FCC Commissioner Pai Continues His Strange, Somewhat Incoherent Assault On Netflix

from the what-the-hell-are-you-talking-about dept

Netflix's vocal support of Title II, criticism of usage caps and, most recently, its complaints about the use of interconnection as an anti-competitive weapon have made the company policy enemy number one among the nation's biggest ISPs. As part of an attempt to undermine Netflix, these ISPs (with Comcast leading the charge) have been using their lobbyists, fauxcademics, and various policy folk to try and portray the streaming company as a dirty freeloader and a nasty company that is really the one to blame for most of the Internet's problems.

Joining this chorus last month was FCC Commissioner Ajit Pai, who in a bizarre letter to Netflix (pdf) tried to paint Netflix as a hypocrite on net neutrality. To accomplish this, Pai pretended (one hopes) he didn't know what a content delivery network (CDN) was, and that Netflix's creation of its own CDN is somehow the same thing as creating Internet "fast lanes." Pai also oddly tried to claim that because Netflix refused to join a new streaming video coalition spearheaded by Netflix critics like Comcast and Charter -- that this was somehow proof positive that Netflix was against "Internet openness."

Pai's sudden interest in streaming video fairness was particularly strange coming from a former Verizon regulatory lawyer turned FCC Commissioner who repeatedly turns a blind eye to broadband industry competition and consolidation woes. Still, Netflix played along, and in both a letter and during personal visits explained to Pai that the company's Open Connect CDN isn't a "fast lane," is free to use, and its peering locations, guidelines, hardware design and open source software components are all pretty plainly documented.

Trying to get more mileage out of his attack, Pai is now pretending that Netflix "refused" to answer many of his questions. In a press release (pdf) issued by the Commissioner, Pai again insists that Netflix is somehow "undermining the development of open standards for Internet video." His evidence? Again, it's the fact that Netflix runs its own "Open Connect" CDN, and encrypts certain CDN URL structures to help protect consumer streaming behavior from third-party observation. This is, Pai insists, proof positive that Netflix has been incredibly naughty:

"In order to test the validity of this assertion, I then asked Netflix to respond to the allegation that it had rolled out its new encryption protocols by first targeting those ISPs that had installed open caching appliances. The company assured me that this was not true and agreed to submit information after our meeting that would disprove this charge. One month later, that commitment remains unfulfilled. When my office reached out to Netflix for the information (in particular, which ISPs were targeted on which dates), the company refused to turn it over. I am disappointed and perplexed by this decision. If Netflix did not target those ISPs using open caching, why would it withhold information that would disprove this allegation? I hope that the company will reconsider its position and supply the facts that would resolve this matter once and for all."

Pai forgets to note that Netflix's "Open Connect" CDN is completely free, and benefits both Netflix and ISPs alike by making streaming more efficient. He also somehow omits to mention that incumbent ISPs refused to sign on to this CDN, something Netflix and Level3 have claimed was part of a plan to force Netflix to pay steep new interconnection fees (this is all currently being investigated by Pai's colleagues at the FCC). While I've noted that Netflix absolutely needs to be more transparent regarding the interconnection feud, its transparency practices are a far cry from the kind of obfuscation incumbent ISPs have been engaging in for years (which you'll note Pai has spent the lion's share of his tenure turning a blind eye to).

Basically, Pai is conflating a bunch of issues, ignoring a bunch of others, and demanding a response to inquiries that can't really be answered because they don't make any coherent sense. In his closing paragraph, Pai makes it clear he's not looking for anyone to do anything about Netflix's villainy, he just basically wanted to make Netflix look stupid with a "gotcha" that isn't much of a gotcha at all:

"To be clear, I do not favor additional FCC regulation in this area. However, if a company asks the FCC to impose public utility-style regulation on every broadband provider in the country in the name of preserving the open Internet but then selectively targets open video standards to secure a competitive advantage over its rivals, it should be called to account."

Netflix has since responded stating it answered all of Pai's questions and that Pai "appears to be targeting us because he disagrees with our Open Internet advocacy, not because of our efforts to protect member privacy." Pai apparently hoped that his criticisms would somehow undermine the credibility of a Title II supporter, but in the process he only really succeeds at making a public official look petty, incompetent, or a delicate combination of both.

Filed Under: ajit pai, cdn, encryption, fcc, net neutrality, title ii
Companies: netflix

BlackBerry CEO Thinks Net Neutrality Means Forcing Developers To Make Apps For His Struggling Platform

from the you,-sir,-are-ridiculous dept

If you hadn't noticed, BlackBerry isn't doing so well in the company's battle to maintain relevance in a mobile ecosystem dominated by Apple and Google. While the company maintains a small but vocal component of fans, efforts to launch compelling new devices have generally stumbled around intoxicated before falling down, and the company has spent the lion's share of the last few years demanding it's still relevant, engaging in strange squabbles and denying reports that it's about to be put out to pasture via acquisition.

Apparently, as part of an effort to gain some attention and play kissy face with large carriers, BlackBerry CEO John Chen this week blogged about net neutrality. His missive starts off innocently enough, pointing out how net neutrality is hard to define. He then proceeds to try and argue that more flexible, tougher Title II-based laws aren't necessary because of the "Carterfone" provisions attached to the U.S. wireless spectrum:

"Those rules, advocated at the time by Google and a coalition of public interest groups, mandate two key non-discrimination principles – no blocking and no locking – which have proven to be a solid model for wireless carrier neutrality regulation....Verizon won the entire C block in the 2008 auction, and has lived under those rules ever since. The rules have withstood the test of time and have functioned well. There is no evidence the rules have failed to achieve their purpose or have failed to protect the principle of an open wireless internet."

Except he's wrong. While those spectrum conditions were supposed to protect consumers from discrimination, they contained enough wiggle room in the wording to ensure that wireless carriers could get away with anti-competitive shenanigans -- provided they pretended it was for the health and security of the network. That's why, when Verizon Wireless and friends blocked Google Wallet to give their own mobile payment platform a leg up (which amusingly didn't work), the carriers simply had to vaguely claim it was for security's sake. Basically, those rules haven't stopped carriers from all manner of bad behavior -- just as long as they defend the behavior with some ambiguous, faux-technical jargon.

From there, Chen tries to kiss up to AT&T and Verizon by attacking Title II and Netflix (the latter being all the rage right now among ISPs and friends), trying to claim that because a company doesn't spend time and money to make apps for unpopular platforms, it's violating net neutrality:

"Netflix, which has forcefully advocated for carrier neutrality, has discriminated against BlackBerry customers by refusing to make its streaming movie service available to them. Many other applications providers similarly offer service only to iPhone and Android users. This dynamic has created a two-tiered wireless broadband ecosystem, in which iPhone and Android users are able to access far more content and applications than customers using devices running other operating systems. These are precisely the sort of discriminatory practices that neutrality advocates have criticized at the carrier level."

Except of course that's total nonsense. Android and iOS, while certainly no stranger to anti-competitive shenanigans of their own, enjoy their dominant wireless market share primarily because they're excellent platforms. Developers would most certainly pay more attention to BlackBerry if the company's market share hadn't tanked (it's somewhere around 2% of all smartphones as of last year). Instead of staying quiet and remaining focused on making better products, Chen's silly solution is net neutrality rules that force developers to make applications and services for struggling platforms:

"Neutrality must be mandated at the application and content layer if we truly want a free, open and non-discriminatory internet. All wireless broadband customers must have the ability to access any lawful applications and content they choose, and applications/content providers must be prohibited from discriminating based on the customer’s mobile operating system."

We've seen so many ridiculous, riff arguments against net neutrality over the years (like the idea of search neutrality), it's hard to tell if Chen is being serious. Perhaps the BlackBerry CEO is a comedic genius, and this is a masterful troll or some amazing new performance art? Because if he's serious, BlackBerry's basically arguing that because it can't compete, government should come in and force developers to craft products for unsuccessful platforms. Given the ridiculous strain this would put on companies (especially small developers) this is obviously not happening, and BlackBerry's going to have to climb out of its deep, dark popularity hole like a big boy if it wants to maintain market relevance.

Filed Under: app neutrality, competition, john chen, net neutrality, neutrality, platforms
Companies: blackberry

Broadband Industry Takes To Congressional Hearing To Praise Wimpy, Neutrality-Killing Proposal It Helped Write

from the pure-theater dept

To derail February's expected unveiling of Title II-based neutrality rules, the broadband industry is engaged in a last ditch effort to pass some of the flimsiest net neutrality rules we've seen yet. Spearheaded by Senator John Thune and Representative Fred Upton (the latter a particular magnet of Comcast campaign contributions), the goal appears to be to propose intentionally awful neutrality rules, offer a few meager concessions, then insist the marginally-less-awful result was crafted only after a long "public conversation" and with bipartisan support.

If you actually bother to read the proposal (pdf), you'll find it actually erodes FCC authority and flexibility to enforce violations by stripping FCC rulemaking rights away, leaving the FCC only able to adjudicate dispute after dispute with no timetable (essentially allowing ISPs to bury complaints in paperwork). The proposal also has intentionally vague loophole language large enough to drive several trucks through, with terms like "specialized services" and "reasonable network management" left intentionally ambiguous. It also intentionally fails to address the latest neutrality flash points (like usage caps or interconnection).

Despite the proposal being a hot mess, phase one of Thune and Upton's plan is to convince the press and public that neutrality opponents had seen the error of their ways and are finally willing to negotiate on real rules. Phase two appears to be to hold a series of public hearings (starting this week) featuring industry friends gushing about the effort -- like former FCC boss turned top cable lobbyist Michael Powell, who today told hearing attendees that all of those clever loopholes his industry helped painstakingly embed in the draft proposal are wonderful for consumers and industry alike:

"The Committee’s proposal to enact bipartisan legislation is a much-needed alternative to this harsh result (read: Title II). Instead of leaving the FCC to find statutory authority in existing provisions of law, we must work together to craft new legislation that establishes unambiguous rules of the road for ISPs while also clearly defining the parameters of the FCC’s authority. The legislative proposal under consideration today represents a new path forward that meets these policy goals. I firmly believe that the proposed legislation under review today achieves the aims of every stakeholder in the Internet ecosystem."

The wireless industry is similarly thrilled by the draft proposal with language you'll note mirrors the cable industry ("excellent start," "great path forward"). Former FCC Commissioner Robert "what broadband competition problem" McDowell, now employed by frequent Comcast client Wiley Rein LLP, also testified at the hearing and offered up a Wall Street Journal editorial using much of the same rhetoric (gosh, it's almost like they're all reading from the same script):

"It’s time to consider a different path—one that leads through Congress—to end the net-neutrality fiasco. Although the legislative process can be perilous, Congress can provide all sides with a way out."

Yes, the same Congress that can't tie its own shoes can most certainly lead us out of a complicated, decade long net neutrality debate -- by trying to pass net neutrality rules written by the nation's biggest broadband companies. Of course if this effort follows the traditional telecom industry trajectory, phase three of the sales job for the Upton/Thune proposal will be to bombard the public with editorials and support from a litany of purportedly objective experts and minority groups -- all breathlessly arguing that this awful bill is our "best path forward" and that Title II will harm puppies and create tears in the space time continuum.

Unfortunately for the phone and cable industries, most folks (with a few press exceptions) appear to realize this change of heart is really just telecom industry business as usual: large companies writing draft legislation and then throwing money at politicians, individuals and groups eager to parrot support for cash. The only interest here is in undermining real net neutrality, not protecting it, and the goal isn't consensus -- it's the illusion of consensus. In the end we're still headed for a fight over Title II, whether the industry likes it or not.

Filed Under: congress, fred upton, john thune, michael powell, net neutrality, open internet, robert mcdowell, title ii

That Study In Every Paper Claiming Title II Will Result In $15 Billion In New Taxes? Yeah, That's Total Bunk

from the damn-lies-and-statistics dept

A few weeks back, we noted how a new study by the Progressive Policy Institute was making the claim that reclassifying ISPs under Title II would result in $15 billion in new state and federal taxes. As also noted, the claim was quickly picked up by media outlets and large ISP executives as the centerpiece of a campaign to convince the press, public and regulators that Title II will result in the sky falling. The cable industry was also quick to use the study as the underpinning of a series of ads pretending they care about soaring consumer bills (adorable!).

The problem, as usual in farmed telecom think tank wonkery, was that the study's findings were largely bunk. Consumer groups were quick to complain (pdf) that study author Hal Singer packed the study with conflations, misleading math (when calculations weren't obscured entirely) and the inclusion of unrelated programs and issues (like 911 funding) to intentionally bloat the predicted impact. Singer also misleadingly included the unrelated temporary moratorium on Internet service taxation in his findings, even though the Internet Tax Freedom Act (ITFA) has since been made permanent, wiping $4 billion, or 27%, off of Singer's prediction in one fell swoop.

None of this of course stopped the study and the scary $15 billion tax estimate from being used by ISPs, CEOs and loyal politicians to wage war on Title II, and the study has since been regurgitated unskeptically in thousands of news reports. Well, except for the Washington Post, which recently decided to actually fact check the study's findings (journalism!), only to discover that even if you could accurately state the full financial impact of Title II, the report went out of its way to paint as ugly of a scenario as possible:

"It is impossible to quantify the exact impact of the potential FCC decision, since Internet regulation is a new area of policy. New taxes are prohibited as long as the Internet Tax Freedom Act is in effect, so it is inaccurate to say there would be $15 billion in new taxes. There may be state charges and fees, but there is no proof that all of the current fees on telephone services would apply again to Internet services. It will not add up to $15 billion, and likely not add up to $11 billion — the worst-case scenario. The researchers agree it is a “high-end” estimate, which was the purpose of the report."

Amusingly, the Post's Michelle Ye Hee Lee contacted politicians that have bandied around the estimate, and few were interested in changing their positions when they were informed the $15 billion total was a phantom. Also of note, the story notes that Singer did at least edit his study when the Internet tax moratorium was introduced, but buried the update:

"There are too many unknowns to alarm consumers who are not well-versed in the technical and legal details of telecommunications regulations and laws. Given the uncertainties, it would be more appropriate to give a range of potential charges. But the researchers did not calculate a low-end figure for the report. In addition, the modification from $15 billion to $11 billion is a 27 percent decrease, yet the change is buried in a footnote and not readily visible for the public."

Note that none of this is to say that Title II won't see some form of tax increase, but most analysts (the ones not trying to scare people) appear to think it will be somewhere in the range of not that big of a deal. Even if Singer was able to successfully calculate the myriad trajectory of dozens of Internet policies and tech trends to come to a hard number, he should have at least used his crystal ball to try and factor the cost benefits neutrality rules -- and a healthy Internet -- would have on the consumer. Would a tax increase be offset by the savings from not being price-gouged by neutrality-violating duopoly? How much would most consumers be willing to pay in additional taxes for a healthy Internet? These are questions Singer doesn't want to ask.

After being called out by the Post, Singer took to Twitter with a unique defense of his bloated, intentionally-inaccurate missive, only highlighting the part of the story that shows there may be some kind of tax increase:

Free Press effort to discredit PPI study fails. @myhlee finds there will be some new charges. http://t.co/dXFKW4iQGp pic.twitter.com/LGIUTjUVQk

— Hal Singer (@HalSinger) January 16, 2015

When Mike pointed out Hal was being incredibly disingenuous, Singer actually responded by blaming the news outlets that used his inaccurate figure. He further argued that even though the Washington Post gave those "three pinocchios" to everyone citing his report, it didn't apply to him because he'd added that little footnote. "Your analysis clearly stating that I'm completely wrong is proof that I'm right," is a new one, and one I'll have to remember the next time I find myself creating bogus science to help prop up duopolists.

Filed Under: hal singer, net neutrality, taxes, title ii
Companies: progressive policy institute

Flimsy Last Ditch Effort To Derail Real Net Neutrality Protections Launches In Congress

from the let's-play-make-believe dept

With Title II based net neutrality rules pretty much a sure thing, the mega-ISPs have been engaged in a last-ditch attempt to derail the FCC ahead of an expected February 26 announcement and vote. This has included significant pressure on lawmakers to rewrite the Communications Act with a core focus on hamstringing the FCC by eroding both their authority -- and their budget. ISPs are also pushing well compensated Congressfolk to pass new, weaker neutrality rules in an effort to preempt tougher Title II provisions.

At the vanguard of this latter effort sit Senator John Thune and Representative Fred Upton. The two have been busily firing up an utterly adorable stage play the last week in which they profess to love net neutrality so much, they're starting a "public conversation" about new, bi-partisan neutrality rules they hope to pass. As part of this campaign, the two took to the Reuters op/ed page last week to convince the public that while they once saw neutrality rules as a "solution in search of a problem," they now think we need tough, comprehensive, bipartisan rules crafted after a painstaking public conversation:

"In the coming days, we plan to pursue a public process to draft and enact bipartisan legislation that would protect the open Internet. We hope FCC Chairman Tom Wheeler and the public will join Congress in working to build and enact a shared set of principles that will protect Internet users, promote innovation, encourage investment — and withstand legal challenge.

We have made this an early priority of this Congress, demonstrating we can come together on a bipartisan basis to protect the vitality of the Internet — now so indispensable to our economy and way of life. Enduring, long-term protections for our digital freedoms are something we should all support."

Clearly this is an amazing, unprecedented example of Congress working through its traditional partisan dysfunction and coming together to ensure the Internet is protected from the lack of last mile competition, nurturing a more robust Internet economy for generations to come. Just kidding. It's all bullshit.

What's actually happening here is Thune and Upton are trying to force through a law written by ISP lawyers that is actually weaker than the original FCC rules AT&T and Comcast supported (but Verizon sued to overturn). By "public conversation," they mean a series of public hearings in which the usual assortment of think tankers, fauxcademics, sock puppets and other ISP-payrolled policy folk gush over the proposal as a more "sensible" solution than Title II. Except when you actually bother to read their proposal (pdf), you'll note that the rules are so stuffed with loopholes, they fail to protect net neutrality whatsoever.

The bill's language leaves the FCC with less flexibility and authority to enforce net neutrality than ever before. It exempts anything having to do with copyright infringement, allows prioritization of a company's own content (provided payments aren't made), doesn't address discrimination via access charges, and has a painfully ambiguous definition of "reasonable network management." It also fails to cover the areas where the most important anti-competitive gatekeeper shenanigans are occurring right now: usage caps, payment schemes to bypass those caps (like AT&T's Sponsored Data), and interconnection.

Consumer groups like Public Knowledge note the proposal only prohibits the kind of ham-fisted offenses ISPs were never even considering (blocking websites or services outright). Otherwise it's a giant wishlist for all of the "creative" gatekeeper pricing efforts carriers have been cooking up for several years, while leaving the FCC largely powerless to protect consumers from them:

"For example, these principles would not have prevented AT&T from limiting FaceTime to particular tiers of service – as it tried to do in 2012. It would not address discriminatory use of data caps, such as Comcast has used to favor its own streaming content over that of rivals. It would not address potential issues arising at Internet interconnection, the gateway to the last mile. Even worse, by eliminating any flexibility on rulemaking or enforcement, the bill would prevent the FCC from addressing any new forms of discrimination and threats to openness that arise."

Still, some folks in the press were impressed that neutrality opponents were striking a "conciliatory note," seemingly portraying Thune and Upton as courageous for reaching across the aisle. That's giving this effort way too much credit, as they're just pantomiming according to a provided script. Worse, the two discard the last four years of progress in net neutrality discussions by actually making their proposal weaker than the rules crafted with Google, Verizon and AT&T's heavy participation in 2010. Thune and Upton's efforts are little more than a mule in a dress trying to do a Marilyn Monroe impression, and it's huge step backward for those interested in meaningful neutrality protections.

Filed Under: broadband, congress, fcc, fred upton, isps, john thune, loopholes, net neutrality, title ii, title x

Surprise! Sprint Supports Title II, By Proxy Highlighting That T-Mobile Doesn't

from the walk-the-talk dept

Sprint today shocked everyone with an announcement that the company has decided to throw its support behind Title II-based net neutrality rules, shifting the Title II momentum needle just that much further. In a letter from Sprint’s CTO Stephen Bye to FCC chairman Tom Wheeler (pdf, spotted at GigaOM), Sprint argues that it's fine with Title II, provided the rules allow for sensible network management. To hear Sprint tell it, sensible neutrality rules using Title II and forbearance will also have no impact on its investment strategy, despite plenty of industry hand-wringing on this front:

"So long as the FCC continues to allow wireless carriers to manage our networks and differentiate our products, Sprint will continue to invest in data networks regardless of whether they are regulated by Title II, Section 706, or some other light touch regulatory regime."

AT&T, Comcast and Verizon have repeatedly tried to claim that Title II-based rules will kill industry investment, even though they've been quietly telling investors Title II really isn't a big deal. As the recent $45 billion spectrum auction and wireless investment (wireless voice falls under Title II) make clear, Title II has never really been an impediment to wireless or wireline investment. Smaller ISPs like Sonic.net have similarly noted that Title II-based neutrality rules are only going to be a problem for companies engaged in bad behavior.

Since the announcement makes Sprint the only major wireless carrier supporting Title II, it's sure to piss off the company's friends at the CTIA. The CTIA was of course thrilled when the FCC's original neutrality rules somehow failed to cover wireless networks. Since then, the group has been breathlessly proclaiming that neutrality rules shouldn't apply to wireless because the wireless industry is a hyper-competitive, unique snowflake (never mind the sector isn't particularly price competitive and wireless is where most of the worst anti-competitive abuses currently reside).

In addition to being good for consumers, Sprint's announcement is an incredibly clever marketing move. By publicly supporting Title II, Sprint has thrown a spotlight directly on T-Mobile's failure to support net neutrality. While T-Mobile has made an often justified reputation the last year for being a fierce consumer advocate, the company has opposed Title II and shown through its Music Freedom program that it may not even understand what net neutrality is. Sprint's support for Title II by proxy demands that T-Mobile and snarky CEO John Legere walk the talk.

Of course we'll still have to see well-constructed rules crafted after a lot more bickering over what "differentiated products" and "fast lanes" actually are. The rules will then have to run the endless gauntlet of ISP lawsuits and emerge intact on the other end, then remain intact should there be a party change impacting FCC leadership. Still, judging from recent comments, there's every indication that FCC boss Tom Wheeler is going to shrug off concerns about his lobbyist past and actually do something good for consumers here, something that was unfathomable to most just one year ago. That's big, however you slice it.

Filed Under: net neutrality, open internet, title ii, wireless
Companies: ctia, sprint, t-mobile