July 2008 – Richard Bennett

No skin in the game

An experiment in publicly-owned fiber to the home in Utah was on the brink of bankruptcy in April. The project was oversold and underfunded, and found itself at an impasse where it had to go back to the taxpayers for a bailout or liquidate. They built it, but nobody came. A big part of the problem, apparently, is that the project was saddled with a structural separation ideal that forced the public infrastructure to act as a wholesaler with third parties providing retail services. See The case for UTOPIA and iProvo: Double down or cut bait?

From the beginning, UTOPIA and iProvo either chose, or were saddled with, a business model that has proved least successful in fiber rollouts, analysts say.

In 2001, the state Legislature passed the Utah Municipal Cable Television and Public Telecommunications Services Act, which allows cities to construct telecommunication infrastructure but not become the retail service provider for those systems. Instead, they have to use a wholesale model in which they build the digital pipe and then lease the lines to retail service providers such as Mstar.

That leads to underselling of the system and friction between the municipality, which needs to see a return on its multi-million dollar investment, and the service providers, which haven’t risked as much, says Michael Render, president of RVA, a market research company that focuses on private and public fiber systems.

“They don’t have skin in the game,” he said. “The more difficult ones have been the wholesale systems such as iProvo and UTOPIA.”

Projects like this are similar to publicly-financed sports arenas. They’re great if you happen to be a fan of the sport, but not so great if you’re simply a hapless taxpayer footing the bill for somebody else’s entertainment. Not to mention the mismanagement that goes hand-in-glove with free money. In order for muni networking to be successful, it apparently needs to be run as a hard-core vertically-integrated monopoly, and that’s pretty distasteful.

The resolution for iProvo was a sale to a private company:

Leaders of Provo City and Broadweave Networks were harder to find Monday (June 30th) than cheap gas.

They were holed up in city offices hammering out the details of the $40.6 million deal that privatizes the fiber optic network, in turn taking the money-losing venture off the city’s hands. The deadline was Monday and by now, Broadweave owns the system — we think.

“I’m holding my breath hoping that it gets done,” said Councilman George Stewart, who was also awaiting word Monday. There was supposed to be a small ceremony, but nothing had been made public, even to council members, by 5 p.m. Monday. The council approved the sale in June.

The sale was concluded in July.

UPDATE: UTOPIA lumbers along, with only one city, Payson, voting to leave the consortium. Take-up rates have been much lower than anticipated, due to good competitive options, but supporters continue to have high hopes for its ultimate success.

For an up-beat view, see the Free UTOPIA wiki and its links. One bright spot is a citizen advisory board, U-CAN, which brings fresh ideas to the civil servants.

Technorati Tags: Internet, broadband, net neutrality

Will Google be the FCC’s next target?

Truth is stranger than fiction. This report in ZDNet suggests that Google may well find itself in the crosshairs of net regulators gone wild: Google clearly wants the FCC to make sure that other private companiesâ€™ networks are open equally to all Internet services. Now, it will be interesting to see if that applies to … Continue reading “Will Google be the FCC’s next target?”

Truth is stranger than fiction. This report in ZDNet suggests that Google may well find itself in the crosshairs of net regulators gone wild:

Google clearly wants the FCC to make sure that other private companiesâ€™ networks are open equally to all Internet services. Now, it will be interesting to see if that applies to networks in which Google is involved.

On Friday, the Commission takes up the question of whether Comcast Corp., the nationâ€™s largest provider of high-speed access to the Internet, is â€œsecretly degrading peer-to-peer applications,â€™â€™ as the FCC agenda puts it.

As Multichannel News reports, Google Inc. is pressing the Commission to provide clear guidance to broadband network owners on acceptable ways of managing Internet traffic.

Google is shortly to become a network operator, a partner with Comcast in the Clearwire 4G network. Google intends to secure itself pride of place with a Google button on the Clearwire phone, a violation of all that is holy and neutral. This should be fun.

Technorati Tags: Google, FCC, net neutrality

Kevin Martin’s secret regulations

As the crescendo of criticism builds against the FCC’s pending publication of its new rules for Internet access providers, the New York Times emerges as the sole source of pro-FCC coverage. They publish a bizarre Op-Ed by Free Press chairman Tim Wu equating competing carriers with OPEC and mistaking the general trend in broadband prices … Continue reading “Kevin Martin’s secret regulations”

As the crescendo of criticism builds against the FCC’s pending publication of its new rules for Internet access providers, the New York Times emerges as the sole source of pro-FCC coverage. They publish a bizarre Op-Ed by Free Press chairman Tim Wu equating competing carriers with OPEC and mistaking the general trend in broadband prices – sharply down – with the trend for gas prices, which goes in the opposite direction entirely:

AMERICANS today spend almost as much on bandwidth â€” the capacity to move information â€” as we do on energy. A family of four likely spends several hundred dollars a month on cellphones, cable television and Internet connections, which is about what we spend on gas and heating oil.

Here’s what’s happening to broadband prices at Comcast:

High-speed Internet revenue increased 10% to $1.8 billion in the second quarter of 2008 from $1.6 billion in 2007 reflecting a 12% increase in subscribers and a 3% decline in average monthly revenue per subscriber to $42.01, reflecting the impact of additional bundling and the recent introduction of new offers and speed tiers.

I’d love to see a 3% monthly decline in gas prices, even at the same volume level. But the Comcast figures show consumers upgrading to higher speed tiers (like Blast, which I measure at 28 Mb/s download speed) and still seeing an average decline in prices. Wu isn’t talking about life in the Real World^TM.

Martin himself held a pow-wow with Times reporters, hoping to evoke some of that old-time populism that the nation’s elite daily is so good at. BITS blogger Saul Hansell reports on Martin’s faulty facts and shoddy analysis:

â€œThe network operators can recoup their investment in the network and can charge for access to network services, but consumers have complete control over the devices and content that donâ€™t have anything to do with investment in the underlying network,â€ he said.

I asked about reports that AT&T now bans all use of peer-to-peer networking software on its wireless data network. It also bans some video services, like the Slingbox feature that lets you watch your home television signal on your cellphone.

Mr. Martin declined to answer. His view is that the commission should not publish explicit regulations. Rather, it should address complaints that are made, as it did with the Comcast case.

â€œThe commission is very careful in that we look at the particular facts that are in front of us. We are not judging the next case,â€ he said. â€œHard and fast rules can actually be over- and under-inclusive, and they can also have adverse impact.â€

Mr. Martin was asked whether the commissionâ€™s approach will push more Internet providers to start to impose caps on how much bandwidth consumers can use.

He said he wanted to reserve judgment on that trend. He seemed comfortable with Internet providers offering services with limits, so long as they are clearly stated.

So we have this new regime for Internet access providers where every move they make is to be judged according to a list of secret regulations. If ever there was a recipe for stalemate, this is it.

Technorati Tags: net neutrality, FCC, broadband, Comcast, regulation

Federal umpire blows a call

The Wall St. Journal joins the chorus of Bronx cheers aimed at Kevin Martin, the one-eyed federal umpire who blew a call that wasn’t even close: Those who would use Comcast’s actions to argue for more Internet regulation have misidentified the Big Brother problem. It’s not the private sector they should be worried about. There’s … Continue reading “Federal umpire blows a call”

The Wall St. Journal joins the chorus of Bronx cheers aimed at Kevin Martin, the one-eyed federal umpire who blew a call that wasn’t even close:

Those who would use Comcast’s actions to argue for more Internet regulation have misidentified the Big Brother problem. It’s not the private sector they should be worried about. There’s no evidence that Comcast was trying to suppress a political view or favor one of its own services. By all appearances, the company’s policies were motivated by nothing more than making sure a tiny percentage of bandwidth hogs didn’t slow down Internet traffic for everyone else on the network.

Giving the government more say in network management, by contrast, introduces all kinds of potential for political mischief. Net neutrality is a slippery slope toward interventions of all kinds — not merely over access but ultimately over content. Naturally, the most powerful lobbies will have the largest sway. Mr. Martin’s decision in this case may well be driven by his own political hostility to Comcast and the cable industry for resisting some of his other policy priorities.

Mr. Martin’s bad instincts notwithstanding, the FCC’s job is not to determine business models in the private sector. The community of Internet service and content providers has proven itself more than able to work out problems on its own as Web use has exploded. If there are bottlenecks in the future, some providers might choose to block file-sharing services at certain hours of the day. Others might opt for some kind of metered or tiered pricing. Banning these options will only reduce incentives to upgrade networks and launch new services.

Regulators would do better to focus on keeping the overall telecom marketplace competitive. If Comcast customers don’t like the company’s network management policies, they’re free to take their business to Verizon, or AT&T, or some other Internet service provider. A World Wide Web run by Kevin Martin and his political friends will leave us with poorer quality and fewer options all around.

Internet users are several times more likely to suffer from slowed or degraded service on account of their neighbors than their ISPs, so Comcast’s actions have been reasonable. And as many others have noted, the regulatory role is to resolve impasses in the technical collaboration process, not to substitute political insight for engineering knowledge.

Martin blew this one, there’s no doubt about it. We need instant replay in politics.

Technorati Tags: net neutrality, FCC, Comcast

Twenty Questions for the FCC

The FCC’s pending ruling against Internet Service Providers who manage their bandwidth in favor of fair access raises some questions. Here’s a list of questions rural ISP operator Brett Glass has raised.

Policy-based Evidence-making

Andrew Orlowski has outdone himself in this admirable summary of the FCC’s expected ruling on Comcast: The landmark decision draws together two strands of policy – one old and specific to the US, and one new and widespread. I’ve noted before how American politics are largely fought through symbolic gestures. Think of the bitter fights … Continue reading “Policy-based Evidence-making”

Andrew Orlowski has outdone himself in this admirable summary of the FCC’s expected ruling on Comcast:

The landmark decision draws together two strands of policy – one old and specific to the US, and one new and widespread.

I’ve noted before how American politics are largely fought through symbolic gestures. Think of the bitter fights over the wording on the US currency, or inscriptions on public statues. The Neutrality campaign was similarly engaged in a symbolic battle.

But the other aspect is more disturbing. Britain’s equivalent of the FCC, Ofcom, prides itself on what it calls “evidence-based policy making”. It may not always succeed, but it’s a tradition based on empiricism. With “Net Neutrality”, what we’re seeing is the opposite, where the direction is set on a hunch or intuition, or the angst of a mob, and the facts cherry-picked to support the conclusion. The definition of harm and “busting” are great illustrations. Call it “policy-based evidence-making”, if you like.

Indeed.

Technorati Tags: net neutrality, FCC, Comcast

Google is Dead

They don’t know it yet, of course. I’ve just checked the new alternative to Google, Cuil (pronounced “cool”) and found it amazingly accurate. They show me as the number 1 Richard Bennett and the number 1 Bennett. Very sweet, even though I’m only the number 12 Richard; that gives me something to strive for. UPDATE: … Continue reading “Google is Dead”

UPDATE: Esteemed BITS blogger Saul Hansell interviewed Cuil president Anna Patterson on her “36 hours of fame” and got an explanation of the site’s first day troubles: â€œWe were overwhelmed with traffic that was not the standard pattern,â€ Ms. Paterson said. â€œPeople were looking for their names a lot.â€

Doh.

The Soul of Kevin Martin

Declan McCullagh takes a good look at the legal and political issues around the FCC’s pending wrist-slap of broadband carrier Comcast in FCC probably can’t police Comcast’s BitTorrent throttling: If FCC enforcement against Comcast is illegal, why would Chairman Martin call Friday’s meeting? Only he knows for certain, but one explanation is that if the … Continue reading “The Soul of Kevin Martin”

If FCC enforcement against Comcast is illegal, why would Chairman Martin call Friday’s meeting? Only he knows for certain, but one explanation is that if the FCC is embarrassed when slapped down by a federal appeals court two years hence, Martin will have long since departed to a lucrative partnership at a law firm or private equity firm. (This is a customary exit path for FCC chairmen: Newton Minow went to Sidley Austin; William Kennard went to the Carlyle Group; James Quello went to Wiley Rein, named for ex-chairman Richard Wiley, where equity partners made an average of $4.4 million in 2006.)

Friday’s ruling may also end up as a cautionary tale for AT&T and Verizon, which as recently as last month seemed to be egging on the FCC to take action against their cable industry rival. But the same activists that have targeted Comcast before the FCC no doubt realize that AT&T’s terms of service limit “peer-to-peer applications”; Verizon Wireless flatly prohibits them; Verizon’s Fios service blocks incoming port 80. Another term for those network management practices is “Net neutrality violations.”

Motivation is interesting, and Declan’s probably right that Martin has a trick up his sleeve. My concern about this action is the precedent it would set. If the FCC is allowed to impose any madeup-on-the-spot rule that it fancies on companies with multi-billion dollar infrastructure investments, I can’t see the financial markets being too willing to part with the cash to engage in the continual upgrade that broadband networks require. The financial markets can tolerate many kinds of risk, but the political or career ambitions of Young Turk commissioners with the power to impose arbitrary sanctions isn’t one of them. Martin should sober up and look at the big picture instead of pulling the trigger on Comcast.

Don’t regulate, collaborate

FCC Commissioner Robert McDowell has written one of the most sober and sensible essays on the Internet’s present technical crisis in today’s Washington Post. With so many members of the Commission willing to jump into the breach with ex post facto rules and regulations, it’s good to see that there are some on the inside … Continue reading “Don’t regulate, collaborate”

FCC Commissioner Robert McDowell has written one of the most sober and sensible essays on the Internet’s present technical crisis in today’s Washington Post. With so many members of the Commission willing to jump into the breach with ex post facto rules and regulations, it’s good to see that there are some on the inside of the regulatory machine who have a sense of the Internet’s history. See Who Should Solve This Internet Crisis?

The Internet was in crisis. Its electronic “pipes” were clogged with new bandwidth-hogging software. Engineers faced a choice: Allow the Net to succumb to fatal gridlock or find a solution.

The year was 1987. About 35,000 people, mainly academics and some government employees, used the Internet.

This story, of course, had a happy ending. The loosely knit Internet engineering community rallied to improve an automated data “traffic cop” that prioritized applications and content needing “real time” delivery over those that would not suffer from delay. Their efforts unclogged the Internet and laid the foundation for what has become the greatest deregulatory success story of all time.

The Internet has since weathered several such crises. Each time, engineers, academics, software developers, Web infrastructure builders and others have worked together to fix the problems. Over the years, some groups have become more formalized — such as the Internet Society, the Internet Engineering Task Force and the Internet Architecture Board. They have remained largely self-governing, self-funded and nonprofit, with volunteers acting on their own and not on behalf of their employers. No government owns or regulates them.

The Internet has flourished because it has operated under the principle that engineers, not politicians or bureaucrats, should solve engineering problems.

Today, a new challenge is upon us. Pipes are filling rapidly with “peer-to-peer” (“P2P”) file-sharing applications that crowd out other content and slow speeds for millions. Just as Napster produced an explosion of shared (largely pirated) music files in 1999, today’s P2P applications allow consumers to share movies. P2P providers store movies on users’ home and office computers to avoid building huge “server farms” of giant computers for this bandwidth-intensive data. When consumers download these videos, they call on thousands of computers across the Web to upload each of their small pieces. As a result, some consumers’ “last-mile” connections, especially connections over cable and wireless networks, get clogged. These electronic traffic jams slow the Internet for most consumers, a majority of whom do not use P2P software to watch videos or surf the Web.

At peak times, 5 percent of Internet consumers are using 90 percent of the available bandwidth because of the P2P explosion. This flood of data has created a tyranny by a minority. Slower speeds degrade the quality of the service that consumers have paid for and ultimately diminish America’s competitiveness globally.

The Commissioner makes many of the points that those of us who’ve been involved in the development and refinement of Internet protocols for the period since Internet Meltdown have made: new applications have broken the Internet before. After the FTP crisis was averted by Van Jacobson’s patch, the Internet very nearly ground to a state of gridlock on the early 90s when HTTP 1.0 came along and opened too many TCP virtual circuits. That problem was averted by HTTP 1.1, which used fewer VCs more efficiently. We didn’t need government mandates to solve the problem, as everyone was motivated already.

The P2P crisis is already the focus of intense industry collaboration in the P4P Working Group sponsored by the DCIA and in the IETF. Whatever orders the FCC issues on the complaints against Comcast are going to be less helpful than these collaborative efforts, and will in all likelihood retard the course of the Internet’s technical evolution.

Don’t regulate, collaborate.

Technorati Tags: net+neutrality FCC broadband Comcast

Regulate first, ask questions later

Press reports on the FCC’s vote on the Vuze/Free Press petitions against Comcast suggest a peculiar outcome, where FCC orders Comcast to stop managing BitTorrent and to also tell the FCC how and when it manages BitTorrent: The FCC would require Comcast to stop slowing or blocking access to certain online applications, mostly video file-sharing … Continue reading “Regulate first, ask questions later”

The FCC would require Comcast to stop slowing or blocking access to certain online applications, mostly video file-sharing services such as BitTorrent. The company would also be required to provide more disclosure to consumers about its network management practices and provide more details to the FCC about how it’s blocked or slowed traffic in the past.

If the FCC is convinced the management is wrong, why ask for the data? And why only ask for the data after nearly a year of investigating and three raucous public spectacles?

Vuze recently changed its business model, providing search service for piracy sites such as Mininova and Pirate’s Bay:

In addition to Vuze.com, the new search box gives users the option to search third-party web sites, with Mininova, Sumotorrent, BTJunkie and Jamendo being preselected. With the exception of Jamendo, all of these also feature unlicensed content. In fact, Mininova was sued by Dutch rights holders just a few weeks ago. But Vuze CEO Gilles BianRosa told me that he doesnâ€™t think his company could run into trouble by searching these sources. â€œWe have considered the existing legal framework and feel comfortable about the addition of this feature to our new release,â€ he told me, adding that rights holders could use the search to add their platforms to the mix as well.

We have a curious outcome where the FCC is ordering carriers to provide free bandwidth to pirates.

Small, wireless ISPs are hit harder by this order than the large corporations. If they can’t manage BitTorrent, they’re out of business. Brett Glass is in that situation.

See my recent FCC Comments here.

More as this develops, but for now enjoy the debate at DSL Reports, where the nefarious scheme to allocate bandwidth fairly first emerged.

John Dunbar’s AP story is here. Pretty straight coverage.

Nate Anderson’s Ars Technica is not so straight, tilting toward an editorial.

Blog talk is here, thanks to the good folks at Google^TM.

Adam Thierer gives props to the big gov’t-pro regulator team at TLF:

It is a difficult thing for me to say, but I am man enough to do it: I must congratulate our intellectual opponents on their amazing victory in the battle to impose Net neutrality regulations on the Internet. With the Wall Street Journal reporting last night that the FCC is on the verge of acting again Comcast based on the agencyâ€™s amorphous Net neutrality principles, it is now clear that the folks at the Free Press, Public Knowledge, and the many other advocates of comprehensive Internet regulation have succeeded in convincing a Republican-led FCC to get on the books what is, in essence, the nationâ€™s first Net Neutrality law. It is quite an accomplishment when you think about it.

Indeed.

Bob Fernandez covers the story in the Philly Inquirer, Comcast’s hometown paper:

Consumer and advocacy groups say action by Martin is necessary to preserve First Amendment protections on the Internet and to protect broadband consumers. Free Press, an advocacy group opposed to media consolidation, filed the complaint with the FCC. It was disappointed that Martin wouldn’t fine Comcast to send a message to the industry.

But others warn that Martin’s decision, announced at a Washington news conference, advances the FCC’s powers on the Internet without new laws.

“This is the foot in the door for big government to regulate the Internet,” said Adam Thierer, a senior fellow at the Progress and Freedom Foundation, a free-market think tank in Washington. “This is the beginning of a serious regulatory regime. For the first time, the FCC is making law around net neutrality.”

Net neutrality refers to the concept that Internet operators should treat all data traffic the same and not interfere with it – a subject hotly debated in recent years on Capitol Hill. Companies say they sometimes interfere with Internet traffic for practical reasons, like easing data jams.

Nobody ever mentions that unmanaged traffic causes more delay for users than managed traffic.