over the top services

Lame Duck FCC Claims Free Data Harms Consumers?

Posted by | Broadband Internet, Video, Wireless | No Comments

Free data plans like T-Mobile’s Binge On let consumers stream internet video without counting their data usage toward monthly caps. The Federal Communications Commission has recognized these plans can benefit consumers and competition. What’s not to like about free data?

According to the lame duck FCC, the answer depends on who’s offering it. The FCC’s outgoing chairman said T-Mobile’s Binge On service is pro-competitive and pro-innovation. According to a recent FCC letter, however, it’s “anticompetitive” when AT&T gives free data to its mobile customers who subscribe to DirecTV’s streaming video service. That’s par for the course with the current FCC, which is more interested in picking industry’s winners and losers than protecting consumers.

That appears to be what the FCC is doing in this case. The agency’s letter acknowledges that AT&T offers the same payment terms to all companies that want to take advantage of free data services. AT&T doesn’t treat DirecTV any differently than it treats Netflix, Hulu, or any other video streaming provider. Read More

Tech Knowledge Reply Comments in FCC ‘Set-Top Box’ Proceeding

Posted by | Broadband Internet, Video | No Comments

On Monday, Tech Knowledge filed the following reply comments at the Federal Communications Commission in its proceeding to impose wholesale unbundling regulations on cable and satellite video programming in the guise of regulating set-top boxes. The complete comments as filed can be downloaded from the FCC’s website in PDF format HERE. (Note, the HTLM version of the reply comments printed below does not contain the footnotes or appendices provided in the PDF version that was filed at the FCC.)

Executive Summary

The arguments made by proponents of the Wholesale Proposal affirm that its true purpose is to limit MVPDs’ ability to exercise editorial discretion by forcibly overwriting MVPDs’ video interfaces. The Communications Act, previous FCC findings, judicial precedent, and scientific studies in behavioral economics all demonstrate that the interface between consumers and MVPDs’ video programing is itself a form of speech or is otherwise entitled to First Amendment protection because it is intrinsic to MVPDs’ exercise of editorial discretion.

Consider Amazon’s example in its comments in this proceeding — that the Wholesale Proposal would enable Amazon to suggest that an MVPD subscriber watch Amazon’s own programming rather than an MVPDs’ program. In the context of the printed news, that would be equivalent to a rule permitting the Washington Post (a newspaper owned by Amazon CEO Jeffrey P. Bezos) to slap a new front page on the Washington Examiner that contains the Post’s chosen headlines and a message directing Examiner subscribers to read the Post instead. Though the Examiner’s subscribers would still have access to the Examiner’s content as a technical matter (by turning the page), the rule would have the effect of compelling the Examiner to publish (or subsidize the publishing of) that which it does not want to publish (the Post’s headlines and advertising messages) while effectively overriding the Examiner’s editorial decisions about what should be considered the “front page news” of the day. Similarly, the Wholesale Proposal would force MVPDs to publish that which they do not want to publish (i.e., mandatory “information flows”) in order to enable third-parties to direct MVPD subscribers to watch third-party programming (and its associated advertising) that displaces MVPDs’ own decisions regarding what programming should be highlighted on the video interface’s “front page.” Whether applied to print or video, such a rule would cut straight through the heart of the First Amendment’s guarantee of press freedom.

Shifting control over the video choice architecture (and corresponding profits) from MVPDs (and the video programming vendors with whom they negotiate content licenses) to Internet software companies (and their affiliated video programming vendors) would threaten the free flow of information and ideas by concentrating control over the video interface in the hands of a few, giant Internet software companies. Read More

Tech Knowledge Comments on FCC Proposal to Force MVPDs to Offer Unbundled Wholesale Services

Posted by | Broadband Internet, Freedom of Speech, Satellite, Video | No Comments

Today Tech Knowledge filed the following comments at the Federal Communications Commission that address an FCC proposal to force MVPDs to offer unbundled wholesale services in the guise of creating competition in the artificial market for set-top boxes (a proposal dubbed Unlock the Box by FCC Chairman Tom Wheeler). The complete comments as filed can be downloaded in PDF format HERE. (Note, the HTLM version of the comments printed below does not contain the footnotes provided in the PDF version available at the link above and filed at the FCC.)

Executive Summary

The Wholesale Proposal Is an Impermissible Common Carriage Requirement

The FCC’s proposed regulations (the “Wholesale Proposal”) would do more than merely create competition in a market for the “equipment” used to access MVPD services that is artificially separated from the underlying MVPD services themselves; the proposed rules would effectively require MVPDs to provide unbundled, nondiscriminatory access to video programming “information flows” that are an essential part of otherwise fully integrated MVPD services. The avowed purpose of the Wholesale Proposal is to enable third parties to combine MVPD’s unbundled programming with “ancillary features” to provide entirely new, “differentiated” services in competition with MVPDs’ underlying services — the same justification that has traditionally been used to impose resale and other wholesale obligations on common carriers under Title II. The FCC cannot accomplish this result in the guise of promoting competition in an artificially created market for “equipment,” because mandatory wholesale requirements are fundamentally common carriage, and the Communications Act prohibits the FCC from treating MVPDs as common carriers. Read More

FCC Net Neutrality Ideology Out of Step with Internet Reality

Posted by | Broadband Internet, Net Neutrality Series, Regulatory State, Video | 3 Comments

“Today, we celebrate the first glorious anniversary of the Information Purification Directives. We have created, for the first time in all history, a garden of pure ideology—where each worker may bloom, secure from the pests purveying contradictory truths. Our Unification of Thoughts is more powerful a weapon than any fleet or army on earth. We are one people, with one will, one resolve, one cause. Our enemies shall talk themselves to death, and we will bury them with their own confusion. We shall prevail!” Apple advertisement, 1984.

There are now two Internets. The Internet envisioned by the ideology embodied in the FCC’s new net neutrality rules, and the Internet as it exists in reality. The “net neutral” Internet is “a garden of pure ideology” where content companies “are one people . . . with one cause” and network congestion is merely a figment of the imagination. The real Internet is different — congestion is commonplace and the interests of content owners are divergent.

The pests of reality’s contradictory truths threw the first hammer at the ideological Internet on Monday, when the Wall Street Journal reported that HBO, Showtime, and Sony Corp. want to stream their Web-TV content separately from the “public Internet.” They fear Internet congestion will only get worse as viewers stream more video content and they don’t want to offer consumers a frustrating experience. So they are talking with major broadband providers about having their streaming services treated as managed services that would give consumers the best experience possible. Read More

What Does the Shift Toward Online Video Streaming Mean for Regulatory Policy?

Posted by | Broadband Internet, Video | No Comments

A flurry of announcements that HBO, CBS, and Lionsgate and Tribeca Enterprises will stream video content online has prompted plenty of speculation about its potential success or impending failure. Some claim it proves that all consumers want to purchase video programming on an ‘à la carte’ basis. Others claim that HBO’s online service is “doomed before it even starts.”

I’m inclined to side with Representative Bobby Rush, who is optimistic that the trend will positively impact the video marketplace while remaining mindful that it’s too soon to predict the ultimate fate of à la carte video streaming.

No matter how these services fare among consumers, however, the fact that a cable channel (HBO), a broadcast network (CBS), and a major movie studio (Lionsgate) have all chosen to experiment with a new distribution model offers valuable insight to policymakers. Read More

FCC Proposal to Regulate OTT Video Providers Like Cable Is a Harbinger of Things to Come

Posted by | Broadband Internet, Regulatory State, Video | One Comment

The Federal Communications Commission’s (FCC) proposal to regulate over-the-top (OTT) video providers as ‘multichannel video programming distributors’ (MVPDs) — regulatory speak for pay-TV networks like cable and satellite television — is a harbinger of the regulatory reality facing so-called ‘edge’ companies. For over a decade, they have been pushing the FCC to impose strict ‘net neutrality’ requirements on Internet service providers (ISPs) (like Verizon FIOS) that would leave Silicon Valley giants (like Google and Netflix) unbounded by the agency’s authority. The FCC’s move to regulate OTT companies who offer ‘linear’ video programming should have these tech titans asking themselves, “Who’s next?” Read More

The Hill: FCC regulating video marketplace with a broken compass

Posted by | Broadband Internet | No Comments

The Hill’s Congress Blog published an article I wrote about the government’s need to collect data on the market for video advertising before it makes decisions that could have anticompetitive consequences in the video marketplace.

The complete article is available HERE.

Netflix Secretly Holds Subscribers Hostage to Gain Favorable FCC Internet Regulations

Posted by | Broadband Internet | 11 Comments

A stunning revelation is buried in a lengthy Netflix filing at the Federal Communications Commission (FCC): Netflix used its subscribers as pawns in a Machiavellian game of regulatory chess designed to win favorable Internet regulations.

The filing reveals that Netflix knowingly slowed down its video streaming service with the intention of blaming Internet service providers (ISPs). Specifically, Netflix used its relationships with Internet ‘backbone’ providers (e.g., Level 3, Cogent) to deliberately congest their peering links with ISPs, and at the same time, started publishing ‘ISP speed rankings’ to make it appear that ISPs were causing the congestion. It appears that Netflix cynically held its subscribers hostage to reduced service quality in order to pressure the FCC into adopting favorable Internet regulations that would permanently lower Netflix’s costs of doing business.

Netflix’s plan to frame ISPs for sabotaging its service has been surprisingly successful so far. Some subscribers have blamed their ISPs for the service disruptions Netflix itself caused, which prompted the FCC to open an investigation of the Internet backbone market. Now all Netflix needs is for the FCC to adopt new regulations.

This post attempts to shed some light on Netflix’s hostage strategy before it’s too late. After a brief summary of the Internet backbone market, it describes the origins of the strategy and explains how Netflix succeeded in manipulating public opinion. Read More

Net Neutrality: FCC Authority Over Non-ISP Gatekeepers Under Title II

Posted by | Net Neutrality Series | No Comments

This is the fifth post in the CBIT net neutrality series.

The previous post in this series explained how sponsored data could promote competition among so-called ‘edge’ companies who provide gatekeeper services on the Internet. In their responses to reporter Howard Buskirk’s coverage of the post for Communications Daily, net neutrality advocates didn’t dispute the critical fact that non-ISP service providers exercise gatekeeper control over other edge providers on the Internet. They merely claimed that concerns about regulatory parity are “silly” and that addressing non-ISP gatekeepers would “muddy” the net neutrality waters.

They thus admitted my fundamental point: That attempting to regulate the transmission component of services that include information processing functions under the ‘gatekeeper theory’ would indeed “muddy” the FCC’s regulatory waters. Avoiding such uncertainty is why the FCC adopted a bright line distinction between basic transmission services (i.e., plain old telephone services) and services that are not in its Final Computer II decision 34 years ago. Even then the FCC was concerned that any attempt to “delineate a distinction between communications and data processing services” would result in a “boundary line . . . [that] can vacillate, and confidence in decisions made based on that distinction would be diminished.”

The bright line approach exempting services that combine transmission and information processing functions from regulation walled off many services from Title II regulation that had been regulated in the context of plain old telephone service. Replacing the bright line approach exempting broadband services from Title II regulation with the ‘gatekeeper theory’ would dramatically expand the FCC’s regulatory authority to cover broadband services that have previously been considered off limits. If net neutrality advocates continue to insist on the reclassification of broadband Internet access services under Title II, they should dispense with sloganeering and engage in a serious discussion about the implications of regulating broadband Internet services as common carriers.

The inability of net neutrality advocates to articulate a meaningful difference between the ‘gatekeeper control’ exercised by ISPs and the control exercised by non-ISP gatekeepers cannot be casually dismissed by the FCC, whose reasoning regarding reclassification would almost certainly be scrutinized by an appellate court. Contrary to popular opinion among net neutrality advocates, Title II regulation — and thus, the gatekeeper theory — is not limited to ‘last mile’ facilities. The Communications Act provides the FCC with broad authority over “communication by wire or radio” and all its “instrumentalities” in order to make available a “nation-wide, and world-wide wire and radio communication service.” There is nothing in the Act to suggest that this authority magically dissipates at some amorphous boundary between the ‘last mile’ and the ‘Internet beyond the wall’, or that ‘last mile’ facilities inherently present “special concerns” with respect to the theory of gatekeeper control. The FCC’s legal authority over communications services has always applied on an ‘end-to-end’ basis, from one communications device to another and everything in between.

The implications of combining the theory of ‘gatekeeper control’ with the FCC’s ‘end-to-end’ jurisdiction over communications services under Title II is discussed in more detail below with regard to mobile operating systems, Internet search engines, and online video distributors specifically, though these implications would likely extend beyond those three particular categories. Read More

Net Neutrality: FCC Gatekeeper Theory Applies to Google, Apple, and Netflix

Posted by | Net Neutrality Series | 3 Comments

This is the second post in a series addressing fundamental questions presented by the prospect of applying per se net neutrality rules under Title II. The first post is available HERE.

The first post in this series concluded that the logic of the gatekeeper theory the FCC used to justify the imposition of per se net neutrality rules extends to any Internet intermediary that is capable of blocking, degrading, or favoring particular Internet services, applications, or content. This post presents a brief analysis of some intermediary services to which the gatekeeper theory would apply if the FCC relies on it to impose per se net neutrality rules under Title II.

The analysis demonstrates that Internet companies must also ‘ask permission’ to pass gates erected by Google, Apple, and Netflix (non-ISP gatekeepers) in order to obtain access to end users:

  • These non-ISP gatekeepers routinely use their gatekeeper control to block, degrade, or discriminate against upstream edge providers (far edge providers);
  • End users may incur significant costs in switching from one non-ISP gatekeeper to another; and
  • These non-ISP gatekeepers provide services in market segments that are highly concentrated.

It would thus be arbitrary and capricious for the FCC to impose per se net neutrality obligations only on ISPs under Title II.

To be clear, I’m not suggesting that reclassification of broadband Internet access services as ‘telecommunications services’ under Title II is necessary or that the FCC should otherwise regulate non-ISP gatekeepers. The analysis in the post is intended to illustrate that the FCC’s theory of gatekeeper control is radically over-broad under Title II and inconsistent with the competition theory of communications regulation set forth by Congress in the Communications Act. Read More