Tales of the Sausage Factory:
The Comcast Witness Protection Program and Misplaced Rage.

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There is a style of article I find online occasionally that takes a classic work of film or literature and tries to flip your idea about who are the good guys and who are the bad guys, or vice versa. For example, this piece explaining why Glinda the Good Witch is really the villain of the Wizard of Oz and the Wicked Witch of the West is just an innocent woman wronged.

 

I thought of that when I saw recent pieces by Randolph May and Geoffrey Manne explaining how the Federal Communications Commission (FCC), by complying with its rules and doing its job soliciting input on the Comcast/Time Warner Cable from stakeholders scared to come forward for fear of reprisals, makes the FCC the bad guy and Comcast the innocent victim. Some of this concern seems to flow from a misunderstanding of the law. The FCC can’t act on anything outside the public record, so the concern that Comcast won’t get to make its case because of some body of secret evidence is groundless.

 

In addition – and this is why I’m particularly bitter here – Comcast set the precedent more than ten years ago for having the FCC look at stuff outside the public record as part of a merger review, and the D.C. Circuit affirmed it when I challenged it as a due process violation. So even if it did make a practical difference, the D.C. Circuit says it’s totally OK (at least when exclusion of evidence from the record favors Comcast).

 

Nor is this process so unusual as my Opposite Numbers (as I call my colleagues on the Libertarian side) believe. True, this is the first time the FCC actually listened to me (and others) and publicized the relevant FCC rules (although, as I explain below, I don’t think I actually had much to do with this). But this is also a rather exceptional merger. As for use of the relevant procedures, my experience is rather contrary to that of Randy May. I’ve not only urged the FCC to use (and publicize) the relevant procedures, I’ve invoked them.  Nor is it unusual for the FCC to solicit input from stakeholders.

 

Below, I offer an alternate perspective and deal with the various objections my Opposite Numbers raise for why they think the FCC shouldn’t be telling stakeholders afraid of retaliation to come in and speak off the record.

 

More below . . .

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Tales of the Sausage Factory:
Is Comcast’s Awful Service Grounds For Blocking The TWC Deal? Yes, Actually.

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The last few months have brought us a spate of Comcast horror stories and Comcast-hate. As captured by this totally not safe for work “Comcast — We Don’t Give a F—“ video from Funny or Die, the announcement that Comcast would acquire Time Warner Cable (TWC) has brought to boil a great deal of simmering resentment. Most recently, a recording of a subscriber spending 20 minutes trying to disconnect his Comcast service has prompted some investigating into Comcast’s service and employment practices. In particular, Adrianne Jefferies at  The Verge has been running an excellent series called “Comcast Confessions” based on hundreds of interviews with current and former Comcast employees showing that these long-standing customer service problems are not a blip but the result of systemic problems and deliberate business and strategy decisions pursued by the company (first three articles published so far here, here and here). I want to highlight this article in particular that puts together the pieces and shows how the TWC acquisition makes things worse.

 

From an academic standpoint, the wealth of data coming to light provides a great study on how conflicting economic incentives and difficulties in melding together a giant company by merger create awful customer service despite the persistent efforts of Comcast top management to improve customer service. But this blog isn’t about industrial organization and business practices for the fun of it. For me at the moment, the hot question is: does Comcast’s awful customer actually provide legal grounds for the FCC to block the Comcast/TWC merger?

 

Actually, yes. And I don’t just mean in the political “so many people hate Comcast the FCC can designate for hearing and survive Comcast’s political pushback.” I mean in the legal “the FCC has jurisdiction over this and should designate, as an issue for hearing, whether Comcast’s proposed acquisition of Time Warner Cable is contrary to the public interest and in violation of various provisions of the Communications Act” sense. And yes, I get that customers are pretty much equally dissatisfied with TWC, which would prompt one to think this should be a wash as “not merger specific” (i.e., service is crappy before merger and crappy after merger, so who cares — other than customers?)  However, as I shall elaborate below, the unique nature of Comcast’s pervasive problems — combined with several other factors — makes this a rare (but not unprecedented) case where the nature of the problems is both merger specific and subject to FCC review.

 

And while I would not normally suggest that such problems alone could block a merger, it becomes one more factor in a deal that already has a lot of problems. At a minimum, it becomes one more set of potentially pervasive behavioral conditions that would prompt Comcast to walk away whether or not the FCC actually designates for hearing, especially if lots of consumers write to the FCC about it (hint, hint).

 

More below . . .

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Tales of the Sausage Factory:
What Do We Learn From Big Data Visualizations Of Net Neutrality Comments?

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“Big data” and “Data visualization” are all very trendy these days. As with all tools, data analysis and data visualization require appropriate context to make sense. As my old mentor Professor Robert Seidman liked to caution: “you generally find the most firetrucks at the biggest fires.” Understanding context tells you cause and effect so that you don’t try to fight fires by eliminating firetrucks.

 

Which brings me to the analysis of the public comments in the FCC’s ongoing network neutrality proceeding. The FCC has received about 1.1 million comments so far (we can expect more when replies come due in September). To facilitate further discussion and debate, the FCC released these comments in 5 XML Files that make doing searches and analysis much easier. We have started to see some data crunching of this data, with a range of results. As someone with 15 years experience with FCC proceedings, I can put these in some context.

 

Briefly, the volume of individual comments and the analysis shows a high level of engagement. More importantly, the comments do not simply reflect the talking points we see in the mainstream media and debated in DC policy circles. A lot of people are actually thinking about this issue and deciding why it is important to them personally, and it has nothing to do with cat videos or Netflix. For a lot of people, this debate goes to fundamental values of basic fairness, opportunity, the American Dream, and the preserving free expression and diversity of views.

 

Perhaps most tellingly, the number of individual comments opposing net neutrality regulations as unnecessary and overly burdensome government regulation of the Internet is so small as to be statistically irrelevant to data visualization analysis. Those people who are engaged on this and care enough to comment all run one way — they want the FCC to adopt rules that prohibit paid prioritization and protect an open Internet.

 

I unpack this below . . .

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Tales of the Sausage Factory:
Those Who Love Uber Should Also Love Unlicensed Spectrum. The Paradox of “Regulatory Property.”

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I’ve decided that we should have a business with a limited number of licenses to conduct the business. All the people who got their licenses for free previously will, of course, be allowed to keep them. But now they can sell them as well. When we (very rarely) make more licenses available, we will sell them at public auction because, as we all know, auctions put the scarce resource in the hands of those who will use it for its highest, best use.” Letting people simply have free access would lead to wastefulness, inefficiency and devalue the resource.

Besides, by limiting the number of licenses and auctioning them off, we the government can make a lot of money without raising taxes. True, you can argue that by artificially limiting the number of licenses to make them valuable we are essentially creating a tax on the ability to do the business — we just collect it all up front. But we don’t like that argument so we will ignore it because “auctions put the resource to its highest best use” and if it is valuable, people ought to pay for it.

No, I’m not talking about spectrum. I’m talking about taxi cabs. State and local governments license taxi cabs. This creates an artificial scarcity. As a result, as anyone who owns a Taxi medallion will tell you, they are extremely valuable. And, as one might expect, the taxi cabs that benefit from this scarcity (and the states and localities that benefit from this scarcity) are less than happy at the thought of a new competitor, like Uber or Lyft, offering a competing service. It is a windfall to these guys to allow them to offer for free what we need to acquire — either at auction or in the secondary market — for money. If they want to compete, say the taxi cabs who have medallions, let the new entrants get medallions like us. When they become available.

OK, I was talking about taxi cabs, but y’all see where this is going right?

More below . . .

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Tales of the Sausage Factory:
Title II Forbearance Is Actually So Easy It Makes Me Want To Puke.

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For those following the debate around whether to classify broadband access service as a “Title II” telecommunications service under the Communications Act of 1934, you may have heard about a thing called “forbearance.” For those unfamiliar with telecom law lingo, “forbearance” refers to  a special magic power that Congress gave the FCC as part of the Telecommunications Act of 1996 — the major edit/update Congress did almost 20 years ago. The 1996 Act added Section 10 (now codified at 47 U.S.C. 160) which gives the FCC the power to say “you know that specific provision of law that Congress passed? We decide it really doesn’t make sense for us to enforce it in some particular case, so we will “forbear” (hence the term ‘forbearance’) from enforcing it.” Or, as the D.C. Circuit explained in a case called Orloff v. Federal Communications Commission, once the FCC invokes forbearance and decides to forbear from a particular statute, the statute for all practical purposes disappears.

 

For those familiar with the argument, you will also know that the anti-Net Neutrality camp argues that getting the FCC to forbear from any rule is such a horribly complicated and detailed market-by-market analysis that the FCC couldn’t possibly grant the kind of broad, nationwide forbearance we would need to make Title II workable. As someone who actually lived through the 8 years of the Bush Administration and saw almost every single pro-competition provision of the 1996 Act stripped away by forbearance proceedings, I can only say “hah, I wish.”

Anyone who actually troubles to look up cases like Earthlink v. FCC or Ad Hoc Telecommunications Users Committee v. FCC, or a bunch of other FCC and DC Circuit cases that are not that hard to find, you will discover that Forbearance is so easy it makes a consumer protection and rule of law guy like me want to puke. Srsly, the standards on this are so low, and so deferential to the FCC, that if Chairman Wheeler stands up at an open meeting and chants “Broadband is great, competition is good, be deregulated like you should. All in favor say ‘aye!'” — and then at least two other Commissioners vote yes — the DC Circuit will affirm it. Heck, according to ATT, Inc. v. FCC, you can even forbear as against potential obligations that don’t even exist yet.

Not that I expect mere facts to alter firmly held opinions that have become factesque. What Paul Krugman has termed the Very Serious People of telecom have all decided that Title II is a terrible onerous thing and that forbearance is just not going to make it work — despite the fact that the stupid cell phone you’re using couldn’t even have existed if Congress hadn’t made it Title II in 1993 by adding Section 332(c) of the Communications Act and the only non-Title II service we have other than broadband access — cable service — is widely regarded a monopolistic nightmare with all the innovating power of a fossilized brick. But the lawyer and eternal optimist in me keeps trying. So I unpack all this below — with lots of quotes because I know most of y’all not gonna actually click through to the cases.

Besides, I do a My Little Pony (MLP) mashup below because ”Broadband is magic!” And that always cracks me up. . . .

 

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Tales of the Sausage Factory:
Two Years Later, The Supreme Court Still Doesn’t Want To Review Red Lion v. FCC.

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Almost exactly two years ago, I wrote a blog post called “The Supreme Court Does Not Want To Revisit Constitutionality of Broadcast or Cable Regulation. Get OVer It and Get On With Your Lives.” I bring this up because yesterday the Supreme Court rejected without comment what some commentators saw as the most likely vehicle for such a challenge, Minority Television Project v. FCC.

 

Not only did Minority Television Project provide the opportunity to overrule Red Lion and abolish all those pesky ownership limits and public interest obligations, it framed this as an opportunity to further expand Citizens United. How could the majority possibly resist, especially given the groupthink that the Supreme Court is simply lusting to overturn Red Lion and totally deregulate the broadcast industry at the first opportunity? And yet, somehow, they resisted. The FCC’s authority to impose broadcast ownership limits (and other spectrum ownership limits for that matter) remains not only intact, but subject to the lenient “rational basis” standard of scrutiny.

 

Nevertheless the groupthink that Red Lion and Turner Broadcasting are either already dead, or very sick and going to die, remains impenetrable. It has become the classic case of the self-fulfilling prophecy. except for stuff around the edges like the non-commercial set aside at issue in this case. To borrow from Stephen Colbert, the argument that Supreme Court has overruled Red Lion (and Turner Broadcasting) and therefore we should all ignore it doesn’t need facts; it has become “factesque.”

 

I unpack this below for those who don’t live and breathe this stuff.

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Tales of the Sausage Factory:
Of CDNs, Netflix, Net Neutrality, and Cable Fu#$@!ery.

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I keep seeing a steady stream of articles that basically go through the following analysis:
1. ‘Net Neutrality is about treating all bits equally.’
2. ‘The Internet has never done this. Particularly we have this thing called ‘content delivery networks’ or ‘CDNs,’ that have been a vital part of moving content around the Internet for over 15 years. CDNs are awesome and wonderful and the Internet couldn’t work without them or other means of moving content around and stuff.
3. All that fuss about Netflix and Comcast (and Verizon and other carriers) is just about CDN stuff and Netflix not wanting to pay money it really ought to pay Comcast because, well, CDNs.
4. Don’t you feel silly now about that whole silly Net Neutrality thing, silly ignorant person?
This piece from Wired by Robert McMillan called “What Everyone Gets Wrong About Network Neutrality” that a bunch of folks seem to have gone all swoony over is rather typical of the genre, but you can find other examples readily enough like this piece from Geoff Manne or this one from Brendan Sasso.
There are a bunch of problems with this analysis. Notably:
1. As demonstrated by this op ed raising similar arguments in 2010, content delivery networks (CDNs) and other ways in which the Internet does not “treat all bits equally” are not some fantastic new discovery that no one in the network neutrality movement has figured out. We all know about CDNs and other forms of prioritization imbedded in the network.
2. This does not violate network neutrality because network neutrality is not about “treating all bits the same” or other dumb ass strawman type arguments the anti-network neutrality folks would likethis to be about. This takes a basic high-level description that people use to illustrate the basic concept of network neutrality, and confuses it for the more sophisticated application of the principle. It’s like claiming that we can’t possibly have laws against race or sex discrimination in the workplace because ”equal pay for equal work” means “pay everyone exactly the same wage all the time for every single job everywhere” and then arguing how rigid application of “equal pay for equal work” ignores things like cost of living in your local area and would prevent merit pay raises.
3. The actual idea behind network neutrality is that last-mile ISPs, like Comcast, Verizon, AT&T or even scrappy little uncarriers like T-Mobile who are trying to give you something free rather than leverage market power should not pick winners and losers by using their unique position as the access provider to the Internet to favor one application or service over another.
Or, stated more simply, John Oliver is right. What we mean by “Network Neutrality” is “stop cable f#@!ery.” How things like the Comcast/Netflix fight and CDNs fit into this broader concept of “stop cable f#@!ery” or — for polite company — “network neutrality” has been covered fairly effectively by Tim Lee over at Vox, and Stacey Higginbotham at GigaOm. As to whether the Netflix/Comcast business fits into the existing network neutrality rules or needs to be handled as a potentially different sort of “cable f#@!ery” called “interconnection f#@!ery” (assuming we decide Comcast was wrong in the first place, a public policy question that remains unresolved at the moment pending more information), you can see conflicting views on that between myself and my friend Marvin Ammori.
Below, I demonstrate the fallacy of this “if you all just understood about CDNs and stuff you wouldn’t want this silly network neutrality’ thing” by comparing it with the two cases we’ve actually used the FCC to enforce network neutrality, Comcast/BitTorrent and AT&T/Facetime. I will then briefly touch on the ‘where does Comcast/Netflix’ fit in all this.

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Tales of the Sausage Factory:
The Zombie Anti-Net Neutrality Arguments The D.C. Circuit Already Rejected.

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I do not expect folks to be models of consistency, or to give up on arguments and talking points they have memorized. I also readily agree that a lot of times the same set of facts or a particular statute or set of cases can lend itself to multiple interpretations. but at some point — unless you are either a religious fanatic or deliberately disingenuous — you have a responsibility to admit that the courts disagree with you (at least when talking about law stuff).

 

For example, as I wrote after the oral argument in the Net Neutrality case (aka Verizon v. FCC) I think Judge Tatel and his fellow jurist are completely and utterly wrong on their interpretation of the supposed “common carrier prohibition” that prevents the FCC from banning paid prioritization entirely (as long as it is a Title I information service). I wish the FCC had appealed this to the Surpreme Court. But they didn’t. I wish the recent 10th Circuit case affirming the FCC on Intercarrier Compensation Reform had addressed this question and created a circuit split to take up to the Supreme Court. But they didn’t. So I’m stuck saying “I think this is stupid and totally contrary to the statute and Judge Tatel just made it up, but it’s the law until the Supreme Court says otherwise.”

 

I bring this up because, as John Oliver recently told everyone, the FCC has (to use Chairman Wheeler’s words) decided to “accept” the “invitation” of the D.C. Circuit to write new network neutrality rules based on the Court’s opinion in Verizon v. FCC.  That means we will play this case as the ground rules. So any arguments the D.C. Circuit already resolved are now decided as a matter of law. But whereas I — dumb lawyer that I am — accept that I am stuck with whatever ignorant, idiotic or just plain wrong thing the two-judge majority voted for, a lot of other people don’t. They go on spouting the same arguments that the D.C. Circuit already rejected AS IF NOTHING HAD HAPPENED while simultaneously arguing that since the D.C. Circuit struck down the network neutrality rules (which is not, in fact, what the court did), the FCC has no authority to make network neutrality rules (which is the complete opposite of what the court actually said.

I go through my list of “Zombie Anti-Net Neutrality Arguments The D.C. Circuit Already Killed Deaded Than A Dead Man On Dead Day In Deadville” below . . .

 

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Tales of the Sausage Factory:
Policy, Anecdotes and The Problem of The Black Swan. Why Events Like Comcast/Netflix and Fire Island Matter.

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Often in policy debates I find myself facing a broad general statement, such as “Wireless is just as good for everyone as wireline, just look at how the market has adopted it.” Or “ISPs would never block or degrade service because they would lose customers.” Point to a counter example, e.g., “Verizon’s effort to replace wireline with Voicelink on Fire Island was a total flop” or “But Comcast, AT&T, Verizon and other ISPs have deliberately allowed Netflix quality to degrade as a negotiating strategy” and the response is invariably “Oh, that’s just an anecdote and you can’t base rules on anecdotal evidence.”

 

Oddly, this throws most people into a tizzy of confusion because (a) they vaguely remember learning something about anecdotes not being proof or something; (b) everyone always says anecdotes aren’t proof; but (c) the general statement is clearly false based on real world experience. People know that “it’s only an anecdote, therefore it doesn’t count” is a bull$#@! answer, but they can’t explain why. Hence confusion and much bull$#@! going unchallenged in policy.

 

In logic, we refer to this as “The Problem of the Black Swan.” No, this has nothing to do with the somewhat racy but very artsy so that makes it OK movie starring Natalie Portman. And, while it is the inspiration for the book by Nassim Nicholas Taleb, it actually means something different. “The Problem of the Black Swan” is a demonstration of the problem of reasoning by induction and falsifiabilty. You cannot prove all swans are white just by finding a white swan, but you can disprove all swans are white by finding a single black swan.

 

While I don’t normally use this blog to teach Logic 101 type stuff, application (and misapplication) of the “Problem of the Black Swan” comes up so often that I will delve into this below. By the time we’re done, you will be able to explain to people who pull that “oh, an anecdote isn’t evidence” crap exactly why they are wrong. You’ll also be able to apply the “anecdote rule” properly so that you don’t get caught in any embarrassing errors.

Elucidation below . . .

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Tales of the Sausage Factory:
Net Neutrality Videos Much More Interesting Than I Could Ever Make.

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It’s impossible to keep up all the videos about net neutrality. Heck, I have been delinquent in flogging my own. For example, I have two new “5 Minutes With Harold Feld” videos out: one on what I call “virtual redlining” (about how permitting prioritized content invariably leads to targeting and segmenting audiences in ways that recreate all the usual stereotypes and re-marginalizing traditionally marginalized communities) and this on “rural virtual redlining” (how allowing prioritization further isolates rural and exacerbates the digital divide).

As you can see from the pathetic hit counts if you click through, my personal contributions are a total flop. Why? Because, in my own words, 5 Minutes with Harold Feld takes “insanely complicated and incredibly boring stuff and make it slightly less boring because THIS STUFF IS IMPORTANT.” So even at my most wildly successful, I am only slightly less boring. This apparently does not help much.

However, lots of much more interesting and entertaining people have used the power of online video — and even traditional media — to provide a much less boring perspective. I’m listing my top 5 Internet videos below the break. Please feel free to add links to your favorites in the comment section, assuming you did not fall asleep trying to watch my videos.

Actually interesting Net Neutrality videos below . . .

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