Put Up Or Shut Up At the FCC on Net Neutrality “Principles”

When the FCC deregulated broadband by declaring it an “information service,” it also adopted four principles that purported to give broadband subscribers a right to “access lawful content of their choice,” “run applications and services of their choice,” “connect their choice of legal devices that do not harm the network,” and enjoy “competition among network providers, application and service providers.” All subject to “reasonable network management,” of course. So when a bunch of us in 2006 pressed Congress to pass a network neutrality law, a lot of folks claimed we didn’t need one because the FCC already had the authority to deal with any problems that might arise. And, when questioned on this very subject at his confirmation hearing for a second term, FCC Chairman Martin said the FCC had ample authority to deal with any violations of the four principles that might arise.

Thanks to Comcast and their decision to “manage” their network load by degrading BitTorrent,it’s put up or shut up time at the FCC. My employer, Media Access Project, along with Free Press and Public Knowledge, just filed a formal complaint against Comcast and a general Petition for Declaratory Ruling asking that the FCC hold that deliberately messing with a customer’s application while refusing to admit doing it when asked pint blank violates the FCC’s “four principles” and does not constitute a “reasonable network management practice.” This will also press the FCC to find out exactly what the heck Comcast is actually doing (since some folk remain uncertain). Given that Comcast initially denied the very idea as “internet gossip,”, instructed their line staff to lie to customers about it, and are still maintaining that nothing of interest is going on, it looks like the only way will actually find out what the heck is going on and why is to have the FCC pry it out of them.

Hey, maybe they are telling the truth. But the FCC is in a much better position to know whether Comcast is deliberately lying to its customers and, if so, why. Because while my friend and opposite number Jim Harper at Technology Liberation Front may be content to see if the market punishes Comcast for its “lack of transparency”, I see a lot of bad consequences in letting Comcast throttle traffic as a network management tool and then lie (or, at best, mislead) about it when asked about it point-blank by their customers.

At any rate, whether folks think we should regulate this kind of behavior or not (and I recognize that a number of smart folks not employed by cable operators feel we shouldn’t regulate this even if everything bad said about Comcast is true), we deserve to know whether the FCC has the authority to regulate this behavior, and the willingness to do so on an enforcement basis. Because if the cable and telco companies that swore up and down that we didn’t need new rules now come in and say the FCC has no authority to take complaints about their behavior after the fact or no authority to order any remedies, then we should know that. And if the FCC is going to leave us high and dry when broadband providers start degrading applications, then we should know that. Because while some folks may think that lying to your customers is an acceptable network management technique, or even an acceptable technique for managing elected members of Congress, I think most Americans would disagree. And I certainly want to know that by November ’08.

Stay tuned . . . .

Look! My Solution Found A Problem! Comcast Degrades BitTorrent Traffic Without Telling Users.

O.K., free speech issues are always sexier. Nothing gets the public (or me) wound up like blocking NARAL or censoring Pearl Jam. But, as Ecclesiastes tells us: “Money answers all.” (10:19) At the very least, it tends to rivet people’s attention without the distraction of whether or not you like the speaker or the message.

So I was quite pleased to see the Associated Press run this story on how Comcast degrades BitTorrent traffic in the name of quality of service (QoS), especially after Comcast had denied such rumors as vicious lies last August. (Where is Mona “the Hammer” Shaw when we need her?) While my friend Greg Rose on Econoclastic gives his (to my mind quite plausible) theory as to why Comcast would engage in such blocking on a large enough scale to be worth getting caught, I would like to play out the public policy implications of Comcast’s actions.

As I discuss below, this recent episode underscores several of the critical points I have made in the past about the economics of access, but without all the sexy free speech stuff clouding things up. In particular, I hope all those idjit content producers like Viacom that oppose Net Neutrality they think it will help police content for infringement and give them an advantage over rivals who can’t afford to pay the “fast lane fees.” Because, as Comcast’s little tepid step toward “How to Monetize Monopsony Power and Make the World Your Bee-Yatch” shows, making a deal with the broadband access devil to police your content guarantees that broadband access providers will end up owning you the way Microsoft ended up owning IBM and everyone else who thought that they could leverage another parties control of a bottleneck facility to its own advantage.

Given the amazing track record the IP mafia has for making bad decision in this regard, I’m not exactly holding my breath they will see reason. But I can at least secure myself the bitter pleasure of saying “toldja so” after it’s too late.

More below….

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Whiny Techies or Dishonest Salesmen?

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

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

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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David Weinberger's Excellent Piece On Structural Separation

Despite the efforts to make common carriage and structural separation of wholesale and retail services a forbidden topic of discussion (go read the piece Greg Rose and I wrote last year on how industry rationalizes policy by controlling the debate), the old and highly successful idea of structural separation for carriers continues to undergo a significant revival. For starters, the Europeans have recently embraced structural separation as a policy goal, and have consequently begun kicking our rear ends in broadband speed, price and overall adoption. For another, some of us do not forget that structural separation used to be the law under the Computer Proceedings, and that this old form of open access is what gave us the internet in the first place. Finally, the argument advanced that simply because we have more providers in the market, the underlying rationale for structural separation goes away, as always struck me as poor policy driven by ideology.

I am pleased to see that David Weinberg has now written this excellent piece on structural separation. This marks the second internet “thought leader” to offer well-written and challenging pieces pleading the case of structural separation, the first being David Isenberg’s Making Network Neutrality Sustainable. Both these authors make the case for the next logical step in the Network Neutrality fight — going back to a set of rules that will prevent the network operators from interfering with the content that flows over the network by altering the economic incentives of the carriers.

Not surprisingly, we can anticipate two responses, the standard antiregulatory response (“Regulation is bad, hmmmmmmKay….Cause, if you do the regulation, then, that’d be government, and big government is bad, hmmmmmmKay….so regulation is bad, hmmmmmKay……”) and the economic response about how such a scheme destroys producer incentives so networks don’t get built. The chief problem with the producer incentive argument, however, is that the empirical evidence in Europe and Asia appears to prove the opposite case: a combination of structural separation and government subsidy facilitates deployment and maximizes incentives and revenue throughout the value chain, while focusing strictly on incentives for core network providers (e.g., the AT&T’s and Comcasts of the world) produces inferior results by every metric other than network operator profits.

My key takeaway here is that we continue to see a revitalized public policy debate that moves beyond the timid counsels of the edge-based industry players who define their “ask” in terms of what the incumbents have defined as possible, and despite every effort by the incumbents and their supporters to convince the broader public that “network neutrality” is dead and lawmakers should not worry their pretty little heads about it. Yes, we are in a legislative lull at the moment, as the public policy pendulum swings away from the incumbents and towards a more aggressive public policy more in line with the broadband success stories of Europe and Asia. But as Weinberg and Isenberg have shown, the public education and public debate remains quiet lively and continues to advance.

Stay tuned . . . .

How is the OECD Different From the FCC? OECD Takes Its Number Seriously.

I must laugh at the recent back and forth on the recent national broadband rankings by the Organization for Economic Cooperation and Development (OECD). Back in December, OECD released its latest set of statistics for broadband penetration for its 30 member states. While the U.S. had the greatest number of broadband subscribers (defined as speed in excess of 256 KBPS one way), we still ranked 14th overall on number of subscribers as a percentage of population (the traditional way of measuring phone penetration).

What these figures do or do not mean I leave to others to debate. OTOH, if we had this kind of crappy penetration in plain old telephone (POTS) or power, we’d be a developing country. OTOH, broadband deployment is still relatively new and the other countries that have pulled ahead of us all have different circumstances that arguably distinguish it from us. No, my point here is merely to highlight the amusing battle of words between the OECD and a consulting firm called Market Clarity. Market Clarity recently issued a report challenging the validity OECD stats.

So far pretty ho hum. Then the fun begins with this OECD Response. It appears that, unlike our FCC, which can run silent for years about possible funny business in its numbers (until prodded by a change in Congress, it decides to ask for advice on how to suck less), the OECD takes its reporting rather seriously. As a consequence, they wasted no time in explaining to Market Clarity, with all the snark that serious researchers reserve for telling hired guns they are ignorant wankers, that Market Clarity didn’t know what the heck it was talking about.

Not to be outdone, Market Clarity quickly issued its own delightfully snarky response to the OECD response.

I have no idea where this ends up, as it rapidly devolves into a series of exchanges like: “While we welcome serious interest and robust public debate, you couldn’t regress your way out of a paper bag!” “Oh yeah, well for an organization with the 30 most powerfull economies as members, you’d think they’d hire some folks who can do basic math!” All I can say is that the Aussies seem to be having more fun with their public policy. And at that I wish our FCC took as much professional pride in their work product as the OECD.

Of course, the FCC would have to do work to be proud of rather than outcome-driven “research” first. But maybe someday . . .

Stay tuned . . . .

Independent Musicians Launch “Rock The Net” Network Neurtality Campaign

My good friends at Future of Music Coalition (FMC) launched a major campaign today for net neutrality. Called “Rock the Net” (a name whose lameness caused some modest embarsement at the begining of the call, but sometimes you gotta grab that cliche by the horns so you can trample the wolves while swimming from the sharks), the campaign brings together major music groups to raise awareness of the net neutrality issue and press for network neutrality legislation (such as the Dorgan-Snowe bill pending in the Senate).

Why do musicians care about network neutrality? And who are Future of Music anyway? See below….

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Great Paper on NN Out of University of Florida

I’m back from a vacation in Israel to discover an amazing economic analysis of network neutrality posted by my good buddies at Consumers Union on hearusnow.org. Written by University of Florida Economists Hsing Cheng, Subhajoyti Bhandyopadhya and Hong Guo, Net Neutrality: A Policy Perspective applies game theory to the network neutrality debate. They conclude that abandoning network neutrality would create a disincentive for broadband network providers to build fatter pipes.

If this analysis seems familiar, it’s because I wrote something similar (but without the fancy math) about a year ago. As always, I get warm fuzzies whenever economists confirm my Econ 101 “gut check.”

Of course, these guys being real economists (as opposed to undergrad posseurs like yours truly) have a bit more to say on the subject and use lots of fancy math that I will not try to reproduce. But I offer some brief plain language explanation (including what I think are the brilliant points in the analysis) below….

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Wireless Broadband As Information Service: Brand X Is Not Enough

According to this story, FCC Chairman Kevin Martin told the Senate he has circulated a Notice of Proposed Rulemaking to classify broadband via wireless as an “information service.”

This might at first seem no big deal. After all, in the wake of the Brand X decision, the FCC has moved to declare broadband an “information service” for DSL and cable and, more recently, for broadband over power lines (BPL). So, while I may not be happy with using regulatory classifications to achieve back-door deregulation, what makes wireless services different?

The answer has to do with the peculiar way the Communiations Act works, and the physical reality that use of the electromagnetic spectrum really is different than laying a fiber line. True, “technological neutrality” is one of the great regulatory shibboleths these days, even if it does to reality what Yiphtach (Jeptha) did to the people of Ephriam. But the law and reality do matter sometimes. Like here.

I must give fair warning that the analysis below hinges on what will appear to non-lawyers an incredibly bizzare and artificial distinction with no apparent difference in immediate outcome. But among lawyers, this is like mistaking a Satmar Chassid for a Hesder bachur.

Some analysis below.

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