The entertainment industry, in cooperation with the nation’s largest Internet Service Providers, joined forces to open a new copyright enforcement center that critics charge sidesteps judicial process, leaving consumers forced to prove they are innocent after they’ve been accused of being guilty.

On Monday, the Center for Copyright Infringement named its executive director and board, and intends to gradually begin serving as a clearinghouse for copyright infringement complaints brought by the nation’s music and movie companies.

CCI has representatives from the Motion Picture Association of America (MPAA), the Recording Industry Association of America (RIAA), AT&T, Cablevision, Comcast, Time Warner Cable, and Verizon Communications collectively working to streamline enforcement of copyright law and control Internet piracy.

Often known as the “Six Strikes Plan,” CCI participants will coordinate piracy notification warnings for suspected illicit downloads of copyrighted content from peer-to-peer file sharing networks.  Hollywood studios and recording labels will identify those they suspect are involved in illegal file swapping and participating ISPs will notify customers tied to the infringing IP addresses up to six times before reducing a customer’s Internet speed, temporarily disabling the account, or terminating service.

The CCI hopes to bypass the court system and adopt a self-regulation, “in-house” approach to Internet piracy.  Some courts have proven increasingly-reluctant to hand over identifying information to copyright holders based on the sometimes-flimsy evidence of illegal downloading included in supporting affidavits.  Judges in some courts have also become leery of a cottage industry of “settlement specialists” that threaten expensive litigation for alleged copyright infringement that can be resolved with a quick cash settlement.

Judge James F. Holderman of the Northern District of Illinois ruled against one litigant who demanded ISPs divulge the identities of every participant exchanging bits and pieces of a copyrighted work in a so-called “BitTorrent swarm,” because they were involved in a conspiracy.  Holderman dismissed that argument.

Such tactics have allowed some settlement specialists to demand settlement payments from a larger group, substantially boosting revenue at little cost to them.

CCI’s executive director Jill Lesser says laws no longer favor copyright holders.

“While laws that protect intellectual property remain strong and enforcement efforts continue, technology has tipped the balance away from the interests of most creators and artists,” Lesser said. “The ease of distribution of copyrighted content has helped create a generation of people who believe that all content should be free.”

CCI’s so-called “Copyright Control System” will bypass the courts entirely, as entertainment companies coordinate directly with major ISPs agreeing to enforce copyright compliance.

Lesser says consumers will still have a fair process to challenge notices of alleged infringement.  But it will cost at least $35 for consumers to argue their case.  Additionally, as a self-regulated, industry-controlled body, consumers’ rights of appeal are undetermined.  The arbitration process will be administered through the American Arbitration Association.

Why would ISPs want to become involved in a copyright control regime?  To reduce their own expenses and legal risks.  Copyright holders and their agents have peppered service providers with compliance and identification demands for years, creating full time positions processing the paperwork.  By adopting a clearinghouse and developing a streamlined process to handle complaints, service providers can cut costs and avoid possible litigation against themselves.

Still, both the entertainment industry and ISPs seem to be open to listening to consumer advocates.  Lesser was formerly involved with People for the American Way, a group sensitive to privacy rights.  Serving on the advisory board are Gigi Sohn from Public Knowledge and Jerry Berman, founder of the Center for Democracy and Technology.  Neither have direct authority over the group’s enforcement efforts, but Sohn told Ars Technica she hoped her involvement would give a voice to consumer interests and maintain transparency in the enforcement process.

Comcast has changed its explanation why the company’s XFINITY TV service, streamed over Xbox 360 has been made exempt from the company’s 250GB usage cap.

Last week, the company claimed the service traveled over the company’s “private IP” network, exempting it from usage restrictions.  That created a small furor among public interest groups and Net Neutrality supporters because of the apparent discrimination against streamed video content not partnered with the country’s biggest cable operator.

Stop the Cap! argued what we’ve always argued — usage caps and speed throttles are simply an end run around Net Neutrality — getting one-up on your competition without appearing to openly discriminate.

Now Comcast hopes to make its own end run around the topic by changing the language in its FAQ:

Before:

After:

Although the words have changed, the story stays the same.

The key principle to remember:

Data = Data

Comcast suggests its Xbox XFINITY TV service turns your game console into a set top box, receiving the same type of video stream its conventional cable boxes receive.  The cable company is attempting to conflate traditional video one would watch from an on-demand movie channel as equivalent to XFINITY TV over the Xbox.  Since the video is stored on Comcast’s own IP network, the company originally argued, it creates less of a strain on Comcast’s cable system.

AT&T's U-verse is an example of an IP-based distribution network.

But the cable industry’s inevitable march to IP-based delivery of all of their content may also bring a convenient excuse to proclaim that data does not always equal data.  They have the phone companies to thank for it.

Take AT&T’s U-verse or Bell’s Fibe.  Both use a more advanced form of DSL to deliver a single digital data pipeline to their respective customers.  Although both companies try to make these “advanced networks” sound sexy, in fact they are both just dumb data pipes, divided into segments to support different services.  The largest segment of that pipe is reserved for video cable TV channels, which take up the most bandwidth. A smaller slice is reserved for broadband, and a much smaller segment is set aside for telephone service.

AT&T and Bell’s pipes don’t know the difference between video, audio, or web content because they are all digital data delivered to customers on an IP-based network.  Yet both AT&T and Bell only slap usage caps on their broadband service, claiming it somehow eases congestion, even though video content always uses the most bandwidth. (They have not yet figured out a way to limit your television viewing to “maintain a good experience for all of their customers,” but we wouldn’t put it past them to try one day.)

What last mile congestion problem?

Comcast’s argument for usage limiting one type of data while exempting other data falls into the same logical black hole.  Comcast’s basic argument for usage caps has always been it protects a shared network experience for customers.  Since cable broadband resources are shared within a neighborhood, the company argues, it must impose limits on “heavy users” who might slow down service for others.

We've heard this all before. Former AT&T CEO Dan Somers: "AT&T didn’t spend $56 billion to get into the cable business to have the blood sucked out of (its) veins."

But in a world where DOCSIS 3 technology and a march to digital video distribution is well underway or near completion at many of the nation’s cable operators, the “last mile” bandwidth shortage problem of the early 2000s has largely disappeared.  In fact, Comcast itself recognized that, throwing the usage door wide open distributing bandwidth heavy XFINITY TV over the Xbox console cap-free.

As broadband advocates and industry insiders continue the debate about whether this constitutes a Net Neutrality violation or not, a greater truth should be considered.  Stop the Cap! believes providers have more than one way to exercise their control over broadband.

Naked discrimination against web content from the competition is a messy, ham-handed way to deal with pesky competitors.  Putting up a content wall around Netflix or Amazon is a concept easy to grasp (and get upset about), even by those who may not understand all of the issues.

Internet Overcharging schemes like usage caps and speed throttles can win providers the same level of control without the political backlash.  Careful modification of consumer behavior can draw customers to company-owned or partnered content without using a heavy hammer.

Simply slap a usage limit on customers, but exempt partnered content from the limit.  Now customers have a choice: use up their precious usage allowance with Netflix or watch some of the same content on the cable company’s own unlimited-use service.

Nobody is “blocking” Netflix, but the end result will likely be the same:

• Comcast wins all the advantages for itself and its “preferred partners”;
• Customers find themselves avoiding the competition to save their usage allowance;
• Competitors struggle selling to consumers squeezed by inflexible usage caps.

It is all a matter of control, and that is nothing new for large telecom companies.

Back in 1999, AT&T Broadband owned a substantial amount of what is today Comcast Cable.  Then-CEO Dan Somers made it clear AT&T’s investment would be protected.

“AT&T didn’t spend $56 billion to get into the cable business to have the blood sucked out of [its] veins,” Somers said, referring to streamed video.

Obviously Comcast agrees.

While Comcast is generously taking the caps off for Xbox customers looking for Comcast Xfinity On Demand content, those looking for HBO Go will not find it available period. Time Warner Cable doesn’t cap their customers, but they are not offering HBO Go for Xbox users either (as well as those with set top streaming boxes like Roku).

Microsoft announced this morning Comcast Xfinity, HBO Go, and MLB.tv apps for Xbox Live were now available, but both cable operators have decided HBO Go on the Xbox is not right for them, at least for now.

Microsoft updated their website to confirm neither cable operator, serving tens of millions of customers, were among the providers supporting HBO Go on the gaming console. The service is available to customers of AT&T, Bend Broadband, Blue Ridge Communications, Cablevision, Charter, Cox, DirecTV, Dish, Grande Communications, HTC Digital Cable, Massillon Cable/Clear Picture, Mediacom, Midcontinent Communications, RCN, Suddenlink, Verizon, and Wow!

Oddly, Stop the Cap! readers tell us they can access HBO Go on Comcast’s iPad and iPhone apps, which hold some hope HBO Go will show up eventually on the gaming console.

Time Warner Cable is another story.  We’ve previously noted they’ve shown no interest in allowing streaming video and game consoles access to premium movie channel content, although they do support some access through phone and iPad apps.

Comcast Monday announced it was exempting its new Xbox streaming video service from the company’s long standing 250GB monthly usage cap, claiming since the network doesn’t exist on the public Internet, there is no reason to cap its usage.

Net Neutrality advocates immediately denounced the cable operator for violating Net Neutrality, giving favorable treatment to its own video service while leaving Netflix, Amazon, and others under its usage cap regime.

Public Knowledge president Gigi Sohn:

“The Xbox 360 provides a number of video services to compete for customer dollars, yet only one service is not counted against the data cap—the one provided by Comcast.” Sohn said. “This is nothing less than a wake-up call to the Commission to show it is serious about protecting the Open Internet.”

Stop the Cap! believes Comcast also inadvertently undercut its prime argument for the company’s 250GB usage cap — that it assures “heavy users” don’t negatively impact the online experience of other customers:

We work hard to manage our network resources effectively and fairly to ensure a high-quality online experience for all of our customers. But XFINITY Internet service runs on a shared network, so every user’s experience is potentially affected by his or her neighbors’ Internet usage.

Our number one priority is to ensure that every customer has a superior Internet service experience. Consistent with that goal, the threshold is intended to protect the online experience of the vast majority of our customers whose Internet speeds could be degraded because one or more of their neighbors engages in consistent high-volume Internet downloads and uploads.

The threshold also addresses potential problems that can be caused by the exceedingly small percentage of subscribers who may engage in very high-volume data consumption (over 250 GB in a calendar month). By applying a very high threshold on monthly consumption, we can help preserve a good online experience for everyone.

Comcast argues around the exemption of the Xbox service by reclassifying it as somehow separate from the public Internet.  The company then tries to claim the Xbox app functions more like an extra set top box, not as a data service.  But, in fact, it –is– a data service delivered over the same cable lines as Comcast’s broadband service, subject to the same “last-mile congestion problem” Comcast dubiously uses as the primary justification for placing limits on customers.

Cable providers who limit broadband use routinely use the “shared network experience” excuse as a justification for usage control measures.  Since cable broadband delivers a fixed amount of bandwidth into individual neighborhoods which everyone shares, a single user or small group of users can theoretically create congestion-related slowdowns during peak usage times.  Cable operators have successfully addressed this problem with upgrades to DOCSIS 3 technology, which supports a considerably larger pipeline unlikely to be congested by a few “heavy users.”

Comcast’s argument the Xbox service doesn’t deserve to be capped because it is delivered over Comcast’s own internal network misses the point.  That content reaches customers over the same infrastructure Comcast uses to reach every customer.  If too many customers access the service at the same time, it is subject to precisely the same congestion-related slowdowns as their broadband service.  Data is data — only the cable company decides whether to treat it equally with its other services or give it special, privileged attention.

Even if Comcast argues the Xbox streaming service exists on its own segregated, exclusive “data channel,” that represents part of a broader data pipeline that could have been dedicated to general Internet use.  The fact that special pipeline is available exclusively for Comcast’s chosen favorites, while keeping usage limits on immediate competitors, is discriminatory.

Comcast customers who have lived under an inflexible 250GB usage limit since 2008 should be wondering why the company can suddenly open unlimited access to some services while refusing to adjust its own usage limits on general broadband service.

Stop the Cap! believes Comcast has forfeit its own justification for usage caps and network management techniques that can slow customer Internet speeds.  We have no problem with the company offering unlimited access to the Xbox streaming service. But the company must treat general Internet access with equal generosity, removing the unjustified and arbitrary usage cap it imposed on customers in 2008.  After all, if the company can find vast, unlimited resources for a service it launched only this year, it should be able to find equal resources for a service it has sold customers (at a remarkable profit) for more than a decade.

Anything less makes us believe Comcast’s usage caps are more about giving some services an unfair advantage — violating the very Net Neutrality guidelines Comcast claimed it would voluntarily honor.

Stop the Cap! strongly believes usage caps are increasingly less about good network management and more about controlling and monetizing the online experience, seeking marketplace advantages and new revenue streams from consumers who already pay some of the world’s highest prices for broadband service.  As we’ve argued since 2008, Internet Overcharging through usage caps and usage based billing is also an end run around Net Neutrality.  The evidence is now apparent for all to see.

[Thanks to our readers Scott and Yannio for sharing developments.]

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Senate Hearing on Verizon-Comcast Deal 3-21-12.flv[/flv]

This afternoon, the U.S. Senate’s Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing on the potential antitrust implications of a deal between Verizon and some of the nation’s largest cable companies that would deliver Verizon warehoused, unused wireless spectrum owned by four of the nation’s largest cable operators and open the door to Verizon Wireless pitching cable television subscriptions.  The hearing: “The Verizon/Cable Deals: Harmless Collaboration or a Threat to Competition and Consumers?” lasts 2 hours, 23 minutes.