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Stakes Are High For Comcast Hearing

Either way, they're sunk

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Cable is on course to be the next decade’s dial-up. With limited capacity, cable companies are in a pickle: manipulate network traffic like Comcast has been doing (which customers and perhaps the government won’t stand for) or go back to metered pricing, which is going back ten years in business model, like Time Warner has done, which customers ultimately won’t stand for, especially as more competition comes around.

This is happening with or without neutral network assurances by the government. Imagine how thrilling the thought must be if you’re a telco. Without government interference, a tiered, managed network can be created and monetized at every level and every redirect, and the biggest competition will not be around long enough to challenge because cable doesn’t have the network to compete. Fiber and wireless capabilities effectively will halve an industry duopoly. (Hint: half of two is: ?)

Timothy Wu, Professor of Law at Columbia University School of Law Timothy Wu, Professor of Law at Columbia University School of Law
(Photo Credit: Columbia Law School)

So there’s a lot at stake for everyone: for telcos, for cable companies, for Internet companies, for network management equipment companies, for entertainment companies, for national intelligence agencies, for consumers, and for government officials who will trade legacies for laughing-stocks if they don’t do something about it.

The heat is officially turned up come Monday, as the FCC holds a hearing at Harvard Law School in Cambridge, Mass., to assess complaints about Comcast’s actions to delay or block (Comcast says "delay," opponents say "block") file-sharing* on its network in an effort to compensate for lack of capacity.
 

Columbia Law School’s Timothy Wu, who coined the term "Net Neutrality" will be on a panel with Harvard Law’s Yochai Benkler, and the two of them will take representatives from Comcast and Verizon. Wu frames the hearing with historic-sounding sentiments.

"What we’re going to see on Monday is a trial of the Internet," said Wu, in a statement. "Comcast is in the docket, accused of crimes against the public interest, and we’ll see how well they are able to defend themselves."

It’s interesting that Verizon is participating, this being a Comcast investigation, but there is sufficient motivation for defending a network operator’s right to manage its network.

But what’s more interesting is the FCC seems more inclined to investigate a cable company rather than Verizon or AT&T, who had their very own Net Neutrality scrapes last year (though Verizon’s hot seat is supposedly on the stove). It’s interesting and not surprising given the FCC chairman’s lovey-dovey relationship with telecoms and his antagonistic relationship with cable. Verizon’s participation is no doubt self-serving and duplicitous, an attempt to ward off government interference while appearing to be concerned about a competitor’s plight.

And what a double-fronted fight for Verizon et alia, as Representatives Ed Markey (D-Mass.) and Chip Pickering (R-Miss.) simultaneously introduce the "Internet Freedom Preservation Act" (HR 5353), which will grant the FCC the authority to enforce Net Neutrality principles. The act is nicely presented in that it stops short of being full-fledged Internet regulation (the chief objection to it) and instead increases the FCC’s network operator policing authority.

Whatever happens, it’s probably going to be bad news for Comcast, and for Time Warner, and for any other cable network operator. With all this public pressure and a bill in the works to expand its authority, it seems unlikely that the FCC will let this incident slide. But even if they do (and God help them if they do, with the uproar they’re sure to face), cable is sunk anyway.

Best-case scenario for Comcast and the cable industry:

The FCC, despite pending legislative expansion of authority and guarantee of consumer rights, decides network operators have a right to manage their networks at the expense of their customers’ heretofore de facto right to send and receive messages without interference.

The FCC throws even more favor on cable by not enforcing the double-must-carry requirement that cable operators must transmit broadcast network transmissions in both analog and digital formats until the country catches up digitally, thereby freeing up some capacity.

The FCC doesn’t force cable companies into a la cart programming (which may actually free up capacity also), thereby guaranteeing steady revenues from the channels nobody watches but cable is paid extra to include in packages.

Unless cable finds a way to evolve (via what, exactly, better digital compression?) all of this lack of regulation buys cable about five years before it becomes painfully obvious to customers that there are better options not just for Internet, but also for TV as AT&T and Verizon crush the cable industry with fiber offerings. Metered pricing and limited access won’t be able to compete with unlimited, blisteringly fast connections.

When that happens, Google represents the only modicum of competition to prevent likely network manipulation akin to the way wireless phone access has been manipulated for a decade.

Worst-case scenario for Comcast (and by default, for the telcos):

The FCC takes the side of the consumer over the desperation of an industry that’s dying anyway and the profit-driven motivations of an industry with disproportionate power. Five years later, cable still isn’t keeping up, but at least the consumer has protections in place against the next lacking set of options, which, if we’re lucky, will be another duopoly instead of monopoly.
 

*File-sharing is an important distinction for a couple of reasons. 1: It’s not really video or audio traffic, the chief scapegoat in periodic warnings that the Internet will one day slow to gridlock, which is looking more and more like a red herring. 2: File-sharing is usually more of a concern of the entertainment industry, which has a bit of a leverage relationship with cable. 

Stakes Are High For Comcast Hearing
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  • Dave

    I have been involved in selling and installing satellite systems for over 10 years now. To keep informed of what apartment owners could do to regulate the installation of dishes on their property I read a lot of the FCC regulations.

    The best thing I discovered was the cable and satellite providers are required to remove programing a customer doesn’t want at the customers request and reduce the amount billed to the customer acordingly. The customer can also request different channels to replace the ones they don’t want. 

    Heres the problem. If a customer wants CNN but not Headlines News it can’t be done. The provider can’t cut just part of the program package, they have to cut the entire CNN, ESPN, Encore, etc. package from the customers account.

    Comcast’s basic cable package is mostly shop at home channels.

    Personally, I don"t watch any of the shop at home channels the providers put in their basic subscription packages.

    I think they are a waste of valuable capacity the cable companies could use to provide  better services to their internet customers.

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