Karl Bode is a freelance writer living in New York that has been babbling, jabbering and prattling about technology, politics and culture professionally for more than fifteen years. Follow me on Twitter @KarlBode
With either an ISP lawsuit or a 2016 party shift the only way to kill our new net neutrality rules, neutrality opponents have some time to kill. As such, they're in desperate need of somewhere to direct their impotent rage at the foul idea of a healthier Internet free from gatekeeper control. Step one of this catharsis has been to publicly shame the FCC for daring to stand up to broadband ISPs in a series of increasingly absurd and often entirely nonsensical public "fact finding" hearings. Step two is to push forth a series of editorials that tries to rewrite the history of the net neutrality debate -- with Netflix as the villainous, Machiavellian centerpiece.
A few weeks ago, Netflix CFO David Wells told attendees of an investor conference that Title II was "probably not" what the company wanted at the outset. This resulted in an endless stream of stories about how Netflix had "flip-flopped" on its net neutrality position and simply could not be trusted. Except if you actually bothered to read the transcript of his comments, he goes on to note the company is very pleased where things have wound up, and happy to have a viable regulatory mechanism at the FCC to file complaints over things like interconnection:
"Were we pleased that it pushed to Title II, probably not, right? I mean, we were hoping that, there might be a non-regulated solution to it. But it seems like companies that are pursuing their commercial interests including us have to arrive at something like that. So we're super pleased that there is now a notion, at least a vehicle, for a complaint...So I would say we are very pleased with what's been accomplished."
Wells pretty clearly explains that while it would have been nice if we could have protected net neutrality without regulation, it became pretty clear that Title II was the only way regulators could adequately police anti-competitive behavior in the broadband sector. That's what Title II supporters have been saying for months: while Title II isn't perfect, it's the best option we have given the lack of broadband competition in the sector (which despite a lot of rhetoric isn't improving anytime soon). There's nothing hypocritical -- or even shocking -- about what Wells said.
Still, that Wells had exposed Netflix as a shady trickster has somehow become the talking point du jour in the media and among net neutrality opponents for much of the last six months, with editorials and headlines suggesting Netflix was now "shunning ObamaNet", or was suffering "lobbyist remorse" over net neutrality. In an editorial for the Wall Street Journal, Holman Jenkins Junior declared the CFO had somehow single-handedly proven that the entire push for net neutrality was somehow a Netflix Con:
"Why, a month after this deluge of demurrers, did Netflix change its tune radically and call for utility regulation of even the upstream “network of networks,” which previously had not been considered part of the net-neutrality debate? Because Netflix was then rolling out its own network, Open Connect, to bypass the public network in favor of direct tie-ups with last-mile providers like Comcast,Verizon and AT&T. This largely ignored story has been told in detail by a disparate group of analysts and lawyers including Dan Rayburn, Larry Downes, Jonathan Lee and Fred Campbell. Netflix effectively engineered a slowdown of its own service in late 2013 by relying on an intermediary with inadequate capacity, then waved a bloody shirt in pursuit of the direct-connection deals that today allow Netflix to distribute its content more efficiently and cheaply.
At least now we understand the famous but nearly indecipherable remarks of Netflix CFO David Wells at a Morgan Stanley media conference two weeks ago. To wit, Netflix had been happy to flog the net-neutrality meme while negotiating these agreements, Mr. Wells indicated, and then unhappy when the FCC took its rhetoric seriously and imposed sweeping Title II regulation.
One, as we've noted repeatedly, the new rules are not "utility-style regulations." ISPs are being classified as common carriers, but the FCC is forbearing from a massive swath of Title II regulations reserved for utilities, including price controls and local-loop unbundling. It's more like "Title II lite," and given the ample remaining loopholes for things like zero rated apps, it's very, very far from "heavy handed regulation." Two, Netflix's Open Connect CDN is a free CDN that benefits ISPs, Netflix and consumers alike, and which ISPs are free to refuse. It's not, as Jenkins and FCC Commissioner Pai have tried to claim, some kind of secret devil-worshiping cult (though that would certainly add an awesome twist to the story).
Three, to hear Netflix, Cogent and Level3 tell it, it was the ISPs that failed to upgrade their side of peering relationships to degrade performance and extract direct interconnection fees. That Netflix intentionally sabotaged its own business so it could enjoy the privilege of paying Comcast, AT&T, and Verizon what basically are "duopoly customer access fees" doesn't make the slightest bit of coherent sense. Still, this is the narrative that's now being pushed by numerous industry-friendly folk in papers and trade rags nationwide.
"Netflix revealed its Title II advocacy was a ruse on March 4, when Netflix chief financial officer David Wells said the company was disappointed by the ultimate outcome at the FCC...Wells didn’t say what “non-regulated solution” Netflix had hoped to achieve, but anyone who followed last year’s shenanigans between Netflix and major ISPs knows that its interest was aimed at obtaining free interconnection deals. Wells’s statement makes clear that Netflix hoped its public push for Title II would force ISPs to capitulate to its demands."
So again, the proof-optional narrative being pushed by ISPs and net neutrality opponents is that the entire ten year net neutrality debate is really all just a clever ploy by Netflix -- to save a few bucks. Netflix is the villain, the narrative continues, and companies like AT&T, Verizon and Comcast -- with a generation of anti-competitive behavior under their belt -- are the real victims here.
Of course most of us realize the crime Netflix is actually guilty of here: the company stood up to ISPs on issues like net neutrality, a lack of sector competition, broadband pricing and usage caps. You can't have a relatively-respected technology company like that talking trash about the nation's cozy, broken broadband duopoly. As such, the only solution is to discredit Netflix using a literal army of policy wonks, paid to push the "Netflix is the devil" narrative so relentlessly and repetitively that it becomes discourse bedrock. I personally think it would have been much more effective to claim Netflix CEO Reed Hastings is a cyborg-vampire hybrid fueled by virgin and puppy blood, but then again, clumsy character assassination has never been my forte.
As we just got done saying, while the new net neutrality rules are certainly a great step forward, there are probably more questions than answers in terms of just how far the FCC will be willing to go when it comes to policing anti-competitive behavior. For example, while the agency says it will keep on eye on "interconnection" fights, we won't know what the FCC will determine as "anti-competitive" until we see the agency act. Similarly, while numerous countries including Canada, The Netherlands, Chile, Slovenia and Norway all have neutrality protections that outright ban "zero rated" apps (letting apps bypass user caps), the FCC so far seems to think zero rating is perfectly ok.
That's potentially a problem, given the bad precedents set by programs like AT&T's Sponsored Data and T-Mobile's Music Freedom, which the FCC has indicated are ok under their interpretation of the rules. These programs profess to be boons to the consumer, yet by their very nature automatically disadvantage smaller internet players. As such, the future of neutrality involves violations accompanied by skilled sales pitches that result in consumers not understanding -- or in some cases even cheering -- when the idea of net neutrality is compromised.
First case in point is HBO and Showtime, which appear eager to determine just where the FCC intends to draw the line. According to a new report in the Wall Street Journal, both companies are working closely with ISPs on deals that would not only give their upcoming streaming video services delivery priority, but would exempt them from carrier usage caps:
"Those companies have talked to major broadband providers such as Comcast Corp. about having their Web TV services treated as “managed” services, according to people familiar with the discussions. In effect, that would move them away from the congestion of the Internet, which they fear will only get worse as more people opt to stream movies and TV shows on the Web.
The other benefit: A separate lane would be exempt from monthly data-usage thresholds operators enforce for public Internet traffic, saving customers from the surcharges that can kick in if they binge on too many episodes of “Game of Thrones” or “Homeland."
The article's descriptions of things like "managed services" and "special treatment" are phrased so ambiguously I get the impression the Journal's reporters may not have fully understood what their sources were telling them. However, there's no ambiguity to the idea that Showtime and HBO are interested in having their content specifically made exempt from what are already arbitrary usage caps. The article proceeds to note that Comcast, with a merger awaiting regulatory approval, is nervous about running afoul of the FCC. Dish Network, meanwhile, makes it clear they'd see such a deal as a neutrality violation:
"At least one emerging online TV player, Dish Network Corp.’s Sling TV, believes the managed-service arrangement would be a negative overall. “It’s a bad thing for consumers and a bad thing for innovation,” said Roger Lynch, Sling TV’s chief executive, adding that big companies like Dish could afford to cut special deals like this but small companies can’t. "It makes a mockery of net neutrality,” he said, adding that Sling would strike such a deal only “under duress,” if other companies did first."
So again, while our new net neutrality rules are certainly a solid step forward, until we see what the FCC specifically determines is a violation -- and how the consumer complaint process will work -- it's hard to tell just how effective they're going to be. If it's ok for T-Mobile to exempt the biggest music services as part of its Music Freedom plan, is it ok for ISPs to similarly exempt Showtime and HBO from their usage caps? Where exactly is the line going to be drawn? The rules don't specifically say, but they won't be worth much if the FCC considers usage caps and "pay to play" cap bypass schemes just innovative market pricing.
from the the-TV-revolution-will-not-be-televised dept
For years now, media reports have suggested that Apple has dreamed of offering a disruptive broadband TV streaming service that rattles the status quo. The problem for Apple (and countless companies before it) has been that the broadcasters in charge of said status quo haven't historically been willing to budge on the kind of flexible licensing needed to make this dream a reality. That has resulted in year after year of Apple TV service rumors that never materialize as Apple repeatedly ran face first into licensing negotiations. Similarly, cable operators, wary of Apple getting the same kind of power it now wields in the music industry and losing set top revenues, haven't been keen on Apple's proposals for Apple-made set top boxes.
Just about a year ago, the Wall Street Journal ran a story stating that Apple was in negotiations with Comcast regarding an internet TV service that would get priority over Comcast's network. One year later, and a new Wall Street Journal report notes that while a new Apple TV service is finally slated to launch this fall (and the Apple rumor gods really, really mean it this time), it's going to likely be without Comcast/NBC Universal content. Why? Apple insiders claim Comcast is stringing the company along to delay Apple while it focuses on its own efforts:
"For now, the talks don’t involve NBCUniversal, owner of the NBC broadcast network and cable channels like USA and Bravo, because of a falling-out between Apple and NBCUniversal parent company Comcast Corp., the people familiar with the matter said. Apple and Comcast were in talks as recently as last year about working together on a streaming television platform that would combine Apple’s expertise in user interfaces with Comcast’s strength in broadband delivery. Apple came to believe that Comcast was stringing it along while the cable giant focused on its own X1 Web-enabled set-top box, the people said."
Meanwhile, Apple's pretty clearly realizing the company needs to ease off of its own (often draconian and bizarre) control demands if it's going to get a foothold in the broadcast and TV industry, as the sort of success and control Apple enjoys in wireless simply isn't going to be replicated in cable without some major concessions. Insiders suggest Apple's willing to go the extra mile to get cable operators and broadcasters on board, including sharing more viewer data than Netflix traditionally does:
"The company is willing to share details on who its viewers are, what they watch and when they watch it to entice broadcast networks and others to go along with the service, sources said...Apple, which is known for tightly controlling its ecosystem, is taking a more hands-off approach with programmers, such as letting them decide whether they want to air ads. "They’re allowing a lot more decision-making by the content owner," said one source familiar with the talks, adding that Apple has told potential partners, "It’s up to you, whatever you guys want to do."
Despite a decade of the cable and broadcast industry fighting internet video tooth and nail, 2015 actually appears to be the year internet video gains meaningful traction anyway. Whether that's through Dish's Sling TV, HBO Now or Sony's Playstation Vue, we're finally starting to see some broader choices when it comes to TV packages and pricing. As for Comcast getting in the way of this progress, it's very possible the FCC and DOJ may approve their merger but impose some conditions that they play nice. Of course whether those conditions are intelligent, meaningful or actually enforced is another question entirely.
Poor Comcast. Despite throwing millions of dollars at think tanks, consultants, PR reps, editorial writers, various front groups and a myriad of other policy tendrils, genuine, meaningful support for the company's $45 billion Time Warner Cable acquisition is still apparently hard to come by. You might recall that last year top Comcast lobbyist "Chief Diversity Officer" David Cohen proudly crowed that support for the company's merger was "pouring in" -- though he failed to mention that Comcast was paying people for that support, and that said support largely consisted of regurgitated form letters.
Despite the money spent however, it appears that actual support in Congress for the deal is tepid to non-existent. Comcast's hometown paper the Philadelphia Inquirer points out that whereas the NBC deal saw major support efforts by members of Congress, politicians appear to want nothing to do with this latest merger attempt:
"When Comcast made its move to buy NBCUniversal, more than two dozen letters from Congress - including one from 22 Republicans - landed at the Federal Communication Commission early in its review. Dozens more, from key chairmen and rank-and-file members of both parties, arrived before that deal was approved in 2011. The vast majority supported the merger, including one signed by 97 House members and several from minority lawmakers who hailed Comcast's commitment to diversity.
But as the Philadelphia giant now pushes a merger with Time Warner Cable, Comcast has had little congressional support, and almost none outside its home state."
"Meanwhile, more than 50 black, Hispanic, and Asian members of Congress have expressed concerns about the impact of this deal and others, warning in a letter to the FCC that recent media "mega-mergers" show that "even the most reasonable conditions and diversity pledges" have proved difficult to enforce."
Most analysts meanwhile see the chance of the DOJ and FCC merger getting approval dropping by the week. The FCC has been on an uncharacteristic consumer-friendly tear of late, whether that's raising the definition of broadband to 25 Mbps, crafting new net neutrality rules or fighting for municipal broadband. As such, approving the Comcast deal without some tougher-than-usual conditions just doesn't seem likely. I personally think the deal will be approved, it will just be saddled with conditions heavily focused on keeping Comcast's bad ideas far away from internet video. Whether those conditions actually work or are enforced will be another issue entirely.
Meanwhile, it's kind of amusing to see telecom companies failing to recognize their own hubris isn't helping their case. As we saw when the DOJ rejected AT&T's attempted acquisition of T-Mobile, there really is a limit to the amount of bullshit you can push before you reach the point of diminishing returns. Using astroturf, claiming that killing competitors creates competition and lowers prices -- or that everyone who opposes your deal is ignorant or irrational -- clearly crosses that particular Rubicon. If you're already one of the most hated companies in the country, that only adds insult to injury.
It remains frequently uttered because it's true: money just can't buy you love.
For months now, AT&T has been telling anybody who'll listen that Title II-based net neutrality rules are "from a bygone era," will "diminish industry investment and competition," and are a draconian, devastating example of regulatory overreach. In protest over the FCC's new neutrality rules, the company even went so far as to "suspend" its largely phony 100-city fiber-to-the-home investments to "prove" Title II was an investment killer (though it ultimately had to walk back the bluff after the FCC decided to fact check the company's math).
While publicly AT&T tries to argue that Title II is a menace of the highest order, privately, AT&T consistently defers to authority of Title II -- when it's in AT&T's best interests to do so. The company recently floated above, around and over Title II and common carrier definitions to skirt an FTC investigation into its throttling practices. You'll note that when AT&T benefits from some of the protections Title II can offer, suddenly, magically gone is all of the rhetoric about Title II being bad simply because it's based on the framework of an older law.
The latest example of this involves a billing dispute between AT&T and several smaller telcos. Basically -- AT&T recently complained that Great Lakes Comnet and Westphalia Telephone Company over-billed the telco to the tune of $12 million, and were demanding AT&T pay another $4.3 million in errant charges for interstate connections. AT&T complained to the FCC, stating that Sections 201(b), 203 and 208 of the Communications Act (**cough** Title II) prohibit such charges when they are not "just and reasonable." The FCC agreed, and sided in AT&T's favor:
"We agree with AT&T," the FCC wrote. "We find that GLC violated the Commission’s Rules governing competitive local exchange carrier tariffs for interstate access services, and that the tariff therefore is unlawful. We also grant AT&T’s claim in Count III that WTC unlawfully billed for services prior to May 2013 that GLC provided."
Just in case it's not clear, AT&T's using Title II to defend itself from over-billing, but has thrown a series of increasingly hostile hissy fits at the very idea the same standards could be applied to defend consumers from AT&T. AT&T's of course not alone in simultaneously demonizing a "regulatory framework developed for Ma Bell in the 1930s" while benefiting from it. Verizon has enjoyed massive tax breaks for years when it comes to classifying portions of its FiOS network under Title II. The wireless industry also witnessed a decade of explosive growth and profit while wireless voice remained classified under Title II.
That's because it's not really Title II the telcos are worried about. All they're worried about are the billions they stand to lose should a regulator be able to defend consumers from anti-competitive behavior. As such, it's never really been specifically about Title II -- it has simply been about government daring -- for probably the first time in fifteen years -- to stand up to broadband ISPs when it comes to seriously protecting consumers.
from the let's-discuss-your-shopping-preferences,-susie dept
Of course, while Samsung got the brunt of the public and media hysteria, many people didn't seem to realize that nearly everything that takes voice commands (from your home automation system to your iPhone) already engages in this same behavior. Case in point: Mattel is taking more than a little heat for the company's new "Hello Barbie," which connects to Wi-Fi, and also records kids' voice commands and routes them to an external server in order to improve voice command tech. In this video from February, Mattel shows how Barbie now stores your preferences and even provides career advice:
"Imagine your children playing with a Wi-Fi-connected doll that records their conversations--and then transmits them to a corporation which analyzes every word to learn "all of [the child's] likes and dislikes." That’s exactly what Mattel’s eavesdropping “Hello Barbie” will do if it is released this fall, as planned. But we can stop it!
Kids using "Hello Barbie"' won't only be talking to a doll, they'll be talking directly to a toy conglomerate whose only interest in them is financial. It's creepy—and creates a host of dangers for children and families. Children naturally reveal a lot about themselves when they play. In Mattel’s demo, Barbie asks many questions that encourage kids to share information about their interests, their families, and more—information advertisers can use to market unfairly to children."
While the CFCC works to keep the toy from store shelves, Mattel is promising that security and privacy has been their top priority while crafting a doll that learns what kids like:
"Mattel and ToyTalk, the San Francisco-based start-up that created the technology used in the doll, say the privacy and security of the technology have been their top priority. "Mattel is committed to safety and security, and Hello Barbie conforms to applicable government standards," Mattel said in a statement."
The problem is, we've seen repeatedly how the companies rushing face-first toward the billions in potential revenues from the "Internet of Things" market are so fixated on profit, that security and privacy have been afterthoughts -- if a thought at all. It doesn't matter if we're talking about Smart TVs with trivial to non-existent security or easily hacked smart car tech, companies are showing again and again that privacy and security really aren't paramount. That's before we even discuss how this collected voice data creates a wonderful new target for nosy governments courtesy of the Third Party Doctrine.
So while some of this hysteria over what's being collected probably veers into hyperbole territory, the cardboard-grade security and privacy standards most companies are adopting certainly create cause for concern. The good news I suppose: the "smarter" our products get, the bigger the market is for "dumb" products that just sit there and do what they're supposed to do, whether that's a television that just displays the damn signal sent to it or utterly insentient dolls that just shut up, smile and drink their fake tea.
from the and-how-is-that-working-out-for-you? dept
For a few years now, Digital Rights Corp (aka Rightscorp) has been trying to turn copyright infringement notices into a revenue stream, sending accused pirates letters telling them they can avoid court battles if they just pay a $20 fee (per infringement). The idea was to engage in a "friendlier" form of copyright trolling where the demands were so "reasonable," most users would quickly settle up. But like so many copyright trolls before it, Rightscorp's behavior has been sloppy at best, with the company often trying to navigate dubious DMCA legal loopholes in the pursuit of cash.
Apparently, the company's methods aren't just legally dubious, they're unsurprisingly unprofitable. We'd already noted a few times how the company's shady tactics -- and the lawsuits (pdf) in response to those tactics, which include violating federal robocalling laws -- were putting the company on unsound financial footing. Now, new SEC filings confirm as much.
According to 10-K documents filed with the SEC earlier this month, the total loss from Rightscorp operations for 2014 was $3,398,873, with revenues of just $930,729 for the year. "As of December 31, 2014, our accumulated deficit was approximately $7,093,377," states the filing, adding that the company lacks the revenue to allow it to "continue as a going concern." Rightscorp stock price, meanwhile, similarly isn't much to write home about. Not so viable for a company that on a recent earnings call declared itself "one of the only viable solutions to the multi-billion dollar problem of peer-to-peer piracy."
There's not much going on there if you're an investor looking for growth. The IP section of the filing notes that Rightscorp has 7 US patent applications on file. Next to most of the patent applications, Rightscorp itself says "this application currently stands rejected by the USPTO," "the rejection is a Final Rejection," or "this provisional application is now expired." Similarly, Ars Technica notes that while Rightscorp continues to expand its ISP relationships from 50 to 233 cooperating ISPs, most of those ISPs are tiny and its overall broadband user coverage is small:
"However, that's not a very meaningful increase. While Rightscorp may have gone from 50 to 233 ISPs, most of those are very small providers, with at least some of them being individual universities who forward notices to students. The amount of the US population who have Internet service providers that cooperate with Rightscorp remains stable at about 15 percent."
And while many small ISPs play along, a number of mid-sized ISPs like Grande Communications and Windstream have increasingly been standing up to the company, lamenting it "abuses the subpoena power of the federal courts" in California and elsewhere. Meanwhile, most of Rightscorp's already limited finances are coming from two companies: Warner Bros. and BMG, which accounted for 76% and 13% of the company's sales last year, respectively. In the end, maybe harassing broadband users isn't quite the cash cow Rightscorp expected and the company may want to explore some additional revenue generation options. Perhaps used car sales or home theater installations?
As we've noted more than a few times, the broadband industry was in dire need of a swift kick in the posterior, and Google Fiber has done a wonderful job highlighting this fact on a daily basis. The company's decision to jump into the broadband market and offer symmetrical 1 Gbps connections for $70 a month (with no obnoxious fees) quickly resulted in thousands of cities all over the country falling over themselves to get Google's attention. In the process, Google was able to not only highlight the overall lack of broadband competition, but also other notably less-sexy (and therefore overlooked) issues like state protectionist community broadband bans. The free marketing in every paper nationwide is of course just an added perk for Google.
Of course, not everybody's so easily impressed. Telecom industry analyst Craig Moffett, who has made a name for himself being rather wrong about things (whether that's predicting the collapse of the wireless industry or pretending cord cutters don't exist), this week poured cold water on Google's efforts by highlighting just how few subscribers Google actually has. In a research note, Moffett notes that Google Fiber has just 30,000 subscribers, and this is somehow proof positive that Google Fiber isn't a big deal. Like, you know....Ebola:
"To Cable & Satellite investors, Google Fiber is a bit like ebola: very scary and something to be taken seriously," telecom industry analyst Craig Moffett wrote in a research note to investors this week. "But the numbers are very small, it gets more press attention than it deserves, and it ultimately doesn't pose much of a risk (here in the US at least)."
The unfortunate tasteless use of a bad metaphor aside, Moffett's not really seeing the big picture when it comes to Google Fiber's impact. As we've noted previously, Google Fiber isn't just about deploying faster, cheaper broadband connections (though Google has made it clear it wants a sustainable business). Google Fiber's been largely about highlighting a lack of competition and lighting a fire under all-too-comfortable duopolists. As the project has expanded, Google has made a point of offering cities a checklist (pdf) helping to make deployment easier, whether it's Google or somebody else doing the building.
Moffett looked to the U.S. Copyright Office to get the total subscriber counts (it tracks video subscribers because of compulsory license fee requirements). It's worth noting however that the USCO doesn't track broadband subscriber totals, and most Google Fiber customers are likely to be skipping traditional video and embracing over-the-top video services, so the actual numbers are likely higher. It's also worth noting that Google's on the cusp of a major new expansion into Raleigh/Durham, Charlotte, Atlanta, and Nashville, with potential Portland, Phoenix, Salt Lake City, San Antonio and San Jose launch announcements later this year. It's a slow drum beat, but it's a steady one.
In other words, while it's true Google Fiber has probably seen some overhype and most incumbent ISPs don't face an immediate competitive threat, looking at subscriber totals and declaring it a non-starter for the telecom industry is pretty narrow thinking. Google Fiber not only shines a spotlight on the lack of meaningful broadband competition, it has sparked the public's imagination and fueled a national conversation about how we can do broadband better.
Now that our shiny new net neutrality rules are on the sixty-day march toward formal approval, there's of course only two real ways neutrality opponents can overturn them: either a lawsuit or a 2016 party change. Since they're legislatively impotent on the matter for the time being, net neutrality opponents in Congress have decided the next best thing is to publicly shame FCC boss Tom Wheeler -- for literally weeks on end. As such, Wheeler faces at least five hearings over the next two weeks all with one goal: publicly punishing him for standing up to giant ISPs and supporting net neutrality.
The primary talking point being used against Wheeler is that he was "improperly" influenced by the White House. Because Wheeler came out in support of Title II after the White House's November support for the idea, the narrative goes, somehow there's dangerous chicanery afoot. Except as we've noted previously, the White House voicing desired policy trajectory doesn't violate any rules, and is standard operating procedure -- like when former President George W. Bush urged FCC boss Michael Powell to ease off media consolidation rules, or when Clinton urged former FCC chief Reed Hundt to ban hard liquor sales on television.
Still, this week's hearing and "fact finding mission" before the House Oversight Committee (again, the first of five over the next few weeks) focused almost entirely on transparency, and how the White House somehow bullied an independent agency into approving tougher net neutrality rules. In Wheeler's testimony (pdf), he again denies he was pressured, stating that he only came to embrace Title II after countless legal experts made it clear it was the most legally defensible platform for the rules to stand on:
"We heard from over 140 Members of Congress. We heard from the Administration, both in the form of President Obama’s very public statement of November 10 and in the form of the National Telecommunications and Information Administration’s formal submission. Here I would like to be clear. There were no secret instructions from the White House. I did not, as CEO of an independent agency, feel obligated to follow the President’s recommendation. But I did feel obligated to treat it with respect just as I have with the input I received – both pro and con - from 140 Senators and Representatives."
Of course, this doesn't help propagate the narrative that Obama is forcing the FCC to destroy the Internet because he's the devil and hates jobs. As such, Committee Chairman Jason Chaffetz handed out a packet of e-mails (pdf) to hearing attendees he claimed indisputably prove undue White House influence on the FCC. Except if you bother to actually read them, they don't actually show anything of the sort. For example, one e-mail only shows a top AT&T lobbyist (who other included e-mails suggest to be Jim Cicconi, no stranger to undue influence of his own) vaguely claiming improper behavior just, well, because:
Another e-mail provided by House leaders features former Harry Reid staffer David Krone (formerly a Comcast lobbyist) urging the White House to back away from their Title II support:
In a third e-mail, Wheeler amusingly seems to suggest The White House coordinated with protesters to annoy the FCC boss in his driveway last November:
None of the e-mails come remotely close to showing Wheeler buckled to heavy White House pressure. In fact, the third e-mail actually appears to show Wheeler being resistant to White House influence (it's worth noting said protestors say they also protested at the White House and weren't "directed" by anyone). Few people expected much from Wheeler given his cable and wireless lobbying past, but if you read any of the better profiles of the FCC boss, you come away with the impression of an older man, no longer beholden to partisan whims or bullies, who actually makes decisions based on the evidence at hand. That's an increasingly rare trait anywhere, much less in Washington. As such, it's probably best to punish him for it.
Again, none of this means much of anything since the rules have been passed. Still, the idea that Obama "forced" Wheeler to embrace Title II helps frame the ongoing narrative that this is an "Obamacare style takeover of the Internet", and not an unprecedented and incredibly rare capitulation to genuine, bipartisan public interest. Meanwhile, while a breathless love of transparency is the cornerstone of these hearings -- that adoration only apparently extends up to the point where it begins to show broadband industry influence over net neutrality opposition.
If you've got the stomach for it, you can watch the entire hearing below:
If you recall the responses to Netflix's botched DVD unit spinoff attempt or the outrage over those price hikes from a few years ago, there were many folks who expected Netflix to implode long before it became the powerhouse it is today. According to the latest Nielsen data, roughly 37% of all households now have a Netflix account, and the company plans to reach 200 countries by the end of this year. Netflix has largely revolutionized television, yet for some reason there's a contingent of folks who just can't stop complaining that Netflix should be more like traditional cable.
Case in point, Wired complained a few years ago that Netflix wasn't complete until it implemented a channel surfing feature, because having the choice of a mountain of different options was apparently too difficult. Similarly there's been seemingly endless lamentation over the last few years about how Netflix's choice to release seasons all at once is bad because it kills the "water cooler marketing buzz" created as office workers prattle about each week's show plotlines. Of course, as noted previously, people apparently love to binge watch, and there's absolutely nothing wrong in giving the people what they want.
Still, the idea that Netflix isn't "cable enough" never seems to go out of style. The latest example comes courtesy of Rex Sorgatz over at The Message, who not only laments that Netflix has destroyed the "water cooler" chatter that helps drive show marketing buzz, but complains that Netflix's release style ensconces him in a cocoon of spoiler paranoia, from whence he's unable to hold any conversations about TV programs without spoilers:
"But you see the problem: We can’t talk about buzzy Netflix shows because our schedules are out of sync. The rough expectations for knowing if your friends are on episode 12 or episode 1 have been destroyed. Netflix thinks it has performed a noble act by releasing the entire season en masse, but it has actually wreaked havoc on the best part of television: talking about television."
Has Netflix really done that? Really? It seems to me Netflix is giving people what they want -- a whole lot of content to be consumed on whatever schedule people see fit. As Frank Underwood himself noted in 2013, dumping an entire season at once gives viewers the power to do whatever they want. Still, Sorgatz proceeds to argue that this is a "problem" in desperate need of fixing, and as such, he's offered this solution:
"This, I propose, is what Netflix, Amazon, and HBO should do. They need to bring back the schedule, updated to modern lives. That schedule should be: Every day, a new episode is released, always at the same time, and blind to time zones. Imagine if House of Cards had played out over two weeks, like a mini-series...Can you imagine? The conversation around this viewing window would be massive, almost unbearable. Fans would feel compelled to catch up every night, so as to be involved in tomorrow’s discussion. And if you missed a day or two, catching up would be painless."
Except if you think about it, that actually solves nothing. If I'm able to watch the show on Tuesday night but you've got an evening cheese club meeting, I'll still spoil the show for you when we meet on Wednesday. Here's a crazier idea: we just accept that Netflix is very different from the traditional cable experience (which is still available if that's your preference by the way), and that this is a good thing? It seems so much simpler than endlessly complaining that Netflix isn't more like a cable TV industry most of us agree is in desperate need of a sharp kick in the ass.
While the FCC's new net neutrality rules are certainly a step in the right direction for consumers, it's aggressively premature to uncork the champagne. There are still ISP lawsuits waiting in the wings, not to mention the fact that a 2016 party shift (and subsequent FCC leadership change) could very quickly dismantle ten years of grassroots activism in the blink of an eye. And then there are the rules themselves and the FCC's dedication to them; as noted last week, it's difficult to know just how useful the new Title II-based rules are going to be until we see precisely what the FCC defines as actionable behavior.
For example, while the rules prohibit blocking, throttling, anti-competitive paid prioritization and require network management transparency -- there's a wide range of ISP behavior that will fall outside of the traditional definition of net neutrality, like Comcast refusing to authenticate HBO Go on Playstation 4 to protect its set top box empire, or carriers blocking Google Wallet for "security reasons" to (unsuccessfully) give their own mobile payment platforms a leg up. And while the FCC says it's going to use its new Title II authority to "keep an eye on" issues like interconnection, nobody actually knows what this means.
AT&T of course has been at the forefront of trying to test the FCC's boundaries for anti-competitive behavior for years, most recently with its Sponsored Data effort, which tries to pass off charging companies for cap-exemption as a great boon to consumers. AT&T's also been at the forefront of blocking access to services or throttling its grandfathered "unlimited" data plan users to shove them toward pricier metered options. So far, the FCC seems perfectly fine with Sponsored Data and T-Mobile's Music Freedom, even though both set incredibly bad precedents (albeit in notably different ways).
In fact, there's a myriad of anti-competitive behaviors carriers may still be able to engage in, provided they argue it's for the safety and the health of the network, or bury it under a cacophony of technical jargon. The term "reasonable network management" has long been a bane to the crafting of sensible net neutrality rules, given that carriers by their nature will always declare their network practices reasonable, even while they're happily abusing gatekeeper power to make an extra buck. The FCC's rules again trot out this definition in stating that network management is obviously fine if it's honestly about the health of the network:
"The record broadly supports maintaining an exception for reasonable network management. We agree that a network management exception to the no-blocking rule, the no-throttling rule, and the no-unreasonable interference/disadvantage standard is necessary for broadband providers to optimize overall network performance and maintain a consistent quality experience for consumers while carrying a variety of traffic over their networks."
The FCC's rules take things one step further in clarifying that "reasonable network management" can't be used as an excuse to make an extra buck:
"For a practice to even be considered under this exception, a broadband Internet access service provider must first show that the practice is primarily motivated by a technical network management justification rather than other business justifications."
Yet as it stands, AT&T's pretty clearly using network management to make an extra buck. For years, the company has been throttling its grandfathered unlimited customers once they reach 5 GB, a practice intended to drive them to more expensive metered plans. And as Ars Technica notes, it's entirely unclear if the FCC's going to act. AT&T, meanwhile, has been circulating this presentation arguing its behavior is perfectly above board. By the time the rules solidify and the FCC does act (should it act), who knows how many unlimited AT&T customers will be left:
"Given the 60-day waiting period before rules go into effect, the time it will take the FCC to evaluate complaints, and uncertainty over how rules will apply, AT&T can keep throttling unlimited data without fear for a good while. By the time AT&T is forced to stop, if indeed that happens, many customers will have already given up their old unlimited data plans and switched to subscriptions that charge them extra every time they exceed their cap. That's what AT&T was after all along, and for now it's still getting what it wants."
Between that and the FCC's refusal to identify zero rated apps as a threat to net neutrality (the practice is outright banned in Chile, Canada, The Netherlands, Norway and Slovenia), you might start to wonder how serious the FCC is really going to be when it comes to policing the murkier (but just as important) edges of anti-competitive behavior. Is the FCC going to be a tough, flexible watchdog on the beat? Or is it going to be so afraid of the hand-wringing over "onerous regulations" -- and so eager to have the debate settled -- that it's intentionally apathetic to more subtle abuses?
And that's the rub: it's great to have rules that give the FCC the flexibility to act against anti-competitive behavior, but they're only useful if the FCC actually successfully uses them. There are more than a few worrying indications that ISPs will be able to engage in net neutrality violations under our new paradigm -- just as long as there's a layer of semi-believable, faux-technical pretense justifying it. Yes, probably gone are the days where carriers could simply block services they don't like, but we've entered a more dangerous, subtle era in the fight for net neutrality.
Moving forward, each time consumers believe their ISP is engaged in anti-competitive behavior that exists in these nebulous grey areas (alongside zero rated apps and interconnection), they'll need to file a complaint with the FCC -- a process the EFF notes benefits deep-pocketed ISPs. ISP lawyers will then go to great lengths to explain how everything they're doing is simply for the health and security of the network and great benefit to the consumer, and it will be up to the FCC and consumers to consistently see through this obfuscation and do the right thing. Similarly, with net neutrality abuses being intentionally more difficult to clearly define, we'll likely start seeing more Chicken Little complaints than ever before, only adding to the uncertainty.
In other words, if you thought the net neutrality debate just got remotely settled by the creation of new Title II rules, you're probably going to be gravely disappointed. While the rules are a good start, we've likely only just finished chapter seven of what promises to be an epic, forty-five chapter novel -- one that's going to require the undivided, persistent attention of those hoping to protect a healthy, open Internet.
On the same day the FCC voted to approve new net neutrality rules, we noted that the agency took steps on an issue that might actually be more important: municipal broadband. While net neutrality rules are designed to protect consumers from a lack of last-mile competition, the agency's moves on municipal broadband are intended to actually strike at the issue of limited competition at the root. As we've noted a few times, ISPs (with ALEC's help) have passed laws in twenty states preventing those towns and cities from deciding their own infrastructure needs for themselves.
It's pure, unabashed protectionism: the bills do little more than protect regional duopolies from change while hamstringing local communities desperate for better service. Usually the laws are passed under the auspices of protecting taxpayers from themselves, ignoring that the bills' sole purpose is to protect duopoly revenues. Petitioned by muni-networks in Tennessee and North Carolina that have been blocked from expanding, the FCC plans to use its authority to preempt the protectionist portions of these awful laws.
In much the same way the municipal broadband issue was overlooked on vote day, so too was the actual plan when it was released alongside the agency's new net neutrality rules last week. The full Memorandum Opinion and Order (pdf) clarifies that the FCC intends to use Section 706 of the Telecommunications Act of 1996 to preempt state laws that conflict with federal regulation of interstate commerce for the good of local communities. The agency lists five legal principles it claims give it the right to put these protectionist laws out to pasture:
Article I, section 8 of the Constitution gives Congress the power to regulate interstate commerce.
Internet access unquestionably involves interstate communications, and thus interstate commerce. Broadband subscribers pay for the right to go to any lawful destination on the Internet, wherever located.
Congress has given the Federal Communications Commission the authority to regulate interstate communications. Indeed, section 1 of the Communications Act of 1934, as amended (Act), specifically gives the Commission jurisdiction over “interstate and foreign commerce in communication by wire and radio."
The Commission has previously exercised its authority to preempt state laws that conflict with federal regulation of interstate commerce, for example with respect to state regulation of VoIP, the deployment of wireless facilities, and its order prohibiting local franchising authorities from unreasonably refusing to grant competitive cable franchises. These preemption decisions all further competition.
Finally, section 706 of the 1996 Act directs the Commission to take action to remove barriers to broadband investment, deployment and competition. There is no question that provisions of the state laws in question do limit broadband deployment — they expressly prohibit Wilson and Chattanooga from providing broadband services to more people in more places, even places where there is no broadband currently available
Unsurprisingly, the broadband industry isn't particularly happy that the FCC has woken up from a decade-long coma on this issue and is finally addressing these ISP-constructed obstructions. Marsha Blackburn, flush with broadband industry campaign cash, has been busy fighting the FCC's push under the pretense that she's just ultra worried about states' rights (that protectionist law written by corporations crushes local rights en masse isn't, apparently, a worry). As such she's introduced a law (that has no chance of passing) aimed at gutting FCC authority.
ISPs have also threatened to sue, but given AT&T and Comcast's interests in getting their mergers approved -- and Verizon busy trying to kill the net neutrality rules -- they may find it a bridge too far to open up an entirely new legal fight. Then again, one of the benefits of duopoly power is the extra income necessary to help pay to keep things that way.
The best way for the broadband industry to stop towns and cities from getting into the broadband business? Provide better service. These towns and cities aren't getting into the business because it's fun or because they're mean and want to make Comcast's CEO cry. They're doing so because they've spent a decade in the firm grasp of utterly apathetic monopolies and duopolies, and they're refusing to take it anymore. And while there are certainly plenty of examples of federal overreach, in this instance the FCC finally helping them is a good thing.
It's almost as if the UK is trying to be a shining example of the "slippery slope" we often refer to when talking about the dangers of filtering the Internet. Either that, or they're secretly creating absurdist art. Whether it's the government's porn filter architect getting arrested for child porn, the UK's filters blocking useful and entirely legal websites, or the desire to expand Internet filters to include ambiguously defined "extremist content," the UK has finally achieved high comedy with its stumbling, bumbling foray into trying to clean up the Internet of its naughty bits.
With the country's Pirate Bay filters going so well (as in not really well at all), the UK is engaged in a heated game of whac-a-mole to stop users from accessing the Pirate Bay specifically and BitTorrent websites in general. Despite years of effort and expenditures it remains relatively simple for most UK residents to dodge these bans, quite often by either changing simple DNS settings or by using a proxy server. The Pirate Bay has made it easier by often switching IP addresses, and when that doesn't work, users can still access the website via dedicated proxy sites. UK ISPs were already being forced to filter these proxy sites.
"Among the blocked sites are piratebayproxy.co.uk, piratebayproxylist.com and ukbay.org. Both sites are currently inaccessible on Virgin Media and TalkTalk, and other providers are expected to follow suit...TF spoke with Dan, the operator of UKBay.org, who’s baffled by the newly implemented blockade. He moved his site to a new domain to make the site accessible again, for the time being at least.
"The new blocks are unbelievable and totally unreasonable. To block a site that simply links to another site just shows the level of censorship we are allowing ISP’s to get away with," Dan says. "UKBay is not even a PirateBay proxy. It simply provides links to proxies. If they continue blocking sites, that link to sites, that link to sites.. there’l be nothing left,” he adds."
The filters include websites like piratebayproxy.co.uk, which features BitTorrent related news but also happens to list available proxies in a sidebar. What's next? A filter on the websites that list the websites that list the websites that offer proxy access to BitTorrent websites? Maybe for good measure UK ISPs should start filtering forums where you can discuss even so much as thinking about piracy just to be safe? It makes one wonder: when does a slippery slope stop being a slippery slope -- and just become an outright waterfall?
Last year, we noted how The Weather Channel was starting to have a hard time getting cable operators to pay the kinds of carriage fee increases the channel is looking for. That's of course in large part thanks to the fact that The Weather Channel increasingly focuses on fluff and nonsense (photos of the world's sexiest beaches, anyone?) instead of oh, forecasting the weather. These struggles have only been compounded by the fact that these days, all manner of apps can quickly tell you the weather while The Weather Channel is busy talking about wacky buffalo with "ginormous" tongues.
Apparently, the company hasn't learned its lesson quite yet. Verizon this week decided to pull The Weather Channel from its channel lineup after the channel demanded notably higher rates. In a note to subscribers, Verizon was quick to point out that, hey -- it's not like reconstituting reports from the National Weather Service is really all that difficult in the Internet age:
"Verizon’s agreements to carry The Weather Channel and Weather Scan have expired, and have not been renewed. In today’s environment, customers are increasingly accessing weather information not only from their TV but from a variety of online sources and apps. Verizon is therefore pleased to launch the new AccuWeather Network, which will be available on FiOS® TV on channel 119/619 (HD) and on our free FiOS Mobile App starting March 10, 2015."
"Customers turned to social media and the Verizon website today, March 10, in support of The Weather Channel, which for more than 30 years, has been the most trusted resource for disseminating timely information to help prepare and protect families across the nation against weather-related emergencies."
Apparently nobody at The Weather Channel has been getting the memos stating that their increasing failure to actually report the weather has made the channel a laughing stock. Cable companies are having a harder time pushing off programming rate hikes to consumers awash with alternative options (whether that's a weather app or Netflix). As such, cable companies themselves are starting to push back harder at broadcasters like The Weather Channel (or post Colbert and Stewart Viacom) that demand higher programming fees for lower-quality product.
If you offer a smash hit product like "Breaking Bad" or "Mad Men," you can often demand higher carriage rates. If your claim to fame instead is programs like "Prospectors" -- or creating a nation of weather neurotics by naming every flimsy storm that comes down the pike -- you're going to have a harder time as the pay TV market begins to finally evolve.
Given the hysterical reaction to the FCC's new net neutrality rules the last few weeks, it was easy to forget that nobody had actually read them yet. As noted previously, the lack of public documents wasn't some sort of elitist cabal, but a routine (if stupid) part of FCC procedure restricting the agency from publicizing new rules until they've been voted on and include all Commissioner commentary. Of course, ISPs and congressional allies breathlessly opposed to Title II hadn't read the rules either, preventing their lawyers from launching their expected legal assaults.
Today the lawsuit countdown can begin in earnest on the news that the FCC has formally released the toughest net neutrality rules seen in U.S. history (which notably isn't saying much). The rules themselves can be found here (pdf), and while it's some 400 pages, much of that is supplemental material and included Commissioner dissents. You can find all the Commissioners' statements here. Ajit Pai, who has waged a one man war against Title II (and Netflix) for months, offered up a sixty-seven page dissent (pdf) in which he called the rules an "unprecedented attempt to replace...freedom with government control."
While it will take telecom lawyers a few days to fully parse out the legal semantics, the rules on first glimpse do precisely what the agency said they'd do, focusing primarily on four areas of protection: making sure ISPs are transparent with network management; prohibiting outright blocking of websites (unless you're the MPAA, of course), prohibiting the throttling of websites and services, and prohibiting anti-competitive "paid prioritization" (no, contrary to repeated claims, this doesn't ban things like technology for disabled people).
While a dramatic improvement over the 2010 rules (they actually cover wireless networks, for example), it remains wholly unclear if the FCC is actually going to tackle the hot spot areas where the modern net neutrality fights are actually occurring.
Issues like usage caps, usage cap meters, zero rated apps and interconnection -- areas where most of the current neutrality debate is focused -- remain in a sort of nebulous grey area when it comes to how far the FCC's willing to go to protect consumers. While the order contains a general conduct rule the agency says can be used "to stop new and novel threats to the Internet," the rules also make it very clear the agency's taking a "wait and see" approach to many of these issues:
"While we have more than a decade’s worth of experience with last-mile practices, we lack a similar depth of background in the Internet traffic exchange context. Thus, we find that the best approach is to watch, learn, and act as required, but not intervene now, especially not with prescriptive rules. This Order—for the first time—provides authority to consider claims involving interconnection, a process that is sure to bring greater understanding to the Commission."
Despite all the hand-wringing about the rules somehow killing innovation angels and startups, carriers will likely need to engage in some particularly ham-fisted abuses to truly get the attention of the FCC, who'll be working overtime to counter the narrative that they're a blundering government agency drunkenly implementing "heavy handed regulation." It's in this muddy grey area that you can expect ISP creativity to flourish when it comes to anti-competitive behavior, and despite a lot of breathy analysis today -- we're simply not going to understand the rules' impact until we have concrete examples of what the FCC considers anti-competitive behavior.
In an accompanying statement (pdf), FCC boss Tom Wheeler again makes it clear the agency is forbearing from many of the heavier-handed utility-style aspects of Title II -- including mandatory universal service contributions, rate regulations, or a return to local loop unbundling (much to the chagrin of some consumer advocates). The FCC boss also tries to shoot down for the millionth time (for whatever good it will do) the idea that the rules will somehow crush sector innovation or investment:
"Let me be clear, the FCC will not impose “utility style” regulation. We forbear from sections of Title II that pose a meaningful threat to network investment, and over 700 provisions of the FCC’s rules. That means no rate regulation, no filing of tariffs, and no network unbundling. During the 22 years that wireless voice has been regulated under a light-touch Title II like we propose today, there has never been concern about the ability of wireless companies to price competitively, flexibly, or quickly, or their ability to achieve a return on their investment."
Upon release, the rules head to the Federal Register, and after being published in the next week or two, a 60-day countdown begins before the rules formally take effect. ISPs have thirty days to sue after publication in the Federal Register, so you can expect legal maneuvering (and ridiculous ISP rhetoric) to heat up quickly. As for which ISP will sue, AT&T and Comcast are waiting for regulatory approval of their respective mergers, and may not want to play starring roles in the next round of legal fisticuffs. That leaves Verizon, whose earlier lawsuit brought us to this point to begin with, as most likely to lead the legal charge.
Before there was Edward Snowden, there was of course the notably less celebrated Mark Klein. As most of you probably recall, Klein, a 22-year AT&T employee, became a whistleblower after he highlighted (pdf) how AT&T was effectively using fiber splits to give the NSA duplicate access to every shred of data that touched AT&T's network. Of course, once it was discovered that AT&T was breaking the law, the government decided to just change the law, ignore Klein's testimony, and give all phone companies retroactive immunity. It really wasn't until Snowden that the majority of the tech press took Klein's warnings seriously.
AT&T's been loyally "patriotic" ever since, often giving the government advice on how to skirt the law or at times even acting as intelligence analysts. Business repercussions for AT&T have been minimal at best; in fact, you'll recall that Qwest (now CenturyLink) claimed repeatedly that government cooperation was rewarded with lucrative contracts, while refusal to participate in government programs was punished. In fact, the only snag AT&T's seen in the years since was to have its European expansion plans thwarted, purportedly by regulators uncomfortable with the carrier's cozy NSA ties (AT&T instead simply expanded into Mexico).
Fast forward a few years and The Hill is now claiming that AT&T's relationship with the NSA could harm the company's $48 billion attempt to acquire DirecTV. This claim is apparently based on the fact that a coalition of AT&T business partners, called the Minority Cellular Partners Coalition, is warning the FCC in a letter (pdf) that AT&T's enthusiastic voluntary cooperation with the NSA shows the company's total disregard for consumer privacy.
"(Despite immunity) the Commission is still obliged to execute and enforce the provisions of § 229 of the Act, see 47 U.S.C. § 151, and it is still empowered to conduct an investigation to insure that AT&T complies with the requirements of CALEA. See id. § 229(c). And the Commission is obliged to determine whether AT&T is qualified to obtain DIRECTV’s licenses in light of its egregious violations of CALEA. This is particularly true given AT&T’s continued and ongoing pattern of misconduct. Accordingly, the Commission should investigate AT&T’s complicity in the PSP to determine whether AT&T engaged in unlawful conduct that abridged the privacy interests of telecommunications consumers on a vast scale and, if so, whether AT&T is qualified to obtain DIRECTV’s licenses."
Of course, that's simply not happening. While the NSA cooperation can be used as a broader example of AT&T's character (like the repeatedly nonsensical claims the company makes when it wants a merger approved, or how AT&T tries to charge its broadband customers extra for no deep packet inspection), it's incredibly unlikely that the same government that granted AT&T's immunity will turn around and sign off on using AT&T's behavior to squash a merger. If the merger is blocked, it will be due to more practical considerations -- like the fact that DirecTV is a direct competitor to AT&T and eliminating them would lessen competition in the pay TV space. When it comes to AT&T's relationship with the NSA, it's pretty clear by now that these particular chickens may never come home to roost.
If you live in a broadband and TV market with anything even closely resembling competition, you've probably learned that the only way to get the best rates is to pit ISP retention departments against one another. Often only by seriously threatening to cancel can users force ISPs to bring out their best promotional offers, something you'll have to repeat every few years if you don't want to get socked with higher rates. The ideal consumer then, from the broadband and cable industry's perspective, is one that grumbles a little bit but can't be bothered to do a little extra legwork to secure better rates (read: the vast majority of users).
Of course pitting ISPs against one another assumes you even have the choice of more than one decent broadband provider, something that's certainly not a given. Even in markets we tend to think of as competitive, we're increasingly seeing non-price competition (what I affectionately refer to as "wink wink, nod nod" competition), wherein duopolies quietly work together to slowly edge prices upward -- because there's simply no repercussion for doing so. The New York City tri-state area, where Cablevision and Verizon FiOS engage in a customer tug-of-war, is a perfect example of this kind of not-really-competition.
While Verizon and Cablevision did compete intensely for a short while in New York, the two sides have in recent years declared what can only be called a competitive cease fire. Both have dramatically scaled back or stopped promotions entirely and raised rates whenever possible. In fact, a study last year noted that while all cable rates are increasing much higher than the rate of inflation, Cablevision customers see some of the highest rates in the nation.
Cablevision executives meanwhile have made their disdain for the smart consumer abundantly clear over the last few years, calling smart shoppers a "dead end" that the company has no interest in pursuing. Speaking at a recent investor conference, Cablevision vice chairman Gregg Seibert took this rhetoric one step further, declaring that customers that follow the best promo offer are a "low quality" subscriber that the company is happy to get rid of:
"We found out that we were pushing subscribers back and forth on a highly promoted basis," said Cablevision vice chairman Gregg Seibert, speaking Monday at the Deutsche Bank 2015 Media, Internet & Telecom Conference in Palm Beach, Fla. "I don't want to roll a truck to you every two years if you keep going back and forth to another provider … So we're getting rid of that lower quality, lower profitability base of subscriber."
Except "pushing subscribers back and forth" is what competition is. Fighting to offer a better value than the other guy is how competition works. That Cablevision and FiOS can just choose when they'd like to seriously compete illustrates perfectly how even in U.S. markets we consider to be more competitive, what we're usually witnessing is just coordinated competition theater. When consumers only have one or two real options for service, and both of those options quietly agree on an unwritten competitive cease fire, there's simply no longer any reason to even try. It's then a lovely layer of hubris to publicly express disdain for customers looking for something better.
For years now, customers have been begging HBO to offer a standalone streaming service. Instead, customers got HBO Go, a streaming service only accessible if you can prove you have traditional cable. HBO Go is part of the cable and broadcast industry's "TV Everywhere" initiative -- or the industry's misguided belief that you can thwart cord cutting by building giant walled gardens firmly tethered to traditional cable. Of course this does nothing to actually thwart cord cutting, and only drives customers unwilling to pay cable's endlessly-soaring rates to piracy.
For many years, HBO was hesitant to offer a truly stand alone streaming service, fearing disruption of the cozy, promotion and subsidy-laden relationships it has with cable operators. Late last year HBO finally announced it would offer a standalone HBO service, but didn't provide any hard details.
The good news? HBO has formally announced that it's launching "HBO Now" next month for a $15 monthly fee. The bad news (for some)? The service is going to be an Apple exclusive at launch, meaning that while you can access the service via iOS devices, you're out of luck if you'd like to use the service on a game console, Roku player, Chromecast, or any of the myriad other competing streaming devices. And while you will be able to watch HBO Now content via the new website and any old browser, you can apparently only register for the service using Apple's HBO Now app and an iOS device.
This resulted in many people correctly noting customers are being herded from one walled garden to another:
The press release can't be bothered to mention this, but the exclusive is only for three months, after which HBO Now will be made available on all the usual platforms. Cable providers may also jump in and pitch the service, though many will likely worry they'll only act to cannibalize existing cable subscribers. In other words, we're not exactly talking about the end of the world here, and HBO Now is still part of a welcome sea change toward more standalone streaming options in 2015. If you're still annoyed, just pretend Apple users are beta-testing the service and ironing out the wrinkles ahead of your arrival this summer.
Still, while the exclusive surely nets Apple a nice cash payout, being greeted by a giant wall isn't a great first HBO Now brand impression for Android, Xbox, Playstation, Chromecast or Roku users. Being greeted by that same giant wall also isn't going to do much to keep the "most pirated TV show on television" from being downloaded via BitTorrent. HBO Now's still a welcome change, it's just a shame its market entry has to be polluted by unnecessary, annoying boundaries just to fatten Apple's wallet.
As we've noted countless times, diminishing the impact of piracy isn't exactly rocket science. Give consumers what they want at a reasonable price, and more often than not you'll be able to minimize piracy's impact on your business model. But as we've seen just as often, that logic is a bridge too far for many entertainment industry executives, who've relentlessly instituted all manner of more "creative" solutions to try and retain legacy power in shifting markets. Why give consumers what they want when you can insult, cajole, sue and otherwise harass your paying customers, then blame everything but your own rigid thinking?
The latest ingenious solution comes courtesy of India's Tamil Film Producer's Council (TFPC), which is considering a plan to stop releasing movies entirely in the misguided belief that this is going to somehow stop people from pirating. Apparently, the logic goes, if you stop releasing films for three months, the lack of things to pirate (ignoring a century of previous content, of course) will magically stop piracy forever! Ingenious!:
"Piracy will automatically stop when there's no content. When we stop film releases, say for three months, the movie pirates will go out of business. We are looking into this option because film producers have suffered heavily in the last 24 months," (said) Kalaipuli S Thanu, TFPC president."
One, there's just a blistering amount of hubris involved in believing that you can turn an entire culture's art creation on and off like some kind of spigot. Like they were scolding a kitten, you'll recall the RIAA often used to state that if people didn't stop pirating content, creators would just stop making music -- as if the business side of the equation could simply wipe all art creation from the face of the earth. That some still think they can unilaterally stop art creation as a "punishment" for piracy perfectly exemplifies the distorted thinking responsible for the global entertainment industry's ongoing struggles.
Two, the report notes that just a three-month ban on film production would impact the release of some 36 Indian films, which would then be harmed by the fact that they'd be shoveled in a more crowded release window. In addition to harming content creators, TFPC can't apparently understand that stopping the release of all films hurts its paying customers. Local filmmaker "Cheran" has a different suggested course of action, involving crazy concepts like modifying release windows and (gasp) lowering prices:
"If original DVD of a new film is available for Rs.50, why would anyone think of buying a pirated copy?" (asked Indian Filmmaker Cheran. "We all know the quality of pirated prints. I've sold nearly Rs.10 lakh (or around $16,800) DVDs of my film in the first two days," he said."I don't mind if one person buys and shows it to his entire family. As long as people don't watch pirated version of any film, I'm happy to release my films on DVD. Most households today have access to digital TV, so new films can be released via direct-to-home medium as well," he added."
Hopefully somebody at the TFPC hears Cheran's outlandish suggestions above the din of indignant entitlement.
During the last election cycle, Representative Marsha Blackburn received $15,000 from a Verizon PAC, $25,000 from an AT&T PAC, $20,000 from a Comcast PAC, and $20,000 from the National Cable and Telecommunications Association, according to the Center for Responsive Politics. Surely that funding is only coincidentally related to Blackburn's recent decision to rush to the defense of awful state protectionist law written by the likes of AT&T and Comcast, preventing towns and cities from doing absolutely anything about their local lack of broadband competition.
That money surely is also only tangentially related to the fact that Blackburn has also just introduced the "Internet Freedom Act" (pdf), aimed at gutting the FCC's recently unveiled Title II-based net neutrality rules and prohibiting the agency from trying to make new ones. Whereas most of us thought net neutrality is about protecting consumers and smaller competitors from the incumbent ISP stranglehold over the last mile, Blackburn's website informs readers that net neutrality rules harm innovators, jobs, and err -- freedom:
"Once the federal government establishes a foothold into managing how Internet service providers run their networks they will essentially be deciding which content goes first, second, third, or not at all," Blackburn said in an announcement yesterday. "My legislation will put the brakes on this FCC overreach and protect our innovators from these job-killing regulations."
And here I was thinking that the FCC was responding to unprecedented public support for some of the rules aimed at keeping AT&T, Comcast and Verizon on their best behavior. Blackburn makes sure to lean heavily on that thoroughly discredited report by the Progressive Policy Institute claiming consumers will all suffer from "billions" in new taxes, and again tosses out the well-worn trope about how Title II is bad because it originated in the 1930s (because old laws are always bad, get it?).
Again though, the fact that Blackburn has received $66,750 from AT&T, $59,650 from Verizon, $56,000 from the NCTA, and $36,000 from Comcast over the last decade surely has nothing to do with her suddenly scurrying on multiple fronts to protect those companies' stranglehold over the U.S. broadband market. For freedom.
Yes as the poster above notes, that Netflix "dominates 30% of peak traffic" (a metric usually used by the same crowd I'm talking about in the article) is a talking point used to somehow suggest Netflix isn't playing fair or is taking up more than their fair share of capacity. Except this is traffic generated by users demanding to use Netflix over connections both sides already pay for. It's also part of the "Netflix is a bogeyman" narrative.
And if you get enough people that don't know any better to accept this is all Netflix's fault, you "win" the discourse war by effectively modifying truth. Or at least muddying the water enough so that it becomes "debatable" over whether Netflix is a villain.
"Why don't we just punish those hypothetical bad things when they actually if and when they come to pass?"
They are coming to pass.
I consider AT&T's sponsored data a "bad thing" and a horrible precedent in that it allows big companies to gain previously unobtainable leverage over smaller operators. And yet here we are with the FCC simply considering it a "creative" pricing model because it's just ambiguous enough to hide the anti-competitive intent below a layer of PR speak.
You're basically injecting a network gatekeeper right in the middle of a relatively healthy ecosystem, where they're suddenly letting companies with the deepest pockets obtain priority marketing and other treatment over small companies. This automatically disadvantages startups, nonprofits, or other smaller ventures and unnecessarily distorts the entire playing field.
"they truly are a leader of the broadband industry."Sometimes. They're pretty great on the engineering front when it comes to DNS security or IPV6 upgrades. But when it comes to customer service they're undeniably the worst not only in the telecom industry -- but according to rankings like the ACSI -- across ALL industries.
Trying to get even basic screw ups fixed can often wind up as a Kafka-esque multi-month nightmare. That's not exactly what I'd call leadership.
That's what I worry about. I think Google eventually sees a management shift and somebody decides to sell this effort on the cheap. Until then though, the pressure it's placing on ISPs is great, and hopefully Google would sell it to somebody with similar goals.
Still, they're at least educating cities on how to get out of their own way, even if the end result isn't exactly curing the digital divide.
Yes, they've been doing this kind of nonsense for YEARS now. That includes push pollsters, who'll call and fill voters heads with all manner of nonsense. I saw one push pollster hired by Cox and AT&T in the Southwest informing locals that if they approved a local municipal broadband operation, the government would attempt to ration their TV viewing AND block their access to religious programming.
I remember AT&T and Comcast used very similar tactics in St. Charles and those other Illinois communities that were considering it.
"Missed in the article, the Apple exclusiveness will end just before the end of the next season of Game of Thrones"
HBO Now launches just ahead of "Game of Thrones" newest season. From there it's a three month exclusive. How is that "the Apple exclusiveness will end just before the end of the next season of Game of Thrones"?
"The core component of net neutrality is that everyone's packets should be treated the same. That's where it starts and ends."
You're going to find that's too narrow of a definition as the conversation evolves and carriers get increasingly clever. By that logic, interconnection won't really be part of the conversation either, since all packets are being treated the same -- Verizon and friends are just demanding payment out at the edge of the network.
Just because they use different network-related mechanisms to reach the same goals doesn't somehow mean it's not part of the same conversation.
Why? It's a clever end around of net neutrality logic by ISPs. Just like interconnection is an extension of the net neutrality debate to the edge of the network, this is an attempt at the same end goals simply using a refusal to authenticate. It's all part of the conversation regarding giant ISPs abusing their market position to limit choice!
Yes, if you've got an incumbent gatekeeper using its power to block consumer choice, I absolutely do consider it part of the net neutrality conversation. The only difference (again) is they're using authentication instead of throttling or blocking to limit consumer choice.