FCC Commissioner: Gov't Should Never Interfere In Private Markets...Unless ISPs Have A Chance To Mock Netflix

from the hypocrisy-is-the-new-black dept

Wed, Mar 30th 2016 9:33am — Karl Bode

As we just got done noting, Netflix recently admitted that it has been throttling the streams it sends to AT&T and Verizon wireless customers in order to lessen the impact of usage caps. While most everybody agrees that Netflix should have been transparent about the practice, most also agree that Netflix -- an outspoken opponent of usage caps and supporter of net neutrality -- was actually trying to improve the customer experience with the move. As such, no real harm was done, and nobody even noticed that Netflix had been doing it -- for five years. Really not much of a story in and of itself.

But the telecom industry and its allies, outraged by Netflix's support of net neutrality, opposition to usage caps, and the threat it poses to legacy TV, have been desperately and hysterically trying to paint Netflix's reveal as some kind of immense gotcha.

AT&T (fresh off of an FTC lawsuit and FCC fine for lying about throttling for years) insisted it was "outraged" by Netflix's behavior. The American Cable Association (fresh off of 10 years of claiming net neutrality was an unnecessary solution to a hallucinated problem) insisted that Netflix should be investigated for its awful behavior, and the FCC should actually expand net neutrality rules to cover so-called "edge" providers. Now FCC Commissioner Mike O'Rielly has joined the fun, insisting that the FTC, FCC, and Congress should investigate Netflix immediately....for something:

"Netflix has attempted to paint a picture of altruism whereby it virtuously sought to save these consumers from bumping up against or exceeding their data caps," O'Rielly said. "There is no way to sugarcoat it: the news is deeply disturbing and justly generates calls for government—and maybe even Congressional—investigation."

It's true what Netflix did wasn't entirely altruistic. Reducing the streams of capped customers means they'll be less likely to erode their usage caps quickly, and happier with Netflix's service. But when it comes to looking out for consumers on the issue of net neutrality and usage caps, Netflix has been nothing but a genuine consumer ally -- while bigger companies professing to love net neutrality (**cough** Google) -- ran and hid when the going got politically tough during the most recent fight over net neutrality rule verbiage.

If you're unfamiliar with O'Rielly, he and FCC Commissioner Ajit Pai (a former Verizon lawyer) vote down absolutely every pro-consumer action item that comes to the FCC, and certainly if it attempts to hold a large telecom company accountable for clear, obvious fraud. From holding AT&T accountable for ripping off the poor or the hearing impaired, to thwarting prison phone companies from ripping off inmate families, O'Rielly votes it all down, consistently lamenting government waste and overreach, while praising the natural ability of the free market to overcome all evil using something akin to magic.

In a recent blog post, O'Rielly argues at great lengths that government should simply stay out of the affairs of the private sector:

"In communications, government is exceedingly busy and involved. It tries to dictate performance of the private sector, enter the marketplace itself, prop-up failing firms, chase flawed policy goals, subsidize favored classes or companies, stifle the offerings of goods and services by disliked firms, tilt the playing field in certain directions and much worse. While some level of activity occurs because of legacy policies, the constant tinkering inevitably interferes with the workings of capitalism and promotes bad outcomes.

And here's an editorial O'Rielly recently co-wrote for Forbes in which the FCC Commissioner rails against government interference in industry as an assault on innovation, citing Netflix itself as a prime success story thanks to a hands-off government approach:

"Given the unparalleled record of U.S. success in developing and bringing new, innovative technology products to market with a relatively hands-off regulatory approach, you would think there would be extreme hesitancy to alter that formula. The environment that brought us services like Amazon and Netflix is no accident, but instead can be attributed to a conscious decision to let the tech sector develop with minimal government intervention."

And while channeling Milton Friedman is certainly fine, here the Commissioner is, pushing for a multi-agency investigation into a non-starter. And when O'Rielly can't seem to find any rules that Netflix might have broken, he just starts hunting and pecking around in the dirt to try and find some:

"A company cannot knowingly make misrepresentations and inaccurate statements before the Commission," O'Rielly said. "In fact, doing so violates Commission rules intended to protect the integrity of the Commission and our decisions. We need to closely examine filings that were made for potential violations in light of this new information. It appears that Netflix made accusations of wrongdoing by ISPs, all the while knowing that its own practices were one of the causes of consumer video downgrading."

But when pressed to cite precisely what "misrepresentations and inaccurate statements" Netflix made before the FCC, O'Rielly can't actually cite any. So again, O'Rielly has whined incessantly about how net neutrality and the lack of broadband competition aren't real or deserving of government attention whatsoever, yet he's pushing for a multi-pronged government investigation into Netflix -- for trying to help customers on expensive wireless plans? It's another example of how Washington is painfully beholden to companies like AT&T, Comcast and Verizon, while simultaneously lecturing the public on the miracle of free markets.

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Filed Under: fcc, free market, hypocrisy, mike o'rielly, throttling
Companies: at&t, netflix

37 Comments

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TheResidentSkeptic (profile), 30 Mar 2016 @ 8:53am

Reached a new level.
Cognitive Dissonance with 3 Part Harmony
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Anonymous Coward, 30 Mar 2016 @ 9:46am

What should really be investigated are these attempts both successful as well as not to prevent competition in the telco industry to get states to ok the prevention of new start ups.

What should really be investigated, is where all the money went over the years where state and federal paid these telcoms to expand out and they failed to do so.

What should really be investigated, is the necessity of caps to raise prices.

What should really be investigated are the attempts to create walled gardens to lock customers in.

Netflix doesn't have anything to do with any of those. Funny how quiet it is on those aspects when calling for investigations.
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Anonymous Coward, 30 Mar 2016 @ 10:21am

Now I'm confused. Netflix is throttling themselves to save consumers from going over arbitrary data caps set by the monopolies and this outraged the FCC Commissioner? Yet, these monopolies throttle traffic that doesn't belong to them, set data caps which don't do anything for network traffic, but this is okay?

Did I get this right?
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Anonymous Coward, 30 Mar 2016 @ 10:21am

The problem...
With what Netflix did, isn't that they did it, it's that they allegedly did it without notifying the customers, or giving them a choice.

If I was paying for Netflix, and expected to get the highest quality viewing that my internet connection would support, I would be a little annoyed that Netflix would arbitrarily decide for me what quality I should get regardless of what was possible.
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Anonymous Coward, 30 Mar 2016 @ 10:23am

Re:
I would say this is an FTC issue more than an FCC issue. Netflix didn't give their customers what they were paying for, and they're not subject to title 2 rules, but they are still a business selling a product.
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Anonymous Coward, 30 Mar 2016 @ 10:30am

Wait, Pai is a former commissioner now? I thought his term lasted until June 30 this year.
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Anonymous Coward, 30 Mar 2016 @ 10:35am

Re: Re:
I would say this is not really that critical of an issue anyway. Netflix did provide the content as requested, just at a different quality. Yes they should have informed the customers they were doing this.

If the FCC or FTC really wants to do something, they should look into protecting the consumer, not the corporations
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Ninja (profile), 30 Mar 2016 @ 10:35am

Re: Reached a new level.
We'll see Mr Orly popping up another head like Zaphod from the hitchhikers book. One head will say one thing while the other says the dissonant opposite.
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Ninja (profile), 30 Mar 2016 @ 10:40am

He effectively argued that the FCC should simply cease to exist because the market sorts itself and now he's arguing for a multi-agency investigation. Amazing how money generates such polar cognitive dissonance. I would facepalm over that but this is no coincidence or display of ignorance. These people seemingly will say whatever falls in line with their sponsors...
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That One Guy (profile), 30 Mar 2016 @ 10:47am

Re:
Of course. See how it works is that when the cable companies implement completely artificial and unnecessary caps, and throttle a customer's connection unless they pay more once they hit those caps, that's 'creative pricing', and to chastise them about it is an attack on the completely free and not at all(promise!) monopolistic market.

When Netlix manages their content such that the quality is decreased so that their customers don't get slammed by massive fees for going over their data caps thanks to binge watching, it's a horrendous abuse of power and deserves the strongest condemnation and punishment.

Totally different you see, the cable companies are just engaged in harmless creative pricing that impacts any activity performed by their customers, while the vile Netflix is engaged in nefarious activity which only affects their content, making it far, far worse.
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TMC, 30 Mar 2016 @ 10:52am

Wait, Ajit Pai is now a -former- commissioner? When did that happen?
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That One Guy (profile), 30 Mar 2016 @ 11:03am

Re:
Wishful thinking leading to a mistake in typing up the article perhaps?
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Anonymous Coward, 30 Mar 2016 @ 11:15am

Re: Re:
Or, they could, y'know, not be directly abused by businesses with a direct vested interest in making Netflix go away.
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John Fenderson (profile), 30 Mar 2016 @ 11:32am

Re: The problem...
That's a legit argument, but one that has nothing whatsoever to do with FCC rules or net neutrality issues.
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Anonymous Coward, 30 Mar 2016 @ 11:36am

test
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medici, 30 Mar 2016 @ 11:55am

teach me Obi Wan
It's like these guys are buying into the Machiavelli method, It's kinda like the D.E.N.N.I.S. method.
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Karl Bode (profile), 30 Mar 2016 @ 12:14pm

Re: The problem...
"With what Netflix did, isn't that they did it, it's that they allegedly did it without notifying the customers, or giving them a choice."

Yep! And you'd be hard-pressed to find anybody that disagrees with that.

The problem is with O'Rielly pointing that out, but insisting that a generation of anti-competitive behavior by incumbent telecom operators is some kind of mass hallucination.
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Karl Bode (profile), 30 Mar 2016 @ 12:18pm

Re:
Brain fart, sorry. Was thinking "former Verizon regulatory lawyer" and wrote former commissioner instead. Or maybe it's wishful thinking, since I think the guy's an absolute revolving door regulation embarrassment.
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Karl Bode (profile), 30 Mar 2016 @ 12:19pm

Re: Re:
While that could be it, I was thinking "former Verizon regulatory lawyer" and mis-typed. Fixed, thank ya.
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Zonker, 30 Mar 2016 @ 12:21pm

Re:
Exactly what I was thinking. O'Rielly has basically argued that his job as a FCC commissioner should not exist and as such he will vote against any FCC regulation of any private communications business. Unless it's Netflix, Google, or some other competitor to existing businesses like Comcast, AT&T, and Verizon.

O'Rielly is being paid by us taxpayers to do the exact opposite of the job he has been appointed to perform.
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Mason Wheeler (profile), 30 Mar 2016 @ 12:38pm

Anyone remember Jim Cramer's appearance on the Iron Man film, trashing Stark Industries as "a weapons manufacturer that doesn't make weapons!!!"?

Mike O'Rielly reminds me of that scene. This is a regulator that doesn't believe in regulating!!!
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Anonymous Coward, 30 Mar 2016 @ 12:39pm

Re: Re: The problem...
Agreed.

And as I stated in another comment, this really has little to do with the FCC, but perhaps is a legitimate case for the FTC to investigate.

The fact that ISPs are up in arms over it really has little to do with the fact that something has gone wrong - and it's clear that O'Reilly is little more than a cheerleader.

I guess that's the news here - but are we surprised?
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Anonymous Coward, 30 Mar 2016 @ 12:41pm

Re: Re: Re:
This issue will likely make Netflix go away the same way as other issues have made AT&T/Comcast/Verizon go away.

Really, probably very few consumers really *care* that Netflix has done this - but it will make the big ISPs happy to see some of the "government regulation" treatment spread around to their competition.
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Muhammet (profile), 30 Mar 2016 @ 12:54pm

The Problem
Anyone remember Jim Cramer's appearance on the Iron Man film, trashing Stark Industries as "a weapons manufacturer that doesn't make weapons!!!"?
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Muhammet (profile), 30 Mar 2016 @ 12:54pm

The Problem
Anyone remember Jim Cramer's appearance on the Iron Man film, trashing Stark Industries as "a weapons manufacturer that doesn't make weapons!!!"?
www.fmcanliradyo.com
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Muhammet (profile), 30 Mar 2016 @ 12:56pm

The Problem
Anyone remember Jim Cramer's appearance on the Iron Man film, trashing Stark Industries as "a weapons manufacturer that doesn't make weapons!!!"?
http://www.fmcanliradyo.com
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Almost Anonymous (profile), 30 Mar 2016 @ 1:33pm

Re:
What should really be investigated is MONOPOLIES IN EVERYTHING BUT NAME held by cable, DSL, and phone companies.

I can't count how many times I've heard the old "I'm sorry, we don't service that area." It's freaking collusion and it's bullshit. Also:
O'Rielly argues at great lengths that government should simply stay out of the affairs of the private sector...
Hey O'Rielly, how about getting rid of these pseudo-monopolies and let the market REALLY sort out some issues? Let them compete on price and service? No? Then screw you, you lying hypocrite.
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Uriel-238 (profile), 30 Mar 2016 @ 1:47pm

Textbook examples
Can he be used as an example of why revolving door methods make an embarrassment of our regulatory agencies?

Can we start turning these people and incidents into economics class and poli-sci class examples of government failure?

Because they do deserve to be literal textbook examples now that they are figuratively so.
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Moo (profile), 30 Mar 2016 @ 2:32pm

How about they make a deal:
That government stops interfering with the normal business of free markets... On the condition that said "free" markets stop interfering with the normal business of government.
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Derek Kerton (profile), 30 Mar 2016 @ 3:14pm

Not Throttling
Karl,

Netflix cannot "throttle" using a precise definition of that word. Throttling occurs at the throat -- in the middle. If Netflix is reducing the encoding rate of their content, that is a "bitrate product decision", not any kind of throttling.

Don't use the language of the O'Rielly. It's like arguing copyright violations using the term "theft". Their language is deliberately a tautology.
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John Fenderson (profile), 30 Mar 2016 @ 4:17pm

Re: Not Throttling
I disagree, but this is a bit of a sideshow argument. For my entire career, when speed restrictions have been placed on network pipes, that has been called "throttling" even if those pipes begin and end in the same organization. It has no more negative connotations than "killing" a process.
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Anonymous Coward, 30 Mar 2016 @ 7:21pm

isps= scum fucking fish fuckers
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Dingledore the Flabberghaster, 31 Mar 2016 @ 6:29am

Re: Re: Not Throttling
Netflix haven't put any speed restrictions on the network pipes. They've just put less traffic down those pipes. It's the difference between a road's speed limit being reduced and people choosing to drive slower.
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Wendy Cockcroft, 4 Apr 2016 @ 5:55am

Re:
One presumes that's how he got the job in the first place, Mason.
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Wendy Cockcroft, 4 Apr 2016 @ 5:55am

Re:
Works for me!
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Muhammet (profile), 23 May 2016 @ 8:38am

purse
should I trust that?
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Muhammet (profile), 23 May 2016 @ 8:39am

purse
should I trust that? http://www.ucuztoptancanta.net
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