Roycroft attacks strawman

Yesterday I posted a brief note on the Trevor Roycroft “study” promoted by Free Press as if it were some sort of substantial piece of the Internet regulation debate, stressing the inappropriateness of the telephone monopoly regulatory model to the Internet. I didn’t pay much attention to Roycroft’s economic analysis, preferring to leave that sort of thing to experts. The Phoenix Center has done such an analysis:

Shortly thereafter, Dr. Trevor Roycroft, of Roycroft Consulting released a critical response to the paper. Upon our request, Dr. Roycroft agreed to allow the Phoenix Center to post his comments on our website In his critical review of our work, Dr. Roycroft’s analysis is “an examination of our economic model.” Dr. Roycroft lists what he believes are four “fatal” flaws in our economic model:

1. the “economic modeling does not address economies of scale in last-mile broadband access networks”;

2. the “economic modeling assumes policy makers, by pursuing a policy of network neutrality, can completely eliminate product differentiation among broadband access providers”;

3. the model “fails to acknowledge the impact of the abandonment of network neutrality on the consumption and production of Internet content, service, and applications”;

4. “the conclusions depend on the existence of low levels of sunk costs associated with constructing new last-mile access networks.”

In an effort to ensure the accuracy and legitimacy of all analysis performed and released by the Phoenix Center, we have evaluated carefully Dr. Roycroft’s response to see if he presents any legitimate criticisms or offers any material improvements to the analysis in POLICY PAPER NO. 24. At the Phoenix Center, we appreciate criticism and comment, since such review can be used to either affirm or improve our analysis, thereby making our work more useful for policy decisions. In some cases, comments on our work provide direction for future research. By all accounts, Dr. Roycroft’s comments confirm the relevance and importance of the general theme of POLICY PAPER NO. 24.

Curiously, none of the “flaws” claimed by Dr. Roycroft are actually present in our analysis. In fact, all of the alleged errors and omissions claimed by Dr. Roycroft are dealt with squarely in our paper. For example, the very purpose of our model is to argue that because scale economies are present, service differentiation is necessary for entrants to successfully enter the market. Yet Dr. Roycroft claims we “do not address economies of scale” and that we “ignored the fact that new entrants will likely need to charge higher prices than incumbents.” As such, this criticism has no merit. Dr. Roycroft’s other arguments, to the extent they address key issues in the Network Neutrality debate, are in fact not criticisms of our model at all and are, in fact, specifically incorporated into our analysis, either formally or informally.

Read the whole thing if you want cool broadband someday, and the original study here.

I never cease to be amazed at the dishonesty of the neuts.