Tales of the Sausage Factory

An insider’s view of the media hegemony

Time Warner Cable’s New Pricing Plan And The Dr. Strangelove Rule Of Price Signaling

, ,

“The whole point of the Doomsday Machine is lost if you keep it a secret! Why didn’t you tell the world, eh?” — Dr. Strangelove, from Dr. Strangelove, or How I Stopped Worrying And Learned To Love The Bomb

Time Warner Cable (TWC) has announced it will expand its existing “Internet Essentials” program to more cities in Texas. Users that elect this pricing plan are limited to 5 GB per month. Go over, and you pay $1/GB until you hit a maximum of $25 extra on your monthly tab. Time Warner also provides  you with meters so you can keep track of your usage. TWC also allows you to switch back and forth between unlimited and “essentials” easily and without any lock-in. If I find I keep going over, I can switch back to unlimited. As an added effort to make sure users know what they are getting in to when they opt for the more restricted plan, TWC gives you a 2 month grace period if you switch to Essentials where they track your overages and don’t charge you for them. This is a good thing, because, as I discuss below, one of the issues for these usage based billing/bandwidth cap things is that many people do not have any clue how much capacity they use.

As I’ve written before, I like the way TWC is experimenting with pricing here.  I don’t know if customers will see this as a good deal, but that is the point of experimenting with different price plans. In fact, I wish other providers would experiment this way, rather than simply impose bandwidth caps or usage based billing (there is a difference between them, although most reports treat bandwidth caps as a form of UBB). Oddly, Time Warner Cable’s experiment may tell us a lot not only about whether customers like a low-bandwidth option (and whether five dollars is the right discount for it), but about whether other operators who are forcing their customers to take more constrained options are able to do so by exercising market power rather than because customers want it.

Which brings me to the Dr. Strangelove Rule of Price Signaling, which I describe below . . . .

 

Continue reading

EU Parliament Rejects ACTA; USTR Starts To Get Clue, MPAA/RIAA Still In Denial.

,

Well, it’s been a fun week on the international trade agreement front. Monday began yet another negotiating round for the Trans-Pacific Partnership (TPP) trade agreement, this time in San Diego. To the amazement of everyone, the U.S. Trade Representative (USTR) announced on July 3 it would now include a provision in the intellectual property (IP) chapter recognizing the importance of “limitations and exceptions” to copyright and embracing the international 3-part test for what constitutes suitable limitations and exceptions. (For those not familiar with this term of art, “limitations and exceptions” are things like Fair Use and and First Sale Doctrine in the United States. As the name implies, limitations and exceptions to copyright limit the rights of the copyright holder and create exceptions to the general rule against copying without permission.)

It is difficult to convey to people who don’t routinely deal with USTR and the copyright maximalists that dominate trade negotiations just how stunning a turn around this is, given the fairly well-established limitations and exceptions in U.S. law and the fact that — as USTR acknowledged in its announcement — the three-part test for what constitutes suitable limitations and exceptions is already well-established and incorporated into international law. Indeed, given all this, the incredible thing is that this is, as USTR acknowledges, the first time USTR has included any explicit reference to limitations and exceptions. In addition, as my colleague Rashmi Rangnath points out over at the Public Knowledge blog, while this is a positive step for USTR, we have not seen the new draft TPP text, so the actual implementation of these principles in the TPP draft could still be a major step backward from existing U.S. law.

More . . . .

Continue reading

The Supreme Court Does Not Want To Revisit Constitutionality of Broadcast or Cable Regulation, Get Over It And Get On With Life.

, ,

Remember how conservatives just could not get over the fact that neither Chris Christie or Mitch Daniels — or anyone else they liked better than Mitt Romney — would run for President? Remember how this collective fantasy actually acquired a factesque quality, so no matter how often and emphatically they said “I’m not running,”, hardcore true believers kept saying it would totally happen? As a result, this collective fantasy actually kept impacting reality, with Mitt Romney forced to spend real time and real money persuading potential supporters that their choices really were Mitt Romney, Rick Santorum, Newt Gingrich, or Ron Paul. Really.

I bring this up because we have our own version of this in telecom policyland. Here, a hardcore group of people in telecom policyland believe that the Supreme Court is positively lusting to overturn the two cases that form the mainstay of the FCC’s authority to regulate broadcasters and cable operators: Red Lion and Turner Broadcasting. The rock solid belief that the Supreme Court cannot wait to get its collective hands on these cases cases to overturn them is an article of faith among so many in the telecom world that it influences behavior. Those who favor regulation of things like media ownership and program access live in mortal terror of any change to the rules that might give rise to a cause of action. By contrast, broadcasters, cable operators, and other opponents of any regulation of Big Media keep trying to generate lawsuits so they can strike down what they see as a vile restraint on the First Amendment.

This past term, the Supreme Court had the opportunity to review both Red Lion and Turner. It opted not to do so.  In May, the Supreme Court quietly declined to hear an appeal by Cablevision that would have allowed the Court to revisit the Turner case. In June, the Court not only refused to reconsider Red Lion in the context of the Fox Broadcasting indecency case, they refused to hear the broadcaster appeal of the FCC’s media ownership decision. These cases presented the cleanest, most clear-cut opportunities for the Court to re-examine the constitutionality of either cable or broadcast regulation in years, and the most obvious opportunities for years to come. If the Court were lusting to take on either Red Lion or Turner, surely this presented the perfect chance for them to do so.

But they didn’t. And, just as even the most avid Romney-haters needed to wake up to the fact that Chris Christie wasn’t playing hard to get, folks in Policyland need to deal with the fact that regulation of media ownership and cable remains constitutional for the foreseeable future.

More below . . . .

Continue reading

USTR Manages To Make The ITU Look Good — Which Will Bite Our Rear Ends In Dubai

, , , , , ,

Pointing out that the United States Trade Representative (USTR) does not understand the concept of “transparency” hardly qualifies as news. It’s kinda like “Jerusalem Chief Rabbi Places Last In Pulled Pork Cook Off.” But every now and then, USTR’s generalized failure to understand why increasing public participation, sharing more information with the public, and generally bringing the standard of transparency up to what we would actually consider vaguely transparent actually threatens U.S. interests in other areas.

 

Case in point, the International Telecom Union] (ITU) meeting in Dubai for the World Conference on International Telecommunications (WCIT) this December.  I’ve written before on why I worry a number of the proposals at made by various repressive regimes at WCIT may have long-term consequences for freedom of expression online.  Many global civil society organizations, as well as many countries committed to freedom of expression and fundamental human rights, oppose these efforts to leverage WCIT for such ends. At the same time, however, many of these countries and organizations have long standing serious concerns around Internet governance. In particular, they resent what they see as the dominance of U.S. government and U.S. corporate interests in supposedly neutral “multistakeholder” forums like the Internet Corporation for Assigned Names and Numbers (ICANN). ICANN is the current home for much of what people mean by “internet governance.” This makes expanding ITU jurisdiction to include Internet issues attractive to some of these countries and organizations, despite the danger to free expression, as one of the few possible counterweights to the U.S.

Persuading enough of these countries and other stakeholders that the downside of expanding ITU authority outweighs the potential benefit is therefore the chief challenge for the U.S. delegation. Unfortunately, the continued conduct of USTR in reenforcing the view that the U.S. Government is the tool of industry by doing things like pushing ACTA (which continues to be held up in Europe and elsewhere as a symbol of the U.S. shilling for Hollywood at the expense of free expression), and maintaining a cloud of secrecy around the Trans-Pacific Partnership (TPP) negotiations, makes this much harder. While we are kind of stuck with ACTA, the USTR can do a heck of a lot more around transparency in TPP. Given that the ITU has made a number of conciliatory gestures to civil society on the transparency front in the last few weeks, It would be really helpful if USTR would at least stop pissing on its critics and generally making ITU look good.

More below . . . .

Continue reading

AT&T and XM/Sirius to Get More Spectrum Online? And What Does It Mean for LTE In The U.S.

,

Every now and then, spectrum licensees do something so sensible it actually seems possible that Coase was right about all that rational actor stuff.   So it is with AT&T’s recent joint submission with XM Sirius on how to resolve the long-standing interference fight between the Satellite Radio licensees (“SDARS,” for reasons we won’t get into now), and the “wireless communications Service” (WCS) licensees. You can read a general summary over here and the AT&T/XMSirius letter here.

Briefly, the deal protects XM Sirius from possible interference by sacrificing some spectrum right next to it. This will mostly shaft a company called Nextwave. But AT&T is taking enough of a haircut on its theoretical spectrum rights to deflect the argument that it is trying to benefit itself solely at the expense of others. And while Comcast (also a licensee here) might try to slow things up as a favor to its new BFF VZ Wireless, that seems unlikely. Since this plan appears the only path forward for getting this spectrum into productive use, I expect the FCC will approve it. Hopefully the FCC will approve it quickly, because it will take a lot of work to develop equipment for the band.

AT&T deserves credit for working with XMSirius on this and coming up with something positive and pragmatic rather than continuing the endless cycle of blame between satellite radio and WCS licenses. On the other hand, like the current AT&T effort to refarm its 2G spectrum for 4G, AT&T had to be pushed into it kicking and screaming by denying it the right to buy out T-Mo. This should also emphasize the next direction for the wireless industry: more efficient multiband radios. The Future of LTE is a multiband future (with the exception of Verizon Wireless). Robust technologies like the TV White Spaces will, as predicted by TVWS advocates, play an increasingly important role in licensed technologies as well.

More below . . . .

Continue reading

The ITU, WCIT and Internet Freedom

, , ,

Very few people ever heard of the International Telecommunications Union (ITU) until recently – and with good reason. For more than 100 years, the ITU managed quite nicely serving as the forum for countries and telecom carriers to coordinate insanely-technical-mind-numbingly-boring-but-really-really-important stuff related to making the phone network work internationally, distributing satellite slots, and trying to harmonize what frequencies countries allocate to what services. But now the ITU has suddenly become very interesting. Why? Because the ITU members will hold a rare meeting — the World Conference on International Communications (WCIT) – where the 193 member countries will vote on whether to amend the current ITU rules (“ITRs”) that set the framework for all this extremely important boringness.

Unclear for now – especially in the pre-game – is whether and how the WCIT represents a potential threat to freedom of expression online. I recently had an argument with Professor Milton Mueller (see the comments section of this post on the IGP blog) about this. Milton’s central thesis is that the recent hysteria about the ITU “taking over the Internet” is overblown and that this is just about how carriers negotiate payments. This has been interpreted by some to mean that civil society organizations concerned with free expression online ought to stop fretting about fleets of UN black helicopters seizing the DNS rootservers and relocating them to ITU Headquarters in Geneva.

For a number of reasons, I strongly disagree with this assessment.  Even without the concern that the ITU will somehow “take over the Internet,” certain WCIT proposals advanced by a number of regimes that engage in Internet censorship threaten the future of free expression online. These proposals, from the Russian Federation and several Arab states, would for the first time explicitly embrace the concept that governments have a right to control online communications and disrupt Internet access services. This would reverse the trend of the last few years increasingly finding that such actions violate fundamental human rights – a valuable tool in trying to pressure repressive regimes to stop using such tactics.

More below . . . .

Continue reading

FCC Special Access Reboot — And AT&T’s Somewhat Disingenuous Response

,

Good news, the FCC has decides to one again reboot its seven year old proceeding on “special access.” Given that I have been flogging the FCC since 2006 to do something about this, with occasional reminders since then, I am obviously pleased. AT&T, one of the chief beneficiaries of the current deregulated monopoly regime, is less pleased.  AT&T’s chief argument against the FCC denying it yet another rate hike and demanding AT&T and the other telcos fork over data critical to determining if they are charging monopoly rents is: “Why you bringing up old stuff?”

This is not exactly the pinnacle of legal reasoning or persuasive policy. But in AT&T’s defense, when it’s all you got you make the best of it. Bob Quinn does a masterful job of portraying this as being about legacy copper phone bits that don’t matter anymore and that somehow the FCC taking action here is distracting us all collectively from building the super cool uber fast Gigabit networks we need and would build if only the FCC would let us buy T-Mobile. Or something.

As I explain, however, this isn’t some musty old copper no one gives a crap about, but a rather critical bit of infrastructure generating between $18-20 billion annually and impacting pretty much every aspect of mobile communications and broadband access. And with the cable operators about to become total BFFs with Verizon, what little competition that exists in the special access market appears ready to disappear altogether.

I explain below . . . .

Continue reading

Turning Off The Phone System? What Do You Mean We’re Turning Off The Phone System?

, , , , , , , , , , ,

A few weeks ago I went to a fascinating gathering of a few dozen academics, policy wonks, and others from the U.S.  and elsewhere to talk about the end of the phone system. While by no means a unanimous consensus, a very solid majority considered the phone system obsolete and ready for the scrap heap. This will come as a surprise to those of you who called home on Mother’s Day or who thanked God for a call center number when your broadband connection went down. But in fact, most of you are probably not using a phone service but a “phone service,” so we are half-way to shutting down the actual phone system anyway.

 

For about a year now, folks in the nerdiest, geekiest, obscurest reaches of Policyland and Wonkdom have been talking about how to turn off the phone service and replace it with “phone service.” For those of you enjoying “phone service” from the likes of cable companies or cell phone providers, you may wonder why this matters. Sure, Grandma may finally need to replace that princess phone, but other than that, who cares? As is so often the case, however, these technical issues matter quite a bit in the real world – but you won’t notice until waaaay too late to make a difference. (Unless you keep abreast of these things by reading this blog.)

 

In the best case scenario, we shift over to an all digital network free from antiquated laws and policies that stifle innovation and needlessly increase cost to consumers. In the worst case scenario, your phone becomes an utterly unreliable overpriced service that doesn’t guarantee that you can communicate with someone on another phone network because the two networks are having a “peering dispute” and won’t exchange traffic. What actually happens is anyone’s guess at this point, but the recent effort to totally deregulate “phone service” in California gives us something of a preview.

 

More below . . . .

Continue reading

CISPA Passes House, But I See Reasons For Optimism — Lessons From 2006 And How to COPE With A House Defeat.

, , , ,

In the face of a remarkably successful public outcry, the House Republican leadership moved up the vote on the Cyber Intelligence Sharing and Protection Act (CISPA) by a full day and amended it to make it even more awful. While obviously not a good thing, I see a lot of positive signs for the future fight.

Why? Because CISPA backers faced serious signs of opposition — enough so that they moved up the vote to avoid further R defections. By the end of yesterday, the number of Rs committed to opposition had grown from 2 (Barton and Paul) to 28. That sounds small, but the trend was rapidly accelerating in the wake of the Tea Party uprising on this. Meanwhile, the White House veto threat combined with the civil liberties outcry from the left help shore up Democratic resistance. While it did not prove sufficient to prevail in this round, it will prove extremely important as we roll on to the Senate.

In many ways, the situation here reminds me of when Congress considered the Communications Opportunity Enhancement Act of 2006 (COPE). Among other things, COPE would have prohibited the FCC from adopting significant Net Neutrality rules (which everyone at the time actually assumed the FCC had the authority to do, so opponents wanted legislation to limit that authority). Almost exactly six years ago, we suffered a similar defeat in the House. Then, as now, I saw good reasons for optimism that we will ultimately prevail. In fact, our situation then was much weaker than the situation now.

I explore some of the reasons to believe that we can continue to ramp up the fight against CISPA in the Senate and ultimately prevent passage of either CISPA or its equally- nasty-but-for-different-reasons Senate version, the Cybersecurity Act of 2012. (While I appreciate the White House veto threat, I prefer not to rely on it.). But before I dig into any detail, let me repeat what I said 6 years ago when COPE passed out of Committee despite the effort of grassroots activists on the left and right to stop it:

There’s a lesson here . . . . YOU CAN’T OUTSOURCE CITIZENSHIP. You can’t let “the tech companies” or even “the consumer advocates” or anyone speak for you. Citizenship carries responsibilities that go beyond the ritual of voting every two years. But when citizens wake up and speak up, and speak to each other, they find — to their surprise — they are strong. They find they have power. And they find that being a citizen may take hard work, but it is so, so, SO much better and more satisfying than being a couch potato. As the great Jewish sage Hillel said: “If I am not for myself, who will be for me? If I am only for myself, who am I? If not me then who? If not now, when?”

More on the current situation below . . . .

Continue reading

Verizon/SpectrumCo: Spectrum Gap v. Spectrum Crunch, Why Competition Is Actually Worse Off If Verizon Swaps AWS For 700 MHz (Part III)

,

For those just joining, Part I recounted how Verizon suddenly encountered unusually strong headwinds in its effort to acquire AWS-1 spectrum from the cable consortium known as SpectrumCo (Comcast, Time Warner Cable, and Bright House) along with the AWS-1 spectrum that Cox Cable took when it broke up with SpectrumCo back in ’08 (you can get all the details on the deal and I why don’t like it from my Insanely Long Field Guide to the Verizon/SpectrumCo deal ). In Part II, I explained how Verizon’s proposed private auction of its Lower 700 MHz A&B block licenses would not resolve the problems with the proposed deal because (a) it wouldn’t address the three side agreements that make this look too much like the foundation of a cartel among the major broadband, video and voice providers; and, (b) AT&T would most likely end up acquiring the licenses.

Now let us assume for the sake of argument that AT&T would not bid for the Verizon Lower 700 MHz licenses. Would that make everything OK?

Sadly, no. Even without AT&T winning the licenses, letting Verizon acquire the SpectrumCo/Cox AWS licenses will massively aggravate the spectrum gap between Verizon and its competitors, while doing little to alleviate the spectrum crunch for competitors. Marguerite Reardon does an excellent job explaining why here, but I cannot help but add a few more wonky details below . . . .

 

Continue reading