Derek Kerton 's Techdirt Comments

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  • On the post: Concord PD Hits For The Cycle: Lemonade Stand + Camera + Wiretap Law

    Derek Kerton ( profile ), 25 Aug, 2011 @ 09:45pm

    Re:

    "He's the sort of jackass for a cause"

    Yeah. What a lame cause, too. Civil rights. Freedom. What an ass whole.

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 25 Aug, 2011 @ 02:45pm

    Re: Re: Re: Re: Re: Re:

    There are no caps on dedicated lines, in all the situations where I've see such deals. You can use the full capacity of your pipe all month long.

    Prices are higher to reflect this unlimited (and guaranteed to be available) bandwidth.

    Check out XO communications offers:
    http://www.xo.com/services/network/dia/Pages/overview.aspx

    You'll note that no pricing is displayed. I did a research report on this industry a year ago, and my conclusion was that the prices are dropping so steadily that no vendor wants to post the deals they are currently making...or all their existing customers would want to re-set their deal to the new low market price.

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 25 Aug, 2011 @ 02:29pm

    Re: Re: Re: Re: Re: someones got some bad math going on, so let me clear it up.

    To answer a few of the points of both you and dan0 at once:

    Yeah, there has been substantial investment at the core in the last decade. But it is true that drastic over-investment running up to the dot-com bust and 2002 left lots of "dark fiber" in the ground. So in the decade since then, the increase of Internet use has been able to leverage that sunk cost investment.

    But lots more fiber is being laid, undersea cables laid, middle mile trenches for Fiber to the Curb, satellite redundancy, metro ethernet. On top of the physical media being buried, technology improvements are being implemented to get more out of the cables. Coarse Wave Division Multiplexing, faster termination equipment, CDNs, caches, transcoders. All of these upgrades are being rolled out by telecom providers. Some will argue it's not enough, and they may be right. But those that argue that there is NO investment lose all credibility with me. You have to be blind and have no knowledge of telecom to think that.

    OTOH, telecom was pretty damned stagnant before 1996.

    "It sure felt at the time like a monopolistic rent that manifested itself as differential pricing."

    You are right. Although I would say oligopolistic. There is not enough competition in last mile broadband in the US, but I think there is enough at the core. However, my definition of "enough" falls short of a perfectly competitive industry.

    Why would I accept a non-competitive industry? Because I don't make the laws of economics, I just live with them. Many segments (core, last mile) of a telecom network are what is know as a "natural monopoly". That is, in a free market, it will tend on its own towards vendors with price power and market control, who are able to extract some rents above Marginal Costs.

    The first paragraph in this entry give a good brief on what Natural Monopolies are:
    http://en.wikipedia.org/wiki/Natural_monopoly

    Telecom is characterized by huge capital requirements. Especially in an era with rapidly evolving technology. The massively difficult act of having to bury or string cables over thousands of miles means the barrier to entry is huge. Such a market does not exhibit the MC=P characteristics of perfect competition. In most nations, a regulator steps in to "oversee" that the economic rents being charged are not egregious. For more, read the wikipedia entry above. The buried cables around the nation ARE scarce, and it is that scarcity that is driving the prices, NOT the bits which are almost free to send about.

    DanO's point is correct. It's not "capitalism" (although I think you mean a free market). It's a natural monopoly. Before it was a heavily regulated natural monopoly. Now it's a lightly-regulated oligopoly. Yes, way back these companies got favored treatment, free rights-of-way, land access, franchise (exclusivity) rights for towns, and all kinds of other advantages. The compact with the people was, supposedly, that this would give the telco an incentive to serve the town with universal communication access. It may be hard to conceive, but this was not assured back in the day. Telcos would have happily skipped entire small or remote towns that were unprofitable to connect. Just consider the towns that don't have DSL right now.

    Now, after all that preferential treatment, the telcos do not appear to have much gratitude. But this is a grey area, too. Do they owe us much? They were forced to offer universal service to unprofitable regions in exchange for privileged access. Is that deal complete and history, or do they still owe us? I don't think the answer is clear. But like you, Dan0, I don't think they should get preferential treatment anymore.

    Sorry people. When we dig down into telecom policy this deep, the answers are not obvious. Lobby groups or not, even the truth is murky and unclear. Making good policy is complicated enough. So we absolutely don't need paid shillheads like Ford and Sununu deliberately lying to get their payoff.

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 25 Aug, 2011 @ 02:00pm

    Re: Re: Re: Re: Re:

    Level 3 is definitely a Tier 1. It mostly passes off its cargo through peering arrangements, not transit agreements.

    But I think the AC gets it, other than the scale of Level 3.

    Level 3 and Comcast have been at each other's throats for years. Most recently, Comcast tried to get Level 3 to change from a free peering deal to a paid transit deal...in fact, this Nov 2010 article frames the entire issue around which Ford and Sununu are now lobbying:

    http://money.cnn.com/2010/11/30/technology/netflix_level3_comcast_traffic/index.htm

    Reading the article above will make you 10 telecom IQ points smarter. I guarantee it. You'll also see how both Comcast AND Level 3 are duplicitous in this debate. The Nov. article is also prophetic with this quote from Matt Wood, associate director of Media Access Project: "Netflix will have to raise its costs...but ultimately customers will pay."

    Once again, if Abraham Stoltzfus (above) wants clarity on how the core network deals work, just read:
    http://en.wikipedia.org/wiki/Tier_1_network

  • On the post: Will John Sununu And Harold Ford Jr. Agree To Pay Netflix's Broadband Bill Next Month?

    Derek Kerton ( profile ), 25 Aug, 2011 @ 01:44pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Well, for me, and the general Techdirt editorial stance, a policy that treats customers badly or punitively is a bad business policy. Gouging customers fits that bill.

    Business are tempted to gouge to meet short-term goals, get their bonuses, hit the numbers Wall Street (or Bay Street in your case) expects of them. However, we generally feel that that is BAD policy that harms the business long-term.

    Pissing off your customers just ensures that your time as their vendor will be limited. As soon as another option pops up, your customers will leave you. They'll even leave for worse deals just out of spite.

    I've been there. I worked at Ameritech (a Baby Bell) when the FCC opened the former monopoly local phone market to competition. There was an exodus.

    "I am tired of pecking here to hear you dismiss my argument with 'bad implementation.'".

    If you were hoping I could act as Cogeco customer service, or fix your beef with them in any way, you were barking up the wrong tree!

  • On the post: A Legal Analysis For Why BART's Mobile Phone Shutdown Was Illegal

    Derek Kerton ( profile ), 25 Aug, 2011 @ 02:42am

    Re: Re:

    No, different.

    The movie theaters were considering "jamming", which is broadcasting powerful radio noise on the same frequencies that cellular phones use, obscuring the signal and thus rendering them useless.

    Jamming is illegal because those frequencies are auctioned off, then licensed for the exclusive use of the spectrum rights owner, say AT&T or Verizon. A theater owner who jams cellular phones is broadcasting on Verizon's spectrum, and that is a violation of a law.

    In contrast, BART just turned off their repeaters, which they normally operate in cooperation with the spectrum rights owners.

    BART passengers use BART's repeaters because the trains travel underground where normal cellular towers don't reach. BART installs either a Distributed Antenna System (DAS) or leaky coax antennas to relay the cellular carriers signals through the tunnels. They own and operate this sub-network. The movie theater is served by regular cellular towers from nearby outside.

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 25 Aug, 2011 @ 02:26am

    Re: Re:

    This is why you are wrong:

    The US federal policy has always been to offer telecom services to people in any state at similar federal rates. To do so, the government set up the Universal Service Fund, which puts a USF tax on the dense population areas (where it is much cheaper to deliver telecom to a customer), and it uses the collected fees to subsidize the rates in rural areas.

    Suggested reading: http://en.wikipedia.org/wiki/Universal_Service_Fund

    As such, most of the US pays a rate that is based on the AVERAGE cost of providing telecom services in the USA. And the USA is, relatively speaking, very sparsely populated. Your effort to compare other countries to US densities state-by-state is irrelevant, since federal policy has pushed for a single unified market, as much as possible.

    So I will give you the population density argument. And the difference between you and I is that I understand all the factors at play, such as the very important USF, the rural broadband stimulus package (also a transfer from dense areas to rural) and the desire of the ISPs to offer somewhat similar rates to all their customers.

    Here's more about how US policy for universally accessible service is being extended from phone dialtone to Internet:
    http://en.wikipedia.org/wiki/National_Broadband_Plan_(United_States)

    I am on your side of the debate versus Sununu...but I prefer to use accurate arguments as opposed to emotional ones. Like I often say here: you can hate telcos for a variety of real reasons, you don't need to make up fictional ones.

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 24 Aug, 2011 @ 08:44pm

    Re: Re: Re: Re: Re: Re:

    +1 Insightful.

  • On the post: Will John Sununu And Harold Ford Jr. Agree To Pay Netflix's Broadband Bill Next Month?

    Derek Kerton ( profile ), 24 Aug, 2011 @ 08:27pm

    Re: Re: Re: Re: Re: Re: Re:

    Your first point,"1/3 GB more per day" etc. Sorry. I can't address that. I just don't understand what you're getting at.

    I dunno what type of cap enforcement your ISP gives you. For now, most have a pretty bad policy of letting it ride for a month or three (that's good) but then sending a nasty letter implying you're a bad person, and that you should spend more with them or go away. They clearly are not throttling.

    Sounds to me like Cogeco, like most others, has a fairly bad implementation of policy around their caps.

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 24 Aug, 2011 @ 05:26pm

    Re: Re: Re: someones got some bad math going on, so let me clear it up.

    "so as long as the infrastrusture is there"

    ...is a clause that obviates a lot of capital investment.

    Now, I'll be among the first to say that marginal costs determine price in perfectly competitive markets, not sunk costs in capital. But is it a competitive market when one vendor is selling the last generation Internet, and another is selling the latest? With Internet service, we are not making "the same phone calls" we made a couple of years ago. People selling faster Internet can charge more.

    Since 1997, we've gone through many generations of infrastructure. Dial up modems, DSL, aDSL, vDSL, DOCSIS 1, 2, 3, FiOS, FTTC, FTTx, WiMAX, LTE. We have had steadily increasing speeds as a result. That happens not because "the infrastrusture is there" but because somebody keeps investing in new infrastructure. It's not free.

    You say "there is no cost to increasing supply". But that's wrong. Supply is increased by investing capital in faster networks. That capital seeks rents.

    So if you make the "so as long as the infrastructure is there" argument, then I will happily accept that as long as you are using your dial-up modem to make your post.

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 24 Aug, 2011 @ 05:10pm

    Re: Re: Re: Re:

    No. It's not half true. It's all true.

    For example, in a DOCSIS 3 cable system, certain frequencies are allocated for upload, others are allocated for download. The cable head-end 'listens' on the upload channels while it broadcasts on the download channels.

    Normally, the upload channels are lower than the download channels, so that your cheap CPE gets the benefit of the better propagation characteristics of lower frequency. Your CPE is cheap because it needs to be priced to scale to every home, while the head-end equipment is much higher-grade.

    Those download channels could be re-allocated to more upload if that is what the average user actually did. But they are not dynamically allocated in real-time.

    It's called FDD for Frequency Division Duplexing. If that's a new concept to you, you have no business trying to correct me. Now, TDD, or Time Division Duplexing, used in some systems, uses the same channels for up and down transmission, using chunks of time for each direction. There are systems that can dynamically alter the proportion of up/down. This is not used by any fixed line ISP that I know of.

    "American ISP's use the upload portion to limit bandwidth usage, you see the less upload you have the slower is your download too"
    ...which is just entirely wrong.

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 24 Aug, 2011 @ 04:49pm

    Re: Re: Re: Re:

    Dedicated line. Like a T1, or an OC1 or OC3

    http://en.wikipedia.org/wiki/OC1

    A business-class service. Also sold as "partials" by some service providers.

    You get the whole pipe to yourself, get guaranteed minimum speeds (unlike "best-effort" consumer service), and a Service Level Agreement to assure your QoS.

    Prices start around $150/mo in the USA.

  • On the post: Could Google's Motorola Buy To Fend Off Microsoft… Actually Drive More Business To Microsoft?

    Derek Kerton ( profile ), 24 Aug, 2011 @ 04:40pm

    Re: I still will not buy it

    You're kidding if you think you understand the mobile phone distribution chain. Except for a few rugged individualists willing to pay the full $500 for their phone, the consumer does NOT decide what is in the marketplace.

    The phone carriers are the actual customers of the phone makers. It is what they buy, in volume, and what they choose to market and make available to the customer that gets bought. They subsidize the phones they want you to have.

    Granted, this is not absolute. Consumers can revolt, backlash, or pay the full nut. But, sadly, the network operators have a greater influence than the consumer overall.

    If you doubt me, ask yourself why you don't see free over the air TV receivers (cost $5) in every phone. Why Bluetooth took so long to arrive at Verizon, and was crippled when it came. Why tethering functionality is removed from Android phones when customers finally take possession. Why the Palm Pre didn't sell high numbers.

  • On the post: Could Google's Motorola Buy To Fend Off Microsoft… Actually Drive More Business To Microsoft?

    Derek Kerton ( profile ), 24 Aug, 2011 @ 04:06pm

    Re: .Re: Google's bigger plan

    You guys are stoned. And just two more in a long line of "Google will kill cellular" voices. In fact, I can hear the echoes of you guys in the 700MHz auction: "Google will win and put up free networks." To which I would write "Google is bidding to trigger the 'open requirements' and has no interest, nor any core competency, in running a network." During the Muni WiFi rush, you guys would say "Google will blanket the US with WiFi and is gonna kill cellular." To which I would write, "Wi-Fi does not have adequate range, nor protected spectrum to compete with cellular on a wide-area scale." So, you're still around.

    Now, one thing in your favor. If you keep saying it, someday you may be right. I mean, over time, things do tend to change. And I do thing Google is a good company. But for now, you're still wrong.

    Google makes pennies on each ad display. Phone bills are $40 - $100/mo. Current devices cost $500. There is a massive disconnect between the revenues and the costs of offering ad-based free cellular service.

    Lemme help you out: Let's take Moore's law and say that those phones will cost just $80 by 2015, and the cellular bills will be down to $15/mo. OK, then, that's still too much money for Google to offer it on a ad-subsidized business model.

    Why do you think Google can't do customer service well? Because that requires humans, and costs money at a measurable scale. This is one of the problems they found with the Nexus One. Pesky customers expected them to support their product, and that was not cost-effective.

    The thing about running a business that earns monies in pennies is that, it truly can add up! However, it means you need to do everything at a massive scale. Huge volumes. And that means, your costs have to remain trivial, or they too will scale out of control.

  • On the post: Could Google's Motorola Buy To Fend Off Microsoft… Actually Drive More Business To Microsoft?

    Derek Kerton ( profile ), 24 Aug, 2011 @ 03:55pm

    Re: Google's bigger plan

    "Most people tend to overlook Google's primary business, which is putting internet advertising in front of as many eyeballs as possible."

    Citation, please.

    I doubt > 5% of people overlook that.

  • On the post: Could Google's Motorola Buy To Fend Off Microsoft… Actually Drive More Business To Microsoft?

    Derek Kerton ( profile ), 24 Aug, 2011 @ 03:50pm

    Re:

    MSFT slapped a $5/device tax on Android.

    Apple got the Samsung Android tablet held up by injunction in Oz and Europe.

  • On the post: Will John Sununu And Harold Ford Jr. Agree To Pay Netflix's Broadband Bill Next Month?

    Derek Kerton ( profile ), 24 Aug, 2011 @ 03:39pm

    Re: Re: Re:

    That's actually a very interesting tangent. If we agree that Netflix pays for their enterprise network services, and the customer pays their ISP for their Internet connection, then:

    - There IS a great deal of competition for Netflix's business. They could work with a variety of datacenters, core network providers, and CDNs.

    - There is far too little competition for the consumer ISP side of the equation.

    Interesting, then, that the lobby effort is directed at screwing the consumers on the non-competitive side...but their feigned anger is about the customers on the free, competitive market side, Netflix.

    I mean, you don't hear Level 3 or Akamai complaining about all the bandwidth Netflix uses, do you?

  • On the post: Let's Up The Ante: We'll Pay John Sununu & Harold Ford Jr. $1,000 To Pay Netflix's Broadband Bill

    Derek Kerton ( profile ), 24 Aug, 2011 @ 03:20pm

    Re: Re: Re: Re: Re:

    You really just need to read the wikipedia entry, offered by Jason, below.

    http://en.wikipedia.org/wiki/Tier_1_network

  • On the post: Will John Sununu And Harold Ford Jr. Agree To Pay Netflix's Broadband Bill Next Month?

    Derek Kerton ( profile ), 24 Aug, 2011 @ 03:14pm

    Re: Re: Re: Re: Re:

    On the subject of my defense of caps, you say I go on and on...and I do...but you'd have to read some of what I wrote if you want to understand it.

    I defend tiers and caps as concepts, because there is nothing inherently unfair about them, nor even customer-unfriendly.

    However, they can be implemented well, or they can be implemented terribly. Usually, an ISP or telco falls closer to the latter than the former.

    Here's a list:

    Caps should not be hard caps. If you hit it, you should be able to continue using the Net at acceptable speeds, sufficient for VoIP and 911 calls. Say 128Kbps at least. That's called throttling.

    ISPs should be extremely proactive in notifying people of hitting thresholds like 50%, 80%, 90%, 100%. Their data on your current usage should be up to date (they are very weak at this), and you should have tools to tell you where you are (website, plugin, taskbar, widget, SMS, email).

    When you hit your cap, they should notify you of your options. They should NEVER block your Internet access. Options should include: buy up to next tier, use throttled speed for billing cycle, buy up for one month, pay per GB for overage.

    Overage GB prices should NOT be punitive (i.e. they should be LESS than the price for the first GBs). It should be a volume discount, not a penalty. It should be in increments NO BIGGER than 1GB. They should not force people to buy 30GB of overage when they go over their cap by 2MB.

    Caps should go with the billing cycle, not the calendar.

    People who use very little Internet should see their bills drop as a result of tiered services. AT&T did this right when they capped the iPhone data plans.

    -----

    So, my point is, caps CAN suck and be unfair. But caps can also be totally fair, and can help allocate the costs of re-investing in network enhancements to the people who use the network the most. In so doing, the network operators will have better incentive to improve the networks.

    And as for your personal ISP, it sounds like the recent changes are fair. They raised your cap by 20GB for $2/mo - that's a good deal (for anyone who uses it...a minor bad deal for someone who uses 5GB/mo). Your overage is $1.50/GB, which is probably near the $/GB you pay for the first 80GB, although you didn't say your rate. Not punitive, though. Your total liability for overages is limited to $50, which is worse than before. Obviously, their trying to make the heaviest users pay more.

  • On the post: Will John Sununu And Harold Ford Jr. Agree To Pay Netflix's Broadband Bill Next Month?

    Derek Kerton ( profile ), 24 Aug, 2011 @ 02:54pm

    Re: Re: Re: Re: Re:

    Sorry. I interpreted your question as rhetorical.

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