Tales of the Sausage Factory

An insider’s view of the media hegemony

Broadcasters Leverage Monopoly on TV Channels to Push Vacant Channel FUD (Fear, Uncertainty, Doubt)

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It’s always nice when you can give yourself free advertising time on television. So no surprise the National Association of Broadcasters has launched a major advertising campaign in the DC Area to persuade members of Congress that allowing unlicensed use of the broadcast white spaces will mess up the transition to digital television. Indeed, the NAB has made this into a grand campaign, including a new website called “Interference Zones” complete with adorable graphics of “Wally, the Unlicensed Wireless Device” messing up the “pristine digital television signal” to your “beautiful new digital TV.” I particularly like how they got Wally’s fun-loving but malicious grin rendered so “pristinely.”

And, in case you missed it the first time, the site also contains a link to the Association for Maximum Service Television classic “educational” video Your Neighbor’s Static. “Your Neighbor’s Static” is as realistic a portrayal of the effects of white spaces devices on TV as Reefer Madness is a balanced documentary on the pros and cons of medical marijuana.

It’s all just the usual fun and games here in DC, and a fine example of why the broadcasters have so much power as a lobby.

More below . . . .

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Whiny Techies or Dishonest Salesmen?

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I cannot help but add a coda onto my latest article. Steven Pearlstein, econ columnist for the Washington Post, has written this piece on the recent complaints wrt to Comcast. To quote Mr. Pearlstein:

The latest rallying cry is “network neutrality.” This campaign started out with the legitimate goal of making sure that consumers could continue to access whichever services or content they want, rather than having to take those offered by the cable and phone company duopolists. But lately the campaign seems to have morphed into a broader demand that all consumers should be able to pay the same monthly fee for using the Internet, no matter how much bandwidth they use or how much their movie downloads and video chats are slowing service to everyone else in the neighborhood.

Perhaps this is the kind of economic illiteracy we should expect from people who get their information from “The Daily Show” and the Daily Kos. But isn’t it time for the rest of us to move on and acknowledge that the days of the online free lunch are over?

As you may imagine from my recent post, my complaint is not with charging more for more bandwidth, but for dishonestly promising me an “always on all you can eat” connection, then cutting me off when I use it all the time for all I can eat. I sent Mr. Pearlstein the following reply, reproduced below….

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Of Bandwidth Hogs, QoS, and Regulatory Chameleons

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I can live with the internet as a best efforts network. I can live with the internet as a regulated utility. What I absolutely cannot stand is the idiocy of the current regulatory scheme that allows broadband access providers to justify the deregulated state of a competitive best efforts environment because they need to provide a public utility.

Case in point, Comcast’s recent actions of cutting off “bandwidth hogs” and purportedly throttling BitTorrent traffic to its subscribers (Comcast denies it targets BitTorrent traffic). Comcast in its user agreement explicitly reserves the right to cut off users using “too much bandwidth” — although Comcast refuses to say how much bandwidth is “too much.” Comcast defends its actions (including the secrecy of the bandwidth limit) on the grounds that “bandwidth hogs” overload the system capacity and thus slow down everyone’s use of the system.

As I discuss below, Comcast and the other broadband providers are speaking out of both sides of their mouths. They claim they have no liability for anything and should not be regulated because they are providing “best efforts” services and everyone knows it. But when they want to cut off users, tier traffic, or indulge in other behavior that sticks it to subscribers they haul out the “Quality of Service (QoS)” and “critical infrastructure” arguments. “What about voice?” They cry. “What about poor crippled Tiny Tim and his medical monitoring unit, cut off by some bandwidth hog downloading pirated child pornography and Al Qeda instructional videos (which, we will admit, makes a very interesting mash up when viewed via deep packet inspection)? You have to let us do whatever we want and charge whatever we want because people are relying on us for critical services.”

Of course, historically, companies that provided critical services were “public utilities.” At which point, the telcos and cable cos amazingly morph back into laissez faire “best efforts” providers and subscribers need to know there are no guarantees and that which we tell you three times may or may not be true.

My further analysis of the amazing regulatory chameleon, the private public utility, below….

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Arise Ye Independent Cable Programers! The FCC Wants To Hear Why The Current Cable Programming Rules Suck Rocks.

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Well, it took nearly a year since the FCC committed to reforming the leased access and carriage complaint processes as part of its Adelphia Transaction Order, but the wait proved worth it. On June 15, the FCC released a notice of proposed rulemaking asking all the right questions and opening the door for major changes in two critical but dysfunctional laws designed to break the stranglehold big cable companies have over cable programming: cable commercial leased access (47 U.S.C. 532) and the prohibition on favoring affiliated programming (aka “carriage complaint process”) (47 U.S.C. 536).

Done right, these two laws can usher in a new era of independent programming by giving programmers access to cable systems on fair terms. As you might imagine from the current cable programming universe — in which we get 30 different flavors of HBO (affiliated with time Warner) and however many Comcast-affiliated channels Comcast chooses to carry regardless of how few people actually watch, but you can’t find local programming or programming that competes with Comcast or Time Warner programming — the FCC has done a rather crappy job of implementing these rules since Congress passed the current versions in 1992. Nevertheless, wild-eyed optimist and occassionally successful crusader for lost causes that Iam, I think we have a real opportunity here to make these rules work. All it will take is for the progressives and conservatives who like to whine about how the media is all biased one way or another to get off their patooties and actually file something with the FCC. Then all the progressive and conservative would-be programmers will have their chance to sell their programming directly to audiences rather than negotiating with the likes of Brian Roberts, Sumner Redstone or Rupert Murdoch.

Notice appeared in the Federal Register on July 18, which makes comments due September 4 and reply comments due September 21. For those without calendars, this translates to the day after Labor Day and the day immediately before Yom Kippur. So I confess I begged for and got and extension. Now, comments are due September 11 and reply comments due October 12. The relevant docket number for those of you who file (and you know you all should!) is MB Docket No. 07-42.

So tired of watching crap you hate on cable, and wondering why people can’t get good programming on despite having a gazillion channels? See below . . . .

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The Bush Administration DOJ Just Can't Do Enough For Its Friends

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I’ve said it before and I’ll say it again. For AT&T and its industry compatriots, domestic spying is the gift that keeps on giving.

Today, the Department of Justice Antitrust Division announced it had filed written comments in the FCC’s Inquiry Into Broadband Industry Practices, aka lets do a wussy study on net neutrality so we can pretend we are defending the public by ‘being vigillant.’ And — surprise, surpirse, SURPRISE! — the DOJ Antiutrust division comments look like the “Cliffsnotes version” of the AT&T filing.

So to recap, in the last few weeks, we have seen top Administration officials go public with classified data to push for retroactive immunity for the telcos for domestic spying, we’ve seen AT&T admit that they “accidentally” bleeped out Pearl Jam’s anti-Bush lyrics, and now we have the DOJ Antitrust division going to the mat for their buddies at the FCC.

I tell you, in this day and age of rampant cynicism and political opportunism, it warms my heart to see the Bushies stick with their buddies through thick and thin, and to see AT&T doing the same. Never mind what it looks like! As Mirror Universe (Evil) Cartman would sing: “You guys are my best friends, through tick and thin we’ll always be together . . . I love you guys.”

Of course, it probably helps that the tiering that the telcos and cable cos want to do makes it much easier to monitor traffic via deep packet inspection, and the fact that it is an “information service” rather than a telecom service means the telcos and cable cos can do whatever they want with the data (they don’t even need to get a warrant, as they would to take advantage of CALEA). But it’s mutual self-interest like this that keeps friendships strong! This way the DOJ gets its domestic spying built into the architecture, and the cable and telcos get to fulfill their fantasies of exacting monopoly rents out of every single bit that crosses their networks (despite the collateral damage to free speech and the long term damage to the economy as a whole). But hey, a “duopoly tax” in the form of higher costs for slower speeds is a small price to pay to have surveillance equipment built directly into the network architecture — and to help a true friend.

You can read my official reaction as VP Media Access Project in this press release on the MAP web page (also reproduced below).

Stay tuned . . . .

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700 MHz Appendix: A List of All My Posts on The 700 MHz Auction Proceeding

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Well, it’s been a fun couple of months. I expect we will see more action on the actual implimentation of 700 MHz Auction, new developments, and so forth. But I’m rather hoping to ratchet 700 MHz back from overwhelming white-whale-type obsession to just one more spectrum item amidst the spectrum and non-spectrum stuf I cover. For example, the M2Z application has taken a serious turn for the interesting.

So, preserved for posterity, and because it makes my life easier than going through the archives, I list every TotSF 700 MHz Auction post to date.

Stay tuned . . . .

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Assessing the 700 MHz Order Part V: The “Property School” Takes It On The Chin

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In this final installment assessing the FCC’s Order on the 700 MHz auction approved at the July 31 Commission meeting, I want to conclude by placing this in the context of the broader spectrum reform debate, notably the Property v.Commons debate.

Short answer, the Property School really took it on the chin here. Not like this was a big victory for the “commons” school either, however, although the C Block conditions helped a smidgen there by reasserted the Commission’s right to regulate and the First Amendment value of open platforms. Actually, I’m talking about the invocation of Section 316 to move a licensee that was making it very difficult for the FCC to resolve the cross-border interference with Canada caused by the new band plan. In keeping with the extremely pragmatic nature of the Martin FCC, the Commission resolved a roadblock by calling upon its statutory powers and telling a licensee: “Sorry dude, you gotta move for the public good.”

This would be wholly unremarkable if some of us didn’t remember back to a distant time a few years ago when the times, they were a changin’, the ideology battles was ragin’, and partisans on both sides confidently predicted the end of “command and control” regulation. But change for anything with as much inertia as spectrum regulation does not happen overnight or even in a matter of years. It happens gradually, with many maddening ebbs and flows. And, as in the case of the stubborn licensee and shift to avoid interference with Canada, we rediscover why “command and control” is never quite so dead as academics, reformers, and others seem to think.

More below . . . .

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Public Knowledge And the IP3 Awards

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Once again, Public Knowledge is calling for nominations for its IP3 Awards. These awards honor people who have made valuable contributions in the fields of intellectual property, information policy, and internet protocol. Nominations must get in by September 14. Send nominations to IP3nominees@publicknowledge.org.

To quote from the PK announcement:

These are individuals who over the past year (or over the course of their careers) have advanced the public interest regarding one of the three kinds of “IP.” While these increasingly overlapping policy arenas pose important challenges for us, they also create important opportunities for creative individuals in each of the three underlying fields to advance the public interest.

Normally, this is where I would insert a rather broad hint that the labor of yr hmbl obdnt blogger and others in the realm of open spectrum would make me an excellent candidate for nomination. Fortunately, you are spared this outrageous and self-serving spectacle by the fact that I am actually judging the nominations this year. Accordingly, nary a word of encouragement that might suggest bias on my part shall pass my lips or make it to this public page.

Instead, I’ll just urge everyone to send nominations in by September 14. Remember, send your nominations to IP3nominees@publicknowledge.org.

Stay tuned . . . .

Assessing the 700 MHz Order Part IV: Lingering Doubts and Details

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The Wireless Bureau has released its Public Notice (“PN”) for the 700 MHz auction. In addition to setting the date for the start of the auction as January 16, 2008, the PN also addresses a bunch of questions left over by the Order. The biggest of these are: (a) Setting rules for package bidding; and (b) setting reserve prices on a “per block” (rather than “per license” basis) for the auction.

What does that mean? Well, the Commission in the Order decided to protect itself politically from accusations that it had set the rules too aggressively and therefore killed the auction. The Commission therefore used its authority to create “reserve prices,” or minimum prices that bidders must meet before the Commission will award the licenses. The Commission has used reserve prices before, but generally on a license by license basis not on a “block by block” basis. Nor has the Commission ever guaranteed a reauction if a block of licenses fails to meet a set reserve price.

“Package bidding,” as discussed in previous posts, means allowing people to bid on a set “package” of licenses rather than requiring a bidder to bid on each license individually. This encourages people to bid because it means I won’t get stuck with licenses I don’t want if I fail to win one or two critical licenses that make it worthwhile (this is called the “exposure” problem). So if I only want the C Block licenses if I can get national coverage, I will still participate in the auction because I know if I lose any C Block licenses, I won’t get stuck paying bilions for the licenses I did win but now no longer want.

The use of this combination of factors, along with the failure of the Commission to adopt an “either/or” rule that would require a bidder to go after either the D Block license or C Block licenses, makes me uneasy. I can see scenarios where a bidder gets the D Block cheap, then chooses to enhance coverage by bidding aggressively for one or two C Block licenses. That’s not necessarily bad, except it may prevent the creation of a second national player because it deprives the second national player of licenses it needs to complete its package (I’m not postulating deliberate blocking, you understand, I’m looking at the potential interplay of circumstances frustrating the likelihood of new national entrants). OTOH, the ability to bid on both D block and C Block may encourage bidders to be more aggressive in both blocks, and may create a larger pool of bidders for these blocks over all.

But what really worries me is the reserve prices. Why? See below . . . .

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Assessing the 700 MHz Order Part III — Anonymous Bidding Alone Makes This a Big Win

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Regular readers will know that, as far as I am concerned, getting anonymous bidding automatically makes this Order a big win. I pushed hard on this in the lead up to the AWS auction a year and a half ago. Sadly, I lost. As a result, the cable companies were able to block the DBS guys from winning any new licenses, and the incumbents generally succeeded in keeping out any potentially disruptive new entrants (the cable guys having made it clear they would not compete with the cellular guys).

Fortunately, Greg Rose spent a year crunching the data and demonstrated that if the incumbents hadn’t rigged the auction, it sure looked like it from a statistical analysis/game theory perspective. With this “smoking gun” evidence in hand (utterly dickish footnotes by the Wireless Bureau staff to the contrary), we were able to persuade the Commission that adopting anonymous bidding rules would make the auction more competitive, give new entrants a better chance, and as a result probably increase the auction revenue overall.

So, having lost this last time around, I consider it a real coup to get it now. As both Google and Frontline supported anonymous bidding as necessary to encourage new entrants, I am hopeful that we may still get our “third pipe” provider even without wholesale open access.

Analysis below . . . .

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