Sunday, April 19, 2009

Mini Exposé - The American Consumer Institute: Center for Citizen Research

You may not have heard of this organization before, but it's called the American Consumer Institute: Center for Citizen Research and it came into existence around June 2005.

The organization is the creation of Mr. Stephen B. Pociask a frequent consultant for the telecommunications industry who spoke out against Net Neutrality in August 2006 and whose team of "experts" is now speaking out in favor of broadband usage caps as a benefit to consumers.

Here is the full text of the ACI About page for your reference:

The American Consumer Institute Center for Citizen Research is a 501(c)(3) nonprofit educational and research institute founded on the belief that consumers’ interests are not satisfactorily represented the wide variety of advocacy and consumer organizations that often represent small subsets of consumers and special interests; ignore distant, collateral and unintended consequences of importance to consumers; and too often mirror advocates’ political views rather than an empirical analysis of consumers’ economic welfare.

The Institute focuses on economic policy issues that affect society as a whole, and we seek to be a better and more reasoned voice for consumers by using economic tools and principles to show that markets work best for the benefit for consumers. We are committed to use of generally accepted quantitative, cost-benefit analyses of policy alternatives and their transparent application to assure that our methods can fully and fairly evaluated on their own terms by those who may disagree with our conclusions. We use economic analysis to empirically measure “consumer welfare,” rather than relying on conjecture, opinion or political leaning to judge what benefits or harms consumers.

Mr. Pociask is a rather inconsistent fellow it seems. Below is a timeline of his activities and those of his organization(s). See if you can spot the inconsistencies of his stance on the Internet and telecommunications in general:

  • October 2005 - Pociask and the ACI report their findings that older Americans are overpaying for their cable TV bills because of lack of competition.
  • August 2006 - Pociask and the ACI report their findings to Congress that Net Neutrality is only being pushed by the "financially powerful [who] earn supracompetitive returns and have significant market power" to the detriment of the consumer and the poor telcos.
  • October 2008 - Pociask advocates his 'study' findings that telecommuting and other Internet-based activities (such as email and downloading movies) is a benefit to the economy and the environment:

  • April 2009 - Larry F. Darby, an 'expert' at ACI, states that usage-based caps are beneficial to the consumer.

Despite his varied history and the eclectic suggestions of the ACI several sites suggest that the ACI has become a source of astroturfing for the telecommunications industry.

Astroturfing refers to political, commercial, or public relations campaigns that feign grassroots behaviors to promote a specific view. However, since it is deliberate and is essentially "faking" being grassroots, it got the name "astroturfing" after the artificial grass, AstroTurf.

When ACI came onto the scene against Net Neutrality (NN) all the cable operators and NN opponents jumped on board the ACI bandwagon and used it successfully to derail any NN legislation.

Once again the ACI is popping onto the scene conveninently just when Time Warner backs away from consumer uprising over its usage cap plan and waving a "study" that finds usage caps to be beneficial to consumers.

The statement from the ACI was made by Larry F. Darby, one of their residents "experts" - an economist who once was a vice president in Lehman Brothers - that shows a woefully inadequate understanding of what bandwidth and capacity mean in relation to usage. Even in his statement he fails to make a conclusive connection between capping usage and solving this alleged bandwidth problem.

As we've discussed before, usage caps do not fix a capacity problem.

It's left as an exercise to the reader to decide whether or not the ACI is to be believed as a credible group focused on the best interests of the consumer.

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