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Comcast v. FCC: Now what?

by on September 24, 2008 · 11 comments

A divided FCC recently issued an order concluding that Comcast acted discriminatorily and arbitrarily to squelch the dynamic benefits of an open and accessible Internet, and that its failure to disclose its practices to its customers has compounded the harm. The commission does get a bit excited sometimes.  Anyway, the FCC required Comcast to end its network management practices and submit a compliance plan.

Richard Bennett reviews the Comcast “protocol agnostic” network management plan requested by the FCC:

[T]he new system will not look at any headers, and will simply be triggered by the volume of traffic each user puts on the network and the overall congestion state of the network segment. If the segment goes over 70% utilization in the upload direction for a fifteen-minute sample period, congestion management will take effect.

In the management state, traffic volume measurement will determine which users are causing the near-congestion, and only those using high amounts of bandwidth will be managed. The way they’re going to be managed is going to raise some eyebrows, but it’s perfectly consistent with the FCC’s order. High-traffic users – those who’ve used over 70% of their account’s limit for the last fifteen minutes – will have all of their traffic de-prioritized for the next fifteen minutes. While de-prioritized, they still have access to the network, but only after the conforming users have transmitted their packets. So instead of bidding on the first 70% of network bandwidth, they’ll essentially bid on the 30% that remains. This will be a bummer for people who are banging out files as fast as they can only to have a Skype call come in. Even if they stop BitTorrent, the first fifteen minutes of Skyping are going to be rough.

Aside from filing a compliance plan, Comcast is also filing suit. For one thing, Commissioner Robert McDowell claims that “the FCC does not know what Comcast did or did not do. The evidence in the record is thin and conflicting.” Ouch.

Yes, there could be years of litigation. Continue reading →

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The ‘D’ Word?

by on September 19, 2008 · 13 comments

Barack Obama argues that John McCain “hurt everyday workers with his longtime support for deregulation,” according to Politico.

Thomas Frank adds,

There is simply no way to blame [the failure of several large financial institutions], as Republicans used to do, on labor unions or over-regulation. No, this is the conservatives’ beloved financial system doing what comes naturally. Freed from the intrusive meddling of government, just as generations of supply-siders and entrepreneurial exuberants demanded it be, the American financial establishment has proceeded to cheat and deceive and beggar itself — and us — to the edge of Armageddon. It is as though Wall Street was run by a troupe of historical re-enactors determined to stage all the classic panics of the 19th century.

But as Steve Forbes points out, the “easy-money” policy of the Federal Reserve helped financial institutions pile up debt and bad assets.

 According to former FDIC Chairman William M. Isaac,

The biggest culprit is a change in our accounting rules that the Financial Accounting Standards Board and the SEC put into place over the past 15 years: Fair Value Accounting. Fair Value Accounting dictates that financial institutions holding financial instruments available for sale (such as mortgage-backed securities) must mark those assets to market. That sounds reasonable. But what do we do when the already thin market for those assets freezes up and only a handful of transactions occur at extremely depressed prices?

The answer to date from the SEC, FASB, bank regulators and the Treasury has been (more or less) “mark the assets to market even though there is no meaningful market.” The accounting profession, scarred by decades of costly litigation, just keeps marking down the assets as fast as it can.

This is contrary to everything we know about bank regulation. When there are temporary impairments of asset values due to economic and marketplace events, regulators must give institutions an opportunity to survive the temporary impairment. Assets should not be marked to unrealistic fire-sale prices. Regulators must evaluate the assets on the basis of their true economic value (a discounted cash-flow analysis).

If we had followed today’s approach during the 1980s, we would have nationalized all of the major banks in the country and thousands of additional banks and thrifts would have failed. I have little doubt that the country would have gone from a serious recession into a depression.

Easy money and mark-to-market are not deregulatory policies. They are examples of government intervention with unfortunate consequences.

The nature of unfortunate consequences is always unpredictable; the inevitability of unfortunate consequences, never so.

Easy money was supposed speed the transition from the dotcom and telecom bubbles to prosperity, and mark-to-market was so we would not have to suffer from similar speculative bubbles in the future. Yet here we have another burst speculative bubble.

According to Frank,

Thanks to the party of Romney and McCain, federal work is today so financially unattractive to top talent that it might as well be charity work. It’s one of the main reasons — other than outright conquest by the industries they’re supposed to be overseeing — that our regulatory agencies can’t seem to get out of bed in the morning.

France attracts its best and brightest to government service, but most of us don’t want to be like France — at least not in all respects. Although it is hard to fail in France, it is also hard to succeed.  

Maybe blaming the regulators is like the blame the messenger proverb. Perhaps the problem isn’t the regulators; it is regulation itself.

Although regulation always seems brilliant in theory, it usually fails in practice. Either it doesn’t work, it spawns corruption or both.   Or it backfires, as it did here.

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Broadband Prices Drop

by on September 19, 2008 · 10 comments

I expected to see more reaction to the Wall Street Journal’s recent observation of a surprising shakeup in the broadband industry. Vishesh Kumar reported that

Verizon Communications Inc., which last quarter became the first company ever to see a drop in DSL subscribers — some of whom went to its faster FiOS service — is now offering customers six months of DSL service free if they sign up for the company’s phone and Internet package. That makes the bundled package $45 a month, vs. $65 prior to the offer. AT&T Inc., meanwhile, is now guaranteeing its current prices, ranging from $20 to $55 a month, for two years.

I cite this because I always claim that less regulation of a highly-regulated industry promotes competition, consumer choice and ultimately lower prices. Occasionally someone claims that prices do not appear to be falling. And depending on the point in time they may be right. Of course, if you don’t have to lower prices to attract and retain customers you won’t. But good times never last forever.

Until the second quarter of this year, the cable and telephone industries were adding roughly equal numbers of broadband accounts. Then something changed, and the cable companies are now signing up three-quarters of new customers. Maybe the marketing efforts of some of the companies are better than others, or maybe the phone companies’ main broadband product, DSL, can no longer compete on speed, quality and/or features.

In any event, when all else fails, you have to slash your prices.

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Cory Doctorow on the Bureacrash Podcrash

by on September 16, 2008 · 13 comments

None other than Sci-Fi author, civil libertarian, blogger, activist, and TLF commenter Cory Doctorow drops in at the Bureaucrash Podcrash (that’s a podcast for “crashers”) to discuss his new book Little Brother.

Austin Grossman’s review of the book for the New York Times remarks:

An entertaining thriller and a thoughtful polemic on Internet-era civil rights, “Little Brother” is also a practical handbook of digital self-defense. Marcus’s guided tour through RFID cloners, cryptography and Bayesian math is one of the book’s principal delights. He spreads his message through a secure network engineered out of Xbox gaming consoles, to a tech-savvy youth underground (we are now post-nerd, I learned — hipsters and social networking experts have replaced the unwashed coders of yore).

We at TLF may disagree with Mr. Doctorow on a number of policy issues, but I must admit that he’s a talented writer. I bought Cory’s Overclocked: Stories of the Future Present, a collection of short stories, at Capital Books here in DC and read it cover to cover by the end of that weekend. A great read available free in digital form at Cory’s Craphound.

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John McCain Invented the Blackberry?

by on September 16, 2008 · 7 comments

Yes, this is my second question mark-festooned post of the day, but it’s another title that calls for being phrased as a question, because it’s so unbelievable that anyone said it.

Turns out, a McCain adviser, Douglas Holtz-Eakin, was struggling to prove that McCain has what it takes to tackle our economic woes.  And here I thought it was the communists, not American war heroes, who believe in managing the economy.  Anyway, Holtz-Eakin reached for anything to prove McCain’s credentials and pointed to the Senator’s service on the Commerce Committee.

This line from a story at CNN.com provides the real kicker:

Pressed to provide an example of what McCain had accomplished on that committee, Holtz-Eakin said the senator did not have jurisdiction over financial markets, then he held up his Blackberry, telling reporters: “He did this.”

That’s right everyone, Al Gore may have created the Internet, but John McCain created the Blackberry.

Continue reading →

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Google Suggest = Keystroke Logger

by on September 11, 2008 · 128 comments

The provocative title hides some pretty good news, actually.

I had been thinking about how the “suggested searches” in the Google homepage and the Google search box in Firefox must rely on sharing your keystrokes with Google as you type them.

This is a privacy concern. Say you typed “I have herpes” in the search box but then thought better of submitting it. Google Suggest would already have sent your keystrokes along, even before you hit “I’m Feeling Lucky!” (Might have reconsidered that “lucky” feeling back in college when you – well, water under the bridge I guess . . .)

I’m pleased to see that Google recognizes this problem and is taking some steps to minimize the privacy consequences of this feature. They will anonymize the 2% of usage data they collect about this service.

Now, keep in mind that Google has been squirrely in the past about what it means to anonymize information. You can disable Google Suggest in “Preferences” by selecting the ‘Do not provide query suggestions in the search box’ checkbox.

The overall lesson is that you shouldn’t type anything on a Web form that you don’t plan on sharing. The curtain hiding your thoughts is pulled back before you click “Submit.”

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Chrome Dodges Antitrust, Could Be Future OS

by on September 2, 2008 · 6 comments

To follow-up on my post from this morning I should note that Google Chrome immediately asks you  which search engine you’d like to use upon installing, conveniently providing users with a chance to use something other than their default search engine and dodging potential complaints about the browser from Microsoft.

Speaking of Redmond, Ballmer and Co. may need to fear Chrome not as a browser, but as a new computing platform.  Michael Arrington writes on this at TechCrunch in a post which gets right to the heart of the matter.  Check out “Meet Chrome, Google’s Windows Killer” in which Arrington shows us how Chrome combined with Gears makes for a platform that can allows OS to fade into the background.

I for one am skeptical that we’re anywhere near cloud computing being practical for anything other than the lightest of tasks.  Google Docs simply doesn’t compare to Office, but I don’t think it’s trying to as many will claim.  I use the service, along with several other “cloud” computing programs, but I use them in addition to my local apps, not as a substitute for them.  See John C. Dvorak for more reasons why cloud applications stink.

Continue reading →

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Google Chrome & the Coming Antitrust Suits

by on September 2, 2008 · 11 comments

Google is entering the browser wars today (if any such war still exists) with the launch of Chrome, its new web browser.  I’m glad to see more competition in browsers as I think—and I hope everyone else agrees with me—that Firefox is the only real game in town. I know that Internet Explorer is more popular, but that seems to only be because it is shipping with every Windows PC and because many enterprise web applications require IE’s non-standard browser. Firefox is preferred browser for anyone who works with the web regularly and has bothered to compare browsers.

One implication of this foray by Mountain View into the browser arena is that—should Chrome be at all successful—they will soon be accused of using their supposed search monopoly to squeeze out competition from IE and Firefox. That is assuming that anything in Chrome favors Google’s search, like making it the default search engine for the browser, which I’m sure it will be.

It’s funny to think that Microsoft, the poster-child from antitrust suits, could be the one launching such a suit. Just a few short years ago we saw Microsoft scoffing at the very notion of antitrust or monopoly power, arguing that it in no way used its market share to its own advantage. Now we see Redmond lashing out against Google as a monopolist. At a recent conference I had the unpleasant experience of watching a panel on online advertising devolve into a fight between the Microsoft and Google reps over whether Google was a search and advertising monopolist.

Continue reading →

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“The Net Regards _______ As Failure, and Routes Around It”

by on September 1, 2008 · 8 comments

Variations on a theme:

* “The net regards censorship as a failure, and routes around it.” —  John Gilmore, SUN Microsystems & EFF co-founder.

* “The net regards hierarchy as a failure, and routes around it.” — Mark Pesce, Writer, consultant, Sydney, Australia

* “The web regards centralization as a failure, and routes around it… by moving to the edge.” — Stowe Boyd, /Message blog

* “The net regards the middleman as a failure, and routes around it.” — Terry Heaton, PoMo Blog

Anybody have any others to add?

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Bandwidth Cap Worries

by on August 30, 2008 · 15 comments

Susan Crawford worries about the implications of Comcast’s bandwidth cap:

Comcast sees a future in which people use the internet to send a few emails or look at a few web pages. They don’t want people watching HD content from other sources online, because that doesn’t fit their business model. So rather than increase capacity, they’d rather lower expectations. 250GB/month is about 50-60 HD movies a month, but we’re not necessarily going to be watching movies. Maybe we’ll be doing constant HD video sessions with other freelancers, or interacting with big groups all over the world in real-time. Who knows what we’ll be doing – it’s all in the future.

But rather than build towards a user-powered future, Comcast wants to shape that future — in advance — in its own image. The company is not offering additional bandwidth packages to people who want more. They just want to be able to shut service off at a particular point – a point of bandwidth use that most people aren’t using right now, so that they won’t be unhappy. By the time we all want to be doing everything online, Comcast users (the company hopes) won’t expect anything better.

There are several observations to make here. In the first place, there isn’t an either-or choice between building more capacity and limiting current users. Comcast is doing both. They’re upgrading to DOCSIS 3.0 at the same time they’re experimenting with new usage limits. Obviously, the ideal situation is when capacity upgrades are sufficient to accommodate increased demand. But if it’s not, network owners have to do something about it. A high and transparent bandwidth cap isn’t a terrible approach.

Second, this cap really is quite high. 250 GB/month is roughly 1 Mbps for every waking hour, or 10 Mbps (which is faster than my current broadband connection) for about 2 hours a day. Her estimate of 50-60 HD movies a month sounds high to me, but certainly there’s enough bandwidth there to download more HD movies than the average family watches in a month.

Third, there’s absolutely no reason to think that this cap is permanent, or that they won’t give consumers reasonable options to get more bandwidth. Comcast is in business to make money. There’s lots of valuable content on the Internet. Therefore, it’s in Comcast’s interest to sell consumers the bandwidth they need to access the Internet content they want. Now, Comcast might charge more for a really high-speed, high-cap Internet access plan. That’s their right, and I’m at a loss to see why it would be a problem. Infrastructure upgrades cost money. It’s only fair to charge the most to the people who use the infrastructure the most. Provided that users do have the option to access the content they want, I fail to see what the problem is.

Finally, Crawford is upset that usage of Comcast’s digital voice service isn’t counted against the cap. But VoIP uses so little bandwidth that as a practical matter, this will matter very little. More to the point, if Crawford is worried about Comcast dedicating bandwidth to its own proprietary services, I’ve got a much bigger target for her to worry about: cable television. Comcast’s cable service has been sucking up bandwidth that could have otherwise gone to Internet connectivity for decades. Does Crawford think it’s unethical for Comcast to offer traditional cable television service? If not, then how is offering dedicated bandwidth to Comcast’s VoIP offering any different?

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