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back to article Almost everyone read the Verizon v FCC net neutrality verdict WRONG

Doomsday arrived this week – or is about to. That's if you've been reading the tech blogosphere. "We are the Folk Song Army. Everyone of us cares. We all hate poverty, war, and injustice, Unlike the rest of you squares." - Tom Lehrer A US appeals court ruled on Tuesday that America's communications watchdog the FCC didn't …

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No choice

For a fair amount of America there is no choice in the ISP that you use. You can have multiple dial ups (they still exist here), maybe a crappy DSL connection, or a cable connection. Outside of major population centers in the US it is the norm to be subject to a monopoly or, at best, a duopoly as far as broadband is concerned, while that is the case the providers can pretty much charge and do what they want. Same market forces apply to mobile phones here, the consumer get's screwed.

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Re: No choice

Well stated and I want to reinforce this point. In my area there is no chance of competition due to franchise agreements between the providers and the city or county. And even in areas where that is not the case, the subscriber base is too small to make it viable for more than one player to enter the market. In areas where there more than one choice, it is between a cable TV provider (e.g. Cox Communications) and a telephone company (e.g. AT&T). Both of course offer their own video services, so they both have a vested interest in making the use of Netflix et al either frustrating or prohibitively expensive.

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Anonymous Coward

Re: No choice

And even in metro areas where you have several providers, you may still not have a choice. For a long time TWC had exclusive contracts in MDUs (multiple-dwelling units, or large apartment buildings). Several years ago NYC changed the laws to give access to other providers. But in many cases, the condo/co-op board members refused to allow access to the other provider. We managed to get our board of directors to agree last summer after much bickering and replacing board members... but there are plenty of other boards that simply refuse.

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Pint

Number of "broadband" ISP options available in my neighbourhood

One.

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(Written by Reg staff) Bronze badge

Re: Number of "broadband" ISP options available in my neighbourhood

Thank the FCC for that one. They destroyed local competition.

All that energy expended over 10 years fighting for something that doesn't exist could have been spent campaigning for local loop competition, and making the giant telcos contribute to a healthy public backbone, and open and transparent public peering. What a waste of time.

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Nice straw man

"...what lingers is the image of the American consumer who doesn't even realize his or her Netflix stream has been blocked, and simply (presumably) stares at the screen".

The way it would really be done would just be via degradation. Dropped packets, occasional freezes, stuttering. Stuff that would be hard to track down and prove responsibility for. I'm reasonable technical, but I certainly don't have the networking knowledge or tools to be able to track and prove that type of degradation. So instead of a completely failed service, there would be a perception that (say) Netflx doesn't give as good a service as (ISP company X)'s own competing service. Or at least wouldn't unless Netflix ponies up some readies ("nice streaming service you have there. Would be a pity if some packets got... dropped").

However, in spite of that, I enjoyed the article. Nice to make it clear that the judges were basing their decision on how the law was framed (such that the FCC were overreaching their remit) and that it is the responsibility of the law-makers to resolve this if they wish FCC or some agency to have those powers.

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Re: Nice straw man

I would add that what consumers don't have a way of knowing is who is at fault for the failure of a remote service. If Netflix appears down, but other Internet sites work the presumption may be that Netflix is where the problem lies. Intentional blocking by traffic carriers is difficult to diagnose. I also agree that consumers have limited options to vote with their wallets.

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Re: Nice straw man

Your comment hints at a bigger problem: there are many things that could cause Netflix service to be "degraded" on Company X's network besides intentional interference on X's part. If the links between Netflix's datacenters and X's network are all at capacity, then X's customers will have problems accessing Netflix. Who is at fault here? More to the point, the only way to fix this is to install a bigger connection between X's network and Netflix (or install some Netflix caching servers directly on X's network) - and neither Netflix nor X are really going to want to pay for this. Furthermore, since the servers supporting X's VOD service are already on X's network, they won't be affected by this congestion and the quality of service will be better. Note that there is no "intentional" degradation of service involved here!

The bottom line is that network neutrality laws and regulations are going to prove very troublesome to enforce, because "degradation" can be percieved in many ways. In the good old days when most sites were producers as well as consumers of data and traffic between networks was more or less symmetric, congestion was everybody's problem and fixing it benefitted all involved. But now that the Internet has evolved into a distribution system for YouTube and Netflix, things are a lot less symmetric and congestion therefore becomes a very thorny issue.

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Pint

Re: Nice straw man

I'm an American, and I've been trying to read this entire article. But the screen went blank as I was reading it.

Since then, I've just sat here in a trance, staring at the blank screen. For hours.

Hoping someone will please bring me some beer.

Can't move to get my own beer. The blank screen is trying to tell me something... something very important I think...

The blankness of the screen is so lovely and fascinating - like Sartre's nothingness of the human soul - like the infinite depths of space. Beer... Need beer...

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Re: Nice straw man

Even with the numerous competing broadband services in the UK, with highly regulated provision of the actual physical connection, it's damnably hard who is to blame for problems. My physical connection is fast enough for streaming video, but about a quarter of the salesman's headline figure. And the service delivered at "peak times" is less than a quarter of the physical connection speed.

The streaming video seems to have erupted onto the UK market in the last year. And the ISPs haven't kept pace. Worse, they don't seem willing to admit to a problem, or say anything about improvements. Try asking about IPv6. "We have no plans." They should at least be buying compatible hardware.

I'm a geek. I know about this stuff. I've been in business. I know something about contracts. I can't get a straight answer about what they can deliver, or how they will handle a possible upgrade to the superfast fibre-boosted broadband. I even have info on a contract signed to upgrade local broadband, under the subsidy scheme for rural broadband, which BT Openreach apparently don't know anything about.

Net neutrality? I'll settle for a bit of honesty.

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Re: Nice straw man

So instead of a completely failed service, there would be a perception that (say) Netflx doesn't give as good a service as (ISP company X)'s own competing service.

All an ISP would have to do is check the source IP of a packet, and throttle packets (impose QoS 'restrictions) coming from competing services; and I am fairly sure it is done already.

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Re: Nice straw man

The way it would really be done would just be via degradation.

I suspect my ISP has been degrading my Netflix streams. Just now I watched "Example Short 23.976" which is some sort of diagnostic video that displays the current bitrate of the video stream and the resolution.

When I watch it using just my normal ISP, I get 235kbps 320x240. When I connect to the VPN at the office, I get 3000kbps, 1280x720. Now there could be a perfectly reasonable explanation for this, but it seems awful suspicious to me.

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Re: Nice straw man

Degradation doesn't even have to be that obvious. If an ISP delayed every packet to or from Netflix by 1 ms, no one would be able to tell the difference. Add another millisecond of delay every week, and see how it takes for anyone to notice. Netflix videos would still work without any obvious glitches, but they'd be a bit slower and take longer to buffer than the ISP's service. If only streaming data is throttled, and not ICMP traffic (such as pings and traceroutes), it would be almost impossible to prove that anything unusual is happening.

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Re: Nice straw man

The monopoly cable internet provider here in the Frozen North was charging customers who used other suppliers VOIP services a $10/month "quality of service" fee - to ensure the VOIP packets got through.

Nice little data packet you got here squire - be a shame if anything happened to it !

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Tl;dr

Not relevant to anyone outsite the country of companies that can never be trusted again anyway.

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Re: Tl;dr

FWIW 48% of Register readers were in the US (according to our latest readership audit, in November 2013).

C.

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Anonymous Coward

Re: Tl;dr

That's because traditional media outlets (Fox, NBC, CBS I am looking at you) tend to limit a thinking American's choices for news reporting and decent debate.

Thankfully, this is beginning to change, however slowly.

Vive la neutralité !

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Black Helicopters

Re: Tl;dr

Nah - it's obviously just GCHQ redirecting all British traffic through NSA servers making it look like we're all American so that they can spy on us.

I mean - we're looking up things about computers and security on the internet - we MUST be a threat.

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Stop humouring us, Net Neutrality doesn't exist, and probably never will again.

I though it was quite humerous you state how bad things would get if you no longer had access to Netflix, and the distinct lack of options if it does go down. Ha, I say, Ha. It's already here. Everyone outside the US is being discriminated against. Proxy servers aside - they don't count because they violate at least a number of licence agreements.

This was the very thing that net neutrality was supposed to protect against - yet it lives on. That doesn't count you say because it's a licence issue, not a 'net issue? Ask me how much I care.

Net Neutrality my arse. It doesn't exist, it may have once upon a time, but certainly not now, and probably never will again. Ever heard of China? That case doesn't count because that's a country issue that's covered by local laws and restrictions? My arse again. Why I can't purchase and download an electronic copy of an AudioBook, but be able to purchase the CDs at higher quality no questions asked? Why one vendor is quite happy to sell me stock from the US, but another won't sell me the exact same thing from the same source because "shipping to your country is not available"? And the ultimate in stupid - why I can't buy a book/CD/DVD/Blueray locally because it's against the law, but I can easily purchase it from overseas LEGALLY?

The Net brings everyone together, and yet everyone is still held at a distance due to other reasons. What's the point of arguing over Net Neutrality if we're held back anyway? Especially if we're held back because of the net (see the audiobook example above).

No, I'm not bitter about it. The bastards.

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bep

Re: Stop humouring us, Net Neutrality doesn't exist, and probably never will again.

I think the net neutrality rules apply within the USA. The rest of the world can, and is, making its own arrangements.

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Anonymous Coward

Re: Stop humouring us, Net Neutrality doesn't exist, and probably never will again.

John Tserkezis, nice post, but what has not being able to buy an audi book from a supplier that doesn't want to sell it to you have to do with net neutrality?

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Holmes

Careful with axe of myths, Eugene!

In 1934 the Federal Communications Commission (FCC) was created to regulate the airwaves and communications over wires – meaning it had to scrutinize the gigantic Bell telephone monopoly. Most telephone companies around the world at that time were state-owned monopolies, but Bell was a private giant, offering Americans the worst of all worlds: touchy-feely USSR-style customer service, and Robber Baron-era monopoly profits.

Not so fast with the presentation of Stuff that My Friendly Bureaucrat told me! Correct history is important for correct analysis. Think AT&T was unbridled capitalism and the FCC was created to fix that? Not so.

First, the FCC was the follower of the Federal Radio Commission, whose business was to regulate spectrum since the 20's, so creation of the FCC was not an idea that came out of nothingness.

Then, 1934 was the time of Mussolini-inspired state interventions all over the US. It was also the time of the neverending Great Depression. As today, these two things are very strongly linked, but that's for another time.

Big Phone was not to be shackled and controlled by the FCC. Big Phone had very good relations to Washington, D.C. Indeed, a bit early, Bell Illinois angled for a little bailout. As Murray Rothbard writes in "The Great Depression: The Hoover New Deal of 1932":

"If Hoover eagerly embraced the statism of the Reconstruction Finance Corporation, he gave ground but grudgingly on one issue where he had championed the voluntary approach: direct relief. Governor Franklin D. Roosevelt of New York led the way for state relief programs in the winter of 1931-1932, and he induced New York to establish the first state relief authority: the Temporary Emergency Relief Administration, equipped with $25 million. Other states followed this lead, and Senators Costigan and LaFollette introduced a bill for a $500 million federal relief program. The bill was defeated, but, with depression deepening and a Presidential election approaching, the administration all but surrendered, passing the Emergency Relief and Construction Act of July, 1932 - the nation's first Federal relief legislation. Particularly influential in inducing Hoover's surrender was a plea for federal relief, at the beginning of June, by leading industrialists of Chicago. Having been refused further relief funds by the Illinois legislature, these Chicagoans turned to the federal government. They included the chief executives of Armour, Wilson, Cudahy, International Harvester, Santa Fe Railroad, Marshall Field, Colgate-Palmolive-Peet, Inland Steel, Bendix, U.S. Gypsum, A.B. Dick, Illinois Bell Telephone, and the First National Bank."

But let's get to the meat of the matter: Regulation. Is it meant to improve the consumers' lot and foster competition? Nope! It is meant to cement existing structures:

In Unnatural Monopoly: Critical Moments in the Development of the Bell System Monopoly by Adam D. Thierer [Cato Journal, Vol. 14, No. 2, 1994 - yes I know ... KOCH BROTHERS!!], we read:

On regulation before the FCC:

Second, the initiation of extensive federal rate regulation is important because it propelled state regulatory commissions to follow suit by greatly extending the scope of their authority. By 1922, 40 of 48 states were regulating telephone rates (Noll 1991: 180), The public utility commissions at the state level immediately began to mimic federal policies established during World War I. Businesses and urban subscribers were charged more than rural customers to help extend service to distant locations. Likewise, long distance rates were averaged to ensure a company could not charge more for toll calls of the same distance. Robert Garnet (1985: 152) describes this state-based rate regulation: “Statewide rate averaging would eventually become a distinguishing feature of Bell System subscriber charges and would be embraced by regulators as a strategy for promoting the extension of telephone service to areas of marginal earnings potential.” And that is exactly what happened. By 1925 not only had virtually every state established strict rate regulation guidelines, but local telephone competition was either discouraged or explicitly prohibited within many of those jurisdictions. Third, by averaging rates geographically to artificially suppress rural rates, policymakers and regulators created a serious disincentive to local telephone competition. Few firms, after all, will seek to enter a market and offer service if they realize it is difficult, if not impossible, to undercut the subsidized service of the incumbent carrier.

Hence, universal service, the final element of AT&T’s strategy to eliminate competition, was in place thanks to the explicit actions of both federal and state legislators and regulators. Once AT&T’s motto was adopted as the nation’s de facto regulatory policy, no other firm was in a position to adequately extend service in accordance with the

new federal and state mandated social policy. The Bell monopoly was here to stay.

The FCC and Telephone Entitlement:

A few years later, this new unwritten law of the land was codified as the raison d’être of the Federal Communications Commission (FCC) with the passage of the Communications Act of 1934. The commission was created, “for the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.”

In effect, every American was henceforth found to be entitled to the right to telephone service, specifically cheap telephone service. To carryout this difficult policy objective, the FCC was given sweeping powers. Beside its powers to regulate rates to ensure they were “just and reasonable,” the FCC was also given the power to restrict entry into the marketplace. Potential competitors were, and still are required to obtain from the FCC a “certificate of public convenience and necessity.” The intent of the licensing process was again to prevent “wasteful duplication” and “unneeded competition.” In reality, it served as a front to guard the interests of the regulated monopoly and the FCC’s social agenda. The overall hostility to competition by the FCC and the drafters of the legislation that gave birth to it is best illustrated by a 1988 Department of Commerce report on the development of the telecommunications industry. The report notes, “The chief focus of the Communications Act of 1934 was on the regulation of telecommunications, not necessarily its maximum development and promotion. [T]he drafters of the legislation saw the talents and resources of the industry presenting more of a challenge to the public interest than an opportunity for national progress” (164). Over time the FCC would come to see the Bell System simply as the implementor of its agenda. Consequently, it would continue to use its power in favor of AT&T when potential competitors threatened the firm’s hegemony. Their bureaucratic mismanagement of the radio spectrum (which was nationalized under the Radio Act of 1927) meant the most capable competitor of the era would never be given a chance to compete. Despite the fact that wireless technologies would be greatly developed in the near future, the possibility of serious wireless competition rising up to meet the Bell challenge in the first half of this century became less likely once government forces, instead of market forces, controlled how the spectrum was allocated. Just as the wireline technologies where subject to blatant political manipulation, the wireless spectrum became the tool of regulatory and special interests; competition was again dealt a severe blow.

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(Written by Reg staff) Silver badge

Re: Careful with axe of myths, Eugene!

That's nice, but I don't believe our summary is inaccurate.

C.

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Re: Careful with axe of myths, Eugene!

@DestroyAllMonsters

What an excellent post.

Two points: The religious zeal for Public Choice Theory amongst some libertarians may be misplaced - they may have cause and effect backwards. Bureaucrats don't always create opportunity for more work for bureaucrats, but they sure know a gravy train when they see one. And they get so cosy with the people they're supposed to regulate (regulatory capture), it's like the gag about dogs resembling their owners. Or owners resembling their dogs.

Secondly, the FCC has for most of its distinguished lifetime dealt with two pressing issues: Bell Telephones and rude things - like swearing, and nipples. Today, nobody really uses landline telephones any more. And so, assuming Janet Jackson doesn't have any more wardrobe malfunctions, that's the FCC other great duty gone.

Is it safe to say this agency is now obsolete? And if that's the case, shouldn't Americans let it go - and (assuming they're serious about having competitive markets for internet-y things), think about how to make other agencies more effective?

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Re: Careful with axe of myths, Eugene!

Today, nobody really uses landline telephones any more

Typical middle-class urban provincialism.

According to the most recent figures I could find, mobile-only households still haven't even reached 50% in the US.

It's true that wired ("landline") telephone use is dropping, in some areas very rapidly; and in at least some states it's dropping faster among the poor than among the rich. But for many rural and poor US residents, a mobile phone is simply not an option at this point. It's an absurd and insulting exaggeration to claim that "nobody" uses them.

I'll also note that my wife and I are wealthy urban residents, with mobile and VoIP telephony at our disposal, but during the last sustained power outage in our area, our wired phone was the only working telephone in the neighborhood after the first 24 hours or so. When the batteries died at the cell towers, those mobile phones became useless toys. And I wouldn't have been able to find dry ice for the freezer without that landline.

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Re: Careful with axe of myths, Eugene!

"Then, 1934 was the time of Mussolini-inspired state interventions all over the US. It was also the time of the neverending Great Depression. As today, these two things are very strongly linked, "

Of course they are! Depressions require state intervention - what's your point? Ah, look: a link to a Cato Institute publication ... you are one of those that subscribes to the "only a free market works" philosophy.* I have never in six years of following Cato Institute publications seen a single thing that makes me think that the contributors are not the most dangerous people on Earth.

*OK - I'm just funnin' ya, DAM: your position is clear and consistent throughout your posting history.

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Lack of competition

Good article. But isn't the point that in the usa there is so little competition that you might only have 2 options for internet access at your house - if they both decide to block netflix, there's little you can do other than hope a 3rd company might spot the gap in the market, invest loads in kit, and then as soon as it deployed one of the others turns netflix back on again long enough to kill it.

We are lucky here in the UK that, if you can get broadband at all, you are likely to have several options. So you can choose for dirt cheap/parental controls/lack of parental controls/refusing to give subscriber details to copyright trolls without a court order...

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Re: Lack of competition

> But isn't the point that in the usa there is so little competition that you might only have 2 options for internet access at your house

Of course, this is the big lie that competition in the marketplace will cure all ills.

Cable, which serves so much of Internet in the US and Canada is a natural monopoly.

There's no getting around that simple reality.

The *only* way that cable can work for the public good is through regulation. It goes against my natural free market instincts, but there are some things that just don't work in a free market.

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Anonymous Coward

"asserts that Americans are too stupid to realize what was happening"

Life is far too busy to know what's happening outside ones field of expertise .

We are all stupid. This has similarities to Apple stunting the web browser and web apps on IOS 7.

Apple's money is in apps, not the web. And A T & T's wll gain new earnings from double selling web access.

There are no wedding bells there but I can see symmetry. That word being 'Control'.

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Remarkably?

Because consumers have inadequate information or market power, bad things will happen to them. And when bad things happen to them, for example if they discover that Netflix has been blocked, they are helpless – and unable to switch. Remarkably, the court supports this point of view.

It is not that remarkable because it is mostly true. If service is only available from one provider it is pretty much put up and shut up or walk away. Hobson's choice.

No end of campaigning can force a provider to do what a customer wants when they have no legal powers to force them to change or where momentum for change is too little to have an impact on providers that convinces them it is in their interest to change. Market forces simply don't work where there is no market or choice and only monopoly.

It is fair enough to say they could have choice but that denies the reality that there is, and may never be, that choice. Even where there is choice there is no guarantee that any provider will actually provide. Change is simply jumping from one frying pan into another with an escape route of jumping into the fire and abandoning all providers.

There is nothing remarkable in a court recognising that consumers may never have a "win" option only "lose" options. I for one am pleased they recognised this.

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Re: Remarkably?

"No end of campaigning can force a provider to do what a customer wants when they have no legal powers to force them to change or where momentum for change is too little to have an impact on providers that convinces them it is in their interest to change. Market forces simply don't work where there is no market or choice and only monopoly."

True, but where there are two, consumers can and will switch. See my other post on this.

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Re: Remarkably?

@Andrew Orlowski

I would like to share your confidence consumer choice will resolve such matters. Unfortunately the evidence is to the contrary. While consumer choice is powerful and resolves many matters, it doesn't work too well when the problem at issue is one element or aspect of a service bundle. But one example being international data roaming. A small but highly significant subset of consumers are highly motivated by roaming rates, there is competition in the mobile market throughout Europe. Yet for years international data roaming has remained criminally high and not at all based on cost. Competition has manifestly failed the consumer here. Even if there hasn't been under the table price fixing (and I would not be at all surprised if there had been) there has been tacit, let's not rock the boat, price correlation so even if we aren't quite in cartel territory it's a strong oligopoly effect.

Part of the difficulty is consumers seek convenience more than price advantage which means they do not organise around points of principle on the pricing of sub-services of larger services. High prices can be charged where many services are bundled. Consequently the competitive model we learned about in A Level economics doesn't work and economies of scale are leveraged to deliver bigger profits to the incumbent big business, not the consumer. So we have Supermarkets charging more for fruit and veg than street markets, and the giant B&Q in New Malden charge more for nails and just about everything else than the tiny but superb Cunningham's local hardware store 5 mins away in Raynes Park (yes, plug, no, I have no relationship to them) where you can still buy nails and screws by the gram and buy just a single gram if you prefer. And when business do really bad things consumers still flock to them. Like Sainsbury's in Chelsea, where years ago they were only allowed to build in the Chelsea Harbour area if they built a supermarket of architectural merit and didn't spoil the feel of the neighbourhood with an excessive outward projection of corporate branding. The architect Richard Rogers won the design competition with an inspired and subtle Egyptian design. But the council's lawyers weren't smart enough with the contract. Sainsbury's opened the store for one weekend with the Richard Rogers exterior design, thus fulfilling their contract obligations, then immediately closed it ripped out the brand recessive exterior and replaced it with their normal bright orange corporate branding. If consumers acted on principle, locals would not have frequented the store. Sainsbury's actions were unconscionable, they were clearly negotiating in bad faith and their actions were akin to a big f**k y** to the local community. But of course, depressingly, that is not the case. The store was popular from the outset.

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Re: Remarkably?

But with just two, it's pretty easy to assume a duopoly and go into cartel behaviour to squeeze out any upstarts. The rival ISP becomes 'the enemy of my enemy' vs. A firm like Netflix.

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Boffin

@Andrew Orlowski

"where there are two, consumers can and will switch"

Riiiiiight.

That's why everyone is now on the best energy tariff and with the best bank current account and buys petrol from the cheapest garage around and has the most sensible mobile phone tariff and why you never see online businesses saying "here are our new terms and conditions, agree to them or close your account" and people sticking with them because they can't be bothered to switch or don't realise there's a better option or think (often quiet rightly) that the other options are equally as bad...

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Re: Remarkably?

And if those two both decide to act in the same manner and refuse to provide the service the consumer wants?

2 choices doesn't qualify as healthy competition.

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Most US consumers have only one ISP - there is no choice

Thanks for this perspective, Andrew. I haven't had time to read the actual ruling, and your summary was very useful. The real problem is that most US consumers only have one broadband provider. This allows a company like Verizon to offer me 15/5 FIOS internet, their lowest speed, for only $74.95 (base) per month. I can get a discount to $49.95 the first year, but then my bill automatically changes to $74.95 plus router, plus taxes and fees. An ADSL feed required me to maintain a dry-line phone number, which was $65 per month with ISP costs on top of that. Some consumers have cable, where it is possible to keep the bill around $50 per month, provided one has some negotiating skills and doesn't mind a low 3/1 data rate.

Despite paying Verizon the $80 monthly fees, if I try to stream a 1080p YouTube video I find the data rate roughly half that of the 720p version (my router logs connection speed). Is it throttling? Yes, most likely, as no similar effect can be noticed on my cable modem feed from a different ISP. So throttling is a public issue, even now... for me, at least...

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Re: Most US consumers have only one ISP - there is no choice

$74.95?????

I pay €30 (in fact 29.99) for internet, telephone, and TV

Intertubes: 22Mb/s ADSL

Telephone:free local, mobile, international calls (international ~110 countries), connection cut off after one hour, just redial

TV: some 100 tv channels included, a lot in HD, more available with additional subscription

We used to pay much more some years ago, then my provider showed up and killed the high margin business for many. They recently did the same for mobile tel's in this country ... €20 per month unlimited calls (landlines, cell phones + international ~110 countries), unlimited SMS, 1Gb data then slower connection.

This price does not include a subsidized handset, however.

Before they showed up, the big three were price-fixing (they were convicted for it multiple times) so this same mobile service cost €50 with limited number of SMS and a subsidized phone - you would pay €200 for the best iPhone 3G, then €50/month for two years, €1400 in total - almost 1.5x the price.

Now, you would think that mobile consumers would rush to this new provider, however, only about 12% did the switch, the others are happily paying extortionate prices for inferior service.

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That's why I come here...

An excellent, detailed analysis putting the court's decision into its historical context

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Re: That's why I come here...

Thank you

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Big Brother

Its not that people are stupid

And I don't think the FCC or Judge is being condescending.

The fact is, it would be a stupid ISP that simply blocks content and services, the smarter ones would simply drop things like Netflix to the bottom of the QoS priority list, and/or throttle the bandwidth to these services.

Hence the service would still work, but quality would be absolutely abysmal, yet the same customer can download 5Gb files in minutes - As far as the customer is concerned the connection is working at a reasonable speed, so they will lay the blame with Netflix!

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Re: Its not that people are stupid

"they will lay the blame with Netflix!"

Even when 50m Netflix subscribers at [One Evil Telco] are all screaming about it at all once on social media - and 50m subscribers at [Other Evil Telco] who haven't seen their service degraded are not?

Can't really see that. Unless you think every internet user never reads the news, or uses social media.

Of course, if [One Evil Telco] and [Other Evil Telco] collude to degrade equally, then Netflix complains and you have an FTC / DoJ lawsuit.

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Re: Its not that people are stupid

> Can't really see that. Unless you think every internet user never reads the news, or uses social media.

> Of course, if [One Evil Telco] and [Other Evil Telco] collude to degrade equally, then Netflix complains and you > have an FTC / DoJ lawsuit.

The poster's point is that the degradation can (and often is) very subtle.

Many people in the metropolis in the US get pretty crap Internet service anyway. Their expectations are not high to start off with.

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Re: Its not that people are stupid

"Hence the service would still work, but quality would be absolutely abysmal, yet the same customer can download 5Gb files in minutes - As far as the customer is concerned the connection is working at a reasonable speed, so they will lay the blame with Netflix!"

Corrcctly assigning blame is always the challenge, and subject of frequent peering battles. A lot of current degradation is due to capacity issues at the interconnects with ISPs, and the net neutrality argument is often about who should pay for them. If degradation is due to Netflix (or any OTT provider) maxing out their interconnect, who should pay for the upgrades, and how should those upgrades be priced?

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Silver badge

>Any argument that relies on the idea of trance-like stupidity has to be rejected, though, as an insult to our intelligence.

Well, quite.

Can't even be bothered to post a detailed take-down of this, it's so wrong in so many ways.

Except to say that clearly key infrastructure 'competition' is working so well in the UK, and has been so good at keeping prices down for consumers and increasing choice, and totally not at creating colluding oligopolies or sad little fiefdoms of consumer hostility and incompetence, that it's a wonder it's not mandated by the state.

That was sarcasm, by the way.

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Stop

Consumers not realizing Netflix is blocked

Surely, they would realize that; but what if it is occasionally throttled? Suppose AT&T throttled Netflix, five minutes at a time? How many customers would realize the glitches in their movie are the fault of AT&T, and not assume Netflix is to blame? Realistically, it would be difficult even for an expert to know what is going on.

And really, even though I'm a Reg reader, sometimes I have no idea if the video is slow because of my WiFi network, my provider, or YouTube. If this only happened with YouTube videos, I might well blame YouTube... Though it might just be a clever strategy of my provider.

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Anonymous Coward

ISPs in America

I believe American ISPs regard the notion of competition leading to a healthy marketplace as quaint and the era of Robber Baron-era monopoly profits as the time when all was right with the world.

Rather than compete by not degrading OTT services, it seems more likely the major providers will compete by degrading different OTT services. If you want Netflix, you have a choice of a subset of providers, all of them suboptimal for your purposes. The same for Hulu, with a different set of providers. Want both? Apologies, but no.

Typically the providers extant in a given area, outside the concentrated population centers on the coasts, number less than five. The barrier to entry in the service provider market is high enough that the existing players regard their positions as quite safe, and rightly so.

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An important point...

It was mentioned that Americans don't have much choice in the ISP department. In a very large metro area, I have two choices for broadband: Comcast and CenturyLink. I've had both, and don't much care for the prices or customer service of either. In the last five years, both have moved to 2 year contracts with large ETFs; even with the contracts, they have the ability to raise prices above and beyond the usual reset to the regular price after a 6 month promotional period ends. If one began degrading my access to their competitors (in Comcast's, damn near anyone not part of NBC), I have to pay a large ETF, move to CenturyLink, and hope they aren't retaliating against Comcast. And if both decide that Google or Netflix has gotten too cozy in the content provider realm, I'm SOL. So it's not, as seemingly asserted throughout the article, that Americans are to dumb to notice; we just don't have the ability to anything about it.

And in case someone asks, the reason we have so few options is that a while back, Congress bought into idea that data delivery systems are expensive and require guarantees of usage to make it worth a service provider's money to build out. So every local city was able (required, really) to promise single-service provider access to their residents. These "franchise agreements" were fine when there were as many cable TV providers as metro areas. But consolidation in the late 80s and 90s meant that are are only a couple of national players; the handful of local or regional providers that remain are in the rural areas, as the Comcasts of the world deem those places too expensive to bother with. So we are left with wonderful results like a carriage-fee dispute for ABC or NBC (national networks with many cable-type channels) can leave whole regions (like the small area of NY, Boston, and DC) without one of the networks that make up 25% of the TV watched.

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Re: An important point...

Your post is 100% correct.

Also, I have Verizon FIOS and it is easily the best ISP out there. No data caps, fast speeds, low ping times, and very consistent performance.

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Re: An important point...

I would also like to add that while I use the phrase cable TV, it's broadband. And to be clear, this is last mile stuff. The truth is that cable TV franchise agreements were how the copper, then fiber, networks were built out that allowed cable TV providers to get into the broadband business. DSL, because of common carrier and the use of those telephony assets, did provide competition to cable and multiple providers in the same region. But I believe there were some rulings in the late 90s or early 00s that allowed the owner of those phone lines to charge whatever they wanted to those DSL ISPs for maintenance and build-out, and the telephone companies certainly did that. So consolidation happened there as well. Hence the two options: Comcast (cable) and CenturyLink (DSL).

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Re: An important point...

And, as is the wont of living in America, that is a product that isn't available in my Top-15 metro area. Go figure.

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