Saturday, June 14, 2014

The schizophrenia of carriage and content for incumbent ISPs

The incumbent ISPs have a dilemma. One the one hand, they realize the value of their content business. Comcast, for example, has spent the last decade working out a content business to stay relevant. They have acquired immense holdings in various media companies like NBC/Universal in their attempt to create a vertical monopoly. They seem to be trying to make themselves, I don't know, indispensable?

Verizon has it's FIOS service to offer, a fiber to the neighborhood service that offers speeds and rates that are very competitive with Comcast. Verizon also offers TV service to their ISP subscribers, and although it doesn't hold any major interests in entertainment companies, it does have agreements to sell such services with other companies. Like Comcast, you can get a triple-play with Verizon.

On the other hand, they are both networks and they carry data. Their content services are in direct competition with their data services, such that they have a genuine conflict of interest. Sure, either service you use, they will make money. But whatever they do, it is in their interests to stifle other properties and to promote their own. That's just the way it is.

Subtle detour: I have come to hate TV because I can't watch the programs I want to watch when I want to, and I have to sit through their commercials. So I wait for what I want to watch and watch it on Netflix so that I don't have commercials polluting my brain. Trust me, dear advertisers, if I want your product or service, I will find you and call you. Until then, sit tight. I'm busy.

I am also noticing discontent in my brain about sitting and watching anything. I'd rather be reading something or writing something. Watching someone else live out a fictional life on a screen is beginning to make less and less sense to me as I get older. I'm a writer and the adventure of pouring words from my brain onto this screen is much more interesting. I also have a growing family that provides family-oriented drama for free. I don't have to watch TV to get that. Even reality television makes less sense to me now compared to something called life.

Watching TV is what you do when you don't have any plans for your life. Life is what happens to you when you're making other plans. Just ask John Lennon.

End of subtle detour: I'm using Verizon and Comcast as two examples who seem to have a really hard time reconciling a conflict of interest. They sell TV services, but they also sell internet access and are fully aware that people will cut the cord if they can to watch their favorite content. So Comcast and Verizon bring in data caps, a limit which, when passed, will incur extra fees because "you've been watching too much video content that we don't sell to you directly." To them, that is a sin.

For Comcast, the cap is set at a fairly comfortable 250 GB of data. I'm a Comcast subscriber because that's the only service in my neighborhood that offers greater than 5mbs. Last time I checked my data usage, I was at about 49 GB of use out of 250 GB available. What is also interesting is that enforcement of the data cap is suspended, at least for me, anyway. Verizon has a similar utility to check usage, you know, to get us used to the idea of data caps.

I don't think I've ever come close to busting that cap. I see that in April, we hit 170 GB of usage, but that is still a long way aways from 250 GB. You have to watch a lot of video to get numbers like that. I certainly don't do that downloading Ubuntu CDs.

Data caps? You mean like, too much data? Yes, you can download too much data, even if, with network upgrades for increased capacity, the costs per bit for the ISP go down.

I know that for Comcast, when data caps were introduced, they were explicit in saying that the caps did not apply to watching Comcast programming over the internet. It's sort of their way of saying, "Hey, you're paying to use our service and we give you the bits for free, so why not?"

I know why not. Don't put all of your eggs in one basket. I don't like to do the triple play, you know, where you get internet, phone and TV all for one unreasonable price. Especially when there is little to zero competition as I have in my neighborhood. I surmise that condition is rampant in most cities in America, with the exception of cities with community broadband.

Businesses have a pretty hard time regulating themselves. We know this because we have experience that proves it. Think Deepwater Horizon, Duke Energy and Exxon-Valdez and you get the idea. The public interest is usually bound and gagged in the trunk of big business, and if government should happen to pass by in the hopes of getting a nice job with big business, well, they will look the other way.

So we have to create incentives for the businesses of the world to do the right thing, not just for their customer, but for everyone else who is not their customer. We need to do that for the environment and the economy because businesses don't exist in a vacuum. There are network effects to their actions that are often unanticipated until it's too late.

For the incumbent internet service providers, they have a proven self-interest in local monopolies. They have worked hard to eliminate any competition that might undermine their ability to milk every last cent the market has available. That includes new entrants to the market and community broadband options. Maintaining a monopoly and a captive audience are the prime directives of the incumbent ISPs, lest there be a cut in CEO compensation or a shareholder lawsuit, or both.

So if the incumbent ISPs really want a monopoly as a carrier, then we need to remember not to put all of our eggs in one basket. If you want to be a carrier, you cannot own any interest in the content you carry, capiche? That means the only thing that concerns you is carrying the bits across your network to the designated recipient and no more, while meeting your service level agreement. The service level agreement defines the minimum speed you're required to provide. If you fail to meet that minimum, you've breached your agreement.

To put it a bit more simply, if you carry content, you have no financial interest in the sources of that content. For example, if you're Comcast, you can't own any part of NBC or Universal Pictures. If you're Verizon, you can't have any special deals for certain content providers like Disney or ESPN.

Separating content from carriage ensures net neutrality because a bright red line, or a wall, has been put in place between carriage and content. No longer will internet service providers be confused about their roles in the communities they serve. You can create content or you can carry it, but you can't do both.

Community broadband doesn't share this confusion with the incumbent ISPs. Like the Keymasters in Ghostbusters and The Matrix Reloaded, they know their single, undivided purpose. Community broadband ISPs are devoted to one purpose and one purpose only: carriage, and they do that very well. You won't see them cutting deals with Nefflix for faster service. It's already there.

Unfortunately, the incumbent ISPs have peppered America with laws that stifle community broadband in order to prevent their entry into the market. But more importantly, the incumbent ISPs have prevented communities from making their own choices about how best to provide access to the utility of the 21st century, the internet. Even the FCC has taken notice of this fact.

Many states and communities are realizing that enacting legislation written by the incumbent ISPs was a mistake and some are beginning to reverse course. Why? They are starting to see what gigabit access can do to revitalize their communities, create jobs and enhance life around town. They are realizing that more often than not, that commercial interests are not always in the public interest.
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