Screw results, motives matter

by on January 21, 2013 · 5 comments

Mixed Response to Comcast in Expanding Net Access.” That’s a headline in The New York Times today.

What an utterly disgraceful hit piece. According to the article, participants in Comcast’s broadband program for low income families, as well as school administrators and city officials, are happy with the program. So what’s this “mixed response”?

>But as the program gains popularity, the company has come under criticism, accused of overreaching in its interactions with local communities — handing out brochures with the company logo during parent-teacher nights at public schools, for instance, or enlisting teachers and pastors to spread the word to students and congregations.

That’s the sixth paragraph, and its passive voice foreshadows that we’re never told who is criticizing nor what exactly is the critique (besides, perhaps, the fact that Comcast is a for-profit business and that it is advertising its low-income program). The gall! How dare Comcast inform people about a product offering! And these teachers and pastors being “enlisted” by Comcast, do they really think the program might benefit their students and congregations?

Then there’s this:

>Broadband service is “a natural monopoly” controlled by a handful of private companies, said Mr. Karaganis, of the American Assembly, adding that Internet Essentials gave Comcast access to people in community settings where it could use the lure of low prices to tap into a new consumer base.

Now, I really appreciate and respect Joe Karaganis’s research on copyright, but he needs to look up the definition of “natural monopoly.” If Comcast is so powerful, it’s kind of odd that they need to use “the lure of low prices to tap into a new consumer base.” Oh, the lure! Kvorka! What this really shows is how price discrimination can serve to [benefit lower-income folks](http://truthonthemarket.com/2008/11/30/price-discrimination-is-good-part-i/) (as well as those who don’t value broadband very much).

No, Comcast isn’t doing anything “out of the goodness of their hearts,” but why should that matter when what they’re doing is benefitting everyone involved?

  • Brett Glass

    The truth is that Comcast’s “Internet Essentials” amounts to predatory pricing. No competitor will enter a market which Comcast serves at prices which are below cost. If government wished to engage in charity, it shouldn’t do it by extracting low rates from one company as a “fee” for allowing a merger. Instead, it should provide users with vouchers that could be spent at a choice of ISPs.

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  • http://www.facebook.com/people/Joe-Karaganis/757497931 Joe Karaganis

    The NYT story was confusing and–while it didn’t misquote me directly–it paraphrased me in ways I disagree with and created a different context for my remarks. I’ve recontextualized them here: http://piracy.americanassembly.org/broadband-adoption-in-low-income-communities/

    To your main point, yes, results matter more than motivations. But I would argue that in this case the results are modest because the motivations are wrong. By Comcast’s estimates, 100K families have been served out of 2.3 million eligible (under its very restrictive terms). Now this is after 1 year of operation, and Comcast talks about the adjustments it has made. But Internet Essentials is a temporary program created as part of a bargain with the FCC to gain regulatory approval for the NBC merger (some have said it was developed earlier as the outlines of the National Broadband Plan became apparent). This requirement was slated to end in 2014, but now will run to 2015 because the FCC dinged Comcast for not complying with the merger requirement to promote broadband-only service options. Even assuming Comcast is doing its best here (which I think the FCC consent decree calls into doubt) what happens then?

    In the absence of strong requirements on the ISPs, the FCC has made Internet Essentials the template for a larger project called Connect2Compete. Connect2Compete is also voluntary and has required substantial philanthropic support to get the ISPs to play. It’s not bad and it’s not the only thing the FCC is doing on this front. But it’s a weak way of addressing what the FCC call a top priority in the 2010 National Broadband Plan: expanding access in low-income communities. Will any of this be around in 2-3 years? Unclear.

    As for whether broadband access is a ‘natural monopoly,’ I did look it up. Here’s Wikipedia’s definition: http://en.wikipedia.org/wiki/Natural_monopoly . I was referring to wire-to-home service but might stand by it for wireless. We’ll have see how much antitrust action it takes to keep the majors apart.

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