Well, that was fun. I reprint my testimony as prepared, not as delivered. I also cut a very insider joke. I’d planned to start:
“Mr. Chairman, I understand that this is the open Commission meeting, so it is perhaps no surprise that we are running an hour late. Also, as I have not had time to complete this testimony, I ask for editorial privileges.”
But no one off the podium was likely to get it.
[Editorial note from John (to help search engines and any random Wetmachine readers who stumble upon this): This post concerns Harold Feld’s testimony at today’s FCC hearing at Stanford University.]
Stay tuned . . . .
Mr. Chairman, Commissioners, thank you very much for inviting me to testify today, and hank you very much for holding this hearing. For one thing, it appears that these hearings have a salutary effect on resolving the issues raised by the complaint filed by myself and Marvin Ammori of Free Press with regard to Comcast’s choice of network management techniques and lack of disclosure (I might even say denial) of same to its customers and the public at large. Just before the February hearing in Boston, Comcast amended its customer service agreement to make clear it reserved the right to interfere with user traffic at any time without warning. Just before this hearing, Comcast announced its agreement with Pando Networks to create a P2P “Bill of Rights” for internet users and developers. I calculate that at this rate, the Commission will only need to have another thirty or so hearings on this topic before Comcast takes real action.
I have personally been involved in this debate about the FCC’s proper role in broadband policy since 1999. At that time, of course, the only one of you at the commission was Chairman Martin in his capacity as an advisor to Commissioner Furchgott-Roth. So you may not recall how back then the FCC was considering whether to require cable operators to allow resale of their broadband capacity at wholesale rates – what we used to call “open access” and what the FCC at that time required of telephone. But I still remember when AT&T Broadband (later acquired by Comcast) announced a deal with Earthlink to allow Earthlink to resell their broadband service. Over our protests, the FCC breathed a sigh of relief that the “market was working” and the need for FCC action averted.
Well, we all know what happened. As soon as the Commission made clear it had switched direction and no longer cared about open access, the deals stopped. Worse, we have moved from debating whether to allow competitors to have access bottleneck facilities, to whether subscribers will enjoy the freedom that the cable and DSL duopoly actively advertise but reserve the right not to provide. When this debate started almost ten years ago, the arguments that ISPs would block or degrade applications were dismissed as technologically impossible and we were accused of paranoia and fear mongering. Now, the worst case scenarios we predicted are proudly defended as “reasonable network management.” Worse, whereas in 1999 companies actually had to take action to appease the watchful eye of the Commission, it is enough now for Comcast to enter agreements to talk about doing something someday to begin a chorus of “Mission Accomplished. These Aren’t the Droids We’re Looking For. Move Along.”
But enough nostalgia. Let me talk about the pending legal pleadings before the Commission, on which it must legally act, and how they impact user access to applications and content. As Dr. Ford observed when we both testified over a year ago at the FCC, I am not an economist. He took me to task for bringing my First Amendment arguments into a forum on competition. Fair enough. But here I stand on unimpeachable ground.
As the Supreme Court observed, the public interest standard under which you operate “of necessity” requires consideration of the First Amendment, particularly of the public’s “paramount” right to access diverse sources of news and other content. The Supreme Court has also said that the internet is a medium “as diverse as human thought,” and that when the government acts to protect diversity of voices it fulfills “a government interest, of the highest order.” Those who recognize that quote from the Turner decision will recognize that it applied to the cable industry for regulations far more intrusive and far less effective in promoting diversity than the modest action requested by MAP, Free Press, Vuze, and millions of others. I should add that as a blogger who occasionally says some rather blunt things about Comcast, AT&T, and the other carriers, this is no theoretical issue for me. I am extremely uncomfortable with the idea that my ability to speak my mind to whoever wants to hear is a matter of corporate grace rather than constitutional right, and I suspect other Americans will feel equally uncomfortable if the FCC abandons its responsibilities and fails to act.
Your authority – indeed, your responsibility – under the First Amendment is therefore clear. The practices defended by Comcast and others as “reasonable network management” will result in the homogenization of both content and services in exactly the same way it did on the phone network, radio networks, television, cable, and now the wireless broadband platform. If Comcast and other carriers may pick and choose which applications it will favor and which it will degrade, then the age of rapid innovation without permission and vibrant user generated content that has triggered a rebirth of civic engagement on a level not seen since the “idiot box” replaced the social hall as the place where people discussed the critical issues of the day. If you are to fulfill you obligations under the First Amendment and under the Communications Act, you must not allow this to happen.
Comcast’s actions after the complaint, to the extent they have actually done anything other than agree to talk, can neither deprive the Commission of jurisdiction nor relieve the Commission of its responsibility to address the complaint. For example, after the Janet Jackson “wardrobe malfunction,” the networks at once engaged in all manner of damage control far more comprehensive than that undertaken by Comcast. But Clear Channel’s firing “Bubba the Love Sponge” or the promise of the networks to broadcast live events with a delay to “bleep” future fleeting expletives did not in any way effect the Commission’s jurisdiction over the indecency complaints that flowed from those actions.
Although we have provided detailed analysis of the Commission’s legal authority in our filings at the Commission, and while I and other lawyers here could go on about this for hours, I will touch on this matter only briefly. First, with regard to statutory authority, the Supreme Court has announced that Congress granted the FCC “broad” ancillary power over any communication by wire and wireless. The D.C. Circuit affirmed the FCC’s ancillary jurisdiction over information services as early as 1981. The Supreme Court in Brand X similarly affirmed this authority. With regard to the notice issues, the Commission included questions on what user protection regulations it should adopt under Title I in every one of the proceedings that culminated in the Commission’s final declaratory ruling on the appropriate regulatory treatment of wireline services in 2005. All parties had more than adequate notice the Commission could adopt rules and regulations – up to and including adjudication on a case by case basis. If Comcast or other parties find that adjudication provides too much uncertainty, let them join us in establishing explicit rules which, as we argued in this and every other proceeding, would benefit all stakeholders. So if the Commission feels it is better to act by rulemaking, it has both the Petition for Declaratory Ruling or – if you really want to do a thorough job – the Petition for formal rulemaking. And, as Professor Lessig observed, you can use your statutory and regulatory authority to punish companies that act with lack of candor—including incomplete disclosures or failure to disclose relevant information during an ongoing investigation.
But whether you prefer the clarity of bright line rules or the precision of adjudiction, you have both the authority to act and the responsibility to act on three separate pleadings before you. Comcast cannot evade the consequences of its action by a regulatory version of the old shell game – where it is somehow always the wrong proceeding and always either too soon or too late to address Comcast’s behavior. But there is something more important here, as my opening trip down memory lane will perhaps illustrate – that failure to take action can have unanticipated consequences as devastating or worse than taking action too soon, or inappropriately. Opponents of net neutrality are fond of quoting the phrase of the Hypocratic Oath “do no harm.” But this injunction does not prevent physicians from administering vaccinations rather than waiting for a “tetnus problem” or prevents them from removing a tumor before it becomes malignant and spreads to vital organs. The evidence of harm is before you in our filings, with new examples constantly emerging – sometimes retreating in the glare of the spotlight, but other times festering to the detriment of us all.. In 1999, we could have saved competition. Now, we are struggling to save free speech and innovation at the edge. As we are fond of saying at the Passover seder, daiynu – it is enough.
Before I conclude, allow me to briefly address the questions raised by Commissioners Tate and McDowell in their opening statement. As a father of a nine year old, I also worry about access to inappropriate material. But we must distinguish between this very important social concern and what Comcast actually did and is doing with regard to Bittorent. MAP recently hired a consultant to test whether Comcast’s practices of network management had any impact on access to adult oriented material. Our tester found that free porn and pay porn remained plentiful and abundant, from websites whose names I cannot read in this public forum. Ironically, Comcast would address its bandwidth problem and do more to reduce access to inappropriate conduct by taking the 2% of its channel capacity devoted to pay-per-view adult programming and dedicating those channels to broadband capacity.
I want to stress that I absolutely support Comcast’s right to offer this content, and I do not want for one minute to suggest that Comcast should try to police this content. But the suggestions by some that the Commission deciding against Comcast in our complaint would somehow increase the adult-oriented content available to Comcast subscribers is false to fact. Comcast’s network management in this case has nothing to do with indecent content, and we must not allow our legitimate concern about children accessing inappropriate material to be manipulated.
On the other hand, and also addressing Commissioner McDowell’s questions regarding whether this impacts downloads, our tester made over 300 hundred attempts over the course of two weeks at randomized times to download the King James Bible via bittorrent from torrentbox.com. Of 300 attempts, two-hundred and twenty-six attempts failed, a failure rate of 75.33% — consistent, I note, with Robert Topolski’s recent experimental data.
I also have to say that, having been involved in the “internet governance” debate since its beginning, having served on the ICANN Names Council, and various other advisory boards and so forth, I find Commissioner McDowell’s rosy description . . . incomplete. For example, will there be a government advisory council for this private P2P organization? How about a non-commericial users constituency? I was able to actually participate in ICANN, even sit on one of its governing bodies. How will Comcast and the other cable operators foster such end user participation? A business constituency for folks like Jason? I can subscribe to the IETF mailing list. I can show up at any meeting, and anyone can initiate an RFC. How do I initiate an RFC with the p2p working group? How do I make my comments known for this bill of rights? I know I would like to know, and I imagine that everyone with an interest in the evolution of the internet — meaning, of course, everyone — would like to know as well.
To conclude, Ecclesiatses says: There is a time to speak, and a time to keep silent. With respect, the time has come for the FCC to speak. The American people, whose right to free speech you are obligated to protect, deserve no less.
Thank you.
A SERIOUS ERROR OF DEFINING NETWORK CONGESTION AS AN ECONOMIC EXTERNALITY IN THE FCC STANFORD HEARING
George S. Ford of the Phoenix Center asserted in effect, that as an externality, network congestion is caused between crowded customers and their overuse of underpriced bandwidth. From this he concludes that the alleviation of congestion by a broadband provider generates economic benefit via the elimination of the externality, a cost on all customers, and further that the provider has no particular strategic incentive to exploit conditions of congestion since externality reduction by definition benefits customers rather than the company.
He has it backwards. In this case, congestion is exactly a strategic phenomena between the company and its customers, and does not reflect typical conditions of congestion among only customers like traffic jams or overcrowded free public parks.
Is bandwidth underpriced and if so, how would it create such an externality?
When Comcast markets bandwidth, it does intentionally underprice it by virture of overstating its availability with an “up to” maximum but no “at least” minimum. In theory, as long as customers don’t experience chronic congestion or blocking, they could still get what they pay for, no matter how large the difference between potential and actual bandwidth use. For Comcast, it’s an economic incentive to minimize cost and maximize revenue and profit by loading up the system with these customers as close to the point of congestion as it can get without going past it.
Here’s where Ford’s “externality” backfires. Once congestion occurs, bandwidth is effectively overpriced in the sense that the service is degraded at a lower quality level for the same price paid. But Ford and others insist the opposite, that from a falsely characterized “all you can eat” pricing model, bandwidth is underpriced at zero for the marginal GB consumed in peak, which therefore is posed to drive aggregate consumption past the point of congestion.
This is the Catch-22 pricing model described elsewhere here by Harold Feld. Service X is sold for price Y available for Z use between zero and a maxmum, for which the provider can restrict use down to zero if necessary to control congestion. There’s no externality here. Service X has a price for any range of Z use between zero and a maximum. That’s the TOS.
The use of service X may or may not contribute to congestion in the aggregate. If it doesn’t, it’s not called an “externality”, and if it does, it is. How much use of X above zero Z use causes congestion? … It’s a mystery … Comcast will let you know, and when it does, opponents of net neutrality like Ford will chime in and call it an externality.
As long as the provider maintains enough network bandwidth capacity to avoid congestion, it can claim the bandwidth was not “oversold” or “underpriced” from the perspective of an individual customer who is never blocked or experiences congestion. But once congestion occurs, it is characterized mistakenly as an “externality” by Ford and others when in fact, it’s a forced degradation of service by virtue of an intentional undersupply of bandwidth maintained by a combination of underinvestment coupled with discriminatory restrictions on its use.
How would net neutrality solve this problem? At one level it would require transparency and at another level, it would require all sources of congestion to be treated equally via pricing, non-price rationing and TOS, like it is in genuinely competitive markets without externalities.
barrypayne_economist, I’m not an economist, I’m a simple blogger, so I’d like to know– how does the concept of “economic externality” fit when, like in the case of AT&T and Verizon, they’ve already received the dough to build the network, in the form of hundreds of billions of dollars in tax incentives, and then chose not to do so? (Silly me, I call that theft.)
Oh, and Harold, didn’t know if you’d seen this:
http://www.technologyreview…
Of course, the powers that be will probably snarf this tech up ASAP to keep it from getting into a potential competitor’s hands.
bj
Theft and externality are not the same thing. When clean air and water is polluted due to its overuse and misuse at a zero price, it can still be legal and impose costs on third parties who use clean air and water.
If clean air and water were priced correctly to avoid externalities, it could still be “stolen” in various ways, including politically, effectively bypassing the prices.
Some economists of the libertarian variety would indeed lump both instances under the “externality” umbrella by insisting that anything that can be privatized should be to eliminate externalities among other things, i.e. there’s no such thing as “market failure”, only “government failure”.
The same school may agree that what AT&T and Verizon did was “theft”, but only as a consequence of manipulation of government regulation by the governed, i.e., any regulation that can be avoided through privatization is a failure by definition.
As for the terrahertz radiation off-the-charts bandwidth, this is one more example of market failure that will be denied by the same school of thought. With that kind of dramatic efficiency, only “one pipe” makes sense, like the electric grid described by Lawrence Lessig in the hearing.
The flip side of negative externalities is positive externalities, where when more users come on line, everyone benefits, so if terrahertz radiation ends up displacing everything else, net neutrality becomes all the more critical to enable positive externalities through the enforcement of open and equal access among producers and consumers of content and free speech.
My prepared comments before the FCC (of which I got to deliver only about half — while Harold got to deliver all of his, even though they were longer) is at http://www.brettglass.com/F…
My prepared comments before the FCC (of which I got to deliver only about half — while Harold got to deliver all of his, even though they were longer) are at http://www.brettglass.com/F…
Brett:
I trimmed mine too, although I suspect they seemed interminable while waiting for your turn.
I just checked the record and I ran five minutes over, which is on par with Barbara and George Ford. You only got to run about 3 minutes over. Alas, you suffered from being further down the line when Martin started to really feel the time pressure. I’ve been there myself, so you have my sympathy, but so it goes. This time, I was fortunate enough to be placed far enough ahead by alphabetical order.
Alas, Harold, even if I had gotten the same 10 minutes as you, it still would not have been fair because many other people were saying the same things you did. I was the ONLY service provider speaking; it was 20 to 1. And even Larry Lessig, who made no substantive points but rather preached a sermon, was allocated 25 minutes and used more than that. I had 8 minutes to represent my entire industry and to cover some facts that had NEVER BEEN PRESENTED before the Commissioners.
As you were looking forward to being a “free man,” I was looking forward to being enslaved and held captive by regulation. This business is hard enough; I’m already competing against giants and constantly being sabotaged by them. Your group is lobbying to turn the government against me — and, ironically, by destroying businesses like mine to DECREASE consumer choice and install a duopoly. I cannot help but think that my existence seems to be, in some ways, inconvenient for you and that your life would be so much easier if there were just a nice, big, comfortable duopoly to pick on. Is that what you want? Because based on the comments I heard at the Stanford hearing and at today’s Senate hearing, that’s what you’re lobbying for.
By the way, to continue the Passover theme: Some of my friends have joked with me that they loved the picture at http://www.indybay.org/uplo… except for a few minor details. Firstly, it doesn’t show me with any matzoh (though I do have a bottle of water which I suppose I could have turned into wine). Secondly, there are too few disciples. But, they noted, Larry Lessig did deny me — both at the FCC hearing and at at the hearing before Congress today — by claiming that there was a duopoly and therefore I did not exist. Still, I am nonetheless about to be crucified if regulations or legislation get passed that put me out of business.
I loved your talk, Harold! I just caught the video part today!
Brett — it took me 3 days to get my presentation down to 5 minutes (and I think I took 7 or 8). I think you said that you had 1 day’s notice to prepare and get out there.
Although we disagree on a lot, good job never the less.
Robb
The job I did was not good enough. I have a lot more work to do.
I expect to spend many thousand dollars of my personal savings (I don’t have big money backing me, as you do) talking to legislators and regulators. I will be renting an apartment in Washington DC at great expense and leaving my business in the capable hands of an assistant several times as I fly back and forth.
You can be as cordial as you like, Robb, but you are NOT going to kill my business and thereby deprive my customers of service. No matter how much you and your cohorts continue to spread lies.
Brett:
I recognize it’s your business, your life, your passion, etc. But a word of friendly advice. Just because people disagree with you does not make them liars. Just because they don’t care about you doesn’t make them liars.
Bob Topolski did not go lookng for this. He was going about his normal business when he discovered something, investigated, and Comcast lied their asses off about it.
Feel free to make the case that the cure we want is worse than the disease, because it would kill you. That’s how the process works. Everyone makes their case and policy makers weigh the costs and benefits and decide.
And, let me add, there are other answers to your problem. The Commission can regulate the access market directly. Arguing that we need to screw the rest of us sot ht you can live strikes me as less optimal than arguing for you to survive without screwing the rest of us. Fix the real problem, rather than try to live off the scraps the FCc has left you after 10 years of aggressive deregulation.
Harold writes: “Just because people disagree with you does not make them liars. Just because they don’t care about you doesn’t make them liars.”
You’re correct. But lying does make them liars.
Comcast did lie. But Robb and Larry Lessig and Susan Crawford are lying as well.
You write: “Arguing that we need to screw the rest of us so that you can live strikes me as less optimal than arguing for you to survive without screwing the rest of us.”
Not true. It’s if I and others like me don’t live that you’re screwed. And you’re lobbying to kill me, Harold. You can’t expect me to react well to that.
By the way, Harold, I must say that many parties — yes, including you — are not being truthful when you assert that Comcast’s behavior was in any way blocking free speech. That simply isn’t so. Comcast was stopping activity that was abusive to the network and in fact was harming free speech by degrading its quality of service and potentially forcing it to raise its prices (thus limiting the access of some members of the public to broadband). Yes, Comcast — a blundering corporation — ineptly and stupidly lied about what it was doing. It should have come right out and said, “We are blocking this abusive and non-neutral behavior for good reason.”
If you really were a champion of free speech, you would welcome mitigation of P2P. But you’ve become an irrational corporation-basher, and because you’re not thinking of what the consequences of your actions will actually be, you are in fact threatening to bring on some of the very harm about which you are being alarmist.
As someone who actually understands the broadband market (because I am in it), let me tell you what will happen if blocking or throttling of P2P behavior is prohibited.
* Small ISPs will be put out of business by rampant cost shifting and deteriorating quality of service, leaving duopoly in urban areas and no access in many rural ones.
* It will be impossible to control piracy of intellectual property or child pornography, because P2P obfuscates the sources of material and makes it hard to stop its distribution. Encrypted P2P will make it difficult if not impossible to detect which content is legal and which is not in many cases.
* The ISPs left standing — and there will be a cable/telco duopoly — will be forced to raise prices due to the crushing bandwidth load caused by P2P.
* The expensive spectrum recently bought by wireless carriers will be monopolized, and hence squandered, by P2P. Any benefits it might have brought the public will be wasted.
* There will be an actual threat to freedom of speech due to duopoly, increased cost of broadband service, and decreased availability of broadband.
This is what you’re about to do, Harold, if you don’t stop and rethink what you are doing and I don’t succeed in stopping you and the irrational mob that you and yours have gathered behind you by creating an imaginary threat.
For more, see Andrew Orlowski’s two brilliant articles at
_neutrality_a_monkey_hangers_guide/” rel=”nofollow”>http://www.theregister.co.u…
and
_neutrality_mob_rule/” rel=”nofollow”>http://www.theregister.co.u…
P.S. — Since your blog software apparently munged the two URLs above, I’ve put them through TinyURL:
http://preview.tinyurl.com/…
http://preview.tinyurl.com/…
Brett:
1) I of course expect that if you believe our advocacy will lead to your destruction, you will fight back. I would hope to persuade you that you are wrong that the end result of our advocacy is your destruction. But, failing that, I expect you to do what you think you need to do to survive.
2) WRT the First Amendment — I recognize you don’t see the connection. But my work is based on the idea that permitting corporations to act as gatekeepers of speech over vital communications bottlenecks is repugnant to the First Amendment, and that the government has an obligation to protect the free flow of information. It’s what MAP _does_. We do this in broadcast, in cable, and now for the internet.
I long ago recognized that many people do not share this view of the First Amendment. Fine. I am sorry I am unable to persuade you. But again, you mistake a fundamental difference in first principles as “lying” or being disingenuous. Believe what you wish, but your failure to appreciate this will both weaken your advocacy, needlessly increase your frutstation levels, and prompt you to fail time and again to recognize the strength and animating force of your opposition.
You write:
“I of course expect that if you believe our advocacy will lead to your destruction, you will fight back. I would hope to persuade you that you are wrong that the end result of our advocacy is your destruction.”
Of course it is. Look at what you are advocating: that we should allow infinite costs to be dumped on us without compensation. Have you ever owned or operated a business? How can you not understand that this would put anyone out of business?
“But, failing that, I expect you to do what you think you need to do to survive.”
Gee, thanks. You draw a nice salary and have megabucks behind you. I’m living hand to mouth. Do you not think it’s rather irresponsible both to try to destroy me and to destroy any last chance that consumers have to choose a broadband provider?
“WRT the First Amendment — I recognize you don’t see the connection.”
There is none. Firstly, the First Amendment says, “Congress shall make no law.” It regulates the government, not private parties. Secondly, nothing Comcast did was in any way a restraint upon users’ speech.
“But my work is based on the idea that permitting corporations to act as gatekeepers of speech over vital communications bottlenecks is repugnant to the First Amendment,”
You want gatekeepers? Just kill off all competition. Want bottlenecks? Let the Net get choked by P2P so that nothing else can get through.
“and that the government has an obligation to protect the free flow of information. It’s what MAP _does_. We do this in broadcast, in cable, and now for the internet.”
The Internet is not a broadcast medium. You are out of your field.
To use a literary reference I’m sure that you will get (though others may not): You’re in a panic about Comcast leveraging market power to hurt someone’s ability to speak (even though they are not doing that). And so, not satisfied with passing or enforcing laws that merely prohibit those things, you are advocating laws that prevent ISPs from even managing their networks. This is what is known as building a “fence around a fence.” It is not only unwise but destructive.