

Time Warner Cable, Cablevision Sink as the FCC Goes ’Nuclear’ - px
http://www.businessweek.com/news/2010-05-06/time-warner-cable-cablevision-sink-as-the-fcc-goes-nuclear-.html

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grellas
The FCC had a choice here (after losing in court on the question whether it
had so-called "ancillary jurisdiction" to impose net neutrality rules on
carriers).

It could have gone back to Congress to get clearer statutory authority for its
mandate to regulate the web. If successful, that effort would have led to a
solution in the form of a new statutory provision that carefully defined what
the FCC could or couldn't do in regulating the internet. While that would have
been an ideal solution, it would have meant having to get support for the
agency's net neutrality goals in Congress, and that support was doubtful.

The other choice was to do what it did here, and that is to take its existing
authority over common carriers in the telephone market and attempt to extend
it to the internet. The problem with this is that such authority is very
broad-based and includes (among other things) the power to regulate pricing
through a complex system of tariffs.

The FCC is claiming to do a "hybrid," however, by saying that, yes, we are
going treat internet access providers like phone companies but we don't intend
to regulate their pricing or exercise any of the other broad regulatory powers
we might otherwise exercise once we use this this approach. In effect, the
agency is saying, "we plan to come in with a scalpel and do only what is
needed to implement our narrow regulatory plan that is focused primarily on
net neutrality rules - so, don't worry about the rest, trust us that we will
not overreach."

Of course, nothing is in place under the FCC's chosen approach to stop
overreaching by the agency except its own discretion. By invoking existing
statutes designed for another purpose altogether, instead of seeking to get a
new statute from Congress aimed at solving the immediate issue of net
neutrality only, the FCC is exerting government power in a way that may not
have been contemplated by the original statutes and in a way that will most
certainly be challenged in the courts.

Maybe this approach will work for proponents of net neutrality but it comes at
a price of the government staking out a pretty broad claim to regulate the
internet without any particular checks on that power beyond the FCC's own
judgment as to what it should or shouldn't do in the future. Thus, this is
basically an agency power grab - perhaps supportable, perhaps not - but almost
certain to have unpredictable and potentially unpleasant side effects as
always happens when there are insufficient checks on government power.

~~~
koanarc
The whole net neutrality debate scares the shit out of me.

One the one hand, we have ISPs, all with near-strangleholds in their area,
making decisions that the market can't effectively retaliate against (high
barriers to entry and whathaveyou).

On the other hand, we have the slippery-slope of government regulation of the
internet. I know I'm in the minority, here, but frankly, I find this option
the more unnerving.

Are we simply damned if we do, damned if we don't? How do we take power from
providers without giving any more power to regulators?

------
illumin8
This is a great move. It is simply tragic that we live in the country that
invented the Internet, and yet the bandwidth available to the average citizen
is very low compared to the rest of the first world countries.

The free market has failed the Internet. For some things, like utilities,
government regulation works best. I think we all can agree that network access
is a utility and should be treated as such.

~~~
ewjordan
_It is simply tragic that we live in the country that invented the Internet,
and yet the bandwidth available to the average citizen is very low compared to
the rest of the first world countries._

To some extent that is a _result_ of the fact that we had it early. A lot of
money was put into the early infrastructure, and it now needs to be upgraded,
but there's little incentive to do so as long as it's working well enough.

Whereas latecomers to the party can get equipment three generations better
than what we started with, and install it for a lot less money than we had to
sink into our old stuff.

This is not too uncommon in business, either, where (especially in fields
where patents don't ensure a monopoly for the innovator), the innovator spends
a lot of resources in development, setting up the supply chain, and driving
consumer demand. The "me, too!" business then comes along and benefits from
all of this without having to pay a dime, and can skip right past many
unprofitable months and challenge the innovator to a game of catch-up very
quickly.

~~~
fnid2
It's called "leap-frogging." Preventing it is the goal of patents, but many
here argue against those as well. It's like they want things to be better, but
they don't want to allow the creators of those better things to benefit from
the betterment themselves.

When you limit the innovators' ability to profit from their innovations,
they'll stop innovating...

~~~
lutorm
You're saying the goal of patents is to force others to adapt outdated
technologies? Funny, I always thought the purpose of patents was to _promote_
progress of "science and the useful arts".

~~~
fnid2
I can't imagine where you got that I was saying that. The goal of patents is
to allow innovators to share their ideas, while still protecting their ability
to profit from the idea.

The goal of patents is to reduce the risk of competitors taking profits for an
idea without investing the R&D in the idea.

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jfager
_the agency plans to impose more regulations on Web-access providers after a
court stripped the agency of its powers last month._

What does that mean? Which powers were stripped? How can they impose more
regulations if they have less power?

~~~
showerst
If I'm reading it right, basically the courts said that the FCC doesn't have
the right to regulate internet providers like they do common carriers (like
phone networks), so they're just going to reclassify them as common carriers,
then regulate them.

IMHO this is probably huge for net neutrality, but I wonder where their
(generally accepted) efforts at traffic shaping will end up in all of this?
I'm not sure anyone wants broadband that can't throttle its bittorrent users a
little.

~~~
swombat
_I'm not sure anyone wants broadband that can't throttle its bittorrent users
a little._

Why would your 24MBit/s work slower for bit-torrent than other uses? The whole
point of this net neutrality debate is that ISPs have no business deciding
which traffic they prefer, much like your phone company has no business
deciding which one of your friends you're allowed to call.

~~~
gte910h
The issue is that network advertisers don't have the bandwidth they say they
do. So they really can't give everyone 24 sustained, only burst.

~~~
lukev
God forbid they actually advertise their real and burst rates instead of
picking a completely unrealistic, sky-high number.

------
CamperBob
_This move by the government certainly throws a wet blanket on any deal
speculations and hampers all cable and telco stock multiples,” said Chris
Marangi, an analyst with Gabelli & Co in Rye, New York. “It’s going to be
years-long litigation and the cable guys can’t give an inch. Time Warner Cable
sank $2.51, or 4.6 percent, to $52.48 at 10:35 a.m. in New York Stock Exchange
composite trading. Earlier the shares dropped as much as 6.4 percent.
Cablevision plunged $1.14 to $25.67, after earlier falling as much as 5.2
percent._

And all they had to do to avoid this was not act like greedy assholes.

I guess it was a matter of asking a leopard to change its spots.

~~~
fnid2
Corporate leaders have a fiduciary responsibility to act like greedy assholes.
We have to understand that. It's required by the SEC and the _law_.

Corporations _must_ grow. They must increase their share price. They must
continue to do more and more and more to get more money or they die. If you
aren't growing you are dead.

That's the problem with our system. But this system violates the laws of
nature. Organisms in nature don't continue to grow forever. Those that don't
stop growing eventually collapse under their own weight. That's exactly what
is happening to our corporations -- and our society.

We have to create a new system, whereby corporations -- organizations -- are
rewarded for their stability, for their consistency. For their remaining the
same for a long time.

Small businesses can do this. At some point, the small business owner can say,
"I have enough." But corporate leaders cannot say, "Our corporation is big
enough." If they say that, they are fired. If you go public, you have to grow
forever until your corporation collapses -- or is broken up by regulators.

There is only one destination for public companies -- destruction, either
through collapse or regulatory fragmentation.

~~~
tbrownaw
It seems to me that acting like greedy assholes to the point that the
regulators step in, would actually be _failing_ at maximizing shareholder
value.

I believe also that paying dividends would be an alternative to having a
pyramidal share price.

~~~
fnid2
You could say they are greedy assholes, or you could say they are trying to
maximize the revenue potential of their investment.

Software companies do it all the time. Oracle charges Salesforce more for its
database than it charges a university and it gives it way for free to some
organizations.

Essentially, net neutrality is saying that the telecoms don't have the right
to choose how to charge for their product.

If the FCC is saying the internet is a right everyone should enjoy at the same
rate, why don't they create a public wireless grid? People argue against that
saying the government will control our traffic, but essentially that's what
they are arguing for here as well. They want the FCC to control the internet,
but keep it private in such a way that limits the corporation's ability to
profit.

I'd be angry if the FCC came in and told me what I could charge for my SaaS or
my consulting hours. Why is it different for the telecoms?

~~~
Kadin
> Why is it different for the telecoms?

Because the telecoms have gotten tons of help from the public, via the
government, over the years. At the Federal level, the cable and satellite
companies got the original anti-circumvention laws that led to the DMCA. They
also get to be exempt from a lot of state level regulation that they might not
like, in exchange for the far friendlier FCC. And at the local level, telcos
get to use public rights of way and often have monopoly grants.

They're in no way comparable to a small entrepreneur. They're like a company
that's been given (or bought) permission to operate a toll road. In exchange
for being allowed to make money, they need to charge everyone the same tolls
and the amount of the tolls that they charge is going to be subject to
regulation.

As for why the government doesn't just build and operate the infrastructure
itself ... if the telcos keep it up, that may just be what happens. Critical
infrastructure has been a frequent target, historically, for nationalization
when the owners of that infrastructure are perceived to be rent-seeking to
excess. The public tolerance for toll roads evaporated in the 1880s [1] and
they were almost entirely stamped out by the Progressives; the
telecommunication operators of today would do well to keep that in mind.

[1] <http://eh.net/encyclopedia/article/Klein.Majewski.Turnpikes>

~~~
fnid2
Personally, I think it'd be great to have a public wireless grid, but think of
the privacy issues. The government _could_ have much easier access to our
emails.

But back to your point, the toll roads I travel on charge more for semi-trucks
than they charge for passenger vehicles.

I understand the thought that the public is investing in these wires, so they
own them, but the public invests in all sorts of industries, including
pharmaceuticals (via the NIH), vehicles (buying GM), mortgages (fannie may,
aig), but yet they don't regulate what gm charges for cars or Pfizer charges
for their drugs.

I wonder why we believe it is okay for the govt to meddle in some areas and
not others? Where and how do we draw the line?

~~~
CamperBob
_But back to your point, the toll roads I travel on charge more for semi-
trucks than they charge for passenger vehicles._

Yes, because the semis cause more than their share of road-maintenance costs.
This is akin to charging me 2x as much if I want to upgrade to a pipe that's
2x as fast. Nobody has a problem with that.

The problem happens when the government sells the tollway to a private
corporation, who then starts up its own trucking line. The road's new owner
charges its own trucks $0.25 and everybody else's trucks $5.00. How could you
defend that?

 _I wonder why we believe it is okay for the govt to meddle in some areas and
not others? Where and how do we draw the line?_

This isn't even a new question. There are some interesting parallels with the
early telephone switching system. About a hundred years ago, an undertaker
named Strowger noticed that his competitor was getting all the calls whenever
someone kicked the bucket. It didn't take much investigation before he
discovered that Betty the Switchboard Operator was the sister-in-law of Bob
the Undertaker at the competing funeral home.

Nowadays we're faced with the exact same scenario, but due to the logistics of
the last-wire monopoly, we can't solve it by inventing a new switching system
like Strowger did. That's where the government has a legitimate role to play.

------
clammer
I like being right about things, but it's a shame to be right when the
Internet has to go completely wrong in order to prove a point.

NN was always a bad idea and this step by the FCC was obvious to anyone who
saw through the NN BS. I'll never understand why people _still_ think the
government can "help" them by solving problems that don't even exist.

Say hello you're new Internet nanny, the FCC.

~~~
clammer
Yeah, keep voting this down, that will make the Internet being controlled by
the FCC better...somehow.

~~~
pieceofpeace
Do you prefer large corporations over FCC to "control the Internet"?

~~~
jonallanharper
Absolutely.

