking are anticompetitive and anti-consumer. Time Warner Cable supposedly makes 97% profit on their broadband service, which isn’t a surprise whenever you have a local monopoly/duopoly for broadband.

Could there have been a better way? Yes, the FCC could have taken action that would have forced increased competition. Something like setting goals for every city in the US to have no fewer than 3 broadband providers and providing assistance to municipalities that wanted to develop their own to meet that goal. Ironically, the one provision not included in the Title II rule that would help with that is local-loop unbundling, which would reduce the cost of a new ISP entering the market as they wouldn’t have to build their own network, which has slowed Google Fiber down considerably.

New FCC Rules and competition

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A friend retweeted the Tweet below today and it got me thinking about the broader context of the FCC rules that past last Thursday

Two things struck me about this tweet. First, it’s disappointing that the author doesn’t understand Title II better considering he co-founded the EFF. Second, that Title II as implemented was designed to do nothing about ISP competition. As I wrote on KBMOD this week, Net Neutrality has no provision for “Unbundling” which would promote competition amongst ISPs at the local level. Unbudling, according to Wikipedia, is a regulation that requires existing line owners (such as Comcast) to open up their lines to anyone that wants to sell cable, internet, or telephony access. Unbundling, under a much more restrictive Title II, is the only reason that AOL was successful as a business model. Since this provision of Title II was forborne, Title II will not, in fact, be for promoting competition in ISPs at all.

Instead, the FCC, at least in my opinion, looked at the Internet as a general purpose platform technology. They were looking to ensure competition ON the technology not between technology carriers. For example, the FCC wants to see as much competition as possible between companies like Netflix, Amazon Prime Video, Hulu, and Comcast’s Xfinity service. However, they want to make sure that Comcast cannot foreclose on the video delivery service by leveraging their existing monopoly in telecommunications. What that means is that Comcast could create rules or an environment where Netflix cannot compete and Comcast customers MUST use the Xfinity service because alternatives didn’t function well (Foreclosure is the thing that got Microsoft with Web browsers).

The FCC did enact a rule that will impact competition at the local level though. It’s a limited rule because it impacts only Tennessee and North Carolina. It is preempting state law by stating that it is legal for municipalities to develop their own broadband networks. Broadband build out is prohibitively expensive for an entrepreneur to set up a network, however if they had a backing of a municipality that is willing to share the risk and the reward, it might be possible for an entrepreneur to build out their own broadband network on a limited scale. Municipalities aren’t the ideal solution to this, it would be significantly more preferable if other businesses moved into areas and built new broadband networks, however unless they have a massive amount of money, like Google, it’s unlikely to happen. A bridge between is a public-private partnership where private enterprise, which has the telecommunications expertise, partners with a municipality, which has the demand and financial support, to build a network.

With the ruling on municipal broadband being so limited, it’s not going to make much of an initial impact, however it’s likely that other municipalities will try to jump on that bandwagon and overrule laws at the state level (as a note I’m not going to argue if this is something they have the authority to do, I’m just looking at the potential impact of the rule).

Innovation Isn’t Just a Buzzword

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It’s rather unfortunate that everything has to be an innovation these days. Even worse, is that for a business to be effective, it seems they must drive disruptive innovations. Innovations are simply inventions that have been successful in the market, those inventions might actually business model changes that have been successful in penetrating the market. I personally find that looking at innovation as a framework to analyze business pressure to be extremely interesting. I did this today in an interview and it felt really good as I was able to create context around changes impacting the health insurance industry.

Several years ago I wrote about the 4 types of innovation, Incremental, Modular, Architectural, and Radical. This is a bit different than the framework that Christenson argues, since he only looks at 2 types, Incremental and Disruptive. I believe that disruptive encapsulates both Architectural and Radical. Architectural changes are business model innovations while making a very similar product but one that significantly undercuts existing businesses or creates a new market. While Radical innovations creates a new market but also attacks existing customers, through a new business model and a completely different type of product. Think of a fan competing against an air conditioner window unit, while central air is an architectural change for the window unit.

da9cf-typesofinnovation

I believe that this framework is just as useful for businesses to analyze their environment as Porter’s 5 Forces because it forces businesses to confront the disruptive innovations that they might have overlooked otherwise. Without using this framework it is likely that businesses would ignore the new entrants force as they don’t feel that those businesses will ever compete with them. However, based on historic evidence those entrants that have a different business models or a different metrics for their performance eventually supplant incumbents. I believe that this type of analysis should be conducted annually or bianually as many industries and markets have continually increasing uncertainty and faster rates of change than historically.

HR, Recruiting, and Candidates

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I read a well intentioned post on LinkedIn today that really got me thinking about the recruiting process. This being near and dear to my heart since I’m going through the process of finding a new job. While at my last job I was fortunate enough to be both a hiring manager for 2 employees and involved in the hiring process for 5 positions that would not be reporting to me. Discussing with my manager the different requirements for positions he and I aligned on one thing, we wanted the best person regardless of how they looked on paper. In many cases this directly conflicted with the requirements of HR since the salary bands the employees we were hiring for required degrees or certifications.

For example one of the Business Analysts we decided to hire didn’t have a college degree, but because of the salary band required to get high quality candidates we had to have a college degree as a requirement, even though we didn’t believe it was truly a requirement. This BA turned out a better hire than one of the other BAs that had a college degree and a great deal of BA experience. Another perfect is example is the face that one of my hires was “required” to have a nursing certification to earn the pay band we knew was required to find a highly qualified candidate. I had to fight HR and argued it wasn’t truly required for the position. I eventually won and the person I hired worked out amazingly well and in fact is more highly regarded than his counter part that has that certification. Finally, one of our POs for the product had neither certification nor college degree. He has done extremely well without those certifications – granted he earned a certification and a great deal of trial by fire experience, but he started out strong because of his business experience.

These are just examples from my personal experience. This is ignoring the number of great people that have become famous despite their credentials that would have had them relegated to the dust bin in less than 6 seconds by the recruiter above. If this is the best system our current Recruiting and HR experts have developed, it’s a deeply flawed system that needs some serious rework. Finding the right candidate is difficult. It requires team work between HR, Recruiting, and the Hiring Manager. These conversations and dissociation of salary and degree requirements from applications will likely reverse the trend of college degrees required for every position. I think our thought leaders in Recruiting and HR need to do better, the article above indicates there’s a great deal of waste and non-value added activity in the vetting process because a good fit that is excluded after 6 seconds is a defect and any candidate that looks good on paper but is clearly a bad fit is also a defect to the process.

The hiring process is extremely expensive as is the onboarding and training of a new hire. Any clear poor fit from the start indicates there defects and waste in the hiring process that need to be addressed. Bragging about a 6 second “review process” isn’t the right thing to be doing, figuring out how to fix the process to ensure that the right people are hired the first time at the right time should be the goal of recruiting.

Legacies and Self Reflection

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Last night while listening to Pandora, Fall Out Boy’s “Centuries” came on, not a huge fan of the song, but it got me thinking about how difficult it is to be remembered for “Centuries.” Even 100 years after a person’s death is impressive. Considering the fact that most people if asked who the richest person ever is, they wouldn’t come up with John D. Rockefeller even though his legacy is likely to last more than 100 years.

This made me think about my legacy at the companies I’ve worked. Once you leave a company having a positive legacy for years to come is difficult unless you implemented a major project or new product. This is important to me considering I’m going through a “Career Transition” according to my previous company. My last day is on Friday the 13th, because I’m being laid off. At my previous company my only real lasting legacy will be the impact of the process improvement training program and my help on the new medical management system. The latter will likely not be a long lasting legacy, while the former might last as long as the people I trained.

I am being let go because my organization didn’t prioritize process improvement, so my position was eliminated to make room for higher priority employees. It happens, i’m disappointed because we were just getting our program off the ground. We had several completed Kaizen events and one of them is up for a Blues Innovation award. I’m excited to have made that much of an impact so quickly with my student’s work and jobs. I believe that my students will continue to thrive and make significant changes to the organization using the skills I taught them.

I hope that my previous job’s legacy for me is to have learned from what I did well and did poorly at the organization. I know I was far from perfect and have room for improvement. I believe I can and will improve and that I will end up in a better position because of my experience at this job.