Mark Cuban Again Illustrates He Has No Idea What Net Neutrality Is Or Why It's Important

from the words-are-but-wind dept

To be very clear, there are some subjects Mark Cuban has a very good understanding of, ranging from his support of patent reform and his helpful goal of improving antiquated film release windows to highlighting the SEC's disdain for the 14th and 4th Amendments during his fight over insider trading allegations. That said, for some reason when the Dallas Mavericks owner begins talking about telecom, Internet video and net neutrality, a string of cryptic gibberish begins to spill forth from his head that's entirely detached from the cogent, mortal plane.

As the boss of HDNet (now AXS TV), Cuban spent years crying and wailing about the rise of Internet video. He frequently attacked companies offering content for free, insisted that Hulu viewers "leech off the money we pay to enjoy tv," waged a bizarre, unsuccessful one man war against "illegal" YouTube, and told anybody who would listen that Internet video was destined to failure. That mindset fueled his position on net neutrality, one that largely mirrors that of the cable and broadcast industry at large (read: everything is fine and we need no rules). Cuban even at one time urged ISPs to go ahead and block P2P entirely (legitimate uses be damned).

Spurred by the recent Title II debate, Cuban has emerged once again to share his neutrality insights on Twitter, where he recently floated the increasingly stale idea that supporting a neutral Internet is a government assault on on the Utopian miracle that is the telecom free market:
Cuban also offered up a Q&A session with the Washington Post because, Post writer Nancy Scola informs us, "there's nothing that Cuban dislikes more than untested conventional wisdom" (aka the need for net neutrality rules). Most of us by now know the U.S. broadband market isn't free or functional -- it's a broken duopoly, slathered in a layer of regulatory capture, preying on a captive audience incapable of voting with their wallets. Cuban's refusal to acknowledge this reality is on stark display throughout the Q&A:
"If it ain't broke, don't fix it. The Verizon decision [the January, 2014, court order that struck down the Federal Communication Commission's 2010 passage of net neutrality rules] has created an opportunity for the FCC to introduce more rule-making. They shouldn't. Things have worked well. There is no better platform in the world to start a new business than the Internet in the United States."
Except innovation is being threatened precisely because the U.S. broadband market is indisputably broken. Companies like Verizon and AT&T have abused the fact they dominate 85% of the wireless retail market for years, whether it's the blocking of handset GPS radio functionality to push their own GPS apps, the blocking of Google Wallet to help adoption of their own mobile payment platforms, or the blocking of Facetime to push users toward metered data plans. On the fixed-line side you've got residential ISPs who've also been abusing the lack of competition to impose entirely unnecessary usage caps to hinder Internet video use and protect TV revenues.

As we've noted for many years now, these very real, very clear anti-competitive behaviors are a symptom of the broader disease that is a lack of competition. While there's certainly a conversation to be had about the perils of government over-reach if rules aren't done correctly, if you're still somehow arguing that the U.S. broadband industry is a healthy, functioning free market, you're simply not credible on the subjects of net neutrality or telecom.

We've noted how Title II with forbearance is the best tool we have in light of this lack of competition to keep the Internet healthy and consumers protected. To defend their government-pampered fiefdoms from any attempt to change the status quo, incumbent ISPs have falsely claimed that Title II "bans fast lanes" or "stifles investment," both of which are demonstrably not true. Yet Cuban buys this argument without question:
"I want certain medical apps that need the Internet to be able to get the bandwidth they need. There will be apps that doctors will carry on 5G networks that allow them to get live video from accident scenes and provide guidance. There will be machine vision apps that usage huge amounts of bandwidth. I want them to have fast lanes."
That protecting net neutrality will break grandma's pacemaker is a favorite talking point of the telecom industry, even though none of the proposed rules would hinder things like prioritized machine to machine connectivity, and the FCC's simply never going to ban intelligent network management. You'll recall that one of Verizon's greasier arguments of late has been that net neutrality rules will harm the deaf. Amusingly the majority of deaf and disabled groups not only don't agree (apparently AT&T hasn't gotten around to paying them yet), the majority of deaf and disabled groups support Title II. For someone who claims to hate "conventional wisdom" and professes loving questioning things so much, Cuban seems quick to buy Verizon's line of nonsense.

In one of the more amusing exchanges, Cuban proceeds to insist that because none of the entrepreneurs he speaks to bring up net neutrality in meetings, net neutrality as a concept must not be very important to the broader Internet:
"I have yet to talk to a single entrepreneur, or investment I have, or potential investment I have, or [seen an] acquisition or sale of a company on the Internet where the issue of net neutrality has come up. No one starting a business even considers net neutrality in their business, except for those that are religious about it and ISPs and networks that have to deal with any uncertainty it introduces."
This couldn't possibly be explained by the fact that entrepreneurs or potential deal partners sitting in Mark Cuban's office have done their research, know Cuban loathes net neutrality, and therefore don't mention it because they want his money right?

The Mavs owner then proceeds to brush aside concerns over programs like AT&T's Sponsored Data, which involves companies paying AT&T for the privilege of bypassing arbitrary user caps. That, as VC Fred Wilson eloquently pointed out, sets a dangerous precedent in that it lets deeper-pocketed companies buy an advantage over the same smaller entrepreneurs Cuban professes to love. T-Mobile's Music Freedom plan sets a similarly bad precedent for small businesses and entrepreneurs. Yet like so many people who don't actually understand net neutrality (including the FCC), Cuban thinks these kinds of arbitrarily-erected monetization efforts are cute and creative business models:
"It's a business decision that has as a much chance to fail as work. If you don't like the offering from T-Mobile you may go somewhere else. Or if you like the offering, you may switch to T-Mobile. If T-Mobile came to me and asked me if I wanted to subsidize their consumers getting [Dallas] Mavs games streamed live over their phones or to mobile home routers, without impacting their data caps, I would love it, if the price was right, and would do it in a heartbeat."
Of course Cuban has already made his fortune. Were we to take 1995 Mark Cuban (who was busy building and transplant his business into the modern era under AT&T, Verizon and Comcast -- you can be damn sure he'd be taking a very different approach to these issues. Cuban has spent a decade making it abundantly clear he doesn't understand net neutrality, the telecom market or the potential pitfalls of these new cap exempt business models. Perhaps we should put Mark Cuban, Donald Trump and all the rest of the billionaires with plenty to say but little actual understanding in charge of the telecom industry. At least we'd get some entertainment value out of the equation while the Internet burns.

Filed Under: broadband, fast lanes, mark cuban, net neutrality, open internet, regulations

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  1. icon
    Mike Masnick (profile), 26 Nov 2014 @ 10:05am


    Hi Mark. As always, thanks for stopping by... Wanted to respond to a few of your points (Karl may respond to others as well).

    As far as entrepreneurs, few people knew my views on NN until the last couple weeks. Ive looked at thousands of deals over the last 10 years. Not a peep about NN>
    So there goes that premise.

    I'm not sure this is a reasonable argument. The companies you've looked at are trying to get money from you, and thus are in a position where they're always going to be putting the best possible foot forward, downplaying the potential risks.

    Second, frankly, most entrepreneurs don't know or understand the underlying issues here or the potential risk. They don't realize how the broadband market has changed or the regulatory issues underlying all of this. So, yes, they may assume that the world will continue to work the way it did in the past, but that's because they haven't -- like we have -- followed the top execs from AT&T, Verizon and Comcast make it clear that they're looking to set up tollbooths on the internet and hoping to double or triple charge successful companies just to reach their users. They don't recognize that threat. Yet.

    But, trust me, when you talk to entrepreneurs about that threat, they recognize it quickly. It's why so many entrepreneurs were quick to sign on to a letter pushing for Title II a few months back.

    Your premise that only big companies can win is so outdated and ridiculous that you would think its 1968 and you just got fired from IBM.

    How many successful startup ISPs do you know? There are not that many. There's Sonic -- but they're supporting Title II.

    This is about the difference between infrastructure and companies on the infrastructure.

    No question you can find stupidity from every company, large and small including mine and yours, but over the past 12 years can you deny the amount of innovation that has taken place despite any and all efforts by ISPs to slow them down ?

    We agree. There's tremendous innovation above the infrastructure layer -- but while that's been happening two important other things have happened. First, consolidation of the infrastructure players, allowing them to become much bigger and much more powerful.

    Second, the Verizon ruling earlier this year actually *massively* expanded the FCC's power under 706 to regulate a variety of things on the internet, outside of the net neutrality/open internet rules. Don't underestimate the value of getting the internet away from 706.

    You using your Facetime over cellular ok ? Has your network wireless performance improved over the last couple years ? Can you hear me now ? Has your wired broadband throughput improved despite NFLX going from nothing to 1/3 of primetime bandwidth ?

    It should be noted that cellular is under Title II, and seems to have done okay, so if you're using examples from the cellular world, I'm not sure your argument that Title II is "bad" survives.

    So... based on that Title II has also resulted in improvements and infrastructure investment in cellular. So why is it bad for wired broadband?

    And, actually, *my* wired broadband has not improved. At all. I live in the heart of Silicon Valley and AT&T doesn't give a fuck.

    If you want ot look at trends, they are going away from big providers, not towards them. Texting fees ? Gone.

    Again, cellular is under Title II, so this works against your point. But, more to the point, why are texting fees gone? Mainly because of competition on the network. If the operators were able to block out that competition, they would have, and texting fees would still be around (see examples like blocking Google Wallet in favor of ISIS/Softcard).

    Do i like that the big ISPs get to put all kinds of bs fees on us and in our bills. No. But i dont think regulation solves any of that

    That assumes, incorrectly, that going to open internet rules under Title II *adds* real regulations. Look at what's being proposed. Look at Sections 201 and 202 of Title II. That's not real "regulation." It's not adding regulatory burden. It's just making sure that the network remains open.

    on most other things we agree :)

    Well, that's good. :)

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