A Wall Street Journal article this morning calls the imminent introduction of Net Neutrality policy “a boon for consumers […] to use their computers or cellphones to enjoy videos, music and other legal services that hog bandwidth.”

The article refers to the widely expected announcement today by FCC Chairman Julius Genachowski that Net Neutrality should be adopted as the fifth principle governing Internet service in the United States.

But Journal reporter Amy Schatz’s judgment about who wins and who loses in the Net Neutrality debate is framed by the flawed broadband provider arguments she adopts as reality:

The proposed rules could change how operators manage their networks and profit from them, and the everyday online experience of individual users. Treating Web traffic equally means carriers couldn’t block or slow access to legal services or sites that are a drain on their networks or offered by rivals.

The rules will escalate a fight over how much control the government should have over Internet commerce. The Obama administration is taking the side of Google, Amazon.com Inc. and an array of smaller businesses that want to profit from offering consumers streaming video, graphics-rich games, movie and music downloads and other services.

Setting aside the inappropriate use of the word “hog” to define broadband usage, which comes straight out of the broadband industry’s public relations strategy, Schatz ignores the fact some of the biggest drains on these networks will soon come from the industry’s own efforts to dominate online video — TV Everywhere.

In fact, the excuses for imposing Internet Overcharging schemes in 2009 do not reference much beyond online video growth as a justification to impose speed throttles and price increases on consumers.

Schatz adopts industry positions as fact in a number of places throughout her piece, which belongs on the Editorial page of the Journal:

If the FCC does force U.S. wireless carriers to open their networks to data-heavy applications like streaming video, it could push them beyond the limited capacity they have. Already, in areas like New York and San Francisco, a high concentration of iPhones has caused many AT&T customers to complain about degrading service.

In fact, many wireless carriers already provide their own wireless video to customers, and don’t seem to be engaging in a lot of hand-wringing over that.  Should Net Neutrality force open the wireless platform, the quality of the service, not the provider’s self interest will govern the success and failure of individual applications.  AT&T, which has earned massive revenue from its exclusive iPhone arrangement with Apple, can and should continue to invest some of that revenue into expanding their network to meet the demand.  If they cannot, it is an open question why they would allow any online video or other data-heavy applications on their networks until those networks can handle the traffic.

In such a scenario, wireless carriers may have to rethink how much they charge for data plans or even cap how much bandwidth individuals get, said Julie Ask, a wireless analyst at Jupiter Research.

This ignores the fact providers have already rethought about how much they charge for data plans.  Some providers are now compelling subscribers to choose data plans as part of their two year service agreements, while the industry is replete with 5GB usage caps on wireless data services today.  Someone should ask Ask what she thinks is forthcoming that hasn’t already happened.

The FCC’s proposal will take into account the bandwidth limitations faced by wireless carriers, according to people familiar with the plan, and would ask how such rules should apply to current networks.

…which takes the wind out of the sails of the argument Net Neutrality would be ruinous to wireless providers.

The proposals come as the FCC faces a federal appeals court case over its authority to regulate Web traffic. Comcast is fighting an FCC decision last year to ding it for violating the agency’s “net neutrality” principles when it slowed traffic for some subscribers who were downloading big files. Comcast said it didn’t violate any rules because the FCC had never formally adopted any, but it did change how it manages its network.

In reality, Comcast’s speed throttle targeted files small and large, all because they were delivered over a specific network Comcast didn’t like: peer to peer.  That’s a protocol that relies on a group of people obtaining files by sharing pieces already downloaded with one another until the file is complete for everyone.  That involves uploading and downloading file pieces, often over a lengthy period.  Comcast’s network was built with the assumption most customers would download far more than they upload, and peer-to-peer challenged that model with its file sharing methodology.  The surge in upload traffic challenged their network at times, so Comcast decided to throttle the maximum speeds consumers could use while engaged in peer-to-peer file sharing.

Republicans are likely to oppose the FCC’s new proposal — both at the FCC and in Congress — arguing that the FCC is trying to fix problems that don’t exist and that the agency should take a more hands-off approach to the fast-changing industry.

“With only a few isolated instances of complaints alleging net neutrality-like abuses ever having been filed, it is a mistake,” said Randolph May, president of Free State Foundation, a free-market oriented think tank.

It’s difficult to fathom exactly how much more “hands-off” the agency can get with respect to broadband, an unregulated service in the United States.  That “hands-off” policy was responsible for the establishment of de facto monopoly/duopoly broadband service in most American cities, wireless broadband that charges nearly the same price for the same usage capped service, and is tinkering with Internet Overcharging to leverage that market status into higher pricing for all consumers.

May’s argument is akin to calling the fire department only after a fire has consumed half of your home, not when the smoke detector first goes off.

As a result, both the cable companies and phone companies had incentives to create conditions on the Internet — either through pricing or slowing or speeding up certain sites — to favor their own content.

This sentence, buried towards the end of the piece, exemplifies exactly why Net Neutrality is so important.  Let’s put this fire out before it burns out of control.

Rep. Ty Harrell (D-Raleigh) submitted his resignation today after an ethics investigation raised questions about his campaign finances.  Harrell resigned to ‘spend more time with his family and to deal with divorce proceedings.’

Stop the Cap! readers will remember Harrell from this past spring, when he allowed Time Warner Cable to help draft anti-consumer, anti-municipal broadband legislation and introduced it as his own.  It seems Harrell has been representing his own interests over that of his constituents well beyond just a telecommunications bill our readers shamed him into walking away from this past spring.

“The people of District 41, and all citizens of North Carolina, deserve representatives who can make clearly-focused decisions on their behalf,” Harrell wrote in a letter to House Speaker Joe Hackney. “With the recent turbulence in my personal life and continued speculation about my campaign expenditures, I do not feel that I can provide the high standard of representation that my constituents expect and deserve.”

On this the people of Raleigh should wholeheartedly agree.  Harrell’s interests in serving some of his corporate friends, who have contributed generously to his campaign, obviously exceeded the interests of his constituents.  The News & Observer today reports:

Harrell’s campaign expense report for January through June of this year showed an unusual number of expenses for a year with no election. Many of the expenses were to restaurants at a time when Harrell had no source of income other than his nearly $14,000 legislative salary. In an earlier report, he listed paying $235 to a pricey children’s clothing store and $191 to Sharon Luggage, with both identified as a “committee meeting.” and the descriptions of the expenses often were listed as “donor recruitment,” “strategy meeting” or other explanations that the elections board found insufficient.

Harrell has been living outside his district for more than a month at a friend’s house, feeling unhappy in marriage. His wife, Melanie Dupon, filed for divorce in July, alleging an extramarital affair.

The affair was probably with big telecom.

Harrell wrote as part of his resignation letter:

“My parents always told me, and I believe, that public service is an honorable calling,” Harrell wrote. “I answered that call by serving in the General Assembly as an agent for positive change. But holding public office can put significant strains on a young family and I am living proof of that.”

One of the strains Harrell writes about could have been how to creatively hide the money in expense reports that he allegedly spent on himself.  As Stop the Cap! North Carolina issues coordinator Jay Ovittore reported back in May, Harrell accepted $2750 in campaign contributions from telecommunications companies, a sizable amount for a state legislator not running a committee.

The election board’s staff found so many alleged discrepancies, it asked for more than 200 pieces of additional information on Harrell’s filings, according to the News & Observer.

As we wrote back in May, Harrell’s response to our charge that his bill represented the direct opposite of his own constituents’ best interests was one of “surprise.”

Representative Harrell, we honestly cannot understand your surprise over the outrage and backlash that came after you handcrafted, on spec from Time Warner and its lobbying lawyers, an incredibly anti-consumer, anti-competitive, nightmare of a piece of legislation designed to destroy municipal broadband across the state of North Carolina.

Rep. Ty Harrell (D-NC), who normally considers himself a progressive Democrat, has so bumbled his way through this entire affair, he’s managed to end up on the same side as the ultra-big-corporate friendly Americans for Prosperity, which is now war-dialing its way through North Carolina with push polls and fear-monger phone messages.  If that doesn’t sound alarm bells that something isn’t right, what will?  He admits he didn’t realize North Carolina has been through this anti-consumer nonsense before.  In 2007, largely the same bill was bought and paid for by big telecom special interests, but failed to pass after elected officials realized it would antagonize their constituents into voting for anyone but them in the next election.  No kidding.

Stop the Cap! is not surprised Rep. Harrell will now be looking for a new day job.  Democrat or Republican, Stop the Cap! is watching our elected representatives like a hawk.  We will continue to call out the bad actors and expose their anti-consumer actions.  The people of North Carolina have one less bad representative to deal with, but unfortunately there are others who are also cashing the checks and prepared to abandon the people they are supposed to represent.  We’ll continue to name names and show how much they’ve taken to vote against your interests.

Two news videos appear below the jump….

Jay Ovittore is Stop the Cap!’s North Carolina issues coordinator.

… Continue Reading

FCC Chairman Julius Genachowski

Federal Communications Commission Chairman Julius Genachowski is expected to unveil Monday a proposal to formalize Net Neutrality protections as part of FCC policy governing broadband providers.

Genachowski is expected to make a formal announcement as part of his appearance at the Brookings Institution, according to a series of leaks Friday afternoon.

The FCC chairman is expected to introduce Net Neutrality as the fifth spoke in a wheel of principles governing broadband service in the United States.  The “Four Principles” of broadband service in the United States was developed to set guidelines providers would follow in return for a hands-off regulatory approach by the Commission.:

1. To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to access the lawful Internet content of their choice.
2. To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement.
3. To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to connect their choice of legal devices that do not harm the network.
4. To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to competition among network providers, application and service providers, and content providers.
5. To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet, consumers are entitled to open access to content without interference or discrimination by broadband providers.

The fifth principle would become part of formal FCC policy, which should provide assurances that Net Neutrality will be enforced by the Commission staff.

The establishment of Net Neutrality protection would fulfill one of the promises made by President Barack Obama during his presidential run in 2008.  The Obama Administration has consistently advocated Net Neutrality as a core tenet of American broadband service.

Genachowski is expected to underline the seriousness of his proposal by including wireless providers in the definition.  That would subject mobile broadband providers to the same rules wired providers face, an important distinction that could put a stop to wireless phone companies acting as gatekeepers to block third party software applications designed to bypass those companies’ networks and calling plans.  iPhone owners in particular have been subjected to restrictions on the types of software and services they are allowed to use on their phones used on the AT&T network.

Consumer advocates are widely anticipated to applaud the FCC’s action, but some remain concerned that an FCC rulemaking by itself does not provide the robust protection federal law would provide, particularly if an administration in power appoints FCC Commissioners uninterested in enforcing it.  A bill has been introduced in the House of Representatives to make Net Neutrality the law, not just an FCC policy.  Passing the legislation provides even stronger guarantees that Net Neutrality principles will be respected.

The move by Genachowski to move forward on formalized Net Neutrality protection now may have come after the Commission watched a federal court throw out other informal FCC policies as unconstitutional.  Comcast has a pending lawsuit against the FCC after the Commission ordered Comcast to stop interfering with peer-to-peer traffic on its broadband network.  Comcast objected to the FCC involvement and feels the Commission exceeded its authority.  Should a judge agree, in the absence of a more formalized FCC rulemaking, Comcast would be free to resume throttling the speed of certain traffic on its broadband service.

An FCC rulemaking could provide ammunition to Net Neutrality critics that passage of a federal law would be redundant and unnecessary.

Net Neutrality critics argue that broadband networks should be free to manage the traffic on their service as they see fit, suggesting the goal of providers is to provide a consistent level of broadband service to all of their customers.  They suggest consumers that find network traffic policies too onerous would take their business elsewhere, discouraging provider excess.

But advocates for Net Neutrality argue the industry can leverage an undercompetitive marketplace to throttle and restrict traffic — reducing the traffic load on and the need for upgrades. In the absence of robust competition, other providers would could follow suit.  Net Neutrality advocates are also concerned broadband providers may attempt to monetize premium levels of service for content creators.  In return for a fee, content providers would be assured of enhanced speeds and performance in reaching that ISP’s customers, while those who don’t pay find themselves on a broadband “slow lane” that could make them uncompetitive.

Genachowski’s proposal is likely to permit broadband networks sufficient flexibility to do some network management, such as blocking denial of service, spam, and virus attacks, but not allow providers to prioritize traffic based on fees.

Phillip Dampier

FCC Chairman Julius Genachowski recorded a YouTube video to talk to Americans about the development of a national broadband plan for the United States.

In optimistic, flowery language, Genachowski invited Americans to submit their ideas and suggestions not only regarding broadband, but also the priorities Americans think the FCC should have in the future.

The most important part of the five minute video comes right in the beginning when Genachowski called broadband critical to the nation:

“Broadband is our generation’s major infrastructure challenge. It’s for us what railroads, highways and electricity were to past generations.”

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Genachowski would do well to remember America’s experience with all three of these important history lessons.  The broadband plan Genachowski envisions is subject to the same type of intrusive, anti-consumer tactics that wreaked havoc on past generations of consumers.

The railroad industry’s cartel of ownership and control is a familiar tale.  The Rise of Monopolies tells the story:

The need for all of these industries to stay successful was worrisome for railroad owners. To avoid the loss of production in any of these areas, large corporations attempted to stabilize their situations by pooling markets and centralizing management. By combining all of the fields into one conglomeration, the railroads had a new power, as they acquired control of many facets of the new economy. This body now had the ability to “squeeze out competitors, force down prices paid for labor and raw materials, charge customers more and get special favors and treatments from National and State government” (Chalmers). The railroads had all the power, because they controlled all the prices. Since the new residents of the West could not survive without the use of the railroads, they were forced to pay whatever rates the railroad companies set.

With these huge stores of capital, the railroad companies were able to finance political campaigns through whatever and whomever was needed in government. With this control in Washington, there was no way to stop the overwhelming control of this industry over society. The entire nation was subject to the whims of this monopoly.

It took direct government intervention to break up the railroad monopoly and protect consumers and businesses from the abusive practices of a transportation industry that can make or break you based on pricing and service, with little competition.

Public highways became an important asset that still pays off today.  The Eisenhower Administration’s deployment of the interstate highway system, at the size and scope required, would not have been accomplished by the private sector on its own.  Today’s federal highway system is largely self sustaining through the collection of gasoline taxes paid by drivers.

As Americans struggle with several incumbent providers that refuse to provide 21st century broadband technology, with little competition to drive that infrastructure investment, an uneven variety of broadband networks have emerged, from fiber to the home in some areas to an indefinite reliance on aging DSL slow speed technology for millions of rural Americans, or worse, inadequate satellite broadband.

It may be time to consider the same kind of national approach with a publicly owned fiber network private providers of all kinds can use to serve customers with a uniformly high speed, high quality user experience.

Electricity and the development of rural America is another very familiar tale to any rural broadband user.  From TVA: Electricity for All:

Although nearly 90 percent of urban dwellers had electricity by the 1930s, only ten percent of rural dwellers did. Private utility companies, who supplied electric power to most of the nation’s consumers, argued that it was too expensive to string electric lines to isolated rural farmsteads. Anyway, they said, most farmers, were too poor to be able to afford electricity.

The Roosevelt Administration believed that if private enterprise could not supply electric power to the people, then it was the duty of the government to do so. Most of the court cases involving TVA during the 1930s concerned the government’s involvement in the public utilities industry.

In 1935 the Rural Electric Administration (REA) was created to bring electricity to rural areas like the Tennessee Valley.

Many groups opposed the federal government’s involvement in developing and distributing electric power, especially utility companies, who believed that the government was unfairly competing with private enterprise. Some members of Congress who didn’t think the government should interfere with the economy, believed that TVA was a dangerous program that would bring the nation a step closer to socialism. Other people thought that farmers simply did not have the skills needed to manage local electric companies.

Any community wrestling with a municipal broadband project to provide service the private market refused to offer is already acquainted with this familiar story.  So are many rural consumers who are waiting, and waiting, and waiting, for the private market to bring broadband to their communities.  Unfortunately for them, the private market has already written them off as “not profitable enough” to provide service.

The electrification of America did not lead to a socialist takeover of America.  It led to the development and sustainability of rural communities and their local economies.  Agriculture remains one of America’s most important success stories, and without widespread electrification, this story might not have been written.

Scare tactics and horror stories have come whenever a private monopoly or cartel faces the threat of competition, regulation, or a municipal option to provide needed services communities are denied by the private sector.

The fear mongering was there when the railroad monopolies faced investigation and regulation, the “socialism” scare was heard when government attempted to undertake public infrastructure projects of many kinds from highways to utility service, and the same kinds of rhetoric is heard today about “socialist takeovers of the Internet” and “municipal broadband unfairly competes with private providers,” and the logical opposite “the government can’t do anything right.”

Unfortunately, the FCC has a long history of cozy relations with lobbyists who understand how to work within the agency’s nearly-impenetrable bureaucracy.  A review of the broadband plan submissions to the FCC reveals a large  number of them come from lobbying groups and the providers themselves.  Most consumers were left typing comments into a box on the web submission form, with every indication those remarks will be deemed “not serious” by FCC staff.

This time, Chairman Genachowski has to show more than a YouTube video inviting consumers to share their input.  We’d like actual evidence the consumer point of view is actually being taken seriously for a change, and is not simply one tiny noise drowned out in a loud crowd of special interests with profit agendas to protect and public policy to influence.  The FCC already knows what consumers want: widely available, fast, reasonably priced broadband free from Internet Overcharging schemes protected with robust Net Neutrality policies enforced by law.

If the existing providers want to erect roadblocks to competition, oversight, and hell-or-high-water-broadband-deployment, it’s time to break them up and get them out of the way.  That’s broadband we can believe in.

Professor Rodney Tiffen

The Sydney Morning Herald ran a piece Friday morning that had absolutely nothing nice to say about the former leadership of Telstra, Australia’s “Private Telecom Monopoly.”

Sol Trujillo was the George W. Bush of telecommunications. For both, the American way was the only way. Being the biggest meant you did not have to do diplomacy, and both were better at starting wars than finishing them. Both used patronage and punishment to ensure a like-minded leadership group that made worse decisions more harmoniously.

Australians remain unimpressed with the tumbleweeds that routinely blow across the Land Down Under’s broadband superhighway — the result of a combination of failed government leadership, special-interest dominated public policies which put the interests of private companies ahead of their own citizens, and the predictable emergence of greedy telecommunications providers delivering the least possible service at the highest possible price for millions of Australians.

Rodney Tiffen, professor of government at the University of Sydney, calls out a succession of Australian governments which have repeatedly dropped the broadband ball, and have left the country with comparatively overpriced service with ludicrous Internet Overcharging schemes that punish citizens with usage caps, outrageous reductions in their broadband speeds or, worse, overlimit fees and penalties:

Australian consumers suffered particularly from the stringent caps placed on downloads and the high expense of exceeding the cap. While in nine of the countries no explicit caps were placed on broadband subscriptions, Australia was one of only four countries (with New Zealand, Canada and Belgium) where all survey offers included caps, and among these four was by far the most expensive when the caps were exceeded – an average of 11 cents per megabyte compared with 1 cent for the others.

Tiffen rejects the argument that Australians have to pay more because Australia has low population density.

“It should also be remembered Australia has a higher percentage of people living in large cities (defined as those with more than three-quarters of a million people) than any of the other countries (measured by the Organization for Economic Co-operation and Development),” Tiffen writes.

The key policy issue Tiffen identifies is: what is a natural monopoly and when does competition produce more dynamism and responsiveness to consumers? Since telecommunications reform came on to the public agenda about two decades ago, there had been a bipartisan failure to address this central question.

Tiffen wants Australia to recognize the mistakes America made dealing with its cable television industry — “replete with cases where a company controlling the delivery platform has favoured its own company’s channels over its competitors.”

“Indeed a private monopoly at a key gate-keeping point often leads to less competition in services than there would be with a publicly owned or regulated infrastructure,” Tiffen argues.