Sidecut Reports

With a disclaimer that we here at Sidecut Reports are not lawyers, we nevertheless offer you our speed-reading analysis of the FCC’s full order in the Comcast-BitTorrent case. While most of the top-level details have been known since the FCC’s Aug. 1 vote, the full order does contain a few nuggets we were able to find that may raise some new hackles — while emphatically supporting our opinion that this order is just the start of Phase II of the network neutrality debate, which should get fully underway in 2009.

While Comcast is busy publicizing its own plans for the future (to delay Internet traffic of heavy users), the most interesting information that we see the FCC’s order providing is its request (on Page 33) for Comcast to disclose exactly what kind of equipment it used in its BitTorrent-related management motions, when it was employed, under what circumstances it was used, how it was configured, and where it was deployed. Like we said earlier, we’re not lawyers but it’s probably not hard to guess that disclosing such a granular level of details about its network operations isn’t high on Comcast’s desired to-do list, and will likely be one area that the cable giant will challenge legally.

Or at least try to keep sealed, should Comcast decide not to challenge the FCC’s order in court. While some knowledgeable folks think that a Comcast appeal is a given, several sources we’ve talked to (none at Comcast) note that getting this particular relatively toothless order overturned may lead to some quick rulemaking next year that gives the FCC much firmer legal ground to police such actions. So is the devil you know better than the one you don’t? Fightin’ Joe Waz, the next steps are up to you.

Reading the order so you don’t have to: Feel free to skip the first 22 pages if you already know what this whole mess is about, and could care less about how the FCC justifies its jurisdiction in the case; that’s how long it takes the commission to set the scene, with lots and lots of footnotes that just make these things so hard to read. On page 23 we finally get to the meat, under the title “Resolving the Dispute.” This is where the FCC gets to rip Comcast’s saying that delaying packets isn’t blocking — “We thus find Comcast’s verbal gymnastics both unpersuasive and beside the point.” Smack!

Page 32 is where the most interesting stuff starts — as in, the Remedy. On page 33 you’ll find the “give us all your info” request, along with the “cease and desist” threats if Comcast doesn’t abide by the FCC’s ruling. (You wonder how the FCC would enforce this — “Mr. Roberts, tear down this coax!“) After that it’s just appendixes and bloviating by the commissioners, as if their words here mean more than their votes. Sidecut Take: Not worth your time.

What is worth reading if you need to know more about net neutrality is our recent report, Net Neutrality Phase II: The Battle of 2009. We promise, no footnotes to make you cry as you try to read. And a fun Top 10 list at the end! Order your copy today.

Since we couldn’t make it to Aspen this year to participate in the expected discourse on one of our favorite topics — network neutrality — we here at Sidecut Reports humbly offer our “Top 10″ list of net neutrality influencers, the people leading the debate into 2009, what we are calling Phase II of the net neutrality deliberations.

With no further ado, the drumroll please:

SIDECUT REPORTS PRESENTS
THE NET NEUTRALITY TOP 10 INFLUENCERS

The movers and shakers in the net neutrality debate, as of August 2008:

1. Jim Cicconi, AT&T — Still the man with the most pawns and the best grasp of the board.

2. Kevin Martin, FCC Chairman — A lame duck, but with a few big quacks left.

3. Rick Whitt, Google — Looks like Phil Mickelson, and his company plays policy like Phil — sometimes a champion, sometimes hitting from behind the concession stand and off a tree. Capable of major victories, but still not Tiger-solid.

4. Rep. Ed Markey, D-Mass. — Driving the House Bus. A big bus but not a tank.

5. Joe Waz, Comcast — I get knocked down, then I get up again… just like another famous fighter from Philadelphia?

6. Ben Scott, Free Press — Riding the big wave of momentum. How long can the Silver Surfer stay afloat?

7. Lawrence Lessig, Stanford – Always effective as the lone voice storming the castle; can he compromise if he is on the other side of the ruling walls?

8. Tom Tauke, Verizon – Maybe not even the real source of power at Verizon but a former congressman who knows which strings to pull. Can pull hard with Ivan Seidenberg behind him.

9. Blair Levin, Stifel, Nicolaus — If not the next FCC commissioner, he will know who it is before anyone else (and will explain why to Wall Street).

10. Sen. Barack Obama, D-Ill. — First he has to win. Then Reed Hundt’s troops can take over.

Honorable Mention: Tim Wu, Columbia Law School; Kyle McSlarrow, NCTA; Eric Schmidt, Google; Walter McCormick, USTA; Chris Libertelli, eBay/Skype; Gigi Sohn, Public Knowledge; Jessica Rosenworcel, Senate Commerce Committee; Jonathan Adelstein, FCC; Phil Weiser, University of Colorado; Preston Padden, Disney.

Need to know more about net neutrality, or why such leading influencers think that 2009 will be a big year for possible passage of net neutrality legislation? Then order our Sidecut Report on Net Neutrality, which contains complete analysis of the recent FCC decision, as well as a net neutrality timeline and interviews with all the top players in the debate.

Google is upping the ante in the ongoing White Spaces issue, announcing today a public advocacy campaign designed to put pressure on the FCC and Washington lawmakers to free up the so-called “white spaces” of wireless spectrum that exists between broadcast TV channels. While the jury is still out on whether this idea can work technically to everyone’s satisfaction, there’s little doubt that finding more spectrum for broadband communications here in the U.S. is a good idea.

While some folks like Om Malik are pointing a cynical eye at Google’s real intentions, I can’t see how opening the debate on this and other matters broadband is anything but good. If we simply listened to incumbent possessors of spectrum on why it’s too risky to try anything new, we might never have had the Wi-Fi revolution happen the way it did. And sure, Google’s Free the Airwaves idea might produce a lot more silly home-cooked video, but if it ultimately opens up another broadband pipe in this country of duopoly providers, it’s worth the effort.

And if you’re a veteran of D.C. telecom lobbying battles, you know that Google’s new group is light-years different from the telecom “front” organizations that hide their real intentions and backers; on the Google public policy blog product manager Minnie Ingersoll is pretty straightforward when it comes to Google’s motivations:

Google has a clear business interest in expanding access to the web. There’s no doubt that if these airwaves are opened up to unlicensed use, more people will be using the Internet. That’s certainly good for Google (not to mention many of our industry peers) but we also think that it’s good for consumers.

Before any of the next-generation ideas in the white spaces can take place, however, the spectrum needs to be freed up. As we noted in our recent QuickCut Report on WiMax Spectrum, there isn’t a lot of spectrum available right now at the 700 MHz frequency, which is where AT&T and Verizon are planning to launch their so-called 4G networks. So why not free up the white spaces, or at least ask more questions why not? Sure it may mean more money for Google, but in these times of pending metered broadband that seems like a weak reason to oppose the idea.

Great stuff from Declan McCullagh today over at C/Net, in a post where he skewers the ongoing fake-newspaper-editorial efforts of Comcast and others in the net neutrality debate. In case you’re not up to speed on this tactic, it’s a time-honored practice in D.C. — big lobbying money fueling so-called “grassroots” outlets who spew the company line in op-eds that never reveal the writers’ true source of information and cash.

As McCullagh points out with links, the practice works — mainly because a big bunch of journalists and bloggers are too lazy to care, and instead just snarf up whatever press release or “official” sounding thing they see, and turn it into a quick story or post. This sad example (about a supposedly grassroots group asking Congress to investigate the Yahoo-Google search deal) that McCullagh found shows that there are still too few like Declan who are willing to dig behind the scenes, and too many who rubber-stamp officious sounding material without a second glance.

Of course, that is what the astroturf sponsors are counting on. And while we do sense a softening in the net neutrality debate and more acts of cooperation, that doesn’t mean the astroturfing will end. Not as long as there are lazy folks on the front end and shills on the back end to keep the astroturf train running.

As we finish up the editing chores on our coming (now live!) Sidecut Report on net neutrality, we wanted to share with you now an email Q-and-A with Rep. Edward J. Markey (D-Mass.), chairman of the House Subcommittee on Telecommunications and the Internet, while last week’s FCC Comcast ruling was still fresh in everyone’s mind.

Sidecut Reports: You have been a passionate advocate for network neutrality for quite some time now. Can you describe what motivated your interest in the topic, and why it became a priority for your office?

Rep. Edward J. Markey: When I was chairman of the Subcommittee on Telecommunications and the Internet back in the late 1980s, I successfully beat back an FCC proposal that aimed to levy per-minute access charges on enhanced services, such as Prodigy, Compuserve and others. My argument was that rather than subjecting the emerging “information industry” to such fees, policymakers should instead seek ways of nurturing access to such information. Winning that fight is the reason we have flat-rate Internet pricing today and this has helped to make the Internet wildly successful with consumers across the country.

Making sure we get policy questions right helps to allow the geniuses at the edges of the network innovate. Network neutrality is in many ways simply a battle against the certain incumbents’ latest attempts to levy new fees or otherwise constrain innovative new competitors. I’ve spent years actively exploring the future of new media technologies. I’ve been an outspoken advocate of promoting choice and innovation, including minority ownership, diversity and localism, in all areas of telecommunication policy.

I believe that an open, non-discriminatory experience on the Internet continues to be vital for consumers and innovators to reap the benefits of this wildly successful medium. The Internet’s role as an economic and cultural phenomenon must be protected by ensuring that the American people are free from unreasonable discrimination by broadband network providers.

Sidecut Reports: Given the distractions for elected officials in a Presidential election year, why did you decide to introduce legislation this year? Might such legislation have a better chance of passing or have a better chance of reasonable debate at a later time?

Rep. Markey: I offered my legislation, the Internet Freedom Preservation Act of 2008 (H.R. 5353), now because preserving the openness of the Internet and protecting our global competitiveness is an issue that I believe needs to be front and center in any telecommunications debate, and it obviously helps to educate the public about the issue even as we look to next year for more progress.

Sidecut Reports: While policy and communications are inevitably intertwined, at what level of priority should communications legislation be for voters, given other pressing social and economic issues?

Rep. Markey: Telecommunications policy is critically linked to social and economic issues. The World Wide Web has become indispensable to companies large and small, regardless of whether their commercial aspirations are locally-oriented or of global proportions. Voters recognize that the Internet has no peer in its ability to foster innovation and provide low barriers to entry for new ideas and businesses.

Sidecut Reports: You seem to be in the Congressional lead for using social media tools like YouTube to increase communication between Washington D.C. and the rest of the country. What is the level of technological acceptance among your peers, and how does that affect the debate of issues like network neutrality?

Rep. Markey: For me, the use of new technologies, like YouTube, has enabled me to communicate with my constituents in new and exciting ways. Congress as a whole is increasingly embracing new technologies (beyond just the requisite Blackberry) from Twitter to Second Life. My goal in the Subcommittee is hold hearings to further highlight the benefits of these technologies and important policy questions that need to be resolved.

Rep. Markey’s responses will be part of our upcoming report, along with excerpts from a long string of interviews with top policy execs from AT&T, Google, Verizon and Comcast, along with leaders of top public-policy consumer groups like Free Press and Public Knowledge. For an email note when the report is ready, drop me a line to kaps at sidecutreports.com.

With all the excitement around the Comcast Order sure to break at Friday’s FCC meeting, if we can’t get on the webcast we’ll watch Drew Clark’s tweets from the proceedings… heck, we’ll watch Drew’s tweets anyway, because they are sure to contain all his great analysis that the stale webcast won’t provide.

FCC commissioner Robert McDowell leaped into the opinion-making fray in the net neutrality debate today, with an editorial in the Washington Post that some have called a sober assessment of the debate, while others have deemed it just more talking points from a former lobbyist.

I actually agree this time that McDowell’s essay is more sensible than most from the GOP side of things, even with a few slips into “regulations will kill the Internet” territory of tired telco BS. Generally it’s not a bad read and it does well to note that in previous instances of Internet pipe-clogging, it was engineers, not lawyers and lobbyists, who solved the problem. A good thing to remember.

What is interesting is to see McDowell say that technical and business solutions are the only way to fix net neutrality problems, at one point claiming the FCC itself simply can’t move fast enough to deliver sensible regulations in Internet time. (So maybe, it’s best we don’t rely on Bob and his co-workers!) But you have to wonder how such “collaborations” might occur in a real world, where typically one party has market power and the other doesn’t. McDowell says the government can step in if needed, but if there are no rules or no clear jurisdiction, then how and when will the government decide to act?

McDowell says, “Sometimes shining sunlight on issues produces amazingly beneficial effects, and the public interest groups that raised the BitTorrent matter should be praised for doing so… Let’s stick with what works and encourage collaboration over regulation.”

A great idea, but would Madison River have stopped blocking Vonage, if not for the FCC’s actions? Would Comcast have listened to the Free Press complaint, or would it have just gone on denying there was a problem, if not for the threat of potential regulator penalties?

For every Comcast-BitTorrent agreement, there is an Ed Whitacre, ready to say you can’t ride his pipes for free. Ed is retired now, but many who would argue with him remember… and perhaps aren’t as willing to trust in collaboration as McDowell is.

(UPDATE: Adds Clearwire response.) As we predicted in our Sidecut Report on WiMax, the “new” Clearwire deal, with its heavy-hitter lineup of investors and their $3.2 billion in capital, was sure to attract the attention of the big telcos, namely AT&T and Verizon. In our predictions we guessed that the big telcos would turn up the heat on Clearwire any way they could, and today it looks like we were right since AT&T just filed a rather lengthy complaint with the FCC, suggesting that Clearwire’s merger application needs a bit more work.

While politely suggesting that AT&T “does not fundamentally oppose the underlying transaction,” the big telco nevertheless accuses Clearwire of not accurately disclosing the full amount of 2.5 GHz spectrum it has access to, perhaps in an attempt to escape greater FCC scrutiny. Of the several complaints AT&T has, this seems to be the most worthy, especially since (as AT&T points out), other carriers (like itself) have been held to very strict spectrum accounting methods during mergers. As AT&T says:

While AT&T does not fundamentally oppose the underlying transactions, the regulatory process must be consistent for all providers, and the FCC must subject Sprint Nextel and Clearwire to the same standard under which it reviews all other carriers.

(What that really means: Hey Kevin, slow these guys down!)

Being somewhat cynical in nature, we had asked Clearwire CEO Ben Wolff specifically about the company’s FCC filing in our recent interview with him, since it appeared even to our non-legal eyes that there was a mountain of spectrum-transfers that looked ripe for questioning. At that time, Wolff said “all the feedback we’ve gotten [on the FCC filing] is generally positive. There don’t seem to be any concerns, nothing contentious.” Wolff did say that Clearwire expected to have a “higher profile” with the new deal, and had always kept a significant presence in Washington to handle regulatory matters. “The wind is blowing in our direction,” said Wolff about regulatory issues. “We can never be too lax, but we are on the right side of the story.”

A quick parsing of some of the comments already filed on the proposed merger does find many in support of Clearwire’s intentions, including WiMax provider DigitalBridge and Voice over IP provider Vonage. In an email reply, Clearwire spokesperson Susan Johnston added: “in detailed spreadsheets and text spanning more than 300 pages, Clearwire and Sprint documented all of their spectrum holdings in minute detail and described the myriad public interest benefits of the transaction. With this filing, the FCC has all of the data and information it requires to perform any competitive analysis it might find warranted.”

Still, given AT&T’s clout with the Kevin Martin-led FCC, it should be interesting to see if and how the commission reacts to the telco’s complaint.

If there is any doubt that Clearwire might be a worthy competitor, it may make sense to read what both AT&T and Verizon have to say. In its complaint, AT&T offers the following statement:

In June 2008, Sprint Nextel Corporation and Clearwire Corporation filed at the Federal Communications Commission its application for merger approval. Our attached FCC filing shows that the combined company will become the largest holder of licensed and leased mobile spectrum of any other carrier, have a service that will be commercially available later this year, have financial backing from Google, Intel, and three of the nation’s largest cable television companies and be fully capable of substantially impacting competition in the mobile communications market.

Verizon, in a filing regarding its proposed merger with Alltel, had this to say about Clearwire:

A new competitor will soon be entering the wireless broadband market. Sprint Nextel and Clearwire recently announced a deal with cable providers Time Warner, Comcast and Brighthouse, chipmaker Intel, and google, under which Sprint Nextel’s and Clearwire’s next generation wireless broadband businesses will be combined to form a new wireless communications company. The combined company will have access to an average of 150 MHz of spectrum in the top 100 markets and an average of
100 MHz in areas outside of the top 100 markets - making it the largest spectrum holder in the Unites States. The merger of ALLTEL and Verizon Wireless will enable Verizon Wireless to compete more effectively with this significant new player. The Clearwire venture plans to serve a substantial portion of the U.S. population by the end of 2009, and must be considered a strong entrant in the mobile marketplace.

Well, if they say so!

Need to know more about WiMax? Order our recently updated WiMax report, with full analysis of the “new” Clearwire deal and the motivations for investors Comcast, Google, Intel and others.

Anyone who’s followed broadband policy matters knows that the FCC’s previous attempts to define what broadband is and how much of it is around has pretty much been a joke. Now that the Bush Administration’s promise of broadband everywhere by 2007 is seen as nothing but a hollow promise, politicians are waking up to the fact that it would be a whole lot better if this country had an actual strategic plan for advancing broadband deployment.

But as Karl over at DSL Reports so wonderfully points out, relying on the current incumbents to draft that plan may not be such a good idea. Our friend Drew Clark, who is trying to build a broadband census of his own, also weighs in on the current kerfluffle.

(Hat tip to Stacey H at GigaOM for the link.)

Back in February, we reported how frustrated FCC commish Jonathan Adelstein was at the pace of broadband deployment in the U.S. While we liked his idea of national broadband summits, at the time it seemed like a good idea without much behind it.

Tuesday, Google and a few of its friends got behind the idea in a big way, launching something called Internetforeveryone.org, which is clearly a place for Google and others to promote their ideas for open, more-available Internet to the masses.

Google, which explains the new endeavor on its public policy blog, is continuing its all-in push into public policy by backing the Adelstein/Lessig/Free Press idea. By holding the as yet-unscheduled summits, Google and its partners can also produce dialogue that with any luck won’t be as scripted or stilted as the FCC hearings that pass for the best discourse on public policy and broadband matters.

Since our next report (due out soon) is about network neutrality, we couldn’t agree more that the level of debate on broadband policy needs to be increased. No better time than now.