Astroturfers like Scott Cleland got all excited yesterday about another misinformed piece about broadband usage caps from George Ou, a technology blogger who previously gained infamy from his strident opposition to Net Neutrality and his ridicule of the “scare-mongers” who predicted throttled speeds, multi-tiered broadband service, penalties and blocks for using Voice Over IP services, and providers trying to control what you see on the net.

George Ou

Back in 2006, he wrote a three-pager on ZDNet lambasting Save The Internet, MoveOn, and other Net Neutrality proponents who didn’t agree with Ou’s position that this was simply a technology issue.  He accused the groups of hysteria at a fever pitch over their concerns Net Neutrality opposition was much more about politics, profit, and protection of the providers’ business models.

With positions like that, Ou need not ever worry about job security because his rhetorical stars are in perfect alignment with big telecommunications companies.  I’m sure as long as he joins the broadband tug of war on the side of AT&T and other big providers, some policy institute, astroturf group, or other industry-friendly job would always be there for him to take.

Oh wait.  He has.  But more on that later.

These days, Ou has been pondering broadband usage caps, our bread and butter issue on Stop the Cap!

You do not get a cookie if you guessed he’s all for them, because that would be too easy.

Ou decided that the recent comparison between broadband usage caps in Japan and the United States by Chiehyu Li and James Losey of the New America Foundation, was… problematic.  That usually means we are about to get a technological-jargon-cannon barrage in an effort to suggest those folks at the New America Foundation ‘just don’t understand how the Internet works.’

You decide:

Li and Losey point out that while Japanese ISPs caps the upstream; they are generous with unlimited downstream while American ISPs are beginning to cap both the upstream and downstream.  But this is a flawed analysis because capping the upstream effectively cuts to total downstream peer-to-peer (P2P) traffic to the same levels.  And because P2P is one of the most heavily used application on the Internet accounting for the vast majority of Japanese Internet traffic, cutting upstream usage greatly reduce all P2P traffic and all Internet usage which was necessary because their Internet backbones were severely congested.  I’ve argued that it is far more efficient to manage the network but until then the caps are needed.

Another problem with Li and Losey’s analysis is that it only looks at the usage cap without an analysis of the duty cycle and its ramifications.  When we compare the usable duty cycle between ISPs in Japan compared to ISPs in the U.S. derived from Li and Losey’s data, we see a completely different picture.  By splitting the U.S. ISP usage caps (some of these caps are only in proposal phase) into an upstream and downstream cap proportional to the upstream/downstream connection speeds, I was able to generate Figure 1 below.  What it actually shows is that U.S. broadband providers have usage caps that allow users to use their Internet connection far more frequently than users in Japan.  So while a user in Japan is capped to 40 minutes a day of upstream Internet usage, which indirectly caps download speed because it severely trims the number and generosity of P2P seeders.  AT&T’s proposed DSL usage caps (similar to other DSL providers) allow for 1111 minutes of usage per day on the upstream and 97 minutes on the downstream per day.  So broadband consumers who are dissatisfied with their tiny Time Warner usage caps can simply switch to their DSL provider.

I guess that wraps that up.  Or not.

Ou wants us to assume quite a bit in his own analysis.  His contention that the “vast majority” of Japanese Internet traffic is peer-to-peer is “proven” by linking to an earlier article… written by him… saying just that.  But let’s grant Ou the premise that peer-to-peer is at the epicenter of bandwidth congestion in Japan.  Ou defends Japanese providers for specifically targeting the upstream traffic, pointing out stingy torrent users that don’t give as much as they get will automatically be speed limited during downloads (Bit Torrent’s way of equal sharing).  But he never extends the upstream cap argument to the United States, where he implies a similar traffic overload is occurring.  Instead, he merely acknowledges that domestic providers are experimenting with caps that limit both uploading and downloading, impacting every broadband user, not just those “problem” peer to peer users.

Caps.  The necessary evil?

Ou is okay with the equivalent of dealing with a pesky fly in the kitchen by setting the house on fire.  Doing that might solve the fly problem, but makes living there unpleasant at best in the future.

In fact, the impetus for dealing with the peer to peer “problem” in Japan turns out to be as much about copyright politics as bandwidth management.¹

I also have no idea why Ou would spend time developing a “duty cycle” formula in an effort to try and convince Americans that those generous looking caps in Japan are actually worse for you than the paltry ones tested in the United States.  His formula is dependent on the speed levels offered by Japanese vs. American providers to work.  But then Ou tries to debunk the speeds on offer in Japan as more fiction than reality, and throws his own “duty cycle” formula under the bus as a result:

Li and Losey also paint a dire picture that Japan has 10 or more times the connectivity speed as the US, but the most accurate real-world measurement of Internet throughput in Japan according to the Q1-2009 results from Akamai’s State of the Internet report indicates that Japanese broadband customers only average about 8 Mbps.

Ou then exposes he is completely clueless about the state of broadband in some of the communities that actually cope with usage caps, or were threatened with them.  Ou’s suggestion that unhappy Time Warner Cable customers could simply leave a capped Road Runner for DSL service from the phone company leaves residents in Rochester, New York cold.  For them, that means coping with an Acceptable Use Policy from Frontier that defines 5GB per month as appropriate for their DSL customers.  In Beaumont, Texas, the limbo dance of caps last left residents picking between a cap as low as 20GB with AT&T or a 40GB “standard plan” from Time Warner Cable, before Time Warner dropped the “experiment” for now.

Ou should have just suggested customers in western New York and the Golden Triangle just pick up and move to another city.  It would have been more realistic than his “if you don’t like them, switch” solution.  It also presumes there is a viable DSL service to switch to, as well as whether or not the service can provide a sufficiently speedy connection to take advantage of today’s broadband applications.

And here is where you can draw lines between the special interests, astroturfers, industry-connected folks and actual real, live, consumers.

Ou brings out the shiny keys, waving them in consumers’ faces telling them to look somewhere else for answers:

So the reality is that usage caps isn’t what Americans should be focusing on and the priority should be to encourage more next generation broadband deployment.

Internet Overcharging schemes that charge consumers up to 300% more for their broadband service, with no corresponding improvement in service, is not the problem for Ou, but it certainly was for Time Warner Cable customers in several cities chosen for their Overcharging experiment.  The need to encourage more broadband deployment is fine, but American broadband customers will be broke long before that ever happens without some other pro-consumer solutions.

Ou has a problem though.  He has a new employer.

A corporate restructuring at ZDNet in the spring of 2008 meant Ou was free to pursue other professional interests, and wouldn’t you know, he turned up as Policy Director of “pro-commerce” Digital Society.  That’s a “free market think tank” website whose domain name is administered by one Jon Henke in… you guessed it, suburban Washington, DC (Arlington, Virginia to be exact).

The sharks are in the water.

Jon Henke

Henke, Executive Director of Digital Society, and presumably Ou’s boss, has quite the agenda of his own, and it’s not consumer driven.  He has a long history of involvement in conservative politics, which brings new questions about how Henke would approach “encouraging next generation broadband deployment.”  Does he favor broadband stimulus money?  How about municipal broadband competition?

In addition to his work with Digital Society, Henke also runs something called the DC Signal Team.  What’s that?  Let’s see:

DC Signal is a strategic intelligence and communications firm specializing in new media consulting. Based in the Washington, DC area, we work with a range of clients — corporations, trade associations, campaigns, and individuals — to craft and execute an effective online strategy.  We provide timely intelligence and analysis, as well as communications that can reach and resonate with key opinion makers, policy experts, and elected officials.

Our expertise in new media communications sets DC Signal apart, allowing us to filter out the background noise on the Internet to deliver just the most relevant information, make creative, appropriate recommendations based on that information, and target communications directly to the most influential audiences.

I love the smell of plastic grass in the morning.

That’s right, folks.  DC Signal is a classic PR firm that uses targeted communications to reach the most appropriate audience for their campaigns.  Need to reach consumers and sell them on a pro-industry position?  Set up a “grassroots” group to do it.  Need to baffle the media, lawmakers and opinion leaders with industry BS?  Set up “authoritative” websites to deliver carefully filtered “relevant information.”  What better way to do that than with a blog like Digital Society?

But wait, there’s more.

Henke is also working for an innocuously named group called Arts+Labs, which starts its mission statement out innocently enough:

Arts+Labs is a collaboration between technology and creative communities that have embraced today’s rich Internet environment to deliver innovative and creative digital products and services to consumers. From the early development of motion picture technology, voice recordings and radio to today’s 3D computer graphics, streaming digital movies, “on-demand” entertainment,  online games, news and information, innovative technologies and creativity have always gone hand in hand to enrich our understanding and appreciation of arts, entertainment and culture.

Then things become more ominous.

At the same time, Arts+Labs is working to educate consumers about how net pollution – spam, malware, computer viruses and illegal file trafficking – threatens to transform the Internet from an essential catalyst to safely deliver this content to consumers, into a viral distribution mechanism that will choke off the Internet for consumers and future innovators and creators alike.

I can understand the threats from spam, malware, and computer viruses — what groups out there actually advocate for these? — but the “illegal file trafficking” thrown in at the end had me wondering.

I smell industry money, probably from providers who oppose Net Neutrality and want to throttle peer to peer applications, from Hollywood content producers who want to keep their content off The Pirate Bay, the music industry who is always paranoid about piracy, and of course equipment manufacturers who sell the hardware that does the bandwidth management.

So who “partners” with Arts+Labs?

• Viacom
• NBC Universal
• AT&T
• Broadcast Music, Inc. (BMI)
• Verizon
• Microsoft
• Songwriters Guild of America
• Cisco
• American Society of Composers, Authors and Publishers (ASCAP)

There you go.

Arts+Labs tries to be clever about its agenda, not so much with strident opposition to Net Neutrality, but instead promoting “consumer interests” by insisting that providers fully disclose the abuse about to be heaped on their customers.  In a press release in June, the group advocated its own national broadband strategy recommendations to the FCC:

A Safe Internet and Smart Management Will Boost Digital Society

It also said that a safe Internet must be a core part of a national broadband strategy and that the failure to protect online data and crack down on net pollution such as malware, spam, phishing and other Internet crime will erode the value of the Internet and discourage broadband adoption.

“To drive adoption and build a successful digital society that reaches every American, all of us must accept responsibility for minimizing online risks, protecting users’ privacy, and ensuring data security against malicious online activity and cybercrime,” A+L said.

It also urged the Commission to embrace “smart management tools and techniques.”

“Used effectively, smart management of our networks will stimulate broadband adoption by expanding the scope of activities available to consumers, by addressing network congestion, and by defending against hacking, phishing, identity theft and other forms of cybercrime,” the filing added.

But it said network operators must not abuse management tools to interfere with competitors or consumers rights and noted:  “In a digital society, network managers owe their customers transparency about their network management practices, including proactive disclosure of new policies or innovations that may affect users’ experiences.”

A+L Urges Collaborative Effort, Says Pragmatism Should Trump Ideology

It also urged the Commission to avoid unnecessary regulatory constraints that would interfere with the ability of content providers, network operators and other Internet-related businesses to experiment with new business models and to offer innovative new services and options to consumers.

Finally, A+L urged every Internet industry and every individual who uses the Internet to work together to achieve the nation’s broadband goals.

“Building an inclusive digital society and achieving our broadband goals will require all of us to think outside of silos, to choose pragmatic and effective policies over ideology, and to drive broadband adoption by encouraging the creation of exciting content, protecting intellectual property, and ensuring that the Internet is a safe place to be.  And, the guiding principle on every issue should be to find the solution that moves broadband forward,” A+L concluded.

Broadband throttles and Internet Overcharging aren’t anti-consumer — they are “new policies or innovations.”  As long as the provider discloses them, all is well.

The ideology reference in the press release is remarkable, considering the people who involve themselves in Arts+Media represent a veritable hackathon of the DC political elite, from Mike McCurry, former Clinton Administration press secretary, Mark McKinnon, who advised President George W. Bush, to the aforementioned Jon Henke, who was hired originally to do “new media” damage control for former Virginia senator George “Macaca” Allen and then went to work for the presidential campaign of Fred Thompson.

As usual, the only people not on Arts+Labs’ People page are actual consumers.

To wrap up this party of special interests, which consumers aren’t invited to, we wind our way back to the home page of Digital Society, which features a familiar roster of recommended blogs and websites to visit.  Among them:

• Arts & Labs blog (Henke works with them)
• Broadband Politics (run by Richard Bennett, who forgot he worked for a K Street Lobbyist, actually on K Street (read the comments at the bottom of the linked article)
• Cisco Policy Blog (also a partner with Arts+Labs, has a direct interest in selling the bandwidth management hardware)
• Verizon Policy Blog (also a partner with Arts+Labs, and an interested provider in this issue)

In the beginning of this piece, I recited some of the “scare mongering” Ou accused groups of engaging in on the Net Neutrality debate back in 1996.  The first major Net Neutrality battle was with Comcast over bandwidth throttles.  The barely-conscious FCC under Kevin Martin spanked Comcast (who sued, of course) and we’ve been in a holding pattern ever since.  But the predictions have become remarkably true north of the American border, where Canada endures all of the things Ou swore up and down in 1996 would never happen.

• Most major broadband providers in Canada throttle the speeds of peer to peer applications, reducing speeds to a fraction promised in their marketing materials.
• Most major broadband providers in Canada not only charge customers based on broadband speed, but also by the volume of data consumed, causing spikes in customer bills and a reduction in usage allowances in some cases.  Customers now face overlimit fees and penalties for exceeding the Internet usage ration they are granted each month.
• In 2006, Shaw Communications in Canada tried sticking a $10 monthly fee on broadband customers wanting to use Voice Over IP telephone service.  Vonage Canada complained loudly at the time.
• As far as controlling what you see online, that’s already in the cards in the States, if the cable industry has any say in the matter.

With a pliable FCC, what exists in Canada today will exist in the United States tomorrow without Net Neutrality protections enacted into law.

(footnoted material appears below the break)

… Continue Reading

The usually business-friendly editorial page of the Wall Street Journal published a surprising editorial this morning which threatens to cause a tear in the very fabric of space.  Why AT&T Killed Google Voice: Telecom Operators Are Yesterday’s Business — It’s Time for a National Data Policy That Encourages Innovation, strikes at the heart of the telecommunications industry’s business models, and dismisses them as increasingly outdated, anti-innovation and anti-consumer.

Welcome to our world.

Using the example of AT&T’s blocking Google Voice from iPhone users, which would allow them to bypass their AT&T plan to make long distance calls, author Andy Kessler, a former hedge fund manager, believes this was the moment America wakened to the realization that telecommunications companies and government policies block innovation and limit competition.

To that, I have to wonder, where has Kessler been the last decade?

Perhaps the Google Voice debacle impacted him personally, and that got his fur in a ruffle.  What AT&T did represents business as usual for those of us who have seen it all before.

Telecommunications companies have influenced most of the government policies that govern them, using high priced lobbyists, astroturfing friends, and bait and switch promises of magical service at dirt cheap prices, if only their legislative agenda becomes law.

Supporting them are many of the subscribers of the Wall Street Journal, investors and the investment media that tut-tuts new competitors or game-changing innovation that shakes up the marketplace, and launches price wars that threaten shareholder value. Legislation that hampers industry profits or enacts consumer protection is called “government interference” in most WSJ editorials, while deregulation that strips away oversight and ignores the abusive practices common in highly concentrated markets is advocated as the one-size-fits-all “free market solution.”

Apple has an exclusive deal with AT&T in the U.S., stirring up rumors that AT&T was the one behind Apple rejecting Google Voice. How could AT&T not object? AT&T clings to the old business of charging for voice calls in minutes. It takes not much more than 10 kilobits per second of data to handle voice. In a world of megabit per-second connections, that’s nothing—hence Google’s proposal to offer voice calls for no cost and heap on features galore.

What this episode really uncovers is that AT&T is dying. AT&T is dragging down the rest of us by overcharging us for voice calls and stifling innovation in a mobile data market critical to the U.S. economy.

I wonder what Kessler will think if AT&T’s market trials in Beaumont and Reno suggest they can limit his Internet access and then charge overlimit fees per gigabyte thereafter?  AT&T may have a lot more “dragging” capability than he realizes.

Andy Kessler

Is AT&T dying?  In the traditional wired phone line market, there is evidence they are headed into a slow decline as consumers dump overpriced and overtaxed phone lines for Voice Over IP or mobile phone service.  They certainly aren’t hurting in their mobile phone business.  They’ve become quite comfortable, thank you very much, splitting the majority of mobile telephone customers in the United States with Verizon Wireless.  The companies in real trouble are the smaller players fighting for the scraps thrown from the table — a declining Sprint, T-Mobile, Cricket, MetroPCS, among many others.  They are being told to merge with each other or die by Wall Street.

Is AT&T stifling innovation by being run badly?  Of course not.  They are leveraging their market power to limit potential competition or innovation that forces them into costly upgrades they’d prefer not to do.  With their expensive “public policy” initiatives (read that “K” Street lobbying), they’ve also got a lot of elected officials and government agencies on their side as well.  A Congress that doesn’t demand greater competition, strong antitrust oversight, and a ban on anti-consumer practices, coupled with a bunch of “don’t ask, don’t tell” oversight agencies that only respond to the most egregious abuses (until the media spotlight is turned off), represents the real problem here.

The trick in any communications and media business is to own a pipe between you and your customers so you can charge what you like. Cellphone companies don’t have wired pipes, but by owning spectrum they do have a pipe and pricing power.

True, except Kessler ignores the fact AT&T and Verizon do own wired and wireless pipes, from coast to coast.  Both companies are highly vertically integrated, often serving customers with everything from their basic telephone service to television, broadband, and mobile phone needs.  Customers are heavily marketed to pick up additional product lines from both companies — products not available from the smaller guys like Sprint, T-Mobile, and others.

Kessler also suggests it’s the bidding war for wireless spectrum that results in high prices for consumers.  Even if true, his free market friends would suggest that is the marketplace at work.  Of course, the real reason for high pricing in mobile service is the lack of competition coupled with the convenience of “stable pricing.”  Namely, the current carriers are quite comfortable not rocking the boat too much with one another, which explains why virtually all of them charge comparable prices for wireless data, text messages, and voice plans.  What they will fight for is handset exclusivity, because it never threatens price and service models.  In fact, it allows them to charge even higher premium pricing for highly-sought handsets and the mandatory service plans that sometimes accompany them.  The iPhone is a perfect example of that at work.

Kessler has four prescriptions to cure the American telecommunications ailment:

• End phone exclusivity. Any device should work on any network. Data flows freely.

• Transition away from “owning” airwaves. As we’ve seen with license-free bandwidth via Wi-Fi networking, we can share the airwaves without interfering with each other. Let new carriers emerge based on quality of service rather than spectrum owned. Cellphone coverage from huge cell towers will naturally migrate seamlessly into offices and even homes via Wi-Fi networking. No more dropped calls in the bathroom.

• End municipal exclusivity deals for cable companies. TV channels are like voice pipes, part of an era that is about to pass. A little competition for cable will help the transition to paying for shows instead of overpaying for little-watched networks. Competition brings de facto network neutrality and open access (if you don’t like one service blocking apps, use another), thus one less set of artificial rules to be gamed.

• Encourage faster and faster data connections to our homes and phones. It should more than double every two years. To homes, five megabits today should be 10 megabits in 2011, 25 megabits in 2013 and 100 megabits in 2017. These data-connection speeds are technically doable today, with obsolete voice and video policy holding it back.

An end to phone exclusivity will require government regulation, something unlikely to gain much support from his free market friends.  An even better idea is to stop the cozy relationship between carriers and phone manufacturers by allowing phones to be sold independently, without customers being pressured into two year contracts to enjoy a phone subsidy.  Any phone, sold anywhere, with compatible technology (GSM, CDMA, etc.) should work on any network without a company trying to browbeat customers into contracts, even when bringing along their own phone.  That customer should also be allowed to reprogram their phone to work with another compatible carrier at any time.

Kessler is naive about “owning” airwaves.  Since the government decided it could profit from auctioning them off to the highest bidder, they’ve become monetized and highly valuable.  They are no longer truly licensed in the public interest — they’ve become private property, to be vigilantly protected from encroachment.  Be it satellite, wireless telephony, radio, television, or innovative new services not yet launched, the moment someone applies for a license to share spectrum with existing providers, a chorus of complaints about potential interference arrives at the FCC, with scare stories about potentially massive disruptions.  In reality, the grounds for these hissyfits are more frequently about the fear of competition.

It’s time to admit the concept of airwave auctions has been shortsighted.  While it may bring the government revenue, it will be recouped from consumers as part of provider pricing models.  The higher the bids, the higher the price providers will charge customers for that service.  Let’s consider granting licenses not based on who can bid highest, but rather who can provide the best possible service at reasonable prices to the public.  Those that fail to serve the public interest, or engage in bad behavior, have the very real opportunity of losing that license.  That’s quite an incentive to serve customers first.  It’s such a pro-consumer, novel idea, expect millions of dollars to be spent on lobbying to make sure it never happens.

Municipal exclusivity deals for cable companies ended in 1992 as part of the Cable Television Consumer Protection and Competition Act (the only bill President George H.W. Bush vetoed that was overridden by Congress).  I know because I was integrally involved in fighting for that legislation.  In the last 17 years, there hasn’t exactly been a rush to wire up communities with competing cable companies, now has there?

Let’s be honest here.  Less regulation will not compel cable competition, no matter how much the astroturfers and special interest lobbyists promise it.  Construction and capital costs to “overbuild” a cable provider in most American cities are high enough to discourage investment from the private sector, particularly when they fear a price war will result and reduce profits, and shareholder value.  Overbuilders like El Grande in Texas had to sell themselves to a more capital-rich company just to find financing to build out their network.

I’m afraid without incentives like tax credits or other benefits, the prevailing attitude is that all but the largest cities will make due with one wired phone company and one wired cable company at best.  Only one major provider has seen fit to rewire their service areas with the most robust technological advancement – fiber to the home.  Verizon has done so, with considerable resistance from investors, in their effort to avoid the obsolescence Kessler foresees in the telephone line business.  But Verizon is only wiring limited areas, primarily in urban areas, but almost never in smaller communities.  For customers of other phone companies, particularly smaller independent providers, too bad for you.  Their only hope may be a publicly financed, or public-private partnership, fiber optic wiring project that acts as a common carrier.  Any provider can deliver their service over it, allowing customers to choose.

Because of the duopoly/monopoly state of cable and broadband service in the United States, Net Neutrality will never be protected through competition.  In Canada, when Bell throttled and interfered with Internet service, most cable competitors simply joined the party and did the same.  When a few upstarts, resold un-throttled Bell wholesale broadband service and made that a selling point, Bell simply throttled them, too, without warning.  That put a stop to that pesky competition problem.  Canada foreshadows what will likely happen in the United States without strong Net Neutrality legislation.

Finally, Kessler’s vision of what is holding back broadband speed totally ignores provider complicity in the slow momentum forward.  While some providers have a progressive attitude about speed, seeing faster broadband’s revenue earning-potential, others see it as an unnecessary expense that most consumers don’t really need.  Time Warner Cable, the nation’s second largest cable company, remains on record as being in no hurry to upgrade to DOCSIS 3 technology, unless one of their competitors threatens to beat their speeds.  In fact, they’ve expressed repeated interest in cost controls by experimenting with ways to limit data consumption, protect their video business model, and extract more revenue from customers at current speeds.

If Kessler was looking to the phone companies for an alternative, most Americans can forget it.  Most phone companies, especially smaller independents, have maintained a death grip on old school DSL technology, which provides 1-3Mbps service in rural areas, and “up to 10Mbps” (if you are very, very lucky) in urban and suburban areas.  They are rapidly losing wired phone customers and are holding out for whatever revenue they can grab from yesterday’s broadband technology, usually doing best only where cable doesn’t compete at all.  Some even want to limit consumption at the slow speeds those networks operate at today.  They are in no hurry to upgrade their existing copper wire networks, much less agree to the “double speed” plan Kessler has.

I’m sorry to say Kessler’s marketplace-based hopes and dreams for a better telecommunications world tomorrow are not forthcoming.  Without radical changes in the current “whatever the providers want is okay with us” regulatory approach we have today, the only innovation Kessler should expect to see is providers finding new ways to charge more money for the same service we have today.

We need a complete review and reality check about the total failure of the deregulation-solves-everything approach we’ve lived under for more than a decade.  If Kessler wants faster speeds, more competition, lower prices, and less market abuse, he will never find it without government involvement.  Remember, in the absence of real competition from those that actually want to compete to win, not just share the healthy proceeds from the status quo, we need stronger arguments than “the free market solves everything” and “won’t you please do it out of the goodness of your heart and civic duty?”

Om Malik managed a quick interview with the new chairman of the Federal Communications Commission, Julius Genachowski. In a wide-ranging interview about the competitive landscape of mobile broadband, which is to say there isn’t a whole lot at present, Malik managed a direct question about Internet Overcharging schemes:

Om: Phone companies and cable companies are trying to impose bandwidth caps on Internet access. By doing so, I feel (and many agree) that they’re actually limiting the scope of innovation. Maybe in that that case, we should think about the need to separate services (TV, video, etc.) from the pipe. What are your views on metered broadband?

Genachowski: It ties into an important policy decision the FCC will be confronting with how we drive a ubiquitous broadband infrastructure that’s open and robust and delivers on the promise of the Internet for all Americans. To tackle these questions we will be focusing on the real facts around what’s going on and what policies will best promote ubiquitous broadband and innovation. It’ll be an ongoing topic. It’s something that consumers of Internet services pay a lot of attention to and we’ve seen that in reactions to some of the events over the last year.

That’s about as non-committal an answer as ever out of the FCC.  The usual formula is there:

1. Express concern.
2. Define the issue in terms of the Commission’s general policy direction and goals.
3. Promise sober assessment of the issue.
4. Under no circumstances commit to anything specific that might get the attention of the press and/or Congress.

Consumers cannot enjoy open and robust broadband that delivers on innovation from providers that are rationing access and charging top dollar for it.  Internet Overcharging schemes represent the best way to run a bypass around Net Neutrality by simply limiting and/or overcharging for access, killing enthusiasm for high bandwidth services like video that challenge current cable television business models.

At least he notes consumers have been pounding the issue with elected officials and the Commission sufficient to warrant mention of it.

Blair Levin, broadband czar

Blair Levin is a broadband czar with a lot on his mind, and he unloaded a lot of it at a public conference this week.  He’s been spending his summer wading into more than 8,500 pages of comments the Federal Communications Commission (FCC) has received on the question of how to formulate a national broadband plan.  Individual consumers using the submission form like a blog’s comment section was the least of his concerns.  Levin has grown far less optimistic about the value of the comments as he digs deep into the pile before him.  His conclusion: at least some of the companies and groups that can afford the most expensive lawyers and professional presentations essentially pulled off an all-nighter let’s-wing-it-effort.

Levin particularly called out a “large telco” that submitted an extensive paper promoting its position loaded with intellectual sloppiness, right down to including a slide that contradicted the phone company’s own arguments.

Levin also claimed a lot of the submissions were loaded with platitudes and consensus about a model broadband society everyone would like to see, with no road map to actually achieve that goal.

The broadband czar reserved special criticism for the locust-like lobbyists who have descended on the comment process with self-serving proposals that are crafted with a “mine first” mentality that cuts out other players.  Levin claimed providers are much more interested in protecting their existing market and business plans before they consider how changes in the marketplace can increase the number of customers available to them.  That’s a mentality consumers are familiar with as broadband providers attempt to protect their video business models with attempts to limit or overcharge for broadband access.

He was upset that plans to open up new spectrum for next generation broadband services were met with resistance from other providers.  Wireless spectrum expansion for broadband projects was promoted as “essential” in one proposal, and attacked as a dangerous threat in another.  Levin characterized the turf war as, “get [the spectrum] from somebody else.”

Many of the major providers are treating the national broadband plan as a giant piggy bank, waiting to shower them with cash for vague projects or goals.  “Look I’ve got to say this — we are not going to be Santa Claus,” Levin said. “There’s actually very little in the 8,500-something pages that moves the ball forward,” Levin said.

Consumer advocacy group Free Press, which submitted an extensive pro-consumer broadband plan of its own, which Stop the Cap! supports, agreed with much of what Levin complained about in a new filing today, in response to Levin’s remarks.

Derek Turner, Free Press

Derek Turner, research director at Free Press, said “the FCC should not be duped by the incumbents’ self-serving claims. The national broadband plan must be built on a record of meaningful data and analysis — not on flimsy evidence and discredited arguments.”

Turner was pointing to telecommunications lobbying policies which reach not only the FCC, but elected officials.

Indeed, they are repeats of the same mantra over and over — “deregulation.”

“Incumbents have the largest pool of resources and broadband data at their fingertips, but their comments offer nothing more than the same old tired pro-deregulation arguments. It is clear from their recommendations that the phone and cable companies want the national broadband plan to simply be a ‘do-nothing’ plan — a strategy that has already proven to be an epic failure for consumers,” Turner added.

Incumbent carriers keep that pool of resources and data close to their vests, refusing to make it widely available for detailed independent analysis.  Instead, their “government affairs” lobbyists engage in astroturfing efforts to hoodwink consumers and policymakers with biased data and maps that help sell their agenda of deregulation and public financing of needed broadband projects, with little or no oversight or conditions.  Most important, they universally characterize today’s broadband offerings as excellent and evidence that the “marketplace is working,” even as the United States falls further behind other nations in access, speed, and low pricing.

While Levin is right to be exasperated at the special interest folderol, the FCC’s previous hands-off attitude during the Clinton and Bush Administrations set the stage for the ballet being performed today.  A deregulatory framework, started by the Clinton Administration and embraced on entirely new levels by the Bush Administration, combined with an agency timid to get involved in oversight potentially raising the ire of Congress, made it possible for 8,500 pages of generic happy talk and thinly disguised grant applications to weigh heavily on his desk.

Caught in the middle, as usual, are consumers.  Most of them were the ones typing their comments into the FCC comments submission page in “the big box,” instead of uploading a professionally prepared multi-hundred page PDF document.  Their needs are simple: affordable, fast, widespread broadband, with Net Neutrality embraced and Internet Overcharging schemes banned.  For those who already have the service, they want the FCC to make sure providers don’t leverage their monopoly or duopoly into a Money Party.  For those who don’t, they simply wonder how the most powerful country on earth cannot “get it done” without 8,500 pages and hundreds of millions of dollars potentially flushed away to feed special interest coffers while their needs are ignored or met with “this is good enough service for you” condescension.

Of course, no matter what Levin thinks, a lot of those providers with mixed up slides and Red Bull fueling their all-nighters know the FCC doesn’t have the last word on anything.  They’ll take the dog and pony show straight to Congress, with checks in hand to lubricate the conversation. Making sure Congress ultimately listens to their constituents will be up to voters like you and I.

FCC Chairman Julius Genachowski

In a dramatic departure from the former Federal Communications Commission’s largely “hear no evil, see no evil” oversight, Julius Genachowski, the new Chairman of the Federal Communications Commission, is a downright activist.

Genachowski, over the course of several interviews given this week, has made it clear that he sees major problems in the American broadband industry — it’s too expensive, it’s not competitive enough, and its widespread availability is absolutely critical to the economic success of the United States in coming years.  He’s made it clear broadband will be the most important issue before the agency for the immediate future.

“It’s tremendously important. I’m convinced that broadband is our generation’s major infrastructure challenge, akin to what railroads were, what the highway system was and universal electricity. This is the platform that will determine whether the country can compete in the 21st century. If we get this right, our broadband infrastructure will be an enduring engine for job creation, economic growth, investment, innovation, so it’s essential,” Genachowski said in an interview published today in The Wall Street Journal.

Although short on specifics in most of the interviews given to date, Genachowski has signaled his interest in preserving the concepts of Net Neutrality — providing open and equal treatment of Internet traffic without favoring or throttling traffic.

“The openness of the Internet has been a big driver of that. And it is important that we preserve that openness in order to drive investment, innovation, job creation and economic growth,” he said.

With the departure of the former FCC Chairman Kevin Martin earlier this year, Genachowski will mirror much of the Obama Administration policies and their telecommunications agenda.

Martin’s FCC, with a Republican majority, exercised a deregulatory approach to oversight, and was frequently criticized for not protecting consumer interests.  But Martin did routinely clash with the nation’s cable television operators, in his unsuccessful effort to force them to provide a-la-carte cable television programming tiers.  Martin’s leadership also brought about heightened oversight of “decency” policies impacting broadcasters, and resulted in substantial fines for radio and television stations that violated language or decency standards.  Most agency watchers summarize the last eight years of telecommunications policy as generally industry friendly, particularly to telephone companies, and mildly hostile to cable.  The Commission also sought to permit an increase in ownership concentration of the nation’s radio and television services, and approved mergers routinely, including one between former competing satellite radio providers XM and Sirius.

Genachowski’s FCC is expected to substantially change its regulatory approach, but only over time.

Although it will maintain an activist approach to broadband issues, Genachowski believes a top-down ‘agency makeover’ is required to prepare the FCC to meet the challenges of the 21st century.

“There are real challenges given the state of the infrastructure at the agency. As an example, there are literally millions of pages of documents that should be available to the public, and technically are because people can come in and look them up, that aren’t in digital form at all. They’re in paper. Some of these are historical documents, but there’s a huge resource downstairs in the pubic reading room that has something like 7,000 linear feet of paper that we really do need to digitize and put online. There’s a lot of paper that is online but not in machine-readable format, it’s not searchable,” he said.

Most FCC watchers believe the agency will move forward on several issues in the next 12-24 months:

1. A review of the Universal Service Fund (USF), which collects several dollars from every telephone customer in the United States to help underwrite and defray expenses of the nation’s most rural and disadvantaged telephone subscribers.  The USF has been roundly criticized for collecting an enormous amount of money, and squandering it on projects that go well beyond the Fund’s original intent, resulting in considerable waste, fraud, and abuse.  Genachowski’s FCC will be asked to consider using USF money to deploy and/or underwrite broadband service in areas not economically viable enough for private companies to provide service.
2. A review of the state of the competitiveness in the broadband, telephone, and wireless telephone industries, with particular emphasis on the latter.  Wireless phone companies like Verizon Wireless and AT&T Mobility are already under scrutiny for their exclusivity agreements with telephone equipment manufacturers, and their attempts to hold consumers’ hostage by refusing to permit them to reactivate their phones on other company’s networks.
3. A review of applications and filings by broadcasters relating to low power radio and television, improving reception for digital over the air television signals, indecency complaints, and mergers and acquisitions in the industry.