Karl Bode’s Techdirt Profile

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About Karl Bode

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

http://www.linkedin.com/in/karlbode



Posted on Net Neutrality Special Edition - 28 July 2015 @ 3:41pm

New York City Decides To Actually Pay Attention To Its Verizon Contracts After Getting Ripped Off On FiOS Deal

from the novel-ideas dept

New York City has decided to actually pay attention to city money paid to Verizon after city officials discovered Verizon's broadband-related-promises don't always hold up to scrutiny. As recently noted, a city audit found that Verizon's 2008 promise to wire the entire city with FiOS fiber broadband by 2014 has only been half completed, the telco using loopholes in the language to argue that getting fiber relatively close to many apartment buildings was good enough. The audit also found Verizon was withholding FiOS from some buildings unless landlords promised broadband exclusivity, something that the FCC supposedly outlawed in 2007.

Basically, Verizon did what Verizon's been doing for the better part of a generation now: getting special perks, subsidies and tax breaks in exchange for promises it has absolutely no intention of actually keeping. Former city leaders likely knew this; the 2008 deal was hashed out behind closed doors with then Mayor Mike Bloomberg's office with little to no serious public input.

Moving forward the city appears to have come up with a novel idea, more closely monitoring Verizon's other business relationships with the city:

"In a meeting at the end of June, Mayor Bill de Blasio told commissioners and agency heads they must inform the Department of Information Technology and Telecommunications of all major contract negotiations with Verizon and other service providers...The de Blasio administration's new protocol has been described by insiders as an attempt to keep Verizon from continuing with business as usual while failing to make good on its FiOS franchise commitments—or even acknowledging the shortcomings of its FiOS rollout."
Yes, that's right, Verizon has yet to even admit it failed in any way, making the city's attempt to hold Verizon accountable rather difficult. What makes it even more difficult is that Verizon's likely just adhering to an agreement its own lawyers intentionally stuffed with loopholes, ranging from clever language regarding homes "passed" with fiber versus homes "served," to unrealistic provisions allowing Verizon to wiggle or buy its way out of obligations if certain TV and broadband uptake marks weren't reached.

Of course reporters at the time urged the city to have a more transparent public negotiations with Verizon to avoid these kinds of caveats and were ignored. Perhaps next time the city can be bothered to heed those warnings, and other cities can use this experience as (yet another) cautionary tale when dealing with Verizon.

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Posted on Techdirt - 27 July 2015 @ 12:43pm

India's New Net Neutrality Guidelines Suggest Facebook's Internet.org Is Just Glorified Collusion

from the we-see-what-you're-up-to dept

India's government has finally released the country's recommendations for new net neutrality protections, and the report makes it very clear: they're not impressed with Mark Zuckerberg's vision of a Facebook-dominated, walled-garden Internet future.

If you recall, Facebook's Internet.org recently took a nasty international public relations beating for its disregard of net neutrality, with content companies dropping out of the purportedly-altruistic program in droves. These companies complained that the program, which gives consumers in developing nations free access to some Facebook-approved services, set a horrible precedent by placing Facebook in the kingmaker position of a new AOL-esque empire, allowing it to pick and choose winners and losers.

The Indian government appears to agree, suggesting in the policy recommendation that Internet.org is basically glorified collusion:

" Content providers have an incentive to leverage the gatekeeper role of networks to collaborate and collude with TSPs/ISPs to stand above competition. Although such practices may enhance consumer welfare in the short run, the distortion in content markets would result in immense damage to the fabric of the Internet economy besides affecting the spread of innovation. While it may be legitimate for content providers to use business tools such as advertisements, reaching the consumer through the control of access or influence over access may have a deleterious impact on the economy."
If Facebook really wants to help the poor, critics like Mozilla have suggested, the company can offer discounted access to the actual Internet.

Facebook's response to these complaints so far has been less than impressive. First, company boss Mark Zuckerberg proudly proclaimed that violating net neutrality via zero rating was ok because the company meant well, and that opposition to the program was an extremist position. Facebook then announced it would be opening the walled-garden front door wider to include more services, but stated they'd still be banning most audio, video, JavaScript, Flash and even encrypted content.

So the good news: the Indian recommendations seem to recognize Internet.org for what it is: Facebook's attempt to elevate itself, break the Internet, and corner ad markets in developing nations for decades to come under the pretense of altruism. That's something Facebook makes pretty clear it doesn't think most people are smart enough to realize. On the flip side, there's some suggestions that cellular carrier Airtel (opposed to Internet.org) had plenty of input in the proceedings, since while zero rating by content companies is outright banned, zero rating by wireless carriers will be examined on a case-by-case basis:
"Before a licensee launches any tariff plan, the same would need to be filed before TRAI within a reasonable period prior to the launch of the plan. TRAI would examine each such tariff filing carefully to see if conforms to the principles of Net Neutrality principles and that it is not anti-competitive by distorting consumer markets."
That's effectively the same approach taken by the FCC here in the States regarding zero rating. While some see this as sane implementation of flexible regulation, as noted previously, it allows ISPs to violate net neutrality if they're just clever enough about it. For example, here in the States, T-Mobile's been making the biggest streaming services cap exempt to the detriment of smaller companies. Support for the plan has been relatively-thunderous despite obvious neutrality implications. AT&T, similarly, has been pushing the idea of letting companies pay to be cap exempt (again, breaking the open Internet and giving select parties a leg up) and many consumers and regulators simply can't see the problematic precedent.

Both of those examples suggest carriers can still blatantly violate net neutrality if the sales pitch is good enough, so you'll need some pretty uncharacteristically tech savvy, consistent and competent regulators if you're going to honestly determine competitive harm from zero rating on a case-by-case basis. Of course these are just recommendations, so they could change with pressure. In a statement, Facebook still claims they created Internet.org to "promote an Internet access model that is open and non-exclusive," and is looking forward to working with the Indian government to convince them that collusion is fine "overcome the infrastructure, affordability and social barriers that exist today."

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Posted on Techdirt - 24 July 2015 @ 1:51pm

FCC Approves AT&T's $69 Billion DirecTV Merger, Announces It Late Friday And Hopes Nobody Notices

from the lava-is-in-the-public-interest dept

Waiting until late Friday afternoon to minimize public and press backlash, the FCC has formally announced that it has voted to approve AT&T's $69 billion acquisition of DirecTV, creating the nation's biggest ever pay TV provider at 27 million subscribers strong. According to the FCC statement, the agency found that the deal, despite the fact it eliminates a direct pay TV competitor, somehow serves the public interest:

"The Commission’s decision is based on a careful, thorough review of the record, which includes extensive economic analysis and documentary data from the applicants, as well as comments from interested parties. Based on this review, the Commission has determined that granting the application, subject to certain conditions, is in the public interest."
It will be curious to see if the DirecTV employees trimmed by AT&T's garden shears as the telco eliminates "redundancies" will feel the same way. Or if the DirecTV customers who'll suddenly face higher TV prices thanks to less direct pay TV price competition feel their interests have been well looked after by this time next year. Only time will illuminate the magical public interest benefits of the deal, since they're not entirely apparent at the moment.

As we noted previously, the temporary conditions attached to the deal appear to be wimpy at best. One condition prevents AT&T from abusing its fixed-line usage caps anti-competitively, but the agency doesn't bother to note that AT&T doesn't have usage caps on the majority of its U-Verse broadband lines, and has no plans to implement them. AT&T's focus, and the current controversy as it pertains to AT&T's use of caps to trample net neutrality, is on wireless, which these conditions wouldn't apply to.

Another condition states that AT&T has to submit any new interconnection agreements to the FCC for review to ensure it's not behaving anti-competitively, but this was already effectively part of the FCC's new net neutrality protections. Thanks to the mere threat of neutrality rules, AT&T was already on its very best behavior in regard to interconnection. Granted AT&T is engaged in two different lawsuits to kill these rules, so at least there's something in place to police interconnection should the neutrality rules get defeated in court. But AT&T promising to avoid interconnection jackassery for a few years is hardly a groundbreaking commitment.

But it's this part of the FCC's statement I find the most misleading:
"Recognizing that the merger reduces AT&T-DIRECTV’s incentive to deploy FTTP service, the Commission adopts as a condition of this merger the expansion of FTTP service to 12.5 million customer locations. This condition also responds to the harm of the loss of a video competitor in areas where AT&T and DIRECTV had directly competed before the merger by providing a pathway for increased competition from services that rely on broadband Internet to deliver video."
One, what good is an expanded "pathway" to Internet video competition if said pathway wanders straight through a monopoly mine field on last mile broadband service? Two, as we noted previously, AT&T and the FCC are being incredibly misleading on this 12.5 million deployment total. A month before the DirecTV deal was even announced, AT&T promised to expand its fiber broadband service (mostly aimed at high-end developments) to "up to" parts of 100 cities. When pressed, AT&T in filings conceded this project, primarily aimed at countering Google Fiber's buzz, would likely bring service to around 11.7 million users. So in short, the lion's share of the 12.5 million total isn't new commitment, it's deployments that were already planned (and in some cases already finished) being dressed up as only having been made possible by the magic of a mega-merger.

So why did an FCC on a bit of a pro-consumer tear approve this deal? It's likely because the FCC knows in time AT&T's acquisition of a satellite TV provider will be made wholly irrelevant by a surge in Internet video competition and cord cutting. The FCC's been engaged in a fierce battle with the broadband industry over net neutrality, a new 25 Mbps definition for broadband, and municipal broadband, so approving this deal was one way to throw the broadband industry a few crumbs with the least amount of market damage. The FCC's likely just picking its battles after having just fought a protracted war.

That said, the short-term harm from effectively killing a pay TV competitor will be felt by TV subscribers and employees alike. And the fact the FCC was so eager to swallow and sell AT&T's miracle math suggests that the FCC hasn't entirely discarded old habits just yet.

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Posted on Techdirt Wireless - 24 July 2015 @ 10:38am

AT&T's Version Of Wireless Price Competition: Raising Prices

from the that's-not-how-this-works dept

There's no doubt that T-Mobile and its smack-talking CEO have been good for the wireless industry, applying pressure on a lot of customer pain points like subsidized devices, international roaming, and long-term contracts and early termination fees. As a result, T-Mobile's been adding more new subscribers than any of the other three major carriers. But as I've noted a few times now, the pricing response to this competition by companies like AT&T and Verizon has been a bit cosmetic and theatrical in nature, since none of the carriers want a real wireless price war.

Sure, there are some occasionally decent promotions but, by and large, the name of the game right now for both AT&T and Verizon is driving network usage and shoving customers as hard as possible toward large, expensive, shared data allotments. Verizon has pretty loudly stated it's not going to seriously compete on price because it believes its network is just that good. The latest example of not-really-price competition comes courtesy of AT&T, who is responding to T-Mobile's competitive pressure by... raising fees and creating entirely new annoying surcharges:

The new activation/upgrade fee for one and two-year agreements is raising from $40 to $45, which gives AT&T the highest activation fee in the industry (Verizon is still at $40 for now). Going forward after August 1, should you choose to sign-up for a new contract to receive a discounted phone, you will pay $5 more than you used to.

In related news, AT&T Next will no longer be a zero-out-of-pocket installment plan. Come August 1, customers who are new to AT&T Next will have to pay a $15 activation fee when they pick up a new phone. This $15 fee also applies to those who bring their own device (BYOD) and sign-up for a new line of service.
So yeah, AT&T's response to price competition is -- to raise prices. And its response to media inquiries so far as to why this is occurring has been total radio silence, since there's not much it could say to defend the practice. Perhaps that's the reason that while T-Mobile is seeing notable growth, AT&T actually lost phone customers last quarter?

There are still a few reasons why AT&T doesn't really have to care what you or the media thinks. One, the company's mammoth lobbying apparatus ensures it still gets favorable treatment, especially on the easily manhandled state level, where most legislators would happily sell their first born to win the company's affections. Two, AT&T still has a stranglehold over a huge swath of wireless spectrum thanks to auction rules that historically favored large companies (though that's changing... slowly). Three, AT&T and Verizon combined still control around 80% or more of the wireless backhaul special access market, which companies like T-Mobile need to pay to access in order to reach their customers.

Of course hammering customers with a bevy of annoying fees is pretty much standard operating procedure in most industries as a way to pretend your advertised rate is staying the same. But AT&T's latest greedy little cash grab is worth remembering the next time industry trade groups like the CTIA are breathlessly insisting that fierce competition is delivering a bonanza of broadband bargains. There is no "wireless price war." It's more of a theatrical pricing improvisational dance.

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Posted on Techdirt - 23 July 2015 @ 9:35am

FCC Commissioner O'Rielly: Nobody Takes Me Seriously After Voting Down Every Consumer-Friendly FCC Policy This Year

from the obstruction-junction dept

FCC Commissioner Michael O'Rielly will never be confused with a consumer advocate or champion of the people. He's voted down nearly every consumer-friendly FCC initiative that has come down the pike, whether that's net neutrality, raising the base definition of broadband to 25 Mbps, or fighting back against state protectionist broadband laws written by ISPs to protect their uncompetitive geographic fiefdoms. O'Rielly most recently made waves by proudly declaring, as an employee of an agency tasked with ensuring timely deployment of broadband to all Americans, that he really didn't think broadband was all that necessary.

Hand in hand with anti-net-neutrality Commissioner Ajit Pai, a former Verizon regulatory lawyer, the two form sort of a knee-jerk, objectionist Commission superhero that opposes everything in its path under the pretense of a deeper, mysteriously undefinable ethos. The dynamic duo have even objected to holding AT&T accountable for ripping off taxpayer money earmarked for the poor.

With that as a backdrop, it was entertaining to see CNET push forth a bit of a puff piece helping O'Rielly portray himself as some sort of unfairly ostracized hero of the Commission, whose insights aren't being taken seriously:

"It takes time and effort to soldier on and make your arguments," he said..."I do the work you'd expect me to do. I read every item. I do my homework. And I make substantive suggestions. But I'm often shot down."
Of course it's actually O'Rielly that's doing the shooting, bravely voting no on nearly every single issue of the day. When AT&T was fined for throttling "unlimited" connections and lying about it, O'Rielly stood up for the little guy, bravely calling the FCC's behavior "Draconian" (Pai, in contrast, compared the FCC's behavior to Kafka). Still, O'Rielly lays the blame at the feet of Wheeler and company:
"O'Rielly and his Republican colleague, Ajit Pai, have opposed all the major Democrat-supported issues that have passed, in large part due to philosophical differences they have with their colleagues across the political aisles on these issues. But O'Rielly said what has truly frustrated him is what he sees as an unwillingness by the FCC leadership to find consensus on any issue.
Partisan patty cake at the Commission is certainly nothing new. Except as we've noted, most people on both sides of the aisle think Wheeler is actually doing a shockingly good job for a former industry lobbyist many expected little from. He's shaken off fifteen years of the status quo, and is actually doing something about the woeful state of broadband competition instead of paying politically-safe lip service to the idea. He also managed to implement real net neutrality protections, an idea that's supported by Democrats and Republicans alike.

It's repeatedly unclear to me how you can be a career obstructionist, then cry when policy and conversation moves on without you. Indeed, O'Rielly tells CNET he's just a hard working fellow who desperately wishes the there was "more receptivity to finding common ground." CNET responds by failing to ask O'Rielly a single difficult question regarding how he aligns this hallucinated persona with his actual anti-consumer and anti-Internet voting record.

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Posted on Techdirt - 23 July 2015 @ 6:21am

Cable Industry Still Proudly Thinks Cord Cutting Is A Media-Manufactured Crisis

from the denial-is-not-just-a-river-in-Egypt dept

A few years ago, if you asked cable and broadcast executives if cord cutting was real, most of them would proudly declare that it was a complete and total phantom (like Yeti). The few that could admit to the trend would usually try to argue that the only people engaged in this kind of behavior were losers not worthy of their consideration when contemplating their business models. Of course data has emerged since suggesting that not only is cord cutting very real (albeit slow), the people doing it are affluent, educated, and right in cable's key future target demographic.

These days, most cable and broadcast executives, after slowly hemorrhaging basic cable subscribers for several years and watching broadcast TV ratings drop through the floor, will at least admit that cord cutting is real. But there's still a strong contingent among them that desperately wants to believe that cord cutting is a media-manufactured phenomenon and that their beautiful legacy cash cow will somehow live forever. The latest case in point comes via a Fortune article that explains "Why Cord Cutting Is a Myth" without actually doing anything of the sort:

"The way content is consumed is changing,” said Amy Banse, managing director of Comcast Ventures. “We’re all aware of that. But I personally believe, and also by looking at our own statistics, that the volume of press around cord cutting doesn’t quite match reality."
Again though, Banse doesn't offer any data to support the argument that cord cutting is a mass media hallucination. Factoring cable's failure to scale with new housing growth as the housing market recovered, telecom analyst Craig Moffett (who used to deny cord cutting) notes the pay TV business lost 1.4 million subscribers in the last year. The pay TV industry saw its first net subscriber loss during the first quarter of this year, and the industry is contracting at a 0.5% annual rate. This is before you factor in that many people aren't "cutting the cord" -- they're not signing up for traditional cable in the first place. And all of this is hitting cable and broadcast ratings hard. Comcast's recent earnings say the company lost 69,000 basic video subscribers last quarter and 3 million over the last six years.

These are measurable metrics -- some small, some not so small. All important, and none imagined.

Still, to hear the cable industry tell it, cord cutting is "over-reported":
"George Kliavkoff, president of Hearst Ventures, agreed, and said the topic is low-hanging fruit for the media: “Cord-cutting is a great ‘story,’” he said. “But I think it’s over-reported.” What’s more likely to gain sizable traction, he said, is cord “shaving,” where consumers simply move away from all-encompassing multichannel packages. “A la carte purchasing of channels—and not taking most of them—is a far more interesting area,” he said.
The second half of that argument could certainly be true. "Cord shaving" or "cord cheating" is also occurring at an increased rate as cable customers socked with bi-annual rate hikes look for any opportunity to cut their monthly bill. Eventually, these users will also likely be turning their gaze toward redundant cable voice services, forcing cable operators to replace that revenue in new and "creative" ways. This is all part of one conversation. And while yes, some media outlets do overhype cord cutting without nuance or context (as happens with all things), how the media explains what's happening is a distraction. The focus should be on how the cable and broadband industry is failing to adapt to internet video through its refusal to offer truly evolutionary products and pricing.

Some of this is semantics. Some cable execs simply don't like to call it "cord cutting," given there's still a cord -- it just happens to be broadband only. But whatever you call it, the answer to all of these problems has a single unified answer. With 2015's rise in new internet video options, cable's going to have to do the one thing it has spent a generation refusing to do: compete on price.

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Posted on Techdirt - 22 July 2015 @ 12:39pm

FCC Signs Off on AT&T DirecTV Merger, And Early Indications Are The Conditions Are Hot Garbage

from the AT&T's-magic-math dept

While Comcast's failed merger attempt with Time Warner Cable received a well-deserved media and public beating, AT&T's almost-as-bad $49 billion acquisition of DirecTV has been able to largely fly under the radar, despite the fact that only the latter eliminates a direct pay TV competitor. With less public pressure from consumer outrage, the FCC and DOJ appear poised to approve AT&T's deal, and the FCC is circulating an order approving the deal among the agency's Commissioners. Approval could occur as soon as this week.

In a statement issued to the FCC website, FCC boss Tom Wheeler states he's pushing for several conditions on the deal he claims will "protect consumers, expand high-speed broadband availability, and increase competition." One of them involves restricting AT&T from using its fixed-line usage caps for anti-competitive advantage:

"In addition, the conditions will build on the Open Internet Order already in effect, addressing two merger-specific issues. First, in order to prevent discrimination against online video competition, AT&T will not be permitted to exclude affiliated video services and content from data caps on its fixed broadband connections."
The problem? While AT&T's DSL users do face a 150 GB monthly usage cap (with $10 per 50 GB overage fees), AT&T's busy kicking these unwanted customers to the curb because they're too expensive to upgrade. On the other hand AT&T's U-Verse customers, the ones AT&T plans on keeping, don't face an enforced usage cap. As such, a condition preventing them from abusing this non-existent cap isn't much of a condition. Most of AT&T's controversial "zero rating" practices in regards to usage caps are happening on AT&T's wireless network, which the condition wouldn't apply to.

Wheeler's also promising that his conditions will force AT&T to deploy upgraded broadband services to more areas than ever before:
"If the conditions are approved by my colleagues, 12.5 million customer locations will have access to a competitive high-speed fiber connection. This additional build-out is about 10 times the size of AT&T’s current fiber-to-the-premise deployment, increases the entire nation’s residential fiber build by more than 40 percent, and more than triples the number of metropolitan areas AT&T has announced plans to serve.
The problem here is that AT&T's been manipulating its broadband deployment statistics for fifteen years or so to win regulatory favor. The company will take deployments already planned (or in some cases built), pretend these users are new deployments, then promise regulators it will engage in a broadband "expansion" if regulators only agree to "X" (deregulation, more subsidies, more tax breaks, merger approval, whatever). Nobody in DC has ever bothered to actually audit AT&T's endlessly shifting deployment projections, or even call them on the statistical slight of hand.

And AT&T appears to be doing that again here. With the FCC's help.

Back on April 21st, 2014 -- a month before the deal with DirecTV was even struck -- AT&T announced a shiny new PR campaign (designed to counter Google Fiber's buzz) proclaiming the company would be bringing fiber to "up to" 100 cities. These are cherry picked installs, mostly high-end developments, where install costs are already low because fiber's already in the ground. You might recall that AT&T then pouted and threatened to pull these limited upgrades if net neutrality rules were passed. When pressed by the FCC, AT&T backed down on the threat.

But in a highly-redacted June response to the FCC (pdf), AT&T states that the company is promising to deploy fiber broadband to a total 11.7 million homes (this includes the April 2014 plans) should the merger be approved, with only 2 million of this total being actual, new deployment. So only a fraction of this 12.5 million number Wheeler is using is "new" at all, and it's certainly nowhere near "10 times" the size of AT&T's current deployment. The tl:dr version is that AT&T's taking existing (and in some cases finished) deployments, pretending they're totally new deployments only made possible by the DirecTV merger, and the FCC's helping them.

The real irony is that AT&T's actually cutting fixed-line investment CAPEX so it can focus on more-profitable capped wireless, and in the process preparing to hang up on tens of millions of unwanted DSL users. This is going to leave cable with an even stronger monopoly than ever before across a huge swath of the country, and few people in the press, public or in government appear to have noticed or care. Instead, we get a mega merger bloated with AT&T's miracle math.

I think the majority FCC is ok with AT&T's merger because buying a satellite TV provider on the eve of the Internet TV revolution is basically business seppuku, ultimately made irrelevant by the rise of alternative options. But the elimination of a direct competitor still means higher rates in the short term, and there's an awful lot of actual fiber that $49 billion could help deploy. There's little to no hard consumer benefits here, and as usual AT&T lawyers are doing a bang up job manufacturing some out of very thin air (while filing two lawsuits against the FCC's net neutrality rules to ensure nobody can police their behavior after the merger conditions expire).

Note the FCC hasn't released the full details of the conditions, so hopefully there's more teeth here than Wheeler's original announcement suggests. But his willingness to buy into AT&T's magic, meandering math isn't a promising start.

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Posted on Techdirt - 22 July 2015 @ 6:30am

Comcast Really Wants Me To Stop Calling Their Top Lobbyist A 'Top Lobbyist'

from the tomato,-tomahto dept

Comcast executive David Cohen is, by dictionary definition, a lobbyist. And not just any lobbyist; a gushing profile piece by the Washington Post in 2012 called him a "wonk rock star" and the company's "secret weapon," who uses "his vast network of high-powered contacts" to help craft Comcast-friendly regulations and apply pressure on DC policy makers. You know, a lobbyist. Unless you're Comcast, which has now e-mailed me repeatedly to demand I stop calling him that.

After I mentioned that Cohen was hosting a $2,700 per plate fundraising dinner for Hillary Clinton last month, I received this e-mail from Comcast spokesperson Sena Fitzmaurice on June 18:

"Karl – your piece today is offensive and inaccurate. David Cohen doesn’t pretend he’s not a lobbyist – he isn’t by the definition of the legal term – we keep very close records of his time and activities to make sure the law is complied with – to imply that we are not complying with the law with no evidence is irresponsible journalism."
You see, the legal DC definition of a lobbyist was beefed up slightly back in 2007, when the Lobbyist Disclosure Act was notably amended by the Leadership and Open Government Act of 2007. Those changes required that if an employee spends more than 20% of their time lobbying, they have to register with the government as a lobbyist, detail their travel with lawmakers, and more fully outline their contributions to politicians and their myriad foundations. Comcast addressed these changes by simply calling Cohen something else.

Cohen's technical title ever since has been Senior Executive Vice President of Comcast Corporation, though more recently the company has been calling him the company's "Chief Diversity Officer" with a big focus on "community investment":
"David L. Cohen is Senior Executive Vice President of Comcast Corporation. David has a broad portfolio of responsibilities, including corporate communications, government and regulatory affairs, public affairs, legal affairs, corporate administration and community investment, and serves as senior counselor to the CEO. He also serves as Chief Diversity Officer for the company."
Cohen played the starring role in selling regulators on Comcast's acquisition of NBC Universal in 2011, crafting conditions it would later be discovered Comcast ignored at its leisure. Cohen's secret weapon during that transaction was Internet Essentials, a program that promised low-income households $10, 5 Mbps broadband for a limited time should they jump through a laundry list of conditions. The program was frequently criticized for being intentionally hard to qualify for, though it provided an endless sea of PR opportunities to help portray Comcast as an agent of pure altruism.

Cohen also spearheads Comcast's entirely-above board (and very common in telecom) practice of giving money to minority groups and organizations with the unwritten expectation that they parrot anti-consumer policy positions. These groups then sing the praises of Comcast's latest merger or sell their constituents downriver on issues like net neutrality, helping to create an artificial sound wall of support for Comcast policies, which, as you may have noticed in your travels, often don't benefit Comcast customers or the internet at large.

So while Cohen is clearly a lobbyist by dictionary definition or for anybody with optic nerves, he's not a lobbyist by legal definition. He's just a guy that really, really loves minority communities and helping the poor, and just happens to spend the lion's share of his time whispering in politicians' and regulators' ears. In fact, as Fitzmaurice was kind enough to illustrate in another e-mail to me on July 18, Cohen has absolutely nothing to do with lobbying whatsoever:
"While I know asking you to be accurate may be futile, David Cohen is not Comcast’s top lobbyist, in fact he is not a lobbyist at all. Lobbyist has a very specific legal definition, and David Cohen does not fit it. David has several different sections of the business which report up to him, only one of which is Government Affairs. The top lobbyist in Washington is Melissa Maxfield."
I responded by informing Fitzmaurice that I'm using the Random House definition of lobbyist, not Washington's intentionally flimsy, watered down definition:

NOUN

1. a person who tries to influence legislation on behalf of a special interest; a member of a lobby.

I write a lot about Comcast. Without bragging (since frankly it's often unpleasant and I'd often rather be doing something else), I might write more about Comcast than potentially anyone on the internet. By and large my experiences with Comcast's public relations department have actually been very positive, and on the very rare instance where they contact me to let me know a data point or statistic is in error (two or three times in a decade, looking at my inbox archive), I'm happy to correct it. But this is curiously the first issue that the company has felt the need to repeatedly reach out to me on, suggesting it's a potentially sensitive subject for some strange reason.

So, out of respect for Comcast's integrity and this nation's great and unimpeachable legal apparatus, I've decided to acquiesce and start calling Cohen something different. I'm tossing around a number of potential titles. Funpants McGillicutty? Comcast's "Overlord of entirely-authentic-and-not-at-all-politically-motivated-altruism"? Doctor Schnitzel-Fuhrer? Surely readers have a few suggestions.

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Posted on Techdirt - 22 July 2015 @ 4:29am

Dueling Lawsuits Threaten The NFL, DirecTV's Annoying Sunday Ticket Exclusive

from the illegal-shift-in-the-backfield dept

The availability of NFL games online has long been a bit of a joke when compared to the NBA or MLB, in large part thanks to the league's exclusive deal with DirecTV for out of market games. The televised bastard child of this unholy union is NFL Sunday Ticket, which charges consumers between $250 and $350 a season to watch their favorite games. And while DirecTV has eased up a little on the restriction that you need to subscribe to DirecTV's other services to get Sunday Ticket, trying to order the standalone broadband-only service over at the DirecTV website results in the user being accosted with a bevy of fine print:

"*NFLSUNDAYTICKET.TV service is only available to non-DIRECTV customers who live in a select apartment building where DIRECTV service is not available, attend select universities, or live in one of the following metro areas: New York City, Philadelphia, or San Francisco. NFLSUNDAYTICKET.TV UNIVERSITY only available to students enrolled in eligible universities. Blackout rules and other conditions apply.
Even if you qualify, it's still a pretty far cry from services like MLB.TV, which is available for as little as $60 a year. Each time the exclusive arrangement is up for renewal, wiser NFL fans quietly pray the NFL will realize the benefits of broader, less-exclusive distribution of games, but ultimately a huge check from DirecTV almost always wins out (this last check clocked in at around $12 billion for an eight year deal).

There is, however, some fleeting legal fisticuffs on the horizon that might (but probably won't) shake up this cozy arrangement. Last month, DirecTV and the NFL were hit with a class action lawsuit (pdf) alleging that the companies' exclusive distribution arrangement for NFL games under the NFL Sunday Ticket brand violates antitrust laws. The suit took specific aim at the inflexibility of the packages sold to consumers:
"The league and DirecTV offer NFL Sunday Ticket only as all-or-nothing. Purchasers of NFL Sunday Ticket must buy all out-of-market games for all teams even if they are only interested in watching the games of a particular team. Likewise, consumers must buy the complete season of games and may not purchase individual games."
Major League Baseball and the National Hockey League have been hit with similar suits (which the NFL is also included in), and both leagues have so far responded with slightly-more-flexible fare (like NBA's League Pass, which allows the purchase of individual games). The NFL, however, is also now facing a second lawsuit (pdf) from a sports bar owner in San Francisco alleging that locking bars to DirecTV service to extract "monopoly rents" (From $2,500 to $120,000 depending on size) constitutes an "illegal monopoly":
"Defendants have colluded to sell the out-of-market NFL Sunday afternoon games only through DirecTV. Such an arrangement eliminates competition in the distribution of out-of-market Sunday afternoon games and requires anyone wishing to view these games to subscribe to DirecTV and purchase NFL Sunday Ticket at the supracompetitive price dictated by DirecTV."
It's unclear if either suit will convince a judge to blow up the NFL and DirecTV's cozy cuddling, but a successful suit could have far-reaching implications. AT&T's $49 billion acquisition of DirecTV is contingent on DirecTV maintaining its exclusive relationship with the NFL, meaning AT&T can walk away should the arrangement crumble. Regardless of the suit(s), you'd hope that the NFL some day wakes up and realizes the benefits of broader, more flexible NFL game distribution when it comes to battling pirated game streams and users who are having to use VPN to get cheaper international NFL streaming options.

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Posted on Techdirt - 21 July 2015 @ 10:33am

Newsflash: Car Network Security Is Still A Horrible, Very Dangerous Joke

from the I'm-sorry-I-can't-do-that,-Dave dept

As we've noted for years, the security on most "smart" or "connected" cars is aggressively atrocious. And in fact it's getting worse. As car infotainment systems get more elaborate, and wireless carriers increasingly push users to add their cellular-connected car to shared data plans, the security of these platforms has sometimes been an afterthought. Hackers this week once again made that perfectly clear after they demonstrated to a Wired reporter that they were able to manipulate and disable a new Jeep Cherokee running Fiat Chrysler's UConnect platform. While the reporter was driving it:

As the two hackers remotely toyed with the air-conditioning, radio, and windshield wipers, I mentally congratulated myself on my courage under pressure. That’s when they cut the transmission. Immediately my accelerator stopped working. As I frantically pressed the pedal and watched the RPMs climb, the Jeep lost half its speed, then slowed to a crawl. This occurred just as I reached a long overpass, with no shoulder to offer an escape. The experiment had ceased to be fun.
Uconnect utilizes Sprint's cellular network, and hacker/researchers Charlie Miller and Chris Valasek were able to pwn manipulate nearly everything about the vehicle with a laptop in a house ten miles away. All thanks to one, unspecified vulnerability:
From that entry point, Miller and Valasek’s attack pivots to an adjacent chip in the car’s head unit—the hardware for its entertainment system—silently rewriting the chip’s firmware to plant their code. That rewritten firmware is capable of sending commands through the car’s internal computer network, known as a CAN bus, to its physical components like the engine and wheels.
The two used to have to physically modify cars to get access to these systems, but as vehicles have gone cellular, it has opened the door to a world of new exploits. And if you've ever experienced the incomprehensibly-clunky in-car GUI of most in-car infotainment platforms, rest assured that the quality of the system's security is usually in the same ballpark. Miller and Valasek will publish a portion of their exploit online during a presentation at the Black Hat security conference in Las Vegas next month.

The exploit appears to work on any Chrysler vehicle with Uconnect from late 2013, all of 2014, and early 2015. Chrysler/Fiat posted a notice to its website last week informing users that they need to update their in-car software either via USB stick (you can download the update here) or by taking it in to a dealer. Of course like many patches, most users won't be paying much attention to the warning. And we're only talking about Chrysler's UConnect; there's a bounty of half-assed security measures implemented in infotainment systems from automakers worldwide just waiting to be tinkered with by pranksters (or worse).

Of course cars aren't the only tech sector where security has failed to keep pace with ambition. "Smart" TVs have been shown to have similarly awful security, often sharing unencrypted user info (even conversations) with any hacker with a modicum of talent. In the rush to embrace the gee whizzery of the "Internet of things," there are more than a few companies that apparently forgot to bring security and intelligence along for the ride.

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Posted on Techdirt - 21 July 2015 @ 6:15am

Verizon Support Wants You To Know That Twitter Is A Perfectly Secure Way To Send Them Your Social Security Number

from the you-need-better-support-reps dept

Hoping to have an errant charge resolved, O'Reilly Media author Jonathan Zdziarski recently reached out to Verizon Wireless on Twitter. While Twitter support can help put a friendly face to a massive, often-times unwieldy conglomerate, anyone that has actually interacted with one of these support agents has likely found the quality of these interactions to be decidedly hit or miss. In Zdziarski's case, the Verizon Wireless support agent in question thought it would be perfectly acceptable for him to prove his identity over Twitter, since the platform is such a "secure means of communication":

Except for the fact that's not remotely true. Back in late 2013 in the wake of reports on the NSA's ballooning skulduggery, Twitter claimed they'd start encrypting direct messages, though by 2014 that initiative appears to have been forgotten. As such, what Verizon's calling a "secure means of communication" is about as secure as a safe made out of paper mache and tin foil. When pressed about this lack of secure transit for personal data, Zdziarski was apparently informed that everything was ok, because "most users are ok with it":
Of course "most users" don't know a gigabit from a garrote, so it's not entirely clear that "most people aren't bright enough to know this isn't a good idea" should be used as a security standard moving forward.

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Posted on Net Neutrality Special Edition - 17 July 2015 @ 2:10pm

Quicken Loans Founder Dan Gilbert Follows Google Fiber's Lead, Brings $70 Gigabit Fiber To Detroit

from the get-your-motor-running dept

When Silicon Valley and New York City struggle to get incumbent ISPs to offer better service and faster speeds, you can only imagine the kind of broadband competition that exists in rust-belt cities like Detroit, Flint or Buffalo. But, following the lead of Google Fiber, Quicken Loans founder Dan Gilbert apparently hopes to do something about it. Gilbert's employed the help of a few fellow Quicken Loans employees to launch a new ISP by the name of Rocket that's going to start offering $70/month Gigabit service to a sizable chunk of Motor City.



So far, the company has received "submissions of interest" from roughly 80 businesses and 3,000 consumers, with plans to reach 12 miles of deployed fiber and 32 buildings by the end of the year. It's a small beach head in a vast underserved telecom hellscape, but it's the latest example of how communities have finally reached the breaking point when it comes to waiting for AT&T, Comcast, Verizon, and Time Warner Cable to give a damn about the territories they service. Rocket hopes to ease into the broadband market thanks to Gilbert's existing ties to downtown real estate ventures, leading to more efficient installs:
"One unique advantage is its ties to Rock Ventures, Gilbert's investment firm which funded Rocket Fiber and also owns more than 75 properties totaling more than 12 million square feet of commercial real estate in downtown Detroit. Foster says these properties and the companies within them are free to pursue internet services from any provider, and that Rocket Fiber has never assumed exclusivity with any of them."
That's good, since the FCC banned such exclusive MDU arrangements (pdf) back in 2007, even though enforcement remains a mixed bag. Like Google Fiber, Sonic.net and municipal operators, Rocket is well aware that there's a growing contingent of customers fed up with the nation's utterly abysmal incumbent ISP customer service. That's of course particularly true of Detroit's entrenched monopoly provider, Comcast:
Nationwide, ISPs are widely regarded as the worst-performing organizations in customer service. Rocket Fiber aims to set itself apart by being the rare local ISP that can focus all of its resources on the one region it serves..."There's a whole host of things that people are disenfranchised about [with] the current providers that, even if they offer exactly the same product at exactly the same price point, we still feel that they will still choose us because there are still intrinsic values other than just the dollar value that you get," Foster says."
Also like Google Fiber, the actual deployment footprint is relatively small. There are still huge swaths of Detroit that nobody is going to want to wire, and fewer still are going to want to use tax dollars to help upgrade. It also probably goes without saying the city, while greatly improved, has problems that take priority over broadband. Still, alongside Google Fiber and municipal network builds, it's another example of how the best hope of breaking down the traditional telecom duopoly -- and returning to an age when customer service was a priority -- is happening piecemeal on the local level.

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Posted on Techdirt - 17 July 2015 @ 7:34am

Comcast Lobbyist Admits It Helped Create Netflix By Refusing To Compete On Price

from the own-worst-enemy dept

Top Comcast Lobbyist (sorry, Chief Diversity Officer) David Cohen was a one-man disinformation firestorm during Comcast's doomed acquisition of Time Warner Cable. Cohen has a nasty habit of spearheading greasy practices -- like paying minority groups to parrot bad public policy positions to create the illusion of diverse support -- then pretending to be outraged when these connections were highlighted. Cohen also amusingly declared that those opposed to the company's merger ambitions were ignorant and unreasonable, without a single supportable fact to be shared among them.

That's why it was pretty interesting to watch such a master of spin candidly acknowledge that Comcast has only itself to blame for Netflix's rise as an Internet video powerhouse. Calling Netflix the company's "ultimate frenemy" at a recent telecom conference, Cohen admitted that streaming services like Netflix were a self-inflicted gunshot wound, created in large part because the cable ecosystem charges way too much money for its services:

"While Cohen sees Netflix as a complement to Comcast’s cable offering, he acknowledges that streaming services, especially those that offer slimmer video packages like Sling TV and Sony PlayStation Vue, could potentially be more attractive to price-conscious consumers. "Part of this is a self-inflicted wound," Cohen said. “We have made video too expensive."
A cable or broadcast executive admitting they've refused to compete on price is a rare animal indeed, and even more rare from a legendary obfuscationist like Cohen. Normally, Comcast has downplayed their slow quarterly hemorrhaging of video subscribers, while Netflix, in contrast, added 3.3 million subscribers last quarter alone. Like most cable execs, the folks at Comcast are so used to a pampered duopoly, they see price competition as a vile alien abomination, justified in part by the millions of consumers that continue to pay an arm and a leg for bloated, over-priced lineups of unwatched channels.

These executives also honestly believe their inflexible legacy empires are able to out-innovate price competition by releasing abysmal "me too" products. Products like Comcast's recently launched and widely-ridiculed "Stream" platform, which is laden with so many caveats as to make it largely irrelevant in full competitive context.

Of course Cohen also got to the modern meat of the issue, reminding attendees at one point that no matter how large Netflix gets, it still needs to come through Comcast to get to its customers:
"Cohen added while some fear that more Netflix customers means less cable customers, he reminded the audience that reliable broadband is a crucial element of the streaming service. “Remember, you can’t get Netflix without broadband service,” Cohen said. “Those are 3 million customers of our broadband service."
And that's the rub. At the end of the day, Comcast still intends to grab its pound of flesh one way or the other, whether that's by forcing Netflix to pay direct interconnection fees, or by slowly expanding the company's usage cap and overage fee trials and hoping nobody notices. Either way, Comcast will continue to do absolutely everything in its power to avoid having to compete on price for as long as humanly possible. But as they say, admitting you have a problem is the first step to recovery.

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Posted on Techdirt - 16 July 2015 @ 10:29am

Netflix Now Supports Charter Merger After ISP Promises Not To Screw Up The Internet...For A Measly Three Years

from the promises-with-expiration-dates dept

Charter Communications is desperately trying to avoid the same fate that befell Comcast's doomed acquisition of Time Warner Cable. As noted recently, Charter hired long-standing net neutrality advocate Marvin Ammori to craft its promise to adhere to (most) of the FCC's new net neutrality rules for three years, regardless of whether the rules are overturned in court. Charter's also promising to avoid the implementation of usage caps and overages during that same time period, something most ISPs are hungrily eyeing in order to protect legacy TV revenues from Internet video.

But Charter's also now taking things one step further. In a new filing with the FCC, Charter declares the company will avoid screwing up the Internet for a whopping total of three years, and provide free interconnection to any large content or transit provider that adheres to certain traffic load and point of presence (POP) criteria. Three years obviously will go by in a flash, and the laundry list of criteria is long, giving Charter ample room (like any good merger condition) to wiggle over, under and around a notable chunk of the promise.

Still, the promising was enough to make Netflix happy, the company stating in their own filing with the FCC that getting free interconnection for three years was enough for them to be willing to sign off on the industry's latest mega-merger:

"This new policy and the commitment to apply it across the ‘New Charter’ footprint is a substantial public-interest benefit and will support scaling the Internet to meet consumers’ growing demand for online services and help foster continued innovation across the Internet ecosystem. Accordingly, Netflix supports the proposed Charter Time Warner Cable transaction if it incorporates the merger condition proposed by Charter."
If you recall, Netflix and transit operators have spent the last two years accusing last mile ISPs of intentionally letting transit points degrade in order to kill settlement-free peering and force Netflix into costly new direct interconnection deals. The problem is since both sides keep these business deals aggressively private, there hasn't been enough hard data to prove it (even though we're getting closer). Regardless, the mere threat of real net neutrality rules (you remember, the rules that were supposed to destroy the Internet) appear to have put the kibosh on a large chunk of this ugly infighting.

Needless to say, Netflix's approval appears to have come relatively cheap, but real consumer advocates I've spoken to are far from impressed with the three year window on any of Charter's promises, even with Ammori's involvement. As such they're pushing hard to either have the condition length extended significantly (five years or higher) or blocked altogether, since promising to play nice isn't worth all that much if your promise has an expiration date. It's worth reminding readers that while Charter's whispering sweet nothings in the ears of regulators and Netflix, it's simultaneously suing to destroy the FCC's new neutrality rules, ensuring that there's no mechanism in place to police Charter once the promised window for good behavior closes.

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Posted on Techdirt - 15 July 2015 @ 12:50pm

We're Still Cultural Nitwits When It Comes To Cell Phone Etiquette And Enforcement

from the slow-learners dept

Apparently we're still rather idiotically feeling out the boundaries of cell phone etiquette and common sense after decades of cellular phone experience. Last week a Broadway play attendee nonchalantly climbed on stage before a production of Hand of God to use the set's (inoperable and quite fake) power outlet. When tracked down by one news outlet, the man proudly proclaimed that he was drunk, and that he needed to charge his phone just then because "girls were calling all day. What would you do?" There's a video of said nitwit's public apology to the theater community making the rounds.

We're apparently not much better when it comes to enforcing cell phone etiquette. A week later, Actor Patti LuPone broke proscenium and ripped a cell phone out of a theater attendee's hands after the audience member wouldn't stop texting during a performance. LuPone issued a statement shortly thereafter suggesting that idiots without etiquette have forced her hand in the matter, and she's not thrilled to be forced into the role of audience baby sitter:

We work hard on stage to create a world that is being totally destroyed by a few, rude, self-absorbed and inconsiderate audience members who are controlled by their phones. They cannot put them down. When a phone goes off or when a LED screen can be seen in the dark it ruins the experience for everyone else - the majority of the audience at that performance and the actors on stage. I am so defeated by this issue that I seriously question whether I want to work on stage anymore. Now I’m putting battle gear on over my costume to marshall the audience as well as perform.
Across the pond, police have shown they're still learning the lines of cell phone etiquette as well, after UK Transit police had to walk back a recent decision to arrest a 45-year-old man for "abstracting electricity" by charging his iPhone via a train power outlet:
"She said I’m abstracting electricity. She kept saying it’s a crime. We were just coming into the station and there happened to be about four police officers on the platform.

"She called to them and said: 'This guy’s been abstracting electricity, he needs to be arrested'."
Some Internet forum users state that the outlets are generally reserved for cleaning the trains, and often feature stickers stating "not for public use." Still, if transit authorities don't want people using the outlets, it makes sense to make them less accessible. The law in question is also pretty clearly focused on cheating utility meters and is reserved for "high value" theft where the victim faces "substantial loss," making the case a bit of a tough sell. As a result, the police subsequently "de-arrested" the man after realizing that they were "abstracting" common sense from their daily enforcement practices:
"We were called to Camden Road London Overground station on Friday 10 July to a report of a man becoming aggressive when challenged by a PCSO about his use of a plug socket onboard an Overground train."

"Shortly after 3.30pm, a 45-year-old man from Islington was arrested on suspicion of abstracting electricity, for which he was de-arrested shortly after. He was further arrested for unacceptable behaviour and has been reported for this offence."
Given that Motorola researcher Martin Cooper designed the first cell phone back in 1973, you'd think that after 42 years of experience with the devices we'd be a little better at understanding the socially-acceptable norms for using them -- and preventing their use. Of course given that people still talk in movie theaters, often don't pay attention to what their kids are doing, and frequently treat one another abysmally, that inconsiderate boneheadedness certainly isn't the fault of the technology.

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Posted on Techdirt - 15 July 2015 @ 8:36am

Putin Aide, Apparently Non-Ironically, Gives Facebook A Lecture On Free Speech

from the pots,-kettles,-and-more-pots dept

As everybody knows, Vladimir Putin simply adores free speech. That's made perfectly clear every time a political challenger winds up mysteriously murdered on a Moscow street, or any time his massive, manufactured troll army shouts down those critical of Russian policies on the Internet. It's made repeatedly clear in percussive fashion each and every time an outspoken journalist winds up mysteriously murdered for simply asking questions, and it's abundantly clear from the 10,000 or so websites the Russian government aggressively filters.

Like so many of his international mega-nation contemporaries, free speech is kind of Putin's thing.

So without the slightest whiff of hypocrisy it should be unsurprising for many people to learn that Putin and friends think Facebook's a little heavy handed on the free speech front. Putin aide Igor Shchegolev is urging Russians to abandon Facebook after the social media website deleted a number of posts containing the word "khokhol" -- which in certain context can be used insultingly to suggest Ukranians are backward peasants. This is, says an administration that thinks assassination an acceptable conversation and debate tactic, wholly unacceptable:

"Senior officials are urging their countrymen to abandon Facebook in favor of domestic social media, saying that the latter offer greater freedom of speech, after Mark Zuckerberg’s firm deleted a string of posts containing a slang Russian term for Ukrainians...The news agency ITAR-TASS reported Igor Shchegolev, an aide to President Vladimir Putin as saying that switching to rivals like Vkontakte would help users avoid having their content blocked."
Russia's relationship with Facebook was already strained after the website temporarily suspended the accounts of Kremlin media watchdog Maxim Ksenzov, and pro-Putin writer Eduard Bagirov. Of course that's not to say Facebook isn't equally awful when it comes to free speech. While Facebook says it deletes the word because it can be used as an ethnic slang, "Khokhol" can also be used to describe a specific haircut and isn't always used as an insult. According to the Russian Times, Russians have been having a very good time highlighting the stupidity of Facebook's inconsistent policies:
"Intrigued by the phenomenon, Russian journalists and bloggers began to experiment with testing Facebook's limits, deliberately using the word khokhly in their posts. Last week Facebook issued a one-week block of journalist Maxim Kononenko's page for posting a poem by Alexander Pushkin, a man widely considered to be Russia's greatest poet, containing the word khokhly."
Meanwhile, Russian Facebook equivalent Vkontakte was quick to welcome annoyed users into the fold:
"We're ready to accept all the blocked Facebook users. Welcome! Again :)"


Perhaps Putin's government and Facebook can somehow make up and join forces to create a global super-storm of censorship and incompetence? Imagine the possibilities of somehow combining Facebook's love of overly-curated and blandly-unoffensive walled gardens, with Putin's utterly brutal love of censorship and murder. Surely there's an amazing new business model buried somewhere therein.

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Posted on Techdirt - 15 July 2015 @ 4:58am

Cord Cutting Is About To Punch ESPN Squarely In The Face

from the dying-cash-cows dept

If there's a primary reason for ridiculously-high cable TV prices, it's sports content generally, and ESPN specifically. On one hand, sports programming is one of the biggest reasons that people continue to pay for traditional TV. But with the slow but steady rise in cord cutting and an increase in so-called "skinny bundle" streaming services, it's pretty clear that the "worldwide leader in sports" is starting to get a little bit nervous. Cord cutting has hit segments like kids broadcasting harder than other areas, but it's increasingly clear the death of the traditional cable cash cow is headed in ESPN's direction at a pretty reasonable clip.

According to a recent Wall Street Journal report, the channel is tightening its belt after starting to feel the cord cutting (and more accurately, the cord trimming) pinch. ESPN has lost 7.2 million viewers in the last four years, and a little more than three million in the last year:

Since July 2011, ESPN’s reach into American homes has dropped 7.2%, from more than 100 million households—roughly the size of the total U.S. pay-TV market—to 92.9 million households, according to Nielsen data. Viewership of SportsCenter, its marquee and high-margin sports-news show, has sagged since September, due in part to the fact that younger consumers are increasingly finding sports news at their fingertips on smartphone apps.
There's a cable and broadcast industry narrative that consumers just can't live without sports, and the blathering talking heads on ESPN somehow get included in this argument. But a recent survey by DigitalSmiths suggested that only 35.7% of consumers would include ESPN in their cable lineup if they were able to pick and choose their channels (a la carte TV). In fact, the channel came in at 20th place in terms of the most desired channels among those surveyed. So according to SNL Kagan data, there are about 94.5 million homes each paying $6.41 per month ($7.5 billion annually) for a channel they're not really all that interested in.

That's pretty clearly not sustainable, and ESPN could be served by getting ahead of the curve and launching its own direct-to-consumer streaming service. But the Journal points out that the company's current contracts with pay TV providers state that if ESPN goes that route, the cable operators have the right to boot ESPN out of their core channel lineups:
If ESPN offers its channel as a direct-to-consumer streaming service, some pay-TV operators have the contractual right to boot ESPN out of their most widely-sold channel packages and sell it a la carte, according to people familiar with the matter. ESPN would have to charge about $30 a month per customer in an over-the-top offering to make the same money using that model, analysts say. But those distributors would have the right to undercut ESPN in their retail pricing, the people said.
And you might recall that ESPN sued Verizon when the company decided to pull ESPN out of the core channel lineup, arguing at the time that this was necessary to protect "innovation":
ESPN is at the forefront of embracing innovative ways to deliver high-quality content and value to consumers on multiple platforms, but that must be done in compliance with our agreements. We simply ask that Verizon abide by the terms of our contracts.
In other words, if ESPN actually decides to get out ahead of cord cutting and cord trimming by focusing on a direct-to-consumer effort, they'll open the door to more cord cutting and cord trimming, since they'll no longer be able to force people to pay an arm and a leg for a product many of them don't actually watch. Isn't the Internet video revolution kind of beautiful?

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Posted on Net Neutrality Special Edition - 14 July 2015 @ 6:25am

Comcast's Answer To Google Fiber, A Service That's Twice As Fast, But Four Times As Expensive

from the fine-print dept

Back in early April Comcast unveiled its response to Google Fiber: a new two gigabit service the company promised would be made available to eighteen million customers before the end of the year. For the next four months the company made a lot of PR references to this ultra fast tier, but despite an April promise the product was launching "soon," there's five months left in the year and nobody can actually sign up for it. Comcast, now facing Google Fiber, indie ISP and municipal broadband pressure in a growing number of markets, has also consistently refused to state how much this new service would cost.

With the new service's website going live, it's now pretty clear why. While Google Fiber will offer users a symmetrical gigabit connection for $70 a month (with a waived $300 install fee if you sign a one year contract), Comcast is offering users twice the speed with this new "Gigabit Pro" service -- but at around four times the cost. As the fine print on the website indicates, Comcast also just can't help itself when it comes to caveats:



So in addition to the double gigabit service costing users $300 a month, Comcast's attempt at competition comes with a $500 installation fee and a $500 activation fee. Users also face a more than $1000 early termination fee should they leave before the two-year contract is up. That's of course before any other mystery fees Comcast adds below the line. You'll also need to wait six to eight weeks after ordering to actually get your service, which thanks to the usual "up to" language may or may not actually reach advertised speeds.

On the plus side, while Comcast continues to experiment with usage-based pricing this tier won't be capped, and it looks like they're offering a $159 promo price for a limited time (though only in some markets and only if users agree to a three year contract). And at least Comcast is building out its network, something you'll recall wasn't supposed to be possible thanks to the horrible, investment-stifling menace of ISP Title II reclassification and new net neutrality rules. That's assuming Comcast's plan isn't just "fiber to the press release," something that's not entirely clear since nobody has been able to sign up for this service yet.

Still, $1000 in buried fees right out of the gate is a very Comcast-esque way of competing when companies like Google Fiber, Sonic.net and and Tucows/Ting are trying to go out of their way to eliminate obnoxious hidden fees as a user pain point. And in places like Atlanta, where Comcast is experimenting with usage caps, Comcast is making avoiding said caps only possible if you're willing to pay an extreme premium for a service with speeds few people will ever need. In short, Comcast is offering two gigabit service simply to say that they do; service pricing on Comcast tiers that people actually buy will meanwhile continue their slow march skyward.

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Posted on Techdirt - 13 July 2015 @ 12:45pm

Comcast's New Half-Assed Answer To Netflix Is No Answer At All

from the learn-to-compete dept

So far, legacy cable operators have crafted an ingenious, two-pronged response to the rising threat of internet video competition. One, mindlessly raise programming and equipment rental rates (since we all know that traditional cable TV is a cash cow that will live forever). Two, pretend to be innovative. This latter part doesn't have to consist of much; you have to do just enough to make it look like you give a shit about television's evolution, like offer a sloppy Hulu clone under your own brand, or launch a "me too" streaming service with so many caveats to make it largely useless.

That's apparently Comcast's MO with the launch of its new creatively named "Stream" internet video streaming service. According to the company's announcement, Comcast's Stream service will offer users a handful of channels (including HBO) with ads, for $15 a month. The biggest caveats: you can only use the service if you're a Comcast "Xfinity" broadband customer, and you can only use the service while at home on your Comcast Wi-Fi connection. It's yet another cable industry attempt to keep cord-cutters in house by offering them something that looks like innovation, but falls well short of the mark.

Comcast and other cable operators are obsessed with the false belief that you can create such wonderful, amazing walled gardens that traditional cable users will somehow be impervious to obscene pricing and will never want to leave. That's the mindset behind the industry's TV Everywhere initiative, and it's a mindset on proud display here. But when you actually look at the pricing and value proposition on display, it's pretty clear where Comcast still thinks it can steer users:

"Here’s some quick math: Comcast sells Internet at different prices in different markets, but right now a basic broadband-only subscription in its home market of Philadelphia is $67 a month. Add in the cost of Stream and you’re up to $82 a month. But Comcast sells a basic TV + Broadband package, including HBO, for $45 a month. You will want to read the fine print when you compare the two offers.** But you might reasonably conclude that Comcast would still rather sell you cable TV than Web TV."
Gosh, yes, you might just reasonably conclude that. Comcast (like all cable operators) is stuck between a rock and a hard place. If it offers a truly disruptive, well-priced internet streaming service, it will start heavily cannibalizing all of the customers currently paying an arm and a leg for traditional television. The answer? Cable will have to do the unthinkable and begin competing on price, offering traditional cable TV and streaming capabilities and a better bundle price. Yes, the reduction in quarterly revenues is going to make investors and executives cry over their lattes, but it's a smarter play over the long haul than responding to fleeing, cost-conscious customers with the inept one-two punch of yet more rate hikes and the pretense of innovation.

Besides, said executives and investors can then turn around and recoup those losses by socking broadband customers with broadband usage caps and overage fees, right?

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Posted on Techdirt - 10 July 2015 @ 11:44am

South Park's Matt Stone To Silicon Valley: Screw You Guys, I'm Going Hulu

from the not-really-stickin'-it-to-the-man dept

South Park creators Trey Parker and Matt Stone have built an entire comedy empire on the back of free distribution. The pair first came to fame by circulating their animated short, The Spirit of Christmas, for free first as a popular bootleg VHS and later on the Internet. They also were among the first TV show creators to operate their own web portal to provide content for free, striking a (at the time) groundbreaking 50/50 ad revenue sharing deal with Viacom. They were the grandfathers of viral content, with free distribution leading them to the mammoth financial and critical success South Park saw at its peak, and continues to enjoy today.

So with the news that Parker and Stone have struck a new, $192 million exclusive, walled off South Park streaming deal with Hulu, it's a little odd to see Stone suddenly forget what made much of his rise to success possible. In an interview discussing the huge Hulu deal, Stone laments how amorphous, villainous "tech guys" demanded he make his content available online, for free:

"This is now particularly satisfying," said Stone in a recent discussion. "It comes full circle since the tech guys came to Hollywood and said you better give us your stuff for free to put online or else it will be taken from you anyway."
The argument that "tech guys" just want everything to be free is a fairly normal response by those who don't understand the digital economy, and are informed that you can reduce piracy by incorporating free into your business model. But again, this is a particularly weird comment coming from Stone, whose entire career foundation was built on such models (apparently begrudgingly). That freemium models help reduce piracy is something Stone appeared to understand perfectly well when talking to Boing Boing back in 2008:
"Basically, we just got really sick of having to download our own show illegally all the time. So we gave ourselves a legal alternative."
Both Stone and Parker also seemed to perfectly understand the benefit viral, free distribution had when talking to the New York Times in 2010 about their continued success:
"NY Times: You’re now about two years into the operation of your South Park Studios Web site, where just about all the content is available for free. Does the gamble seem to be paying off?

PARKER: To be honest, we don’t care about the money. We both have all the money we need. It’s really just about the survival of the show. First hearing about, O.K., we’re going to be putting everything on the Internet for free, I was like, Really? Wow, O.K. [laughs] That’s the world we live in. I’m actually surprised at how smooth the transition is going.

STONE: If we had years and years to discuss it, and we had determined what the right course of action was – but we don’t have years and years. We’re doing the show right now in 2010, and the reality is, we have to have our show on the Internet. Would the network like it if everyone who watched it for free on the Internet actually had to pay? Yes. But it always ends up helping us when people can see the show.
Yet here we are, the better part of a decade later, with Stone clearly annoyed by what he insists is Silicon Valley's demand that he not get paid for his hard work:
"Frankly, in the past I haven't much liked dealing with the people from Silicon Valley. I don’t like our stuff being talked about as content. Spoons are metal and guns are metal, but they're not the same thing. We don’t make content. We make television. And that's now what digital understands it has to pay for."
Arguing that "content" is a reductive word is understandable, but this narrative that ambiguous "digital" enemies in Silicon Valley don't want to pay for television programming is odd, since "digital" has been paying an arm and a leg for content since inception. Netflix, for example, is expected to spend as much as $5 billion in 2016 on programming, making the streaming operator the second largest content buyer behind ESPN. Does that strike you as a "digital" industry that doesn't think there's a price tag for quality television? Perhaps Stone is just developing a nasty case of "get the hell off my lawn" and no longer has the best memory, perched as he is upon precariously-leaning towers of money.

Streaming companies, broadcasters, and content creators alike also don't appear to understand the potential pitfalls these exclusive streaming arrangements create. While 2015 has been a banner year for the evolution of internet video by any standard, there's been a troubling rise in not only exclusive content deals (Hulu, owned by Comcast/NBC, also shelled out $160 million for exclusive streaming rights to Seinfeld), but also standalone streaming services from every broadcaster under the sun (even those B-grade schlock masters over at Lifetime), each of which is going to be eager to lock their own content down exclusively to keep it out of the hands of more successful third-party operators.

While streaming operators might correctly believe that having exclusive access to select programming can lure customers in the short run, fracturing the content availability landscape in such a fashion could have some nasty downsides. Making consumers hunt and peck their way through an endless variety of $7 to $40 streaming packages for what they want might easily drive annoyed consumers back to piracy (something we've been saying for years). Streaming operators also risk driving those users back to cable if the industry ever wakes up and decides to offer a more uniform value proposition. Right now that's not a risk, since cable execs are still obliviously raising rates in the face of increased competition; but it will be.

Internet video was supposed to be something different and better, built on the legacy dinosaur bones of an industry obsessed with turf protection and utterly terrified of disruption. There were notable lessons learned during internet video's rise during this period; hopefully they're not all mysteriously and suddenly forgotten just as internet video starts reaching its true potential and the money truly begins to flow.

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