Series of Tubes

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

A Guide to The Mechanics of the Comcast/TWC Deal. Part II: Antitrust Review

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In Part I, I gave a general overview of the regulatory review process for the Comcast/TWC Deal. In Part II, I describe how the antitrust review works (which, in this case, will be conducted by the Department of Justice Antitrust Division). Keep in mind I am not discussing any of the arguments on the merits. I’m just trying to give people a sense of how the process will work and where they can weigh in if they feel so inclined.

Part III will address the review by the Federal Communications Commission (FCC) under the Communications Act.  Part IV will talk about Congress, the White House and the public.

 

Antitrust process described below . . .

 

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A Guide To The Mechanics of the Comcast/TWC Deal. Part I: Introduction

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Those unfamiliar with how the merger review process works will want to know what happens next in the Comcast purchase of Time Warner Cable (TWC). In this 4 part series, I sketch out how the application will proceed and what role Congress plays in all this. I’m going to save for another time the arguments on the merits and what the likelihood is of blocking the deal (or getting stronger conditions than Comcast/TWC have already put on the table). I intend this simply as mechanical guide so that folks playing at home can follow the action, and weigh in as they see fit.

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Comcast/TWC Merger Explained By Taiwanese News Animation

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I will, eventually, have more to say about the Comcast’s proposed acquisition of Time Warner Cable (TWC). My first reaction, I will admit, was pretty visceral. “My God! Aren’t you already freakin’ BIG ENOUGH Comcast?” But then, I realized that I needed to actually calm myself, and recall that bigness is not necessarily —

OH MY GOD!! YOU COMCAST PEOPLE HAVE NO LIMITS! YOU’RE LIKE SOME GIANT, COAX-TENTACLED CTHULHU-BEAST THAT KEEPS PROMISING TO DEVOUR US ALL BETWEEN 8 A.M. AND NOON BUT DOESN’T ACTUALLY GET AROUND TO DEVOURING US UNTIL AFTER 3 P.M. BECAUSE YOU GOT ‘STUCK IN TRAFFIC’ AND A PREVIOUS DEVOURING RAN LONGER THAN EXPECTED . . . .

Breathe, Harold, breathe. Think policy. [pause for calm] Several folks have posted excellent policy analysis, starting with my Public Knowledge colleague Jodie Griffin in this blog post here to this excellent piece by David Karr to this more general expression of antitrust concern by Paul Krugman —

COMCAST IS ALREADY BUYING A POWER COMPANY! A FREAKING POWER COMPANY!!! YOU ALREADY ARE DOMINATING VIDEO, DATA AND VOICE AND YOU ARE BUYING A POWER COMPANY AND RUN ALARM SYSTEMS AND ARE PROBABLY GOING TO IMPLANT CHIPS IN OUR BRAINS SO WE CAN STREAM XFINITY DIRECT TO OUR EYEBALLS AND —

As you can see, I’m still having a bit of trouble getting over my visceral reaction to the shear size and scope of this deal. So while I am calming down and getting ready to write my Insanely Long Field Guide To the Comcast/TWC Merger, I will simply let the good people at Taiwan’s fine Tomo News capture the moment. Because nothing really says “Comcast/TWC” better than giant robots and tasers.

Stay tuned . . . .

Broadband and Burgernomics: Is the Monthly “Netflix Rankings” The New Big Mac Index?

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Some years ago, The Economist developed an informal metric for determining whether currencies were overvalued or undervalued based on purchasing power. They looked at the price of a McDonald’s Big Mac in the target country currency as compared to the price in the U.S. This “Big Mac Index” works on a theory that currencies should converge on the cost of a standardized basket of goods, and Big Macs are an internationally standardized product using pretty standard food goods available locally, which makes them the ideal metric for comparison over time. (Let us set aside for the moment various tweaks for low wages.)

 

As explained by The Economist:”Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies.”

 

I thought of this when reading this piece by Jon Brodkin on the decline over time of several major broadband providers in the monthly Netflix Rankings. As reported extremely well and in great depth by Stacey Higginbotham at GigaOm (see here, here and here) and others (see, for example, this long and good piece by Jon Brodkin), a lot of factors go into how well or how poorly your ISP performs — particularly on high-bandwidth applications like video. With no standards by which to judge performance and with variability a factor over time, how can the consumer tell if its really worth it to shell out big bucks for top-tier speeds on your ISP when the video you want may still behave unreliably?

 

Then it occurred to me that the monthly ranking by Netflix of how well its service works on the major ISPs may work as the new Broadband Burgernomics. As I explain below, performance over time allows people to compare relative ISP performance (both the ISP’s performance over time and its comparative performance to competitors – if you are lucky enough to live in a market with good competitors). As with currencies, make a rough estimate as to whether or not the ISP’s speed and performance claims are ‘overvalued’ (i.e., the speed tier purchased does not deliver to the consumer a consistent experience the consumer would expect for the stated speed), accurate, or ‘undervalued’ (i.e., the speed tier purchased delivers to the consumer an experience better than what the consumer would expect based on the stated speed.)

 

I want to stress this doesn’t tell us whether the ISP is doing anything illegal or immoral. It doesn’t tell us anything about blocking or throttling. It also doesn’t tell us whose “fault” it is that performance drops — at least not for month-to-month variations.  But, as I explain below, using the same logic as “Burgernomics,” the “Netflix Rankings” index, taken over time, should provide a reasonable rough indicator for consumers as to whether or not their ISP can make that higher speed tier worth the money for the upgrade, and a possible indicator to policymakers and investors about deeper changes in the market.

 

Before all you carriers and the usual suspects who go apoplectic on the subject of ISP performance metrics and the various policy issues freak out, read my full reasoning below . . .

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Jessica Rosenworcel And the Mantle of Michael Copps

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The Federal Communications Commission (FCC) moved forward on the transition of the phone system by adopting an order at its February open meeting. By a 5-0 vote, in addition to a number of other important first steps, the FCC adopted a set of governing principles for the transition. The principles focus on core values: Universal Service, Consumer protection, Competition, and Public Safety.

 

These principles did not just drop out of thin air.  Commissioner Jessica Rosenworcel first proposed them in this speech in December of 2012. While few have noticed, Rosenworcel continued to quietly and effectively push this framework, culminating in a unanimous vote with broad approval from both corporations and public interest groups.

 

More amazing for this hyper-partisan and contentious times, the principles capture both progressive values and conservative values, traditionally shared by Republicans and Democrats alike. The idea that access to communications services is so essential to participation in society that the Federal government has a role in making sure that ALL Americans have affordable access goes back to the New Deal and Section 1 of the Communications Act. But the basic precept is even older, going all the way back to Founding Fathers. Article I of the Constitution gives Congress the express power ”to establish post offices and post roads” in recognition that ensuring that all Americans can communicate with each other is what helps make us a single country and one people — a core conservative value. As the arteries of commerce and the means of communication have evolved from post roads and post offices to steam trains and telegraphs to the automobile and the telephone, we have continued to preserve this idea of universal service to All Americans as a core traditional value of what it means to be an American.

 

But as essential and shared as these values are, no one was talking about them as the basis for the Phone Transition, or how to bring them forward into what Chairman Wheeler calls “The Fourth Network Revolution,” until Commissioner Rosenworcel started the conversation. From the time AT&T first proposed a “sunset of the Public Switched Telephone Network” during the National Broadband Plan in 2009 until Rosenworcel’s December 2012 speech, no one even talked about values – let alone proposed that a set of fundamental values needed to guide the transition. The conversation remained mired — and stalled — in myopic focus and bickering on the details of specific regulations. Commissioner Rosenworcel understood well before anyone else that the best way to move forward, and the way to keep the process firmly centered on the public interest, required reaffirming our fundamental values as the first step.

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Impact of Net Neutrality Decision On The Phone Transition, or “What Happens When You Can’t Make The Phone Service Work Like A Phone.”

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I suppose I can best sum this up as “sucks to be rural.” On the plus side, it looks like all those lobbyists who went around getting states to pass laws prohibiting any kind of regulation of IP-based services and prohibiting local governments from offering broadband service wasted their money.

Also on the plus side, we can regulate the crap out of IP-based phone services to enhance consumer protection because it is all part of the virtuous circle of innovation. On the downside, if you are Mosque in the middle of small town USA, your local VOIP provider can now totally refuse to serve you. Sure, the fact that we cannot impose a duty to indiscriminately serve the public on VOIP providers (since that is the “hallmark of common carriage”) will only impact a statistically small number of people like the poor, the unpopular, and those in high cost rural areas. But screw it. Protecting the weak and helpless is soooo ‘New Deal.’ Who the #$@! needs a rule of law when we got markets baby!

Sure, some people we like might get rolled over by big companies and have no recourse. But ya know what? Who cares. Cause if a few big companies accidentally run over a few customers now and then, does that really matter? I mean, really?

And the best part of getting rid of that dumb old common carriage stuff? All the people that matter — like the judges making the decisions and the lobbyists arguing how we don’t need this stuff — will never even notice.  They never even have to deal with all those annoying weak, poor, vulnerable or unpopular people that the law protects. It’s like getting rid of the 4th Amendment, or stop and frisk, you only miss it if you’re someone we don’t give a crap about.

Read below to preview the exciting new world that now awaits us as “the fourth network revolution” meets “I can’t do rural call completion but I’m too scared to make VOIP Title II. So suck it rural.”

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Quick First Cut On Network Neutrality Decision — State of Net Neutrality Today

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 I will, eventually, have time to write up a full dissection of he D.C. Circuit’s latest magnum opus on Net Neutrality, Verizon v. FCC.  Until then, I am going to be recycling here posts I wrote and posted on the blog of my employer Public Knowledge. i also highly recommend this blog post from my Public Knowledge colleague Clarissa Ramon on the impact of this decision and Monday’s D.C. Circuit Order staying the FCC’s August decision to regulate the outrageous phone rates charged by prison phone companies communities of color.

 

Below, the current — and now thoroughly confused — state of Net Neutrality and FCC authority as it stands today.

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Celebrate 100th Anniversary Of the Kingsbury Commitment With A Telecom Steel Cage Death Match and A Copy of Our Home Game!

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Tomorrow, Thursday December 19, marks the 100th Anniversary of the “Kingsbury Commitment.” As just about no one outside the wonky world of telecom policy knows, the “Kingsbury Commitment” was the resolution of the anti-trust case between American Telephone & Telegraph (as AT&T was known then) and the Department of Justice wherein AT&T agreed to provide phone service to everyone (either directly or by providing interconnection to other local monopoly providers) and interconnect with its rivals in exchange for natural monopoly in most of its markets. You can see the text here.

 

 

Put another way, tomorrow marks the 100th anniversary of when we mandated interconnection and universal phone service as the fundamental values/defining responsibilities of the phone system. For those following my endless blather about the “transformation of the phone system” the Kingsbury Commitment provides the cornerstone of those 5 Fundamental Values I’m always going on about (see exciting white paper here).

 

With a Steel Cage Policy Deathmatch and with release of copies of our home game!

 

See details below . . .

 

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Free Event on IP Transition In Boston Next Tuesday. Come Hear Me Preach.

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Next Tuesday, December 3, the Massachusetts Department of Telecommunications and Cable will hold a free event open to the public about the whole “transition of the telephone system thing” I keep going on about. As you can see from this flyer here, the event will run from 9 a.m. to 2 p.m. at Suffolk University Law School. I’ll be speaking on the last panel — which is generally where the “consumer stuff” gets stuck.

 

As you can also note from the flyer, the list of speakers is practically indistinguishable from a similar event here in D.C., except the moderators are local. So if you have attended any of the various events on this subject here in D.C. in the last 6 months, you are unlikely to miss anything. On the flip side, if you are local to Boston, then you bloody well ought to show up. We’re talking about the future of your phone service.

 

Stay tuned . . .

Wheeler Blog Post Shifts Phone Transition Into Second Gear.

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First a belated welcome Chairman Wheeler. I must warn you that, after Chairwoman Clyburn’s short but extremely productive tenure, you have a very tough act to follow. Mind you, I give kudos for your shrewd opening move of poaching my (now former) boss Gigi B. Sohn for your front office.

 

I will add I am delighted to see another wonky telecom blogger on the scene. Which awkward segue brings me to  Chairman Tom Wheeler’s recent blog post announcing his intent to get an Order out on the transition of the phone system by January.

 

We could characterize the time since AT&T filed their application to “begin a dialog” last year as chugging along in first gear, and this blog post definitely kicks things up into second gear. I outline what I think this means, and where I think we’re going in the next few months, below . . . .

 

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