Michael Lynton, Chairman and CEO of Sony Pictures Entertainment who was the subject of our last HissyFitWatch, has decided damage control was the order of the day after being caught making remarks suggesting the Internet had never come to any good and was filled with pirates and freeloaders.  A recap:

“I’m a guy who doesn’t see anything good having come from the Internet, period.”

The Internet has “created this notion that anyone can have whatever they want at any given time. It’s as if the stores on Madison Avenue were open 24 hours a day. They feel entitled. They say, ‘Give it to me now,’ and if you don’t give it to them for free, they’ll steal it.”

Just brought to our attention, Lynton decided he’d better clarify those remarks, because the blog world had already spent a week burning him in effigy for making them.  So off to The Huffington Post he went to pen his long-form explanation on May 26th.

In March, an unfinished copy of 20th Century Fox’s film X-Men Origins: Wolverine was stolen from a film lab and uploaded to the Internet, more than a month before its theatrical release. The studio investigated the crime, and efforts were made to limit its availability online. Still, it was illegally downloaded more than four million times.

That kind of wide scale theft was very much on my mind when I was on a panel the other day which opened with a question about the impact of the Internet on the entertainment business, and I responded, “I’m a guy who sees nothing good having come from the Internet. Period.”

But, I actually welcome the Sturm und Drang I’ve stirred, because it gives me an opportunity to make a larger point (one which I also made during that panel discussion, though it was not nearly as viral as the sentence above). And my point is this: the major content businesses of the world and the most talented creators of that content — music, newspapers, movies and books — have all been seriously harmed by the Internet.

Some of that damage has been caused by changing business models (the FTC just announced an inquiry into the impact of new media on the newspaper industry). But the primary culprit is piracy. The Internet has brought people with no regard for the intellectual property of others together with a technology that allows them to easily steal that property and sell or give it away to everyone, with little fear of being caught or prosecuted.

He could have said this at the Whine & Cheese breakfast in Syracuse and it would have provoked the same reaction his original comments had.  Not much to see here beyond another big corporate Hollywood studio executive pleading poverty and ruin because one of the industry’s own employees made off with a film print to score big bucks and eventually the copy drifted into Pirate Bay.  Nobody need call CSI to determine the cause of injury in this case.  Even the most casual observer can see most of these wounds are self-inflicted.

… Continue Reading

Live Coverage of SaveOurNet.ca‘s National Open Internet Town Hall, netcasting from Toronto has now concluded.  Unfortunately, connectivity issues at the hotel plagued the live streaming event, and a good deal of it was not available on the live stream.  A recording of the presentation should be forthcoming shortly, and will be embedded in this space, when available.

The Federal Communications Commission is accepting comments from citizens until July 8, 2009 as they craft a national broadband plan.  Free Press’ Save the Internet campaign has made sending our comments a lot easier for you and I.  They’ve created an online form that directly interfaces with the FCC’s formal comment submission system.  They have pre-filled a sample message to send to the Commission for consideration, but I strongly recommend you write one of your own.  Net Neutrality is a critically important issue for Stop the Cap!, but there is room to also share your thoughts on usage caps, metered pricing, competition and oversight — all of the issues we focus on regularly here.

They are already hearing from special interests and lobbyists attempting to influence the Commission into creating a broadband policy that caters to the whims of commercial interests.  It is paramount that the Internet first and foremost serve the interests of the people.

For the first time in a long time, every citizen can have a voice heard by anyone who wants to listen.  The impact and importance of that voice is judged on the merit of the message, not on how much money, power or influence that person has to present it.  Net Neutrality rules enforced as part of a national broadband policy protects your voice, your ideas, and your participation in our democracy.  Some commercial interests seek a net where their voices can travel faster, their partners get preferential treatment, and everyone else risks being throttled, capped, metered, or impeded.

Gordon F. Snyder, Director of the National Center for Information and Communications Technologies

Without Net Neutrality protections, the Internet may find itself resembling broadcasting in this country, where a few powerful interests control the medium, the message, and the content.  No company should be making these choices for you, either through speed throttling or imposing limits or meters on those products and services that aren’t owned, controlled, or partnered with that provider.  Your ISP should not have the right to impose a broadband strategy that is designed to protect the business model of another product or service they happen to offer, such is the case with online video.

Tell the FCC you don’t want to settle for a national broadband policy that doesn’t make America #1.  That means:

• The fastest possible speeds, not rationed “fast enough for most people to check e-mail and web pages broadband.”
• An end to policies that allow providers to artificially limit consumption through throttles, usage caps, and forced metered pricing at enormous markups.
• Protections against manipulating broadband policies to protect providers’ other business interests, such as streaming online video competing with traditional cable television business models.
• Policies that encourage competition among providers, even if it means establishing “common carrier” status to permit competitor access to wired infrastructure under fair terms.
• A policy that recognizes the rapid development of broadband technology and expects providers to grow with the times to accommodate new platforms, technologies, and applications.
• A policy that embraces municipal, public, and/or non-profit organizations that wish to establish advanced networks as they see fit, without having to face lawsuits and delay tactics from commercial interests.
• Recognition that there cannot be two broadband platforms in this country – one slow lane for rural and under-competitive markets and one fast lane for urban areas.  Equal access.  Equal speeds.  Fair pricing.

Gordon F. Snyder, Director of the National Center for Information and Communications Technologies, provides additional insight in his blog, and should be considered when writing your suggestions to the FCC:

… Continue Reading

Marcel Boyer

Marcel Boyer penned an opinion piece for Canada’s Financial Post this week attacking the virtues of Net Neutrality as short-sighted and potentially devastating to the Internet if codified into law.

Boyer, in a piece called “Don’t Throttle the Net,” advocates precisely that, applauding broadband providers for traffic shaping, which artificially slows non-preferred Internet traffic delivered over broadband networks.

There are many facets to the net-neutrality issue, including pricing and broadband allocation, which are central. Proponents of net-neutrality call for government intervention and regulation to prevent broadband providers from prioritizing or interfering with the data that flows in their networks. On the other hand, broadband providers are arguing that even though they continue to invest in their networks, their customers would still be affected by congestion during peak periods in the absence of traffic management measures. Other large networks face the same type of issues. New applications (video streaming and VoIP, among others) require a high quality of service assurance, making a more reliable network necessary.

Boyer delivers the usual talking points about bandwidth pricing and competition that Stop the Cap! readers are all too familiar with:

Making it illegal for broadband companies to offer a diversity of choices would destroy incentives to invest continually in improved Internet bandwidth, quality and security. Net-neutrality legislation would unnecessarily regulate a free and competitive market when there is no real evidence of consumer harm.

Let network owners and operators as well as service providers differentiate their offerings and price them the way they choose. Customers would benefit from more diversified offers by selecting the ones best suited to their needs. In such a competitive context, network operators and service providers would routinely aim to satisfy demand for Internet services most effectively while simultaneously aiming to manage the growth in peak demand.

It is to the advantage of consumers to allow competing vendors to experiment with various price and service combinations. From this discovery process, a portfolio of winning offerings will emerge. As long as competition is present and sufficiently intense, and assuming the level of information available and provided to consumers enables them to make informed choices between the various offerings, regulation of price schemes is neither necessary nor desirable as it would stifle innovation and obscure the best offerings and pricing schemes.

From an economic point of view, policies that would restrict the ability of broadband providers to manage their networks are likely to do more harm than good. Regulation of prices and offerings, products and services, has generally resulted in higher costs and lower benefits, especially when competition is present. The complexity of market dynamics poses particular problems in emerging industries. Instead of adopting regulations that could induce unwanted harmful effects, it is preferable to mandate the Canadian Competition Bureau to investigate when there is evidence of abuse or unlawful actions from broadband providers.

The impetus for the opinion piece was this week’s news highlighting Canada’s rapid decline in standing among top industrial nations’ broadband services.  The original report specifically called out the impact of draconian usage caps and throttles which reduce usage, limit innovative high bandwidth services’ entry into the Canadian market or bypass it entirely, and the potential economic and competitive impact on Canada’s economy as a whole.

Boyer’s premise presupposes there is a healthy competitive marketplace for broadband in Canada, a conclusion ridiculed by many.  Most Canadian cities have two primary choices for broadband, a usage capping phone company or a usage capping cable company.  Smaller independent providers typically resell bandwidth obtained from Bell or other similar entities at wholesale rates.

Despite pricing more than $15 a month higher in Canada than in the United States, and healthy financial returns among most of Canada’s providers for their broadband divisions, the “continual investments” in bandwidth Boyer claims are hardly eye popping.  Incremental speed increases, usually accompanied by rate hikes, and the imposition of often paltry usage caps has artificially reduced consumption, which also reduces the need to improve infrastructure.  Indeed, while fiber optics deployment is becoming increasingly common in the United States, it is not nearly as common in Canada.

Canadians find little diversity in pricing and service levels in a marketplace that nearly always imposes limits on consumption, doesn’t provide robust access in rural communities, and typically delivers slower speeds than their counterparts in the United States are providing customers today.  East York (near Toronto) residents, for example, can obtain “blistering fast” 10Mbps service from Rogers for about $60US per month, limited to 95GB of consumption.  Overlimit fees are $1.50/additional GB.  Bell offers “speed of light” Internet access at “up to 16Mbps” for $82.95 a month (100GB usage cap – $1.00/additional GB, billed in increments of 100MB, $30 monthly maximum applies.)

Head across Lake Ontario south to Rochester, NY and Time Warner Cable provides “Turbo” service offering 15Mbps, currently without any usage cap, for $50.00 a month.  Verizon FiOS pricing provides 20Mbps service with no cap for $54.99 a month.

In the absence of significant competition, duopoly-style pricing usually results, and that’s precisely what has happened in Canada.  Allowing the “wild west — hands off” approach Boyer advocates merely guarantees more of the same.  Providers in the United States, already enjoying phenomenal returns, would love to adopt the Canadian approach.  They’ve already been increasing rates, decreasing investment in their network infrastructure as a percentage of revenue, and enjoying the benefits of reduced bandwidth expenses.  The only components left are usage caps and throttling broadband applications they don’t own, control, or partner with.  Experiments are being attempted on some of these fronts now.

The end result: even higher profits and locking broadband into a rationed, expensive, and slow backwater.

Boyer should know that wired broadband competition beyond the aforementioned duopolies in most Canadian markets comes only from independent ISPs typically reselling wholesale bandwidth (which is now also being capped) and a few independent providers who may wire limited areas in large cities.  There will never be a free market paradise in cable television – the traditional one company per city approach is well rooted throughout North America.  Wireless is even more heavily capped and expensive than wired service.  And telephone companies, outside of Verizon in the United States, are loathe to aggressively deploy fiber optics unless required by local market conditions.

Broadband throttling and capping, particularly to discourage online video consumption, comes aggressively when companies have a vested interest in preventing erosion of their traditional video programming business model.  Both Rogers and Bell are in the business of delivering television entertainment to Canadians.  Should a sufficient amount of that entertainment be available online, some consumers may dispense with the video package and rely exclusively on the Internet.

Speaking of vested interests,  the Financial Press had plenty of space to print Boyer’s article, and even concluded it by noting his title:

Marcel Boyer is vice-president and chief economist of the Montreal Economic Institute.

Apparently things got throttled at that point, because they forgot to include one additional affiliation Boyer holds: Bell Canada Professor of industrial economics at the Université de Montréal.  How ironic.

Politico published an article this week attempting to navigate the waters of the nation’s telecommunications regulatory policies, as seen in the eyes of the Federal Communications Commission.  As Stop the Cap! readers already know, Net Neutrality has a tendency to be defined in many different ways.  It’s the color-changing Magic Sprinkles of regulatory policy.  Everyone has a favorite color.

We define Net Neutrality as giving equal access and treatment to all data on broadband networks without favor or foe.  Usage caps indirectly impact on Net Neutrality because they can artificially limit consumption with the potential of exempting “preferred partner” content. Another example: “digital phone” products from the bandwidth provider that are excused from consumption meters violate Net Neutrality principles when the competition doesn’t get the free pass your own product does.

Obama’s appointments to the FCC claim to support Net Neutrality principles and state they will keep those in mind as they regulate telecommunications for at least the next four years.

“In the beginning of the storm, we were in this frenzy because of statements being made by the CEOs about charging websites and application providers for different levels of access to reach Internet users. That got policymakers engaged, and the president made it his No. 1 tech agenda item,” he said. “Now we have a brand-new government. The community is looking to see what is going to happen. If things don’t happen in a timely way, you will see the back end of that storm.”

Tom Tauke

Tom Tauke, executive vice president of public affairs, policy and communications at Verizon tried to put banana colored sprinkles on a watermelon flavored ice cream cone when he attempted to conflate the concept of Net Neutrality with wireless phone companies handing out free phones to victims of stalkers and domestic violence.  Huh?  Under Net Neutrality, the stalkers should also get phones?

Tauke also demonstrated either a fundamental misunderstanding of the concept, or deliberately tried to muddy the waters of Net Neutrality. Verizon has traditionally despised and has lobbied against Net Neutrality for years.

In Tauke’s eyes, Net Neutrality protections may somehow impact parents’ abilities to monitor and control their children’s access to the Internet, interfere with identify theft control measures, and force an end to protecting your wireless cell phone call from deterioration because too many kids at the mall are texting on the same network.

Bizarroworld definitions like that cheapen the reality that enforced Net Neutrality will go a long way to protect consumers from predatory practices of a different kind — greedy providers looking for another payday by demanding compensation to move your web page, video, or download along at a “reasonable” speed.  Those unfortunate enough to not pay may find the very definition of “broadband” redefined as well… “Internet access mildly faster than dial-up most of the time, except on weekends when ‘freeloaders’ have to wait until after 11pm.  Material owned, controlled or partnered with us are always exempt, of course.”

Meanwhile, the rest of Verizon thinks American broadband is highly competitive, fast, and that companies are implementing new pricing and service “options” to bring “greater value” (ie. mandated usage caps) to their customers. A preview of the remarks Verizon will make at today’s Free State Foundation panel on broadband was highlighted on Verizon’s Policy Blog:

Link Hoewing, V.P. for Internet and technology policy for Verizon, previews his discussion about the health of the U.S. broadband marketplace. The Capitol Hill panel he references is hosted by the Free State Foundation and will take place 6/5/09.