Politics 117
The regulation of the Internet
Anti-trust
How big should anyone
on the Internet be?
• Microsoft on Google
– "If a single search engine serves as
the dominant gateway between
consumers and content—there is a
greater risk that economic forces will
not exert sufficient discipline to
prevent the dominant search engine
from altering search results to favor
its own interests or viewpoint. Also,
because consumers will lack
competitive options, it may be
impossible for them as a practical
matter to determine whether the
results reflect hidden biases or
whether there is other speech that is
not being conveyed."
“natural” vs. “paid” searches
• Transparency on
“natural” vs. “paid”
practices needed
– Natural = you search
for stuff and some
neutral system of
finding transpires
– Paid = you get results
that companies pay
for
The Sherman Anti-trust Act (1890)
• "Every contract,
combination in the form
of trust or otherwise, or
conspiracy, in restraint
of trade or commerce
among the several
States, or with foreign
nations, is declared to be
illegal."
The Clayton Anti-Trust Act, 1914
• Beefed up the Sherman Act,
outlawing
– price discrimination that
effectively turn the
discriminator into a monopoly
– exclusive deals that harm other
companies
– mergers that substantially
reduce market competition
– “Interlocking directorates” that
amount to a single company
Thomas Edison and the Motion Picture Patents
Association, 1908
Early Edison films
• Laura
Comstock’s
Dog
• Stealing
Dinner
• Princess
Raja’s Dance
Left to right: Jack
Warner, Adolph
Zukor, Carl
Laemmle (center),
Louis B. Mayer
Three ways to settle an anti-trust suit
• Fall upon the sword and die
• Break yourself up
• Enter into a consent decree in which you
engage in a series of reforms short of a
breakup
Judge Jackson: Microsoft saw Netscape
Navigator as a competitive threat (2000)
• Tethered Internet
Explorer to the op
system
• Made it more difficult
to install or pre-install
Navigator by making
Application
Programming Interface
data less available
• Orders Microsoft to
split in two
DC Circuit Court of Appeals throws out
decision (2001)
• Microsoft’s
monopoly over OS
not a “presumptive
indicator of
attempted
monopolization of
an entirely different
market“ (web
browsers)
DoJ settlement (2002)
• Microsoft must
refrain from
retaliating against
non-Microsoft
software vendors
• Must disclose all
APIs to software
and device makers
2004: European Union hits Microsoft
with 497(EU) fine
• Concludes MS had
abused its monopoly
power against the
RealNetwork
RealAudio player
• Orders MS to release a
version of Windows
without Windows
Media Player
EU finds MS tethering Internet
Explorer a violation of anti-trust laws
• Eventually
requires
Microsoft to
create a
“browser ballot”
system in which
you can choose
your web
browser (2010)
Back in USA (2009), DoJ says Microsoft
can’t stop OEMs from . . .
• Installing shortcuts to nonMicrosoft software
• Adding non-Microsoft
middleware
• Offering other operating
systems (eg, Ubuntu Linux)
• Offering a different browser
in the initial boot sequence
What you’ve got to do to get a merger
approval
The Hart Rodino act: big merger
applicants must apply for
government scrutiny
Two agencies oversee the merger,
they can be:
The Federal Trade Commission
The Federal Communications
Commission
or, The Department of Justice
December 2009, Comcast announces
merger with NBC Universal
• Comcast will own 51
percent of new entity
• General Electric (NBCU’s
current owner) will
possess the other 49
percent
What does Comcast own already?
• cable video to 24.2
million subscribers,
• serving 26 percent of
multichannel video
consumers across the
country
• high-speed Internet to
14.9 million households
• phone service to 6.5
million VoIP customers.
What else?
•
•
•
•
•
Plaxo!
Fandango!
Fancast
The Daily Candy
Comcast.net
Comcast channels
• E! Entertainment Television, 85 million subscribers;
• Golf Channel, 73 million;
• VERSUS, sports and leisure programming network,
66 million;
• G4 ("gamer lifestyle programming") with 57 million;
• Style ("lifestyle-related programming") 51 million.
• Comcast SportsNet system, with branches in the
Baltimore/Washington area, California, the
Mountain states, Boston, Portland, and Chicago
• TV Everywhere
•
•
•
•
•
•
•
The Philadelphia Flyers hockey team
The Philadelphia 76ers basketball team
Philadelphia's Wachovia Center Sports Arena.
Global Spectrum event management company
Front Row venue marketing/advertising firm
New Era ticket processing company
A skating production company, a food services
company, and several other ventures
Other stuff
• iN DEMAND
• TV One (African-American-oriented
programming), MGM, SportsNet New York
• FEARnet (horror Web TV on demand)
• New England Cable News
• Music Choice, the Pittsburgh Cable News
Channel
• PBS KIDS Sprout. (partnership between
Comcast, HIT Entertainment, PBS, and Sesame
Workshop.)
• Ten television stations
• Telemundo
• NBC Entertainment (Jay
Leno, etc)
• NBC News
• NBC Universal Sports and
Olympics Universal Pictures
(movies)
• a big stake in Hulu.com
(about 27 percent)
• Universal Parks and Resorts
(Universal Studios
Hollywood)
Comcast public interest commitments
•
In exchange for the merger, Comcast promises the following:
–
–
–
–
–
–
–
For three years, the NBC O&Os will provide at least the same
amount of local news and information programming as today
– and will not cut the amount of news programming.
A commitment to provide an additional 1,000 hours of local
news and information programming by the NBC O&Os.
An additional 1,500 programming choices for children and
families within three years on VOD.
An additional hour of children’s programming each week
(above the current three-hour requirement) using multicast
channels of NBC O&Os.
Tripling the amount of time that program ratings
information appears on the screen, from 5 to 15 seconds at
each commercial break, and enlarging the information box.
Launching a new over-the-air multicast channel using
Telemundo’s programming library.
A continued reaffirmation of our commitment to keep NBC
as a free-over-the air broadcaster with a workable business
model in the evolving economic and technological
environment.
Could merger harm Internet as source
for alternative video distribution?
• Comcast will own strong interest
in Hulu
• Comcast will have more of an
incentive to block non-Comcast
owned online content
• Comcast’s TV Everywhere initiative
ties Comcast content to Comcast
only ventures
• Ownership of NBC Universal
content will create incentive for
Comcast to limit that content as
well
Mark Cooper, Consumer’s
Union
– Mark Cooper testimony here.
Comcast will still enjoy small share of
video market
• “The Comcast share is
meek; combined with
NBC‐Universal program
assets it will account for
only about 12% of total U.S.
cable program network
revenues. This will yield
some economies of scale,
or so Comcast hopes, but it
hardly moves the needle in
terms of the concentration
of the industry.”
Thomas Hazlett testimony
here.
Senator Al Franken
on Comcast/NBCU Merger
“FinSyn” = Financial
Interest and
Syndication Rules.
Prohibited TV
stations and networks
from owning the
programming they
aired in prime time.
These rules were
largely abandoned in
the 1990s.
Senator Al Franken
on Comcast/NBCU Merger
FCC carriage rules
prohibit cable
companies from
unfairly discriminating
against non-affiliated
cable programs (eg,
putting them on a
more expensive tier).
Possible condition for approving
Comcast/NBCU
• Make Comcast share its broadband
lines at wholesale rates
• Two ways to encourage openness and
diversity
– Net neutrality
– Maximum competition
• Line sharing Berkman center report:
– "The lowest prices and highest speeds
are almost all offered by firms in
markets where, in addition to an
incumbent telephone company and a
cable company, there are also
competitors who entered the market,
and built their presence, though use
of open access facilities.“
• This is how Canada does it
Is wireless a competitive alternative?
• FCC: AT&T and Verizon,
now enjoy a 60
percent chunk of mobile
wireless revenue and
subscribers, "and
continue to gain share.“
• Sprint and T-Mobile
control most of the rest
Ways to keep wireless broadband
industry competitive
• Monitor and control early
termination fees, through
– Legislation
– Probes
• End exclusive handset deals
• Probe key wireless decisions
on blocking applications like
Google Voice, more here
• Launch “bill shock” rules
• Encourage consumers to
keep up with their data use
Most Americans are totally clueless
about their broadband speed
• "When asked to specify their home
internet connection speed, described as
'the download or downstream speed of
your connection per second,' the vast
majority of home broadband users in
the United States cannot identify it.“ –
FCC Report
• 24% say they “always” receive
promised speed (which they don’t
know)
• 47% says they receive it “most of the
time” (although they can’t identify it)
• Check your speed here.
Mbps (Megabits Per Second)
• Stands for "Megabits Per Second."
• One megabit is equal to one million bits or 1,000
kilobits.
• Kilobits (Kbps) = 1,000 bits
• While "megabit" sounds similar to "megabyte," a
megabit is roughly one eighth the size of a megabyte
(since there are eight bits in a byte).
• Mbps is used to measure data transfer speeds of
high bandwidth connections, such as Ethernet and
cable modems
• So 2,600 Kbps = 2,600,000 bits or 2.6 Mbps