Tales of the Sausage Factory

An insider’s view of the media hegemony

Outsourcing Big Brother

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I gave this speech last July at the ACLU Biennial Conference in New Orleans. At the time, the news that major telcos and search engine companies were cooperating with the government by providing all kinds of personal infomration had not yet hit the press. I was just applying logic.

It seems useful to me to publish here as a reminder that the recent headlines are not an aberration or the work of a few evil or gready or misguided men. It is the inevitable result of a system that concentrates power and information in the hands of a few large coorprations with every interest keep those in government happy.

We don’t ask chain saws to distinguish between human beings and trees. They are inanimate tools. If you turn it on, it cuts through things. If you want to make it safer, you need to put on safety locks and other devices, or someone is likely to cut his or her own leg off by accident some day.

Similarly, it is ridiculous to depend on corporations to defend private information. They are designed to maximize revenue for shareholders. This does not make them good or bad, greedy or virtuous. It makes the corporation a tool. If we, as citizens of democracies, care about our civil liberties, then we need to install some safeties.

Stay tuned . . .

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STOP THE WIFI TAX RUMOR

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Freaking trade press should know better, or at least learn to read more carefully. There is a steady drum beat of reports, starting I think with this one at RCR Wireless News that the President wants a “wifi tax.” This is, bluntly, a misreading of the plain language of the President’s budget proposal.

Lord knows there is plenty in the proposed budget not to like, but there’s no “wifi tax.” My analysis (and a little context) below.

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Did the Bells Rip Off America? and Is There An Alternative?

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I want to put two pieces side by side here: Bruce Kushnik’s magnum opus The $200 Billion Broadband Scandal, accusing the Bell Companies of ripping off the U.S. public to the
and Bob McChesnney’s and John Podesta’s visionary Let There Be Wi-Fi talking about the power of unlicensed spectrum as a broadband solution.

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Memo to RIAA: It's not the “piracy” — your music sucks

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For about five or six years now, I’ve been hearing the music industry folks piss and moan about how downloads are killing their profits. My usual response has been to observe that (a) while true that CD sales declined in 2001-2004, those were also years of general economic recesion and it was no surprise sales dropped (the music industry has been pretty quite about this since the CD market rebounded along with the economy in 2005); (b) if you put out an over-priced crappy product, the market will respond.

The problem is that most executives in the entertainment industry have enjoyed their monopoly status for so long that when the market finally responds, they get caught completely by surprise and usually enter a state of denial. (This is equally true for broadcasting and movies and cable, al of which have spent the last ten years or so busily consolidating and producing predictable products. Eventually, sales and ratings decline. And these guys are are surprised and looking for some regulatory fix they can plug to solve their “problem” — like broadcast flag or limits on satellite radio.) As a result, they don’t want to hear that they need to stop abusing their customers and work for a living.

A recent poll provides one more piece of evidence which I predict the music ndustry and their lap dogs in Congress will continue to blissfully ignore. A recent poll shows that most music fans don’t “steal music” and are very happy to pay for quality products — particularly things like downloading that really suit their needs. But music lovers are tired of being treated like trained seals expected to buy whatever the music industry offers at whatever price they chose to sell it in whatever format the music industry insists on providing.

Why this trend is so shocking in the music industry when we see it in a variety of other industries (have YOU driven a Ford lately? Probably not, because they offer crappy behemoth-class cars instead of better fuel efficient ones) I have no idea. I guess being a cartel gives you such a sense of security you forget about that whacky free market you’re always praising in Washington.

Stay tuned . . . .

Adelphia Transaction Advances

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Lost in the hub-bub of yesterday, the Federal Trade Commission voted 3-2 along party lines to approve the proposed division of Adelphia between Comcast and Time Warner and accompanying system swaps. What surprises me is not so much the result (getting conditions in this administration, particularly on a cable merger, was always a long-shot) but the timing. The FCC is still chewing over the data request it made in December, and the Adelphia Bankruptcy proceeding has been rescheduled for mid-March. It smacks annoyingly of a political favor done for a stalwart Republican (did we mention Brian Roberts, CEO of Comcast, is a big Bush supporter and fundraiser?) than the careful reasoning of the anti-trust agency charged with protecting the public. But that’s probably just my imagination post-State of the Union grumpiness combined with discovering how many big companies are spying on us for the government.

My analysis below . . .

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Cable Market Power For Dummies

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Most folks outside of Washington DC still find their cable company an obnoxious monopoly, despite the presence of competitors like DirecTV, Dish Network, and the occassional overbuilder like RCN. But, despite the fact that customers express far more satisfaction with satellite and overbuilder service, most folks remain subscribed to cable. What gives? And how does cable get away with raising prices and favoring affiliated programming in the face of this “vigorous competition.” Needless to say, the cable folks respond with a host of fancy economic papers that they file with the FCC and present to members of Congress.

My own impression, having spoken with a number of economists, is that the Cable Cos use economics the same way Creationists use intelligent design. The point isn’t to engage in real scientific inquiry. The point is to throw enough scientific sounding stuff out there to confuse the issue and make people believe there are two equally valid sides to the debate. My problem is that the FCC and Congress usually end up playing the the Dover School District Board rather than Judge Jones.

Anyway, in an attempt to cut through some of the nonesense, MAP released a white paper of my authorship yesterday: “The Switching Equation” and Its Impact on the Video Proramming Market and MVPD Pricing. As you can tell by the title, even an attempt to write a simple, plain language version of this ends up more complicated than I’d like. (Sad fact is, economics is hard.)

So here’s the short version — most people find it such a pain in the butt to switch from one service to another that they will put up with higher prices, worse programming, and worse customer service rather than kill two days futzing with unsubscribing to cable and resubscribing to someone else. As long as cable doesn’t stink too badly, they can keep enough market power to make it even harder for competitors by cutting exclusive deals for regional sports programming and jacking up the price of video on demand to competitors (Comcast and Time Warner own 78% of iN Demand, the leading supplier of VoD). If we want real competition, we need to have rules that actually address market power and make it easier for people to switch to competitors. Otherwise, we get a lot of empty rhetoric about “level playing field” and “free market” and blah blah, and we still pay ridiculously high prices for cable and broadband service that still suck.

You want proof? Go read the paper.

Stay tuned . . .

Down to the wire in Indiana

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The press has not generally covered the fight in Indiana over their telecom dereg bill, known in the Indiana Senate as SB 245. What coverage there has been has primarily focused on deregulating phone rates or elimination of local franchising of video offerings (i.e., the new telco video products will not need local franchsies). Few stories have observed that Chapter 35 of SB 245, as drafted, would hamstring the ability of local governments to either provide broadband services directly or do so through partnerships with others.

The version of SB 245 that passed the Senate included minor modifications to Chapter 35. In the Indiana House of Representatives, the House eliminated both Chapter 35 and the state franchising provisions. The bill has now gone back to the Senate.

I want to urge folks in Indiana, and elsewhere if you do business in Indiana or otherwise have a connection to the state, to make your views known to the Senate. In I hope people and organizations will tell the Indiana State senators that anything that impedes the flexibility of localities to create effective broadband strategies, such as Chapter 35, cannot be good for the people of Indiana.

I have included a draft letter below. Please feel free to print out or in any other way use it to help stop Chapter 35 of SB 245.

This is also a good time for me to stress that, as usual, I speak only on behalf of myself and not my employer or Wetmachine.

Stay tuned . . . .

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Too geeky even for Wetmachine

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For all you progressive’s who remember the TV Show Babylon 5, I wrote this on my LJ.

Back in the mid-1990s, it amused me no end to see know-it-alls pound on [series creator] J. Michael Straczinsky for the ridiculous idea that the government could shift from democratic to essentially a military dictatorship in so short a time, simply by leveraging the fear of “alien influences” assaulting our “way of life.” “Ho ho ho,” they laughed. “That trick may work on others, but it couldn’t happen in a real democracy like the U.S. I mean, if the President started to intrude on people’s rights and civil liberties, started locking them up and holding them for years without pressing charges, or started spying on his own people, no one would sit still for it! He’d be out on his ear when everyone rose up in protest.”

Sadly, I think JMS may end up with the last laugh, although I doubt he will find saying “told ya so” much comfort.

What the $#@! is the “Public” Internet

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So here I am, at one of these DC discussion fests between “stakeholders” on “network neutrality.” Net neutrality is what we talk about post Brand X . It means the provider can’t mess with the packets (other than to screen malware or engage in network management). Needless to say, the incumbent wireline providers are not happy with this thought, while all the time proclaiming they will never, ever mess with content.

So what incumbents float instead is the concept of providing “enhanced service” to those with content who will pay extra to be given “priority” to the broadband provider’s subscribers. (“Hey, nice packets you got there. Be a shame if anything . . . happened to them on the way to the customer. But good news. We’re here to offer you a ‘premium’ service that gaurantees you speedy delivery! I suppose I shouldn’t mention this, but your competitor has already signed up . . .”)

This is being justified, in part, as offering premium service on the “private internet” as opposed to the “public interent.”

What the #$@! is a “public internet?” Unless there is some remnant of the NSF backbone out there, or we’re talking about the government funded root servers, there is no such thing as a “public” internet and never was. “The Internet” (back when everyone always used to capitalize it) is a “network of networks” which, since the mid-1990s, have been private networks.

So why are wireline incumbents pushing the “public internet” meme? See below . . .

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