What Europe can teach us about keeping the Internet open and free
Economy Watch The S&P 500 is up almost 20 percent so far this year, including a 6.4 percent rally in the third quarter through last week. Reports this week on data from second-quarter U.S. gross domestic product to consumer confidence and new home sales may help investors gauge the outlook for stimulus tapering from the Fed. Bullard told Bloomberg TV that last weeks decision to retain its $85 billion a month in bond buying was a borderline decision after weaker data came in. The U.S. House of Representatives voted last week to finance the federal government through mid-December and choke off funding for President Barack Obama s health-care law, setting up a showdown with the Senate and the White House. Government Funding Government funding expires Oct. 1 and the Treasury (USGG10YR) is expected to exhaust its ability to borrow funds in mid-October, when it will reach the statutory debt limit. The White House said Obama would veto the House bill. The Senate will consider its version of the funding measure next week. Banks helped lead declines in the Stoxx 600. Barclays Plc dropped 3 percent, while HSBC Holdings Plc fell 0.6 percent.
That’s a fancy term for when major network operators are required to share the infrastructure they built with other service providers. In France, unbundling dropped the costs of starting a new ISP to attractive levels. Start-ups didn’t have to worry about laying their own cables; they just piggybacked off the existing ones. As the market flourished with more ISPs, according to the New America Foundation’s Danielle Kehl, some of those providers even began building their own Internet infrastructure that could compete with the big carriers. As a result, a 100 megabit-per-second, triple-play bundle now costs around $35 which is 17 times as fast and roughly half as expensive as the most cost-effective Internet plan in the United States. The U.S. market could have turned out much like that. In fact, with the telephone industry, it did. But then the FCC decided not to regulate broadband the same way. Whereas telecom providers had to practice unbundling, Internet providers didn’t the better to encourage them to build more infrastructure , or so the logic went. If all the companies expected to freeload, nobody would take the responsibility to lay the cables. Today, that means every ISP owns its own network. But it also means there are fewer competitors in the marketplace. “In the year 2000, there were 9,000 ISPs in the United States,” Kehl told me. After the FCC steered clear of unbundling for broadband, she said, the number fell by 74 percent to less than 2,500 in 2005.
China, Europe orders signal economic healing but U.S. disappoints
Markit’s Eurozone Flash Composite PMI jumped to 52.1 in September from last month’s 51.5, its highest since June 2011 and beating expectations for a reading of 51.9. The pace of expansion in the bloc’s dominant services sector also beat all forecasts in a Reuters poll and the surveys suggested the recovery was becoming more broad-based. Business at firms in Germany, Europe’s largest economy, expanded at a faster pace than last month and in France, the second biggest, activity increased – albeit marginally – for the first time in 19 months. FORWARD MARCH Markit said the composite euro zone PMI, which surveys both manufacturing and service sector companies across the region and is seen as a good guide to economic growth, pointed to a 0.2 percent expansion this quarter, matching a Reuters poll taken earlier this month. “Today’s PMI figures support the view that the euro zone recovery is gradually becoming more entrenched and, as such, further reduce the odds that the ECB will follow up its forward guidance rhetoric with action,” said Martin van Vliet at ING. European Central Bank President Mario Draghi said earlier this month monetary policy would remain accommodative for as long as necessary, and that interest rates would remain at present or lower levels for an extended period of time. However, some analysts had speculated the bank may take solid action to keep a lid on rising loan rates which could inhibit the recovery. New business in the bloc increased again this month, boding well for October activity, and it was a similar story in China where new export orders jumped to a 10-month peak. Encouragingly, domestic demand also showed resilience, with new orders rising to a five-month high. The Chinese flash HSBC PMI climbed to 51.2 this month from August’s 50.1, hitting a high not seen since March. A breakdown of the data showed 10 of 11 sub-indices rose in September. “Today’s figure adds to the raft of recent better-than-expected Chinese data, indicating that the growth slowdown has already run its course and industrial activity is gaining traction,” said Nikolaus Keis at UniCredit. In July and August there were concerns that growth could be slower than the government’s target of 7.5 percent, which would already be the slowest growth in more than two decades.