Archive for March, 2010

Four background statements and a question:

1.  FCC says that as of about 2012 about 90% of Americans will be able to buy 50-100 Mbps download speeds – for high-speed Internet access.  (Asymmetric upload, but that’s for another day.)

2.  At that point, however, 75-85% of the population (again, according to the Commission) will likely have only one choice of provider for this kind of speed: their local cable operator.  The major cable systems have clustered their operations and don’t compete with one another.

3.  Verizon’s FiOS fiber-to-the-home Internet access service is and will be competitive with the cable high-speed access, but Verizon does not plan to expand this service.  (Boston, Baltimore, and Alexandria, forget it.)  So that’s why 75-85% of Americans will have only one choice of provider.

4.  Satellite providers can get you content, but not the same kinds of Internet access speeds that your cable operator will be able to provide.  FiOS can get you speeds, but not the same sports and other content that cable can.  And DSL and wireless just can’t compete on the speed factor.

Then what happens?

Last Thursday’s House Commerce Subcommittee on Communications, Technology, and the Internet hearing about the National Broadband Plan included a surprising moment when one of the FCC commissioners said that broadband had never been regulated under Title II of the Communications Act.  (This is at 1:46:30 of the archived webcast.)

This was surprising – because until August 2005, high-speed access to the Internet over telephone lines via DSL technology was regulated under Title II of the Telecommunications Act as a common carriage, telecommunications service.  Then, following its decisions about cable modem service, the Commission deregulated DSL in 2005.

It’s fair to say that “You’re planning to regulate the Internet!” is something that people say when they want to raise emotions – Rep. Mike Rogers (R-MI) made this assertion during the hearing.  This is useful to incumbents who want to squelch any hint that high-speed access to the Internet should be reclassified as a “telecommunications service” under the Communications Act.

So let’s unpack these terms.

There’s a difference between high-speed access to the Internet (also sometimes called “broadband”) and the Internet itself.  The Internet can be understood as the protocols that allow computers to host and access files without asking the network provider for permission – it can also be understood as the applications, content, and flow that people access when they are online.

Looking through either of these lenses, “the Internet” is not the same thing as the transmission services that carriers provide.  You can think of “broadband” as an on-ramp to “the Internet,” and we’ve regulated the on-ramps in the past.  For decades, transport/transmission services were regulated by the FCC.

So high-speed access/transmission, or “broadband,” has certainly been subject to Title II regulation in the past, and the earth continued to spin on its axis.

“The Internet,” if you think of it as applications and content, is certainly subject to the rule of law.

The problem is that people often use “broadband” as an omnibus term meaning both the on-ramps and the applications/content online.  (The FCC Commissioner may have been using the term in this way, and he later said that “broadband transmission” had been regulated, but not “broadband services.”)  The FCC has not applied Title II regulations to applications/content – for good reason.  The highway is clearly distinguishable from the cars that use its services.

It would help if we called the on-ramps “high-speed access to the Internet” instead of “broadband.” Commr. Clyburn does this, and it’s helpful.

The blurriness of “broadband” as a term causes confusion.  As long as we’re stuck with this word, we might as well be clear about its history.

There’s a good back-and-forth between Chairman Genachowski and Rep. Rogers at about 3:04 in the archived hearing webcast about “regulating the Internet.”  Genachowski is very clear.

So – broadband HAS been regulated in the past, and the FCC is NOT planning to regulate the Internet.

Karl Bode put up a post recently about TV Everywhere.  There’s a lot to chew on in the comments section.  Here’s a pro-bundle comment, comparing the price of bundled services to the daily lunch special down the street and concluding proudly that these bundles give the best value for money that a consumer sees.  (You really should read this guy’s comments – they’re extraordinary.)  Someone responds:

“[E]nough with “bundles.” The #1 reason the bundles exist is to give perceived value to the person paying the bills each month and to simplify it. They don’t like seeing line item after line item with a monthly charge some of which they think they can do with out. Again, the bundles prevent people from calling up and saying “I don’t want to pay $8.95 for X anymore, please cancel it.” You can’t really do that when all the charges are on a “Xtreme Bundle ABC – $139.99″ can you?”

In a BernsteinResearch report today, Craig Moffett says that we may be reaching the tipping point for bundles and consumers’ ability to pay.  “[O]ne can’t help but feel we’re on the brink of breaking the camel’s back. The price of video is not infinitely expandable.”  In 2009, Comcast’s monthly revenue per video customer went up 6.4% – from $111 to $118.

But if you’re the bundle guy in the DSLReports comments section, that’s just great:

“You know..what the REAL problem is is that some people spend SO much time trying to save a buck..that they miss out on the real savings.”

Great weekend, everyone.

OSTP is suggesting today that we need to unleash some students.  They’re the ones who are going to come up with the next great digital applications that will change everything.  Students have done pretty well so far, as a group, if you count Mosaic, Ethernet, graphics, and a bunch of other things – including Google.

From my personal experience I can tell that there are a lot of students out here in America.  What’s missing?  Well, money, access to superfast networks, incubation of genius ideas, encouragement, and time to focus.  OSTP is saying that companies, universities, and students can work together to create the kind of dense, playful, experimental context within which student experimentation thrives.

Help them out – help all of us out.  Send your best ideas along these lines to broadband@ostp.gov.

Let’s say you’re watching TV (about 35 hours a week) and simultaneously clicking around online.  Nielsen says (ArsTechnica here) that’s happening more often these days for almost 60% of us.

Here’s the question:  Why doesn’t your set-top box allow you to see anything you want?  Why does the laptop screen allow you to see video from whatever source manages to get itself online, but the set-top box hooked up to the TV screen doesn’t? Why don’t TVs have modems that allow standard connections with any content?

The FCC has taken up this question:

The convergence of the television and content delivered by IP makes this a critical time to promote innovation in set-top devices that could support the Commission’s effort to drive broadband adoption and utilization. Accordingly, the Commission wishes to consider taking an active role in formulating a solution that will spur the development of a retail market for nationally portable video devices that will work across all delivery platforms, including MVPD platforms and broadband-based video platforms.

We don’t have a competitive retail market for set-top boxes.  Motorola and Cisco together have a 95% market share.  Although the FCC mandated back in 1998 that subscription video providers separate the system that customers use to access programming (the “conditional element”) from the system or device customers use to navigate the programming (something like a swap-out SIM card for set-top boxes), this hasn’t worked.

In the National Broadband Plan, the Commission makes some strong recommendations for set-top boxes.

1.  All video distributors (cable, telco, satellite) should install a gateway device or functionality in all subscriber homes that will create a bridge between their paid content and open standards.  The idea is to ensure that consumers have a seamless way of moving between the two – so you could watch your favorite cable channel, go to your favorite online site, and then move over to a free over-the-air digital signal without leaving your position on the couch.

2.  These gateways should allow a huge variety of consumer electronics devices (set-top boxes, TVs, other in-home devices) to access all paid-subscription content to which the consumer is a subscriber and display it – by the end of 2012.

3.  In the meantime, while these standards are being developed, the FCC should create better rules for the current SIM-card-like regime, which really hasn’t worked at all.  These rules should include transparent pricing, standardized installation policies, and swifter certification processes.

This is a big deal.  It will allow consumer electronics companies to create new devices that will play well with subscription services.  It will allow online video to be accessible on equal terms by those devices (right now only 1% of households have Apple TV or Roku).

I’m sure this set of recommendations raises difficult implementation issues.  But the point is that current set-top boxes promote lock-in and make it easy for providers to inextricably tie together their high-speed Internet access services and pay-subscription services for consumers who want to use one screen.  They also allow for enormous control over subscription video streams – so that no one else can layer new businesses on top of them.  Breaking this regime open will force a great deal of change.

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Jim from Mongomery County, Maryland, sent this to me a few days after the post went up:

“I wanted to post this to your blog on the set-top boxes topic but the blog doesn’t accept pictures. This is a photograph I took at Comcast headquarters in Montgomery County, Maryland on a Saturday morning in December 2009. Comcast had switched to mandatory set-top boxes a month earlier, and this is the line of people exchanging defective ones. Some people said this was their second exchange. I was returning my defective box and canceling cable service. I was told that the lines had looked like this all month. Comcast has only one exchange point in a county of 950,000 people with an area of 507 square miles. The headquarters was about fifteen miles from my house. I might have kept cable service if could have purchased a set-top box on the open market. There is a Best Buy less than a mile from my house, or I would have bought it from Amazon which offers free return service on defective products. The point is, cable customers would have more and better choices if they weren’t locked in to the cable company’s set-top boxes.”

1. Washington Monthly article about the relationship between corporate consolidation and job creation.

2. Joy for #HCR; also delight that the Times opines (and has Yochai Benkler opine) about high-speed internet access on the same day that health care reform comes up for a vote.

3. Senate Commerce hearing tomorrow on national broadband plan – 2:30pm. Chairman Genachowski is the only witness listed.

4. Next up: jobs, helping small businesses, financial reform, energy, immigration.  And high-speed Internet access.

5. Happy birthday to Twitter – 10 billion tweets so far.

In Edmund Morris’s biography of Theodore Roosevelt’s presidency, “Theodore Rex,” Morris writes that Roosevelt’s great friend Owen Wister placed Roosevelt’s effort to break up a key railroad trust “at the top of all Roosevelt’s great and courageous strokes in the domain of domestic statesmanship.”

[I]t had excited public optimism at the very moment that public pessimism saw no end to the tyranny of wealth. [Wister]: ‘I think that to make up his mind to take this first step, to declare this war, on the captains of industry, was a stroke of genius; and I more than think – I know – that it marked the turn of a rising tide.’

Oliver Wendell Holmes’s somewhat snide dissent to the Supreme Court decision upholding the railroad trust-busting prompted Roosevelt to say: “I could carve out of a banana a judge with more backbone than that.”

What really got to Roosevelt was J.P. Morgan’s Olympian assumption that creation of an enormous railroad trust – the greatest combination in the world – was something that should have been worked through by business and government as peers.  According to Morris, Morgan could think of the President only as some kind of rival operator with whom a deal could be done:

MORGAN:  “If we have done anything wrong [in our charter], send your man to my man and they can fix it up.”

ROOSEVELT:  “That can’t be done.”

KNOX (Attorney General):  “We don’t want to fix it up, we want to stop it.”

Afterwards, Roosevelt said:  “That is a most illuminating illustration of the Wall Street point of view.”

It was great to watch yesterday’s FCC meeting presenting the National Broadband Plan.  It has been an embarrassment for years that we haven’t had a serious strategy for bringing high-speed (and higher-speed) Internet access to more people and more businesses more quickly.

The Internet is our nation’s common medium, as Reed Hundt recently said – open, expressive of American values, accessible to everyone, an engine for business, an organ for government.  The Plan makes this clear, finally, and begins the task of making sure that high-speed Internet access is ubiquitous and cheap – a commodity input to the rest of the story.

I’ve been reading the Plan, starting at the end (good job outlining the classification issue) and there are many positive difficult issues to point to – more unlicensed spectrum, more competition through better information made available about what providers are actually doing, reform of basic broken subsidy programs, finishing the white spaces proceeding, and on and on.

But the basic move here is crucial:  what’s our industrial policy for providing this commodity input to all Americans?  The Plan starts to answer this question.

Yes, it’s the health care week, the financial reform week, the Rielle-in-GQ week, the embassy-employee-slayings-in-Mexico week, the U.S.-Israel crisis week, the education reform week, and the slow-judicial-appointments week – but it’s also the high-speed Internet access week.  Let’s hope the issue gets the attention it deserves.

The executive summary of the FCC’s National Broadband Plan pulls together all the announcements the agency has been rolling out.

It’s a plan in beta. The idea is that this is a start.  There’s a tremendous amount of work to do and it will take a long time.  We’ve got big problems in coverage, adoption, speed, and prices.

What about competition? The Commission wants to start by collecting and publishing information on high-speed Internet access pricing and competition.  They’re interested in doing a “comprehensive review of wholesale competition rules.” NPR has a good, swift story today about the reaction to the exhaustive Berkman study of how other countries have worked this issue.

Spectrum is key. Broadcasters are already alarmed – and the plan isn’t even out yet. (Didn’t they notice the sentence that said “For example, [incentive auctions] would allow the FCC to share auction proceeds with broadcasters who voluntarily agree to use technology to continue traditional broadcast services with less spectrum”?)  The Commission’s idea is that the overall plan will be revenue neutral because of revenue reaped from spectrum auctions.  There’s a focus on “opportunistic and unlicensed use of spectrum and increasing research into new spectrum technologies,” and the hope that wireless access will fill gaps that expensive wires can’t.

It’s good to have a focus on high-speed Internet access, and great that a plan is rolling out.

The overwhelming vote in the European Parliament this week – 663-13! – to oppose the secretly-negotiated Anti-Counterfeiting and Trade Agreement was striking.  They’re calling for the text to be revealed, and they’re not happy about making ISPs introduce “US-style draconian ways” to punish misbehaving subscribers.

According to Wired, the Parliament isn’t saying that there shouldn’t be a treaty covering counterfeiting.  But the text of the proposed treaty should be public, and if it requires ISPs to punish Internet users the Parliament will oppose it.

The US has refused to reveal the text of the treaty on national security and other grounds, citing its need to work with other government representatives on a confidential basis before the treaty is finalized.  (Interesting interview with Michael Geist, the cyberlawyer of Canada, here.) Public interest groups in the US have been allowed to see the text – but only if they agree not to tell anyone about what they’ve read.

There’s a good deal of confusion about what the text of the treaty actually says.  There’s also a great deal of concern about what it could do to harm users’ rights and interests.  Is it a global DMCA?  Does it mandate a global “three strikes” regime?

The cloak of secrecy that the US has flung over the ACTA proceedings has only served to make free-flow-of-information fans around the world more anxious.  Now the European Parliament has put a heavy foot down.  It’s good to see principled parliamentarians worried about civil liberties, and unfortunate that American interests are being presented in such a one-sided way.