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.

Phillip "No, I won't take your word for it" Dampier

Did you realize if you are pro-Net Neutrality, you’re probably pro-piracy and a broadband hog?  That’s the new low achieved this past week by Net Neutrality opponents who are spending millions trying to protect their broadband fiefdoms from any regulation.  But even if they lose their fight to stop Net Neutrality when they find consumers won’t accept a throttled “network managed” broadband future, providers will be “forced” to control those dirty pirates and broadband hogs with usage limits and overlimit fees to help “pay for network expansion.”

It’s why Net Neutrality and Internet Overcharging schemes like usage caps and “consumption billing” go hand in hand.  What providers can’t profit from on one end they’ll try from another.

Longtime readers of Stop the Cap! already know how this scam works.  Canadian broadband users got stuck with both: speed throttles -and- usage caps and overlimit fees.  Assuming purposely throttled speeds are banned by Net Neutrality policies, simply under-investing in network expansion, despite the rampant profit-earning capacity broadband delivers, gets us to the same place — throttled speeds from overcongested networks and a convenient excuse to impose usage limits and other control measures to more “fairly” provide service to every customer.  Best of all, providers can pocket the overlimit fees charged to customers who exceed their allowance and train them to use less broadband with fears of more stinging penalty fees on their next bill.

Back in 2008, when Stop the Cap! launched, we challenged providers to provide the raw data to prove their assertions that they needed to impose formal limits and so-called “consumption-based billing” and abandon the lucrative flat rate pricing model that earns them billions in profits every year.  Of course, they have always refused, citing “competitive reasons,” “customer privacy,” or some combination of laws that supposedly prohibits any third party analysis.  Of course, they’re only too happy to characterize usage themselves, and we’re supposed to trust them — the same people that want to use that data to justify Internet Overcharging schemes.  Independent analysis?  When broadband pigs fly!

Now, telecom analyst Benoit Felten from the Yankee Group is asking the same questions on his Fiberevolution blog and issuing a challenge:

So here’s a challenge for them: in the next few days, I will specify on this blog a standard dataset that would enable me to do an in-depth data analysis into network usage by individual users. Any telco willing to actually understand what’s happening there and to answer the question on the existence of hogs once and for all can extract that data and send it over to me, I will analyse it for free, on my spare time. All I ask is that they let me publish the results of said research (even though their names need not be mentioned if they don’t wish it to be). Of course, if I find myself to be wrong and if indeed I manage to identify users that systematically degrade the experience for other users, I will say so publicly. If, as I suspect, there are no such users, I will also say so publicly. The data will back either of these assertions.

Felton’s co-author Herman offers his assessment:

Unfortunately, to the best of our knowledge, the way that telcos identify the Bandwidth Hogs is not by monitoring if they cause unfair traffic congestion for other users. No, they just measure the total data downloaded per user, list the top 5% and call them hogs.

For those service providers with data caps, these are usually set around 50 Gbyte and go up to 150 Gbyte a month. This is therefore a good indication of the level of bandwidth at which you start being considered a “hog”.  But wait: 50 Gbyte a month is… 150 kbps average (0,15 Mbps), 150 Gbyte a month is 450 kbps on average. If you have a 10 Mbps link, that’s only 1,5 % or 4,5 % of its maximum advertised speed!

And that would be “hogging”?

The fact is that what most telcos call hogs are simply people who overall and on average download more than others. Blaming them for network congestion is actually an admission that telcos are uncomfortable with the ‘all you can eat’ broadband schemes that they themselves introduced on the market to get people to subscribe. In other words, the marketing push to get people to subscribe to broadband worked, but now the telcos see a missed opportunity at price discrimination…

TCP/IP is by definition an egalitarian protocol. Implemented well, it should result in an equal distribution of available bandwidth in the operator’s network between end-users; so the concept of a bandwidth hog is by definition an impossibility. An end-user can download all his access line will sustain when the network is comparatively empty, but as soon as it fills up from other users’ traffic, his own download (or upload) rate will diminish until it’s no bigger than what anyone else gets.

Rep. Eric Massa (D-NY) has a better idea to stop Internet Overcharging: the Broadband Internet Fairness Act (HR 2902), which would ban unjustified billing schemes for broadband

The arbitrary nature of what constitutes a “hog” invalidates providers’ arguments at the outset.  Frontier defines a hog as someone who consumes more than 5GB.  Comcast sets their definition of a broadband piggy at 250GB.  The gap between the two is wide enough to allow a small planet to slip through unencumbered.

If a consumer does all of their downloading from midnight to six the following morning, are they as much of a hog on a shared cable modem network as the user watching Hulu during prime broadband usage time?  Probably not.  If a cable provider tries to force too many homes to share the same finite amount of bandwidth available in a designated area, service will slow for everyone during peak usage times.  But nobody will notice or care if customers are maxing out their connection in the middle of the night.  The appropriate answer, especially for an industry that enjoys enormous profits, is to expand their network to maintain basic quality of service at peak times.  DOCSIS 3 upgrades for cable are cost efficient, flexible and often profitable, because providers can market new, premium-priced speed tiers to those who want cutting edge service.

Instead, some providers see delaying upgrades as a better answer, enjoying the cost savings that follow implementation of usage caps, limits and other overcharging schemes which artificially limit demand and further monetize their broadband service offerings.

Unfortunately, even if Felten got responses from providers, he’ll be forced to trust the integrity of data he didn’t collect himself.  Rep. Eric Massa has a better idea.  His proposed Broadband Internet Fairness Act would ban such overcharging schemes unless providers could prove to the satisfaction of a federal agency that such pricing was warranted.  The big difference is that providing “massaged” data to Mr. Felton might be naughty, but would be downright criminal if tried with the federal government.

Shouldn’t the central lesson here be to “trust but verify?”

Master conspiracy theorist Glenn Beck should have written the last episode of The X Files.  To think I waited nine seasons to find what truth was out there only to have screenwriter Chris Carter rip me off with a chain smoker sitting in a Native American pueblo hearing the date when “they” arrive to begin colonization.  Imagine what Glenn Beck could have conjured up given the same nine years.

The problem with wildly-spun conspiracy theories is that you usually end up tangled in one, and Beck proved when he managed to tie his boss, Rupert Murdoch, into both a ‘Maoist -and- Marxist plot.’

To Beck, Net Neutrality and its supporters come straight out of Marxism. Beck warns “if you sit down and work with these people (Net Neutrality proponent Free Press), you might as well just go out and purchase your own blindfold and cigarette for the firing squad, because I don’t see the difference here.”

Beck slammed a Federal Trade Commission workshop he tied to Free Press, a pro-consumer advocacy group Beck considers Maoist (I didn’t realize they had the power to run government agency workshops — oh wait, they don’t), accusing the whole affair of being a conspiracy to silence free speech.

But here comes the “oops.”  It turns out this very same workshop which ran Tuesday, “From Town Criers to Bloggers: How Will Journalism Survive the Internet Age,” had among its participants none other than News Corporation CEO Rupert Murdoch, who was one of the featured speakers.

Just a few weeks earlier, Beck’s attempt to slam Fox News enemy MSNBC (and its owner NBC) brought a broad indictment against too-similar-sounding messages promoting volunteerism from President Obama and the Entertainment Industry Foundation (EIF), which Beck likened to “living in Mao’s China right now,” noting NBC executive Mitch Metcalf is an “EIF board member.”

How inconvenient for Glenn that Murdoch sits on EIF’s honorary board of governors, and Fox Broadcasting is a participant in the group’s initiatives.

Meanwhile, over on RedState, the blog that bans you for fact-checking their nonsense, writer Neil Stevens just discovered the Obama Administration is working on a National Broadband Plan.  That is like missing a train… that left the platform January 20th, 2009:

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.

Phillip Dampier

Lobbyists, corporate executives, and several interest groups are busy lobbying the newest additions to the Federal Communications Commission in an all-out effort to stop Net Neutrality.

The Hill newspaper today reports Mignon Clyburn, daughter of House Majority Whip James Clyburn (D-S.C.), is particularly under pressure to reject Net Neutrality.  The Hill reports industry lobbyists believe that if her father is amenable to their position, his daughter might also be.  To date, several hundred letters from minority groups and organizations, many opposed to Net Neutrality, have been filed with the FCC.

After reviewing dozens of those letters, it’s readily apparent many are the fruits of AT&T and Verizon lobbying labor, because several adopt both companies’ anti-Net Neutrality talking points, often word for word.

Even the newest Republican commissioner, Meredith Attwell Baker, is under a lobbying assault.

The thinking on K Street is that Baker’s views on net neutrality may not be set. Lobbyists and corporate executives have sought out Baker before the FCC votes on a final rule sometime next year.

“They are trying to get in there and remind her where she comes from to shore up her vote for the anti-net neutrality camp,” said one lobbyist working on the issue.

While the special interest blitz attempts to kill Net Neutrality, one pro-Net Neutrality advocate got into a dispute with some of the minority interest groups opposing Net Neutrality, which was gleefully covered by the broadband industry trade press. Public Knowledge got a bit too close to a nerve of several of these groups who put their logos on a letter sent to the FCC opposing Net Neutrality.  The letter represents the groups’ concerns that broadband for many in America is simply not available, especially for the economically disadvantaged.  They’ve been swayed by industry propaganda to characterize Net Neutrality as a threat to addressing the digital divide by making service ultimately even more expensive.  Some of those groups fired back against Public Knowledge, offended by some of the language used on their blog they felt suggested minority groups were naive and possibly even “selling out” the people they represent.  A few public exchanges later led to an apology from Public Knowledge if feelings were hurt and a plea from Free Press to put aside some of the personal disputes and rhetoric and argue the merits of the issue pro or con.

We agree with Free Press that personality disputes and pointless name calling don’t work and serve only to distract from the issues at hand. These groups advocating against Net Neutrality should be open to receiving additional information that doesn’t come from the broadband industry, particularly arguments that debunk those fear-mongering industry talking points.  Perhaps those groups will be amenable to changing their position once they gather additional facts.

But we also feel the first rule of politics must always be to “follow the money” and that is true for non-profits, for-profits, and government interests.  There must be full disclosure of the financial support and board membership of all of the groups claiming to represent consumer and minority interests.  Consumers, and more importantly members of the groups themselves, deserve to know where the money is coming from and if their boards have members working for or with the telecommunications industry or its friends.

For example, in our own research of the background of 100+ members of Broadband for America, we found instances of telecommunications industry involvement in virtually every single group.  If one chooses to believe that is a coincidence and still feels comfortable with that organization, so be it.  However, if one is concerned to learn that in several cases those ties were being scrubbed from interest groups’ websites, or were not openly disclosed to members, learning about that could be a cause of concern.  People should have the right to make an informed decision.  Some of the groups complaining about Public Knowledge are also members of Broadband for America and have telecommunications industry money backing them.  There is nothing wrong, in my judgment, in making sure that information is out there for readers to consider.

Be aware that while pro-Net Neutrality groups ring their hands over potentially offending one another, opponents are wasting no time mass mailing anti-Net Neutrality correspondence to the FCC.  Let’s remember our first priority is to fight for Net Neutrality.  If a group is offended, send them flowers, apologize quickly if you must, and be done with it.  Don’t entertain the trade press.

Navarrow Wright on BlackWeb 2.0 called proponents of Net Neutrality “digital elites” and then condensed many of the industry talking points that are common to many of the anti-Net Neutrality letters heading to the FCC:

The risk that a regressive pricing mandate that net neutrality rules could impose will shift online costs to the poor is real.

The risk that over-regulation will depress deployment and access is real.

The risk that restrictions on network management will reduce the quality and reliability of Internet service for light users — students, the poor on fixed incomes, the elderly, and community organizers who rely on Internet access to reach their communities – is real.

Wright doesn’t bother to provide any evidence to back up these claims.  Underlining the word real does not make it reality.

We recognize these talking points from the broadband industry’s lobbying efforts against Net Neutrality.  The industry scare tactic about raised prices is exactly the same one they use to justify Internet Overcharging schemes like forced consumption billing and usage caps, despite earning healthy profits and enjoying a decline in their traffic costs.  Read the financial reports from the major players about broadband profits for yourself.  Don’t take our word for it.

Net Neutrality simply demands the status quo — open and equal access to everyone, including the economically disadvantaged Wright is concerned about.  If Wright is concerned about the cost of broadband services for the economically disadvantaged, giving the providers the right to monetize content delivery in new ways, it will lead to even higher prices than we cope with today.

Industry rate hikes come in spite of Net Neutrality, and we call on Wright to join our effort to demand increased competition so these kinds of price increases become untenable.  Time Warner Cable, the nation’s second largest provider, is busily increasing prices for Road Runner service right now in several regions, even without the “imminent threat” of Net Neutrality.

Net Neutrality is hardly “over regulation,” and the empty rhetoric about it depressing investment, deployment, and access has been made every time this industry has faced the prospect of some oversight.  Wright should remember the industry used the same arguments to resist universal wiring requirements made in franchise agreements to guarantee that income challenged neighborhoods had the same access to cable and telephone broadband services as wealthy suburbs.  In their fight to obtain quick and simple statewide video franchising, they argued that without it, it would discourage investment, deployment, and access to competition.  Regulating rates?  Same argument.  The Discovery Institute, which has produced suspect studies on demand for the industry, paid for by the industry, provides an excellent example of “we’ve heard this song before” in comments they made to the FCC back in 2006 to try and reform cable franchising:

V. LEVEL-PLAYING-FIELD REQUIREMENTS ARE ANTICOMPETITIVE

Build-out requirements were an appropriate quid pro quo for the telephone, cable and wireless companies who received an exclusive franchise. An exclusive franchise ensured the viability of average pricing by eliminating the risk of cherry-picking by a competitive entrant, and allowed providers to serve the most profitable customers first who could then, in turn, subsidize the cost of serving everyone else.

Competitive entrants already have an incentive to expand their networks: They must produce consistent revenue gains, and the cost of adding additional users declines as a network grows. But unless flexibly and intelligently applied, a build-out requirement threatens the entire undertaking by creating the possibility that the initial investment will be effectively lost if, for whatever reason, it just isn’t possible to meet the deadline. The evidence that cities possess the inclination to perform this thoughtful and delicate task is entirely conjectural.

Build-out is typically not required of competitive entrants, because it imposes costs that may not be recoverable in a competitive market. Exceptions are Personal Communications Service (PCS) providers and Eligible Telecommunications Carriers (ETCs). However, these examples are clearly distinguishable. As the Commission has noted in another context, the grant of a PCS license confers on the licensee an exclusive right to use a designated portion of the electromagnetic spectrum. In that decision, the Commission rejected a Texas build-out requirement applicable to competitive entrants in the local exchange market.

ETCs are required to provide service and advertise their rates throughout the area for which they seek Universal Service support, but an ETC has the right to resell another carrier’s services. There is no suggestion in the current proceeding that telephone companies seeking to offer video services should have the right to resell the services of the incumbent cable operator, nor should there be. However, in view of the fact that telephone companies cannot be assured of the capital needed to build out their advanced services networks, a resale requirement would probably be the only practical way ensure that a competitive entrant could serve every household.

Build-out is not the same thing as redlining. Redlining is illegal, but by its terms, 47 U.S.C. 621(a)(4)(A) does not require build-out. It merely imposes a reasonableness requirement on the amount of time locally-enacted build-out requirements provide for the competitive entrant to serve every household. There is no Congressional mandate for build-out.

Since cable operators are not required to offer voice services to every household, it is not clear why telephone companies should be required to offer video services throughout their service area. There is no way to predict whether competitive entrants will have access to sufficient capital or be able to gain enough market share to make build-out requirements objectively reasonable. These risk factors suggest that build-out requirements would be anticompetitive.

It is also utter nonsense to suggest network management restrictions will reduce the quality and reliability of Internet service for light users.  In fact, the industry’s proposed “light user” solution is a consumption billing scheme that includes usage allowances and limits, overlimit penalties for exceeding them, and consumers forced into limited use plans, often for little or no savings over existing under-marketed “lite” plans.

Most providers currently tier broadband based on speed.  If a consumer wants to get “light service,” they can purchase a discounted lower speed package perfectly adequate for most web use, and never have to worry about how much they choose to use it.  They want to continue offering speed tiers, but also limit customers’ use of their accounts, giving them a paltry usage allowance and then subjecting them to steep penalties for exceeding it.  Residents in Rochester, New York fought back against two such schemes advocated by Time Warner Cable and Frontier Communications, the local phone company.  It is under the guise of “network management” that these Internet Overcharging schemes were born.  A word to the wise – this price gouging hurts the economically disadvantaged far more than wealthy suburbanites.

I also point Wright’s attention to the broadband situation in Canada, which has adopted the viewpoint of our provider friends.  There, Internet usage is limited by allowances, with fees of $1-5 per gigabyte for exceeding them.  Net Neutrality is not protected, and certain Internet services are “network managed” with speed throttles, reducing their speed by 90% or more, making their use untenable.  Yet, Canadian broadband dropped in global broadband rankings, service providers increased prices anyway, and the digital divide Wright is worried about has not been addressed.  In fact, it’s arguably worse, because the industry won efforts to also limit and ration wholesale broadband access used by independent service providers to create competitive, lower-priced alternatives.

Does that make Wright stupid or a “sell-out?”  Of course not.  It means we have a lot of information to share with Mr. Wright and others like him.  As consumers ourselves, we believe in getting affordable broadband access to disadvantaged communities, and support Universal Service Fund reform and appropriate stimulus funding, or providing municipally built networks to introduce needed competition to get quality, affordable broadband service into urban and rural homes that are woefully underserved.  The industry advocated “don’t regulate us” approach has been in place since the 1990s and has not come close to solving the problem.

It’s our view broadband service is rapidly becoming as important as water, gas and electric, and telephone service, and must be provided to every American that wants a connection, at an affordable price.  When private providers won’t do that, it’s time to follow the same path we took to assure electrification of this country decades earlier, with public projects to get the job done.

We think every person should check out these issues for themselves.  As a consumer, confronting Internet Overcharging schemes was what got this site started, and once I examined the facts about the profitable state of broadband, and the quest to make it even more profitable at consumer expense, I got angry and involved.  That doesn’t make me an “elitist.”  It makes me an informed and involved citizen.

We have always told providers this isn’t personal and we respect the work done by the employees to serve their customers.  Most of us are customers ourselves.  We will debate policy matters and advocate for our position, and try and bring supporting evidence to the table, and let the best argument win.  Along the way, disclosing who represents who and where they money comes from is part of that debate.

It will remain our policy to expose industry connections in organizations that purport to advocate for consumer interests, particularly when those connections are not routinely disclosed.  Consumers have a right to know whether the industry is writing checks to ostensibly independent groups, or have executives seated on their governing boards, potentially influencing their public policy positions.  To not provide this needed information would sell out our readers, and not living up to the standards we set for ourselves.

For the record, Stop the Cap! has zero industry money backing us.  We are 100% consumer-funded and have no involvement in any online business or telecommunications company.