Series of Tubes

Net Neutrality, ICANN, and other issued related to internet infrastructure

Please Tell Idiots In Industry Wireless Broadband Is ALREADY Metered, So Stop Spreading FUD To Support Price Gouging.

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If I had a dime for every article I have seen since AOL went to flat rate back in 1996 that foretold the coming end of flat rate internet access plans and the inevitability of metered pricing, I’d have so much money I could actually afford what wireline providers dream of providing as a monthly fee. Despite the “inevitability” of metered pricing for nearly 15 years, it hasn’t happened and I don’t expect it any time soon. Why? Because not only is it wildly unpopular with the customers (it is one of the few things powerful enough to overcome the switching cost for anyone with a choice), but the economics of it do not make a heck of a lot of sense. Heck, Comcast (the largest residential broadband provider) announced in its earnings call on 4Q 09 that it is reducing its capital expenditure on network capacity for 2010 because it has nearly completed necessary upgrades for DOCSIS 3.0, which gives it all the capacity it needs for the foreseeable future. “We don’t need to invest anymore in our network because we have all the capacity we need” is a might inconsistent with “we need to switch to metered pricing so we can afford to expand our network capacity and create incentives against ‘bandwidth hogs’ and other mythical beasts.”

I can forgive wireline providers for indulging in metered pricing fantasies, while admiting them for perpetuating the useful myth og limited capacity to ward off regulation. But when this article on the purported inevitability of metering wireless plans. This strikes me as “Keep The Government Out of My Medicare” lunacy.

As the article itself concedes without saying directly, wireless broadband plans are already metered. Blow past your monthly usage cap and you will pay per-minute charges. For those not old enough to remember, this was the old AOL metered pricing model. You got ten hours for free, then got charged on a per-minute basis. They abandoned it because customers hated it and moved to flat rate price plans. So what wireless providers apparently mean by “metered” is “find a away to reduce the usage cap further by pretending to call it something else.” I expect this will not catch on any better than the efforts to change pricing structure on the wireline side, and for the same reason. The economics don’t make sense.

Which brings us to the next lesson on network economics. The cost structure of building and maintaining the network is marked by high fixed cost and low marginal cost. That is to say, the vast majority of cost comes from building the network itself, regardless of how many customers use it. Once the network is built, the actual marginal cost of each customer is fairly low. Even an intense user does not “consume” very much of the network resources (the supposed “bandwidth hog” is a problem only because network capacity is ridiculously oversold). The argument that the majority of subscribers subsidizes the few “bandwidth hogs” is simply rubbish. The question is simply how obscenely high a rate of return can the network operator squeeze out of each customer.

Back in the old days, we used to require providers to prove cost. Sure we had metered pricing, but that was so that the very profitable areas could subsidize the high cost areas. Nowadays, we rely on “the market” to regulate cost, with the result that profit per customer for the major providers continues to rise. I’m cynical enough to wonder if that’s why we see this endless parade of speeches by network operators and articles by their sycophants about the “inevitability” of metered pricing — so we will thank our lucky stars that when we are outrageously ripped off that it is at the “bargain” of overpriced flat rates.

Stay tuned . . .

Does Comcast Fear To Win Too Much?

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I grant I wasn’t there, but pretty much everyone who was seems to think the D.C. Circuit oral argument in the Comcast/BitTorrent case was an utter disaster for the FCC/pro-NN forces and a total triumph for Comcast. Given my previously voiced opinion about the judicial activists on the D.C. Circuit, I can’t say this surprises me even in light of the previous precedent. Indeed, from what I have heard, the D.C. Circuit appeared breathtakingly eager to rush past the procedural issues and declare that the FCC has absolutely no jurisdiction to regulate anything an ISP ever does, ever.

So why has Comcast, which (along with its trade association) has argued that it would violate its First Amendment rights for the FCC to regulate its conduct as an ISP, posted this blog entry to explain that of course they totally support FCC regulation of broadband ISPs, under the right circumstances, etc.?

Answer: Comcast fears to win too much. For Comcast (and other broadband providers), the ideal world consists of an FCC with jurisdiction but no authority. That is to say, they want an FCC that appears to have authority to do something, but when push comes to shove is prevented from actually doing anything Comcast doesn’t like. Which is why Comcast wanted to win on procedure and, perhaps, get the court to threaten the FCC that it had no authority. In that universe (which could still come to pass), Comcast could keep Congress from giving the FCC explicit authority by saying it has jurisdiction but keep the FCC from doing anything by claiming that it lacked authority for any specific action.

But there is every indication that the D.C. Circuit will go much further, and find that the FCC has no jurisdiction to even consider regulation of ISP behavior no matter what the circumstances, because it doesn’t believe that ancillary authority exists. While that sounds like exactly what Comcast would want, it scares them silly. Because even the fear of this sort of huge loss creates a panic that could lead Congress explicitly delegating the FCC extremely clear and unambiguous authority.

More, including a shout out to all my fellow Buffy the Vampire Slayer fans, below . . . .

UPDATE: According to this blog post by Washpo Reporter Cecilia Kang, I’m not the only one thinking this way. A few more choice remarks from NCTA’s Kyle McSlarrow about how the FCC’s role is to be a big ATM for his members may get even this Congress off it’s rear end.

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McDowell Forgets He Already Voted That FCC Has Authority To Enforce NN Rules.

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I recently complained that no one else ever seems to follow the record on the network neutrality stuff. But Commissioner McDowell took the prize for failure to remember what he had previously voted for in this very proceeding back in March 2007 when the Commission voted out the Notice of Inquiry that started this whole thing. Mind you, McDowell should not feel too bad, given that nobody else at the FCC seems to remember this stuff either. Not when they wrote the Comcast/BitTorrent Order, nor even when they wrote the Notice of Proposed Rulemaking last week. Despite the fact that both items are actually in the same blasted docket. Because good God almighty, how hard is it for the staff at the FCC to actually know the friggin’ docket? It’s just the basis for this entire proceeding. And the entire collective agency cannot remember that it voted as settled law by 5-0 that it has authority to regulate and enforce network neutrality rules. And that McDowell not only voted in favor, he explicitly concurred!

I swear, it’s enough to make a poor obsessed policy wonk tear out what’s left of his hair and beard.

More below . . . .

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Canada Adopts Comcast/Bitorrent Standard For Network Management

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On the eve of the FCC’s upcoming Network Neutrality rulemaking, Canada has now settled its definition of “reasonable network management” and set rules for traffic throttling. Amazingly, the rules the Canadian Radio-television and Telecommunications Commission (CRTC) settled on for “reasonable network management” look a lot like the standard our own FCC settled on in the Comcast/BitTorrent Order, but even stronger on the notice and transparency side. Hopefully, the FCC is paying attention here as it considers its own rulemaking on the definition of “reasonable network management.”

You can read the CRTC press release here and the detailed order here. The CRTC also says that it will sue this new framework “to review practices that raise concerns or generate complaints.” i.e., it will treat this as the equivalent of the Internet Policy Statement and entertain complaints like the Comcast/BitTorrent complaint.

While this means I will no longer have my realtime experiment to see if unrestricted traffic shaping screws up broadband, it does make the FCC look less like whacked out nutbars who don’t understand engineering and threaten the entire internet and more like foresighted regulators who are ready now to move on to a formal rulemaking rather than merely rely on a framework.

Moe below . . . .

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A Brief Nod To Cox For Raising Its Bandwidth Caps

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I need some sort of icon or whatever for “while I don’t necessarily like what you’re doing, I like the way you’re doing it.” Last week, that went to Speakeasy for giving excellent notice on its unfortunate decision to block certain phone numbers. This week, my “Tip of My Hat While Wagging My Finger” (yes, the reference Stephen Colbert is obvious) goes Cox Cable and their decision to increase the size of their bandwidth caps (new terms of service here).

I am not happy with bandwidth caps, but don’t have a position yet on regulating them unless they are so obviously limited that they appear designed to protect video revenues and fall into the antitrust/competition zone. I recognize there are advantages and disadvantages to metered pricing. In the short term, it can help bridge the gap where demand for capacity rapidly outpaces available capacity. In the longer term, it works to reduce use and innovation which has negative implications for our economy and overall digital future. It’s also not that clear that there is a good linkage to bandwidth caps and actual capacity limits, and whether bandwidth caps discourage investment in capacity by making it easier and cheaper to cap use rather than build capacity.

Still, if one must have bandwidth caps, then they need periodic review and should get upgraded as “average” use grows and as network operators make needed upgrades. So while I’m not thrilled that Cox has bandwidth caps in the first place, I’m pleased they have now upgraded them. Hopefully Comcast, which has had the same bandwidth capacity cap for a year now, will soon follow suite and upgrade its 250 GB cap.

Stay tuned . . . .

Speakeasy now blocks calls — this is getting serious.

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In the wake of reports that Google Voice is blocking calls to “traffic stimulator” sites (like free conference calling and free porn sites), Speakeasy has now changed its terms of service to explicitly block calls to these sites with its VOIP product. To its credit, Speakeasy directly informed its users (a friend forwarded me the email reproduced below). But this now elevates the question of VOIP providers and calls to a new level.

The FCC has danced around the regulatory status of “interconnected VOIP providers” (meaning VOIP providers that connect to the regular public switched voice network (or PSTN)). It has required regular phone companies to interconnect with VOIP providers in the famous Madison River case, and subjected VOIP providers to Enhanced 911 rules and CALEA, but has shied away from calling them telecommunications services. So the ability of VOIP providers to engage in the kind of “self-help” the FCC said was off-limits when the traditional Title II phone companies tried it. (Actual Order here for us legal buffs).

I’m not making a specific recommendation here because I’m still trying to gather info. As a general rule, I despise regulatory chameleons who shift regulatory treatment based on what their best interest. If you want to be a Title I information service and be able to refuse to connect calls, don’t complain when you get blocked because you are not eligible for mandatory interconnection under Title II. But I’m also well aware that reality matters and its intrinsic messiness means that these inclinations need to be guides rather than hard and fast rules. I am aware of my ignorance of the factual situation enough to know that I’d like to have a lot more information about the nature of the services and the regulatory environment (about which I know only enough to make my usual uninformed guesses).

But the one thing I can say definitively is that the longer this goes on without any FCC response, the more VOIP providers are going to look to save themselves money by blocking these “free conference call” sites.

Stay tuned . . . .

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A Brief Response To Richard Bennett's New Paper

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I salute Richard Bennett’s new paper Designed for Change, in which he traces the engineering history of the end-to-end principle. It is a serious paper and deserving of serious response. Unfortunately, it being right before Yom Kippur and various deadlines, that more serious response will need to come from elsewhere. I can give only a brief, surface response — reality is messy.

OK, too brief. A bit more elaboration. Richard Bennett is eminently qualified to write the technical history and draw engineering conclusions. As are a large number of other folks who take very different views on the issue of net neutrality and the virtues of end-to-end (Vint Cerf, David Reed and kc claffy to name a few folk of my acquaintance). The history described by Richard is layered onto an equally rich history of political and economic events which all interweave, and continue to interweave, to create a complex and messy reality in which public policy tries (in my opinion) to set rules to create the strongest likelihood of the best possible outcome.

More below . . . .

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Canada Continues To Play With Itself For My Amusement — CRTC Allows New Tarrif for Metered/Capacity Limited Wholesale Services.

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Back in December, I was very excited by the decision of the Canadian Radio-Telecommunications Commission (CRTC) to permit Bell Canada to throttle traffic for its wholesale customers. This represented the first OECD country taking a major step away from mandatory unbundling since the FCC deregulated our telcos in 2005. As a lover of empirical data, the thought of another country playing games with its critical infrastructure to test market absolutism struck me as a welcome relief from the U.S. always playing the guinea pig on free market absolutism.

And now, CRTC has gone further. In this Order, the CRTC approves an interim tariff for usage based billing (UBB) or, as we would call it here, metered billing with a capacity cap. I’m not sure if, reading this, it merely permits Bell Canada to offer a wholesale metered plan or if it allows Bell Canada to drop their unmetered plans and offer only metered plans. If the later, CRTC has pretty much delegated the entire industry structure over to Bell Canada. But even if this is just an option, it lets Bell Canada set the business model for how ISPs can do metered billing. So again, Bell Canada is going to have pretty tremendous influence on how the business model for DSL delivery evolves going forward.

Bell Canada had also asked for a fairly steep charge against an ISP if the ISP could not identify the specific customer using capacity, since that would evade the capacity cap. Happily for independent ISPs in Canada, the CRTC decided to hold off on that one for a bit.

As always, I shall be very interested to see what happens as a result. It’s always rare to see a similarly situated country willing to become a laboratory for experiments with its critical infrastructure. I look forward to seeing multi-year data on what happens to their broadband penetration, pricing, and overall use as a consequence.

Stay tuned . . . .

Could NTIA Please Put ICANN Out of Its Misery Before It Embarasses Itself Further.

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I mostly follow the ICANN follies from sentimental reasons. Can it really be more than ten years ago when naive Clintonistas conspired with engineers trying to insulate themselves from politics and a slew of bullies from the intellectual property mafia to create what has become a runaway warning to the world about what happens when you have the power to tax and absolutely no oversight? Why, I can remember when ICANN was a modest little operation with a handful of employees and a budget of under $5 million — and we wondered then what they needed all that money for. What is it now? Oh yes, the FY 2009 Budget was $60.7M. Schweet!

ICANN generally trundles along by being insanely technical, insanely boring, insanely complicated, and never doing anything so outrageous that people get rid of it — primarily because no one can agree on what would replace it. Not that ICANN hasn’t had a few close calls, especially back at the World Summit on Information Society. But, just when ICANN appears about to win itself the global governance equivalent of a Darwin Award, hijinks ensue, ICANN eats a little crow, we All Learn A Valuable Lesson In Life, and we start all over again back where we were next season.

In other words, ICANN is kinda like cross between a bad TV sitcom and a reality show. But like so many TV shows with a small-but-devoted fan base, ICANN now finds itself on the bubble waiting to find out if it will be renewed. Sadly, there are signs that ICANN has definitely jumped the shark. And no, I don’t mean the “new kid on the block” addition Rod Beckstrom to boost ratings. I mean recycling the same tired plot line of ICANN staff and Business & IP constituencies trying to limit the ability of the Non-commercial User Constituency (NCUC) to “cause trouble” — especially those meddling civil society do-gooders Milton Mueller and Robin Gross. Season after season, we get to see the same accusations that NCUC is “divisive,” or “not representative” or other code words for “Goddam it! Get those $#@! civil society groups out of our club house!!!!”

More on why NTIA ought to consider canceling this circus once and for all below . . . .

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What We Learn From the VZ-Frontier Deal

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Verizon is selling 5 million access lines to Frontier. I expect the deal will go through — after all, a dominant carrier is getting smaller, there is no place where VZ and Frontier compete, etc., etc. What makes the deal interesting is what it tells us about the problem of relying on ILEC/Cable competition to drive broadband. Briefly, (a) we will be perpetually without fiber in a lot of places if we are going to wait for cable and ILECs to meet our needs; and (b) the real problem for is not just the high cost of deployment, but the need to show high rates of return to keep Wall St. happy. It is this latter that will keep telecom policy a very unhappy and complicated place unless we get out of our usual silos and start thinking about some holistic solutions.

More below . . . .

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