Author: Harold

Follow Up On MI PEG Lawsuit

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So the judge heard the motion for a restraining order by Dearborn and Meridian to keep Comcast from migrating PEG channels to digital. The court issued the restraining order, finding that the towns were more likely than not to prevail on several of their issues, that Comcast would suffer no harm from the delay, but that the cities would potentially suffer irreparable harm if Comcast migrated the PEG channels to where most citizens couldn’t see them. (You can find the opinion, the pleadings, and other useful information here.)

On the question of the definition of “basic tier” I raised in yesterday’s post, the court found:

1) Nothing requires a cable operator to offer the basic package as all digital or all analog, so it is more likely than not that Comcast can migrate PEG to digital while keeping broadcast channels analog.

2) However, cable operators must offer the basic tier on equal terms. Requiring rental of additional equipment to get part of the basic tier therefore is more likely than not a violation of law.

A preliminary restraining order is not a final judgment. The court must make a determination on what arguments are “likely to prevail.” But the court may rule otherwise once the questions are fully briefed and argued. Hence, the “more likely than not” language.

But the courts findings produce some oddball results. By implication, at least so far, the court accepts that the obligation to offer a “basic tier” persists even after the FCC finds “effective competition.” But despite what I would think is fairly straightforward legislative language and strong legislative language, the court thinks it more likely than not that cable operators can treat the elements of the basic package in a different way from each other.

I expect fights over the basic package and the meaning of Section 623(b)(8) to become much more common, as cable operators try to migrate more popular programming to digital and look to stop carrying analog after the digital transition. For me, the real question is: “Will the FCC weigh in?” If so, when, and how? Under NCTA v. Brand X (yes, that Brand X), the FCC can weigh in at any time, since a decision by a court deciding the issue does not alter the deference due to the agency. So there’s no rush for the FCC to assert jurisdiction on its own. Cable operators are rather unlikely to rush in and ask the FCC to start a rulemaking to preempt the states on this issue. So will someone else go to the FCC and ask them to resolve the issue? PEG supporters or local governments would be a logical choice, but they don’t exactly have warm fuzzy feelings about this FCC Chairman given his willingness to preempt local franchise authorities to the detriment of PEG and local consumer protection. Especially given the outcome in Michigan (which buys time) and the possibility of Congressional help, I expect the PEG folks to wait and see what the new FCC looks like before going to the FCC.

Broadcasters might also look to get the FCC involved early, rather than wait for a situation to develop. But that seems unlikely. Still, if folks at PBS or folks representing the independent affiliates get spooked, or if problems develop in the field, we may see the broadcasters come in.

Finally, the FCC itself could wake up and notice the issue. But that also strikes me as unlikely.

Stay tuned . . . .

Martin Gets the Ball Rolling On “Blocking” Investigation: What Does It Mean And What Happens Next?

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As always, I am impressed with the ability of so many people to hate whatever Kevin Martin does, and for so many different reasons! At CES, Martin announced that the FCC would investigate allegations of blocking content and determine whether they violated the FCC’s four broadband principles. Comcast pledged to cooperate in any investigation (although, unsurprisingly, Comcast representatives — along with supposed object of Martin’s affection AT&T and other big telcos and cablecos — said at CES they would restructure or eliminate FCC altogether).

As I said in my PK blog post, while details remain unclear, I am “cautiously optimistic” that this will be a good thing. But it did not take long for the folks in the “Martin is a bastard 24/7 crwd” to express themselves. DSL reports doubted this would go anywhere, while the “why ya gotta hate on cable” crowd at Techdirt opined that Martin would never investigate if it were a telco rather than a cable co.

So we flash forward to yesterday, when new developments began to percolate out of the FCC. Of significance:

1) The FCC issued a public notice asking for comment on our Petition for Declaratory Ruling that Comcast’s “network management practice” of messing with BitTorrent uploads violated the FCC’s “Broadband Policy Statement,” which includes a principle that network operators may not block or degrade content or applications. In a separate public notice (but as part of the same proceeding), the FCC also seeks comment on the Vuze Petition for Rulemaking on how broadband access providers handle and shape IP traffic generally. (Copy of Vuze Petition here, copy of our Petition here).

2) Separately, the FCC issued a separate public notice seeking comment on a Petition filed by Public Knowledge and the usual suspects asking the FCC to declare that wireless carriers cannot deny short codes or block text messaging. This goes after Verizon’s high profile “oopsie” of denying a request by NARAL for a short code. Although, as we pointed out in the Petition, the more likely and pernicious problem is with plain old anticompetitive blocking, such as denying a short code to VOIP provider Rebtel.com and denying applications to major banks offering competing services.

3) Comcast confirmed that the FCC has lanched a formal inquiry into whether it violated the FCC’s broadband policy statement. Comcast reiterated that it will fully cooperate with the FCC, and expects any investigation to show that Comcast did not block content and has engaged in legitimate network management practices.

Not bad for a commitment made a week ago. But what does it mean and where will it go from here? Analysis below . . . .

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Potentially Much More At Stake In Michigan Than PEG — NAB, PBS and Folks Worried About Bundling of Services Better Wake Up And Pay Attention!

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Compared to the primary battles in Michigan, the fight between Comcast and local governments about Comcast’s decision to migrate Public Educational and Government (PEG) channels to digital seems like small potatoes. But potentially, the lawsuit filed by the cities of Dearborn and Meridian in local federal court could have huge impact on how cable operators carry broadcast television and even how they bundle video services with their voice and broadband offerings.

For those just tuning in: Comcast has decided take advantage of Michigan’s franchise reform law and forcibly migrate PEG channels to digital tier, which will require anyone who wants to see PEG channels to get a digital box and will put the PEG channels waaaay up the dial where channel surfers rarely tread. This has prompted angry protests by city officials, and even a reprimand from House Commerce Chair Rep. John Dingell (D-MI). While other cable operators have used such tactics in the past, Comcast appears to be the first operator to do this for an entire state at once.

As a result, Dearborn and Meridian challenged Comcast’s right to move the PEG channels without consent by the localities in federal court. But while this focus remains on PEG, it goes much further. In 1992, Congress mandated that cable operators must offer subscribers a “basic tier” that consists of the broadcast channels and PEG channels. Congress also prevented cable operators from bundling this “basic tier” with any other service or “buy through.”

For reasons having to do with the Telecommunications Act of 1996, cable operators may no longer need to offer a “basic tier.” But if that’s true, what does that mean for broadcasters? Can cable operators forcibly migrate broadcast channels in the same way they claim they can forcibly migrate PEG? And — looking ahead — does that mean that cable operators will have the freedom to change how they bundle packages? Right now, cable operators generally offer their basic video product and then offer all manner of additional services. But what happens if the “basic tier” requirement is really dead? Will we see cable operators get more aggressive, forcing customers to take additional services if they want video programming?

From where I sit (which is really just looking at the plain language of the statutes), it’s a real muddle. I’m glad I’m not litigating. But if I were the NAB and PBS, I’d start paying real close attention here. Otherwise, they may wake up and discover that they are also going on a forced march migration to digital, even if they can keep their channel position and not end up in the 900s.

Analysis below . . . .

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Can users shape traffic better than ISPs? Some Lessons From The Electric Industry.

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A dialog between David Weinberg and Seth Finkelstein on David’s blog raises an interesting question. Dave W argues (as do I) that a network provider is the last person who should engage in such practices, because of the inherent potentials for mischief and the possible conflicts of interest. Seth Finkelstein argues that, as a practical matter in the real world, only the ISP can effectively make a determination on traffic shaping that maximizes the use of the network for everyone, protects time sensitive applications, and prevents a “tragedy of the commons” from a handful of users absorbing all the bandwidth.

David Isenberg (in the comments and in this blog entry) makes the case that we don’t need traffic shaping, just more capacity or, in the alternative, neutral means to reduce packet flow such as throttling all traffic equally or going to metered pricing. Others (including myself) have argued that the problems of “bandwidth hogs” are exaggerated, or that users dissatisfied with the “best efforts” environment of the internet should stick with the network optimized for voice (the phone network) or the network optimized for video (cable, broadcast television) rather than “break” the internet to better accommodate these applications. Neither of these answers, however, is popular in regulatory circles. Further, it is a legitimate argument that we should allow ISPs to choose what product to offer customers. If an ISP wants to offer services optimized for VOIP by retaining the power to shape traffic, why shouldn’t it bring that service to market? This inevitably leads to a debate on market power, availability of choice, switching costs, captive customers etc., etc.

So lets shake things up with something new. I will — for the sake of argument here — accept the proposition that we “need” traffic shaping (like I “need” “scare quotes” so that people will not “quote” me out of context or argue on trivialities). But accepting the need for traffic shaping does not mean ceding all power to the broadband access provider. To the contrary, I argue that we will achieve far better results by giving subscribers the ability to shape their own traffic.

Madness you say? “Tragedy Of The Commons” and all that. Maybe, but the electric industry tells a somewhat different tale. As described in this NYT story, a fair number of folks are taking advantage of pilot projects that allow people to shape their power usage in the same way I propose allowing them to shape their Internet use. Such programs may save $70 Billion in the next few years. Why not see if they can have serious impact on the supposed exaflood of internet traffic that supposedly justifies traffic shaping? Especially when contrasted with the pur privatization model, that gave us the Enron scandal and the California black outs in 2001?

More below . . .

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There's Patriotism, But Then There's Cash

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Like many, I have been both appalled at the federal domestic spying program and the subsequent the effort to undermine the Rule of Law by granting the telcos retroactive immunity. Which is why I don’t know whether to laugh or cry at this USA today story reporting that the telcos shut down wiretaps legally authorized under FISA because the FBI failed to make the requisite billing payments.

But, but, but…..I thought the telcos were noble friends and patriots, who only violated our civil liberties because the government asked them to “do the right thing” and “step up to the plate” to help our national security. You don’t mean to tell me that these noble, brave, patriotic telcos — that, in the words of Rep. Lamar Smith (R-TX) “deserve our thanks, not a flurry of lawsuits” — these true Amerian heroes who so bravely, gladly, and swiftly, and without a moment’s hesitation, broke the law to spy on their customers like you and me, would let a matter of mere money stop them from doing their patriotic duty? You don’t mean to say that when a wiretap is actually legally authorized under the existing law, that the telcos would stop their monitoring of genuinely proven security threats over a trivial matter of a late bill, would they?

Not that I or anyone else should be surprised. “To thine own self be true,” says the Bard of Stratford on Avon, and corporations are profit maximizing firms. Small wonder they will break the law and sell us out in a heartbeat to suck up to the government in the hope of future favors (like, say, subsequent approval of mergers without conditions) while suddenly not giving a rat’s patootie about “national security” or “stopping the next 9/11” when the FBI misses a payment. After all, it’s OK to break the law and abet violations of the constitution to screw your customers, but you wouldn’t want to violate your fiduciary duty to your shareholders.

Even patriotism and national security have their limits, apparently. At least where corporations are concerned.

Explain to me again, Rep. Smith, why these companies “deserve our thanks, not a flurry of lawsuits?” Ah yes, because unlike the FBI, AT&T is NEVER late with the PAC donation check.

Stay tuned . . . .

Of Legitimacy, Paper Trails, and the Power of The Blogosphere: The Clinton/Diebold Episode

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I like this because it makes so many useful points about so many important things in this election season. In particularly, I think there are valuable take aways about the importance of asking questions without pre-judging, the value of a paper trail in voting to everyone, and the power of the blogosphere to raise and answer serious concerns.

Yesterday, the progressive bologosphere began to buzz with rumors that Hilary Clinton had “stolen” the NH primary from Barack Obama because of errors by the Diebold optical scanning machines used by some NH polling places. The allegation rests on an observed swing in results between precincts using the Diebold optical scanners and hand count districts. Notably, the Brad Blog posted this piece which stated that “informal statistics” indicated that precincts counted by hand generally favored Obama by 2%, whereas precincts using the Diebold optical scanners generally favored Clinton by 4.5%, creating a 7% swing.

Few circumstantial evidence items appeared to lend credence to the rumor. Ron Paul supporters claimed Diebold shorted him 31 votes in one NH town. Diebold is not generally trusted by progressives, Clinton is not generally trusted by a number of progressives, and the pattern of wild variance between polling data and actual vote turn outs is similar to that seen in 2004, including the apparent consistency of the error. A general failure of the technology should produce a spread of errors, why would the same machine favor one candidate consistently?

This had the capacity to turn quite ugly (and I suppose still could). But the internet breeds the ability to check facts and analysis and discover more plausible explanations. This analysis from “DHinMI” on Daily Kos Diary, for example, shows why these accusations don’t hold up. Most importantly, NH requires a paper trail, so that it is easy to double check results. The variations are not consistent at 4.5% and only for Diebold optical scanners, but follow a geographic variation that more accurately accounts for the differences. The Ron Paul missing votes likewise appears to be a human error on the part of the town clerk certifying the results rather than the count itself.

To this I will add that we need to remember that we are dealing with relatively modest sample sizes. Quite good by the standards of modern statistical analysis but still relatively small so that a few thousand people changing their minds for different reasons out of over a hundred thousand votes cast can produce a statistically significant change.

But I must disagree with DHinMI that “ultimately, there’s tremendous arrogance and/or ignorance at play when people assume that Hillary Clinton’s victory in Tuesday’s New Hampshire primary is or might be explained by election fraud.” It is a responsibility of citizens to hold their elected leaders accountable, to question results that raise legitimate questions, but — ultimately — to accept answers supported by the evidence. Certainly anyone leaping to the conclusion that Clinton conspired with Diebold on the basis of an initial question went way too far, and should accept the lesson in caution. But the investigation and retention of paper ballots will hopefully do what such investigations do when the subject is innocent: provide a definitive answer that lays the matter to rest and proves once again the integrity of the process, providing needed legitimacy.

I expect many people will shake their heads at those irresponsible internet nuts and their vile rumors, and will take the wrong message that the internet is full of whacko progressives who degenerate to conspiracy theories rather than face unpleasant realities. But I prefer to see this as an excellent example of the system working, just as a mild cold is a symptom of my functioning immune system driving out a virus. It emphasizes the need for paper ballots and mechanisms for confirming results, the importance of getting questions about legitimacy answered rather than having them fester, and the importance of the internet in letting people debate the facts and squash “whisper campaigns” one way or the other.

In Kenya, we have seen what happens when an election loses legitimacy because of widespread mistrust and efforts to suppress inquiry. I rejoice to live in a country where citizens feel free to exercise their responsibility to investigate and question election circumstances that raise questions, and equally rejoice that NH and the internet provide the means to answer those questions. It is neither arrogance nor lunacy to want to double check elections — especially in light of the suspicions raised in the past. Nor is it conspiracy or arrogance to provide answers that sustain the result. Indeed, if there is one lesson we can all take from this, it is the value of treating all those who take their duties as citizens seriously enough to participate with the respect due to a fellow and comrade rather than the hostility of an enemy combatant.

Stay tuned . . . .

We Interrupt This CES Convention For A Breaking 700 MHz News Item

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I’m out here at the Consumer electronic Show with actual blogger credentials (primarily so I can get the free back pack and use the blogger lounge). So, of course, we get major 700 MHz Auction news today before I can even start to do CES blogging.

As reported by my fellow PISC-ER Gregory Rose and elsewhere, Frontline Wireless has dropped out of the bidding. That’s kind of a surprise, given how Frontline fought to get a designated entity credit and still pursue wholesale as a real business model. It’s also impossible to say (at the moment at least) why Frontline self-destructed at the last minute.

Leaving aside the Frontline specifics, the big question is “how will this impact the auction” and “will we see wholesale emerge at all as a model.” Unsurprisingly, most analysts are going conventional and saying (a) D block (which Frontline had targeted) may not attract bids to meet the reserve price, and (c) This makes it even less likely we will see a new entrant, let alone a wholesale new entrant.

Also as usual, I will play the contrarian here. D Block is still very attractive to the conventional carriers looking to get national footprint or others looking for national footprint and willing to work with public safety. If AT&T and Verizon are both serious about this auction (and indications are that they are), both may push hard for D Block — especially if C Block is competitive.

On the new entrant side, it still remains to be seen what Vulcan and Google will do. Even if — as I suspect — Google wants to win the network but not build out, it may find D Block attractive. As holder of D Block, Google could still negotiate with third pary carriers (such as Alltel, US Cellular or even Sprint or T-Mobile) to build the network on its terms and to the satisfaction of public safety. The much lower price of D Block would offset the the aggravation of working with public safety and ensuring that their needs come first.

Finally, there’s Towerstream and the other wild cards like Qualcom. Who knows what they intend, especially given the likely competitiveness for C Block.

So while I’m sorry to see Frontline go, I don’t think it hurts the odds for a very competitive auction or a new entrant. It does potentially make a wholesale network more of a stretch, because Frontline was really the only bidder gung-ho on the model (Google being traditionally in favor of wholesale but making no promises at this point beyond “open”). That’s a shame, but not devestating or fatal to a new entrant.

Stay tuned . . . .

Iowa, oh Iowa, Iowa, Ooooohhh Iowa

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I can’t be the only Dar Williams fan out there, especially on the day after the caucuses. Especially after Iowans appear to have gone through the screen door of discretion while some candidates wake up to a nightmare/that I could not bear to see/They were out caucusing/A freezing night in Iowa/But they were not voting for me.

I’m actually on sabbatical for the next two months trying (among other things) to actually get the stupid blog book done (talk about New Year’s resolutions), so I’ve been trying to cut back on other work and focus. But what political junkie can resist the urge to comment on last night’s Iowa result? I will, however, try to keep it to TotSF appropriate topics and bipartisan snarkiness.

My take, as aways, below . . . .

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Why Teens Are Smarter Than Regulators — The Difference between Ubiquity and Substitutibility

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Greetings gentle reader! Welcome to another chapter in my occasional series “What All Policy Wonks Need to Understand About Economics So They Can Spot The Industry Baloney” aka “The Econ 101 Gut Check.”

In today’s lesson, we look at two concepts often confused with one another. UBIQUITY, which means how widely available something is; and SUBSTITUTIBALITY, which means whether people regard one thing as a substitute for their first choice. Most arguments for deregulation of the media and the internet rest on confusing these related but very different concepts. For example, the argument that the availability of video clips on YouTube or other types of content creation confuses ubiquity and substitubality, as does the argument that cellphones compete with DSL and cable for broadband access.

But according to this USA Today article (reporting on this study by the PEW Internet and American life project), teenagers who actually use this stuff on a regular basis understand the differences perfectly. And if regulators, policy types, or even just folks who care about getting it right for its own sake want to get our national media and broadband polices right, then we better learn from these teenagers and get the difference between ubiquity and substitutibility straight.

Class begins below . . . .

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