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Monday, November 24, 2014

Net Neutrality and the Comcast Monopoly

A couple weeks ago the president finally entered the net neutrality debate, giving the issue additional visibility. He said that the FCC should categorize the Internet as a public telecommunications utility and not some abstract "information service" as it is now.

Then corporate shills like Ted Cruz started saying dumb things like "Net neutrality is Obamacare for the Internet."

Without net neutrality, Comcast would be free to slow the Fox News website to a crawl while running MSNBC at top speed.
The fact is, net neutrality is what everyone, liberal or conservative, expects the Internet to be. Net neutrality would prevent broadband companies like Comcast from charging for Internet "fast lanes." Without it, Comcast could, for example, slow the Fox News website to a crawl while letting the MSNBC website (which Comcast owns as part of NBCUniversal) run at full speed.

More and more people are getting their news from the Internet, rather than broadcast television or the radio. The FCC regulates radio and television stations as common carriers because they serve the public interest. As society comes to rely on the Internet as a common carrier it should be treated as one. Do you want the execs who run MSNBC to decide what news you should be able to read?

But it's more than just access to websites. With the rise of Facebook, Twitter, Instagram, Snapchat, Skype, and so on, it's clear that the Internet has supplanted the telephone as the primary communications channel for large segments of the population.

Government is giving Comcast preferential treatment over other ISPs.
And then there's the issue of equal treatment under the law. When the FCC made its regulations about the Internet back in the 1990s, there was no such thing as consumer broadband. Internet traffic was transmitted over standard telephone lines. That paradigm has been turned on its head: now Comcast is the one providing actual telephone service over broadband. Comcast has therefore become a telephone company and should be regulated as one. But government is giving cable companies like Comcast preferential treatment over ISPs that started out as telephone companies.

Once upon a time, AT&T had a monopoly over most telephone service in the United States. Their subsidiary, Western Electric, manufactured almost all the telephone equipment in the country. "Ma Bell" made you rent a telephone from them, charging much more than it was worth. They also charged you for every "extension" in your house. This vertically integrated monopoly was broken up into seven regional "Baby Bells" in 1984.

Comcast is in a similar position and exhibits similar behaviors. Like AT&T, it charges you more if you connect more computers to the Internet, or use a WiFi modem. While you can buy your own cable modems and set top boxes (similar to TiVo, but without the extra subscription fee), Comcast makes it extremely hard for customers to do so. By comparison, my ISP (the phone company) doesn't charge extra for having a WiFi modem or additional computers.

Cable TV rates have gone up four times faster than inflation.
But unlike AT&T, Comcast is mostly unregulated. That means they can raise their rates at any time, and they do. A lot. Since 1995 cable TV rates have gone up at four times the rate of inflation. Comcast likes to claim that they've been upgrading infrastructure and adding new channels, but I don't get Internet through them, I've had the same cable leading into my house for 30 years and I don't watch any of the hundreds of useless channels they keep tacking on. I'm getting nothing for that increased price.

When cable TV was regulated all channels but premium ones like HBO were unencrypted, making it easy to watch and record TV shows with your own equipment. But since deregulation, Comcast has stopped transmitting channels in "Clear QAM" (the digital equivalent of the old unencrypted analog NTSC signal), forcing customers to use Comcast equipment to watch and record TV.

And the "Just use satellite TV line" is bogus. There's just no comparison between cables and satellite and broadcast TV: satellites are hostage to the weather and they're totally one way. Broadcast TV is worse; its coverage is extremely spotty and now that it's fully digital a lousy signal doesn't mean you get a snowy picture, it means you get no picture at all.

The Time Warner acquisition would give Comcast a broadband cable monopoly over two-thirds of the country.
Comcast has a monopoly on broadband and cable TV service over huge sections of the country, yet they're trying to extend their domination of the US market with their acquisition of Time Warner cable, which would give Comcast two-thirds of the broadband cable market in the country. They try to justify the acquisition by claiming that they don't compete with Time Warner -- but the whole reason that they don't compete is that cable companies are granted local monopolies!

Comcast is quickly becoming a vertically integrated nation-wide monopoly, in much the same way that AT&T was: Comcast controls the production of movies, TV programs and news through Universal Studios and various television production companies. It distributes programming through its own television network (NBC). And it delivers that programming to households through the cables it owns, and is granted monopoly status by cities across the country (mostly through acquisitions over many years).

In the early years of cable, cities used to exercise a great deal of control over providers, but after cable deregulation and acquisition of all local cable companies by national behemoths like Comcast and Time Warner, the cable companies call all the shots.

Internet service is usually priced by throughput: for example, in our area Comcast charges $30/month for 6 Mbps, $40/month for 50 Mbps, and $78/month for 105 Mbps. Users pay a sliding price based on the data rate. Now, Comcast doesn't actually promise you'll get that data rate, and they threaten to cut you off you use too much data. Comcast is also trialing data usage plans that charge you more if you exceed certain limits.

Comcast wants to make you pay twice to stream from Netflix.
The point is, you pay to get data at the rate you paid for. But now Comcast also wants to charge Netflix and other companies (presumably HBO, now that it's launching its HBOGO service) to send you that data at the rate you already paid for. And the only reason Netflix made a deal with Comcast is that Comcast has a monopoly position over such a large part of the country.

To pay Comcast, Netflix and HBO will have to charge more for their services. But Comcast isn't my Internet provider. Why should I pay more for Netflix because Comcast is extorting Netflix? Netflix isn't paying my ISP anything extra.

And what about YouTube? If Google doesn't pay Comcast blood money to send YouTube videos produced by Internet users for the entertainment of other Internet users, will Comcast throttle YouTube into uselessness? And what about all the other services that are migrating to the Cloud, like backups, your photos, your music, etc. Will Comcast charge every company that sends any data to their customers? I mean, if they can charge Netflix, why can't they charge everyone a fee to get access to their customers?

Comcast is engaging in that practice that conservatives consider the most heinous of all sins when the government does it: double taxation. Comcast wants to make you pay twice for getting your data: once for receiving it, and once for Netflix to send it to you.

In recent years Time Warner has cut off channels in several markets across the country (Showtime in Kansas City, NBC, CBS and ABC in various cities around the country). Comcast owns NBC and its news channels, MSNBC and CNBC. When the merged Comcast/Time-Warner company enters negotiations with Disney, ESPN or Fox, will it do the same to those channels? Will it also cut off Fox news sites and ESPN video streams as a negotiating tactic? Without net neutrality, nothing could stop them except "negative feedback from the customers." But since Comcast has a monopoly, their customers have no real alternatives.

In essence, Comcast is demanding "protection" money from its competitors and everyone else on the Internet. They're telling Netflix (you'll have to imagine the in a Jersey gangster accent), "Dat's a nice movie youse got dere. It'd be a shame if dose packets got lost..."

2 comments:

juris imprudent said...

Read and then comment.

Larry said...

my guess is: he no readee, he no thinkee, he no commentee, forever and ever. Nikto is the consummate shit-and-run poster.