Does Big Media’s One-Two Punch Knock Out the Internet?
March 17th, 2008 by jrintelsLast week saw Big Media deliver a powerful one-two combination of punches that may knock out today’s wide open Internet. First, in a speech delivered by Motion Picture Association of America President Dan Glickman, the nation’s media conglomerates vowed to fight increasingly vocal calls from policymakers and the public for “network neutrality” — a requirement that broadband Internet consumers be permitted to access the lawful content of their choice.
 Guest post fromJonathan Rintels of Center for Creative Voices in Media |
That’s hardly a revolutionary concept, unless you’re a broadband gatekeeper like Comcast that makes its customers’ choices for them by discriminating against some websites and favoring others.
To justify allying with Comcast, ATT, and their ilk in a mega-million dollar lobbying campaign to beat back government action that might prevent such anti-competitive, anti-consumer discrimination, the media congloms cited the need to combat piracy of their valuable content over broadband networks.
But as much as we also support fighting piracy, the MPAA’s invoking that fight here is a diversionary smoke screen for what’s really going on. The existing FCC policy principles that call for network neutrality, as well as every proposal to turn those principles into enforceable rules, speak to ensuring that broadband providers allow consumers “to access the lawful Internet content of their choice.”
By definition, pirated content is not “lawful content.” Big Media’s claim that Net Neutrality rules will prevent it from combating piracy goes way too far, as evidenced by Comcast’s recent blocking and slowing of its customers’ access to content distributed by BitTorrent. In kneecapping BitTorrent, Comcast didn’t just block pirated content, but all BitTorrent content, including legitimate un-pirated content such as a file containing the text of the King James Bible, and video that BitTorrent was distributing on behalf of its clients Fox, Time Warner, and Viacom - all card-carrying members of the MPAA!
Now consider the second powerful blow Big Media leveled against the open Internet last week. On Wednesday, Hulu.com went “live” after months in beta, streaming video of film and television produced by most of the media congloms that make up the MPAA.
[BTW, as Nikki Finke asked, how is it that this NBC-Universal and News Corp. (FOX) “joint venture” to distribute via Internet content owned by these companies, plus that of Sony, Warners, MGM-UA, and others, doesn’t violate antitrust laws? After all, not even the Bush administration’s “anything goes” antitrust regulators would allow these same alleged competitors to create a “joint venture” to distribute their content via movie theaters or a Dish Network-type satellite system.]
Allowing Comcast, ATT, and other broadband gatekeepers to discriminate against video content delivered by the BitTorrents of the Internet world vastly strengthens Hulu’s competitive position as the leading and “safe” web distribution method for video.
And can there be any doubt that as a condition of Big Media’s allying with the broadband providers to fight net neutrality that there is a clear understanding between them that Hulu will never be discriminated against in the way BitTorrent was? Look for all the Big Media companies currently using BitTorrent and other distribution over the Internet to sign up soon with Hulu.
Following that, to ensure they are not discriminated against by broadband gatekeepers and placed at a competitive disadvantage, look for many more video content creators to place their content on Hulu. In a world without Net Neutrality, linking up with Big Media’s Hulu — and its insulation from Comcast-style discrimination and degrading — will be a matter of self-preservation.
Kudos to the Independent Film and Television Alliance (IFTA) for immediately calling out the MPAA and exposing its anti-competitive collusion. Writes the IFTA:
That openness [of the Internet] is threatened by the power of a small number of broadband providers to discriminate unilaterally against some categories of users or types of traffic or to accord preferential treatment to certain content providers over others, all under the ambiguous claim of “network management.” While these providers may have some legitimate issues related to the technical management of their networks, there have already been cases of different treatment of users and it is clear that there must be transparency, equal treatment and an avenue of redress when the providers’ private decisions trespass fair rights of others and the public interest. Thus, the issue is not whether government should regulate the Internet, but whether there will be effective oversight to prevent a handful of corporate giants from imposing their own version of private regulation to the public’s detriment.
Last week’s opening of Hulu and the MPAA’s vehement denunciation of net neutrality are intimately related, a double-barreled shot aimed at the heart of the open Internet. With its back-to-back denunciation of Net Neutrality and its launch of Hulu as its anointed site for streaming TV, films, and video, Big Media’s goal is nothing less than to turn today’s wide open Internet into a closed system more akin to cable television.
The likely result: as we’ve documented in cable, independent and diverse voices and their content will be inexorably marginalized or silenced.
To prevent this Big Media alliance with Big Cable/Telco from cornering and controlling the Internet, it is time for the government to implement reasonable network neutrality oversight that protects consumers and content creators, and preserves the open Internet we enjoy today.
March 18th, 2008 at 11:26 am
IS THE KNOCK-OUT PUNCH STILL TO COME OR HAS THE REFEREE ALREADY STOPPED THE FIGHT?
Three of four referees have already stopped the fight for net neutrality and called it a loser. The Federal Trade Commission and Justice Department issued public policy statements against explicit enforcement of net neutrality.
The third referee, the Federal Communications Commission via its Chair, Kevin Martin, is still trying to decide if Comcast lied by concealing brass knuckles inside its boxing gloves to bloody the opponent, implying that if Comcast had admitted what it’s doing by taking off the gloves publicy in … (cough) … competitive transparent fashion … it would not be a violation of net neutrality.
The fourth referee is the Courts, which through a series of rulings, has closed off the possibility of effective competition punching through the broadband landline duopoly which controls 93% of service to customers.
It’s Round 10 in a 15-round match and “Net Neut” is staggering but not yet down from the blows of “Competition Con”, who took the gloves off and unleashed a series of Pirate and Hulu sucker punches while slipping the referee a few hundred grand between rounds.
The One-Click/One-Vote crowd went wild as “Net Neut” bounded back from the ropes time and again from the underhanded blows and illegal holding of “Competition Con”, chanting “Hands Off Neut … Hands Off Neut …”.
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HULU AVOIDS THE TIPPING POINT OF COMPETITION
Technically, even though Hulu is a heavily concentrated source of media content, it is important to separate this version of “Competition Con” from that associated with net neutrality.
Specifically, within a framework of effective net neutrality, the concentrated content market power of Hulu can be diluted as long as access and provision of all other competitive content is made available on a level playing field, which is not possible without net neutrality.
That’s why Hulu et al is against net neutrality, because it will offset its market power and force it to play on a competitive playing field. This is the key tipping point between effective competition and market power on a physical broadband network not subject to effective competition from other networks.
When the Federal Trade Commission rendered null and void any reasonable enforcement of net neutrality in 2007, it opened the door to concentrated content provision like Hulu on broadband networks ordinarily subject to anti-trust restraint in other contexts.
In opposing net neutrality, Hulu et al is attempting to get from the broadband world of content what it was prohibited from getting via anti-trust restraints, however lax, in other venues of producing and distributing media content.
Conversely, Hulu is seeking to acquire the same market power of Cable and Satellite TV, to grossly overprice content through forced bundling and packaging.
But Hulu cannot gain this market power if net neutrality is in place. The minute Hulu attempts to raise price above competitive cost or force consumers to purchase unwanted content, they’d simply move to other providers of content on the same network - not another facility based network under the effective competition provided by net neutrality.
For now, Hulu content is “free”, provided on an advertising model under a fragile framework of implied network neutrality that exists only due to the threat of its enforcement.
Further, in sharp contrast to those against net neutrality, it would not have (and did not) prevented, blocked, or discouraged the incentive to produce and distribute something like Hulu content on the internet in any way.
Another sharp contrast is that between the early concerns of large content providers like Google and “Whitcare tiering”, essentially an extortion tax proposed by Ed Whiticare, ex-CEO of AT&T for content providers “using the network for free”. This was a primary reason large content providers originally supported net neutrality, so what happened?
Either Hulu et al has cut a back room deal with facility-based broadband providers to avoid Whiticare-like fees, or conversely have agreed, or expect to recover and redistribute them to network providers through market power pricing afforded through the abolishment of net neutrality.
Another way to explain this is that the concentration is so powerful that it can extract fees above competitive cost implicitly through forced integration of advertising content or explicitly through discriminatory pricing of network services or content itself.
Once the threat of net neutrality is removed, the brass knuckles of Comcast and “Competition Con” will reappear in the form of discriminatory bandwidth access and gegabyte volume tiering along with selective “management” of network congestion, all confounded by grossly oversold bandwidth capacity under deceptive marketing practices.
For millions of broadband customers, the price of having what they have now will easily double or triple as the price of “everything packages” emerges from the rising complex of a broadband landline duopoly coupled with Hulu-like concentrated content.
The United States is falling behind in many areas for complicated reasons and the lack of a neutrally competitive broadband infrastructure is one of them.
To allow an emerging, electronic platform of democratic participation and competitive electronic commerce to be overwhelmed by private market power in the name of fraudulent competition undermines the last frontier of free speech as well as competition among content providers and consumers.
The answer to bad speech is more speech, not less speech, and the answer to bad content is more content, not less content. If the referees can’t enforce competition, then a political solution is necessary.
March 25th, 2008 at 9:56 pm
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