The quick fix is the wrong fix

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I was out on my bike ride today and stopped for a coffee.  I checked the Twitters, as you do, and saw a tweet by my friend Glenn.  I made a quick reply.

To which Glenn shot back:

That’s too much to reply back to on my phone via Twitter, so now that I’m home, so I can be clear and a little more verbose about why we don’t want the FCC getting into the business of content on the internet.  They’ve done a poor job on broadcast TV, so giving such a politicized group even more control is a bad idea.

Let’s be clear on the differences between over the air, broadcast television and internet video.

In the United States, the public owns the electromagnetic spectrum.  We’ve decided to license that spectrum for various uses, including to private companies for television broadcasting.  Part of the deal is that these licensors provide their service for free to people in their area and act “in the public good”.  It’s a little more complicated than that, but basically we get over the air television (OTA) for free because the airwaves belong to us.  We have the right to record this television, store it, and watch it wherever we want on any device we want.  The media companies don’t want this to be so, but the courts have ruled this way consistently.

The internet is a different story.  The internet is mainly a collection of private networks that are joined together with peering agreement to enable the global connectivity we all enjoy.  In the US, the FCC partially regulates internet access companies, because in many cases the companies enjoy monopoly or duopoly status due to their heritage as cable television and telephone companies and their agreements with local governments (the cable franchise boards Glenn mentions) that allow tearing up streets, easements, and string lines overhead.  But the internet does not belong to the public.  The public doesn’t own the Olympics either.

To force the television broadcasters to stream their content over the internet for free is wrong because we don’t own the internet or the content being shown, all we own is the radio spectrum.  The intent of the ‘public airwaves’ is that we get what the airwaves are used for free.  Expecting otherwise with like saying “I get free water from the fountain at the public park, so I should get free soda at McDonald’s.”  They are two completely different situations and the public’s rights are considerably different.

The FCC net neutrality discussion should be focused on access, not content control.

What combined broadband/media distribution companies would love to put in place is pricing based on KINDS of internet sites you visit.  Nothing would make them happier than to be allowed to charge a premium to visit Netflix and Hulu.  The ramifications of this would terribly restrict competition, innovation, and freedom of speech. THIS is what net neutrality should aim to prevent.

I don’t have a problem with broadband providers charging more for excessive usage or higher speeds.  Sure it sucks, but it’s my choice of what speed/amount of access I want.  Just don’t restrict my access to anywhere on the internet I want to go.  Just like I have a choice of what car I want to buy at widely varied prices and buy whatever gasoline I want, I expect to drive my car on any road I want.

To ask the FCC to start meddling in how media companies deal with the internet and forcing them to do things because of over the air television paradigms is misguided.  Enshrining government intervention into the rapidly evolving digital media marketplace is a sure way to stifle innovation and avoid competition.

Already you see things like Aereo popping up to disrupt the control that OTA broadcasters have on television online.  Let’s let innovation solve these problems, not politicians.

Yes, it sucks that much of the digital Olympics coverage is behind a paywall.  But we all have many options from using an antenna to having a UK based VPN to paying for cable/satellite to relying on pirate retransmissions.  If NBC makes bad choices in how they serve the public online, they will pay for it in the long run as the marketplace walks away from them.

NBC paid for the rights to broadcast the Olympics. Anyone with the cash could have outbid them, with or without a OTA outlet. Compare it to DirecTV, who pays a huge amount for exclusive rights to the NFL games, preventing digital distribution by NBC, CBS, and FOX (the OTA broadcasters). Should the FCC force DirecTV to allow NFL games to be streamed for free as well, just because they air on local stations?  How far down this rabbit hole do you want to go?

Again, I’m not trying to defend NBC, just to point out that the answer to this kind of problem is not to legislate it away.  Just like any trouble on the internet, the answer is to route around the damage.

Patience.  Patience my friends, solve your own problems, and you will get what you want in the end.

“The future is here, it’s just not evenly distributed.” – William Gibson

 

  • http://twitter.com/GlennF Glenn Fleishman

    “To ask the FCC to start meddling in how media companies deal with the
    internet and forcing them to do things because of over the air
    television paradigms is misguided.”

    I disagree with this because the model of the public airwaves being provided license free has two associated issues. First, that broadcast stations have a minimum public obligation, which these days is mostly paid lip service. It should be more emphasized or we should be more honest and auction off the trillion-dollar value of the airwaves.

    The second is that the Internet didn’t exist when the public airwaves arrangement was met. Nor did it exist when cable franchise boards were set up. Nor did VoIP service exist. Thus the FCC and Congress have twisted the existing paradigms and regulation to exempt Internet services and the method by which VoIP is sent (not the voice service itself, which is regulated).

    The public airwaves provide value to NBC in the form of advertising revenue, as well as a quasi-monopoly that allows them to extract fees under the Telecom Act of 1996 from cable and satellite providers. Without the public airwaves, the ability for these many billions of dollars of lines of revenue do not exist.

    “NBC paid for the rights to broadcast the Olympics. Anyone with the cash could have outbid them, with or without a OTA outlet.” NBC paid with money derived from the utility to which they are putting a free public resource provided to them under assumptions that no longer hold true. No other outlet can afford in this country to outbid them. Nor would the Olympics wanted to be restricted as a matter of policy to a non-broadcast medium.

    But I realize, after all this, I am misunderstood, because I didn’t explain myself well. I wasn’t referring to NBC being required to provide free access (at HD quality or whatever) to everything they are airing or streaming. Rather, that given that they are allowing cable subscribers to validate themselves for access, so, too, should _limited_ access (even at SD) be provided to people in given service areas. They could still give cable subscribers the whole megillah. I don’t think that’s unfair in any way.

    The inequity that bothers me is that cable subscribers who pay a third party, including Comcast which now owns NBC, are being afford additional rights beyond the public under the same terms to material that is funded in large part by the public good.

    I would be totally satisfied with a regulatory requirement that judged people in a given service area should have the same streaming access as cable subscribers to material available OTA. What I’m thinking is very modest, actually.

  • http://twitter.com/GlennF Glenn Fleishman

    Oh, and one more thing! I like net neutrality and the free and unfettered undifferentiated and non-discriminatory access to all sites, regardless of tier, that the Internet affords. However! You and I both know that cable and telecoms are currently allowed to engage in discriminatory behavior because of monopoly position. Cable firms, in particular, are allowed to offer “Internet services” under the same monopoly model (because of Brand X SCOTUS decision in part) that allowed them to provide franchised cable TV access.

    If cable firms had to offer Internet wholesale to competitive firms unbundled from their triple-play (as BT is forced to do in UK), you would see a very different environment here, and Comcast would never have had the money to buy NBC!

    So it’s hard to argue for hands off the Internet when the FCC has structured “Internet services” to blowjob money at incumbent monopolies who established rights of way and wireline bases because of cable and phone agreements that were tarriffed.

    • Michael Pusateri

      I disagree slightly.  Forcing broadband providers to resell others, like we did with telephone companies in the late 80s, would lead to price wars, poor service, and a lack of innovation.  It took the introduction of mobile phones to truly break the old telco models.  

      To me, improving the quality of internet access by encouraging new players like Google, Sonic.net, and the wireless folk is much better than entrenching the crappy service we get today with tariffs.

      The speed on new ideas and huge amounts of VC capital ensure that we will see much better options.  Allowing the incumbents to have government regulators manage things leads to exactly the kind of political maneuvering, revolving door payoffs, and campaign spending that has gotten us into the situation we are in now.

      • http://twitter.com/GlennF Glenn Fleishman

         That’s not what BT did and not what I’m proposing. And I disagree about the basis of the market. Also, in what way are having Verizon and the Terminator 2 like reconstituted AT&T “truly break[ing] the old telco models”? These are the old telcos, new pricing model, same markups, same false scarcity.

        Google is not a new player. It has a single test fiber market. Sonic.net has expanded. It is one of the only independent ISPs in the country aided by particular aspects of the market it serves that cannot be generalized, which is why it is pretty much the only firm you can cite when you try to find alternatives to telcos.

        The trouble is that, as you don’t respond to here, the monopoly regulatory structure allowed single cable companies and single telcos to get rights of way and other monopoly benefits in exchange for accepts tariffs on service, paying franchise fees (cable), etc. Those same monopolies use public assets now to produce markets in which there is no true competition and in which false scarcity abides in the form of low bandwidth rates (relative to other developed nations, urban areas only; not trying to make a rural point here) and high cost per Mbps.

        What the UK demanded and enforced was that BT’s division that handled infrastructure had to separate from the retail and other portions. That led rapidly to a massive reduction in the price of DSL (the dominant broadband flavor), a massive increase in availability stretching quickly to 98% of the country, including extremely rural areas, and incredible competition in the private sector. One mobile-phone chain _gave away 8 Mbps ADSL_ with every mobile subscription as a promotion because the cost to the firm was $8/month (since lower).

        Ofcom reports continue to document that prices drop, service area improves, competition increases, and the BT infrastructure portion _pushes data rates ever higher_ because its goal is 100% utilization of its network, not a model of scarcity.

        BT’s retail broadband side has done quite well as well. By removing the entire wireline cost side, it freed the firm up for more productive assets.

        This model has worked in other countries, developed nations all, in some cases in which the government built or set up infrastructure, and then turned over operations to a cost-limited wholesale non-discriminatory operator.