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[ba-unrev-talk] FW: [IP] harmonious contention, cheating, and antitrust enforcement

>From: "Tim O'Reilly" <tim@oreilly.com>
>To: <fsb@crynwr.com>
>Not directly relevant to free software business, but very relevant to the
>interests of this group.
>I've always argued that the reasons to be mad at Microsoft have to do with
>"cheating" as described here, rather than with proprietary software per se,
>and this is a nice summary of the kinds of cheating that shouldn't be
>It's also relevant to FSBs because the state of the telecom market (the
>cheating being addressed here) is very relevant to the future of some of the
>key markets in which F/OSS software plays.
>Tim O'Reilly @ O'Reilly & Associates, Inc.
>1005 Gravenstein Highway North, Sebastopol, CA 95472
>1-707-829-0515 http://www.oreilly.com, http://tim.oreilly.com
>------ Forwarded Message
>From: Dave Farber <dave@farber.net>
>Reply-To: dave@farber.net
>Date: Sun, 27 Oct 2002 09:29:33 -0500
>To: ip <ip@v2.listbox.com>
>Subject: [IP] harmonious contention, cheating, and antitrust enforcement
>------ Forwarded Message
>From: Daniel Berninger <dan@PULVER.COM>
>Harmonious Contention, Cheating, and Antitrust Enforcement
>The process of determining winners and losers that we call *competition* has
>two dimensions.  One can cross the finish line first by running faster or
>one can *win* by handicapping opponents.
>The former represents harmonious contention and the latter cheating. There
>exists no uncertainty about how to label a given action.  Activities
>directed at improving the value proposition delivered to end users (i.e.
>running faster) represent harmonious contention.  Activities directed at
>reducing (i.e. handicapping) an opponent's value proposition represent
>We don't let Johnny cheat on tests.  We don't let Lance Armstrong win the
>Tour de France by slashing his opponents tires.  The antitrust laws exist to
>prevent cheating in the business sphere.
>The antitrust laws don't get engaged until a company achieves a level of
>market power that yields an incentive to cheat.  A market with several
>competitors already limits the utility of cheating.  Individual companies
>likely won't have efficient means to make others suffer and diverting
>energies to injure one opponent risks creating a disadvantage relative to
>John Nash, the Princeton University Professor profiled in the movie
>"Beautiful Mind", won a Noble Prize for working out the mathematics of this
>idea.  He proved using the framework of game theory that in the absence of a
>dominance solution (one player stronger than all others), the best strategy
>from an individual player's perspective corresponds with the one that
>obtains the greatest value for the group.  This does not mean the same
>outcome for everyone, but that all energies go toward building value rather
>than destroying it - harmonious contention.
>The Bell companies remain in pursuit of a dominance strategy.  The present
>problems in telecom follow directly from this reality and the failure of
>effective antitrust or regulatory enforcement to counter it.  Consider the
>extent of Bell company energies directed at handicapping non-ILEC's as
>opposed to their work on the value proposition offered end users.
>The FCC seems intent on complying with Bell company pressures to further
>remove regulatory constraints, but this will only make the cheating worse.
>When the Bells claim regulatory changes will serve competition, they have in
>mind the cheating side of the ledger.  Nothing stops the Bells from winning
>through harmonious contention today.
>Regulations and antitrust laws only limit cheating:
>o Refusal to deal - cheating
>o Tying - cheating
>o Collusion - cheating
>o Predatory pricing - cheating
>o Market allocation - cheating
>o Boycotts - cheating
>o Various other exclusionary practices - cheating
>The Bells have won regulatory relief on numerous occasions over the years.
>The many concessions did not reduce a single telephone bill or lead to the
>deployment of a single new service.  The historical track record makes it
>clear we should expect the opposite.
>The Department of Justice has a woeful record of holding the Bells
>accountable to the antitrust laws except for the historical accidents
>associated with Bill Baxter's tenure as Antitrust Chief that produced the
>MFJ in 1982.  Consider that the DoJ  worked to dilute the MFJ immediately
>after Bill Baxter returned to Stanford.
>Telecom suffers dominance more than any other sector of the economy.  Even
>ignoring that the Bells operate as a cartel through the USTA, consider that
>the twenty largest power companies collectively control only 30% of the
>market.  Bell company economic and political power chills dissent not to
>mention their tendency to threaten litigation.  Raise you hand if you fear
>speaking out against the Bell companies.
>Aggressive antitrust (anti-cheating) enforcement represents the only
>Daniel Berninger
>* You may redistribute this message freely if you cc: dan@pulver.com and
>include this notice.
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