[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Bloomberg Oppenheimer Declares Net Neutrality A Victory for Consumers 12-21-10.flv[/flv]

Wall Street continues to consider Monday’s lukewarm Net Neutrality regulations to be a victory for AT&T and other providers.  Bloomberg News asked Tim Horan, an analyst at Oppenheimer & Co., whether the impact of Net Neutrality would be higher prices for consumers.  “Uhhh,” began the stumbling reply.  Watch as Oppenheimer tries to get back on board with provider-generated talking points, eventually declaring the almost non-existent protections “a victory for consumers.”  Do you think he really believes that?  (3 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/CNN Net Neutrality Primer 12-21-10.flv[/flv]

For those who may not fully grasp Net Neutrality, CNN’s Ali Velshi delivered a primer that helps explain how Internet traffic moves, how providers want to manage that traffic, and the implications of not enforcing robust Net Neutrality.  Velshi’s explanation delivers both sides of the argument with only a few minor errors.  We’d remind him consumers already paid for the big pipe depicted in the video.  Consumers should not have to pay twice for the same thing.  Less useful is CNNMoney Staff Writer David Goldman, who got several points wrong, especially about wireless. (8 minutes)

No, don't get up. We've got it.

Want an example of the kind of lazy journalism you get from one of America’s largest news operations, about to become a part of the Comcast family?  Look no further than MSNBC’s Wilson Rothman, who shared some serious Net Nonsense in his piece: ‘Open’ Internet just a pipedream.

Rothman apologized in a tweet after publishing the essay, admitting it was “cynical.”  But we want to know where the apology is for being wrong on the actual facts.

The author tells readers it’s a Comcast world this winter:

As long as you buy Internet access via cable provider, wireless carrier or telecom, you’re going to have to play — or at least pay — by their rules. They’ll just have to make sure to tell you what those rules are. That seems to be the real gist of the FCC order that was ratified today.

[…]The only people currently getting throttled by their broadband providers are file-sharing pirates who wouldn’t be protected by any net neutrality regulation anyway; meanwhile, wired and wireless broadband networks are increasingly controlled by a smaller, more powerful cadre of competitors.

Tiered pricing has to happen

You can use as much electricity from the power grid as you want, but you have to pay by the kilowatt hour. If you think of the Internet as a utility — and why shouldn’t you? — network management should look something like that. Prices offered by regulated private companies should be competitive and reasonable, but highly metered. Sadly, that means no more flat-fee unlimited access.

[…]I don’t mean to sound cynical, but I come at this from a technology background, not a legal or political one. What I see are all the ways in which “public” access to utilities become profit centers for increasingly massive companies.

After the break-up of the Bells, the phone companies eventually consolidated and worked their way back together like some kind of liquid-metal Terminator. The good news? Instead of a single monopolistic phone company, we have two Leviathans and some smaller fish. Long-distance service used to be their cash cow; now it’s wireless and broadband, and they’re not going to let those slip so easily.

“Give that man a raise,” said Brian Roberts, Comcast CEO.

Seriously, Rothman might come from a technology background, but he sure doesn’t know his way around the broadband public policy debate. Digging into the reasons for today’s broadband mess would require actual reporting.

Rothman suggests Americans are effectively required to accept today’s decision from the Federal Communications Commission.  That’s akin to telling Time Warner Cable customers they should have just knelt down to the cable company’s 2009 pricing experiments.  Or that North Carolina needed to padlock community broadband networks until they could be sold on eBay to the highest Big Telecom bidder.  Or that Frontier can and should get away with a 5GB usage cap.

We said no.  You said no.  And we won all three of those battles.

Today’s FCC vote has relevance only until the first major cable or phone company (or interested third party) files a lawsuit.  The outcome is predictable — the same court that threw out the FCC’s authority earlier this year will do so again, for many of the same reasons.  For consumers, that isn’t all bad.

Rothman’s claim that only pirates are victims of speed throttling is demonstrably false, and nothing less than journalistic malpractice.  Innocent consumers are routinely throttled on wireless and wireline broadband networks using “network management” technology.  Are Clear’s customers all pirates?  How about Cricket’s clients?  Exceeding an arbitrary amount of usage on these networks guarantees you a spot in the dial-up-like doghouse.

The author also misses the point about increasing consolidation in the Big Telecom marketplace.  Cadre?  Sure.  Competitors?  Hardly.  Most Americans endure a broadband duopoly for reasonable Internet access — a cable and phone company.  Cable and phone companies have quite a deal.  They effectively charge around the same price for service and never have to worry about a third cable or phone company entering the marketplace.  Cable companies don’t compete with other cable companies.  Same for telephone companies.  Community broadband networks deliver the only real competition some areas have, which is why Big Telecom wants to ban these upstarts wherever they can.  Big Telecom believes Americans should not get to choose an alternative cable company if Comcast delivers terrible service.  Consumers living in small communities like Penn Yan, N.Y., live with Verizon DSL, if they are lucky.  Outside of the immediate town limits, there isn’t a cable competitor, much less another phone company.  That’s the real “take it or leave it” Americans contend with.

Rothman's electric utility analogy is as valid as charging for broadband by the foot.

Why shouldn’t Americans think of broadband as just another electric utility?  Because it isn’t.  This common talking point/analogy adopted by Rothman’s future employer has as much validity as pricing broadband by how many feet of wire was necessary to install it.

Broadband is neither a limited resource nor a product that requires a utility to purchase raw materials to perpetually generate.  His argument works only if a provider “generated” the actual content you consume online.  They don’t — they simply transport content from one point to another over a network that becomes enormously profitable once the initial construction costs are paid.  Rothman can discover this for himself reviewing the quarterly financials of broadband providers.  After billions in profits are counted, it’s clear this is one recession-proof industry that is hardly hurting.

It’s no mistake these analogies always leave out the one utility that is most comparable to broadband — telephone service.  You know, the one service that is rapidly moving towards unlimited, flat rate — talk all you want.  Providers using the consumption billing argument cannot afford to include phone service in their analogy, because then the ripoff would be exposed.  One would think a reporter for NBC News might have managed to figure that one out as well, but no.

The fact is, there is no healthy competition in broadband.  You know what that means — high prices for limited service.  Rothman seems ready and willing to take whatever Big Telecom wants to dish out, but then his paycheck is about to be paid by one of those companies, so he can afford to be cynical.

Unfortunately for his readers, Rothman is oblivious to the reasons why phone companies have consolidated and consumers are stuck with the results.  The recipe:

• A multimillion dollar lobbying effort that includes huge contributions to politicians, astroturf “dollar-a-holler” groups paid to front for Big Telecom’s agenda, and a mess of scare tactics predicting horrible things if they do not get their way;
• A supine media that simply accepts provider arguments as fact, deems the abusive practice that follow as inevitable, and apologizes later for being cynical;
• An uninformed public that decreasingly relies on media companies that also happen to have direct financial interests in the outcome of these public policy debates.

Consumers have more power than Rothman thinks when they take a stand with elected officials.  When taking AT&T money becomes more costly than voting for their constituents, elected officials will do the right thing.  That takes individuals letting elected officials they are watching them closely on these issues.

Consumers can also tell their local elected officials that the Big Telecom Money Party needs to come to an end.  A community-owned broadband network that throws out the online toll booths and creates a network for Main Street instead of Wall Street is the functional equivalent of handing unruly Verizon and Comcast their coats and escorting them the door.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Franken FCC Net Neutrality Plan Flawed 12-20-10.flv[/flv]

Sen. Al Franken (D-Minn.) took to the Senate floor this weekend to explain his strong opposition to the proposed Comcast-NBC/Universal merger, how some of the nation’s largest telecom companies use limited competition to maintain confiscatory pricing for service, and why feeding the Big Telecom beast with favors requested in multi-million dollar lobbying campaigns will cost ordinary Americans more money for less service in the future.  Franken’s remarks are a refreshing change of pace from the usual Congressional rhetoric, reduced to “Obama’s takeover of the Internet,” “socialist broadband,” and “Maoist net policies” we usually hear about.  It’s well worth the time to educate yourself about Big Telecom’s agenda.  (25 minutes)

FCC Chairman Julius Genachowski sold President Obama's campaign pledge, his credibility, and you down the river in a sweetheart deal with Big Telecom.

The Federal Communications Commission voted today to pass what Chairman Julius Genachowski called “Net Neutrality” — reforms that will guarantee a free and open Internet.  But critics charge any similarity to actual Net Neutrality is purely coincidental.

In a 3-2 vote along party lines, the Democratic Commissioners approved Genachowski’s framework to keep providers from blocking access to websites.

Genachowski claims the rules will protect consumers from providers controlling the free flow of online content and will provide regulatory certainty for the broadband marketplace.  Providers, who have either lined up behind the chairman or have muted their criticism of the proposal in recent days, suggest they weren’t about to censor Internet content in the first place and that Net Neutrality is a cause in search of a problem.

Public interest groups were less than satisfied, dismissing today’s proceedings as “Net Neutrality-lite,” or “Net Neutrality with more (loop)holes than Swiss cheese.”  In particular, Genachowski’s willingness to exempt wireless broadband from the rules was a very sore spot among Net Neutrality proponents and some in Congress.

“Maybe you like Google Maps. Well, tough,” said Sen. Al Franken (D-Minn.) “If the FCC passes this weak rule, Verizon will be able to cut off access to the Google Maps app on your phone and force you to use their own mapping program, Verizon Navigator, even if it is not as good. And even if they charge money, when Google Maps is free.”

Franken is convinced excluding wireless networks from open Internet rules is the first step towards a free speech calamity.

“If corporations are allowed to prioritize content on the Internet, or they are allowed to block applications you access on your iPhone, there is nothing to prevent those same corporations from censoring political speech.”

Craig Aaron, managing director at Free Press bemoaned today’s vote over rules he suggests were written by the industry itself.

“These rules don’t do enough to stop the phone and cable companies from dividing the Internet into fast and slow lanes, and they fail to protect wireless users from discrimination. No longer can you get to the same Internet via your mobile device as you can via your laptop,” Aaron said. “The rules pave the way for AT&T to block your access to third-party applications and to require you to use its own preferred applications.”

The Obama Administration is likely to claim credit for the new rules and declare Net Neutrality a campaign promise fulfilled, a claim that makes several net activists’ blood boil.

“Chairman Genachowski ignored President Obama’s promise to the American people to take a ‘back seat to no one’ on Net Neutrality,” says Aaron. “He ignored the 2 million voices who petitioned for real Net Neutrality and the hundreds who came to public hearings across the country to ask him to protect the open Internet. And he ignored policymakers who urged him to protect consumers and maintain the Internet as a platform for innovation. It’s unfortunate that the only voices he chose to listen to were those coming from the very industry he’s charged with overseeing.”

Aneesh Chopra, Obama’s chief technology officer said on Dec. 1 that the FCC proposal was an “important step in preventing abuses and continuing to advance the Internet as an engine of productivity growth and innovation.”

Genachowski’s two fellow Democratic commissioners agreed, noting the policies probably don’t go far enough, but it’s a start and they wouldn’t oppose them.  But Commissioner Michael Copps made it clear he remains unhappy with how the entire debate was managed.  He fears corporate control of broadband content will bring the same mediocrity large corporations have managed to deliver Americans over radio and television.

“I don’t want the Internet to travel down the same road of special interest consolidation and gate-keeper control that other media and telecommunications industries — radio, television, film and cable — have traveled,” Copps said. “What an historic tragedy it would be,” he said, “to let that fate befall the dynamism of the Internet.”

If today’s mild net reforms are a step forward, it’s a small one say critics like the Center for Media Justice.  They suggest the FCC’s idea of Net Neutrality offers “minimal protections” for consumers.

“Our greatest fears have been realized,” said Malkia Cyril, Executive Director of the Center for Media Justice. “The Internet can only work if it’s a truly level playing field. Telecommunications companies have used their considerable wealth and lobbying might to exclude some of the most vulnerable communities from the only protection there is from their corporate abuses. These rules aren’t fair, and they don’t provide a path to equity or opportunity. We’re deeply concerned that today’s vote sends a clear message to our communities that if you access the Internet through your cell phone, you don’t count. The FCC has sadly shirked its responsibility to protect all Internet users equally.”

All of the debate may ultimately mean nothing should one of the providers decide to challenge the new rules in court.  The Commission failed to address an earlier court decision that ruled the Commission’s regulatory framework was based on nothing more than good intentions.  The agency was toying with the idea of reasserting authority over broadband using a different framework, but providers furiously lobbied against that, claiming it would “regulate the Internet” under rules designed for landlines.  The Commission’s decision to proceed under a foundation condemned by an earlier federal court ruling exposes an obvious weak spot providers could attack in additional lawsuits.

“We know these rules will be hotly contested,” said Betty Yu, MAG-Net Coordinator. “As they roll out, grassroots communities will continue to monitor the process, ensuring that the rights of wireless users are protected from the over reach and abuses of AT&T, Verizon, Comcast and other telecommunications companies. These rules are a compromise- unfortunately, what was lost in the deal are the rights of wireless users.”

Verizon may make things easier for Yu and other consumer groups to clear the playing field and start over again.  The company released a statement today that foreshadows a willingness to challenge the agency’s Net Neutrality rulemaking in court (underlining ours):

“While it will take some time for us to analyze the F.C.C.’s rules and the order once they are released, the F.C.C.’s decision apparently reaches far beyond the net neutrality rules it announced today,” the company said in a statement. “Based on today’s announcement, the FCC appears to assert broad authority for sweeping new regulation of broadband wireline and wireless networks and the Internet itself. This assertion of authority without solid statutory underpinnings will yield continued uncertainty for industry, innovators, and investors. In the long run, that is harmful to consumers and the nation.”

Net Neutrality Order Snippets

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The Federal Communications Commission’s Open Meeting introducing Net Neutrality and includes a vote on the rulemaking.  (2 hours, 42 minutes)