Big Broadband Begs FCC Not To Expose Their Lies By Defining Broadband Accurately

from the good-luck-with-that dept

Last week, FCC boss Tom Wheeler pointed out two important things: (1) The FCC's definition of "broadband" internet service (4Mbps down / 1 Mbps up) was silly because it was way too slow for things that people do online, like streaming HD video and (2) if you go up to higher (more accurate) levels of broadband, competition in providers all but disappears. This was important on two accounts. The big broadband players have always pushed for keeping the "official" broadband standards as low as possible, in order to pretend that we have better and more competitive broadband than everyone knows we actually have. In the past, the FCC has been a willing accomplice in this charade. By showing the following chart, and suggesting that it was time to really jack up the official broadband standards, Wheeler was clearly signaling that perhaps those bad old days when the FCC was a partner in the big US broadband lie are over, and that it might actually start trying to represent reality and push for rules that actually make the US a competitive broadband player. Of course, the FCC had already asked for comments concerning the possibility of raising the official broadband definition to 10 Mbps down about a month ago, arguing that based on actual usage information, this would" fall within the mid-range needed by a three-user household with moderate broadband use, but would not accommodate demand for a three-user household with high use. Specifically, the FCC noted that this would allow a family of three "at periods to stream a movie, participate in online education, surf the web, and have a mobile device syncing to its email account." Fair enough.

Except... no. Not according to the big broadband providers, which did the FCC comment-equivalent of a freak out at this possible proposal. Let's start with AT&T:

Although the industry remains well ahead of the curve, the centerpiece of the Commission’s Notice is a proposal to change the definition of advanced capabilities – in particular, a proposal to increase the minimum “advanced” capabilities benchmark from 4 Mbps download speeds to 10 Mbps. Given the pace at which the industry is investing in advanced capabilities, there is no present need to redefine “advanced” capabilities, and, as discussed below, the proposed redefinition is not adequately supported. The Commission should undertake a more rigorous, fact-based and statutory analysis before determining what, if any, definitional revisions are warranted at this time. Even recognizing that the definition of broadband will evolve over time, the Notice presents no record basis for a conclusion at this time that a service of less than 10 Mbps is no longer “advanced.”

AT&T insists that people really aren't using that much bandwidth, and that the FCC overestimates how much bandwidth things like streaming HD video really take. In a neat bit of tautological reasoning, AT&T actually argues that because people aren't using that much bandwidth now (perhaps because AT&T doesn't let them...), it's clear that this isn't a reasonable definition of broadband:

Consumer behavior strongly reinforces the conclusion that a 10 Mbps service exceeds what many Americans need today to enable basic, high-quality transmissions. AT&T data show that, in areas where its customers have access to a service that offers download speeds greater than 10 Mbps, many consumers choose to buy services with lower download speeds. Indeed, even in areas where only a 6 Mbps service is available, a substantial portion of consumers choose to purchase a lower-speed service.

Perhaps that's because your pricing sucks, and even when people do pay more, you do crappy things like throttle Netflix.

Over to Verizon, which argues that raising the broadband speed definitions would be a problem because it might confuse people, and you know how much Verizon wants everyone to have a clear understanding of everything, right?

Furthermore, the Commission should avoid adopting new requirements for defining “broadband” that would unnecessarily complicate the Commission’s analysis and hinder the proper assessment of broadband deployment

Simply boosting a number to more accurately represent what is considered a high speed internet connection would "complicate" things how exactly? Oh, because now we couldn't compare the old bogus numbers to the new bogus numbers.

for the sake of consistency and to ensure meaningful comparisons over time, the Commission should maintain a relatively stable benchmark for defining broadband, even if the Commission also sees a benefit of tracking the availability and adoption of higher-speed services

Verizon also pulls AT&T's trick of claiming "well, people have slower connections, so that's proof that lower standards are fine."

At the same time, the data confirm that services providing 4 Mbps/1 Mbps are still popular and meaningful to consumers.

Meaningful? I wonder how the data concludes that.

Next up, we've got NCTA, representing the cable companies, and it's (of course) of the opinion that it would be absurd to raise the rates, because, really, there isn't any good HD content online anyway:

The Commission suggests that higher speeds may be needed to handle “super HD” video traffic, but even if true, given the limited presence of super HD video at this time, and the many other Internet services and functionality that can be easily accommodated with a 4/1 connection, there is no basis for finding that a connection must be able to handle one particular type of video in order to meet the definition of broadband.

Yes, but perhaps the reason there isn't much super HD video is because your damn connections are too slow. Content follows bandwidth. If the FCC jacks up the standards, the broadband guys will ramp up their speeds, and watch the content flow...

There are some other fun submissions, including CTIA, representing the wireless operators (which include Verizon and AT&T, of course) arguing that looking to the future is lame, man. We should base our broadband stats on historical usage:

The Commission should analyze mobile broadband speeds in light of existing marketplace offerings

Don't aspire to the future, let's settle for today's mediocrity. At least some folks are arguing for the change, including the Communications Workers of America, who probably realize that requiring higher speeds would likely lead to more work for its members. It's interesting to note that satellite internet providers are more than happy to support the FCC's higher standards, noting that those rates are easy to meet. Compare and contrast this statement to the whining from above:

The FCC’s proposal to adopt a 10/1 Mbps speed benchmark represents a reasonable minimum threshold to ensure consumers in a “moderate use household” can satisfy their broadband internet access needs. Speeds of this level allow a “moderate use household” to stream videos, make VoIP phone calls, browse webpages, and check emails, which are the core broadband applications used by typical consumers. Consumer broadband satellite services provided by Hughes go as high as 15/2 Mbps and by ViaSat go as high as 12/3 Mbps, and they offer all of the above applications as part of their respective satellite services.

That said, those satellite providers do then complain about including a "latency" component to the benchmarks, because satellite internet latency has always sucked.

Public Knowledge went in the other direction, arguing that even 10 Mbps is too low and that the new standard should actually be 25 Mbps. Imagine the level of freakout from the legacy broadband players if that went through...

Either way, upping the definition of what qualifies as broadband by the FCC would be a big step in more accurately reflecting the state of the broadband market in the US today, both from the standpoint of what kinds of speeds are really available and recognizing the lack of competition across the nation. The fact that it's scaring the traditional broadband players so much says an awful lot about how they've been able to hide behind the weak benchmarks in the past.

Filed Under: broadband, definition, fcc, tom wheeler
Companies: at&t, ncta, verizon

FCC's Tom Wheeler Admits There Isn't Really Broadband Competition

from the preach-it,-tom dept

The big broadband providers have all been spinning a yarn for a while now pretending that there's widespread competition. A key partner in this has been the FCC, which for years has helped spread this myth by pushing out totally bogus broadband data. If you want a good laugh, go over to BroadbandMap.gov and type in your address -- and discover a bunch of bogus claims about broadband which you really don't have. The speeds are inflated. The services are inflated. It includes mobile data broadband, despite it being priced much, much higher and with very low caps and limits -- and speeds that no one truly considers to be broadband but, that doesn't stop the big broadband players from using that bogus data to claim there's tons of competition.

It looks like maybe, just maybe, the FCC is going to be getting out of the business of furthering this bogus narrative. FCC boss Tom Wheeler gave a very interesting speech today, in which he spoke out about the lack of any real competition. Not only that, he didn't use the FCC's old bogus definitions of broadband. Instead, he made it clear that when we're talking about real broadband most people have no competition. The FCC released this chart in conjunction with his speech: Every part of that chart is useful, because it doesn't just blindly say "broadband" and lump in a bunch of crap that isn't broadband. It shows there may be some (still not much) competition at very low speeds, but as you get up to real broadband speeds, competition basically disappears, with most people having only one option (or no options!). Past FCC's have lumped all this data together in a misleading way to pretend there's a lot more competition. It's good to see Wheeler clearly admit that there isn't -- and that this is a big problem.

Wheeler makes it clear that 4 Mbps may be the official FCC definition of broadband, but it's not really broadband with today's internet:

The bar on the left reflects the availability of wired broadband using the FCC’s current broadband definition of 4 Mbps. But let’s be clear, this is “yesterday’s broadband.” Four megabits per second isn’t adequate when a single HD video delivered to home or classroom requires 5 Mbps of capacity. This is why we have proposed updating the broadband speed required for universal service support to 10 Mbps.

But even 10 Mbps doesn’t fully capture the increasing demand for better wired broadband, of which downstream speed is, of course, only one component. It’s not uncommon for a U.S. Internet-connected household to have six or more connected devices – including televisions, desktops, laptops, tablets, and smartphones. When these devices are used at the same time, as they often are in the evenings, it’s not hard to overwhelm 10 Mbps of bandwidth.

And consumer demand is growing; today over 60% of peak-time downloads are streaming audio and video. While today that video may be for entertainment, other applications are right behind. For instance, if we are to tackle healthcare costs, high-speed broadband video for remote examination, diagnosis and even surgery is important. If our students are to get a 21st Century education, high-speed broadband to the classroom is essential. And, increasingly, that high-speed will be in both directions

And, he finally admits that wireless broadband is not a real competitor:

We have great hopes for wireless as a potential substitute for fixed broadband connections. But today it seems clear that mobile broadband is just not a full substitute for fixed broadband, especially given mobile pricing levels and limited data allowances. We welcome, and we must encourage, the development of new technologies that can bring greater competition and more choices to consumers.

Furthermore, Wheeler says he recognizes how many other problems are created when there is no real competition in the broadband market:

The simple lesson of history is that competition drives deployment and network innovation. That was true yesterday and it will be true tomorrow. Our challenge is to keep that competition alive and growing.

Of course, some of us have been saying exactly that for years, while wondering why the FCC was doing nothing to help it -- and, actually, often helping to enable consolidation, rather than competition.

Wheeler also notes that while Google Fiber and other experiments have clearly driven big broadband players to increase investment (not decrease it), Google Fiber and a few similar players are few and far between with very limited footprints.

On top of that, he points out that the switching costs are too high. Even if you have choices, if it's a pain to switch from one to the other that makes you captive to the broadband provider you've signed up with -- and apparently he wants that to change as well.

But even two “competitors” overstates the case. Counting the number of choices the consumer has on the day before their Internet service is installed does not measure their competitive alternatives the day after. Once consumers choose a broadband provider, they face high switching costs that include early-termination fees, and equipment rental fees. And, if those disincentives to competition weren’t enough, the media is full of stories of consumers’ struggles to get ISPs to allow them to drop service.

Okay. So all of that was very good to see, and actually quite refreshing from the FCC. But there's the big question that remains: we've seen FCC people claim we need more competition, but they've done little to actually make that happen. And... that's where Wheeler's speech begins to fall down. Then it devolves back into lip service. Wheeler says the FCC will protect competition where it exists, will "encourage" greater competition where it is needed, will work to "create" competition where there is none and where that's impossible, will "shoulder the responsibility for deploying" broadband. But, what will that actually mean in practice?

Wheeler has talked about preempting bans on muni-broadband, but that needs to become a reality (even as some of Big Broadband's friends in Congress have sought to block it). He doesn't really mention anything about net neutrality or reclassifying broadband under Title II -- which would actually give the FCC more power in this space. He doesn't say anything about the Comcast, Time Warner Cable merger, which would clearly (despite what those companies claim) limit competition (not directly in a market by market basis, but in creating a large dominant player in negotiating deals).

Not that anyone actually expected Wheeler to tip his hand on any of those things before an official decision is made, but it's one thing to talk the talk -- and the talk was good -- but to actually walk the walk? It's been a long time since we've seen an FCC willing to make the tough decisions.

Filed Under: broadband, competition, fcc, mergers, muni broadband, muni-broadband, net neutrality, title ii, tom wheeler
Companies: at&t, comcast, google, time warner cable, verizon

Why Internet Access Monopolies Harm Innovation

from the innovation-stifling dept

When antitrust stories make headlines—as the Comcast-Time Warner Cable merger has—even well-intentioned analysis often confuses harm to competitors with harm to competition. Viewing antitrust law through a "competition" lens, as opposed to a "competitors" lens, is not intuitive: consumers are harmed not by being denied access to existing services, but by being denied new ones.

In antitrust law there is a debate, known as Schumpeter-Arrow—based on the initial intellectual adversaries, Joseph Schumpeter and Kenneth Arrow—which concerns whether monopoly power leads to innovation. On the pro-monopoly side, Schumpeter believed that companies with market power have economies of scale and financial stability, which allow them to invest more capital into R&D. By contrast, more competitive firms have to focus their energy—and money—into maintaining their competitiveness. On the other side of the debate, Arrow argued that monopolists have no incentive to innovate. Anti-monopolists preach the gospel that competition begets innovation. Consumers will gravitate towards companies that are offering new and better services.

In reality, each view holds some validity, depending on the specific market at issue. In some markets, market power might have a more positive effect on innovation. For example, in certain markets—usually referring to patents—many believe that monopolies are sometimes necessary. The most commonly mentioned market of this nature is the development of new pharmaceuticals. Pharmaceutical companies claim they need the promise of a monopoly on their work if they are going to invest enormous research dollars into a new drug (whether or not this is actually true is another discussion for another day).

In most other markets, however, monopoly power is likely to do more harm than good. For example, in the market for Internet services, the Schumpeterian view that companies with dominant market power will invest their profits into innovation is both implausible and disproven. As Brendan Greeley wrote in Business Insider:

The utterly consistent position from the ISPs has been this: Guarantee us a higher income stream from a more concentrated market, and we'll build out new infrastructure to reach more Americans with high-speed Internet. A decade ago, this argument had at least the benefit of being untested.

A graph published by the National Communications and Telecommunications Association confirms that consolidation has not resulted in increased infrastructure expenditures.

Using inflation-adjusted dollars, it is clear that infrastructure investment has actually declined:

In sum, with experience as a guide, we know that monopoly power is harmful in the broadband industry.

In addition to monopolization of Internet service, ISPs can also exert market influence over the content that flows over those networks. But the Arrow-Schumpeter model is limited. It simply answers the question of whether less pipe manufacturers results in better or worse pipes. It does not take into account whether there will be less or more water, or what the quality of the water will be. In the network infrastructure industry, where monopoly power means control of networks which operate the Internet, monopoly harm is amplified.

In addition to residential broadband, the other crucially important network is wireless. They are not mutually exclusive. Verizon is both. And it has been reported that Comcast "might try its hand at mobile phone service." Verizon and Comcast have been able to use not just their existing monopoly in Internet service and wireless data to obtain and to maintain monopolies in television, phone service, and other content markets.

Competition would disrupt the incumbents' monopolies in all of these markets. These markets all exist on the Internet, and yet, the status quo allows Comcast and Verizon to charge separately for these markets. In other words, the Internet is, or could be, people's television and phone service as well. There already are Internet-based video and phone service alternatives. For phone service, Skype, Google Voice, and other free alternatives already exist. For "television," there are also numerous services available. YouTube, Hulu, Netflix, and Amazon Prime all have a vast array of content, with different pricing models and delivery methods.

Despite the fact that free or low-cost services are available for video, phone calls, and texting, consumers are still forced to pay individually for cable television, data plans, and calling/texting service. The Internet, in addition to being a gigantic market on its own, hosts the market for everything else. Advertising, banking, and mail are all done online. And entire industries like social media, servers, and coding have been created as a result of the Internet.

Perhaps the best example of the Internet's ability to transfer data for free is WhatsApp. Originally valued at 1.5 billion dollars, Facebook purchased the app for a total of $19 billion. In 2013, WhatsApp saved consumers $33 billion that they would have otherwise had to pay their cell phone carrier. In addition to ISPs and wireless companies, television networks and phone companies profit from the existing business model, where television, land line phone service, and cell phone service takes place without the aid of the Internet.

Having people pay for each individual thing they do online, in addition to diminishing the incredible power of the Internet, also costs consumers. And harm from monopolization—in all industries, not just network infrastructure—is often underestimated. Rutgers Law Professor Michael Carrier calls this "innovation asymmetry," where existing businesses and business-models are over-valued at the expense of yet-to-be-developed technologies.

Carrier notes that new, innovative technologies are often undervalued because they

are less tangible, less obvious at the onset of a technology, and not advanced by an army of motivated advocates. First, they are less tangible. [Moreover, the value of new technologies is] difficult to quantify. How do we put a dollar figure on the benefits of enhanced communication and interaction? . . . Second, they are more fully developed over time. When a new technology is introduced, no one, including the inventor, knows all of the beneficial uses to which it will eventually be put.

The essential problem is that monopolies prevent innovative technologies from reaching the market. The value of the technologies lost cannot be quantified. Carrier notes examples of new technologies initially being undervalued:

• Alexander Graham Bell thought the telephone would be used primarily to broadcast the daily news.
• Thomas Edison thought the phonograph would be used "to record the wishes of old men on their death beds."
• Railroads were originally considered to be feeders to canals.
• IBM envisioned only 10 to 15 orders for the computer in 1949.

In the Internet context, Google, Facebook, and Wikipedia are just some examples of companies that disrupted the existing marketplace.

With Internet service, we have ample evidence of what a more competitive market looks like, and what sort of service consumers could expect with a more open Internet. Many Europeans get Internet at substantially faster speeds for a fraction of the price. In the few cities that are lucky enough to get Google Fiber, users get Internet at exponentially higher speeds at much lower costs.

The existing business model is based on the dearth of competition in the high-speed residential broadband market and in the market for wireless data plans. In the former, Comcast-TWC dominates; in the latter, Verizon and AT&T dominate. In both of these industries, the incumbents have a substantial infrastructure advantage over their rivals, which creates an insurmountable barrier to entry, preventing significant competitors from entering the marketplace. The incumbents further solidify their position through frivolous litigation. As Ars Technica documented, potential new ISPs face a blizzard of lawsuits.

Another area of litigation which solidifies incumbents' market power is copyright litigation. Copyright is a form of artificial monopoly, which allows the owner to exclude others. The paradigmatic example of copyright in action is professional sports. Football and baseball broadcasts are "blacked out" nationally when a game is available in a local market. Comcast profits from sports both directly, through Comcast Spectacor, and indirectly, through NBC's licensing agreements.

When the sword of copyright law is given to companies with market power, the result is that incumbents' market power is solidified and compounded. For example, in June, the Supreme Court essentially ruled that TV-streaming service Aereo had an illegal business model because it violated copyrights. Because copyright damages can be exorbitant, the likely result of the Aereo decision is that investment in new technology companies will be chilled. As Carrier put it, "harms from ambiguous standards used as a litigation hammer are exacerbated by statutory damages and personal liability."

The result of the competitive landscape is that both wired and wireless companies can exploit their monopoly on the network to receive royalty payments from the content which the network hosts. There is a two-fold result: innovation in content markets is stifled and costs of entering the network market become insurmountable. We have ample evidence that consolidation in network infrastructure has harmed innovation, and that further consolidation will result in greater harms.

Filed Under: access, antitrust, innovation, internet access, monopolies, net neutrality
Companies: comcast, time warner cable

Data Analysis Of FCC Comments Reveals Almost No Anti-Net Neutrality Comments

from the so-what-will-the-fcc-do dept

Recently, the FCC released most of the comments it has received so far -- commenting is still open for a few more weeks -- concerning its (pretty bad) net neutrality proposal as XML files for people to analyze. There have been a few attempts, but the most interesting so far has to come from data analytics firm Quid on behalf of the Knight Foundation and revealed in an NPR article. The key reasons pulled from the comments that standout and cluster are definitely interesting and worth noting, but what's much more noticeable is what's missing from the map: any significant argument against having the FCC step in and stop the broadband companies from screwing up the internet. The folks who put this together note that there were certainly some such comments, but just not enough to matter:

The comments did include "anti" net neutrality positions. They included statements opposing the "FCC's crippling new regulations," as commenters wrote. But they came from a form letter, or template, and all comment clusters that came from templates (five separate ones in all, four of five supporting net neutrality) were collapsed into a single node.

Taken with the entire body of comments sampled, there weren't enough unique or organic anti-net-neutrality comments to register on the map.

The analysis shows that about 50% of the comments came from templates (again, many of them coming from "pro net neutrality") folks, but it's fascinating to see that once you get outside of the form letters, the number of anti-net neutrality letters basically doesn't register. That's kind of interesting to me, because I've actually been building a list of just those letters (I've found a few) and trying to reach out to the folks who wrote them to find out what made them write those letters. I've made contact with a few, but as soon as I explain what I'm doing... they all stop responding. I hope to have more on this soon.

Either way, it seems fairly clear that, of the people who actually took the time to express their full opinions about net neutrality, almost all of them are in favor of having the FCC actually do something real. The only question is if the FCC will ever actually listen.

Filed Under: comments, data analysis, fcc, net neutrality

Parallel Conduct: How ISPs Make The Consolidated Internet Service Market Even Worse

from the making-monopolies dept

Much of the focus on consolidation in the broadband industry has focused on national market share. The problem is focusing solely on national market share implies that large companies are competing, when they don't. Just because there are multiple companies in an industry doesn't mean those companies compete. This is especially true in the broadband and wireless industries. As Susan Crawford explained

These companies don't have to agree in writing to carry this out or even raise their prices; they can simply, within their separate geographic and product territories, bundle and tie their services, buy up inputs that a competitor might need, and refuse to connect to competitors — among many other potential tactics. It's in their interest for these local monopolists to cooperate, because any defection would make the whole system crumble.

What Crawford is describing is parallel conduct, which is when companies that would otherwise compete create a monopoly-like setting without having to merge or coordinate operations. Parallel conduct in the broadband industry is not hypothetical. In 2011, Comcast and Time-Warner Cable sold parts of the wireless spectrum they owned in exchange for an agreement that Verizon would stop expanding its fiber optic network. Essentially, Comcast and Time-Warner Cable paid Verizon to stop offering new high-speed broadband service. (As part of the deal, Comcast and Time-Warner Cable also further divided up the United States geographically, foreshadowing the merger between the two companies.)

The 2011 agreement also resulted in Comcast and Verizon's "joint marketing campaign," where they are charging identical prices for Internet, television and phone service. In addition to charging the same price for the same service, Comcast and Verizon also would strongly encourage customers to buy service "bundles," of Internet, cable TV, and phone service. The bundles themselves are a potentially anti-competitive form of product tying. In antitrust law, tying is presumptively illegal when tied with market power.

Parallel conduct is not, by itself, harmful. In fact, companies imitating one another often benefits consumers. Google, for example, which is widely considered one of the most innovative tech companies of the last decade, has largely offered new services which are already offered by other companies, such as search (Yahoo), email (Hotmail), and driving directions (MapQuest).

There are two forms of parallel conduct: parallel pricing and parallel exclusion. With parallel pricing, companies can mimic monopoly behavior by pricing their products at the same level. Parallel exclusion is where companies can enter into similar agreements with suppliers or customers. For both parallel pricing and parallel exclusion, it is much more likely to occur in industries where there are fewer competitors, and where those competitors compete less within geographic markets. The result of parallel conduct is that a market with a small number of competitors, an oligopoly, acts as one firm, which is referred to—perhaps euphemistically—as a perfect monopoly.

Tim Wu and C. Scott Hemphill wrote an article arguing that parallel exclusion provides a better metric for antitrust enforcement than parallel pricing. In competitive markets, with lots of competitors and low profit margins, companies are forced to price their goods and services at the same price. However, in consolidated, noncompetitive markets, companies may also price goods similarly, through an agreement, explicit or implicit, to reduce competition. If companies are pricing similarly, there is no way to know if that is the result of a competitive marketplace or collusion. Punishing companies that are pricing similarly as a result of competition would be counterproductive.

The deal between Comcast, Time-Warner Cable and Verizon is the most pernicious form of parallel conduct: an exclusionary price control agreement between corporate behemoths. Granted, the agreement isn't exactly news. It happened in 2012. But the Comcast-Time Warner Cable merger has changed the competitive landscape in the industry. Absent the agreement between Comcast, Time-Warner Cable and Verizon, the number of truly national high-speed broadband providers would have gone from two to three. Post-merger, it will go from two to one.

Filed Under: antitrust, market power, monopolies, net neutrality, oligopolies, parallel conduct, pricing
Companies: comcast, time warner cable, verizon

Can We Kill This Ridiculous Shill-Spread Myth That CDNs Violate Net Neutrality? They Don't

from the stop-it dept

Okay, so we debunked this silly argument back in 2006 (and again in 2008), but it appears to be back again now that the net neutrality battle is heating up: it's the idea that because we have CDNs, the internet has never been neutral (for those who don't know, a CDN is a Content Delivery Network -- a system, like Akamai, that allows internet companies to distribute their content geographically, so that download speeds are slightly shorter across the network, since physical distance is not as far). But that's based on a bogus definition of "net neutrality" that only telco shills or very confused people make. The simplest way of explaining this is as follows: CDNs make the surfing experience better for everyone, by better distributing content to speed delivery to everyone. The efforts by big broadband to break net neutrality is to set up a tollbooth so that they get to pick winners and losers. In short: CDNs benefit end users. Breaking net neutrality only benefits the big broadband gatekeepers. This is about the power of big broadband to pick winners and losers.

And yet... it's the myth that just won't die. The worst example comes from Ev Ehrlich. As you may recall, we wrote about Ehrlich's reality-challenged claims a few months ago (right after a PR person who pushed those thoughts to us refused to confirm or deny whether Ehrlich was being paid by big telcos or broadband providers). Ehrlich's arguments weren't even close to accurate back then, and in the intervening months, they seem to have become even more reality-challenged:

It's great to say that everything on the Net should be equal. But there's nothing neutral about the Net now, despite what a few strident voices say. When Google caches its content around the world so that its stuff gets to you faster than its competitors, is that neutral? When Netflix buys - or perhaps one day builds - its own, faster private network to take its movies from its servers to your ISP so it can get a competitive advantage, is that neutral?

Again, no one has ever said that internet providers can't improve the overall experience for all of their end users. The issue is not about that, no matter how badly Ehrlich and other broadband shills would like it to be. It's about whether or not the broadband gatekeepers can pick winners and losers by setting up tollbooths and fast and slow lanes. When Google and Netflix improve their networks, the benefit goes to everyone. When Comcast sets up tollbooths, the only thing that goes to everyone is... increased costs.

The only thing neutral about neutrality is the price these big websites pay - under Netflix's "strong neutrality" proposal, it would pay nothing to get access to you. And that means that you pay more than you should.

Bullshit. Seriously. This is flat out bullshit. Netflix pays through the nose for its bandwidth. As we've asked in the past, any time a big broadband shill makes the bogus argument that Netflix "pays nothing," let's see if Ev Ehrlich will trade his broadband bill with Netflix's. After all, they pay "nothing" right? Of course, the weasel wording here is paying nothing "to get access to you." But that's also bullshit. Netflix pays to get on the internet. People pay to get on the internet to get access to Netflix. If Netflix then has to pay again to get access to you, then it's double paying for the bandwidth you already paid for. That's a big part of what big broadband is trying to do: to get everyone to pay twice for the same internet access.

And the idea that you pay more because Netflix doesn't have to pay tolls to Comcast, Verizon and AT&T is ludicrous. Hell, Netflix recently did agree to pay interconnection fees to all three of those companies. So, according to Ehrlich, now that it's paying, Comcast, Verizon and AT&T should all be lowering their bills, right? Right? When that doesn't happen and the bills actually go up, will Ehrlich admit that his argument is ridiculous? Somehow I doubt it. Furthermore, it doesn't take a genius to recognize that if every internet site has to pay once for bandwidth and then a second time to "get access" to end users, that the cost of basically every internet service out there is going to go way up -- meaning that end users will be paying a lot more.

But that sort of "logic" eludes Ehrlich.

Why? Think of it this way. The cable, fiber, DSL, wireless and satellite companies that bring you the Internet serve two markets at the same time. They try to attract customers to be their users, and they try to attract websites to be their content. The more users they get, the more content they attract, and the more content they attract, the more users they get.

This is also totally incorrect. It's as if Ehrlich has never actually been on the internet. The big broadband companies have never tried to "attract websites to be their content." No internet site in the history of internet sites was created because a big broadband provider said, "Hey, be content for us!" No, internet sites are created because those sites want end users, and those end users are on the internet requesting their content. Hell, based on this ridiculous argument, shouldn't Comcast, AT&T and Verizon be paying me for being "their content"?

The problem is, however, only one side of that two-sided market pays - you, people like you and me and Selby.

Again, not true. Both sides pay for their bandwidth. What Ehrlich wants is for internet companies to pay again for the bandwidth you already paid for.

Content pays the neutral rate for the neutral service, which means they can keep their advantages (like caching and private-backbone networks) and create congestion, while letting you pay for the Internet, lock, stock and barrel.

Again, those "advantages" improve the internet for everyone. The congestion -- as many broadband providers have more or less admitted -- is entirely their own fault. They have more than enough capacity, but are letting ports clog to create fake bottlenecks to try to force these companies to pay.

Think about a newspaper - it works the same way. The Chronicle attracts readers so it can attract advertisers. It also attracts advertisers so it can attract readers. What if The Chronicle weren't allowed to accept money from advertisers because "newspaper neutrality" made it impossible to let some stores advertise and others not? The price of the paper would go up, because the reader would have to carry the entire cost of the paper.

Bad analogy is bad. It doesn't work the same way, at all. The real analogy here is that imagine if you paid for your newspaper subscription and the newspaper pays the delivery fees and their taxes, but then the guy who paved the road to your house demanded that the newspapers also pay an extra fee to use those roads that he paved (even though he was fully paid for the paving). It's a tollbooth. And that's what the big broadband providers are doing.

And let's remember that the premium signal that the neutrality advocates want would make it harder to get distance learning, remote medicine, live entertainment, gaming and other innovations that need an unbuffered connection. If you have one speed limit, you can't have ambulances.

None of this is true. It's outright dishonesty. There is more than enough capacity to provide those services if the big broadband providers don't deliberately let ports clog, as they're currently doing.

Ehrlich's entire piece is incredibly dishonest. And, furthermore, the San Francisco Chronicle does not disclose the fact that he's paid by a lobbying firm hired by the big broadband providers to spew this sort of misleading crap. I guess if you're going to be totally dishonest about the arguments for net neutrality, why not also be dishonest about who's paying the bill, huh?

Meanwhile, a similarly misguided piece appeared in the Wall Street Journal, by the paper's former publisher, L. Gordon Crovitz. At least with Crovitz, I don't think that he's directly being paid by broadband companies. I just think he's shown a pretty long history of being somewhat clueless about how the internet works and is incredibly gullible to claims made by biased parties about how things work. In the past, Crovitz flunked internet history by arguing that it was created by private companies without government support (not at all true). Crovitz also recently argued that all Snowden had really proven was that the NSA is really, really careful about its surveillance. Once again, here, he's quite confused on the facts:

But as Internet use grew, sites like Google created their own fast lanes by sending data directly to ISPs such as phone and cable companies via what are called "peering" arrangements. Sites like Netflix created another set of fast lanes using "content delivery networks" to place their computer servers inside local ISPs so that video and other bandwidth-hoggers can be delivered smoothly.

In other words, fast lanes won't kill the Internet. They've saved the Internet.

Again, this is buying into the myth that CDNs violate net neutrality. They don't. Full stop. CDNs make things better for all internet users equally. Violating net neutrality doesn't.

If it weren't for these fast lanes, the Web would have screeched to a halt when photos and video began to supplement text-based traffic. At peak times, Netflix alone now accounts for one-third of all Internet traffic. If it weren't using its own network to cache video locally around the world, other traffic on the Web would get hung up or delayed. Fast lanes keep everything else flowing smoothly, from email to security cameras to remote surgery.

Again, (yes, I'm on repeat here), CDNs are about improving access for everyone. As others have pointed out, a CDN doesn't degrade other traffic. It improves the overall experience by moving content closer to the edges of the network. The efforts by Comcast, Verizon and AT&T are entirely different. They're looking to reallocate traffic to burden some players in favor of those who pay. That's picking winners and losers. The impact is wholly different. A CDN benefits everyone. The gatekeeper broadband providers are looking to hinder some sites in order to favor those who pay.

Crovitz then goes further, buying into the broadband spin and bullshit about what reclassification would mean:

Activist groups in Washington with benign names like Free Press and Public Knowledge want the Internet reclassified as a public utility, subject to the sort of regulations that micromanaged railroad monopolies in the late 19th century and the phone monopoly in the 20th.

That would spell the end of permissionless innovation on the Internet. Bureaucrats would have authority to dictate how networks operate, which technologies can be used, and what prices can be charged. Regulators would approve or disapprove innovation in business terms as well as in technology.

No, it wouldn't. There's a reason we keep talking about forbearance rules in association with reclassification, and it's because with forbearance, the FCC could restrict all of that bureaucratic mess. And, even if it didn't, it wouldn't make a direct difference for "permissionless innovation on the internet" because that's actually protected by not allowing the big broadband providers to pick winners and losers as it desires.

There are legitimate concerns to be raised about how to best protect the internet and innovation online. But bogus arguments claiming that CDNs prove that there is no net neutrality don't help. They just make whoever wrote them look clueless about how the internet works. Those claims were debunked nearly a decade ago. To keep bringing them up today requires being willfully or deliberately ignorant of the facts.

Filed Under: cdns, ev ehrlich, fast lanes, gordon crovitz, losers, net neutrality, open internet, shills, slow lanes, winners

Tom Wheeler Responds To Congressional Letters On Reclassification And Muni-Broadband; Doesn't Say Much

from the repeating-himself dept

It seems unlikely to expect FCC boss Tom Wheeler to say much that really matters concerning the key issues the FCC is facing until the final decisions are made (and, if history is any indication, even when those decisions are made, the statements will be bland nothingness), but it's still worth noting that he recently responded to two very different letters from members of Congress. The first was a letter from a number of Senators coming out strongly in support of reclassifying internet access under Title II, basically defining it as a common carrier service, and creating real rules that prevent broadband providers from picking winners and losers. Wheeler's response could be summed up as "Yeah, we're considering it." But that's about it.

As I stated in the June 30. 2014, letter to you, our Notice proposes that the Section 706 framework set forth by the court provides us with the tools we need to adopt and implement robust and enforceable Open Internet rules. However. the Commission is also seriously considering moving forward to adopt rules using Title II of the Communications Act as the foundation for our legal authority. The Notice asks specific questions about Title II. including whether the Commission should 1) revisit its classification of Broadband Internet Access as an information service; or 2) separately identify and classify as a telecommunications service a service that "broadband providers . . . furnish to edge providers," as proposed by Mozilla in a May 5. 2014, Petition filed with the agency. The Notice seeks comment on the benefits of both Section 706 and Title II, including the benefits of one approach over the other, to ensure the Internet remains an open platform for innovation and expression.

In other words, nothing new at all. In fact, the response is frustratingly circular. Wheeler asked for feedback on whether the FCC should reclassify, and these Senators said, "Hell yes, you should reclassify," even explaining why reclassifying is the only way for the FCC to "put truly effective open Internet rules on the books," and Wheeler's response was, "Yes, we've asked people to tell us what they think of Title II." It's a complete brush off in someways. Imagine asking your significant other what you should have for dinner, and they explain why it makes sense to have fish for dinner, and you respond with "Yes, I am asking people for options, and fish is one of them," rather than actually responding to the direct explanation as to why fish is the answer. It would be pretty obvious that you're not really paying attention and don't want fish.

The second letter comes from a bunch of Representatives in the House who idiotically flipped out over Wheeler's announced plans to preempt questionable state laws that block municipal broadband. These laws are almost always driven entirely by the big broadband companies, and local politicians have even admitted that they're just doing the bidding of folks from the big broadband providers. The letter comes from the same folks in Congress, led by Marsha Blackburn, who has already helped pass an appropriations amendment that would block Wheeler's plans.

Wheeler's response here is a bit stronger and more direct. He points out that the FCC has the authority to promote competitive broadband markets, and if that means trampling on big broadband lobbying efforts that restrict competition, that's well within the FCC's authority. He also points out that for all of Blackburn's supposed "concern" about the federal government overruling "local" governments, she doesn't seem to have a problem with state governments blatantly blocking municipal governments from doing what they want.

[M]any states have enacted laws that place a range of restrictions on communities' ability to make their own decisions about their own future. There is reason to believe that these laws have the effect of limiting competition in those areas, contrary to almost two decades of bipartisan federal communications policy that is focused on encouraging competition. I respect the important role of state governments in our federal system, but I also know that state laws which directly conflict with critical federal laws and policy may be subject to preemption in appropriate circumstances. I recognize that federal preemption is not a step to be taken and must be done only after careful consideration of all relevant legal and policy issues.

The rest of the letter is him basically repeating that there will be lots of "careful consideration" before any move is actually taken.

It's almost as if Wheeler doesn't want to reveal what he's going to do until he does it (shocking, I know). At this point, it's not worth making too much of either letter, other than noting that Wheeler is sending responses that basically repeat the same thing he's been saying all along. And that takes us back to the point that many of us have been raising about the FCC for over a decade. It does an awful lot of talking, but rarely does much of substance. The real question here is if the Wheeler FCC will stand up and do something beyond a lot of talking.

Filed Under: congress, fcc, marsha blackburn, muni broadband, net neutrality, open internet, title ii, tom wheeler

Why Is The FCC Only Holding Net Neutrality Meetings In DC?

from the there's-a-big-country-out-there dept

On Friday, the FCC announced plans to host a bunch of "open internet roundtable discussions" as it continues to explore the rules that it will put in place. That's a good idea... until you realize that all of the meetings will be held in Washington DC. And, of course, by doing that, it more or less guarantees that the space will be filled by lobbyists and friends, rather than the actual public. EFF is asking the FCC to get out of Washington DC and to talk to real people, rather than just telco insiders -- pointing out that it's done so before and can easily do so again. While I'm sure the big broadband players would still seek out "friendly" seat-fillers at any location around the country, getting the debate outside the beltway would do a lot towards actually getting a more honest discussion going.

Filed Under: echo chamber, fcc, inside the beltway, net neutrality, open internet, roundtables

President Obama Says He's Against Fast Lanes On The Internet, But FCC Proposal Would Allow Them

from the time-to-call-mr.-wheeler dept

In some comments at the US Africa Leaders Summit in DC yesterday, President Obama claimed that he's absolutely against fast lanes and slow lanes on the internet -- which is pretty interesting given that his own FCC appears to be poised to allow exactly that:

Net neutrality in the United States -- one of the issues around net neutrality is whether you are creating different rates or charges for different content providers.

That's the big controversy here.

You have big, wealthy media companies who might be willing to pay more and also charge more for spectrum, more bandwidth on the Internet so they can stream movies faster.

I personally, the position of my administration, as well as a lot of the companies here, is that you don’t want to start getting a differentiation in how accessible the Internet is to different users.

You want to leave it open so the next Google and the next Facebook can succeed

Again, the current proposal from the FCC would actually allow just that. Of course, prepared remarks like these are carefully scoured by White House staff, so this isn't an offhand remark. As with Harry Reid's recent statements, it's entirely possible that this statement is a public nod towards Title II reclassification -- something that Wheeler has previously suggested there wasn't enough political support for. But if powerful Senators and the President are standing behind blocking fast and slow lanes, it certainly seems like the "there isn't political support" argument is quickly disappearing.

This certainly doesn't make it a done deal by any stretch of the imagination, but there is reason to believe that Wheeler has been using this comment period to see if there really would be political support for recassification. It's increasingly looking like there is -- and it's going to be up to Wheeler to see if he's willing to be a true leader and make the right call for how to protect an open and free internet, rather than the "easy" call.

Filed Under: barack obama, even playing field, fast lanes, fcc, net neutrality, open internet, reclassification, slow lanes, title ii, tom wheeler

FCC Releases All Net Neutrality Comments As Giant XML Files For Data Analysis

from the open-records dept

While it had trouble keeping its site up during times of intense commenting, the FCC's IT team is now working to make all the submitted comments on its "open internet" net neutrality proposals available to download in a bunch of XML files:

Because of the sheer number of comments and the great public interest in what they say, Chairman Wheeler has asked the FCC IT team to make the comments available to the public today in a series of six XML files, totaling over 1.4 GB of data – approximately two and half times the amount of plain-text data embodied in the Encyclopedia Britannica. The release of the comments as Open Data in this machine-readable format will allow researchers, journalists and others to analyze and create visualizations of the data so that the public and the FCC can discuss and learn from the comments we’ve received. Our hope is that these analyses will contribute to an even more informed and useful reply comment period, which ends on September 10. We will make available additional XML files covering reply comments after that date.

While the more cynical among you may see this as more of a statement on the rather weak capabilities of the current FCC's system for handling searching through the submitted comments, it's still nice to see at least a move towards openness and transparency in sharing this data for others to search through. As we've noted, we've been digging into some of the data on the comments, and hopefully this will make the process much easier.

Filed Under: comments, fcc, net neutrality, nprm, open data, open internet, xml