vertical integration

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

Time Warner Cable Doesn’t Deserve the FCC’s Help

Posted by | Video | No Comments

From the moment the deal was announced, many questioned the unprecedented price Time Warner Cable (TWC) agreed to pay for the exclusive right to distribute Los Angeles Dodgers games through its SportsNet LA channel. Though the deal was deemed a coup for the team’s new owners, TWC acknowledged the risk that it could lose money on the Dodgers. Would this be the deal “where the big TV money in baseball bubble pops”?

The free market answer is, “Yes”. When TWC demanded that SportsNet LA be carried on the basic service tier at rates of $4-$5 per subscriber, DirecTV balked. The satellite operator was willing to place a bet in the marketplace that its subscribers would rather skip the Dodgers than be forced to bail TWC out of its bad deal, and so far, its bet has paid off. Fans feel like its the Dodgers who let them down. Read More

What Does Netflix’s Decision to Block Content Tell Us About Innovation and Investment in Internet Infrastructure?

Posted by | Broadband Internet, Video | One Comment

The Netflix debate tells us there is a yawning gap between the reality of current network architecture and the outdated theories supporting our regulatory policies. This gap is the single biggest threat to the virtuous cycle of invention, investment, and growth that have characterized the Internet over the last decade.

I’m having my own case of Cassandrafreude after reading the responses to my posts on Netflix’s decision to block consumer access to its new Super HD service. One commenter says it is a “great thing” that Netflix is relieving Internet congestion (a tacit admission that Internet congestion actually exists) by deploying computing power inside ISP networks. Another commenter suggests Netflix is attempting to “vertically integrate (from just content provider to content provider + CDN)” because “existing CDNs may not be equipped to handle the new traffic Netflix wants to push over them.”

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FCC Chairman Genachowski Is Right to Let Legacy Program Access Regulation Expire

Posted by | Broadband Internet, Video | No Comments

The limitations imposed on Internet transformation by the program access rules should be removed along with other legacy regulations that are inhibiting our transition to all-IP communications.

In 1992, Congress directed the FCC to establish “program access” regulations. These regulations generally require vertically integrated cable operators (i.e., cable operators who also own video programming) to offer their programming to rivals on reasonable terms. Congress prohibited cable operators from entering into exclusive contracts with video programming affiliates because a “cable system faces no local competition,” which gave vertically integrated cable programmers “the incentive and the ability to favor” their own distribution networks. Congress recognized, however, that additional competition could render this prohibition unnecessary, and provided that the exclusivity prohibition would sunset in ten years unless the FCC finds the prohibition continues to be necessary.

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Podcast about Google Fiber at Surprisingly Free

Posted by | Broadband Internet | No Comments

After he read my analysis of the tech policy lessons learned from the Google Fiber deployment, Jerry Brito, director of the Technology Policy Program at the Mercatus Center at George Mason University, invited me to do a podcast on broadband deployment for Surprisingly Free. During the podcast, Jerry asked me a number of questions about Google’s strategy for fiber deployment and other policy issues that impact broadband deployment. The podcast is available here.

What Google Fiber Says about Tech Policy: Fiber Rings Fit Deregulatory Hands

Posted by | Broadband Internet, Media | One Comment

Google’s first lesson for building affordable, one Gbps fiber networks with private capital is crystal clear: If government wants private companies to build ultra high-speed networks, it should start by waiving regulations, fees, and bureaucracy.

Executive Summary

For three years now the Obama Administration and the Federal Communications Commission (FCC) have been pushing for national broadband connectivity as a way to strengthen our economy, spur innovation, and create new jobs across the country. They know that America requires more private investment to achieve their vision. But, despite their good intentions, their policies haven’t encouraged substantial private investment in communications infrastructure. That’s why the launch of Google Fiber is so critical to policymakers who are seeking to promote investment in next generation networks.

The Google Fiber deployment offers policymakers a rare opportunity to examine policies that successfully spurred new investment in America’s broadband infrastructure. Google’s intent was to “learn how to bring faster and better broadband access to more people.” Over the two years it planned, developed, and built its ultra high-speed fiber network, Google learned a number of valuable lessons for broadband deployment – lessons that policymakers can apply across America to meet our national broadband goals.

To my surprise, however, the policy response to the Google Fiber launch has been tepid. After reviewing Google’s deployment plans, I expected to hear the usual chorus of Rage Against the ISP from Public Knowledge, Free Press, and others from the left-of-center, so-called “public interest” community (PIC) who seek regulation of the Internet as a public utility. Instead, they responded to the launch with deafening silence.

Maybe they were stunned into silence. Google’s deployment is a real-world rejection of the public interest community’s regulatory agenda more powerful than any hypothetical. Google is building fiber in Kansas City because its officials were willing to waive regulatory barriers to entry that have discouraged broadband deployments in other cities. Google’s first lesson for building affordable, one Gbps fiber networks with private capital is crystal clear: If government wants private companies to build ultra high-speed networks, it should start by waiving regulations, fees, and bureaucracy. Read More