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August 01, 2008

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It is a big deal. Applause.

[However that scribd embed is really slow; why not just link to the FCC?]

you win - i just linked it. i think i just like showing off scribd b/c i think it's cool

Most encouraging, publius. Thanks for keeping us up on this.

Let's hear it for Davids who don't give up before they even pull out the slingshot!

Wait, a regulatory body ruling against a major corporation and ruling in the public's best interest? Did I miss something? We are still in the Bush administration, right?

This is great news. I have three questions for the experts though:

1. Does Comcast have realistic appeal options?

2. The press release mentions that bitorrent competes with Comcast's VDO service. Was that fact just an aside or did it play a role in the FCC's reasoning? In other words, if BT did not compete with VDO, would the commission have still made the same decision?

3. What exactly constituted "competition" between VDO and BT in the FCC's eyes? Having used both, they seem different enough that I can't see how they compete with one another. VDO is instant but BT takes hours; the video on BT that is also available on VDO is almost never legal; VDO offers a far more limited catalog than BT, etc.

1 - This is potentially complicated, but it depends on what the actual order tells them to do. If it's a final "stop," then comcast could appeal and then all eyes would fall on the odious DC Circuit. If, however, it's a "show cause" (i.e., tell us why we shouldn't punish you), then there's no appeal right now. Comcast has to go through a hearing first.

2 - That's the best part -- the FCC acknowledging that competition concerns motivated it. I mean, the short answer is who knows. But the larger point is that the language is in there and creates a precedent going forward.

3 - I think you've answer your own question. if you get a movie via BitTorrent, that's one less movie you'll buy from Comcast (they're expecting to vastly increase their selection in the years ahead)

Thanks for answering publius!

Regarding (3), while you can get movies on BT, you can't generally get immunity from prosecution. To me, it seems like that makes the products on offer different, but my intuition need not agree with the FCC. I mean, if I sell bootleg videos next to a legit video store, can I really get busted for unfair competition (as opposed to copyright infringement and trademark violations)?

I wouldn't necessarily look at it too legally. For instance, "bootleg" competition wouldn't count as legal competition for, say, antitrust purposes. But it's still a form of competition that might push comcast or others to support stronger copyright penalties.

Accordingly, whether BT is legal or not isn't all that relevant. even assuming it's 100% ilelgal, it still competes with their service so they have a motivation to stop it.

In other words, if BT did not compete with VDO, would the commission have still made the same decision?

If BT didn't compete with VOD, do you think Comcast would have made the same decision? We wouldn't even be talking about it because they never would have risked getting the FCC involved.

publius, thanks for the explanation.

Roger, if Comcast didn't have a serious VDO offering, I think they might still have done something about BT traffic in order to either reduce congestion at their neighborhood concentrators or to reduce peering costs for shipping those bytes to other networks on the internet. When last we discussed this, I think publius and Adam differed as to which of these reasons would be compelling for Comcast, but I think they both agreed that at least one of them would be.

Wait, a regulatory body ruling against a major corporation and ruling in the public's best interest? Did I miss something? We are still in the Bush administration, right?

Verizon and some of the other big telcos pushed the decision through their advocacy groups, because they can afford to provide bandwidth without throttling, and Comcast can't. I seriously doubt that this would have happened before Verizon rolled out FiOS.

if Comcast didn't have a serious VDO offering, I think they might still have done something about BT traffic in order to either reduce congestion at their neighborhood concentrators or to reduce peering costs for shipping those bytes to other networks on the internet.

Correct. Cable internet usually hubs out of a local node so just 1 or 2 BitTorrent users in a neighborhood can degrade everybody's service. It would have been very hard to build around this given the architecture constraints, so Comcast went the cheap route and used throttling. And to make things worse, they used bad throttling techniques -- forging packets that caused connections to reset even though they didn't really know what was being transmitted. That's what really got them in trouble.

Frankly, I don't really buy the competition rationale here -- VDO services are one thing, but you can't stream BitTorrent movies. But it was tortious interference at any rate, and pretty scummy no matter how you look at it. Comcast could have done this in a bunch of ways and they decided to go the underhanded route because they were betting that no one would stand up for Teh Evil Bittorrent Pirates. They lost that bet.

Shocking. Unbelievably shocking.

An issue on which you have two powerful lobbies on one side (entertainment and telecom) and only common sense and the rule of law on the other, and Bush appointees make the right decision? I'm very pleased and legitimately surprised.

Also: not to defend Comcast-- one of the least competent and trustworthy corporations in their field-- but the accusation that the throttling was done to reduce competition for Comcast's own VOD offerings is ludicrous. Not only do the target demographics of VOD and illegal downloading not overlap, but the basic facts of the case don't even make sense in this context.

Comcast was blocking UPSTREAM bittorrent traffic. As I understand it, Bittorrent downloads would be unaffected. I suppose the logic was that because downloads wouldn't be affected, no one would notice the throttling. I suppose they don't know about Oink-like private trackers where people fetishtically manage their upload speeds in order to stay on the site. This whole thing was about allowing Comcast to go a few more years without upgrading their outdated infrastructure-- it had nothing to do with some sort of content-delivery rivalry.

Why am I saying VDO? VOD. Turb, stop messing with my head. :)

An issue on which you have two powerful lobbies on one side (entertainment and telecom) and only common sense and the rule of law on the other, and Bush appointees make the right decision? I'm very pleased and legitimately surprised.

Again, the division wasn't that clean. The telecom/entertainment folks have plenty of things in the works that will compete with BT without having to use the blunt approach the Comcast did -- which, as you say, probably wasn't really about VOD at all. When it's BT against whatever Verizon rolls out for VOD or against the "P4P" techs they're touting, then we'll see how the chips fall.

Most of what happened today was Comcast's competition punishing it for a bad decision. Verizon and AT&T were both pushing against Comcast here. Comcast deserved this, certainly, but it's a qualified win against the content cartels at best.

Some justification: Net neutrality foes back FCC investigation into Comcast traffic blocking

Adam- a couple of points:

1 - I understand the whole "Martin is a Bell hack" argument and that explains it. But how do you square that with his vote to put open access on big C Block in the auction? Vz definitely didn't want that.

I'm borrowing from Harold Feld here, but I honestly think Martin is less of a pro-business republican and more of a pro-market one (they used to exist i hear). he's fairly convinced (to the extent a republican can be) that cable and wireless companies do some anticompetitive things.

2 - It may well be that the telcos reap a short-term advantage. But... they're not looking very far ahead on teh chess board. The legal and political cover this gives a future Democratic FCC is gold. The establishment of the authority will carry over regardless of the access provider.

3 - As for VoD, i mean, those are fair points. But, the key is that the language about competitive concerns got in there. that's ultimately what everybody is afraid -- and that's why people want to ultimately have openness requirements.

why so serious :)

1 - I understand the whole "Martin is a Bell hack" argument and that explains it. But how do you square that with his vote to put open access on big C Block in the auction? Vz definitely didn't want that.

Discussed that on the last thread here. I don't think he's a Bell hack, I think he just doesn't understand net issues that well -- or rather that he sees them through the lens of the phone system and doesn't get the big picture.

The 700Mhz auction in general was a good idea, and the C block rules are testament to the fact that Martin can be convinced to do the right thing even if he doesn't necessarily understand why. :)

But in my book, the fact that Google was behind the argument and that they were clearly right was the dealbreaker there. I have yet to see Martin make a decision that comes down squarely in the public interest (i.e. where there's not a rich lobby on one side).

I don't think it's a matter of malice; I think that he probably wants to do the right thing in a general sense, but he's driven by this vague shibboleth of "competition" and often defers to business to make the arguments for him.

That's sort of along the lines of what you're saying, but to my mind "pro-market" is only preferable to "pro-business" when it's paired with a strong understanding of the market. Otherwise it just leads to reckless deregulation and then to bad actors filling the gaps (see, e.g., Enron), and that's really hard to roll back once it's happened.

2 - It may well be that the telcos reap a short-term advantage. But... they're not looking very far ahead on teh chess board. The legal and political cover this gives a future Democratic FCC is gold. The establishment of the authority will carry over regardless of the access provider.

Again, I'll believe it when I see it -- and as you know I'm still worried about how putatively "pro-market" reforms like usage-based pricing carry subtle benefits for centralized providers at the expense of decentralized networks like Skype and BitTorrent. To my mind, this sort of thing is just a way of laying the groundwork for structural abuses by providing the necessary regulatory cover -- i.e., "look, we stopped Comcast, what are you complaining about?" will be the refrain shortly.

As for the possibility of Democratic leadership at the FCC -- I think that it's probably better than the alternative, but on the other hand, Michael Powell actually turned out to be a pretty decent Commissioner and did a good job of pushing open access and commons-access reforms. (Of course, it got him fired pretty quick, but hey.)

Based on their handling of the FISA-immunity fiasco, it seems to me that the Democrats aren't much better at standing up to big telecom than the Republicans are. It's understandable, in a way -- the telecom lobby is very very good at what they do and there isn't a clear "left" or "right" in many cases in telecom law -- but in this case I do worry that without an actively hostile Administration, there won't be enough sustained focus on the issue to prevent opportunistic deregulation.

Verizon and AT&T have been heading down this path very steadily since their merger agreements concluded, with no pushback. Normally I try to avoid this kind of conspiracy-mongering, but not where telcos are concerned. But when Verizon lined up against Comcast on this last November, they certainly didn't do it to curry favor with net-neutrality advocates. I've dealt with telcos personally from time to time and they're just too good at what they do for me to not think that there has to be some sort of angle here.

As for VoD, i mean, those are fair points. But, the key is that the language about competitive concerns got in there. that's ultimately what everybody is afraid -- and that's why people want to ultimately have openness requirements.

Yeah, but again, energy trading markets can easily be sold as "open" because "it's the free market at work!" -- but there still may be a question of "who benefits?"

Here's an example for you, if you feel like doing some digging -- go look up AT&T's recent hearing on Universal Service funding in front of the Texas PUC and compare their assessment of their costs with the state's assessment and then look at how the decision was eventually made. (I may have the docket number laying around somewhere.)

That's $150M that just got handed over to SBC/ATT without a peep -- and that's how the telecom industry works. They do not lose at the long game, but when they win you rarely hear about it because the issues are so abstruse.

why so serious :)

How about a magic trick?

;)

Here's a different way of putting it.

Part of the reason that decentralized protocols work on the 'net is because of architectural designs built in at a fundamental level -- like end-to-end intelligence.

Those ancient structural choices have ripple effects -- for example, in peering agreements, as we've discussed elsewhere. Or, in the obvious case of Comcast, where trying to shoehorn a legacy technology (cable) into a new technology (internet) created a technical problem (local node connection) that they eventually tried to solve in an underhanded fashion.

Verizon and AT&T, being less stupid than Comcast, haven't tried to do anything like this -- instead they spent an enormous amount of capital building out their fiber backbones and now Comcast is paying the price for their lack of vision. And they started making that play a long, long time ago. To me, that demonstrates a deep understanding of the importance of structural constraints in communications.

So when Verizon takes a nonintuitive position on Comcast's blocking, or AT&T's CEO lets slip that usage-based pricing is at least partially intended to constrain peer-to-peer apps, I think it's worth taking notice. And it's worth noting what they're not saying -- for example, they contest packet forging, but don't push against the network-management arguments.

I view these moves as attempts to influence the structure of the Internet -- because the structure defines the market. If these issues ever reach the FCC, the argument will be, "well, what we're doing is a natural result of market and technical constraints," which except for a few notable exceptions has been a winning argument for big telecoms.

What's usually missed is that these are frequently designed flaws -- the structure of the network is defined by routing, pricing, transit agreements, etc., and those parameters are being carefully shepherded in a particular direction, specifically for the purpose of being able to say later on, "well, that's just the way it is."

Of course, YMMV.

But how do you square that with his vote to put open access on big C Block in the auction? Vz definitely didn't want that.

Something I forgot to mention -- I don't think that the open-access requirements are really conclusive evidence one way or the other yet. I was tasked with looking into VZ's "open access" policy a few months back, and it says that access is contingent upon vaguely-specified QC tests in VZ labs and regulations concerning copyright protection, among other things.

What's more, since devices on the network are assigned device IDs, the policy also allows VZ to retroactively deauthorize devices from the network until/if they can be brought into compliance. And the policy itself can be changed retroactively, too.

Of course, you probably wouldn't know that unless you'd dug through over a half dozen huge specification documents and found that language buried in the middle of them, like I had to.

So yeah, confidence not exactly inspired on that particular count.

Adam - one quick point before I sign off for the night.

Will you email me at the obsidianinfo. i'd like to discuss off-list the Texas USF stuff. That might be something I'd like to dig more deeply into. I did lots of federal USF in DC, so i know the basic contours of how the system works, costs issues, etc.

publius -- done. godspeed reading all that stuff, though. ;)

Also, I'm always game to discuss USF stuff -- that's one of the areas I work on, too. The broadband/mobility reforms in particular seem like an interesting area right now.

Not quite as accessible as net neutrality issues, but important nevertheless. :)

One thing that comes through in the press release though is that the FCC didn't appreciate being lied to.

The press release seems pretty standard to me.

The press release seems pretty standard to me.

Check out the third graf on the first page -- the Commission talks about two claims that Comcast made and then backed off on, and concludes,

The Commission’s extensive investigation into this matter – which included two public hearings, substantial input from experts, and thousands of comments from companies, organizations, and the public at large – confirms that Comcast’s interference is far more invasive and widespread than the company first conceded.
Disregarding whether it comes through in the press release, the Commission was definitely pretty peeved about the way Comcast handled this.

I call the decision moderate. I tend to agree with publius and Adam, above. The commentary I read when the ruling reached the media seemed to be less about FCC's forward vision with respect to net neutrality, but more toward FCC's sense of needing to repeat to the media principals the fact of its existence. I wondered, fleetingly, whether the Comcast slowdown loop to which its deep packet inspection apparatus probably diverted the BitTorrent streams similarly might be part of the gearWorks at other telcos. Marketwise, seems like a good characterization of KMartin's vote. Telcos are going to have a difficult time with throughput oversight from the feds, so in a sense Comcast's unilateral abuse of what is a politically sensitive matter without engaging FCC in some way prior to unbalancing their standard procedures for equal and fair access, was the incivility which tipped FCC ultimately against letting them proceed with further lawlessness, but also represented a controversial topic CTOs at the competition need to monitor closely. It is a long time since I looked at Comcast's topology, however, and I am uninvolved in the business now, so, I defer to the insights of others here.

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