We’ve all heard how Comcast is exempting its own IP video traffic from its bandwidth caps. But by doing so, it’s not just the FCC’s Net Neutrality rules they are taking on, but the terms of the consent decree that allowed them to buy NBC Universal just last year. And as some others noted at the time, it’s actually in there rather explicitly.
From Section V. Prohibited Conduct, in section G. Practices Concerning Comcast’s Internet Facilities:
- Comcast . . . in the provision of Internet Access Service, shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s Internet Access Service.
- If Comcast offers consumers Internet Access Service under a package that includes caps . . . it shall not measure, count, or otherwise treat Defendants’ [i.e. Comcast, GE and NBCU] affiliated network traffic differently from unaffiliated network traffic. Comcast shall not prioritize Defendants’ Video Programming or other content over other Persons’ Video Programming or other content.
Comcast’s argument to the net neutrality crowd is that their Xfinity TV service isn’t part of their Internet Access Service, as they travel on different pipes. But here Comcast seems to have agreed not to ‘measure, count, or treat’ network traffic differently when it comes to caps, and different pipes or not it’s still network traffic. Sending their own traffic down a separate pipe that doesn’t get counted seems impossible to reconcile with this language. It’s still network traffic, and it’s quite explicitly being treated and counted differently.
To put it another way, this restriction on counting differently with a cap would have no meaning at all if one could bypass it by doing what Comcast says it is doing. Clearly the DOJ meant this clause to have meaning, so I doubt the agency is particularly pleased to have had it bypassed so brazenly.
Now, I know that reneging on promises made to the FCC and DOJ for the purposes of getting M&A approved isn’t exactly uncommon in the telecommunications industry. But generally one waits a few years and just quietly forgets to follow up while sending the regulators gourmet donuts or something. This is a tad more public, yes?
Perhaps it’s also more enforceable, since few seem to think that the FCC’s Net Neutrality rules will hold up in court for long. After all, Comcast has another deal in front of regulators right now – the sale of AWS spectrum to Verizon. Surely the DOJ would be hesitant to approve that deal with conditions if the conditions it added so recently have been ignored or bypassed with such ease.
It’s not just the upstart Netflix anymore. The Japanese giant Sony says Comcast’s capping maneuvers are hindering their own big video plans, according to ArsTechnica yesterday.
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Categories: Government Regulations · Internet Traffic
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Nice work along with analysis! You’re an animal, POWELL!
This is certainly no surprise. Great summary though, more consumers should understand what their money is feeding.
The problem is in the title of the section, ie “Practices Concerning Comcast’s Internet Facilities” – by saying Internet, in Comcast’s mind this does not touch the video service and legally I tend to agree. Everything flows under the title, you can’t give the word “network” a more general meaning all of a sudden when it has already been bounded.
anon, great point, but isn’t a rose by any other name….??
comcast refers to this as a streaming product, not a cable product. If it’s not cable and not internet, what exactly is it?
I think this is just another move towards their bigger balkanization strategy with eyeball owning network operators like vz, t, comcast, cox, etc on one side and content, data center and transport on the other.
From the outside it looks like Comcast (and it’s eyeball owning network operator peers) feels like it has the political might for this battle. Why else undertake such a provocative measure with this streaming product?
It seems every bit as arrogant as ATT’s decision to acquire T-Mobile with such onerous breakup fees. I hope it suffers the same fate.
Comcast and its supporters publicly wrap themselves in capitalism and ayn rand free markets, but nothing could be further from the truth. They neglect the fact that in each market Comcast operates in, it was first granted EXCLUSIVE franchise rights by municipalities.
Now that that they have the infrastructure in place, they say to regulators let the free markets operate naturally. Comcast’s idea of competition is a duopoly against the other carrier that built its network with its own set of exclusivity rights.
What they’re really doing from a network perspective (ie logical vs physical separation – I am sure they are doing the former and not the latter) is one thing, but the main point is that the regulation words cover Internet service and are not other things. So as knowledgeable networking professionals we may say it’s all the same thing, but I am not convinced it is from a regulatory perspective.
Otherwise we’re essentially saying that any network operator (AT&T, Verizon, etc.) which carries both video and Internet on the same physical network becomes potentially subject to regulation. Especially where the same network is used for both public and private (ie Enterprise) IP services, if they are considered identical from a regulatory perspective, then the implications are profound and wide-ranging.
I don’t disagree, but I would point out that the other side of the coin is equally valid. If all one has to do to become unregulated is to add a QoS tag to certain traffic and call it a private network, then no traffic can ever be effectively regulated. The implications are then similarly profound and wide-ranging.
Are airline passengers of x weight and a package of x weight treated the same?
I’ll bite, no
Suggests that regulated (FAA) carrier has right to charge for a ride on its network as it sees fit… Some charge for bags, some don’t. Some carry produce ($$) some carry junk mail. It is up to the owner to decide how to own & use the owned asset
Anon, hopefully, i understand what you’re saying, but you’d be ok if AA or USAir started manufacturing their own luggage and told passengers they’ll be exempt from paying baggage fees only if they board and/or check-in with the airline’s own line of luggage?
What if all the major airlines started charging fees for laptops, book readers, mp3 players, cell phones, etc. that weren’t manufactured by airline’s NEW line of electronic/hi-tech gear?
You may have just solved the airlines’ recurring financial problems.
Does “I don’t disagree” mean you agree? 🙂
I think all this proves is that the regulators are not sophisticated enough to enact laws that achieve their objectives.
Neither your scenario nor mine is appealing for them, although I would argue mine is more immediately commercially catastrophic, there are ways to mitigate yours.
anon & rob, i think you both make fair points.
Anon, I think your argument is exactly how comcast will respond to regulators and DOJ. They’ll provide packet-flow diagrams, engineering diagrams and descriptions that seek to demonstrate a meaningful difference between their streaming content delivery and Netflix’s. Their response will include affidavits from experts and engineers supporting their claim.
In response, I suspect, Netflix, Hulu, and the rest will try to demonstrate that the differences comcast highlights (e.g., Rob’s QoS tags) are enabled because the content originates on Comcast’s network by Comcast. In other words, the differences are purely a function of Comcast’s vertical integration of content, transport and delivery. But those differences are merely features on top of existing packet delivery technology and not some new technology in itself.
Rob, I agree with you that the implications of granting comcast a pass on this would have wide-ranging impact.
“Comcast’s network by Comcast” is a euphemism for “THE LEVEL 3 NETWORK” which they are “LEASING” via IRU’s and approx. twenty years remaining tethered to their TYRANNY against citizens’ best interests.
Futurist, Jacque Fresco has it right when he says, “THIS SHIT HAS TO END!”
http://www.cmcsk.com/releasedetail.cfm?ReleaseID=394770
Lease, Purchase, Right-to-Use don’t change the analysis. Airline can own the plane, lease it or charter it and still price tickets, bags and sandwiches as they see fit. When (and why?) did a private cableco become a public park?
To Cost Causation,
Re AA making their own bags and then discounting: YES! I call it free enterprise. If you don’t like what owner is selling, don’t buy. This is why Amazon worked and Webvan didn’t. Soviets mandate who sells what and for how much. In America we let the market and the “wisdom of crowds” sort through who has better prices, products & services
What if I told Rob Powell that “blog neutrality” obligated him to charges less for ads, more for moments and mandated that he use or buy Reuters content. Nabsurd. Just like forcing Comcast to treat stuff they don’t own & don’t favor as if they do ???
Anon, as for your last comment about “forcing comcast to treat stuff they don’t own & don’t favor as if they do” that’s a slightly different scenario. I’m pretty sure that’s exactly what the internet is and why Comcast was able to eke out an additional $25-100/month from its subscribers.
More importantly, Comcast WAS GRANTED A MONOPOLY IN EVERY MARKET IT SERVES to build its infrastructure. (I’m not looking for a battle but you seem to overlook that very HUGE privilege.)
As I’ve said before, COMCAST is (and you seem to agree) now finding its inner-capitalist spirit and telling regulators and content competitors that Comcast is just doing what a good capitalist does. BUT I have a hard time with a business first seeking the guarantee of a regulator to protect its market and then, once solidified, telling the regulator to go away and let me compete as I choose. Exactly what tenet of capitalism is that?
There does not appear to be any meaningful difference between Comcast’s streaming product and Netflix’ or Hulu’s or others. If there was, Comcast wouldn’t need to induce customers with a capless benefit that its competitors could not possibly provide.
The entire reason we’re all paying Comcast or Verizon an extra $25-100/month for high speed Internet is for the content others were producing. Now you seem to be saying that it’s communistic to tell comcast what Internet content it must deliver. Isn’t that effectively permitting Comcast to redefine what the Internet is.
As Comcast’s customer don’t I have a right to know if they’re not going to deliver the content I want?
I come back to my original point (and name), if Comcast thinks I’m consuming more bits and bandwidth than they’d like, CHARGE ME!!! Don’t charge the content provider. I AM THE COST CAUSER.
Anon, I guess I see a wasteful diminution of consumer economic welfare when monopolists, duopolists or oligopolists use their market structure to coerce consumers into acquiring lower quality goods and services than the market would produce in a more competitive market structure.
Under this scenario, if I fly AA 5-10x a year because they have a hub in my home market, it will be cheaper to purchase lower quality — but, perhaps, higher priced — AA licensed luggage and electronic gear to avoid excess fees. In this scenario innovation by other manufacturers of luggage and hi-tech gear is stifled by the undue influence of the airline industry flexing its market structure on consumers.
While I agree that it’s AA’s asset and they’re free to do with it what they like, the artificial barrier and innovation suppression this creates, I believe, will hurt the economy in the long run. (Staying with this example, even if, let’s say, HTC were to enter in a licensing contract for smart phones with AA, HTC would be forced into paying rents to AA merely to hold on to the same market share they have already. Those incremental costs will be passed on to consumers.)
To be clear, they certainly can do this, but something about it just doesn’t pass the smell test for me.
I think we agree a fair amount. No argument at all for the Bells who began life as a government protectorate. But to call Comcast a monopolist is perhaps a bridge too far. They pay franchise and ROW fees everywhere they serve (Bells don’t) and have plenty of competition (e.g., DBS x 2, verizon FIOS, etc). NYC and Chicago (best, densest markets) even have a second cableco. Why exactly does Comcast have to bill you for using a service they don’t favor? AT&T doesn’t allow Skype over cel network and AA doesn’t let customers buy seats on southwest and show up on AA. My local bar says no shirt = no beer. I can agree that aggravating customers isn’t. Good plan but shouldn’t an owner be free to do so?
Anon, we need to take a step back and consider what the consumer purchased with his/her high speed Internet access from Comcast, Verizon, ATT, Cox, etc. Content editing was not part of my package when I signed up.
I get that I DID accept some form of content editing when I chose between DBS, FIOS and Cable for television programming. If VZ offers more HD sports channels and I like HD sports, I choose FIOS. If Comcast offers more DIY channels and I like DIY, then I go there.
On the other hand, the Internet access I purchased did not come with any such packages or selections. My neighbor could watch his son’s little league game on youtube that the coach uploaded while I listened to a lecture on string theory presented on the princeton physics homepage uploaded by a professor. At the same time my neighbor and I could IM with each other on our AIM accounts about Saturday’s fishing trip.
What seems to be happening here is that Eyeball Owning Network Operators (EONOs) want to redefine what the Internet is. As a high speed INTERNET access subscriber, I don’t expect Comcast or VZ to tell me what I can and can’t download/upload, view, read, learn, etc unless it’s against the law or it’s a virus that can harm the network. I purchased a dumb pipe over which I alone would choose what I want to see and send.
EONOs CAN certainly put a limit or charge me for exceeding some contractually agreed upon limit. But when they suddenly start telling me what Internet material I can and can’t watch either by content blocking or content discrimination, then I’m no longer purchasing Internet service.
By your standard if Comcast decided to branch into pay education, they could suddenly restrict my access to the princeton string theory lecture because, they believe, it conflicts with their own content. I purchased Internet access not Comcast Selected Content access.
If my wife purchased a canister of pepper spray, only to find out it was baby powder after being attacked, would you say that the pepper spray manufacturer was within its rights to redefine pepper spray to include baby powder without informing the consumer?
How is your support of Comcast’s content editing and discrimination any different? I pay for high speed Internet access — a packet delivery system — and that’s what I expect Comcast to deliver.
How fast would subscribers abandon Comcast’s High Speed Internet service if Comcast announced tomorrow they would commence content editing and content discrimination? Borrowing from Monty Python, I’d say that event would make the Netflix backlash look like a mere flesh wound.
I am not saying that comcast’s business decisions – recorded in their Terms of Service – are great or smart. But they ate their terms of service. Like paying $16 for wifi at a hotel – annoying but up to the hotel. Vid you don’t like Comcast, Hilton, AA or Pepsi (they choose ingredients) then vote with your wallet and buy from someone else. But to ask the State to force them to change their products, services & pricing is off the charts
Anon, please take a look at Comcast’s Policies page documents, including Terms of Services, Comcast Agreement for Residential Services, Terms and Conditions of Sale for Products for High-Speed Internet Customers, etc…..
http://www.comcast.com/Corporate/Customers/Policies/Policies.html
I’ve been through those associated with High Speed Internet (HSI) and I don’t see where they have the kind of content editing or content discrimination rights you say they have.
I’m not trying to be a wise ass, but I just don’t see it.
Respectfully, the comments you make above about their right not to provide me with a service (or access to a website) they don’t favor does not seem to be present.
As noted above, I buy Internet access under the Comcast HSI offering, not Comcast Selected Content access.
The debate between A along with CC on this thread, continues to be one of the most rational, spirited conversation thread I have observed on this board in a long time. Than you both!
The analogy which CC offers tied to a pursuit of “education” interests, passions, and/or requirements over an unfettered “internet connection” continues to ring loud and clear in my mind.
Moreover, when and if those Monopolists or Oligopolists were ever required to “prove” their “costs” to add to price for their “DUMB PIPES” like the FCC continues to refuse to do in the case of their gouging Netflix subs with an additional carrying fee tied to the Level 3 dispute, we might finally see our “naked internet” connections from which they have been granted licenses by regulators over time, heading down versus up!
Has anyone figured out why these TITANS in the last mile have an AD REVENUE STREAM–pun intended–while carriers carrying ad bits for long distances from content creation to consumption do not?
I recommend a DISTANCE FORMULA be created to address these INEQUITIES.
And while I am at it: FREEDOM!!!!!!!!!!!!!!!!!!!
Carlk, can you provide a reference article or material on ISPs deriving ad revenue. I’m not aware of that. I was under the impression the ad revenue went to content owner and any intermediaries they’re working with.
Personally, I think neither Eyeball Owning Network Operators (EONOs) nor IP Transit providers should get any ad revenue.
EONOs recover costs from subscriber revenue and IP Transit providers from the content providers.
Unless content providers volunteer to share ad revenue with IP Transit providers to cover IP Transit costs, I see no reason for that arrangement.
I was just noticing that Cogent got depeered in China, CC. Enron must be MAD as HELL!
As for your ISP question, are you not aware of content owners paying Akamai for “value added” ad services from which Akamai shares a portion of those revenues with network owners including the cables as well as other in the last mile?
This of course, is not UNCOMMON in non internet delivery systems by cable, telecom and satellite corps. in the last mile as well.
It’s time for the largest carrier of IP traffic X the globe to collect FAIR FREIGHT inclusive of understanding the lunacy behind the archaic regulatory scheme of P2P traffic or “FREE EXCHANGE” by sharing a portion of the ad revenues that EYEBALLS are seeing courtesy of their network carriage.
can you provide a link for that…no, i’m not familiar with it but would like to read more.
I’m very familiar with the cable tv side of the revenue which makes sense to me, but was unaware it occurred on the ISP side.
Carlk, as for your “FAIR FREIGHT”, argument, unfortunately, it doesn’t really work for me. No reason for content providers to give any ad revenue to transport providers. Transport providers are already collecting IP Transit fees. If not making enough, they should charge more for IP Transit. No compelling reason for more or revenue share.
CC, have you reviewed the satellite t.v.’s yearning for earning AD DOLLARS yet? Direct T.V. is one that comes to mind with heavy emphasis as well as focus on the ad revenue side including selling it directly to advertisers reaching their end user world.
I have often called Akamai, the cables’ and telecoms’ “dirty little secret” in exchange for domiciling their “edge servers” inside their homes, i.e. co’s or head ends, sometimes for “free” depending upon “agreements.”
It’s not by accident that you are receiving ads for things you might be writing about or discussing in your private emails. Privacy?
Has this never happened to you as part of being an internet traveler?
CC, BIG BROTHER has YOUR NUMBER! Be careful out there!
Since Big (3) is providing “intelligent bandwidth” from creation to consumption, there is no reason why this spectacular company bringing global eyeballs together after investing nearly forty billion pesos and still counting, shouldn’t be arranging such terms with their content customers across the INTERNET PARADIGM.
I was always cautiously optimistic that this would come to pass for this NETWORK OWNER, when a couple of years ago, a FOUNDING INTERNET FATHER with MIT roots agreed with me.
I will be forever thankful when it finally occurs. “Sharing is caring” and the long term stability of the internet will not be LOST when this begins.
Never mind, I found it.
“Note that Netflix formerly did its streaming through Akamai’s Content Distribution Network (CDN) which shares revenue with participating ISPs. Level3 probably got the Netflix gig by beating Akamai on price and they beat Akamai on price because they are relying on that darned peering agreement to make it possible.”
I don’t have a problem with Akamai revenue sharing if it’s in lieu of IP Transit fees. As the above quote suggests, transport providers like LVLT can remain competitive in IP Transit space if peering arrangements hold.
Peering arrangements come under pressure when net neutrality goes out window and replaced by access-like regime. If IP Transit providers lose their peering status with EONOs or they are forced to pay an access fee to deliver, for example, time sensitive packets, then content providers, I suspect, will move their content to CDNs resident on EONOs networks.
Should that happen, I don’t think that will be a very good outcome for backbone providers.
The answer, however, is not to force ad revenue share models.
I believe the central issue in this debate revolves around the answer to a single question.
Does Comcast have a dominant market position in one or more markets? If the answer is yes, it’s a violation of antitrust laws to use this dominant position to disadvantage competitors like Netflix. It was AT&T’s abuse of such a dominant position that led to the 1984 breakup. Microsoft ran into a similar problem in the market for computer operating systems.
For my part, I believe that if the market is defined as broadband access of sufficient speed to enable full screen broadcast quality video, than Comcast et al do have a dominant position. The FCC apparently agrees since a footnote in the Open Internet Order notes that cable ISPs supply about 70% of the “video quality” broadband access in the US. I would note that most antitrust lawyers would say that over 60% share of a market is the line where dominance begin to be an issue.
PS: A “market” for antitrust puposes includes both a product or service, and a geograpical component. I think that there is little doubt that in many areas of the US, cable is the only practical high speed provider of video quality access.
While I don’t disagree, I don’t share your certainty about DOJ’s Antitrust department intervening anytime soon.
It will take the likes of larger content providers than Netflix and Hulu to get DOJ engaged. Why traditional media with a large internet presence haven’t been more vocal is beyond me. Where is Disney, ESPN, NFL.com, MLB.com, Apple, Bloomberg, ABC, CBS, etc? (I know that Cap Cities owns ABC, ESPN and Disney.) These multimedia giants have a vested interest, yet, as far as I can tell, they have been relatively quiet.
If I somehow implied that DoJ would take action, I misrepresented my views. Antitrust actions take many years to develop and I heavily dependent on which way politaical winds are blowing. I just expressed a personal opinion that Comcast and potentially other ISPs have the means and motive to violate the anti trust laws and may very well be doing so today.
CC, you really have to love “THE BACKBONE” Reed Hastings has! We will agree to disagree on the changing paradigm necessary for distributing “ad revenues” equitably to the various pieces of the internet puzzle.
http://www.fierceonlinevideo.com/story/netflix-presses-case-against-discriminatory-data-caps/2012-05-14
A letter to FCC Secretary Marlene Dortch indicates that Netflix officials pressed the company’s case to U.S. regulators that broadband caps should be applied fairly to all online-video sources.
Short of that, data caps should be eliminated entirely, company executives told the Federal Communications Commission, in a May 8 meeting with the FCC’s Office of General Counsel.
Broadband caps that are not applied fairly “limits” end-user control, are “not transparent” and interfere with consumer choice and “distorts” competition, Netflix officials argued in a presentation to FCC officials.
Read more: Netflix presses case against ‘discriminatory’ data caps – FierceOnlineVideo http://www.fierceonlinevideo.com/story/netflix-presses-case-against-discriminatory-data-caps/2012-05-14#ixzz1uyq2smwo
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