
Does the FCC really not get it about the Internet? - seansh
http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/10/31/does-the-fcc-really-not-get-it-about-the-internet/
======
teddyh
“ _It is difficult to get a man to understand something, when his salary
depends upon his not understanding it!_ ”

— Upton Sinclair

~~~
MCRed
This is true for both sides of the debate.

On one side you have the lobbyists and big cable companies (and telcos).

On the other you have the people who want more regulation because these
companies are too big-- but who ignore the fact that the only reason these
companies are so big is that they are state granted monopolies in the first
place.

The "right" to run cable is a monopoly that the local municipality uses to
extract money from the populace (via cable fees that the populace ultimately
pays in cable bills)

The "right" to operate a cell tower is a monopoly (or tri-opoly- only three
providers are permitted per metropolitan area) that the FCC created when it
"auctioned" off the spectrum.

The reality is, both over cable wires and over the wireless airwaves, there is
no natural monopoly. Spread spectrum technology (and the infinite variance in
frequencies of light a single optical cable can carry) mean that there is no
real scarcity of capacity. And while there are limits, there are huge swaths
of spectrum that can be used, but that the government is keeping off the
market to increase the revenue it gets from the "auctions". There's enough
money in the industry to run separate cables. Many larger cities ran fiber
rings and these could handle many, many competing providers. The cost of
laying fiber to one cable complex is fixed, while the number of providers that
could use it is pretty high (multiple providers per fiber and multiple strands
per cable, and hundreds (thousands?) of wavelengths per fiber.)

Further we've already seen what the government has done with the internet--
they tapped it. They started recording everything. They weakened cryptography.
They have forced people to give up private keys.

They have proven that they cannot be trusted with something as sacred as the
internet.

So, while "regulating" the internet might seem like a savior now-- we all get
the bandwidth we're paying for-- and I'd certainly like that[1]-- I believe
the end result will be further consolidation into ever larger, and fewer
players, all of whome are very closely tied with the government, and even less
privacy or security.

Ultimately resulting in a return of an AT&T like monopoly which has no
interest in innovation because it has no competition.

Back in the "old days" of the internet, the primary impediment to getting good
connectivity was AT&T and its remains after it broke up (into smaller still
highly regulated and not-at-all-interested-in-what-you-wanted-to-do-with-
THIER-phone-lines.)

[1] I find it astounding that in south america, where the entire country has
to share a single optical connection to north america I could watch netflix in
HD, but here in a city that google is currently wiring for fiber, I can only
get Netflix on SD over my "40 megabit" cable modem. So, yes, I've experienced
this problem first hand. It pisses me off.

~~~
quanticle

        but who ignore the fact that the only reason these companies are so big is 
        that they are state granted monopolies in the first place.
    

I disagree with that statement. Standard economics theory has long held that
"natural monopolies" are possible, in markets with high barriers to entry [1].
Internet infrastructure, with the massive fixed costs of laying wires to every
home, is one such natural monopoly. So it's not fair to say that the only
reason these companies are so big is because of state granted monopolies. AT&T
was a monopoly before it became a state sanctioned monopoly. Standard Oil, as
well, became a monopoly without very much state aid. While state regulations
may make natural monopolies worse, it's inaccurate to say that removing
regulation (e.g. allowing anyone to run cable or put up cell towers) will
automatically end the dominance of Comcast and Verizon.

[1]
[http://www.economicsonline.co.uk/Business_economics/Natural_...](http://www.economicsonline.co.uk/Business_economics/Natural_monopolies.html)

~~~
ams6110
Where I live we have a local telco that is rolling out fiber, neighborhood by
neighborhood. They are successfully competing in this "natural monopoly". It
is not infeasible for competing "last mile" providers to exist, just
infeasible for any of them to immediately service any home in a given area. So
you could imagine a situation where you have choice between the existing
monopoly provider (Comcast, ATT, or Verizon who has their cable or copper
everywhere) and a smaller provider who might just serve a couple of
neighborhoods.

~~~
quanticle
While it's not _impossible_ to compete with natural monopolies (after all,
there are upstart airlines), the amount of competition in a market with high
barriers to entry is much lower than in a market with no barriers to entry.
Imagine how many more choices you would have if companies didn't have to lay
wires to your door in order to get your business.

------
ck2
Fast lanes are just one horrible side effect of our "everything capitalism"
country.

The fact that most cities in the USA are duopolies when it comes to wired
internet means essentially everyone is screwed.

Even if the FCC was strict with them, it wouldn't matter.

I pay $45/mo for 5mbps in 2014. Higher speeds are available but at much
greater cost, because there is no competition.

~~~
crazy1van
>Fast lanes are just one horrible side effect of our "everything capitalism"
country. The fact that most cities in the USA are duopolies when it comes to
wired internet means essentially everyone is screwed.

The duopolies you describe are definitely terrible. They are cronyism and
corporatism operating under the guise of capitalism, but they are very far
from the free markets of capitalism. It's worth noting that these monopolies
could not exist without government regulation. More ISP's can't run fiber to
your house because the local law prevents them. I'd rather get rid of those
bad laws instead of piling more bandaid laws on top of them.

~~~
digikata
How many times to you think companies would pay to run a connection to a
house? After the first, or maybe even the second time, does the financial
payback for laying additional redundant physical lines make sense?

City gov't is a minor problem, but remove that and you still have strong
natural monopoly conditions.

It seems like the only way to get competition in the last mile is that the
entity which owns the last mile infrastructure must be required to provide
competitive access to that network. Ideally that might have been government
owning the infrastructure, with a market of multiple competitors running
services across the last mile. It seems like many nations with competitive
last-time ISP markets got there by starting out with national ownership of
much of that infrastructure, but when much of that network is privately owned
- it's much harder to get there.

~~~
crazy1van
> How many times to you think companies would pay to run a connection to a
> house? After the first, or maybe even the second time, does the financial
> payback for laying additional redundant physical lines make sense?

I think that depends on the current market. If there's room to make money in
the long run by either offering better service or cheaper service, then I
think companies will take the plunge and run the cables. In my area, we had
DSL over phone lines and cable internet over coax for years. That didn't stop
Verizon from laying all new fiber to nearly every house in the area. They
smelled profit in doubling existing internet speeds in my area. What did
nearly stop them was intense lobbying by the existing players to deny them
access to run cable.

What bothers me is that it required huge lobbying muscles to get through the
red tape. What about all the other less politically connected companies with
innovative ideas that could revolutionize our connectivity in ways most people
have never considered? That's the beauty of the Internet. Got a great idea for
a new web service? There's no government wheels to grease, no need to lobby
the FCC for broadcasting permission. You just do it and let the consumer
decide your fate.

~~~
digikata
You mean the Verizon fiber service whose expansion was halted in 2012ish time
frame because it wasn't paying back, and was recently reiterated that they
wouldn't be investing more into for some time?

[http://www.fiercetelecom.com/story/verizons-shammo-well-
look...](http://www.fiercetelecom.com/story/verizons-shammo-well-look-fios-
expansions-once-it-returns-cost-capital/2014-03-10)

Or actively trying to reverse rollout agreements in NJ
[http://www.philly.com/philly/business/Will_Verizon_be_allowe...](http://www.philly.com/philly/business/Will_Verizon_be_allowed_to_break_its_FiOS_promise_to_New_Jersey.html)

I'm no expert analyst of Verizon, but even during the expansion many wall
street analysts were skeptical of the ROI of Verizon's FIOS rollout.

If companies are going to be digging up the street in front of my house, I
want a certain amount of red tape to ensure it's not multiple separate times
instead of fewer times with better coordination to minimize inconvenience. I
also don't want some undercapitalized startup to start digging, run out of
funding, go out of business and leave a bunch of open trench - so I'm fine
with cities verifying plans and funding too.

------
drawkbox
I am glad the article mentions discrimination. I think the net neutrality
debate should be framed this way.

There are no fast lanes. We don't want slow lanes designed to segregate and
discriminate against traffic from individuals content or demanded content,
essentially creating a virtual caste/class system. What class are you in? What
class will areas/countries be put in? Who will be our privileged new kings?
What part of the internet bus can you sit in?

People don't realize what they have until it is gone sometimes. When you have
some freedom, hold onto it because it takes fighting to get it back. Nothing
we have on the internet now would exist like it does with internet
segregation.

------
arh68
I think the FCC is responding to industry pressure that the Internet, in its
p2p form, is a dead experiment. Cable worked better. Never had to worry about
Napster before, just descramblers (but switched networks eliminate that).
Read-only, receive-only, don't produce anything, just consume. Put the content
distribution servers next to the backbones, but squeeze the small players &
independent creators. (Netflix, Twitch..) Charge them more for slower access
to the same fiber. Throttle any peer-to-peer protocols, encourage
server->client protocols and traffic. Merge content creation & distribution
into large conglomerates. Crush the companies who won't be acquired.

The question is: is the open nature of the Internet worth preserving at all?
We're already forbidden to run 'servers' on domestic IPs. Can they now destroy
the notion that the Internet was ever a peer-to-peer thing?

------
bsg75
The FCC gets it. They also know where lobbying dollars come from, and its not
consumers (individuals or companies other than carriers).

~~~
detcader
"Last week, the Obama administration announced its choice to lead the Federal
Communications Commission: Tom Wheeler, who is not only a former telecom
lobbyist but also a huge bundler for the Obama campaign. The New York Times
Editorial Page today explains that this choice is "raising serious questions
about [Obama's] 2007 pledge that corporate lobbyists would not finance his
campaign or run his administration." It also notes that "given his background,
it is almost certain that [Wheeler] raised money [for Obama] from people whose
companies he would regulate, creating potential conflicts of interest."

Last week, President Obama named another big bundler of his, the billionaire
heiress Penny Pritzker, to be his Commerce Secretary; at the Nation, Rick
Perlstein details just some of the interesting questions about that choice
that need to be explored. At this point, the only surprising thing is that
there are any more bundlers left for Obama to appoint to important
administration positions." \- Glenn Greenwald,
[http://www.theguardian.com/commentisfree/2013/may/09/hawking...](http://www.theguardian.com/commentisfree/2013/may/09/hawking-
israel-manning-transparency-fcc)

------
venomsnake
They do get the internet. But the future income of the top brass depends on
not getting it right for the consumers.

~~~
rectang
Maybe the general public can gofundme Tom Wheeler 40 or 50 million dollars to
compensate him for for the bribe we're asking him to sacrifice.

~~~
mentos
I've had this thought before. I feel like if you changed the mechanism of
donating to PACs to only be drawn if a goal is reached (like kickstarter)
you'd have much more engagement. No one wants to donate a dollar if they feel
like it is going to be alone.

But I imagine something like this already exists?

~~~
sitkack
You have to actively prevent money getting from those with it to the
politicians they want to bribe. Simply having other funding sources won't stop
the cartels from installing their own puppets.

*edit, this was actually directed @rectang

~~~
WildUtah
"You have to actively prevent money getting from those with it to the
politicians they want to bribe. Simply having other funding sources won't stop
the cartels from installing their own puppets."

Exactly wrong. The solution to lies is not censorship, it is more truth. If
censorship -- or prohibition of campaign money -- is the law, only the
interested liars will control the machinery of censorship and they're not
going to use it to promote truth.

If all personal campaign donations were illegal, the telecom monopolies would
be even more powerful and unaccountable. They have armies of employees, ex-
employees, influential executives, relationships with regulators, no-show jobs
for pols' shiftless cousins, charitable foundations for networking paid for
with your fees, and everything it takes to exercise influence without campaign
cash. Only the existence of public spirited and ideologically motivated and
unrelated agenda private donations can empower the leaders that do question
the insider power of the telecoms.

~~~
sitkack
I agree, in part. Politicians do need to have a glass bank account. It was a
metaphorical prevention, like not getting a job in an industry you just
regulated. Corruption is American politics runs so deep, I don't know of an
acceptable way to handle it.

------
barrkel
This article doesn't get the internet.

I think it's spurious and mendacious to suggest that consumers upload amounts
of data that are in any way comparable to the amount downloaded by people who
stream HD video for live consumption.

I'm not particularly pleased about putting content consumers and content
producers into two separate boxes, but the classifications of internet
endpoints definitely exists in the usage patterns we have today.

Unless the security and privacy problems of the cloud are fixed, people are
unlikely to upload the kind of data required to make them comparable - the
only thing I can think of that could make it happen is life streaming or
continuous security footage across multiple cameras. But I think cloud
storage's problems are increasing, not decreasing, and they'll continue to
increase until we get to the bottom of the tension with government spying and
commercial exploitation of user privacy.

I think net neutrality, as it's naively presented, is highly unfair and
subsidizes people who consume a lot of content at the expense of people who
only use the internet occasionally. Flat rates for all you can eat downloads,
combined with necessarily oversold capacity (since most people don't use all
their available capacity all the time), inevitably means that high usage
consumers are subsidized by low usage consumers.

There's two ways to make this fairer. Charge people based on how much they
download - i.e. caps and overage charges, as horrible as that sounds - or
charge companies that upload data more, who can then pass on those costs to
their customers. The market has generally rejected the first solution. It's
now trying the second solution. But either way is better than network
neutrality.

And I say that as a person for whom "network neutrality" is in their interest.
But I can see that it's plainly and patently unfair.

~~~
pdonis
_> Flat rates for all you can eat downloads, combined with necessarily
oversold capacity (since most people don't use all their available capacity
all the time)_

What does this have to do with net neutrality? Net neutrality is not about how
much data gets transferred. It's about not privileging some data types or data
sources over others. Charging higher fees for more bandwidth usage is fine,
and completely consistent with net neutrality. Charging someone who streams
100 GB/month from Netflix more than someone who streams 100 GB/month from
Redbox or Hulu is not.

 _> The market has generally rejected the first solution._

No, ISPs have generally rejected the first solution, because if people who
only used small amounts of bandwidth only got charged for small amounts of
bandwidth, the ISPs would get less revenue. They are able to get away with
this because the market for internet access in most places in the US is not
free: ISPs have sweetheart deals with local governments giving them exclusive
access. (And every time a local municipality tries to build out broadband as a
public utility, with equal access for any ISP, the big ISPs have kittens and
take them to court.)

~~~
barrkel
> _ISPs have generally rejected the first solution_

I think ISPs like segmented pricing models. Segmented pricing models let them
extract more profits from sections of the market that can afford more. But
segmentation by bandwidth cap doesn't seem to be very successful.

> _Charging someone who streams 100 GB /month from Netflix more than someone
> who streams 100 GB/month from Redbox or Hulu is not._

Just to get some reality into these figures; on a 5Mbit line, 300G/month was
typical for our house. Now that we have an 80Mbit line, I would expect our
home usage is now well in excess of 1T/month. (I live in the UK.) This should
tell you that I have no self-interest in bandwidth caps, especially joke
2-figure ones.

Given that, I agree that there shouldn't, in principle, be a distinction
between packets from company A vs company B. But without being able to
efficiently price the scarce resource via bandwidth caps and segmented pricing
models on the consumer side, the ISP is reduced to negotiating with the
upstream providers of packets that are consuming the scarce resource on behalf
of their customers. It then becomes a business negotiation problem, with
contracts, leverage and relative power. So naturally there will be variance in
which company pays what.

Somebody has got to pay for the scarce resources being exhasuted. That person
will be the consumer who downloads more. The only question is how the payment
will be routed.

~~~
Istof
If they sell you a 100Mbit/s line with unlimited data, it should be illegal to
charge you again if you use all that potential... either directly or
indirectly.

~~~
barrkel
> _If they sell you a 100Mbit /s line with unlimited data, it should be
> illegal to charge you again if you use all that potential... either directly
> or indirectly._

(QFP) It's "thinking" like this that's responsible for a good 40% of the
outrage over net neutrality, IMO.

~~~
lutorm
The argument about whether "unlimited data" really means unlimited data is a
completely different discussion. It has nothing to do with net neutrality,
it's a discussion about false advertising.

~~~
barrkel
Only a child could read "unlimited data" and think it meant unlimited data.
Your network speed is finite; multiply it by time and you get the maximum
amount of data you can possibly download. This is a hard limit that cannot be
exceeded, and it is well short of "unlimited".

What grown ups understand "unlimited" to mean is that there is no bandwidth
cap. There is no hard limit on number of bytes downloaded, beyond which the
connection stops working until the next rebilling period.

But this doesn't get rid of the underlying problem. Thinking that it does,
that it's just an advertising lie, is magical thinking unfit for adults.

Without a bandwidth cap, other mechanisms need to be used to deal with the
fact that consumer internet is sold via contended lines. Some packets will
need to be dropped; available bandwidth must shrink when there is more
contention. What decides which packets get dropped and which ones get priority
- complete randomness, or should your phone call be less important than the
difference between a 1.9M/sec video stream and a 2M/sec stream? This is
exactly where network neutrality comes in. It's a different way of dealing
with the scarce resource, the contended lines.

So it is not a completely different discussion. It is in fact the same
discussion, from a different angle.

~~~
TheLoneWolfling
Here's an alternative viewpoint.

Power companies have the exact same problem. That being said: how do power
companies solve it? They make absolutely sure they have enough extra capacity
- because if they don't people complain, loudly.

So: Here is what I read "unlimited data" as: The service provider has enough
capacity that a customer has access to at least their full subscribed service
normally.

In other words, I am challenging the preconditions of your response: I do not
believe that consumer internet should be sold via lines that are contended to
the point that "brownouts" (that is having bandwidth of < subscribed rate) are
a normal occurrence.

~~~
pdonis
_> Power companies have the exact same problem._

Not to anywhere near the same extent. The range of power consumption of
residences probably covers less than an order of magnitude. The range of
bandwidth consumption of residences probably covers several orders of
magnitude.

 _> how do power companies solve it?_

By charging people for power consumed, directly. Power companies don't have
flat-rate, unlimited-use plans. Everyone knows that if they use more
electricity, they pay more, and if they use less, they pay less.

 _> if they don't people complain, loudly._

Yes, because electrical power is a necessity in a way that Netflix-level
internet bandwidth is not.

 _> I do not believe that consumer internet should be sold via lines that are
contended to the point that "brownouts" (that is having bandwidth of <
subscribed rate) are a normal occurrence._

ISP's do have customers that get that kind of service. Those customers are
called "businesses", and they pay significantly more than residential
customers do, because they insist on actual service level guarantees.

------
diafygi
Here's a similar situation that turned out much better than expected.

Back when I grew up in Texas in the 80s, the power utilities were regulated
monopolies (like pretty much everywhere else). They owned both the power
plants and the wires going down the street. Then in the 90s, the utility lobby
convinced the state that it would be much better for "competition" if
utilities were "deregulated". The state went along with it, split utilities in
to "wires" and "production", and deregulated production[1] (i.e. let anyone
build a power plant and sell power at any price).

This was great for the current utilities because they were the only ones with
existing power plants, so they could collude and jack up the rates[2].
However, in the early 2000s oil companies/prospectors started realizing that
all this natural gas they were fracking could be used in power plants, and
they could be the ones who owned the power plants.

So there was a huge boom[3] of gas power plants in the 2000s as many non-
utilities built and competed on the wholesale market to provide power. This
drove the price in the late 2000s and early 2010s down significantly since gas
was so cheap. Deregulation actually worked in eventually driving down the
price due to competition!

The difference between Texas utilities vs. FCC/ISPs is that the grid operators
were still regulated and had to let anyone who sold power to use their grid.
This effectively created the equivalent to the "Title 2" common carrier for
the electric grid. The competition is fierce on the power production side, and
the parts of the old utilities that were split off to compete are starting to
go bankrupt[4].

So if the FCC wants competition, they need to follow the Texas system and
split the cable company into regulated "wires" and deregulated "ISP" parts.
Unfortunately, the existing monopolies have seen what happened in Texas, so I
don't think they'll push for deregulation.

[1]:
[http://www.ercot.com/about/profile/history/](http://www.ercot.com/about/profile/history/)

[2]:
[https://en.wikipedia.org/wiki/Deregulation_of_the_Texas_elec...](https://en.wikipedia.org/wiki/Deregulation_of_the_Texas_electricity_market#Electricity_prices)

[3]: [http://www.poweracrosstexas.org/wp-
content/uploads/2013/01/P...](http://www.poweracrosstexas.org/wp-
content/uploads/2013/01/PAT-2013-Issue-Brief-Electric-Generation-Mix1.pdf)

[4]: [http://www.nbcdfw.com/news/business/TXU-Oncor-Owners-Vote-
fo...](http://www.nbcdfw.com/news/business/TXU-Oncor-Owners-Vote-for-
Bankruptcy-257126791.html)

~~~
lbotos
So in this model, you are saying we should have companies that are responsible
for just laying literal wires to connect houses to some type of neighborhood
switch and then from the switch side on is "ISP" territory and they are
responsible to connect to the "greater internet"?

I'm just wondering how the physical roles would be split and literally where.

~~~
mason55
The reason for the split is that you don't want to have a bunch of companies
trying to lay wire everywhere. It's very easy to build 10 power plants to
connect to the grid vs. trying to run 10 sets of power lines everywhere.

The problem is that internet wire technology moves so much faster than power
wire tech. Even in just the last 20 years we've gone from copper phone lines
to cable to fiber. As long as the last-mile tech continues to improve it will
be hard to work this scenario because what incentive does the "wires" company
have to re-do all their infrastructure from fiber to the next big thing?

~~~
jessaustin
_Even in just the last 20 years we 've gone from copper phone lines to cable
to fiber._

Is there any reason to suspect that today's fiber (albeit possibly "lit" by
tomorrow's fiber modems) will be insufficient twenty years from now? Are we
approaching some sort of theoretical limit to the number of beams of light
that one glass fiber can transmit?

~~~
AnthonyMouse
> Is there any reason to suspect that today's fiber (albeit possibly "lit" by
> tomorrow's fiber modems) will be insufficient twenty years from now? Are we
> approaching some sort of theoretical limit to the number of beams of light
> that one glass fiber can transmit?

No. And the premise that we've gone from twisted pair to coax to fiber in a
period of 20 years is similarly silly. Telephone wire is essentially telegraph
wire and has been in use since before the American civil war. Coax is from the
same century and had been in use for cable TV before the internet was even a
thing. Even modern fiber optic cable is older than, say, TCP/IP. The only
reason fiber wasn't used to begin with is that the other cable was already in
the ground before the internet existed.

------
ep103
They get it, they're just corrupt. What I want to know is why mozilla pushed
such a proposal.

~~~
doctorshady
The ISPs seem just as mad about the proposal as we do. I'm convinced after
watching Wheeler that he isn't so much corrupt as he is some combination of
stupid and corrupt. I guess that's what makes him an "inspired choice" as
Comcast put it.

As for Mozilla, it's possible they were convinced the FCC was going to go for
section 706 entirely at the time, and pushed for something to increase the
chance that they wouldn't be completely fucked.

------
discardorama
I think the converse can also be asked: Does the Internet really not get it
about the FCC?

Time and again, these government agencies (e.g. FDA) have shown that they care
more about the companies than the general public.

------
marak830
Their paid to not quite get it.

