Series of Tubes

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

I Debate The Would-Be Vulcans

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So Marvin and I had our debate with Ken Ferree and Lawrence Spiwak. On the whole, I thought we mixed it up pretty thoroughly and civilly — although you can all judge for yourselves by watching the archive here (free registration required).

The issues won’t surprise anyone, but I want to address one meta-issue on framing. Perhaps not surprisingly, the anti-NN folks repeatedly seek to claim the mantle of reason, relegating us pro-NN types with our emotional commitment to romantic ideas like democracy and free speech to the status of irrational and unreasonable fanatics.

Ah, de ja vu all over again. I can remember when I heard similar sentiments from Ken Ferree and his former boss Michael Powell during the fights over media ownership reform in 2002-04. Of course, these were the same “logical,” “rational,” purportedly proof driven folks who developed the “diversity index” which weighted the Dutches County Community Television station as having the same media power as the New York Times, and inspired the Third Circuit to observe that believing this “scientific” approach reflected reality “would require us to take leave of our senses.” But, undeterred by the fact that the Third Circuit considered his previous efforts at “scientific reality building” to be either a bad joke or an excellent parody, Ken is quite prepared to rely exclusively on the view from “Ferree Land” and denigrate the rest of as emotional hysterics who listen to voices from the past.

My beef with Lawrence Spiwak is rather different. Unlike Ferree, Spiwak is actually living in the real world. My complaint is not that he lives in fantasy land or ignores evidence. My complaint is that he wishes to define the terms of the debate in a rather narrow way — i.e., only economic analysis and only University of Chicago-type analysis at that. All else is mere “rhetoric” and “emotion,” and only a proper grounding in rational analysis (aka economic analysis by economists of the Chicago School) can properly frame things. (I should point out the Spiwak’s colleague from Phoenix Center, George Ford, took a similar line at the Federal Trade Commission broadband competition hearing last year, chastising Tim Wu and myself for meddling in economic matters in which we were not competent to express an opinion.)

As one might expect, I find the attempts of the would-be Vulcans to define the terms of the debate unpersuasive. To see me do unto them as Kirk did unto the M5, Landru, and the other would be uber-rational computers, see below . . .

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The Boston Tea Leaf Party

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Those interested in a great eye witness account of what happened at the FCC hearing in Boston on February 25 should read fellow Wetmachiner John Sundman’s piece on the part he saw (including the reception afterwards). But after listening to the FCC’s video archive, reading the statements, and reading the coverage, I’m willing to read the Boston Tea Leaves and see where we are so far and how I think this ends up.

Speculation below . . . .

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The Markey-Pickering “Net Neutrality” Bill: Grinding Out One More First Down In The Internet Freedom Bowl.

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God knows I love Ed Markey as one of the true defenders of us average folks. Time and again, he has proven himself that rare combination of smarts and political savvy to remain an effective champion against media consolidation and telco and cable interests even when he was minority member. Which is why it always pays to pay attention when he acts.

Markey’s latest bill, The Internet Freedom Preservation Act of 2008, H.R. 5353 (co-sponsored by retiring Republican “Chip” Pickering (R-MS)), would seem at first glance pretty weak gruel compared to his previous bill in 2006. So what lies behind this apparent retreat from an outright ban on ISPs discriminating to Congressional findings, a mandate for some FCC hearings, and a report? After all, with Markey chair of the Subcommittee, shouldn’t he be pushing something more aggressive? I mean, the Dems control both houses of Congress now, right?

The answer lies in the pragmatics of Washington and the recognition that — unlike in the movies — major battles aren’t won overnight. As I have said before, this is a long, messy fight in which both sides invest a heck of a lot of time and energy in positioning themselves and grinding out short yardage plays to advance the ball. Seen in that context, the Markey Bill is a very effective tool for both keeping the debate alive and advancing the ball another ten yards toward the goal post.

Analysis below . . .

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Comcast Reacts To FCC Probe By Changing Fine Print

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Well, it appears that Comcast has learned a valuable lesson from our complaint about blocking BitTorrent and subsequent FCC investigation. Sadly, but unsurprisingly, the lesson appears to be “make our policies more explicitly outrageous.”

My thanks to Marvin Amouri at Free Press for this excellent analysis of Comcast’s new terms of service. As Marvin notes, Comcast released this puppy quietly on its website, taking advantage of the pre-existing fine print to alter terms unilaterally. (Question for Comcast, if I don’t like the new terms, can I cancel without tirggering an early termination fee?)

Marvin really says everything that needs to be said on his excellent post, so I shall limit myself with simply rolling my eyes and wondering when we will have a Congress and an FCC genuinely interested in promoting broadband adoption and competition rather than providing cover for lazy duopolists squeezing locked in customers unwilling to invest in network upgrades. Oh yeah, I forgot. According to this Administration, we already solved the broadband problem.

Stay tuned . . . .

The Economics of Telco Deregulation: Califronia Dreaming, Economic Realities, and the “Reverse Ramsey” Pricing Model

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This article in the LA Times on the impact of telco price deregulation in California is a good illustration of the complex nature of the economics of competition and deregulation, and why it’s so friggin’ important for regulators and the public to understand this stuff. In 2006, the California PUC decided that voice service faced sufficient competition to phase out price regulation. In theory, competition would lead to lower costs and increased services and would remove the invariably stultifying impacts of regulation.

The result has been an increase in the availability of services and an overall decrease in the cost of service, but not in the way that ordinary folks understand or that regulators professed to expect from deregulation. Most customers have, in fact, increased the amount they pay for telecommunications services overall. But because they buy larger bundles of services that profess to discount the price of each element in the bundle, the average cost per service is lower although the amount of money paid has gone up. That might seem a good value trade if it were driven strictly by consumer choice. But consumer choice is driven by the decision of telcos to increase the cost of stand alone services. So people not looking to bundle do so because it is “cheaper” while poor people who cannot afford the higher price for the bundle get a real price hike with no value added.

Example: Feldco the Telco raises the price of basic local voice from $10 to $20, and raises the price of additional services taken a la carte from $5 to $10, but I offer a package of basic voice and five additional services for $30 (which I tell you charging $5 for voice and $ 5 for each additional feature). Any customer that can afford to upgrade to my bundled package will do so, because the “value” of the bundle (at my new prices) is $70 and you are getting it for $30. So even though you upgraded and are paying me more, the cost of basic voice (calculated as part of the package) just dropped by $5. What a savings! of course, the customers who cannot afford the additional $10 a month for the bundle experience a real price increase of $10.

Basically, the problem of wealth inequity that we have seen in every other sector of the economy — where the highest earners have enjoyed the greatest increases — is now mirrored in California’s telecommunication service market. How did this happen? Do we care? And what does this tell us about the future of the metered internet, wireless competition, and the ever popular video competition?

Answers below . . . .

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Cleland's “Common Sense.”

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“You keep saying that word. I don’t think it means what you think it means.”
–Inigo Montoya, The Princess Bride

I suppose it’s just overkill for me to pounce on Cleland’s over-the-top (even for him) blog post purporting to make the “common sense case” against our complaint against Comcast and Petition for Declaratory Ruling. After all, Dave Isenberg and others have already taken this on. But (a) it helps to restate the facts and focus on the issues, and (b) it gives me a chance to quote Angels by Within Temptation, and I ABSOLUTELY LOVE THAT SONG (In fact, if y’all haven’t done so, scurry to your favorite place to buy music online and download this and their other stuff. I’ll wait . . . .)

Cleland’s claims can be divided into two: whether Comcast’s behavior was “reasonable network management” and whether the FCC Policy statement is enforceable. I shall address each (and get to the music quote) below . . . .

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Time Warner May Pilot Metered Pricing With Easy Consumer Monitoring Tools. Good for now, but bad for ecommerce in the long run.

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As reported by Broadband Reports and now confirmed elsewhere, a Time Warner internal memo indicates Time Warner will pilot a program where it has an explicit bandwidth cap, and users that exceed the cap will pay additional explicit fees — rather like what happens now with your standard cell phone package where you buy a bundle of minutes and then pay for any overages. The pilot will include a website to allow customers to track their usage, moderate their behavior, or buy additional capacity if they wish.

I agree with Dave Isenberg that this is the best way for Time Warner to handle its network capacity constraints and address the supposed 5% of users gobbling 50% of the bandwidth. We can expect some heavy users to move to other networks without caps, but also expect that users that use much less capacity and frustrated by congestion caused by heavy use by others to prefer plans like Time Warner’s because it should produce a less congested pipe overall.

I would be remiss if I failed to note that I was just musing about this the other day, giving me a chance to do another Stephen Colbert I CALLED IT!!! dance.

O.K., shameless gloating over. Analysis below . . . .

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Dave Sez: AT&T Are [Bleep!]

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My friend “Dave” recently moved from San Francisco to Sacramento. Being of the modern mobile generation that has “cut the cord” and lives by the cell phone, Dave wanted to get “naked DSL.” i.e., DSL (or other broadband) without any kind of telephone or video contract (Dave also refuses to pay for cable TV, on the grounds that 99% of the programming “sucks”). To his surprise and disappointment, Dave couldn’t find any naked broadband available in his neighborhood. So he wrote to me, as the known expert on all things broadband. “Isn’t there any way I can just get broadband without a telephone contract?” Dave wrote me in an email.

So I thought about it, and I said: “Is Sacramento AT&T territory?”

“Yeah.”

“Well AT&T has to offer $20 naked DSL, as a merger condition from when they bought BellSouth. Why don’t you try for that.”

So Dave dug around until he found the offer for AT&T DSL until he found the AT&T Yahoo! High Speed Internet Package With No Voice Contract:

Basic 768 kbps $19.95
Express 1.5 mbps $23.99
Pro 3.0 mbps $28.99

We talked, and I recommended the “Express” package as probably the best suited to his needs. Dave went to order it. His reactions below (warning, contains frank language and highly suggestive ASCII)….

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Martin Gets the Ball Rolling On “Blocking” Investigation: What Does It Mean And What Happens Next?

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As always, I am impressed with the ability of so many people to hate whatever Kevin Martin does, and for so many different reasons! At CES, Martin announced that the FCC would investigate allegations of blocking content and determine whether they violated the FCC’s four broadband principles. Comcast pledged to cooperate in any investigation (although, unsurprisingly, Comcast representatives — along with supposed object of Martin’s affection AT&T and other big telcos and cablecos — said at CES they would restructure or eliminate FCC altogether).

As I said in my PK blog post, while details remain unclear, I am “cautiously optimistic” that this will be a good thing. But it did not take long for the folks in the “Martin is a bastard 24/7 crwd” to express themselves. DSL reports doubted this would go anywhere, while the “why ya gotta hate on cable” crowd at Techdirt opined that Martin would never investigate if it were a telco rather than a cable co.

So we flash forward to yesterday, when new developments began to percolate out of the FCC. Of significance:

1) The FCC issued a public notice asking for comment on our Petition for Declaratory Ruling that Comcast’s “network management practice” of messing with BitTorrent uploads violated the FCC’s “Broadband Policy Statement,” which includes a principle that network operators may not block or degrade content or applications. In a separate public notice (but as part of the same proceeding), the FCC also seeks comment on the Vuze Petition for Rulemaking on how broadband access providers handle and shape IP traffic generally. (Copy of Vuze Petition here, copy of our Petition here).

2) Separately, the FCC issued a separate public notice seeking comment on a Petition filed by Public Knowledge and the usual suspects asking the FCC to declare that wireless carriers cannot deny short codes or block text messaging. This goes after Verizon’s high profile “oopsie” of denying a request by NARAL for a short code. Although, as we pointed out in the Petition, the more likely and pernicious problem is with plain old anticompetitive blocking, such as denying a short code to VOIP provider Rebtel.com and denying applications to major banks offering competing services.

3) Comcast confirmed that the FCC has lanched a formal inquiry into whether it violated the FCC’s broadband policy statement. Comcast reiterated that it will fully cooperate with the FCC, and expects any investigation to show that Comcast did not block content and has engaged in legitimate network management practices.

Not bad for a commitment made a week ago. But what does it mean and where will it go from here? Analysis below . . . .

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Can users shape traffic better than ISPs? Some Lessons From The Electric Industry.

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A dialog between David Weinberg and Seth Finkelstein on David’s blog raises an interesting question. Dave W argues (as do I) that a network provider is the last person who should engage in such practices, because of the inherent potentials for mischief and the possible conflicts of interest. Seth Finkelstein argues that, as a practical matter in the real world, only the ISP can effectively make a determination on traffic shaping that maximizes the use of the network for everyone, protects time sensitive applications, and prevents a “tragedy of the commons” from a handful of users absorbing all the bandwidth.

David Isenberg (in the comments and in this blog entry) makes the case that we don’t need traffic shaping, just more capacity or, in the alternative, neutral means to reduce packet flow such as throttling all traffic equally or going to metered pricing. Others (including myself) have argued that the problems of “bandwidth hogs” are exaggerated, or that users dissatisfied with the “best efforts” environment of the internet should stick with the network optimized for voice (the phone network) or the network optimized for video (cable, broadcast television) rather than “break” the internet to better accommodate these applications. Neither of these answers, however, is popular in regulatory circles. Further, it is a legitimate argument that we should allow ISPs to choose what product to offer customers. If an ISP wants to offer services optimized for VOIP by retaining the power to shape traffic, why shouldn’t it bring that service to market? This inevitably leads to a debate on market power, availability of choice, switching costs, captive customers etc., etc.

So lets shake things up with something new. I will — for the sake of argument here — accept the proposition that we “need” traffic shaping (like I “need” “scare quotes” so that people will not “quote” me out of context or argue on trivialities). But accepting the need for traffic shaping does not mean ceding all power to the broadband access provider. To the contrary, I argue that we will achieve far better results by giving subscribers the ability to shape their own traffic.

Madness you say? “Tragedy Of The Commons” and all that. Maybe, but the electric industry tells a somewhat different tale. As described in this NYT story, a fair number of folks are taking advantage of pilot projects that allow people to shape their power usage in the same way I propose allowing them to shape their Internet use. Such programs may save $70 Billion in the next few years. Why not see if they can have serious impact on the supposed exaflood of internet traffic that supposedly justifies traffic shaping? Especially when contrasted with the pur privatization model, that gave us the Enron scandal and the California black outs in 2001?

More below . . .

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