Tales of the Sausage Factory

Congratulations to Gene Kimmelman, and to the American People.

I haven’t been posting much and will continue to be busy for the next while, owing to Passover and bunch of other things. But I had to give a brief post of congratulations to Gene Kimmelman on his appointment to the Department of Justice as Chief Counsel for Competition Policy and Intergovernmental Relations. Gene has been a tireless advocate for consumer protection and pro-competitive policies as the head of Consumers Unions Washington office. His addition to the DoJ in this critical office is good news for those who want to see policies that genuinely promote competition rather than deregulation for its own sake.

Stay tuned . . . .

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Tales of the Sausage Factory

Update: Cable Cos Respond, FCC Reviewing.

To update on the question of whether cable companies think they are above the law. According to this piece by Ted Hearn in Multichannel News, all 13 cable cos responded to the FCC’s letter of inquiries (LOIs) issued in response to the consumer complaints. The FCC is apparently now reviewing the adequacy of the response.

Mind you, according to the article, we are still likely to find that the cable cos responded in a less than thorough way, and will necessitate the FCC coming back with another request. But this is merely the usual fun and games by which large companies avoid obeying the law, rather than an outright statement of defiance that the law simply doesn’t apply to them.

I suspect the cable cos will do their best to run out the clock, in the hopes that the next FCC will be more tolerant of their exercise of market power. Whether that is true or not (and it will certainly NOT be true if either Adelstein or Copps is chair), I would hope that all the FCC Commissioners, but especially the two Democrats, back Martin on this investigation and make it clear to the cable cos they will not tolerate any efforts to run out the clock.

As President-elect Obama observed at his first press conference: “The United States only has one President at a time.” Similarly, the FCC has only one Chairman at a time. Certainly when it comes to investigating consumer complaints, all FCC Commissioners need to stand united in making it clear to industry that a time of transition is not a time when you can get away with screwing consumers.

Stay tuned . . .

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Tales of the Sausage Factory

The Comcast Bandwidth Cap — Blame Florida (and lack of competition and refusal to upgrade).

As all the world knows by now (the world that follows this anyway) Comcast has imposed a new bandwidth cap, limiting downloads to 250 GB/Month. Unsurprisingly, some folks blame the FCC’s recent decision on prohibiting Comcast from blocking BitTorrent and other p2p applications as pushing Comcast to make this change, although Comcast itself has repeatedly stressed that it was not compelled to do this and planned to do this anyway so no biggie.

What the world did not know, but I thank PK’s Art Brodsky for finding, is that Comcast agreed to clarify its cap as part of a settlement with the Florida Attorney General’s office. As some of us have observed for awhile now, Comcast long had a policy of cutting off “bandwidth hogs” for exceeding a capacity cap while refusing to say what the actual capacity cap was. Well, on July 29, Comcast agreed to make clear their capacity cap and pay $150K in fines.

I highly recommend reading the full terms of the settlement — particularly the factual background which Comcast has agreed is true (without, of course, admitting wrongdoing). Of greatest import, until it announced the 250 GB/month cap, Comcast did not have an actual hard and fast cap. Rather, according to Paragraph 5 of the factual stipulations, Comcast simply knocked off the highest 1000 users regardless of their actual bandwidth usage or geographic location. Comcast is almost certainly telling the truth when it says the highest 1000 users were atypically intense bandwidth consumers. duh. Of course the top 1000 out of 14.4 million will be at the high end of the curve.

No, the more interesting question is what the hell kind of a system is it where Comcast simply goes after the top 1000 users no matter how much they actually use, and why Comcast would adopt such a policy if it wants to reasonably manage network congestion? It seems rather . . . inefficient and arbitrary. Unless, of course, one is trying to save money running a crappy network and generally discourage high-bandwidth use.

Apparently, the Florida Attorney General also thought a policy that simply shut off the top 1000 users every month regardless of actual use or congestion did not meet proper standards of consumer protection or “reasonable network management.” The settlement requires Comcast to state clearly what it means by “excessive use of capacity” in its acceptable use policy (AUP). That’s it (as well as paying $50K for attorneys fees and other associated expenses to the AG for bring this action). Comcast has total discretion to set a limit or have a limit or change a limit, as long as there is (a) an actual fixed limit, and (b) Comcast clearly communicates to its subscribers what that limit actually is. This is in line with the settlement reached last year between Verizon Wireless and the NY AG’s office that Verizon would no longer advertise its wireless internet access package as “unlimited” but would provide a hard monthly cap.

Which explains why Comcast is not going around telling the world that it adopted bandwidth caps because of the big bad awful FCC and their wicked regulatory ways. They didn’t. Rather, Comcast was using an even more ridiculous bandwidth cap the entire time, and they were required as a matter of consumer protection law in Florida to actually come clean with a real number so customers can find out what they are paying for and get full value for their monthly subscriber fee. It seems Comcast has sense enough not to play those kinds of games on something so easily verifiable. Good for them. Nice to see they learn from experience.

Stay tuned . . . .

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Tales of the Sausage Factory

And People Ask Me Why I Don't “Trust the Market . . . .”

From recent headlines:
Now that the FCC hearing in Standford is over, Comcast had dumped the idea of a consumer “bill of rights” for consumers. Instead, apparently picking up on Commissioner McDowell’s confusion over ICANN and how it works, Comcast has announced it is joing the Distributed Computing Industry Association (DCIA). While purportedly eager to include us regular folks in the dialog, consumer interests will not be represented in the initial discussions.

Comcast also is looking at bandiwdth caps, but that’s in addition to “managing” p2p, not instead of managing p2p.

Meanwhile, Earthlink is apparently walking away from Wireless Philly, and may simply shut the system off unless the city buys it out.

And folks ask me why I don’t “trust the market” when I am skeptical that big companies will stick by their commitments….

Stay tuned . . . .

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Tales of the Sausage Factory

YAMA (“Yet Another 'Mission Accomplished'”) On Wireless Carterfone.

“Mission Accomplished” has become a useful catch phrase denoting a declaration of victory so premature as to be ironic, comical, and/or tragic. Sadly, Kevin Martin’s decision to circulate an Order denying the Skype Petition is the latest YAMA (for “yet another ‘Mission Accomplished’”). To refresh folk’s memories, in the Skype Petition, Skype asked the FCC to enforce the Broadband Policy Statement against wireless broadband networks: specifically, the part that says that consumers have the right to attach any device to the network that will not harm the network, and run any application of their choosing.

While not official, Martin has stated that he has circulated a draft Order dismissing the Petition, although Martin indicated at last week’s House 700 MHz hearing that he would dismiss the Petition “without prejudice” (meaning “not now, but try again later if things don’t improve”). Indeed, although none of the coverage of the 700 MHz hearing focused much on this, Martin’s statements and answers to questions indicate that he thinks (a) the C Block open device condition was the right thing to do, and (b) the FCC shouldn’t do anything else on “wireless Carterfone” until we see how the C Block open device condition works out.

While disappointing, this decision is hardly surprising. And, as usual, it is weirdly consistent with Kevin Martin’s First Church of the Market, Reformed ideology and a dash of realpolitik (waste not, want not after all, and if you can make what you think is the right decision serve your political ends, so much the better). Lamentably, Martin clearly has the votes from his fellow Republican Commissioners — although Tate appeared to hedge a bit. Nor do I expect there is much for Copps and Adelstein to do here, other then issue a strong dissent and make sure the damage (in the form of bad precedent) is limited. Indeed, there is a certain appeal to taking a dismissal without prejudice and living to fight another day rather than getting into a fight that may end up with stronger language a future Commission would need to overcome.

Some more analysis below . . . .

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Tales of the Sausage Factory

Whiny Techies or Dishonest Salesmen?

I cannot help but add a coda onto my latest article. Steven Pearlstein, econ columnist for the Washington Post, has written this piece on the recent complaints wrt to Comcast. To quote Mr. Pearlstein:

The latest rallying cry is “network neutrality.” This campaign started out with the legitimate goal of making sure that consumers could continue to access whichever services or content they want, rather than having to take those offered by the cable and phone company duopolists. But lately the campaign seems to have morphed into a broader demand that all consumers should be able to pay the same monthly fee for using the Internet, no matter how much bandwidth they use or how much their movie downloads and video chats are slowing service to everyone else in the neighborhood.

Perhaps this is the kind of economic illiteracy we should expect from people who get their information from “The Daily Show” and the Daily Kos. But isn’t it time for the rest of us to move on and acknowledge that the days of the online free lunch are over?

As you may imagine from my recent post, my complaint is not with charging more for more bandwidth, but for dishonestly promising me an “always on all you can eat” connection, then cutting me off when I use it all the time for all I can eat. I sent Mr. Pearlstein the following reply, reproduced below….

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