I plan to write more about broadband competition and the impact of Google Fiber but in the meantime, there is a New York Times article on the subject that I’ll briefly address.
The author, Eduardo Porter, misdiagnoses why tiered pricing in broadband exists, giving readers the impression that only monopolies price discriminate:
That means that in most American neighborhoods, consumers are stuck with a broadband monopoly. And monopolies don’t strive to offer the best, cheapest service. Rather, they use speed as a tool to discriminate by price — coaxing consumers who are willing to pay for high-speed broadband into more costly and profitable tiers.
Christopher S. Yoo, the John H. Chestnut Professor of Law, Communication, and Computer & Information Science at the University of Pennsylvania and author of the new book, The Dynamic Internet: How Technology, Users, and Businesses are Transforming the Network, explains that the Internet that we knew in its early days—one with a client-server approach, with a small number of expert users, and a limited set of applications and business cases—has radically changed, and so it may be that the architecture underlying the internet may as well.
According to Yoo, the internet we use today barely resembles the original Defense Department and academic network from which it emerged. The applications that dominated the early Internet—e-mail and web browsing—have been joined by new applications such as video and cloud computing, which place much greater demands on the network. Wireless broadband and fiber optics have emerged as important alternatives to transmission services provided via legacy telephone and cable television systems, and mobile devices are replacing personal computers as the dominant means for accessing the Internet. At the same time, the networks comprising the Internet are interconnecting through a wider variety of locations and economic terms than ever before.
These changes are placing pressure on the Internet’s architecture to evolve in response, Yoo says. The Internet is becoming less standardized, more subject to formal governance, and more reliant on intelligence located in the core of the network. At the same time, Internet pricing is becoming more complex, intermediaries are playing increasingly important roles, and the maturation of the industry is causing the nature of competition to change. Moreover, the total convergence of all forms of communications into a single network predicted by many observers may turn out to be something of a myth. Policymakers, Yoo says, should allow room for this natural evolution of the network to take place.
Download
Related Links
Matt Yglesias today responded with a post of his own to a NYT article about sports channels and cable pricing by Brian Stelter that Yglesias believed had “bad analysis.” I’m here to defend Stelter a little bit because I think Yglesias was too harsh and that Yglesias erred in his own post about the nature of cable bundling. Yglesias’ posts on cable bundling are good, and especially valuable because his Slate and ThinkProgress audiences are not the most receptive to economic justifications for perceived unfair corporate pricing schemes. In part due to him I suspect, you rarely hear econ and business bloggers calling for a la carte pricing of cable channels.
And Yglesias is certainly right that you can’t really complain about the price of your cable package, which includes the few channels you watch plus the sports channels you don’t watch, because you obviously value the channels more than the price you pay per month, even if the sports are a “waste.” He falters when he says
So since those channels are worth $60 to you, even if unbundling happens your cable provider is going to find a way to charge you approximately $60 for them. Because at the end of the day, you’re paying your cable provider for access to the channels you do watch—not for access to the channels you don’t watch. The channels you don’t watch are just there. If the channels you do watch are worth $60 to you, then $60 is what you’ll pay for them.
Continue reading →
Ryan Radia recently posted an impassioned and eminently reasonable defense of copyright with which I generally agree, especially since he acknowledges that “our Copyright Act abounds with excesses and deficiencies[.]” However, Ryan does this in the context of defending broadcaster rights against internet retransmitters, such as ivi and Aereo, and I have a bone to pick with that. He writes,
[Copyright] is why broadcasters may give their content away for free to anybody near a metropolitan area who has an antenna and converter box, while simultaneously preventing third parties like ivi from distributing the same exact content (whether free of charge or for a fee). At first, this may seem absurd, but consider how many websites freely distribute their content on the terms they see fit. That’s why I can read all the Techdirt articles I desire, but only on Techdirt’s website. If copyright protection excluded content distributed freely to the general public, creators of popular ad-supported content would soon find others reproducing their content with fewer ads.
I think what Ryan is missing is that copyright is not why broadcasters give away their content for free over the air. The real reason is that they are required to do so as a condition of their broadcast license. In exchange for free access to one of the main inputs of their business–spectrum–broadcasters agree to make their signal available freely to the public. Also, the fact that TV stations broadcast to metro areas (and not regionally or nationally) is not the product of technical limitations or business calculus, but because the FCC decided to only offer metro-sized licenses in the name of “localism.” That’s not a system I like, but it’s the system we have.
So, if what the public gets for giving broadcasters free spectrum is the right to put up an antenna and grab the signals without charge, why does it matter how they do it? To me a service like Aereo is just an antenna with a very long cable to one’s home, just like the Supreme Court found about CATV systems in Fortnightly. What broadcasters are looking to do is double-dip. They want free spectrum, but then they also want to use copyright to limit how the public can access their over-the-air signals. To address Ryan’s analogy from above, Techdirt is not like a broadcaster because it isn’t getting anything from the government in exchange for a “public interest” obligation.
Ideally, of course, spectrum would be privatized. In that world I think we’d see little if any ad-supported broadcast TV because there are much better uses for the spectrum. If there was any broadcast TV, it would be national or regional as there is hardly any market for local content. And the signal would likely be encrypted and pay-per-view, not free over-the-air. In such a world the copyright system Ryan favors makes sense, but that’s not the world we live in. As long as the broadcasters are getting free goodies like spectrum and must-carry, their copyright claims ring hollow.
To summarize, on August 22, the FCC found it was appropriate to re-impose monopoly price cap regulations developed over twenty years ago because the FCC lacked “reliable” evidence that cable operators are competing in the special access market. On August 23, the very next day, the FCC found cable companies are “well-positioned” to compete in the special access market and are “increasingly successful” competing in that market. . . . It is impossible to reconcile these inconsistent findings.
Last week, the FCC issued two significant orders. Late Wednesday evening, the FCC issued an order suspending its pricing flexibility rules for special access services (“Special Access Order”), and on Thursday afternoon, it issued an order approving multiple transactions between Verizon Wireless and several cable companies (Comcast, Time Warner, Bright House Networks, and Cox) as well as mobile providers T-Mobile and Leap (“Verizon-Cable Order”).
The FCC addressed special access competition in both orders. One would assume two FCC findings regarding special access issued within a single 24-hour period would be consistent with one another, but that would be assuming too much. The findings in these two orders relied on evidence submitted by the same companies to reach contradictory conclusions. Continue reading →
Google’s first lesson for building affordable, one Gbps fiber networks with private capital is crystal clear: If government wants private companies to build ultra high-speed networks, it should start by waiving regulations, fees, and bureaucracy.
Executive Summary
For three years now the Obama Administration and the Federal Communications Commission (FCC) have been pushing for national broadband connectivity as a way to strengthen our economy, spur innovation, and create new jobs across the country. They know that America requires more private investment to achieve their vision. But, despite their good intentions, their policies haven’t encouraged substantial private investment in communications infrastructure. That’s why the launch of Google Fiber is so critical to policymakers who are seeking to promote investment in next generation networks.
The Google Fiber deployment offers policymakers a rare opportunity to examine policies that successfully spurred new investment in America’s broadband infrastructure. Google’s intent was to “learn how to bring faster and better broadband access to more people.” Over the two years it planned, developed, and built its ultra high-speed fiber network, Google learned a number of valuable lessons for broadband deployment – lessons that policymakers can apply across America to meet our national broadband goals.
To my surprise, however, the policy response to the Google Fiber launch has been tepid. After reviewing Google’s deployment plans, I expected to hear the usual chorus of Rage Against the ISP from Public Knowledge, Free Press, and others from the left-of-center, so-called “public interest” community (PIC) who seek regulation of the Internet as a public utility. Instead, they responded to the launch with deafening silence.
Maybe they were stunned into silence. Google’s deployment is a
real-world rejection of the public interest community’s regulatory agenda more powerful than any hypothetical. Google is building fiber in Kansas City because its officials were willing to waive regulatory barriers to entry that have discouraged broadband deployments in other cities. Google’s first lesson for building affordable, one Gbps fiber networks with private capital is crystal clear: If government wants private companies to build ultra high-speed networks, it should start by waiving regulations, fees, and bureaucracy
. Continue reading →
On Forbes today, I have a long article on the progress being made to build gigabit Internet testbeds in the U.S., particularly by Gig.U.
Gig.U is a consortium of research universities and their surrounding communities created a year ago by Blair Levin, an Aspen Institute Fellow and, recently, the principal architect of the FCC’s National Broadband Plan. Its goal is to work with private companies to build ultra high-speed broadband networks with sustainable business models .
Gig.U, along with Google Fiber’s Kansas City project and the White House’s recently-announced US Ignite project, spring from similar origins and have similar goals. Their general belief is that by building ultra high-speed broadband in selected communities, consumers, developers, network operators and investors will get a clear sense of the true value of Internet speeds that are 100 times as fast as those available today through high-speed cable-based networks. And then go build a lot more of them.
Google Fiber, for example, announced last week that it would be offering fully-symmetrical 1 Gbps connections in Kansas City, perhaps as soon as next year. (By comparison, my home broadband service from Xfinity is 10 Mbps download and considerably slower going up.)
US Ignite is encouraging public-private partnerships to build demonstration applications that could take advantage of next generation networks and near-universal adoption. It is also looking at the most obvious regulatory impediments at the federal level that make fiber deployments unnecessarily complicated, painfully slow, and unduly expensive.
I think these projects are encouraging signs of native entrepreneurship focused on solving a worrisome problem: the U.S. is nearing a dangerous stalemate in its communications infrastructure. We have the technology and scale necessary to replace much of our legacy wireline phone networks with native IP broadband. Right now, ultra high-speed broadband is technically possible by running fiber to the home. Indeed, Verizon’s FiOS network currently delivers 300 Mbps broadband and is available to some 15 million homes.
Continue reading →
Writing over at the conservative Big Government blog (part of the Breitbart.com network of blogs), someone who goes by the pseudonym “Capitol Connection” has posted an editorial about the debate over retransmission consent reform that is full of misinformation and misguided policy prescriptions, at least if you believe is truly limited government. The piece is entitled, “Big Cable Would Prefer if You Paid Their Bills,” and the problems are almost immediately evident from that headline alone. First, what is a supposedly small government-oriented blog doing using a silly label like “Big Cable” to describe a vigorously competitive sector of our capitalist economy? Using terms like “Big Cable” is a silly lefty tactic. Second, no one in the cable industry is proposing anyone “pay their bills” except for the customers who enjoy their services. Isn’t a fee for service part of capitalism?
Anyway, that’s just the problem with the title of the essay. Sadly, the rest of the piece is filled with even more erroneous information and arguments about the retransmission consent regulatory process as well as the bill that aims to reform that process, “The Next Generation Television Marketplace Act” (H.R. 3675 and S. 2008). That bill, which is sponsored by Senator Jim DeMint (R-SC) and Rep. Steve Scalise (R-LA), represents a comprehensive attempt to deregulate America’s heavily regulated video marketplace. In a recent Forbes oped, I argued that the DeMint-Scalise effort would take us “Toward a True Free Market in Television Programming” by eliminating a litany of archaic media regulations that should have never been on the books to begin with. The measure would:
- eliminate: “retransmission consent” regulations (rules governing contractual negotiations for content);
- end “must carry” mandates (the requirement that video distributors carry broadcast signals even if they don’t want to);
- repeal “network non-duplication” and “syndicated exclusivity” regulations (rules that prohibit distributors from striking deals with broadcasters outside their local communities);
- end various media ownership regulations; and
- end the compulsory licensing requirements of the Copyright Act of 1976, which essentially forced a “duty to deal” upon content owners to the benefit of video distributors.
This represents genuine and much-needed deregulation of a market that has been encumbered with far too much top-down control and micro-management by the FCC over the past several decades. To be clear,
none of these rules apply to any other segment of our modern information economy. Every day of the week, deals are cut between content creators and distributors in many other segments of the media industry without these rules encumbering the process. The DeMint-Scalise bill is an attempt to get big government out of the way and let these deals be cut in a truly free market without regulators putting their thumb on the scale in one direction or the other. Continue reading →
Frederick Jackson Turner (1861-1932)
On
Fierce Mobile IT, I’ve posted a detailed analysis of the NTIA’s recent report on government spectrum holdings in the 1755-1850 MHz. range and the possibility of freeing up some or all of it for mobile broadband users.
The report follows from a 2010 White House directive issued shortly after the FCC’s National Broadband Plan was published, in which the FCC raised the alarm of an imminent “spectrum crunch” for mobile users.
By the FCC’s estimates, mobile broadband will need an additional 300 MHz. of spectrum by 2015 and 500 MHz. by 2020, in order to satisfy increases in demand that have only amped up since the report was issued. So far, only a small amount of additional spectrum has been allocated. Increasingly, the FCC appears rudderless in efforts to supply the rest, and to do so in time. Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.