Posted on Techdirt - 29 July 2016 @ 9:34am
As cable operators consolidate and AT&T and Verizon continue to hang up on millions of unwanted DSL customers they don't want to upgrade, cable's monopoly control over the U.S. broadband market is actually stronger than ever. In most markets, cable broadband's "competition" still consists of either a cash-strapped telco incapable of offering speeds greater than 6 Mbps, or no competition at all. That's why we've seen Comcast rush to impose usage caps on many of these captive markets; an effort to protect legacy TV revenues from Internet video -- a move only made possible by a lack of competition.
Despite this lack of competition, Comcast has at least flirted with the idea of adapting to streaming competition and offering a cheaper, more flexible streaming TV option of its own. About a year ago the company launched a product creatively-dubbed "Stream," which for $15 a month offers Comcast broadband customers access to its traditional cable service. But despite the company's promise that every market would see this service by the end of 2016, the rollout of this product appears to have stalled, in large part because it appears Comcast only wanted to appear innovative.
The company made that position abundantly clear on this week's earnings call, when it effectively tried to claim that the "economics" of offering better, cheaper TV service don't work:
"Neil Smit, the CEO of Comcast Cable (as opposed to the whole Comcast company), told investors that, “We haven’t seen an OTT model that really is very profitable for us."
That doesn’t speak well for its “Stream” streaming service, which is still in a very small pilot test. Smit continued, “We think that … the bundle is still the best value. And concerning single-play and broadband, we do market that. We think there’s going to continue to be streaming services and OTT services that come through and broadband will continue to grow as we continue to invest in the network and the WiFi capabilities.”
In other words, we don't want to offer a truly innovative, less expensive streaming solution, because customers would stop paying for our bloated, extremely expensive legacy cable bundles. You will take the traditional, bloated cable bundle -- and you will like it.
Comcast CEO Brian Roberts piled on, attempting to claim that the economics of offering a streaming video service are "unproven":
"OTT economics are unproven to us, and out of footprint” — meaning, to people who aren’t already Comcast cable or internet subscribers — “it’s not clear that that’s the right strategy for us,” Roberts said. “So we’re about a business model where we’re able to grow the customer base, have customers that have multiple products, really high value and ever-reducing churn and innovative new products you that bolt on. Now, it’s not clear how you do that where you don’t have a network, but we’re innovating all the time, and we’re happy with the strategy we have,” he concluded."
Yes, gosh, how do
you offer TV service in areas where you don't have a network? Perhaps Netflix, Hulu and Amazon have some idea? Perhaps AT&T, which is planning not one but three
out-of-legacy-network streaming services later this year, could give Comcast a hand? The reality is the economics are "unproven" for Comcast because offering better, more flexible, cheaper TV service would cannibalize the company's existing pay TV subscriber base. This is a company that has worked tirelessly over the years to eliminate competition, why would it ruin things by effectively competing with itself?
Comcast has made its plans to tackle the streaming video threat very clear. By pricing TV and broadband significantly lower than broadband alone, Comcast leverages its mono/duopoly in broadband to drive users to TV bundles they may not even actually want. From there, Comcast intends to cap and meter usage, ensuring that these captive customers still give Comcast its pound of flesh, even if they find it financially viable to shell out more for a standalone broadband connection.
Of course the "economics" of doing things differently don't work; under the economics of monopoly control, Comcast has absolutely no real incentive to try.
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Posted on Net Neutrality Special Edition - 28 July 2016 @ 4:05pm
After months of anticipation, last June the U.S. Court of Appeals for the D.C. Circuit upheld the FCC's Open Internet Order, an indisputably-massive win for net neutrality advocates. Not too surprisingly, net neutrality opponents have been engaged in histrionics ever since, with ISP loyal allies in Congress doing their best to punish the FCC with a series of senseless, taxpayer funded "accountability hearings" designed specifically to shame the agency for daring to stand up to large, incumbent ISPs. That's when they're not busy trying to gut FCC funding and authority via a rotating crop of sneaky bill riders.
As Mike and I noted in a recent Techdirt podcast on net neutrality, most of these efforts are just lawmakers barking for their campaign contributions. There are really only a few ways for ISPs to effectively kill the rules, one of which being the election of a President who'll restock the FCC with revolving door regulators who'll either try to roll back the rules, or (more likely) will just refuse to enforce them whatsoever.
On the legal front, options are more limited; ISPs like AT&T have stated they'll appeal to the Supreme Court, but with the FCC's legal win relatively solid, the court itself not fully stocked, and the high court just not hearing all that many cases, most telecom lawyers think a win via this path is extremely unlikely. The other option is for carriers to request an en banc review from the full 9-member DC Circuit Court of Appeals. Even though these requests are commonly rejected, it's that latter path that the wireless industry's biggest lobbying and trade association, the CTIA, has started signaling it will take:
"CTIA: The Wireless Association, which represents wireless ISPs, will seek en banc (full court) rehearing of the three-judge panel decision upholding the FCC's Open Internet order reclassifying fixed and mobile broadband as telecommunications services subject to Title II common carrier regs. That is according to a source familiar with the association's thinking. The deadline for seeking that hearing from the U.S. Court of Appeals for the District of Columbia is Friday (July 29), 45 days after the initial decision June 14."
It's likely we'll see appeal requests by numerous incumbent ISP organizations, each using their fifteen-page appeal request to roll the dice on different arguments. But again, telecom lawyers I've spoken to over the last few months don't think the en banc victory is likely, assuming the request for a hearing is even granted.
"I honestly don’t see success," Free Press Research Director S. Derek Turner tells me. "The dissent’s main argument is that the FCC didn’t explain why it was changing its mind, and spent quite a bit of ink on the issue of the market’s competitiveness. But how competitive a market is or is not has no bearing on the classification issue, only the nature of the service itself. The majority opinion does a good job of explaining why the dissenting opinion is off base, noting that the FCC had satisfied the standard in Fox for reversing a prior opinion."
ISPs and their policy wonk allies will obviously try to claim the contrary.
Regardless of the outcome, it remains important for people to understand that net neutrality isn't magically "over" just because of June's court victory. Net neutrality and the quest to keep the Internet relatively open is a fight that will never
actually end, because incumbent ISPs will never stop probing for creative new ways
to take advantage of their last-mile broadband monopoly. However fatiguing and hyperbole-soaked the net neutrality debate may be, consumers, startups, and small businesses can't afford to tune out now -- or ever.
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Posted on Techdirt - 28 July 2016 @ 6:29am
We've long discussed how Verizon has a bit of a pattern of getting billions in tax breaks and subsidies in exchange for fiber broadband it only half deploys. State after state, city after city, Verizon gets politicians to sign off on cozy deals that effectively give Verizon everything it wants -- in exchange for promises of "full" city or state fiber broadband deployment. Except time, and time, and time again, cities that signed these sweetheart, loophole filled deals then stand around with a dopey look on their face when they realize they've been had.
Fast forward to this year, when Verizon surprised everybody by announcing that it would finally deliver FiOS to Boston, one of more than a dozen cities Verizon left hanging when it stopped seriously upgrading its fixed-line network -- to apparently focus on gobbling up failed 90s internet empires. The announcement crows that the $300 million dollar deal will absolutely revolutionize the city of Boston's telecom infrastructure:
"Mayor Martin J. Walsh today announced a new partnership with Verizon to make Boston one of the most technologically advanced cities in the country by replacing its copper-based infrastructure with a state-of-the-art fiber-optic network platform across the city. The new network will offer enormous bandwidth and speeds. Through an investment of more than $300 million from Verizon over six years, this change will bring increased competition and choice for broadband and entertainment services in Boston, and support the ongoing efforts to spur innovation and economic opportunity in all neighborhoods."
This announcement was quickly translated by the press as "FiOS is coming to the entire city," though if you look more carefully at the language it becomes clear that Verizon isn't actually promising that
"This will be a fiber platform across the entire city,” Verizon Wireline Network president Bob Mudge said at an event at the Bolling municipal building in Dudley Square Tuesday. “This is not just about a fiber investment — that’s important, and it’s a fuel. But the fire and the excitement will come from the applications.”
If you study the release it's actually pretty ambiguous as to what Boston gets out of the deal. What's actually happening? Verizon struck a $300 million deal with the city that will deliver a combination of fiber, wireless service, fiber backhaul
for wireless towers, and Verizon's internet of things technologies
. Much of this is stuff Verizon already planned to spend money on (especially wireless backhaul), and a sizable chunk of it (especially on the IOT front) may or may not actually wind up actually benefiting anybody, as the mindlessly over-hyped IOT is wont to do.
How much actual last mile fiber is left utterly ambiguous. Learning lessons from failures of the past, Verizon isn't getting specific, though speaking on an earnings call this week Verizon made it pretty clear most of these connections will be fifth generation (5G) wireless
"I think of 5G initially as, in effect, wireless fiber, which is wireless technology that can provide an enhanced broadband experience that could only previously be delivered with physical fiber to the customer," McAdam said. "With wireless fiber, the so-called last mile can be a virtual connection, dramatically changing our cost structure."
And while 5G wireless should be faster with lower latency than existing 4G connections, it's not truly going to be a substitute for traditional fiber. The 5G standard itself hasn't even been agreed upon yet, and most analysts don't believe 5G will see serious deployment any time before 2020. There's also a matter of cost: while Verizon FiOS is uncapped, Verizon Wireless service is capped, metered, and among the most expensive in the country, and 5G will be no exception. It's a $300 million investment, yes, but what it's being invested into
isn't really clear.
But good news! Whatever mish-mash of half-promises Verizon is delivering this time may be coming soon to your city
, states the telco:
"We will create a single fiber optic platform that is capable of supporting wireless and wireline technologies and multiple products," McAdam said. "In particular, we believe the fiber deployment will create economic growth for Boston and we are talking to other cities about similar partnerships."
Most reporters covering Verizon's plans can't be bothered to note Verizon's long history of not delivering what it promises
, or the multiple hearings ongoing in several different states
trying to hold Verizon accountable for that fact. Fast forward several years from now, and you'll likely find Boston (and any other cities excited to "partner" with Verizon without reading the fine print) complaining that Verizon delivered only a small fraction of what was actually promised. You'll also find a media incapable of tying all of these narrative threads together.
Still, on a positive note it's great to see Verizon spending anything at all on cities it has been neglecting for the better part of a decade, given this was the same company that claimed net neutrality would kill all telecom investment
dead in the water.
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Posted on Techdirt - 27 July 2016 @ 8:34am
Last week we noted how the cable industry was distorting the definition of copyright to try and fend off the FCC's attempt to bring competition to the cable box market. Through misleading editorials and leveraged relationships with beholden lawmakers, the cable industry has been successfully convincing some regulators that we can't bring competition to the cable box or we'll face a piracy and copyright apocalypse.
Dig deeper and you'll find that copyright has nothing to do with the proposed changes being tabled. The FCC's proposal simply requires (pdf) that cable providers deliver their existing programming, sans CableCARD, to third party set tops with an eye toward boosting competition. The FCC has stated repeatedly that under their plan, cable providers can utilize the standards and copyright protection of their choice to make this happen, keeping existing DRM in place (for better or worse). Again, it's important to understand that for cable providers this fight is about control and $21 billion in annual rental fees.
Annoyingly it's not just clueless politicians, cable lobbyists and entertainment industry editorials pushing the narrative that the cable box fight is about copyright. The Copyright Office has joined the cable and entertainment industry in opposing the FCC's plan because... copyright. This support has had a major impact on the FCC's efforts, with some of the commissioners that originally voted yes on the proposal (Mignon Clyburn, Jessica Rosenworcel) now starting to waffle in large part thanks to Copyright Office warnings.
Not too surprisingly, the Copyright Office's opposition to a major consumer-friendly policy has raised eyebrows among numerous IP Lawyers, who fired off a letter to Acting Librarian of Congress David Mao this week warning the Office that it's wandering too far afield:
"We understand that the Copyright Office has expressed concern that the FCC’s proposal, if implemented, would lead to the infringement of copyright. We do not share that concern, particularly in light of the legal and technical measures contemplated in the NPRM for protecting copyrighted content from illegal copying."
The letter is quick to argue that the Office's attempt to massively extend copyright to protect cable control over every aspect of the cable box runs in stark contrast to the limitations set forth in the Supreme Court's Sony v. Universal
decision. As such, the letter politely suggests it might be nice if the Office adhered to the law and stopped giving regulators and politicians bad advice on this subject:
We urge you to oversee the Copyright Office pursuant to Section 701(a) of the Copyright Act to ensure that the Office dispenses advice to policy makers that is reasonably consistent with settled principles of copyright law. When the Office acts to advise Congress on matters within its purview, it must do so in a way that seeks to further the Copyright Act’s primary goal of rewarding creators for the public’s ultimate benefit. Interpretations of copyright law that operate to expand copyright entitlements into copyright-adjacent fields of commerce run counter to Supreme Court precedent and the copyright system’s goal of increasing public access to knowledge and information.
Among the letter's five signatories is Annmarie Bridy, who, in a statement of her own
, again makes it clear that bringing competition to the cable box is not going to usher forth the piracy and copyright apocalypse:
"We pointed out in our comments that the FCC’s proposal is fully attentive to the content protection issues that could arise from opening up cable programming streams to non-cable equipment manufacturers. The cable box, in other words, is not a copyright Pandora’s box; it can be opened carefully, in a way that both protects copyright holders and enables overdue innovation in the way that cable subscribers access content for which they’ve paid."
While it's helpful for experts to warn the Copyright Office it's actively harming the public interest here, the damage may have already been done. The FCC, already under fire for net neutrality rules and new broadband privacy protections, has descended into internal bickering over whether cable box competition will harm copyright, consumer privacy, puppies, and a wide variety of other vibrant red herrings put forth by cable lobbyists, entertainment industry allies, and the Copyright Office. Unless something changes in the next few months, it seems entirely likely that the FCC's plan will, quite intentionally, get buried in committee.
Again that may not be the end of the world. With the streaming market evolving the cable box is a doomed relic anyway; the FCC's plan would simply have accelerated its demise by five years or more. Losing this fight may also give the FCC more time to focus on more important issues for the health and future of the video marketplace, like broadband competition and the use of zero rating
and usage caps to thwart alternative streaming providers. Still, the FCC's plan would have not only saved consumers millions, it would have given consumers access to better, cheaper, more open and innovative hardware than ever before.
Shame then that the Copyright Office couldn't be bothered to give politicians and regulators some real device on this subject: namely that the cable industry's opposition to cable box competition is little more than a sound wall of disinformation
, delivered by an an army of for-hire sycophants
, fueled entirely by the ham-fisted desire to retain monopoly control in the face of inevitable evolution.
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Posted on Techdirt - 27 July 2016 @ 6:58am
Over the last year we've repeatedly noted how Putin's Internet propaganda efforts go well beyond flinging insults in news story comment sections. Thanks to whistleblowing by the likes of Lyudmila Savchuk, we learned how Putin employs multiple factories operated by a rotating crop of shell companies whose sole purpose is to fill the internet with Putin-friendly drivel twenty-four-hours a day. Early reports noted how these efforts focused on what you'd expect from Putin: discrediting reporters, distorting Russia's invasion of the Ukraine, or opposing Finland's entry into NATO.
But a little more than a year ago, New York Times Magazine's Adrian Chen decided to see just how deep that particular rabbit hole went.
What he uncovered was a global, not-at-all subtle disinformation network of well-constructed hoaxes, heavily-produced YouTube videos, fake Wikipedia entries, and tens of thousands of bogus social media accounts -- many of which were designed to pollute the global discourse pool here in the States. The report went so far as to highlight one disinformation effort where Putin-paid trolls posed as Americans online, directing users to a fully-realized museum in Chelsea, Manhattan professing to show the "other side" of the Ukranian conflict (you say invasion, I say tomahto).
That Putin's trolls have extended these tactics to the US election is more than likely. In fact, in an accompanying podcast discussing his story, Chen notes that he also discovered that a number of Putin's disinformation pugilists have been posing as Trump supporters for some time -- something New Yorker contributor Ben Taub was quick to highlight this week just as the DNC e-mail hack hysteria began to peak:
Obviously this insight begins to carry new meaning as Russia's involvement in the DNC hack becomes clearer. Many of course have spent significant calories
trying to suggest a direct Putin to Trump connection; that's certainly the narrative being pushed by a DNC with a vested interest in avoiding any real conversation about what the e-mails actually say
. But it's equally possible that Putin's simply using Internet propaganda to pour gasoline on a rolling dumpster fire that's already veering out of control.
This level of propaganda is something the United States -- already effectively at war with itself -- is not only very good at, but incredibly susceptible to. As a nation we're already prone to over-reaction in tech policy (ban all encryption!), adore responses that make already bad situations worse (immediately launch a cyberattack on Russia
!), have an echo-chamber media for whom fact checking is often optional, and an ongoing, passionate relationship with cybersecurity hypocrisy
During election season we're additionally susceptible to this type of attack; sportsmen in our color-coded onesies and ear plugs -- ready to pounce at the faintest suggestion that our preferred
candidate has anything other than the noblest of intentions. We're wading into some very dangerous and ugly territory during what's already been one of the most divisive years on record. Enter the latest expanded claims that the DNC hacker was likely
under Putin's employ:
"The researchers, at Arlington, Va.-based ThreatConnect, traced the self-described Romanian hacker Guccifer 2.0 back to an Internet server in Russia and to a digital address that has been linked in the past to Russian online scams. Far from being a singly, sophisticated hacker, Guccifer 2.0 is more likely a collection of people from the propaganda arm of the Russian government meant to deflect attention away from Moscow as the force behind the DNC hacks and leaks of emails, the researchers found."
“These are bureaucrats, not sophisticated hackers,” Rich Barger, ThreatConnect’s chief intelligence officer, told The Daily Beast. In blog posts and in interviews with journalists, Barger said, Guccifer 2.0 has made inconsistent remarks and given a version of how he penetrated the DNC networks that technically don’t make sense. For instance, the hacker claims to have used a software flaw that didn’t exist until December 2015 in order to break into the DNC networks last summer.
Given countries are busy hacking each other every god damned day
, Russia's involvement here -- if true
-- shouldn't be a shock. Neither should Russia's use of propaganda and hybrid warfare, a response it believes is justified retaliation to decades of this country's own information warfare efforts
. Enter the U.S. media stage left, not only hysterically surprised that nation states hack each other, but immediately losing the forest for the trees; happily insisting the actual content of the e-mails are meaningless
-- when they're not busy pushing op-eds advocating all out cyber war
. If this is a test of things to come, it's one the press is already failing.
We're already up to our necks in our own
marketing, political disinformation and propaganda, leaving us incapable of differentiating Russian disinformation from home grown vitriol. We're barely coordinated enough to agree on what cybersecurity should mean
-- much less differentiate hostile Russian propaganda from the vanilla rancor and bile pervading the internet on any given afternoon. Ill-prepared, poorly informed and confused as hell, there's numerous possible responses from the United States here. Given our history with abysmal cybersecurity policy and even worse media dysfunction -- none of them are likely to be any good.
Welcome to the post-truth era's disinformation wars, ladies and gentlemen. Team "level headed" is going to need all the help it can get.
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Posted on Techdirt - 26 July 2016 @ 8:34am
If you're a long-standing reader of Techdirt, you know we've well documented the shitshow that is the "internet of things." It's a sector where countless companies were so excited to develop, market and sell new "smart" appliances, they couldn't be bothered to embrace even the most rudimentary security and privacy standards once these devices were brought online. The result is an endless stream of stories about refrigerators, TVs, thermostats or other "smart" devices that are busy hemorrhaging personal data, inadvertently advertising that sometimes the smart option -- is actually the dumb one.
This systemic incompetence has now fused with a cultural disdain for more modern consumer privacy protections. The end result has been an obvious uptick in concern about how much data is now being collected by even childrens' toys like Barbie dolls, something that last year's Vtech hack illustrated isn't just empty fear mongering. Convincing parents who already find technology alienating has proven to be difficult, as is attempting to craft intelligent regulation that protects kids' playtime babbling from being aggressively monetized, without hindering emerging sector innovation and profits.
To that end, the Family Online Safety Institute and the Future of Privacy Forum held a presentation last week (you can find the full video here) where analysts and experts argued, among other things, that privacy policies need to be significantly simplified and modernized for an era where a child's doll can profoundly impact the privacy of countless people. It has been, needless to say, an uphill climb.
And while this all is seen as kind of cute and theoretical when we're talking about not-so-smart tea kettles or talking dolls, the amusement has worn off as the conversation has shifted to territory where incompetence or a clever hack can kill you (namely, automobiles). As Bruce Schneier notes over at Motherboard, this massive introduction of privacy flaws is a pretty big problem at scale, when appliances aren't swapped out or updated often:
"As more things come under software control, they become vulnerable to all the attacks we've seen against computers. But because many of these things are both inexpensive and long-lasting, many of the patch and update systems that work with computers and smartphones won't work. Right now, the only way to patch most home routers is to throw them away and buy new ones. And the security that comes from replacing your computer and phone every few years won't work with your refrigerator and thermostat: on the average, you replace the former every 15 years, and the latter approximately never."
And while mocking the internet of things has become a running joke
, Schneier notes it quickly becomes less funny when you begin to realize that the interconnected nature of all of these devices means we're introducing millions of new attack vectors daily in homes, businesses, utilities, and government agencies all over the world. Collectively these flaws will, no hyperbole intended, inevitably result in significant deaths:
"Systems are filled with externalities that affect other systems in unforeseen and potentially harmful ways. What might seem benign to the designers of a particular system becomes harmful when it’s combined with some other system. Vulnerabilities on one system cascade into other systems, and the result is a vulnerability that no one saw coming and no one bears responsibility for fixing. The Internet of Things will make exploitable vulnerabilities much more common. It’s simple mathematics. If 100 systems are all interacting with each other, that’s about 5,000 interactions and 5,000 potential vulnerabilities resulting from those interactions. If 300 systems are all interacting with each other, that’s 45,000 interactions. 1,000 systems: 12.5 million interactions. Most of them will be benign or uninteresting, but some of them will be very damaging."
At that scale, the argument that you didn't embed useful security because "it was only a refrigerator" or you didn't impose some basic privacy protections and guidelines because "it might hurt an emerging sector's ability to make more money" start to lose their luster. Schneier tries to argue that the only way we can truly mitigate the looming risk is the involvement of an informed public and an accountable government:
"Security engineers are working on technologies that can mitigate much of this risk, but many solutions won’t be deployed without government involvement. This is not something that the market can solve. Like data privacy, the risks and solutions are too technical for most people and organizations to understand; companies are motivated to hide the insecurity of their own systems from their customers, their users, and the public; the interconnections can make it impossible to connect data breaches with resultant harms; and the interests of the companies often don’t match the interests of the people.
Governments need to play a larger role: setting standards, policing compliance, and implementing solutions across companies and networks. And while the White House Cybersecurity National Action Plan says some of the right things, it doesn’t nearly go far enough, because so many of us are phobic of any government-led solution to anything.
The next president will probably be forced to deal with a large-scale internet disaster that kills multiple people. I hope he or she responds with both the recognition of what government can do that industry can’t, and the political will to make it happen.
This is of course the part of the story where the author is supposed to inform you that with good intentions and enough gumption
, government, the public and industry will come together and quickly nip this problem in the bud. Of course this particular post's readership is painfully aware that the same government Schneier hopes will come to the rescue is too busy trying to embed its own problematic backdoors
in everything under the sun while a large portion of it rushes to gut the funding and authority
of any regulator capable of imposing basic privacy and security protections.
Said readers are also probably painfully aware that neither looming major Presidential candidate has shown the remotest competence in regards to technology or genuine cyber-security. That means it's more than likely these unfortunate outcomes Schneier predicts will need to arrive before
we're collectively even willing to begin
to take serious steps to address them. At that point the only certain outcome is that all of the players involved will be sure to shirk their own personal responsibility for the security and privacy nightmare they helped build. Still, for whatever it winds up being worth, we can't say we weren't warned.
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Posted on Techdirt - 25 July 2016 @ 10:41am
Remember when Yahoo rejected a $44.6 billion offer by Microsoft? Good times. After months of redundant rumors about the bidding process, Verizon has confirmed that it has acquired Yahoo in a $4.8 billion all cash deal. According to Verizon's press announcement, the acquisition of Yahoo's stumbling empire will position Verizon as a superpower in the new media age, helping the formerly stodgy telco in its pivot toward slinging ads at Millennials. As you might expect, the press release trots out AOL boss Tim Armstrong to sell a dull deal he claims will finally let poor Yahoo shine:
"We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth. Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers."
Verizon executives have acquired Yahoo and AOL in the belief they can pivot from a government-pampered telco mono/duopoly to a Facebook and Google-esque advertising juggernaut.
And while there is little doubt that the advertising technology acquired from these deals will be useful in Verizon's quest to monetize the company's 140 million mobile subscribers, there's been little to no evidence that Verizon is actually competent enough to execute its own game plan.
Verizon's jumping into the media and advertising game because mobile and fixed broadband subscriber growth is slowing to a point where it's incredibly profitable, but just not profitable enough
for Wall Street. And if you've followed the net neutrality fights, you're probably aware that most telcos believe they're absolutely entitled
to a larger share of ad revenues -- simply because they built the networks these services run over. The problem (for these telecom companies) is that most of them have spent so long as government-pampered duopolies focusing on lobbying and turf protection, innovation and competition are alien concepts
As a result, pivoting from stodgy telco to hip Millennial-focused ad empire has had an almost comical learning curve for Verizon execs. You might recall it began with Verizon launching its own tech blog
dubbed Sugarstring, where its reporters weren't allowed to even mention subjects like net neutrality or surveillance
. As that effort was busy imploding, Verizon's advertising arm was busted covertly modifying wireless user data packets
to track consumer behavior around the Internet. This is of course all while Verizon was busy trying to deliver a killing blow to net neutrality; not exactly endearing itself to its target audience.
After several years of stumbling, Verizon launched a new, hip streaming video service Go90, which by most measurements has been a disappointment
, despite Verizon's anti-competitive practice of zero rating
the service. Now we're to believe that the combination of multiple, marginal 90s brands will somehow be the missing ingredient needed to transform Verizon into a media and advertising god, despite the fact Verizon has shown minimal competence and an aggressive, active disdain for the users it's trying to target. Good luck with that, Verizon.
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Posted on Techdirt - 22 July 2016 @ 4:07pm
If you want to see what the U.S. broadband market really looks like, you should take a close look at West Virginia. Historically ranked close to dead last for broadband access and quality, the state has been a perfect example of what happens when you let the incumbent telecom monopoly incestuously fuse with state regulators and politicians. For years now the state has been plagued by news reports of unaccountable broadband subsidies, money repeatedly wasted on unnecessary hardware, duplicate consultants overpaid to do nothing, and state leaders focused exclusively on ensuring nobody is held accountable.
Frontier acquired Verizon's phone and broadband networks in the state back in 2010, and while jumping from an entirely apathetic incumbent monopoly ISP to a barely competent one netted some slight improvements initially for users, the lack of competition continues to keep serious advancement at bay. In an attempt to improve access to neglected areas of the state, Frontier that same year received $126.3 million in federal stimulus funds to provide high-speed Internet to such areas, including 1,064 public facilities such as schools, courthouses and first responders.
Roughly $40 million of that money was supposed to be used to build an "open-access middle-mile network" intended to help multiple, competing West Virginia ISPs improve last-mile connectivity to roughly 700,000 homes and 110,000 businesses. But it didn't take long for allegations to surface that Frontier had used that money solely to shore up its broadband monopoly in the state, building fiber connections that only benefited itself. Allegations also surfaced that Frontier had manipulated just how much fiber was actually laid, with state investigations and audits, as they're wont to do, going nowhere fast.
Fast forward to this week, when the courts unsealed a 2014 lawsuit (pdf) by competing West Virginia ISP Citynet, shining a little more light on the claims, while also naming a number of government officials as defendants alongside Frontier. Among other allegations, the lawsuit claims that Frontier artificially inflated fiber deployment metrics in ways that weren't even particularly creative and shouldn't have been difficult for regulators or auditors to uncover:
Citynet claims that Frontier “double-counted” fiber to 58 buildings in 32 counties, and “used excessive maintenance coil to make up for fiber not constructed.” “Frontier also misrepresented the proposed distances for many of the community anchor institutions by simply inputting the same number for several projects,” the lawsuit alleges. “Incredibly, there were 36 [buildings] in seven different counties that each required the exact same 4,390 feet of new fiber.”
Not only did Frontier deliver less fiber than actually promised in a way no competitor could access (again, the state and Frontier repeatedly promised this would be an open access network), the company charged significantly more than originally estimated. With the help of a former Verizon executive turned state Technology Officer, the lawsuit alleges that Frontier inflated its invoices using something called "loadings fees"
Citynet claims on July 1, 2012, Given, the former president of Verizon, was appointed as the new State Technology Officer and immediately took exclusive control over approving Frontier’s invoices for the BTOP project. Within one month, every one of Frontier’s invoices that were submitted for payment contained a “loadings” charge, which, per the invoices, was for “allocated indirect costs such as vehicles, accounting, administration, etc.”
FCC data ranks West Virginia 48th
In many instances, the indirect cost fee was higher than the original total cost estimate for the fiber build and there were 365 separate invoices with loadings fees, totaling $4,553,387.31, according to the suit.
“Even though Frontier often ended up building much less fiber than was originally estimated, its final charges were substantially higher than the original estimate,” the complaint states.
in terms of broadband availability. After the project was completed, the lawsuit claims West Virginia ranked 53rd among 50 states, Guam, Puerto Rico and the District of Columbia. It's unfortunate in that broadband stimulus subsidies really have helped a number of communities where the private sector failed, just not in states where incumbent monopolies have excessive control over state players that should be policing this kind of behavior.
Should West Virginia's dysfunction follow the historical tendency of other boondoggles of this type by the likes of AT&T and Verizon
, absolutely nothing will come of this case or any subsequent investigation, audits (in the rare case they actually occur) will magically conclude no wrong doing by any participant, and the entire sordid affair will magically be forgotten the next time Frontier is in line to receive additional taxpayer handouts.
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Posted on Techdirt - 22 July 2016 @ 8:37am
Last week we noted how copyright has once again become a straw man, this time as part of an attempt to kill the FCC's plan to bring competition to the cable box. Under the FCC's plan, cable providers would have to provide their programming to third-party hardware vendors -- using any copy protection of their choice -- without forcing consumers to pay for a CableCARD. The plan has little to actually do with copyright, but cable providers have tried to scuttle the effort by trying to claim more cable box competition will magically result in a piracy apocalypse (stop me if you've heard this sort of thing before somewhere).
The cable industry's attack on the FCC's plan has been threefold: hire sock puppets to make violently misleading claims in newspapers and websites nationwide; push industry-loyal politicians (who have no real clue what the plan does) to derail the plan publicly as the worst sort of villainy, and present a counter proposal packed with caveats that makes it all but useless. This counter proposal involves the cable industry delivering its programming via apps (much like it already does), but forces consumers to continue renting a cable box if they want to record programs via DVR.
Given the cable industry's plan is little more than a press release, that's only the caveat we know of. But anybody thinking the cable industry's going to just give up $21 billion in set top rental fees and their walled garden control over the user experience is utterly adorable.
Numerous companies with feet in both streaming hardware and TV (Google, Amazon, TiVO) obviously support the FCC's original proposal. A regulatory filing from Amazon back in April (pdf) applauded the FCC's plan, and while it raised some questions about copyright and copy protection, it also argued that most of the modern protection systems already at play on streaming hardware should be more than effective at protecting programming:
"Amazon Fire TV 4K, nVidia Shield TV,
Roku4, and numerous televisions from Sony, Vizio, and other manufacturers are already trusted by movie studios to deliver high-quality ultra HD movies with theater quality sound. These devices use hardware protections that assure that content delivered to these devices can only be
decrypted and played back by devices authorized to play back that content. Furthermore, the technological solutions that exist today are much more advanced and robust than they were even when CableCARD was created. As the proliferation and success of OTT services (including those offered by Amazon) demonstrate, modern content protection technologies are both in use today and highly effective."
Given the fact that most DRM is almost always bypassed and generally only succeeds at making the end-user experience difficult and annoying, that's debatable. Still, it should again be noted that copyright itself isn't really the issue here
. As the EFF rather eloquently noted back in April
, this fight is about control of the end-user experience and, for cable, protecting cable box rental revenue and keeping its customers firmly ensconced within the traditional cable walled garden.
That said, it's interesting to watch how the nebulous term "copyright" morphs and shifts meaning as both sides try to use the concept as a malleable weapon. For example the Washington Post this week pointed
to a another Amazon filing with the FCC
(pdf) in which Amazon complains that it's the cable industry's app-based "compromise" solution that violates copyright and would be a piracy nightmare (despite cable delivering current content via apps with no problem):
"The parties also discussed the recent submission from NCTA of an alternative method using an app-based approach. The Amazon representatives said that it was hard to comment specifically on the short submission since it lacked important details. However, some aspects of it warrant attention. The Amazon representatives stressed that hardware-based digital rights management (“DRM”) is the gold standard for content protection. A native application has no impact on the robustness of properly implemented hardware-based DRM with regards to content security. Thus, the NCTA submission does not in fact address the security concerns MVPDs have identified as one of the central reasons to oppose the proposals set forth in the NPRM.
In short, the cable industry says it can't possibly support
real cable box competition because... copyright! Amazon argues this is nonsense, but in its own way is perpetuating the straw man by claiming that only a hardware-based solution will work because... copyright! As we noted last week
the very definition of copyright is being molested for argument's sake; a giant ugly red herring distracting observers from the fact that this is about control, not copyright. And obviously if you've used Amazon's own locked down, walled-garden products, the negative impact of DRM is very often a distant afterthought -- not entirely unlike traditional cable.
It should be noted that the Amazon-owned Washington Post first gives way too much credence to these copyright claims, then mistakenly tells readers that the FCC's proposal and the cable industry's proposal are effectively the same thing, both efforts ultimately saving consumers money:
"Critics say requiring companies such as Comcast to make their TV content freely available to any other box maker poses copyright risks, raising the possibility of theft by content pirates. Both the FCC approach and the cable industry proposal could reduce the cost of renting set-top boxes — in some cases, by potentially eliminating the need for them altogether.
Well, no. The FCC's effort is a well-intentioned (though possibly doomed
) attempt to bring real competition to the cable box, driving down costs for consumers. The cable industry's counter-proposal is a page of ambiguous promises with the clear intent of delivering programming via app, but forcing users to either still rent a cable box -- or pay their cable provider a premium if they want to record and store content (either on physical DVR or cloud-based DVR system). One effort is trying desperately to make the cable box more open and PC like, the other is a show pony designed to retain control in the face of evolution.
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Posted on Techdirt - 22 July 2016 @ 6:26am
Broadband ISP CenturyLink this week confirmed it's following on Comcast's heels and starting to impose usage caps and overage fees on the company's already pricey DSL services. As we've long noted, there's no reasonable defense for what's effectively a glorified rate hike on uncompetitive markets, but watching ISP PR departments try to justify these hikes has traditionally been a great source of entertainment (at least until you get the bill).
According to a new CenturyLink "excessive usage policy (pdf) being circulated by the company, customers in early trial markets will soon face monthly usage caps of 300 GB for connections 7 Mbps or slower, and 600 GB monthly caps on connections 7 Mbps or higher. Exceed that usage allotment and you'll face overage fees of $10 per each additional 50 GB, up to a monthly maximum of $50 per month. The trial is starting in Yakima, Washington and is expected to expand into other CenturyLink territories later this year.
As data has increasingly shown usage caps to be little more than a cash grab (and not really an effective way to manage congestion should it even exist anyway), many ISPs have stopped giving any justification whatsoever for their rush to cap customers. CenturyLink's PR department, however, does some yeoman's work in its new FAQ, first proclaiming that they're just nobly trying to improve customers' "internet experience":
"Data usage limits encourage reasonable use of your CenturyLink High Speed Internet service so that all customers can receive the optimal Internet experience they have purchased with their service plan."
Yes, charging your customers more money for the same (or less) service sounds like a lovely
experience indeed, on par with a day of camping or swimming in the lake! Note that there are people who do consume an "excessive" amount of bandwidth, but traditionally those users can simply be pushed toward business-class tiers. No, these restrictions aren't about determining what's reasonable in terms of bandwidth consumption, they're about saddling all broadband customers with usage restrictions to protect legacy TV revenues from the rise of Hulu, Netflix, and other streaming services.
After the story first broke this week
CenturyLink took this narrative a bit further, issuing a press statement to all news outlets claiming that charging more money for the same service is an act of consumer empowerment:
"CenturyLink is conducting usage-based billing trials in Yakima, WA, to allow customers to control their Internet usage. This gives our customers proactive management of their usage and ensures they are being billed fairly. Very few customers will see any change in what they pay for Internet service, as customers will only be billed an additional amount if they exceed the Internet usage limit for the High-Speed Internet plan they purchased. CenturyLink will analyze the data from this trial to determine next steps and make decisions regarding further rollout of usage-based billing."
As we've noted with Comcast's caps
, large ISPs like to suggest these price hikes are a "trial" where customer input matters. This lets them argue to regulators that they're not aggressively penalizing users in captive markets, they're just engaged in "creative price experimentation." It also gives consumers the false impression that their feedback matters
, when ISPs know perfectly well that consumers loathe being charged more money under what's a highly punitive and often confusing new billing system.
As for usage caps and overage fees giving consumers "proactive management of their usage" while ensuring "they are being billed fairly," keep in mind that unlike traditional utilities, no regulator checks the accuracy of ISP meters. That has historically resulted in ISPs billing consumers for phantom usage, or even charging them for consumption when the power is out
or the modem was off. ISPs want to bill like utilities, but the faintest mention of them being regulated as such results in no limit of histrionics and hand wringing from the sector.
Meanwhile, CenturyLink knows full well that customers can't do a damn thing about this glorified rate hike, because they either have no other broadband option -- or their alternate option (usually Comcast) is imposing usage restrictions as well. Behold the competitive glory of a broken broadband market few in government -- and even fewer in the telecom sector -- are actually interested in fixing.
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Posted on Techdirt - 21 July 2016 @ 6:28am
We've talked at great lengths about how AT&T's gruesomely cozy relationship with many state legislatures has severely damaged broadband expansion and adoption across huge swaths of the country. That's particularly true in Tennessee, one of nineteen states where AT&T lobbyists have literally written protectionist state laws defending AT&T's monopoly from broadband competition. AT&T's goal has been to stop the rise of public/private partnerships, which have only emerged as a direct response to AT&T's apathy.
AT&T lobbyists have been happily getting such laws passed for fifteen years with little attention by the media. That began to change with the rise of efforts like Google Fiber, which more clearly illustrated how public/private partnerships have become essential in bringing broadband competition to countless areas incumbent ISPs deem "not profitable enough" to care about. Last year, the FCC finally woke up from its own long slumber on the subject, stating it would be preempting measures in two such state laws (in North Carolina and Tennessee) that hindered municipal broadband efforts from expanding.
Tennessee's response? To sue the FCC -- claiming that state rights were being violated (letting AT&T write bad state law? Perfectly ok, though).
As that lawsuit is being hammered out in the courts, Tennessee state leaders have been forced to respond to an increasingly annoyed citizenry; one that's slowly woken up to AT&T's role in keeping Tennessee a broadband backwater. Part of this effort by Tennessee leaders has been to fund a new study taking a closer look at the state of broadband in Tennessee. And while some thought the study would be used to obfuscate state broadband problems, the full survey has been released and it doesn't pull any punches (pdf).
The study ranked Tennessee 40th in terms of overall broadband investment and availability, and found that 13% of households (or 834,545 Tennesseans) lack access to any high-speed broadband internet service whatsoever. The study found that the vast majority of Tennessee residents still get internet access through slower services like DSL, wireless or dial-up connections, either because that's all that's available, or because they couldn't afford faster options. The bright spot in the Tennessee report? The ultra-fast services being offered by the state-owned utility in Chattanooga (EPB):
And while the study does yeoman's work avoiding specifically citing AT&T's campaign-cash stranglehold over state leaders like Marsha Blackburn
as a massive reason why Tennessee broadband remains mired in mediocrity, it doesn't shy away from pointing out that the state's decision to try and blockade public/private partnerships -- when they're the primary driver of broadband improvement everywhere else in the country -- isn't very smart:
"In States where there are no restrictions, administrative burdens or regulatory limitations for any entity to build telecommunications infrastructure and offer services, there is more competition and more broadband investment, especially in rural parts of the state. Municipalities and electric cooperatives who have a vested interest in the vitality of their local communities are investing in broadband infrastructure because it is a key driver to economic development."
But this shouldn't really be new information for state leaders who prioritize AT&T campaign contributions over the welfare of countless Tennessee residents and smaller businesses. They've just chosen to ignore reports like this one, because they've convinced themselves that selling state laws to the highest bidder is ok -- because they're engaged in a noble fight against government intrusion into the private sector
. AT&T, as you might expect, clung tightly to this narrative when asked about the study by the Chattanooga Times Free Press
"...a spokesman for AT&T called the consultant's report "disappointing," because it appears to favor more government involvement in private business. "It largely ignores private sector investment and focuses heavily on proposals that grow government with little reference to the associated costs and risks to taxpayers," spokesman Joe Burgan said."
In reality, AT&T and other incumbent broadband providers simply adore
bloated, dysfunctional government -- just as long as it's doing what AT&T wants. It's when government starts to heed the will of the people that you'll usually find AT&T crying like a petulant child. Tennessee politicians, too, showed they're not making much progress in opening their minds to the reality that improved broadband may mean some layer of local government involvement when the private sector fails state residents:
"Norris, who said he remains wary about municipal broadband based on the failure of Networx in his district near Memphis, said he hopes the push for more broadband is not an excuse for bigger government. Sen. Mark Green, R-Clarksville, vice chairman of the Senate Commerce Committee, also expressed concern about allowing government-owned utilities like EPB to compete with private firms such as AT&T or Comcast. "We want to look closely at this study, but in general, I am not for government and business competing in the marketplace," he said.
Again, though: AT&T and Comcast aren't competing
, and Senators like Green are letting large ISPs literally write laws ensuring they never have to
. And these local governments aren't getting into the broadband business because it's fun
or because they're villains trying to ruin your ideological good time
-- they're doing it because they've been saddled with awful broadband thanks to regulatory capture perpetuated by the same folks complaining about dysfunctional government.
Dysfunctional government fighting municipal broadband under the pretense of caring about stopping dysfunctional government is, for lack of a more scientific term, a massive disingenuous circle jerk. One that perpetuates distraction from the real issues of the day by intentionally inciting partisan discord.
All told the study found that Tennessee could easily deliver speeds of 25 Mbps to every business and consumer in the state for somewhere between $819.5 million and $1.7 billion. And while that's not a small number, you can be absolutely guaranteed that significantly more than that has been spent by AT&T (and unfortunately taxpayers) over the last fifteen years to ensure real, vibrant broadband competition never materializes.
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Posted on Techdirt - 20 July 2016 @ 4:23pm
Last week, new New York Times public editor Liz Spayd said something completely and utterly crazy: she suggested that news outlets and websites should actually listen to and interact with their visitors in news comment sections. Given this is the age where most "enlightened" media outlets are now closing their comment sections and pretentiously pretending it's because they "value conversation," Spayd's comments were treated like the incoherent ramblings of a mad woman on some fronts, people claiming actually caring about readers was a form of "phony populism" and the "willfully naive" rhetoric of a bygone era.
But we've noted time and time again that by muzzling them or shoveling off your community to the homogonized blather of Facebook, you're pretty clearly saying you don't think your audience really matters. Countless editors refuse to believe this, by and large because nobody at a multi-million dollar media empire wants to actually have real conversations with the dirty plebeians they profess to be so selflessly dedicated to. The entire mechanism should be demolished, they argue, because commenters are mean and say bad things -- ignoring studies suggesting this can be easily fixed by giving a damn.
Nick Denton, likely overjoyed to talk about something other than Peter Thiel, last week indicated he's among this "willfully naive" minority that believes news comments are worth saving. Regardless of whether or not you like the Gawker empire, Denton makes it clear that maintaining communication with the company's customers is not only common sense, but embracing on-site comments makes money:
"The key is to distribute the moderation, to make every editorial team responsible for the discussions that their stories instigate. It’s not that hard—though it took several years and several million dollars for us to get it right. The commitment to quality discussions was one of the smartest decisions we made. In economic terms, we see a payoff not just in greater editorial leverage, but in time spent on page. On mobile, for instance, we outperform the other publishers by more than half: 81 seconds compared with a Google Analytics benchmark of 53 seconds. I think that’s largely because the pages are more interesting, for longer."
Again, it's worth noting that while Gawker spent a significant amount of money on its Kinja commenting platform with some mixed results, data has suggested that just having writers show up to talk
can have a profound impact on the quality of comments. But Denton also focuses on the fact that stifling the inherent bi-directional communication nature of the Internet is just dumb
, and many outlets just don't like comments because they advertise errors made in their reporting or commentary:
"Above all, this is just the way that Internet news should be. Why wouldn’t you want to tap the opinions and expertise of your readership? Unless you are embarrassed by them."
Despite all the media's bluster about social media being an adequate replacement for an "unsavable" comment section, the reality is many bigger media brands just don't like having real human beings pointing out when they're wrong
in such an obvious and public fashion. If you've spent any time writing on the Internet, you probably know that the comment section, warts and all, is also stocked with some very bright people with wide ranging expertise who'll often provide invaluable corrections. Possibly right after they make a joke about your mom, but still.
Throwing out the entire concept of on-site comments because a jackass said something mean
or pointed out you were wrong about something
has never been much of a solution. Subsequently claiming you muzzled your customers
because you wanted to "build relationships" and "value conversation" only informs these muted community members you also think they're all incredible, irredeemable morons. If that's the brand message you're actually pursuing in your quest to nab more advertising eyeballs? Phenomenal job.
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Posted on Techdirt - 19 July 2016 @ 10:47am
Late last year, Netflix raised rates on the company's new streaming subscribers from $9 a month to $10 a month. Existing subscribers were grandfathered in at the previous rate until last May, when they too saw the price hike. Reporting the company's earnings this week, Netflix noted that it "only" added 1.7 million new subscribers worldwide. And while that's still pretty impressive at a time when most major cable companies are slowly bleeding subscribers, that's still well below the 2.5 million Netflix expected to add. The most likely reason for the dip? Price hikes (though foolishly blocking VPN users may have also played a role).
But in a Netflix letter to investors this week (pdf), the company tried its very best to try and blame the press coverage of its rate hikes -- not the rate hikes themselves -- for the company's slower than expected growth:
"Gross additions were on target, but churn ticked up slightly and unexpectedly, coincident with the press coverage in early April of our plan to ungrandfather longer tenured members and remained elevated through the quarter. We think some members perceived the news as an impending new price increase rather than the completion of two years of grandfathering."
It was the press coverage of your staggered rate hikes that annoyed users? It was member "perception" of that news that was to blame for people leaving? That's some very Comcast-esque spin from Netflix, who throughout the letter consistently replaces the phrase "price hike" with "grandfathering" as if the investors they're talking to aren't bright enough to tell the difference (and perhaps that's true):
"While ungrandfathering and associated media coverage may moderate near term membership growth, we believe that ungrandfathering will provide us with more revenue to invest in our content to satisfy members, thus driving longterm growth. Over the second half of this year, we’ll complete ungrandfathering. Our three tier pricing (in the US: $7.99 SD, $9.99 HD, and $11.99 UHD) is working well for us and for new members, and our gross additions remain healthy."
Of course to be fair, one small U.S. price hike isn't really much of a big deal for a company that just expanded into 130 more countries only back in January
. Also, if you recall, the internet media went into histrionics a few years ago after Netflix bungled its DVD arm spin off (Qwikster, RIP
) and imposed a different rate hike, one many analysts insisted spelled doom for the company. The reality is most people still find Netflix to be an incredible value in the age of soaring legacy cable TV prices, and the company still has some leg room on both international growth and pricing.
But just like its traditional cable counterparts, Netflix is going to start having to feed insatiable investors with either additional international growth (likely China), or price hikes on existing customers. And just like any innovator pressured by Wall Street's incessant hunger for more, the company's strategy will slowly but surely shift from disruption to turf protection as streaming competitors arise and cable figures out it needs to compete on price. And while these recent hikes may not be dramatic, they're arriving as Netflix's overall catalog has shrunk in the last few years by as much as 40% by some estimates
So while the Netflix of today
remains a better value and more consumer friendly on issues like net neutrality (usually
), the decision to start charging more for less -- then blaming the press
when consumers balk -- is a relatively Comcast-esque move that may not bode well for the Netflix of tomorrow.
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Posted on Techdirt - 19 July 2016 @ 6:37am
In the quest to stop the FCC from bringing competition to the set top box, the cable industry has trotted out all manner of misleading arguments, most of which have been pushed in editorials in newspapers nationwide without highlighting author ties to the sector. Some of them have tried to pretend that cable box competition will create a piracy apocalypse. Others have tried to somehow argue that better, cheaper hardware and choices will somehow harm minority communities. Most of those are just flimsy attempts to try and keep the FCC from cracking open a $21 billion monopoly on cable box rental fees.
Fearing their own loss of control, the entertainment industry has joined the cable sector in also claiming new cable box rules will somehow violate copyright law. Under the FCC's original proposal (pdf), the agency simply states that existing cable content must be delivered to third-party hardware using the copy protection of the industry's choice. Nothing in the rules will change that, or magically give third-party vendors the right to violate copyright. Still, opponents of the rules have consistently tried to claim the rules are some kind of cabal by Google to freeload off of and repackage "their innovation."
A recent filing by the cable industry's biggest lobbying organization (pdf), the NCTA, put it this way:
"The proposed approach would circumvent the MVPD’s (read: cable company's) technological protection measures and license restrictions, with no enforceable means to prevent streaming that movie outside the home, in clear violation of the license to the MVPD, and the content owner’s copyright."
Except if you actually read the proposal (which hasn't even been fully cooked yet), it does nothing of the sort, and the FCC time and time and time again has stated whatever rules are passed will adhere to existing copyright (probably to a fault, if history's any indication). As the EFF noted a few months ago
, claims that set top box competition will violate copyright is simply a head fake -- where the very definition of copyright has been mangled and distorted to fight off efforts to open technology up for user benefit. Put simply, copyright doesn't really apply to the improvements the FCC wants to make to your cable TV viewing experience:
"Copyright is only an exclusive right to copy creative work (and to distribute, publicly perform, and adapt it). Copyright has important limitations, including fair use. Copyright doesn’t give rightsholders the ability to stop others from “monetizing” (double ugh) or even “exploiting” creative work unless one of the specific rights laid out in the law is violated. TV and home stereo manufacturers, used DVD sellers, and popcorn growers all “monetize” and profit from the creative works of others without asking permission or paying royalties. Last year, a federal court ruled that copyright doesn’t stop Dish Networks from offering a DVR that can skip commercials automatically. And no one has to pay extra for a mute button that works during commercial breaks (yet).
Real set top box competition would not only demolish $21 billion in captive revenues, it would dismantle a walled garden under construction for a generation. Set top box competition would result in more open boxes more inclined to show users alternative, niche options
outside of the traditional cable and broadcast wheelhouse. Worse, it would give the consumer more control than ever before
in terms of how content and media is consumed, bringing the cable box more in line with open platforms like the PC. How terrifying
. The EFF continues:
"...Since competition would mean lower prices and more choice for customers, and less control and profits for the monopolists, they would rather keep the conversation on their made-up version of copyright law. Consumers are not fooled. Consumers recognize that the cable set-top box market has been a long, frustrating experience where they have little choice and have witnessed even less innovation. Consumers know they are being ripped off by the current marketplace ($230 per consumer totaling $20 billion in rental fees each year) because they don't have an easy way to just own their box like they do with computers, cable modems, smart phones, tablets, and other electronic devices."
Understanding that copyright is a straw man in this conversation about monopoly hardware control makes some of the waffling
we've been seeing at the FCC on the proposal all the more frustrating. It's waffling only made possible by the literal army of broadcast, cable and entertainment industry lobbyists busy "educating" politicians on their mangled definition of copyright, and how these systems actually work. And as a Washington Post article detailed last week
, this lobbying campaign appears to be working:
"My office has met with the Copyright Office, and I know that the Copyright Office has expressed concern about just what you described," Democratic FCC Commissioner Jessica Rosenworcel told House lawmakers Tuesday. "So I think more work is necessary on our part." Rep. Marsha Blackburn (R-Tenn.) said Tuesday that she's heard from the Copyright Office, too, on the same issue. Another Democrat on the commission, Mignon Clyburn, said copyright protections "must be in place" in any final rule, but stopped short of saying the FCC's initial plan had problems."
The furrowed brows of worry over entirely artificial copyright concerns don't bode well for the FCC's proposal. In the post truth era, repetition (not truth) dictates reality, and it's becoming abundantly clear that the cable and entertainment sector's misinformation efforts are paying dividends and stalling the effort. Again, that's not the end of the world as the FCC may find it more effective to focus on the biggest problem in the streaming age (the lack of broadband competition and usage caps), but it's still frustrating to see how effective these kinds of coordinated campaigns continue to be in the campaign-contribution-soaked nation's capital.
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Posted on Net Neutrality Special Edition - 14 July 2016 @ 2:24pm
Europe only has a few days left to ensure that its member countries are actually protected by real net neutrality rules. As we've been discussing, back in October the European Union passed net neutrality rules, but they were so packed with loopholes to not only be useful, but actively harmful in that they effectively legalize net neutrality violations by large telecom operators. The rules carve out tractor-trailer-sized loopholes for "specialized services" and "class-based discrimination," as well as giving the green light for zero rating, letting European ISPs trample net neutrality -- just so long as they're clever enough about it.
In short, the EU's net neutrality rules are in many ways worse than no rules at all. But there's still a change to make things right.
While the rules technically took effect April 30 (after much self-congratulatory back patting), the European Union's Body of European Regulators of Electronic Communications (BEREC) has been cooking up new guidelines to help European countries interpret and adopt the new rules, potentially providing them with significantly more teeth than they have now. With four days left for the public to comment (as of the writing of this post), Europe's net neutrality advocates have banded together to urge EU citizens to contact their representatives and demand they close these ISP-lobbyist crafted loopholes.
Hoping to galvanize public support, Sir Tim Berners-Lee, Barbara van Schewick, and Larry Lessig have penned a collective letter to European citizens urging them to pressure their constituents. The letter mirrors previous concerns that the rules won't be worth much unless they're changed to prohibit exceptions allowing "fast lanes," discrimination against specific classes of traffic (like BitTorrent), and the potential paid prioritization of select “specialized” services. These loopholes let ISPs give preferential treatment to select types of content or services, providing they offer a rotating crop of faux-technical justifications that sound convincing.
The letter also urges the EU to follow India, Chile, The Netherlands, and Japan in banning "zero rating," or the exemption of select content from usage caps:
"Like fast lanes, zero-rating lets carriers pick winners and losers by making certain apps more attractive than others. And like fast lanes, zero-rating hurts users, innovation, competition, and creative expression. In advanced economies like those in the European Union, there is no argument for zero-rating as a potential onramp to the Internet for first-time users.
The draft guidelines acknowledge that zero-rating can be harmful, but they leave it to national regulators to evaluate zero-rating plans on a case-by-case basis. Letting national regulators address zero-rating case-by-case disadvantages Internet users, start-ups, and small businesses that do not have the time or resources to defend themselves against discriminatory zero-rating before 28 different regulators."
Here in the States the FCC decided to not ban zero rating and follow this "case by case" enforcement, which so far has simply resulted in no serious enforcement whatsoever
, opening the door ever wider to the kind of pay-to-play lopsided business arrangements net neutrality rules are supposed to prevet. Of course European ISPs have been busy too, last week falling back on the old, bunk industry argument that if regulators actually do their job and protect consumers and small businesses from entrenched telecom monopolies, wireless carriers won't be able to invest
in next-generation networks.
Those that care about net neutrality have just four days left to make their voices heard
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Posted on Techdirt - 14 July 2016 @ 6:28am
As we've noted for some time, Comcast continues to expand the company's usage cap "trial" into more and more markets. As a clever, lumbering monopoly, Comcast executives believe if they move slowly enough -- consumers won't realize they're the frog in the boiling pot metaphor. But as we've noted time and time again, Comcast usage caps are utterly indefensible price hikes on uncompetitive markets, with the potential for anti-competitive abuse (since Comcast's exempting its own services from the cap).
This is all dressed up as a "trial" where consumer feedback matters to prop up the flimsy narrative that Comcast is just conducting "creative price experimentation."
Last week, Comcast quietly notified customers that the company's caps are expanding once again, this time into Chicago and other parts of Illinois, as well as portions of Indiana and Michigan. Comcast recently raised its cap from 300 GB to one terabyte in response to signals from the FCC that the agency might finally wake up to the problems usage caps create. And while that's certainly an improvement, it doesn't change the fact that usage caps on fixed-line networks are little more than an assault on captive, uncompetitive markets.
To sell customers on the exciting idea of paying more money for the exact same (or less) service, a notice sent to Comcast users last week informs them they're lucky to now be included in the "terabyte internet experience," as if this is some kind of glorious reward being doled out to only the company's most valued customers. The company also tries to shine up its decision to start charging users $50 more per month if they want to avoid the cap as an act of altruistic convenience, and tries to make the caps seem generous by measuring them in terms of gaming hours and photos:
"We know customers want a carefree online experience that doesn't require them to think about their data usage plan, and we offer a plan that does just that...What can you do with a terabyte? Stream about 700 hours of HD video, play more than 12,000 hours of online games, or download 600,000 high-res photos in a month."
How generous. You can also check your email account 8 billion times
under our totally unnecessary restrictions. As we've long noted, caps are solely about protecting legacy TV revenues from Internet video, while creating new ways (zero rating) to distort the level playing field. And as AT&T and Verizon give up
on unwanted DSL customers and cable's broadband monopoly grows in many areas, this incredible "experience" will be headed in your direction sooner than you probably realize.
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Posted on Techdirt Wireless - 13 July 2016 @ 6:41am
Last week, we noted how Verizon had unveiled some new wireless data plans intended to be a competitive response to T-Mobile. In very Verizon-esque fashion, the new plans involved first and foremost raising already-industry high data prices another 17%, then scolding media outlets that called it a rate hike. The new plans also involved taking a number of ideas T-Mobile and other carriers had implemented years ago, then somehow making them worse.
For example, Verizon belatedly introduced a "Carryover" rollover data option. Under most implementations of this idea (as with T-Mobile), you're allowed to take any unused data at the end of the month and store it in the bank for future use. But under Verizon's implementation, this data only lasts one month -- and you have to burn through your existing allotment of data before it can even be used. This is Verizon's attempt to give the illusion of offering an innovative and competing service, but saddling it with caveats to make it incredibly less useful.
Not happy when the media quite correctly pointed out that its new data plans weren't much to write home about, Verizon issued a second, amusing press release clarifying the "myth v. reality" of what Verizon's offering versus what the media reported. As its opening salvo, Verizon repeats its claim that a 17% rate hike isn't a rate hike if you squint and look at the numbers in just the right way:
Myth: Verizon is raising prices with its new plans.
Reality: The price per GB is lower, across the board. The price went from $30 to $17.50 per GB on the S size plan and from $5.56 to $4.58 on XXL.
This is, of course, not unlike the cable industry trying to claim you're not really paying too much for cable
because you're now getting more amazing value per channel
. In reality, usage caps are already arbitrary constructs
with no ties to real-world costs, and Verizon's entire plan structure is carefully built to drive as many customers to the most expensive data plans. Plans they may not need, but sign up for simply because they have no idea what a megabyte even is, and want to avoid any risk of absurd $15 per gigabyte overage fees.
More amusing perhaps is Verizon's attempt to claim that the Carryover data plan outlined above isn't just copying a relatively good idea and making it worse (and charging more), it's Verizon's incredible delivery of "the entire package" and an "incredible value":
Myth: Verizon is copying the competition with introducing Carryover and Safety Mode; Verizon’s competitors offer the same type of plans, but for less money.
Reality: No other wireless company can offer the entire package. We bring together options customers tell us they want, in a new plan with incredible value - and a new My Verizon app that puts you in control - all on the best network.
Verizon's modus operandi in response to heightened competition from T-Mobile has been to pretend that the company's network is just so good
, it doesn't have to compete on price. In fact, as T-Mobile has applied more and more pressure, Verizon has gone so far as to claim that "price sensitive" customers don't matter
. But that's not how real competition works. You don't get to magically choose when you have to compete on price, though with a generation of being a government-pampered duopoly under its belt, Verizon executives clearly believe otherwise.
Verizon's tactic of charging "premium pricing for a premium service" worked for a while, but as T-Mobile's network improves and the company has started hoovering up the sector's valuable postpaid subscribers, Verizon's been forced to take more serious notice. So far Verizon's response has been to try and pantomime competition, assuming that consumers and the media are too stupid to notice the difference. Verizon slowly but surely learning that you don't get to head fake real competitive pressure should prove interesting to watch.
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Posted on Techdirt - 12 July 2016 @ 10:39am
If you spend any time online, you've by now noticed that the internet this week belched forth a tidal wave of incessant chatter over Pokemon Go, Nintendo's new augmented reality game involving scrambling around real-world locations to "catch" collectible, virtual beasts with your phone. The game is by any standard a smashing success, boosting Nintendo's market cap by an estimated $9 billion in two days with the app rocketing to the top of both major app stores. The phenomenon is, frankly, pretty amazing:
As with any massive phenomenon involving tech many people don't really understand (augmented reality in this case), the news wires immediately lit up with all manner of hysteria over the game's impact on the real world, with much of this impact wholly imagined
as sites rushed to pursue search trends and ad eyeballs. The media being, well, the media, one hoax website was able to get countless news outlets to parrot all manner of fake stories about Pokemon Go
, from claims that brothers were killing brothers
to reports that major traffic accidents were being caused
by players running out into the middle of traffic to collect creatures that technically don't exist.
An ouroboros of phantoms chasing phantoms.
The media also stumbled all over itself to pounce on claims that the Pokemon Go app was a privacy nightmare, busily reading your e-mail
and digging through an ocean of personal data that would any second now be in the hands of nefarious hackers
. Most of these reports had to be subsequently walked back with updates
after analysts actually bothered to study the app and reporters started (gasp) actually asking questions about just what the app was really doing:
"But in a call with Gizmodo, Reeve backtracked his claims, saying he wasn’t “100 percent sure” his blog post was true. On the call, Reeve also admitted that he had never built an application that uses Google account permissions, and had never tested the claims he makes in the post.
Cybersecurity expert and CEO of Trail of Bits Dan Guido has also cast serious doubt on Reeve’s claim, saying Google tech support told him “full account access” does not mean a third party can read or send or send email, access your files or anything else Reeve claimed. It means Niantic can only read biographical information like email address and phone number."
While the app did appear to be asking for broader Google account permissions than was necessary (on iOS and less frequently on Android), both Google and app-maker Niantic issued a statement noting this was a bug they're busy fixing and that no personal information had actually been accessed:
"We recently discovered that the Pokémon Go account creation process on iOS erroneously requests full access permission for the user's Google account. However, Pokémon Go only accesses basic Google profile information (specifically, your user ID and e-mail address) and no other Google account information is or has been accessed or collected. Once we became aware of this error, we began working on a client-side fix to request permission for only basic Google account information, in line with the data we actually access. Google has verified that no other information has been received or accessed by Pokémon Go or Niantic. Google will soon reduce Pokémon Go's permission to only the basic profile data that Pokémon Go needs, and users do not need to take any actions themselves."
And while a bug that gives broader permissions than necessary is bad
, it was far from the "hacker's dream
" and "privacy trainwreck
" portrayed by dozens upon dozens of different outlets. Meanwhile, most of the data being collected is a fraction of the data being hoovered up and sold daily by your wireless carrier, something routinely forgotten by those laboring under the illusion that privacy in the cellular era still actually exists.
None of this is to say that many of the stories bubbling up amidst the Pokemon Go chaos aren't incredibly interesting. Watching police having to remind players that the laws of the state (and of reality) still apply while playing the game
has proven pretty fascinating. Interesting too are conversations about whether African Americans and Muslim Americans will have a decidedly different and potentially unpleasant experience
playing the game in the land of shoot first, think later law enforcement. But the most interesting story remains the meta narrative of a press so focused on profitability and being first that it couldn't give a flying Aerodactyl
about actually being right.
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Posted on Net Neutrality Special Edition - 12 July 2016 @ 6:30am
Tell me if you've heard this one before: broadband carriers are once again claiming that if regulators pass net neutrality rules, their ability to invest in next-generation networks will somehow be severely hindered, causing no limit of damage to consumers, puppies, and the time-space continuum. That's basically the line U.S. broadband providers tried to feed the FCC in the States. But no matter how many industry-tried, cherry picking think tank studies have tried to claim that net neutrality hurts broadband investment, real world data and ongoing deployment show that just isn't true.
As we noted last October, Europe passed net neutrality rules that not only don't really protect net neutrality, but actually give ISPs across the EU's 28 member countries the green light to violate net neutrality consistently -- just as long as ISPs provide a few flimsy, faux-technical justifications. The rules are so filled with loopholes as to be useless, and while they technically took effect on April 30, the European Union's Body of European Regulators of Electronic Communications (BEREC) has been cooking up new guidelines to help European countries interpret and adopt the new rules.
With BEREC's public comment period set to end on July 18, European net neutrality advocates are giving it one last shot to toughen up the shoddy rules. Fearing they might succeed, a coalition of twenty European telcos (and the hardware vendors that feed at their collective trough) have taped together something they're calling their "5G Manifesto," (pdf) which trots out some pretty familiar fear mongering for those who've remotely followed the last fifteen years of net neutrality debate.
Among them is the continued, not so veiled threat that technological progress will stop dead in its tracks if these companies don't get the kind of consumer net neutrality protections they want (namely, none):
"The EU and Member States must reconcile the need for Open Internet with pragmatic rules that foster innovation. The telecom Industry warns that the current Net Neutrality guidelines, as put forward by BEREC, create significant uncertainties around 5G return on investment. Investments are therefore likely to be delayed unless regulators take a positive stance on innovation and stick to it."
And the threat doesn't just involve next-gen wireless. The carriers also proceed to effectively argue that unless they're allowed to include huge gaping loopholes (like the existing exemption of "specialized services
"), other technologies like VR, smart cars and smart cities will all be hurt (much like ISPs here in the States tried to argue that net neutrality rules would somehow hurt medical technology
unless ISPs were allowed to discriminate):
"In this context we must highlight the danger of restrictive Net Neutrality rules, in the context of 5G
technologies, business applications and beyond. 5G introduces the concept of “Network Slicing” to accommodate a wide-variety of industry verticals’ business models on a common platform, at scale and with services guarantees. Automated driving, smart grid control, virtual reality and public safety services are examples of usecases with distinguished characteristics which call for a flexible and elastic configuration of resources
in networks and platforms, on a continuous basis, depending on demand, context and the nature of the service."
This is all, for lack of a more scientific term, unequivocal and total crap. The argument that "net neutrality rules will stop us from keeping your pace maker from working" is fear-based prattle with no foundation in reality. If anything, the EU's rules go well out of their way
to ensure traffic can be treated differently (to an extreme fault). As for 5G, these upgrades are a necessary part of doing business, and carriers will invest in networks whether or not there's some flimsy net neutrality rules governing their behavior. Realize too that the "manifesto" is talking about rules as currently written that effectively say it's ok to violate net neutrality
provided you support your anti-competitive behavior in veiled, faux technical justifications (see comments made by Sir Tim Berners-Lee
In short, people should understand these European companies' lawyers and lobbyists directly wrote net neutrality rules pretty much ensuring they can do whatever they like -- about as "certain" as things are going to get -- yet they're still god-damned complaining
When it isn't busy making empty threats, the manifesto trots out some similarly-meaningless promises, such as claims that the "right" net neutrality rules will result in scheduled large-scale 5G demonstrations by 2018, and the launch of 5G commercially in at least one city in every EU country by 2020. Again though, this was already happening
with or without net neutrality rules. Tying the success or failure of network investment to net neutrality is a hollow bogeyman, one we've seen used repeatedly in countries where carrier executives twitch at the faintest specter of a regulator actually doing its job and protecting consumers from the aggressive abuse of uncompetitive telecom markets.
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Posted on Techdirt - 11 July 2016 @ 2:22pm
For some time now, the opinion du jour in "enlightened" media circles has been to treat the news comment section (aka the customers who visit your website daily and directly) as some kind of irredeemable leper colony. One that should be nuked from orbit before the infection spreads. As such, we've seen website after website proudly crow about how they've given up on allowing site comments because a handful of posters are obnoxious, hateful little shits and the social media age means more direct community interaction is passe.
These announcements usually come hand in hand with all manner of disingenuous platitudes from the editorial staff, like we killed comments because we wanted to "build relationships," or we muzzled our entire user base because we just "really value conversation." Usually, this is just code for websites that are too lazy and cheap to moderate, weed and cultivate their community garden, and find it convenient to argue that outsourcing discourse to the homogenized blather realm of Facebook is an improvement.
Since this trend began a few years back, you'll occasionally see an editor stop and realize that these disregarded masses are, warts and all, the life blood of a community -- and preventing them from publicly interacting on site is actually a step backwards. Case in point is new New York Times public editor Liz Spayd, who this week asked a bizarre and outlandish question: what if websites were to treat these people like actual human beings and the comment section as something worth saving? Says Spayd:
What The Times and most other newsrooms mostly do now is not so much listen to readers as watch and analyze them, like fish in a bowl. They view them in bulk, through statistics measuring how many millions of “unique” users clicked on content last month, or watched a video, or came to the site multiple times, or arrived through Facebook.
What would prove more fruitful is for newsrooms to treat their audience like people with crucial information to convey — preferences, habits and shifting ways of consuming information. What do they like about what we do and how we do it? What do they want done differently? What do they turn to other sites for?
This isn't really complicated. Spayd refreshingly realizes that the rise of the comment troll is in many ways the fault of websites themselves. Writers and editors simply don't want to cultivate real conversation, because it's hard work
and their current analytical tools can't monetize discourse quality
. Instead, websites have begun to approach the end user relationship like the owner of a prison colony who believes the entire sordid affair can only be improved by a good, industrialized delousing or the outsourcing to bigger, meaner prisons.
In reality studies have found that comment sections can be dramatically improved -- simply by treating site visitors well
and by having somebody at the website make a basic effort at fundamental human-to-human communication:
One surprisingly easy thing they found that brought civil, relevant comments: the presence of a recognized reporter wading into the comments.
Seventy different political posts were randomly either left to their own wild devices, engaged by an unidentified staffer from the station, or engaged by a prominent political reporter. When the reporter showed up, “incivility decreased by 17 percent and people were 15 percent more likely to use evidence in their comments on the subject matter,” according to the study.
With the daily struggle to produce more and more content in a sea of more and more competitors, it's simply easier to pretend that the comment section doesn't matter.
But what's being pushed as enlightened evolution by editors is just willful obliviousness driven by lazy thinkers, incapable of embracing anything that can't be clearly, graphically monetized. It's thinking built at media empires with the multi-million dollar backing of giant conglomerates, where actual human interaction is already more easily obscured by the daily shuffle of incessant bi-coastal conference calls. Since the comment section is perhaps the most valuable source of corrections, it's also a wonderful way for such giant companies to avoid advertising that their writers may have made a mistake.
I've been at the heart of one smaller, community-driven website since 1999 (DSLReports.com) and a writer here at Techdirt for several years, so it's perhaps more obvious to me that scrappier upstarts don't have the luxury of telling their entire community to piss off to Twitter if they want to leave public feedback.
Not too surprisingly, Spayd's idea was received poorly by some in the news media who believe public interaction with readership on site is either beneath them or wholly irrelevant in the social media era. MIT Technology Review Editor Jason Pontin was quick to declare that Spayd's comments reflected a "disastrous first outing" as the Times' new public editor, going further to suggest that anybody who gives a damn about public comments has the "wrong priorities":
Slate was also quick to deride Spayd's outlandish treatise (which again, is to simply give a damn about your on-site community) as the "phony populism" and "willfully naive" rhetoric of a bygone era
After writing that the paper is trying to move in the direction of more comments, she adds that the speed at which it has done so has been hindered by "other newsroom priorities." I’m not sure what those other priorities are, but to spend your first column focusing on something like a comments section is another sign that Spayd’s priorities are bizarre and even—this will sting—out of touch.
Yes, how gauche
. As we all know by now, you don't build community by treating site visitors well, you build community by telling them all to fuck off to Facebook, where their infectious, intellectual detritus can be more easily ignored.
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