Qwest, the former-Baby Bell serving the upper midwest, mountain west, and desert states got caught on tape telling customers the company’s intent is to eliminate competition from independent Internet Service Providers by banning them from their network.

One such ISP, XMission, has blown the whistle on the anti-competitive practice, noting they could potentially be run out of business if Qwest manages to keep them from delivering competitive service over Qwest’s upgraded partly-fiber network.

In 1997, XMission first started providing service over Qwest’s DSL.  We have literally paid millions of dollars of revenue to Qwest for the privilege, all the while relieving them of the difficult task of providing excellent customer support.  In 2008, Qwest launched their “Fiber-to-the-Node” product which is usually falsely advertised as just plain “fiber”.  Unlike the UTOPIA system which runs fiber optics all the way to the home, Qwest FTTN runs fiber to a neighborhood, then copper DSL lines to the customer.  Because of the subsequent shorter distances on copper, they are able to attain download speeds of up to 40Mbit to the customer and 5Mbit from the customer.  This is normally referred to “download” and “upload” respectively.

There is one key difference in the FTTN product.  Qwest is not not allowing 3rd party ISPs like XMission to sell their own service over it, as we traditionally have with their first DSL product.  In addition, Qwest has been notorious for disinformation and service problems that motivate customers to drop their current ISP and change over to Qwest.  Technical problems exist, such as radio interference that degrades existing XMission customer DSL speeds, sometimes making their Internet connection unusable.  The solution offered by Qwest was not to shield the radio interference, but to switch customers off XMission and to their own product.  We have also had reports and in one case, a recording, of Qwest sales representatives telling customers that Qwest’s intent is to “eliminate” 3rd party ISPs.   Today, I received an email from a customer who was told by Qwest that XMission’s equipment is “too slow” to handle FTTN service.  Considering that we service customers on fiber and in our data center with up to a gigabit in solid bandwidth, one has to wonder why Qwest feels the need to lie to sell their service.  There is no technical reason why Qwest could not allow 3rd party ISPs like XMission to provide service over their FTTN network.

XMission has been hemorrhaging DSL customers for the past year, and I really don’t blame them for looking for bigger Internet connections.  I personally can only get 3Mbit download and 500Kbit upload to my own home and it is not enough bandwidth for me.  With Netflix, Hulu, Youtube, and other services demanding more and more bandwidth, homes will need larger and larger connections.  Unless they’re in a UTOPIA connected city, chances are that they are going to choose from two companies to buy Internet from in the future, neither of them stellar.

UTOPIA is Utah’s publicly-owned fiber optic platform delivering competitive choice to residents of 16 Utah cities.  Residents enjoy true fiber optic service and can select from 11 different Internet Service Providers, each offering their own speed levels, bundles, and pricing.  How many ISPs can you choose from?

Qwest’s newest network upgrades deliver service somewhat comparable to AT&T’s U-verse — faster broadband through a hybrid fiber, copper phone line-based network.  Qwest also sells traditional DSL service over standard phone lines, including so-called “dry loop” service that delivers broadband service without also buying a phone line.  While competing providers can sell service over many of Qwest’s DSL lines, they have been barred from selling access over these new, faster-speed lines.

Customers have been unimpressed with Qwest’s traditional DSL services which often promises far more than it actually delivers.

Alex Langshall in South Salt Lake was guaranteed 7Mbps DSL service from Qwest, but ended up with only 640kbps.  The reason?  His distance from the central office and the deteriorating quality of Qwest’s landline network.  Qwest’s technicians told Alex even after line conditioning and rehabilitation, he would only get 1.5Mbps service.

XMission publicized this recording between Qwest and one of their customers about the phone company’s intentions for independent ISPs on their network (July 21, 2010) (3 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

The Internet video revolution will increasingly be blocked by Internet Service Providers who will leverage their duopoly markets with restrictive usage limits to keep would-be video competitors from ever getting their business plans off the ground.

William Kidd, industry forecaster for iSuppli, an industry analyst group, sees a future of Internet Overcharging schemes like usage caps, overpriced pay-per-use pricing, and other limitations designed to erect roadblocks for online video content, which increasingly threatens the cable-TV products of both cable and phone companies.

The latest scheme to limit usage of streaming media come not from concerns about bandwidth costs but rather the “unknown risks” online video could have for cable and phone companies’ other products.

Such risks, Kidd believes, will compel broadband providers to increasingly implement caps in order to mitigate any long-term gambles that providers might have to take to make streaming media available to home and mobile environments.

At present, content can be streamed over TV from online service offerings such as Hulu and Netflix, or accessed through a device such as the PlayStation from Sony Corp. In addition, new-media business models continue to emerge with the introduction of new platforms that circumvent services currently provided by traditional cable or satellite pay-TV providers.

The caps planned for implementation will sink virtually all of the video streaming services that are not partnered with cable and phone companies.  Kidd notes the caps he’s seen offer limited viewing — as little as three hours for wireless 200kbps video streams or standard definition video streamed on wired networks for up to 25 hours per month.  True HD viewing is simply not going to happen with caps on many providers planned to cut off viewing after only seven hours.

Business plans and would-be investors must take notice of what providers have in store for would be competitors, Kidd argues.  Since the phone and cable companies maintain a near-monopoly on broadband, they ultimately control what Americans can do (and see) on their broadband accounts.

Rogers reduced usage allowances on several of its broadband plans days after Netflix announced a streaming service for Canadians.

One need only look to Rogers Communications in Canada for a timely example.  Rogers promptly lowered usage limits on some of its broadband plans just days after Netflix announced a video streaming service for Canadians that could directly compete with the cable giant’s video rental stores and cable pay per view services.

“These new-media business models imagine that they don’t have to pay the network through which their data traverse,” he said. “However, such a theory is directly at odds with the ambitions of cable and satellite-TV operators, which increasingly are unwilling to provide heavy data access through their networks for free—especially if a way can be found to monetize ongoing data traffic into viable revenue streams.”

In addition, new Internet-born content providers wrongfully take for granted that the way their largely free content has been consumed now also will apply in the future to premium services. The assumption is a bad one, Kidd observed, because in order for consumers to consider the Internet as a true substitute for their big-screen TV, content would need to be comparable in both technical quality and entertainment value. And to achieve the same level of value, such content necessarily would be extremely bandwidth intensive.

As a result, for any number of these emerging TV-substitute models to work someday, one has to assume that the picture quality being proffered is acceptable for viewing on large-screen TVs.

But providers have a trick up their sleeves by implementing seemingly tolerable usage caps as high as 250GB per month, which seem generous by today’s usage standards.  But they will be downright paltry tomorrow, especially if they do not increase over time, as online video increases in quality and size.

“By implementing caps now that don’t impinge on the way subscribers use the Internet today, cable and telco operators are able to create for themselves an advantageous situation,” Kidd said. “Under these circumstances, emerging media competitors must work more directly with the network owners before getting their services off the ground—as opposed to around them, as they may have previously hoped.”

That means giving them exactly what they want — a piece of the action and control over the content that crosses over their wires to broadband consumers.

Connected Texas is well-connected -- to AT&T and Verizon, charge critics.

Texas Agriculture Commissioner Todd Staples in under fire for choosing Connected Nation, a telecom industry-financed mapping group, to draw broadband availability maps for Texas.  Connected Nation has close financial and organizational ties to the nation’s largest telecommunications companies, several of which have also contributed heavily to Staples re-election campaign.

Critics contend Staples should have never chosen Connected Nation for the project, especially when two of its biggest backers — AT&T and Verizon, both made substantial campaign contributions towards his re-election.  Staples also owns small amounts of stock in both companies, according to a report published yesterday in the Dallas Morning News.

The Texas mapping project has been condemned by smaller Internet service providers for leaving them off the map altogether while providing plenty of details about large phone and cable company offerings.  For consumers shopping for broadband service, who is on the map may have a considerable influence over which provider they pick.

“They hit the big guys,” James Breeden, founder of LiveAir Networks, which covers rural parts of Central Texas told the Morning News. “I didn’t even know they were putting together a broadband map until I saw it on the news and went ‘Oh.’ Then I logged in and went, ‘Oh, really!’ ”

Staples

He said he couldn’t find his company or two nearby providers on the map. Some areas didn’t show the correct distributor. Others named one when none existed. “The map is just off. It’s not technically accurate,” he said.

As Stop the Cap! reported earlier, maps produced by Connected Nation are notorious for favoring the telecommunications companies that back the mapping group, in addition to being just plain inaccurate. But more importantly, their maps downplay broadband availability problems and conveniently serve the industry’s position that America doesn’t have a broadband problem.  Connected Nation maintains tight control over the raw data, citing provider confidentiality agreements.  That makes reviewing the data for accuracy impossible.

“It’s a scandal, a total scandal,” Art Brodsky, communications director of Public Knowledge, a public interest group that follows digital culture said in the Morning News piece. A longtime critic of Connected Nation, Brodsky has tracked the nonprofit since Kentucky officials accused it of overestimating broadband availability several years ago. The agency that grew into Connection Nation started there in 2001.

Brodsky said nondisclosure agreements make it difficult to see who really benefits from the mapping process.

The controversy has become campaign fodder for Democratic Ag Commissioner candidate Hank Gilbert, who has been bashing Staples in the press for spending taxpayer money to produce maps that benefit his campaign more than the people of Texas.

“Staples and … [the Agriculture Department] are willing to let a bid go to a company with such close ties to the telecom industry,” said Vince Leibowitz, Gilbert’s campaign manager. “That means they’re not doing their job as a consumer protection agency.”

Other groups given the opportunity to apply either were not given enough advance warning, or simply never heard anything back from the state.

Five other organizations responded to the Agriculture Department’s request for proposals. Luisa Handem of the Austin nonprofit Rural Mobile & Broadband Alliance said her group never heard back.

“We didn’t think the process was transparent,” she said. “We’re not even sure they looked at our application.”

The Agriculture Department restricted the opportunity to nonprofits, based on its interpretation of federal law. The agency told the University of Texas at Austin it could apply, but officials didn’t think they could complete the proposal in a month. The Agriculture Department said the federal government set the timeline.

Stop the Cap! reader Bones sends word the FCC needs volunteers to help keep America’s broadband providers honest about their speed claims.  But the agency warns heavily usage capped consumers they probably shouldn’t apply, and anyone consuming over 30 GB per month is disqualified.

The FCC SamKnows Broadband Community aims to gather and report statistical data on the performance of America’s broadband providers.  Thus far, most of the earlier speed results being studied by public officials come from data aggregated from voluntary visits to speed test websites.  But the data is subject to considerable variation depending on the speed test site chosen, traffic and capacity issues that only impact the route to the test site, and what else a consumer may doing with their connection during the test.  Many also conduct speed tests when a technical problem is apparent, using the speed test site to verify their suspicions.

The FCC will send 10,000 volunteers a free router that will hook up to one’s broadband connection and quietly test it several times daily.  Comprehensive measurements to be taken include latency, packet loss, DNS query times and failures, web page loading times, as well as the obligatory suite of speed tests.  The testing is done in the background and the results are uploaded to SamKnows for review.  The FCC can use the data from all of the volunteers to identify the true performance of national and regional Internet Service Providers.  Do their speed claims actually match reality?  Do they suffer from congestion problems and at what times of day?

One group of ISPs the agency will have trouble measuring are those that heavily limit their customers’ use.  In fact, the Test My ISP website warns off customers with low data caps because the project is expected to send and receive about 4 gigabytes of data in full over the course of each month. While the program designers felt that much data was so insignificant it would not create a problem, some greedy ISPs out there beg to differ.  With some providers offering usage allowances at 5 or fewer gigabytes per month, the FCC quickly learned it doesn’t want to be responsible for spiking consumer broadband bills with any overlimit fees.

As a result, they’ve asked those usage capped consumers to think twice about applying for the traditional testing program:

Our units download approximately 2GB per month and upload around 2GB. If you’re on a product with a low usage cap then we’d advise against signing up, or at least informing us beforehand so that we can apply a different testing profile.

The FCC also isn’t interested in sending test units to customers they designate as “heavy downloaders”:

We’d classify anything above 30GB per month as being too heavy for us to gather useful results.

With the increasing use of multimedia content and other high bandwidth applications being released to the Internet masses, we beg to differ with the arbitrary definition that 30 GB constitutes “heavy downloading.”  We understand the agency doesn’t want other online usage to create an issue for the accuracy of its speed tests, but they should take better care with their language.  One could use a file backup service and easily consume more then 30 GB uploading and never download more than a gigabyte.

A screenshot of the types of data SamKnows will be collecting and measuring (click to enlarge)

Other restrictions:

• You have a fixed line broadband Internet connection to your residence.  This is not for WISPs, mobile broadband, or other wireless broadband services.
• You use a standalone device to connect to your broadband service – i.e not a USB ADSL modem.
• You have a stable broadband connection (i.e. it doesn’t disconnect frequently). Note that this is just referring to the connection – not the speed.
• You have a spare power socket near your existing router (or wherever you plan to connect the unit. Keep in mind that a network cable must run between the unit and your router though! We supply a 1m cable).
• You need to be on one of the ISPs that we’re measuring.
• You are not an employee or a family member of an employee of one of the ISPs being monitored.

Also, you must agree to the following:

• Not to unplug the unit or your ISP’s router unless I’m away for an extended period of time.
• Not attempt to reverse engineer or alter the unit.
• To notify Samknows if and when I choose to change ISPs.
• To return the unit to Samknows should I no longer wish to be involved (Samknows to pay reasonable postage costs).
• To connect the unit in the way described in the documentation.
• To keep Samknows updated with valid contact details (i.e. email and postal address).

SamKnows is a British company hired by the FCC to conduct the speed test project.  SamKnows is already familiar to British broadband consumers for its comprehensive broadband availability checker showing all of the broadband choices available based on the address where service is to be installed.

The company also reports on broadband news, mostly impacting Europe.

And before the paranoid start suggesting this is Obama’s Internet Spy Box, SamKnows offers this:

However, the unit simply acts as a standard switch or standard router and does not look at any of the packets flowing across your network. It only monitors traffic volumes for the purposes of deciding when to run (or not to run!) the tests and to measure consumption.

Testing information uploaded from the unit to our servers contains no information about you whatsoever. Furthermore, all such communications are encrypted, ensuring that results cannot be tampered with en-route.

Your individual unit’s test results will be available to you alone. Your unit’s results will also be aggregated with others from the same ISP to form a larger average set of results that can be viewed publicly.

We have absolutely no intention of doing anything that may adversely affect your privacy or security.

The implications for the FCC’s national speed test program could mimic Great Britain’s, where providers were held to account for wide variations between speeds promised and those actually delivered.  Meaningful broadband reform in the States could include a requirement that providers’ marketing claims be provable, compelling at least some to perform competitive upgrades instead of delivering broken promises.  This ITN News report from last summer illustrates what happened when UK provider speed claims were put to the test.  (3 minutes)

[Stop the Cap! will be closely following Google's experimental gigabit fiber-optic broadband network.  We'll be bringing regular updates about the communities applying, the strategies they are using to attract Google's attention, what the competition thinks, and the impact of the project on American broadband.]

Columbia, Missouri is excited about the prospect of being chosen as a test city for Google gigabit broadband.

It’s just one of tens of communities seeking to apply for Google’s new experimental fiber to the home network delivering super fast broadband to residents and businesses.

Columbia is the fifth largest city in the state, with 100,000 residents who call the heart of mid-Missouri home.  Columbia is a classic college town, supporting the University of Missouri.  It’s uniquely known as one of the most-educated communities in the country, with over half of its residents holding college degrees.  Columbia residents are quick to embrace new technology, and this drive to adopt the latest and the greatest has fueled interest in Google’s fiber network.

Columbia’s Regional Economic Development, Inc. (REDI), promoting local business and economic development, has been coordinating what to do next.  They’ve been joined by ComoFiber, which is working to generate public interest in the project and help devise a strategy to win Google’s attention.

Columbia, Missouri

Mike Brooks, from REDI, said the city has seen a great deal of interest from the community to apply for Google’s plan.

Last week, both groups met to educate the public and start identifying why Columbia poses an attractive place for Google’s project.

Some believe Columbia would be the ideal city to build such a network.  ComoFiber explains:

The reasons are numerous, but the biggest reason is really quite simple: Columbia is on the knife’s edge: the sweet spot between big, highly-developed cities and small, under-served towns.

The reason this is so important is because it’s easy to see why Google might want to deploy its fiber in either a big city or a small town, but it’s equally easy to see why they wouldn’t. The big cities have high-tech industry, universities, highly educated populae and other capabilities that allow them to produce the kind of applications and creative products that Google wants to research. On the other hand, major cities already have a great deal of fiber infrastructure, and their broadband prices are generally reasonable. So really, they’re already enabled; adding marginally-faster service to those markets won’t be the kind of sea-change that the plan is designed to study.

ComoFiber compiled a list of strengths from both the “big city” and “small town” perspective:

Columbia/Boone County, Missouri

Columbia as Big City:

1. Multiple colleges and universities, including world-class research facilities.
2. A major life sciences epicenter. Life-science is perhaps the most data-intensive industry in the world.
3. A highly-educated, technically-skilled populace. Thirteenth-most educated in America, to be exact.
4. Many high-tech small businesses, including Internet-centric outfits such as Newsy.
5. Several major hospitals and health care businesses, including some at the forefront of technological advancement.
6. Small-business incubators run in cooperation with universities and the city.
7. The world’s foremost journalism school and the Donald W. Reynolds Journalism Institute, which houses a state-of-the-art Technology Testing Center.
8. Several existing Internet service providers who can take advantage of this new open network.
9. Excellent data backhaul capability due to our position on the I-70 corridor.
10. With over 100,000 people, the population is high enough to meet Google’s goal for project scale.

Columbia as Small Town:

1. Sub-par broadband performance with high prices.
2. Very little existing fiber-to-the-home infrastructure.
3. High tariffed rates for enterprise-class data products (T1, DS3, etc.)
4. Midrange population density should be a good microcosm for suburbia nationwide.
5. Smaller building development (no high-rises) makes infrastructure deployment simpler.
6. ”The District” contains the kind of mom-and-pop small-town businesses that can innovate unencumbered by corporate imperatives.
7. Frequently listed in “best places to live” compilations, such as that of Money Magazine.
8. Location in the heart of middle America sends a powerful symbolic message.
9. Low cost of living will be nice for the employees Google will need to move in.
10. With only a bit over 100,000 people, the population is low enough not to dwarf Google’s goal for scale.

The incumbent cable operator, Mediacom, can’t understand why there is such excitement over Google’s fiber project.

“Google is going to be in select markets, and it’s kind of a test that they’re rolling out,” Mediacom director of operations Bryan Gann told KOMU-TV in Columbia. ”It may be limited to some commercial applications in the beginning.”

Mediacom is Columbia's incumbent cable company

Mediacom doesn’t think most residents have any need for super fast broadband.

“I think when you get up to those higher speeds that fast, it’s a select group that would even be interested in it going at that speed,” Gann said.

Despite that remark, Gann quickly added Mediacom was already providing the fastest broadband access in town.  In early February, Mediacom boosted its top broadband speed to 50Mbps, and Gann says the company already has plans to boost that speed to 100Mbps in the future.

“We’re already supposed to go to 100, so we can press on the accelerator anytime we want to,” Gann said.

When a new fiber-based competitor threatens to arrive in town, most cable companies downplay the competitive threat.  Mediacom was no exception.

Gann told KOMU Mediacom was used to competition in broadband service and doesn’t see Google Fiber as a threat.

“With the technology that the cable industry put into Columbia, we’re ready to increase our speed to match competition,” Gann said.

http://www.phillipdampier.com/video/KOMU Columbia Faster Internet May Reach Mid-Missouri 2-16-10.flv
KOMU-TV talks about Columbia’s prospects as a chosen city for Google’s new fiber-to-the-home experiment. (2/16/10 – 1 minute)

The Electronic Frontier Foundation is not happy with the Federal Communications Commission’s proposed Net Neutrality rules because they come with built-in loopholes, the most egregious being a clause which allows providers to throttle, block or otherwise interfere with traffic that could consist of “the unlawful distribution of copyrighted works.”

The movie and recording industries have been attacking Net Neutrality for months, accusing it of providing a copyright-violating-free-for-all.  The FCC seems all-too-willing to adopt that meme, and write a convenient lobbyist-friendly loophole into Net Neutrality policies that would suggest provider interference with broadband networks is bad… except when this or that special interest redefines it as “good and lawful network management.”

For years, the entertainment industry has used that innocent-sounding phrase — “unlawful distribution of copyrighted works” — to pressure Internet service providers around the world to act as copyright cops — to surveil the Internet for supposed copyright violations, and then censor or punish the accused users.

From the beginning, a central goal of the Net Neutrality movement has been to prevent corporations from interfering with the Internet in this way — so why does the FCC’s version of Net Neutrality specifically allow them to do so?

The EFF is asking consumers to sign an online petition asking the FCC to yank that exception out of their proposed Net Neutrality rules, and let the industry use existing law enforcement methods to protect copyrighted works.  Of all the industries that seem to do just fine zealously efforting to protect its copyright interests, Hollywood and the music industry don’t need additional special protection clauses inserted into broadband policy law.

Law enforcement can use existing laws to chase crime, and most honest Internet Service Providers would tell you they don’t want to police their users.  Allowing this exception is a convenient backdoor to do what some have wanted all along — to throttle or block high volume network traffic like torrents and newsgroups, this time under the guise of taking a bite out of crime.

While directly appealing to the FCC might be more effective, signing the petition at least gives the EFF the ability to draw media and political attention to a worthy endeavor.

Let’s not repeat the same mistakes certain other major policy initiatives have endured this past year, where good intentions were steamrolled by lobbyists into a loophole-ridden, industry-protectionist horror show.

The best way to ensure an open and free Internet is to literally demand exactly that — no exceptions.

DC Circuit Court

Once again, the United States Court of Appeals for the District of Columbia Circuit is proving to be the best friend corporations have to unravel regulatory policy and consumer protection laws that might violate corporate free-speech or trade rights.  It has become a favored venue for telecommunications providers who want to be rid of pesky prohibitions or reasonable regulation.

After a series of arguments, universally considered disastrous for the Federal Communications Commission’s authority to regulate broadband, the cable operator may want to send flowers to the Court… a lot of them.

Earlier this month, attorneys for the FCC defended their right to tell Comcast it cannot throttle its customers’ broadband speeds.  The FCC maintains it has regulatory authority over broadband service, claiming such power could be inferred from Title I, Section 230(b) of the Communications Act, which states that it is the policy of the United States “to preserve the vibrant and competitive free market that presently exists for the Internet” and “to promote the continued development of the Internet.”  From that the FCC wrote a policy statement stating it was, “necessary to ensure that providers of telecommunications for Internet access or Internet Protocol-enabled (IP-enabled) services are operated in a neutral manner.”  That was the basis for their crackdown against Comcast’s speed throttle.

After the arguments between Comcast and the FCC concluded, court-watchers believe the Commission’s days of broadband oversight are numbered.

Ars-Technica’s Matthew Lasar documented the probable train wreck for those who seek to rein in provider abuses.

At issue is whether the FCC has been granted direct legal authority for Internet regulation by Congress. Comcast, and as it turned out many on the Court, believe the FCC is relying on policy statements, not written law, for their regulatory authority over Internet Service Providers.  The Court transcript says it all:

Randolph

“In looking this over I found a good many situations in which Congress has instructed the FCC to study the Internet,” said Justice A. Raymond Randolph, [appointed to the Court by President George H.W. Bush in 1990], “and taxation of transit sales transactions on the Internet, and this, and that, and the other thing. But what I don’t find is any congressional directive to the FCC to regulate the Internet.”

It wasn’t hard for [Comcast attorney Helgi G.] Walker to summon a response to this observation. “That’s right,” she declared.

And with that, Comcast had won. Even before the FCC’s attorney got to the bench, the judges were doing Walker’s job, swatting aside arguments on behalf of the agency’s Order sanctioning the ISP. Pro-FCC briefs to the court had noted that the Supreme Court recognized the Commission’s ancillary authority in its Brand X decision, a crucial ISP access case. Randolph threw this bullet point into the trash icon, referring to the “offhand statement” in Brand X. “And the Supreme Court has moved so far away from that kind of an analysis in today’s modern jurisprudence,” he added, “it seems antiquated.”

By the time Commission lawyer Austin C. Schlick began his rebuttal, Randolph moved in for the kill.

“May it please the Court,” Schlick began. “Ms. Walker hasn’t attempted to defend the actual network practices that were employed here, and so I won’t spend time just… ”

Sentelle

[Justice David] Sentelle cut him off. “Well, her position is that she doesn’t have to,” he tersely noted. “She’s here to say that you don’t have any business inquiring into those practices, ergo we don’t either.”

That’s true, Schlick conceded. “Right,” Sentelle warned. “So you may want to move on to something that’s at issue then, Counsel.”

And that was largely that.  The Court is very likely to hand down a ruling that strips the FCC of its ability to regulate or oversee broadband service in the United States.  Even Schlick knew what has forthcoming:

By the end of the discussion Schlick was bargaining with the judges. “If I’m going to lose I would like to lose more narrowly,” he confided. “But above all, we want guidance from this Court so that when we do this rule-making, if we decide rules are appropriate we’d like to know what we need to do to establish jurisdiction.”

“We don’t give guidance,” Randolph grumbled, “we decide cases.”

Comcast should have bought lunch for everyone.

So now public policy groups and advocates of FCC oversight over broadband, particularly as it relates to Net Neutrality, are scrambling to figure out what to do next.

It comes down to four possible outcomes:

1. One of the parties appeals the case;
2. Corporate control of broadband without oversight is assured, as the FCC is stripped of any regulatory authority;
3. The FCC manages to find some other wording from laws Congress passed that justifies lawmakers wanted the agency to oversee and regulate broadband services;
4. Congress passes new laws specifically enacting broadband regulatory authority for the FCC.

Of course, today’s bland authority over broadband comes as a result of legislative compromise from the great regulatory battles over telecommunications during the Clinton Administration.  Providers argued less is more, and have grudgingly accepted limited FCC authority over some of their services, except when a challenge threatens to cost them control or a lot of money.

With a hostile reception at the Court, and the FCC’s “surrender first, fight later” legal argument, an appeal may only delay the inevitable.  The FCC does have plenty of Congressional directives to review which may permit it to enact Net Neutrality protection, but another provider lawsuit opposing Net Neutrality is inevitable.  In fact, without the passage of a clear, concise federal law providing the Commission with explicit broadband regulatory authority enacting Net Neutrality and other protections, the aptly-numbered “2″ is the likely outcome for consumers.

Thankfully, Rep. Edward Markey’s (D-MA) Internet Freedom Preservation Act would solve much of this problem, by forbidding Internet service providers from doing anything to “block, interfere with, discriminate against, impair, or degrade” access to any lawful content from any lawful application or device.

Getting it passed in a Congress mired in division is another matter.  The best way to overcome that is a strong showing of support for Markey’s legislation in calls and letters to your members of Congress, and that you are carefully watching their votes on this issue.

New Zealand Telecom

New Zealand’s Telecom is the latest company caught with a defective broadband usage meter that overbilled 150,000 of their 500,000 customers for Internet usage never utilized.  The problem was tracked to a “technical problem” involving the company’s network upgrade in preparation for the introduction of TiVo.  Telecom’s engineering partner Juniper was held responsible for introducing the error which resulted in more than one hundred thousand customers finding their broadband speeds reduced for “excessive usage” to near-dial-up or billed steep overlimit penalties for the months of November and December.

On December 23, Telecom sent out letters to around 150,000 customers informing them of the error.

“Our reports show us that you will have experienced slowed internet speeds earlier than expected in your billing months,” said the letter, signed by Telecom’s general manager of broadband, Ralph Brayham.

Telecom spokeswoman Emma-Kate Greer told the New Zealand Herald all customers who had been affected by over-charging or slowed internet speeds had been identified.

They had been refunded and credits had been given to “customers who may have been incorrectly slowed.”

Customers shocked by their November and December bills were initially stuck taking Telecom’s word for the overbilling, resulting in lots of finger-pointing in New Zealand households.  The Herald reported:

Sarah Broughton, from Herne Bay in Auckland, said she had been frustrated by the slow broadband, and had accused one of her flatmates of downloading too many movies.

“There are six people living in our house. We all suspected everyone else was downloading heaps,” she said.

“We were blaming other people.

“I never suspected it was Telecom. You think when you give them money they are going to use it properly.

“It’s just been so annoying.”

Usage meters, a vital component of Internet Service Providers seeking an enhanced payday from Internet Overcharging schemes that bill customers based on how much data they consume, have been controversial because of questions regarding the accuracy of their measurements.  Most providers do not permit independent verification of the accuracy of their meters, despite their accounting for a significant portion of a customer’s monthly broadband bill.

It took a concerted, organized effort by members of the Geekzone website to “out” Telecom’s erroneous billing practices and get the company to issue compensation to impacted customers.

Kyle McSlarrow

Once again, the telecommunications industry is threatening to run to the courts if it faces Net Neutrality regulation, claiming their corporate freedom of speech would be violated by protecting the rights of consumers to access the content of their choice on their terms.

Kyle McSlarrow, President & CEO of the National Cable & Telecommunications Association, the nation’s big cable operator trade association, delivered the warning at yesterday’s appearance at the Media Institute in Washington, DC.

In a speech clearly designed to put regulators on notice, McSlarrow dismissed Net Neutrality as a solution in search of a problem and a concept big cable would likely challenge in the courts.

“When all the dire warnings of the net neutrality proponents are stripped away, there really are no signs of actual harm.  Yes, there have been a couple of isolated incidents that keep being held up as examples of what needs to be prevented, but nothing that suggests any threat to the openness of the Internet,” McSlarrow said. “Internet Service Providers do not threaten free speech; their business is to enable speech and they are part of an ecosystem that represents perhaps the greatest engine for promotion of democracy and free expression in history.”

McSlarrow told the audience that the cable industry would be among the victims of Net Neutrality, claiming their rights to transact business on their networks could be trampled by an overzealous Federal Communications Commission.

Almost every net neutrality proposal would seek to control how an ISP affects the delivery of Internet content or applications as it reaches its customers.   This is particularly odd for two reasons:  First, there is plenty of case law about instances of speech compelled by the government – “forced speech” — that suggests such rules should be scrutinized closely. Second, and perhaps more importantly, it is an almost completely unnecessary risk.  All ISPs have stated repeatedly that they will not block their customers from accessing any lawful content or application on the Internet.  Competitive pressures alone ensure this result:  we are in the business of maximizing our customers’ choices and experiences on the Internet.  The counter examples used to debate this point are so few and so distinguishable as to make the point for me.

Beyond the forced speech First Amendment implications, however, net neutrality rules also could infringe First Amendment rights because they could prevent providers from delivering their traditional multichannel video programming services or new services that are separate and distinct from their Internet access service.  While the FCC’s NPRM acknowledges the need to carve out “managed” or “specialized” services from the scope of any new rules, it also expresses concerns that “the growth of managed or specialized services might supplant or otherwise negatively affect the open Internet.”   Meaning what?  Well, the strong implication is some kind of guaranteed amount of bandwidth capacity for services the government deems important.

McSlarrow is focused front and center on the rights of providers, not consumers, when he speaks about the First Amendment.  His constituents are Time Warner Cable, Cox, Comcast, Charter, and the other NCTA members, namely big cable companies.  In his view, any regulation or interference in how providers decide to deliver service is a potential violation of their constitutionally protected rights.  That’s a side effect of the nation’s courts recognizing that corporations have rights, too.

McSlarrow predicts a laundry list of  ‘doom and gloom’ scenarios that would befall providers if Net Neutrality was enacted:

• Net Neutrality could prevent providers from delivering their traditional multichannel video programming services or new services that are separate and distinct from their Internet access service;
• Net Neutrality would prohibit ISPs and applications providers from contracting for any enhanced or prioritized delivery of that application or content to the ISPs’ customers.  Under the proposal, ISPs wouldn’t even be permitted to offer such prioritization or quality-of-service enhancements at nondiscriminatory prices, terms and conditions to anyone who wanted it.
• Net Neutrality may mean that they [content providers] can’t provide material in the enhanced form that they want.
• Net Neutrality could tell a new entrant or an existing content provider that it cannot enter into arrangements with an ISP for unique prioritization or quality of service enhancements that might enable it to enter the marketplace and have its voice heard along with those of established competitors.

McSlarrow doesn’t offer a shred of evidence to prove his more alarmist predictions, even as he demands it from those who support Net Neutrality.  The kind of unregulated, non-neutral net McSlarrow advocates already exists in places like Canada.  What you see there is what you’ll get here  — threats of usage caps unless speed throttles are permitted, arbitrary “network management” that reduces speeds for some services while “enhancing” or “exempting” certain other services (usually those partnered with the provider), and in the end usage caps -and- throttles -and- price increases.  In Canada, the story extends beyond the retail broadband market.  Wholesale broadband sold to independent ISPs comes nicely throttled and overpriced as well.

McSlarrow maintains a see no evil, hear no evil approach to his provider friends who pay his salary.  Comcast’s quiet throttling of peer to peer applicati0ns that blew up into a major scandal when the truth came out was evidently one of the “isolated incidents” he speaks about.  That’s only the nation’s largest cable operator — no reason to get bent out of shape about that.

Let’s break down McSlarrow’s concerns and read between the lines:

• Nothing about Net Neutrality impacts on a cable system’s ability to deliver its multichannel video programming.  What McSlarrow is hinting at is that cable may end up using some of the same technology that moves online video to your computer to transport television programming to your TV set.  AT&T does that today with its U-verse system.  It’s basically a fat broadband pipe over which television, telephone, and broadband service travels together over a single pair of wires.  There is no demand that broadband must usurp your cable television package.
• McSlarrow is trying to be clever when he describes “new services” that he defines as separate and distinct from Internet access service.  That usually includes “digital phone” products which providers already exempt from usage limits imposed on competitors like Vonage.  If “network management” throttles Vonage while exempting the cable system’s own phone product, is that fair?  What about the forthcoming TV Everywhere?  Could a provider throttle the speed of Hulu while exempting its own online television service?  What happens if a provider’s own service is exempted from these throttles and can deliver a higher quality picture because of that exemption?
• “Bandwidth is not infinite.”  That’s something I’ve heard providers argue for more than a year complaining about their congested networks and why they need to impose controls to “manage them.” McSlarrow wants providers to be able to “manage” those networks by selling enhanced speeds for applications that partner with the provider.  Unfortunately, because cable broadband is a shared resource, those premium enhanced speeds will consume a larger share of that resource, naturally slowing down everyone else who didn’t agree to pay. Providers will say they are not ‘intentionally’ slowing down the free lane, but that’s a distinction without a difference to the consumer who will find many of their websites slower to access.
• Today’s model asks consumers to make the ultimate choice. If they want a faster online experience, they can purchase a faster tier of service. Now providers want to change that by establishing a nice protection racket — pay us for “enhanced speeds” or your content may not reach your customers at a tolerable rate of speed.
• It’s ironic McSlarrow is suddenly crying about how unfair it is content providers can’t purchase these “enhanced services.”  That’s a change of tune from an industry that used to accuse the large number of content providers who support Net Neutrality as freeloaders trying to use “their pipes for free.”

Customer demand for higher speeds and more reliable service should be all the impetus the cable industry needs to deliver quality service, particularly considering consumers pay a lot of money for the service and remain loyal to it.

McSlarrow’s final argument is a testament to the arrogance of the cable industry on the issues that concern subscribers.  A-la-carte channel choice, equipment options and expenses, usage limits, rate increases, and service standards are all issues this industry has fought with regulators about.  What customers want is secondary, and can remain that way as long as consumer choice is kept limited.  McSlarrow’s valiant defense of the rights and freedoms of the cable industry to offer extra freedom of speech through enhanced speed-privileges to content partners is more important to him and his provider friends than the rights of customers to not have their service artificially degraded to make room for even bigger cable profits.

Mark A. Jamison

Stop the Cap! reader Joe sends along news of another one of those guest opinion hit pieces on Net Neutrality that pop up regularly in the media.  This one, The Internet is Never Neutral, printed in today’s Sun-Sentinel in south Florida, comes from Mark A. Jamison and Janice Hauge, a dynamic duo who have co-written several papers that always manage to turn up favorable conclusions for big telecommunications companies, including these page-turners:

• “Bureaucrats as Entrepreneurs: Do Municipal Telecom Providers Hinder Private Entrepreneurs?”
• “Subsidies and Distorted Markets: Do Telecom Subsidies Affect Competition?”
• “Dumbing Down the Net: A Further Look at the Net Neutrality Debate.”

The two are also working on other papers purporting to study regulatory policy and competition issues.  Let me illustrate my psychic powers by guessing they’ll find regulatory authorities to be obstacles to the well-oiled telecommunications machine and competition will be most hearty if there are no pesky regulations to hamper it.  We’ve seen how well that has worked so far for consumers in North America.

Remember Al Gore calling the Internet the information superhighway? The metaphor wasn’t and isn’t perfect, but it is instructive. Suppose we applied net neutrality to our transportation system — there would be no high-occupancy vehicle lanes during rush hour, no car-only lanes on interstates, and no toll road as an alternative to I-95 in South Florida. Transportation would be more costly and provide less value.

Forcing net neutrality would have similar results. Time-sensitive information, such as stock market transactions, would wait in line behind football game highlights.

Jamison, who is a former manager at Sprint Communications, and Hauge miss the entire point of the Internet’s biggest strength: its equal treatment of traffic from the smallest blog to Amazon.com.  Assuming providers, earning billions in profits even as their costs decline, invested appropriately in those networks, there would be no need for high-occupancy vehicle lanes and toll roads.  These kinds of “traffic management” techniques are proposed because provider dollars don’t keep up with consumer demand.  Social engineering tries to throttle traffic downwards by discouraging it with toll fees or manage it with special high cost lanes reserved only for those willing to pay or follow arbitrary rules governing their use.  More often than not, those premium lanes go underutilized while the rest of us remain stuck in the slow lane.

Net Neutrality would not impede network management that enhances the efficiency of traffic, except when it comes at the expense of someone else’s traffic. Net Neutrality also throws up a roadblock against providers who would plan to cash in with enhanced connectivity services that cannot exist unless  a market is created to sell them.  It’s similar to providers in Canada limiting your access to broadband, then throwing a penalty fee on your bill… unless you sign up and pay for their “insurance” plan to protect you from those charges.

Want to run a video streaming application on the Internet?  Pay for a broadband provider’s deluxe delivery insurance, and customers will be able to watch that video without buffering.  The alternative is to be stuck waiting because your video is being delivered on an artificial “slow lane.”

If you are thinking that it sounds like net neutrality restricts innovation and hurts customers, you’re right. Our research has shown that net neutrality limits innovation, contrary to the claims of the net neutrality proponents. How can this be? Imagine a one dimensional network — one that does nothing but carry information from point to point, which is how the old Internet has worked. What kinds of content providers flourish in that context? Those big enough to distribute their software across the net and those whose software takes advantage of the great bandwidth that they don’t have to pay for.

Their research makes numerous assumptions that might prove accurate in a laboratory environment, but simply discounts provider mischief in their efforts to maximize profits and minimize costs.  Providers have earned countless billions providing this “one dimensional network” to consumers.  It’s the one bright spot in a lackluster telecommunications sector.  Those who innovate new broadband applications have flourished.  Some providers who have not want to innovate in a different way – by inventing new Internet Overcharging schemes to profit from the service without actually improving it.  When their interests are at stake in owning and managing their own content services, bandwidth suddenly becomes plentiful.  The TV Everywhere project will potentially provide a value-added service to cable and telco TV providers, all made possible in marked contrast to their argument that other producers’ video content is clogging their networks.

Another naked fallacy in the authors’ argument is that content providers don’t pay for the bandwidth to host and distribute their content.  They do — to the companies that host their content and provide connectivity to the Internet.  That’s the job of web hosting companies.  Internet service providers simply want to be paid extra for doing their job – providing connectivity to consumers who pay $4o or more a month Free Press found costs about $8 to provide, and then also charging content creators a second time to facilitate delivery of that content.  That’s akin to charging a phone customer for placing a long distance call and also demanding to bill the person who answers.

Now, suppose that the network can offer enhancements that improve customers’ experiences. Content providers whose sites would not benefit from such enhancements could ignore the offering. But there will be some content providers who could improve their services by buying the enhancements, such as priority packet delivery. These sites become better without net neutrality and offer customers more service. In other words, there is more innovation and greater customer welfare without net neutrality than with it.

Promises, promises.  Just getting these providers to upgrade broadband speeds to consumers has been a never-ending quest.  Many consumers are willing to pay for “improved service” in the form of faster connections to the Internet.  Consumers are not willing to pay more for artificially limited service, be it through throttled speeds or usage caps.

At the conclusion of their study, which assumes providers will not leverage their duopoly in most American markets to increase pricing/revenue and reduce costs by limiting demand on their networks, they readily admit they did not take into account several possible scenarios:

One issue is how the offering of premium transmission might affect the network provider’s incentive to change the standard transmission speed. At least AT&T has committed to not degrade service for any network user, but it is unclear how such a commitment would be enforced.

Secondly, we do not analyze the effects of peer-to-peer communication, which is growing in importance on the Internet.

Thirdly, we do not consider the effects of vertical integration by the network provider and whether this would provide an incentive for foreclosure.

The PURC is part of the University of Florida, but also receives private corporate funding

Because the broadband industry fights any attempt to regulate their service, it is unlikely any such promise from AT&T would be enforced.  What AT&T defines as “degraded” service is open to interpretation as well.  As broadband demand is dynamic and growing, should AT&T leave standard transmission speeds exactly as they are today, that non-premium service would be degraded through inattention to broadband growth.  Peer to peer communication is largely a story from the first round of the Net Neutrality debate in 2006-7.  A more significant amount of traffic is now attributed to online video.  Finally, not considering vertical integration in the cable and telephone industry is a fatal flaw.  The history of telecommunications regulation has largely been written during periods when the cable and telephone industry abused their market position to overcharge consumers for service, lock up content distribution channels, and forestall competition wherever and whenever possible.

Frankly, Jamison and Hauge’s world view only innovates new, even fatter profits for providers like AT&T.  Perhaps some of those profits can go towards even greater funding for the Public Utility Research Center, where Jamison serves as director and Hauge as a Senior Research Associate.  The PURC, part of the University of Florida, just happens to have, among others, AT&T and Embarq Florida as sponsors, and both companies have seats on the PURC Executive Committee.

Sun-Sentinel readers don’t have that information because it’s not included in the disclosure at the bottom of the piece.  Following the money would shed a lot more sun on this important debate.