Tag Archives: Comcast

Comcast and regulation

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I believe that the 300 GB data cap that Comcast is tossing around is tomorrow’s 640k predictions from Microsoft. In 5 years when they are claiming to plan to implement it, 300GB will be woefully small. As it stands many games are 50GB and likely will only grow. As will the size of our movies we stream and other services that will develop in the next five years.

Comcast’s arrogant attitude towards it’s customers can only be described economically in one way: market failure.  If we had a strong competitive telecom market, Comcast would not be able to dictate prices in this way. We know this is true because we can see prices AND speeds that are significantly better elsewhere in the world.

There are two other results of this market failure, pushing regulation that prevents competition and preventing regulation that would prevent a foreclosure of another market. I’ll start with the regulation preventing competition.

In my last blog I mentioned an idea call private public partnership. This is the concept of a municipality working with a private enterprise to spread the risk of implementing a local high speed network because one of the big players won’t. Comcast and other telecoms have pushed and been successful at making these partnerships illegal in a few states. This means a small rural community can’t develop their own fiber network if comcast doesn’t do it for them. It also means a big city like New York couldn’t either. This type of regulation only hurts competition and helps comcast control the market. In the US these partnerships have worked well. Provo Utah sold theirs to Google.

The other way that Comcast is using this market failure is to push the idea that net neutrality is regilation. It is a bit, because it prevents comcast from using a monopoly to foreclose another market. This is what Microsoft got in trouble for with Internet Explorer.  Leveraging the monopoly of Windows to push out other browsers. In the EU the ruling against MS really help other browsers immediately. Comcast will likely try a similar tactic with their Xfinity platform by never having it count against your data cap. Pushing people to their platform and squeezing out Netflix.

The play to get Netflix to pay them is a long term play, hurts Netflix now, but essentially will be funding further development of Xfinity.  Don’t forget, Xfinity will likely get Universal content earlier as they own that conent. This will give their platform a distinct advantage over Netflix. It’s pretty obvious to everyone that the future of in home entertainment is streaming content. Hence, Google looking to buy Twitch.

Comcast is using the anti – regulation faction to fight net neutrality while leveraging that same group’s anti- government sentiment to prevent novel forms of competition to exploit customers and move into new markets. This is a dangerous problem because they will keep doing this to push out other competitors.

Should we celebrate about Google joining net neutrality fight?

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It’s time we be skeptical of high tech companies that support policies that we want. Today, a large number of tech companies came out against the FCC’s plan to allow internet fast lanes. They aren’t as bold as Mozilla in their claims, they don’t push for the most extreme best for the consumer perspective. We, as consumers, have to understand there’s a reason for this. These companies (and there are a lot) wrote the letter without stating what their position actually is, just that they are for a “free and open internet.” This is essentially a dream statement for a lawyer/lobbyist, because “free” and “open” can mean a variety of things based on that company’s perspective.

These companies are willing to push for a free/open internet insofar as it enables them to make money. We have to understand that. Many of these companies are looking to disrupt incumbent market players and are leveraging the internet to enable them to do that.

Normally, I’d be really excited about all these companies coming out in favor of net neutrality. However, because of their tepid support, their lack of recommendations of what to do to address the net neutrality issue, and tardiness to the conversation I’m concerned as to what their actual motives are for this debate. This is a very different discussion than SOPA, where just coming out against the bill was enough. In this case it’s not, we need them to provide clear direction on what the FCC SHOULD do instead. This provides the FCC a path forward and a way to drive the conversation. Without that, essentially there’s no clearly articulated alternative during THIS debate. Yes, they’ve made an argument before, but they aren’t this time.

I also am concerned by this turn of events because of the recent report that Google and the NSA had a very close relationship. In very strict version of net neutrality deep packet inspection wasn’t possible because there was no way to actually do it. The first step to packet discrimination is knowing what’s in the material. Truly end-to-end net neutrality precludes the ability to eavesdrop and snoop on content being passed along the IP backbone. Any sort of relationship between the NSA and arguably the largest internet company in the world necessarily limits the full extent that Net Neutrality can actually be implemented.

Furthermore, we also must remember that a large number of these companies that are now for Net Neutrality were also for CISPA which includes handing over data to the government. Which, based on Google’s relationship with the NSA, they essentially did anyway.

So, it’s a good thing that these companies came out for Net Neutrality because truly only the power of their lobbying can overcome the FCC’s proposal and push Comcast and Verizon into accept the new rules. I don’t think that we citizens could do it on our own.

(if you want to try to fight corruption that’s sort of on display here, check out Mayone.us)

FCC, Net Neutrality, and the Internet as a platform

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The proposed FCC rules for Net Neutrality are pretty terrible. The Verge has a pretty good write up on them, here. Is this a good or bad thing? Personally, I think this is terrible for the future of innovation as I’ve written about before in a few spots, most recently here. I also think it depends on what you think about the role of the ISP. If you think that the role of the ISP is to provide a conduit to the internet and simply pass data to you, then Net Neutrality is for you. If you believe that the ISP should actively play a role in the content you seek, then Net Neutrality is not for you. If you think that the ISP has a role in shaping the way data flows, has the right to extract as much money out of the internet ecosystem, then you probably don’t think that Net Neutrality is the right thing either.

I believe that this comes from a fundamentally different world view on how the economy should function. There are a lot of people out there that truly believe that organizations have the right to maximize profitability. I don’t really think that’s true. I think that organizations have a role to play and those that exploit platforms like the internet are drains on the economy and limit our ability to innovate.

Many of the developers of the initial internet protocols strongly believe in net neutrality. Ranging from the guys that used to run Xerox PARC to Tim Breners-Lee, there’s a lot of different push back against non-neutral positions.

I think from an evolutionary economics standpoint, technology platforms of the past have been wildly successful because they’ve been able to continually lowered in prices which increases accessibility. This drives further adoption of that technology as a platform encouraging more companies to compete to make that technology platform. Some historic platforms are roads (shocking), steel, silicon chips/processors, and now the internet.

Roads have been pretty much government sponsored and open for just about anyone to use. In Portland, the Blue Line MAX line has driven $7 Billion in new development, the largest for a new commuter line anywhere. Computer chips are near and dear to my heart as I’ve worked at a few companies that make them. I think that we can all see in our daily lives how these chips have dramatically changed the world. That the company that makes chips (Intel) is worth a lot less than a company that leverages those chips (Microsoft). The combination of these two companies has essentially driven a great deal of the modernization we’ve experienced in the last 20 years in the US.

In the last 10 years the internet has driven the worlds most valuable companies. It has more quickly shifted how companies engage with their customers and powerful retail based stores have fallen on extremely hard times (Sears/KMart,etc…). My job is only made possible because of the internet I work with people in different states every day.

The fact that it will soon be government policy to enable a company to seek as much money from every user of their platform is only going to hurt the entire ecosystem. If my service stays the same but my price continually increases, that means I can’t afford to buy services that I want online, so I’ll switch to other options or drop the options all together. This will kill competition and negatively impact consumer choice. Furthermore, if I’m paying for Netflix and Comcast and Netflix is forced to pay for access to Comcast customers, then Comcast is charging everyone. I’d expect massive quality upgrades on a continual basis or something in return for all this extra cash flow. Instead it will likely go to investors in the form of higher profits.

Who’s responsible for the internet’s capacity?

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AT&T thinks that Netflix is trying to pass off the cost of network connections to end customers. There have been a few different displays of the architecture of the internet. Netflix operations at a different layer than AT&T does – Netflix is an application, so it runs on a layer above the network layer, which AT&T operates. Netflix doesn’t really care who actually sends their bits to the end user – they just care that they get there in a fashion that enables high def video. To this end, they purchase bandwidth from a company, mostly Cogent, and I pay Comcast (others pay AT&T) for me to receive those bits from the bandwidth provider of Netflix. I pay Netflix for access to their content.

Based on this payment model, if there’s not enough bandwidth for Netflix and I’m paying AT&T or another ISP for accessing Netflix, it’s up to them to make sure I have that connection. Content is King, so for me, it’s most important that I can access what I want when I want. That’s why I have an ISP so they can let me see what I want.

I think that the best analogy for content trumping gate keepers are the examples of higher premiums from popular channels. In some cases Timewarner cable pushed for lower rates to show a specific channel to their subscribers. In this example Forbes points out that ESPN costs $5.54 per viewer, they wanted to lower that price and pulled the channel out of rotation. This made a lot of people unhappy and in some cases people left Time warner over the issue.

Essentially, this is the same thing that is happening with Netflix. The ISPs don’t want to pay to upgrade their infrastructure to ensure that the consumers of media online (many of these people paying for higher download speeds and higher data caps). Netflix is providing a service that these people are willing to pay for but cannot control how the ISPs interact with their intermediaries so is in a tough spot. It’s a target because of it’s popularity and has no control of how anything gets to a specific user. That’s why it’s looking at the peer2peer model (which is how Skype keeps their rates low) so it won’t need to go through Cogent and will likely burden other parts of the network very differently.

I believe that if an ISP cannot meet it’s advertised speeds 90% of the time, then they need to update their infrastructure to meet my needs. If they throttle a popular service I’m watching and thus make it unwatchable, they need to upgrade their infrastructure. Most ISPs have an extremely high profit margin, which means that it’s coming out of their infrastructure investment and are not actually adding value.

There are many companies that are responsible for the capacity of the infrastructure and all of them can negatively impact our ability to use the internet. However, from an end user perspective, my ISP is on the hook first, then everyone else.

Culture wars: the battle we didn’t know we’re losing for access to our culture

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Our culture is being held hostage

Humans are a collection of story tellers. When we hang out with our friends, new and old, we spend a great deal of time telling stories. These stories define who we are. In cases where we first meet we try to find common ground through current events, current cultural experiences, like the Olympics – TV shows, books, and movies. When you know nothing about another person, these are the only basis you have for building an understanding of what they stand for and who they are. To be honest, in many ways they are terrible indicators of what type of person they are, but they can help you identify if that person is someone with a similar world view to your own. Once you move past those conversations you move on to personal stories. The things that made you laugh and, conscious or not , enter into a game of one upmanship. Now most of the time you’re just trying to find a similar experience to relate to theirs, but it can be misconstrued.

In many cases the only context you’ll ever have with the person is through a shared experience, access to our communal culture. Regardless of our awareness or how willing to admit it we are, we have cultural gate keepers. To access any of our current culture we have to pay to access it. That’s fine, the people that produced it should definitely get paid for the work that they did. However, the people we’re paying are necessarily the people that produced the work. We’re paying for internet access at least twice (if you have home internet and a mobile data plan). In some cases that means you’re paying the same company twice for access to the same thing (verizon wireless and verizon FiOS).

Additionally, these companies have no incentive to provide better access to the content that you want o see. It’s actually in their best interest to make it more difficult and have worse service, so that the services that you want to access will pay them again for you to access the service that you are paying to access. Furthermore, these same companies think that if you use the internet a lot you should pay a higher rate!

This isn’t really anything new. I’ve been saying this for a few years. But what drives this is rent seeking behavior, investors that don’t really know what’s going on, and arrogance.

Shrinking Public Domain

The public domain is the area of our culture that no one owns any more. It’s been published for so long that it’s free to be consumed by everyone. Disney hates this. The main reason is that Mickey Mouse should be in the public domain, or would be based on the laws at the time of his creation. However, Disney is not above using the public domain to make a lot of money. Here’s a list of movies they’ve created based on public domain (over 50). FIFTY movies based on the public domain – it’s great for a corporation to exploit the public domain, but if you try to do something you’re going to get sued.

I’ve written about Lawrence Lessig a lot, he’s a bit of a hero of mine. He’s got a lot of integrity and really pushes for what he believes. He recently was sued (he’s a copyright lawyer) and forced a settlement with the company. He’s one of the few people that can do this, he has the knowledge, the money, and the desire to do this. In many other cases, it’s up to pro bono lawyers to fight these cases because the person in the wrong cannot fight. It’s literally David vs. Goliath. However, if David is provided the right resources most of the time Goliath goes down.

This is the case we’re dealing with in the propose Comcast Time Warner merger. Where the people most impacted have little voices. Companies are pushing to turn more of our activities into opportunities to make money. Gamers that stream on Twitch are going to be pushed to pay more, Twitch is going to be pushed to pay more for high quality access for uploads and downloads, and the people watching those streams are going to be forced to pay for quality streams. This is our culture. We are people that don’t want to be controlled by cable companies. We don’t want to be forced to deal with this. Our needs are not being met by the market.

Because we’re disparate, companies and incumbents are winning the culture war. Most people aren’t aware that we’re in a battle over affordable access to our culture. Memes, TV shows, Movies, and whatever retarded shit we watch on the internet is our culture. Making it inaccessible is a battle our gate keepers are winning. We need to figure out how to fight back. I plan on switching from Comcast when I move and never going back. I plan on switching to T-mobile and never going back to Verizon. It’s time to put our money where our mouth is. It’s going to be painful, but without our support those companies can’t oust the incumbents and cannot force change.

We need to force change with our wallets.