An insider’s view of the media hegemony

My Insanely Long Field Guide To The War On CableCARD — Part II: STAVRA Section 203.

When it comes to special interest sleaze, Section 203 of the Satellite Television Access and Viewer Rights Act (STAVRA) is just an absolute brilliant work of art. We like to talk about how much money cable throws around, about Comcast Chief Lobbyist David Cohen golfing with President Obama, yadda yadda yadda. But that is just crude muscle.  Getting a blatantly anti-consumer provision inserted in a pro-consumer bill behind the scenes, and getting it rammed through by a combination of obscurity, chicanery and log-rolling, is where that army of lobbyists earns their 6-and-7 digit salaries.

 

I gave the whole bloody history in The War on CableCARD Part I: More Background Than You Can Possibly Imagine. To review, Section 203 of Stavra (and its matching provision in the House STELLA 2014 bill) cripples CableCARD  by eliminating the “integration ban.” This effectively ends any hope third party devices will compete with the cable industry, and we remain stuck leasing digital video recorders (DVRs) and set-top boxes (STBs) and other equipment and services from cable operators rather than owning our own or using cheaper, better rival services. Consumers pay over $1 billion in rental fees annually to cable operators for equipment they could otherwise own. So eliminating the integration ban (and thus killing CableCARD) pretty much condemns consumers to keep getting gouged for the foreseeable future just when independent equipment like the TiVo Romaio is finally starting to take off.

 

To add to the special interest sleaze factor, Section 203 of STAVRA converts a pro-consumer bill (that was originally a lot more pro-consumer) into a billion dollar rip off of consumers for the profit of one of the most loathed industries in America. And it does so in such a subtle way that it is almost impossible to detect. AND it comes with a fake pro-consumer ‘solution’ so the cable industry (and, more importantly, members of Congress seeking cover) can claim to have the best interests of consumers at heart.

 

Happily, it has an easy fix and a champion to convert this back into an actually good pro-consumer bill and have this blow up all over the cable guys so that they will be hoist by their own petard. Oooh, such justice would be sweet. And eminently achievable.

 

If you want the short version of this, without the appreciation of all amazing special interest sleaziness, you can see these Public Knowledge blog posts: here, here, here and here. But if you want the full TotSF treatment with all the wonk and snark you’ve come to expect from yr hmbl obdn’t blogger, then see more below . . . .

 

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My Insanely Long Field Guide To The War On CableCARD — Part I: More Background Than You Can Possibly Imagine.

We often talk about the power of cable lobbying in the context of big proceedings like network neutrality. But where the real power comes, and where consumers routinely get screwed the most, happens off-screen. Because people hardly ever know what is happening, cable lobbyists play an outsized role in working their magic and making it legal to find new ways to screw over subscribers. Nothing illustrates this better than the fight over the Satellite Television Access and Viewers Rights Act (STAVRA). As my Public Knowledge colleague John Bergmayer explains in this blog post, unless Congress passes STAVRA, a lot of satellite TV subscribers will lose access to some of their broadcast channels. Since Americans totally freak out if they cannot watch their favorite show, and channel this rage to their members of Congress, that makes STAVRA “must pass” legislation.

 

The cable industry lobbyists have managed to append this bill designed to protect consumers a little gift to themselves. Cable operators make over $1 billion a year on equipment rentals to subscribers. Section 203 of STAVRA eliminates the FCC rule (“the integration ban”) that makes it even vaguely possible at the moment for people to avoid these rip off rental fees and actually buy your own cable set top box (STB) or digital video recorder (DVR) using something called CableCARD.

 

From a policy wonk perspective, I have to say that Section 203 of STAVRA is a work of art. Unless you know what to look for, you will never find it by flipping through the bill. And unless you know the whole background on how the cable industry has frustrated the effort to get competition in the STB and cable device attachment business, you would never know how the cable arguments about how CableCARD doesn’t work are self-serving baloney. And, best of all, Section 203 contains a fake solution so members of Congress and the cable lobby can pretend this will make things better, rather than continue to screw consumers out of hundreds of millions of dollars in cable fees annually.

 

Hence the need for two insanely long posts. But since we are talking about consumer rip offs of over $1 billion a year, I kinda hope you will consider it worth reading. Here in Part I, I will give you everything you need to know about the history of how cable has ripped us off on equipment rental fees despite Congress passing two separate laws (here and here) to make it possible to actually own equipment and avoid this nonsense (which worked from 1992 until we went digital), what the heck the “integration ban” is, and why CableCARD — lame as it is — actually does make things mildly better and is picking up steam as a result of stuff the FCC did back in 2010.

 

In Part II, I will cover the current fight over the Section 203 of STAVRA, what makes Section 203 such an amazing work of art and how Senator Ed Markey (D-MA) is standing up for consumers on this. With help, Markey can actually flip this around and convert this from a gift to the cable industry to something that would genuinely help consumers by making the promise of stand alone STBs and other cable equipment real. But, at a minimum, Markey needs help getting the bad provision stripped from the bill so we can at least keep what we have and keep working to make it better.

 

Part I with all the background you need to understand Part II below. You can find Part II by clicking here.

 

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President Obama Says Some Good Things About Net Neutrality and Intellectual Property.

Everyone likes to get mad at President Obama these days. So I figured I would briefly highlight some good things Obama said during this Town Hall Meeting last week while I was off doing the Jewish holiday thing. After the holiday, I saw an email with the subject: “Obama Talks About Net Neutrality & Intellectual Property.”

 

I am sufficiently weird that “Obama Talks About Net Neutrality and Intellectual Property” is probably the most irresistible clickbait headline for me that I can think of, so of course I was hooked.

 

Speaking of clickbait, more below . . . .

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Wheeler: “We Now Return To Our Transition of the Phone System Already In Progress.”

In the last two days, Federal Communications Commission (FCC) Chairman Tom Wheeler has made back-to-back speeches that on their surface appear as dissimilar as could be. First, he gave this speech at the Fall 2014 COMPTEL Show. The next day, he gave this speech at the 32nd Annual Everett Parker Lecture. Dig a little deeper, however (and keep in mind what I have previously said about Tom Wheeler signaling what he wants to do if anyone actually pays attention) you notice some startling commonalities between these two speeches. Notably, this is the first time Wheeler has brought up the transition of the phone network in a serious way in a long time. And, in both speeches he made it very clear that transition of the phone system to an all IP platform does not end the FCC’s role.

ITo summarize my take aways:

1. Wheeler wants to shift the FCC back into working on the IP Transition despite the fact that AT&T is not going to have its pilot project ready until the second half of 2015. It is, after all, the thing he came to the FCC to do in the first place before net neutrality and Comcast/TWC essentially hijacked 2014.

 

2. While the nature and form of regulation will change, the FCC will continue to play a critical role — during the transition and after the transition — both in promoting competition and protecting consumers.

 

3. That Network Compact Wheeler keeps talking about? He really means it. When he leaves the FCC, he wants to leave an agency that still protects network users under this fundamental set of values.

 

A bit more below . . .

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Forbearance Redux — Still Easy Peasy

As the groundswell for reclassifying broadband as a Title II telecommunications service grows, the arguments against reclassification have grown increasingly shrill and desperate. Like Democrats frantically emailing supporters to try to hold the Senate, the National Cable Telecommunications Association (NCTA), has been flooding DC radio stations with advertising denouncing public infrastructure and calling for the privatization of our roadways in an effort to whip up anti-Title II sentiment (I notice their newfound embrace of Ayn Rand does not include repeal of poll attachment subsidies). As I’ve noted previously, only inside-the-beltway does anyone think “death to public roads, death to your right to clean water, and lets deregulate energy so we can have the lights flicker when the wind blows” is a winning argument. But panic does things to people . . .

 

Which brings me back to the arguments about “forbearance.” I blogged last July that the FCC can forbear fairly easily from any provisions of the Communications Act it thinks shouldn’t apply to broadband if it reclassifies broadband as Title II. As my employer Public Knowledge has pointed out at length in our official comments, this is neither necessary or good policy. Most of the provisions the anti-Title II crowd point to as potentially crushing the spirit out of Broadband Equestria (“Broadband Is Magic!”) have been effectively deregulated already for traditional telephone service, and other provisions actually support good stuff like Universal Service Fund or privacy rights for consumers. Nevertheless, if the FCC feels the need to indulge in broad forbearance, it has the authority to do so.

 

Needless to say, those invested in portraying reclassification as The Death Of Freedom As We Know It do not take kindly to having their nonsense called out in plain English, with lots of links to the relevant documents. Some folks have therefore devoted some considerable effort in the last few months to explaining why, all cited evidence to the contrary, forbearing from Title II would be Utterly Impossible.

 

So I find myself once again revisiting this topic. Happily, the arguments break down into 2 basic categories:

 

  1. None of the precedent I cited applies anymore because of the “Qwest Forbearance.”

 

  1. There is something magical and exceptional about broadband that makes it impossible to forbear here where it would be contrary to the interests of the carriers, but forbearance would be easy-peasy in any case where carriers want forbearance.

As I shall explain below, argument #1 relies on a fundamental misunderstanding of how administrative law works (and a failure to read any recent forbearance cases, which address this issue squarely and reject this argument), whereas argument #2 relies on a fundamental (and rather self-serving) misunderstanding of how the forbearance statute works.

 

More below . . .

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Reliability Rather Than Rainbows — Why Title II Remains the Best Option for Net Neutrality.

[Reprinting here a blog post published last week by my employer Public Knowledge.]

Recently, the Federal Communications Commission (FCC) published a blog post describing the “rainbow of policy and legal options” available to protect the open Internet, contrasting them to other “monochromatic options.” Reading this blog post reminded me of the quote apocryphally (and incorrectly) attributed to Winston Churchill:   “Americans will always do the right thing – after exhausting all the other alternatives.” While I applaud the FCC moving in the right direction on policy, I hope the FCC does not exhaust itself chasing the policy rainbow when the right thing – drab and monochromatic as it might be – continues to stare them in the face.

On the positive side, the FCC’s blog post reflects an understanding that the FCC’s original proposal from May, permitting paid prioritization (aka “Fast Lanes”) under a ‘commercial reasonableness’ standard will not do the job of protecting the open Internet. The political reality has also shifted, thanks to a tremendous public outcry in favor of recognizing that broadband is the essential service of the 21st Century, a fundamental service that everyone increasingly relies on and therefore – to use the legal expression – is affected with the public interest. Wheeler’s own writing on the network compact likewise recognizes this fundamental principle, which has made his resistance to embracing Title II and insistence on exhausting all other option all the more frustrating.

Judging by the FCC’s blog post, we have made progress since May. Title II has gone from a reluctant inclusion in response to public outcry to something “very much on the table.” But the FCC continues to look for something that will spare it the embarrassment of admitting the agency went down the wrong path ten years ago when it reclassified broadband as a Title I information service, and continues to be distracted by its bright shiny new Section 706 authority.

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I Summarize (Some of) My Net Neutrality Arguments in 15 Minutes

Back in August, I spoke about network neutraliy as part of a panel the Federal Communication Commission (FCC) Consumer Advisory Committee. My opening 15 minutes hit most of what I think are the important (and often overlooked) arguments around network neutrality. Specifically:

1. In terms of real world experiments, the service that has never been Title II is cable television. The service that has always been Title II is wireless voice (or, as we telecom folks call it, “Commercial Mobile Radio Service,” (CMRS)). As we know, consumers loooooove their cable television provider more than any other service, and hate wireless as completely not innovative. Oh wait, other way around.

2. Net neutrality is extremely important for maintaining diversity of voices. Not simply the ability of commercial entities to compete on a level playing field, but the ability of anyone to speak without an intermediary. When we eliminate that, even with the best of intentions, we destroy something that makes the Internet special.

3. Title II is a flexible and well understood tool for protecting consumers, protecting diversity of voices, and protecting competition. Title I and Section 706 are a roll of the dice with our fundamental rights.

This is not a comprehensive list of arguments in favor of net neutrality by any means. I also recognize that “Harold Feld Talks For 15 Minutes About Net Neutrality” is probably the Worst. Clickbait. Headline. EVAR! But I hope some of you will find it useful and entertaining.

 

Stay tuned .  .  . .

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The Comcast Witness Protection Program and Misplaced Rage.

There is a style of article I find online occasionally that takes a classic work of film or literature and tries to flip your idea about who are the good guys and who are the bad guys, or vice versa. For example, this piece explaining why Glinda the Good Witch is really the villain of the Wizard of Oz and the Wicked Witch of the West is just an innocent woman wronged.

 

I thought of that when I saw recent pieces by Randolph May and Geoffrey Manne explaining how the Federal Communications Commission (FCC), by complying with its rules and doing its job soliciting input on the Comcast/Time Warner Cable from stakeholders scared to come forward for fear of reprisals, makes the FCC the bad guy and Comcast the innocent victim. Some of this concern seems to flow from a misunderstanding of the law. The FCC can’t act on anything outside the public record, so the concern that Comcast won’t get to make its case because of some body of secret evidence is groundless.

 

In addition – and this is why I’m particularly bitter here – Comcast set the precedent more than ten years ago for having the FCC look at stuff outside the public record as part of a merger review, and the D.C. Circuit affirmed it when I challenged it as a due process violation. So even if it did make a practical difference, the D.C. Circuit says it’s totally OK (at least when exclusion of evidence from the record favors Comcast).

 

Nor is this process so unusual as my Opposite Numbers (as I call my colleagues on the Libertarian side) believe. True, this is the first time the FCC actually listened to me (and others) and publicized the relevant FCC rules (although, as I explain below, I don’t think I actually had much to do with this). But this is also a rather exceptional merger. As for use of the relevant procedures, my experience is rather contrary to that of Randy May. I’ve not only urged the FCC to use (and publicize) the relevant procedures, I’ve invoked them.  Nor is it unusual for the FCC to solicit input from stakeholders.

 

Below, I offer an alternate perspective and deal with the various objections my Opposite Numbers raise for why they think the FCC shouldn’t be telling stakeholders afraid of retaliation to come in and speak off the record.

 

More below . . .

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Is Comcast’s Awful Service Grounds For Blocking The TWC Deal? Yes, Actually.

The last few months have brought us a spate of Comcast horror stories and Comcast-hate. As captured by this totally not safe for work “Comcast — We Don’t Give a F—“ video from Funny or Die, the announcement that Comcast would acquire Time Warner Cable (TWC) has brought to boil a great deal of simmering resentment. Most recently, a recording of a subscriber spending 20 minutes trying to disconnect his Comcast service has prompted some investigating into Comcast’s service and employment practices. In particular, Adrianne Jefferies at  The Verge has been running an excellent series called “Comcast Confessions” based on hundreds of interviews with current and former Comcast employees showing that these long-standing customer service problems are not a blip but the result of systemic problems and deliberate business and strategy decisions pursued by the company (first three articles published so far herehere and here). I want to highlight this article in particular that puts together the pieces and shows how the TWC acquisition makes things worse.

 

From an academic standpoint, the wealth of data coming to light provides a great study on how conflicting economic incentives and difficulties in melding together a giant company by merger create awful customer service despite the persistent efforts of Comcast top management to improve customer service. But this blog isn’t about industrial organization and business practices for the fun of it. For me at the moment, the hot question is: does Comcast’s awful customer actually provide legal grounds for the FCC to block the Comcast/TWC merger?

 

Actually, yes. And I don’t just mean in the political “so many people hate Comcast the FCC can designate for hearing and survive Comcast’s political pushback.” I mean in the legal “the FCC has jurisdiction over this and should designate, as an issue for hearing, whether Comcast’s proposed acquisition of Time Warner Cable is contrary to the public interest and in violation of various provisions of the Communications Act” sense. And yes, I get that customers are pretty much equally dissatisfied with TWC, which would prompt one to think this should be a wash as “not merger specific” (i.e., service is crappy before merger and crappy after merger, so who cares — other than customers?)  However, as I shall elaborate below, the unique nature of Comcast’s pervasive problems — combined with several other factors — makes this a rare (but not unprecedented) case where the nature of the problems is both merger specific and subject to FCC review.

 

And while I would not normally suggest that such problems alone could block a merger, it becomes one more factor in a deal that already has a lot of problems. At a minimum, it becomes one more set of potentially pervasive behavioral conditions that would prompt Comcast to walk away whether or not the FCC actually designates for hearing, especially if lots of consumers write to the FCC about it (hint, hint).

 

More below . . .

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What Do We Learn From Big Data Visualizations Of Net Neutrality Comments?

“Big data” and “Data visualization” are all very trendy these days. As with all tools, data analysis and data visualization require appropriate context to make sense. As my old mentor Professor Robert Seidman liked to caution: “you generally find the most firetrucks at the biggest fires.” Understanding context tells you cause and effect so that you don’t try to fight fires by eliminating firetrucks.

 

Which brings me to the analysis of the public comments in the FCC’s ongoing network neutrality proceeding. The FCC has received about 1.1 million comments so far (we can expect more when replies come due in September). To facilitate further discussion and debate, the FCC released these comments in 5 XML Files that make doing searches and analysis much easier. We have started to see some data crunching of this data, with a range of results. As someone with 15 years experience with FCC proceedings, I can put these in some context.

 

Briefly, the volume of individual comments and the analysis shows a high level of engagement. More importantly, the comments do not simply reflect the talking points we see in the mainstream media and debated in DC policy circles. A lot of people are actually thinking about this issue and deciding why it is important to them personally, and it has nothing to do with cat videos or Netflix. For a lot of people, this debate goes to fundamental values of basic fairness, opportunity, the American Dream, and the preserving free expression and diversity of views.

 

Perhaps most tellingly, the number of individual comments opposing net neutrality regulations as unnecessary and overly burdensome government regulation of the Internet is so small as to be statistically irrelevant to data visualization analysis. Those people who are engaged on this and care enough to comment all run one way — they want the FCC to adopt rules that prohibit paid prioritization and protect an open Internet.

 

I unpack this below . . .

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