Cable

cable, franchising, related issues

Can The States Really Pass Their Own Net Neutrality Laws? Here’s Why I Think Yes.

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We are seeing lots of activity in the states on net neutrality. The Governors of Montana, New York and New Jersey have issued Executive Orders requiring that any broadband provider doing business with the state must certify that it won’t block, throttle, or prioritize any content or applications. Several states are looking at passing legislation applying some version of the 2015 FCC Net Neutrality Rules, with California furthest along in passing something that effectively replicates the pre-2017 rules. All of which raises the question — can the states actually do that?

 

The FCC not only says “no,” but in the 2017 Net Neutrality Repeal Order, the FCC purported to explicitly preempt any state effort to recreate any net neutrality rules. However, as I pointed out back in 2011 when Republican Commissioners wanted to preempt state reporting requirements, the FCC does not have unlimited preemption power. The FCC has to actually have some source of authority to preempt localities. Indeed, Chairman Pai was so insistent that the FCC lacked the authority to preempt state regulation of intrastate communications services that — in a highly unusual move — he refused to defend the portion of the FCC’s Prison Phone Order capping intrastate rates.

 

 

The critical question is not, as some people seem to think, whether broadband involves interstate communications or not. Of course it does. So does ye olde plain old telephone service (POTS), and state regulated that up to the eyeballs back in the day (even if they have subsequently deregulated it almost entirely). The question is whether Congress has used its power over interstate commerce to preempt the states (directly or by delegating that power to the FCC), or whether Congress has so pervasively regulated the field so as to effectively preempt the states, or whether the state law — while framed as a permissible intrastate regulation — impermissibly regulates interstate commerce (aka the “dormant commerce clause” doctrine). Additionally, certain types of state action, such a the action of the state as a purchaser of services, are exceedingly difficult (if not impossible) to preempt.

 

As always with complicated legal questions, one cannot be 100% sure of how a court will decide. But for the reasons set forth below, I’m reasonably confident that the states can pass their own net neutrality laws. I’m even more confident that a state can decide to purchase services exclusively from carriers that make enforceable pledges not to prioritize or otherwise discriminate against content. Mind you, I don’t think either of these is an effective substitute for federal Title II classification and the 2015 rules. But I encourage states to do what they can and for activists to push for state action in addition to federal action where possible.

 

More below . . . .

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Why We Need Title II And Strong Net Neutrality Rules; Or, Fool Me Twice, Shame On Me. Fool Me Every Time — I’m the FCC!

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As we slog away once again on Federal Communication Commission (FCC) Chairman Ajit Pai’s summer blockbuster reboot “Net Neutrality: The Mummy Returns!,” it’s worth noting in passing the anniversary a previous Pai celebration of industry self-regulation, #DitchTheBox. I bring this up not merely as a fairly bitter bit of Cassandrafreude, but to remind everyone why only those who most desperately want to believe ever put any faith in “industry self-regulation” — especially when that industry is the cable industry.

 

The cable operators, along with the telcos and other broadband access providers, all claim to loooove the basic idea of net neutrality and a “free and open Internet.” Mind you, we still have the occasional True Believer trying to tell us how good for us it would be if ISPs could “innovate” in exciting pricing plans like “screwing with your video streaming to charge you extra” or “blocking/degrading your efforts to access peer-to-peer applications without telling you.” But as an industry, the major broadband providers have recognized that they need some kind of fig leaf concession (preferably cemented into law by a compliant Congress). And so we have seen the cable companies falling all over themselves to swear their undying support for net neutrality and promises to do nothing to harm the open Internet.

 

So a brief review of the history of cable industry self-regulatory promises, and Chairman Pai’s willingness to believe them, seems in order for the day.

 

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Welcome Back to the Net Neutrality Fight Summer Blockbuster Reboot!

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Hi everyone! Back from a 3 month sabbatical and my Mom’s heart surgery, and just in time for the nth+1 replay round on Network Neutrality. As with so many things, I can’t believe we are going to reboot this franchise once again and run through pretty much the same arguments. But as with repeal of Obamacare, Republicans would rather focus themselves on undoing Obama’s legacy rather than moving on and getting stuff done. Since they run the show, we play this game again.

 

Regular followers of this blog will know I have been fighting the net neutrality fights since they began back in 1998 (when it was the “open access” fight and the telcos were on our side). I have seen a steady stream of victories and defeats. Time and again, we have found ourselves backed into a corner and had to rally when everything seemed hopeless. However, as I explained back in 2010, there are reasons why network neutrality refuses to die, but that doesn’t mean we’ll win (this round) either. So, in the spirit of movie reboots and sequels, I will quote Captain Kirk to Captain Picard: ”I take it the odds are against us and the situation is grim . . . Sounds like fun!”

 

While I had certainly hoped the Republicans would see reason – Pai has made it clear that he is as obsessed with exterminating net neutrality and every other pro-competitive and pro-consumer policy at the FCC. Pai is obsessed with demolishing every single accomplishment of Wheeler’s as Kahn was to have his revenge on Kirk (which did not, in fact, work out very well for Kahn).  But Pai, and Blackburn and Senator Lee go beyond the usual Obama/Wheeler derangement syndrome (“Wheeler, hates it precious!“) This is full on Davros and the Daleks utter willingness to destroy reality.

 

Now I’ve heard people ask: “But the Republicans control the FCC. They control both houses of Congress. They are determined to ignore the millions of people who have already made their opposition plain, and ignore all the mountains of evidence that sits before them. What can we possibly do?”

 

Well, I have a message for Chairman Davros and his army of industry Daleks.

 

Stay tuned . . . .

Update on Muni Broadband Decision. The Fate of Pinetop, N.C.

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Last week, I wrote about the 6th Circuit’s decision in the muni broadband case, TN v. FCC. I mentioned in passing that the opinion pretty much keeps the status quo. Then I found from a reader about Pinetop, N.C.

 

As reported here and here, Greenlight, the muni provider of Wilson, N.C., took advantage of the FCC’s 2015 Order and began offering gigabit broadband in Pinetop, population 1400. Pinetop lies in Edgecomb County, next door to Wilson County. Under the 2010 N.C. anti-muni law, Greenlight could serve anyone in Wilson County but not go outside Wilson County to neighboring Edgecomb  County. But Wilson decided to take a shot and honor Pintetop’s request to provide service (Greenlight already provides electric service in Pinetop as a muni electric provider, so it wasn’t much of a leap).

 

The legal situation on this is now somewhat complicated. The 6th Cir. had not stayed the FCC’s preemption order in 2015, so it was totally legal for Greenlight to offer service. What is unclear now is how to read NC law now that it is “un-preempted” by the Sixth Circuit overturning the FCC. I admit I have no idea how to even begin to answer this question.

 

But it’s not an abstract legal question. The availability of broadband in Pinetop matters a great deal to the people of Pinetop.

 

Stay tuned . . . .

Broadband Privacy Can Prevent Discrimination, The Case of Cable One and FICO Scores.

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The FCC has an ongoing proceeding to apply Section 222 (47 U.S.C. 222) to broadband. For those unfamiliar with the statute, Section 222 prohibits a provider of a “telecommunications service” from either disclosing information collected from a customer without a customer’s consent, or from using the information for something other than providing the telecom service. While most of us think this generally means advertising, it means a heck of a lot more than that — as illustrated by this tidbit from Cable One.

 

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Cable Set-Top Box Arguments: Nothing But Reruns

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It is inevitable that right before a major filing on an issue that the cable guys HATE!!! with all the passion of an injured monopolist, the we see a flurry of distracting nonsense designed to fuzzle the FCC, generate bad trade press, stoke the wholly-owned subsidiaries in Congress, and provide more material for the chanting cheerleader chorus. You may remember this from 2014’s: “Net Neutrality — The FCC Is Totally Gonna Lose On Banning Paid Prioritization,” and its 2015 Sequel: “No Wait, We Were Totally Lying Last Time, Banning Paid Prioritization is Cool But The FCC Is Totally Gonna Lose on Title II.”

 

Meanwhile, Comcast steps up with some “deal” that supposedly totally solves the problem they say doesn’t exist anyway so now there is no reason to do anything. In net neutrality, that was “look, we cut a deal with Netflix so you don’t need that silly old net neutrality.”

 

So it is no surprise that in 2016 we see another rerun. With comments on the FCC’s wildly popular (outside the Beltway) #unlockthebox rulemaking going on, aka the “Expanding Consumer’s Video Navigation Choices” proceeding due tomorrow, the cable industry has run true to form. Yesterday, Comcast announced it would make an ap available to Roku to let consumers stream Comcast content (under Comcast’s licensing terms, subject to Comcast control, and only to those Comcast finds sufficiently non-threatening). The fact that Comcast was messing around with the HBO Go ap on Playstation just last year  has not stopped the usual chorus of useful idiots from chanting hosannah’s of praise and declaring the problem solved. (Hopefully I will get to deal with everything wrong with the ap approach in a future post. But the short version is: “swapping one thing Comcast controls for something else Comcast controls is not “solving the problem.”)

 

But perhaps more importantly, we now come to the inevitable second act of this  well worn cable rerun. The press call headed by NCTA CEO Michael Powell with a panel of high power corporate lawyers who will trot out the same arguments they always do on why the FCC is totally gonna lose. I am eternally mystified why anyone takes this seriously because Duh, what else do you expect the cable guys to say? “Oh yeah, we don’t have a legal leg to stand on and the FCC is totally going to win. Damn, I knew I shouldn’t have drunk that bottle labeled Veritaserum!”

Nevertheless, for some reason, pronouncements by lawyers paid to make such pronouncements seem to have some mind clouding effect which not only makes people forget all the previous times these people have made exactly the same prediction, but forget the actual FCC detailed refutation of these arguments in the notice of proposed rulemaking. So once again, we here at Tales of the Sausage Factory will play the part of the annoying little dog exposing the man behind the curtain while everyone else trembles at the Great and Powerful Oz — played here by NCTA CEO Michael Powell.

 

Curtain pulled back bellow . . .

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Net Neutrality Litigation: Round 1 Goes To the FCC.

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Good news! The D.C. Circuit denied the request by the carriers suing the Federal Communications Commission (FCC) to prevent the FCC’s net neutrality rules and reclassification of broadband as a Title II telecom service. As of today, the Net Neutrality rules are in effect, and broadband access is once again a Title II telecommunications service — pending the final outcome of the lawsuit challenging the the FCC’s actions.

 

Reactions from net neutrality opponents have ranged from defiance to “no biggie” with a side of trying to claim a partial win for getting expedited briefing (I’ll explain below why this is a tad disingenuous). On Twitter, I did see a few of my opposite numbers wailing and gnashing their teeth, at the prospect that their beloved Broadband Equestria ruled by the wise Queen Comcast Celestia and Princess Verizon Twilight Sparkle is now going to be converted into a Hellscape overrun with Tyrannosaurus Tariffs that will devour helpless ISPs like tourists dumb enough to go to Jurassic World. Needless to say, supporters of net neutrality and Title II, like my employer Public Knowledge, have been somewhat more upbeat.

 

So what does all this mean for the litigation and the ongoing machinations in Congress around net neutrality? Short version — the court was not impressed with the arguments of the carriers that the FCC was so whacky crazy power-usurping unlawful that this case is the slam-dunk reversal the carriers and their cheerleaders keep saying it is. Mind you, that doesn’t mean the FCC will win. But it does mean that opponents of net neutrality and Title II might want to ratchet back the TOTAL CONFIDENCE OF VICTORY they have exuded until now just a wee bit. It also provides a psychological lift to the pro-net neutrality side that the FCC can win this even in the D.C. Circuit.

 

On the political side, Republicans had hoped that a stay would push Democrats to the bargaining table to avoid the litigation risk. Because the FCC’s odds improve with the denial of the stay, this may have the opposite effect, with Democrats more likely to wait for a court decision rather than try to strike a deal. This could either prompt Republicans to sweeten their offer, or double down on efforts for total repeal.

 

I provide the longer version below . . .

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Verizon Strikes A Blow For Competition And Consumer Choice.

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Probably not a headline anyone thought to see here at Tales of the Sausage Factory, but the fact is that Verizon’s decision to offer “skinny bundles,” and to (at least so far) defend that decision against the inevitable programmer lawsuits, confronts one of the biggest problems in pay TV. For many years now, I’ve talked about the interrelation between large cable operators exercising control over programmers and programmers responding by consolidating so they can exercise market power over cable operators. The result, as laid out in this 2013 paper by S.Derek Turner at Free Press, big cable and big content have become locked in a death spiral driven by ever-increasing prices to the point where even Americans in love with television increasingly look at “cutting the cord” and dropping their pay TV subscriptions altogether.

 

Now before anyone jumps on me, I am fully aware that Verizon is a profit maximizing firm that is doing this for the best of all possible reasons — to keep existing customers and hopefully attract new ones. I’m also aware of the limitations of the offer — they sell it with the lower speed FIOS package because they are going after the cost sensitive cord cutter not the higher end customer who either is not cost sensitive or has already cut the cord and now wants super broadband speed. So what? Public policy is not about getting companies (or anyone else) to do the right thing for the “right reason,” it is about getting companies to do the right thing for their own reason. Verizon sees that good policy (giving consumers more choices) is also potentially good business. Hoorah!

 

Mind you, as with all market dynamics, there is always an interplay between the invisible hand of the market and the very visible hand of government. It is, I would maintain, no coincidence that we are seeing a ferment in pay-tv and online video at a time when the DoJ antitrust division, the FCC and even folks in Congress signal that they will not take kindly to companies exercising market power to get in the way of innovation online. Also, as with the “false dawn” of online video in 2009-10, we can expect the dominant players (including Comcast, now no longer constrained to play nice to try to get its acquisition of Time Warner Cable approved) to fight back. We should by no means declare “mission accomplished” when it comes to breaking up the existing business model/incipient market failure/death spiral. We have a lot of work to do, and companies like Verizon might well settle in court the way DISH and Disney did on the Hopper.

 

Nevertheless, credit where credit is due. Likewise, huge applause to Cablevision for offering an even more revolutionary “cord cutting package” consisting of a digital antenna for free over-the-air-TV and the option to add HBO Go to the package (pay us a small fee and we’ll authenticate the ap for you). While Cablevision is more revolutionary, it does not require it to withstand lawsuits from ESPN and other disgruntled programmers, and maintains the dichotomy of the industry between all or nothing on cable channels which is why I give Verizon a bit more shout out cred here.

 

Now if I can only get Verizon to follow the suggestion I made back in 2008 that they sell high-speed FIOS broadband at dirt cheap prices to get people addicted to speed.

 

I unpack a bit what’s going on and why, and what additional policy steps need to happen to support pro-consumer changes in the industry, below . . .

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Comcast/TWC/Charter — OK, NOW It’s Time To Pop The Champagne, And Thank Staff For Doing Their Job.

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Yesterday I wrote that it was too soon to start celebrating and that we could expect Comcast to muster its vast army of lobbyists and effectively bottomless treasury to keep trying to push its merger through. I even gently chided Tim Wu for declaring the Comcast deal “dead.”

 

Well, I am incredibly happy to eat crow on this one. To my surprise, Comcast decided to pack it in rather than push like Hell for the next few weeks. But on reflection, Comcast’s decision makes sense for several reasons. I will break these out in a separate post. But first, before the wonky stuff, I want to pause and reflect on the last 16 months.

 

At the start of 2014, things looked grim. First, the D.C. Circuit threw out the old Net Neutrality rules. Then Comcast announced it would buy Time Warner Cable. People believed that in corrupt Washington, no one could stop the well-connected Comcast whose CEO plays golf with Obama from getting what it wanted, and assumed the “former cable lobbyist” Tom “dingo” Wheeler would simply hand the Internet over to his cable buddies.

 

In February 2015, the FCC reclassified broadband as Title II. Today, Comcast will announce that it is abandoning its effort to acquire Time Warner Cable in response to resistance at every level of government. And Tom Wheeler appears on track to put a real pro-consumer, pro-competition agenda in place.

 

I know it is typical at this point for me to remind everyone that we have proven once again that Citizen’s movements are citizen driven!   And it is indeed the case that without the massive and coordinated efforts by the grassroots at every level — like my friend Hannah Jane Sassaman and the Media Mobilizing Project taking it to Comcast HQ in Phildelphia (and who continues to organize efforts to reform Comcast’s practices via the city’s refranchising process), the folks at TURN and Greenlining who opposed Comcast at the California Public Utility Commission, and everyone who wrote to the FCC or called their member of congress — we could not have won these battles and the battles yet to come.

 

But we also need to actually appreciate the hardworking folks at the Department of Justice and the Federal Communications Commission who actually did their jobs and looked at the facts and recommended the right thing — despite all the pressure some of the most powerful corporations in America could bring to bear. The staff who took the time to pick apart all the carefully prepared expert statements and the professionally prepared and packaged “evidence” submitted by Comcast and sift through the millions of pages of documents submitted into the record, patiently building the legal and factual case against the merger that could survive not only judicial scrutiny, but the anticipated counter-attack by the army of coin-operated think tanks and shills.

 

Yeah, those guys. The despised “bureaucrats” and the FCC and DoJ bosses who had their backs and gave them room to do the right thing. Them. They did their jobs. They worked hard at it. They came to the right result.

 

Next time you want to score cheap points or enjoy the pleasures of easy cynicism, remember that. I’m not saying they’re perfect, or all good and pure and noble. Heck, I spend a good deal of my time trying to swim upstream and push staff in directions they may not want to go, and am not afraid to call out the bad calls, the politically based decisions, and the stuff that’s just plain wrong — often in rather snarky and unflattering terms. I’ve got a job to do as well, and that means making sure that those in charge don’t get a free pass when they side with special interest against the public interest.

 

But I am saying that there are a lot of people at the FCC — and in federal service generally — trying to do their job and get it right. Sometimes they even succeed, if the process lets them. When that happens, it would not kill you to say “thanks.”

 

Stay tuned . . . .

 

Comcast/TWC/Charter — Looking Good But Too Early To Pop The Champagne.

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We’ve seen a bunch of news reports recently that the Department of Justice Anti-Trust Division (DOJ) staff and the staff at the Federal Communications Commission (FCC) appear ready to recommend that the proposed Comcast acquisition of Time Warner Cable does not pass statutory muster and their respective agencies should take appropriate action. You can review what that means in these two lengthier blog posts I wrote about how DoJ merger review works and how FCC merger review works.

 

Critically, however, as this CNN piece notes, we only have rumors and speculation. Obviously, as an opponent of the deal, I would not be surprised of staff at DoJ and the FCC, after reviewing the record, concluded that this deal caused serious anti-competitive harm and offered no offsetting benefits. But, as someone who has played regulatory poker with Comcast for 15 years now, I can say from personal experience that no one counts Comcast out until the game is well and truly over. Even if the rumors are true (and I have no way of knowing), these would only be staff recommendations. Comcast still has plenty of opportunities to plead, cajole and bully DoJ and FCC into submission.

 

Which is why it’s important to remember my advice from last February with regard to Title II reclassification: DON’T BE THE SEA HAWKS! We need to continue to keep the pressure on to get this over the goal line. You can start at my employer, Public Knowledge, which has this action page up over here.

 

At the same time, while not getting ahead of ourselves, it is important to understand how this deal went from “sure thing, no antitrust issues, these aren’t the drioids you’re looking for, move along, move along” to “on the ropes and sinking fast.” While I’m not going to fall into the trap of thinking we have already won, we have a lot of good reasons to believe that this fight is winnable. I elaborate a bit below . . . .

 

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