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As has been widely reported today, Comcast has proposed a $45.2 billion takeover of Time Warner Cable Inc., a merger of the number one and number four video service providers (DirecTV and Dish are numbers two and three). The consumer benefits are abundant, which the business proposal will demonstrate even under regulatory review, so that consumers can start enjoying the benefits as quickly as possible.
Faster broadband service will more quickly roll out to the eight million consumers that Comcast will be earning. Comcast has increased its broadband speeds essentially annually for well more than a decade, including being an industry leader in introducing DOCSIS 3.0, a significant boost to broadband speed. The FCC has noted that Comcast’s broadband speeds are consistently higher than those at Time Warner Cable.
How is it that a “cable” company is advancing so rapidly? Cable companies are increasingly “tech” companies and Comcast more so than any. Most of the work of cable companies is now being done in the cloud, not in trenches through the earth. Comcast’s Brian Roberts has remarked, “That’s how you build a software company. In fact I think we would describe ourselves more as a technology and innovation company…”
The new product offerings by Comcast, and those in the pipeline, make clear that his assertion is more than just wishful thinking, it is the truth. A truism of the technology industry is that anything that can be expressed in hardware can be expressed in software and vice versa. Comcast is now demonstrating that in the cloud. The X1 Entertainment Operating System and Comcast’s video on demand offerings provide 50,000 choices on TV. Comcast also offers 300,000 plus streaming choices on XfinityTV.com, and Xfinity TV mobile apps that offer 35 live streaming channels plus the ability to download to watch offline later. The innovations continue with the integration of Web video into the traditional stream of video content, an improved user interface focused on ease of use and customization, and a voice driven interface for the visually impaired.
As for hardware, Comcast’s newly launched X1 DVR, which enables customers to watch their entire TV channel lineup and DVR recordings on mobile devices in the home, and download recorded content to take on-the-go are leading the industry.
And it is not just products, but services too. Comcast offers a program designed to get more students and families online by offering broadband and a home computer at drastically reduced prices for those who could least afford broadband. The program has signed up more than one million Americans, rapidly adding to the number of people with broadband at home. The low income families who qualify for the service have been using the online connection to try to better their situation. Fifty eight percent of the customers report that they have been using the broadband service to search and apply for employment.
All of these benefits—speed, products, services — will now be available to new customers, as Comcast’s multi-billion dollar upgrade to its system now spreads.
With the number of cable subscribers declining in the last eight years bringing advanced technology and services to consumers is an industry imperative just to be able to stay in the game. During those same years satellite subscribers have grown by seven million subscribers and traditional telecommunications companies have scooped up another 11 million. The competition is real and fierce, and not about to lessen.
Comcast and Time Warner Cable serve completely different markets without overlap. So consumer choice is absolutely maintained even while consumers gain better technology and greater services. As for Comcast’s competitors, which are growing in number, they will still face the same amount of competition
Further proof of the rabid competition siphoning off “cable” customers is that, in the end, Comcast really will end up with around 30 million subscribers, less than 30 percent of all the video subscribers in the U.S., approximately the size it was in 2006.
Regulators and legislators should tread carefully to not disrupt the ever accelerating innovation marketplace. Others may try to invent storylines about this business proposal but the facts make clear that consumers and innovation will win again.
Exactly three weeks ago, the D.C. Circuit court ruled in Verizon v. FCC that the FCC’s net neutrality order regulating the operations of broadband companies, hence the Internet itself, was illegal. All the judges agreed that the FCC’s order that a telecommunications provider must treat all data in the same way, regardless of any other factors, was impermissible given how the FCC was trying to do it.
Why reject this particular means of regulation? Because the net neutrality rules functioned like they were under one title of the Communications Act which is where plain old telephone is regulated, as opposed to broadband, “information services,” which are under a different title of the law. The ruling effectively said that the FCC will not be allowed to regulate broadband like it regulates the telephone, because the legislation as crafted by Congress was clear that they are not to be regulated the same way. This outcome was completely unsurprising. One would never imagine other agencies to blend laws to make up what they want. Imagine if the IRS suddenly decided to apply corporate taxes to an individual so that the IRS could extract more revenue. Without a doubt this was a “win” for consumers and broadband providers, freeing broadband from smothering “common carrier” regulations. The decision allows the Internet to remain free and open to innovation to the betterment of consumers.
The court did not stop with that. They overtly rejected the argument that Congress did not provide the FCC with jurisdiction over broadband access. The court found that section 706 of the Communications Act did provide the FCC with an affirmative grant of authority from Congress, or in other words, Congress empowered the FCC to be the broadband cop on the beat. So while the specific rules were struck down, the court was not opposed to, and seemed wholly open to, other rules and regulations.
So what can the FCC do now? There has been much talk about whether the FCC would “reclassify” broadband as a communications service rather than an information service and therefore allow the imposition of net neutrality, and a whole host of 19th Century, regulations on the Internet. But that path is, at best, challenging, fraught with political and legal challenges.
The general affirmation of authority to regulate broadband means that a new thicket of innovation can grow, that choking regulations will begin anew. One day information service regulations could be as damaging as communications service regulations are today – a legal and administrative briar patch. If the FCC can make a plausible case that a company is somehow impeding broadband rollout or competition then, presumably, it would be successful in justifying regulating service providers and maybe even Web services. Need proof of the direction things are headed?
As reported in Politico today, “A group of congressional Democrats is drafting a bill to restore the Federal Communications Commission’s net neutrality rules – reversing, at least for a time, the federal court decision that struck them down. The still-unreleased proposal, from California Reps. Henry Waxman and Anna Eshoo and Sen. Ed Markey of Massachusetts, would allow the FCC to revive its Open Internet Order, requiring service providers to treat all kinds of Web traffic equally, according to two industry sources. That power would remain in place until the FCC can devise a policy to replace the one rejected by the court, the sources said.”
Newly confirmed FCC Chairman Wheeler spoke to the issue last week at the annual Congressional Internet Caucus, State of the Net Conference explaining that to him the court did explain what could be done, interpreting the “court decision as an invitation” and that “he intends to accept that invitation.” He indicated that he wants to establish a foundation of principles that “will take on a life of their own.” He explained that the FCC should provide the canvas, the broad outline of “what we want” and then address the specifics saying “that’s not right” and acting to stop those things.
All of this could be “bluster,” or as some have suggested “noises,” to make sure that those who want broadband regulated feel like they are being taken care of, or it could be the green shoots of a briar patch. Right now there is much talk, the answer will manifest in action, or lack thereof.
A new regulatory thicket would result in real costs. The costs are not necessarily in any one rule so much as in the push for the expansion of regulatory control, a system not nearly so predictable and one less in touch with the people than through legislative action. Also, the investment drop off that would have occurred with a reclassification would still take place as new regulations sprout up, ultimately leaving consumers holding the bag with higher costs and impeded innovation, not to mention less jobs and a slower economy. In all, new regulations would put at risk the tens of billions of dollars every year that broadband providers spend to expand and improve their networks to the benefit of consumers – a total of $1.2 trillion over the years. As some are calling for wireless to be included in new regulations, the risks are increased by another margin, $30 billion invested last year alone.
Regardless of whether new regulations will be drafted immediately is hardly the issue. That the court has interpreted the language of Congress to allow wide-ranging broadband regulation by the FCC is the issue. The time is well past for Congress to review and tightly focus the powers they have granted to the FCC, making sure it is appropriate, and preserving the massive investments that have been one bright spot in an otherwise bleak patch for economic growth.
Last week the USPTO and NTIA held a public meeting to discuss five copyright issues raised in the recent green paper titled “Copyright Policy, Creativity, and Innovation in the Digital Economy” released by the Commerce Department’s Internet Policy Task Force. The Green Paper, and the meeting, divides the discussion into five separate areas. One of the sections considers, “Improving the Operation of the Notice and Takedown System.” The paper proposes a series of meetings to focus on improving the effectiveness of the Digital Millennium Copyright Act’s (DMCA)’s notice-and-takedown system.
Given that no system is perfect, and clearly in an area of rapid advancement such as with technology, laws do need occasional reconsideration, ongoing conversations make sense. Improvements should always be considered but the benefits and challenges that would be posed to all parties under a new regime must be weighed against the challenges of the current system.
This very notion of conversation and cooperation was contemplated by Congress and built in to the DMCA, via the “safe harbor provisions”, which was designed and overtly encourages “service providers” and copyrights holders to work together to solve copyright infringement challenges. In other words, Congress attempted to legislatively encourage all parties in what we now call the Internet ecosystem to work together as a community to address concerns. Parties were encouraged to work on issues because even in the very beginning of the “Internet revolution” it was clear that challenges not contemplated would arise as technology continued to advance.
Consider the alternative – a system where every time a problem is raised that rights holders or service providers run to Congress to seek a solution to their problem. A more ponderous, inefficient, and moribund, government dependent system could hardly be imagined. Or reflect on the system before the DMCA when courts were flooded with cease and desist orders regarding copyrighted material, costing service providers precious resources and preventing the rapid removal of infringing material. The inefficiencies of that system are what drove whole industries to lobby Congress for years to intervene.
So, when asked specifically about “establishing a multi-stakeholder dialogue on improving the operation of the notice-and-takedown system for removing infringing content from the Internet under the Digital Millennium Copyright Act (DMCA)” the answer is “yes,” such dialogue should be encouraged. Any government driven efforts along these lines should actively seek to include all players in the Internet ecosystem whether rights holder or service provider, cloud companies or search engines, as all have an equal stake in the outcome of any government discussions. Just as the net was cast wide during the DMCA deliberations so too should it be now. In addition, as it was then, the spirit of finding solutions should lead the process. Too much is at stake for our current and future economy to do otherwise – all stake holders have something to offer.
Perhaps more important are the private sector voluntary efforts and dialogue that may be encouraged by government, but which do not involve government routinely or as a key part of any process. These efforts were come even closer to the spirit of the Act. Such efforts will be the only way that challenges can be adequately addressed.
One recent example is the Copyright Alert System, a new take down regime that did not require Congressional action. According to the Center for Copyright Information , which coordinates the System, the “Copyright Alerts are part of a progressive educational system to help subscribers understand the significance of protecting copyright in the digital environment, to advise them about the importance of avoiding inadvertent or intentional online distribution of copyrighted content, and to suggest legal ways to obtain digital content. These alerts will be similar to current credit card fraud alerts.”
The new system takes head on the challenge of how potential copyright infringers should be handled. Whether one likes this solution or not, this result is better than a years-long legislative battle, which may fail to reach any sort of resolution. This solution was reached because responsible, serious parties voluntarily engaged in a dialogue. Success will come as all parties understand that they cannot stand on their own, that in fact, an economically thriving digital ecosystem requires good faith cooperation, within the bounds of the law, with an eye towards what is best for the broader ecosystem. Robust dialogue made in good faith is a clear good step in achieving this goal. Less infringement combined with great legal choices available in many places for consumers is in the best interest of all.
But challenges do exist. A common complaint by rights holders is that they must send multiple notices for the same infringing material that can be found on the same Internet site. They would prefer to send one notice and have the site take down the same infringing content wherever and whenever found without the need of a new, URL specific notice for each instance. For their part, Internet companies complain that they spend too much time complying with all of the notices, time and money spent away from their principle endeavors.
The challenge is real. As Professor Bruce Boyden recently pointed out, from March through August 2013, the MPAA’s six member companies sent 25.2 million takedown requests to non-user generated content Websites and to search engines to remove infringing content located at specific URLs. Of those requests, 13.2 million were to a site to remove an infringing file and 12 million were to a search engine to remove a link from search results.
No law will ever address every issue, so private stakeholders should be encouraged, and should want, to craft infrastructure that solves the problems they perceive. Collaborative meetings are a good first step.
Whether addressing or identifying a problem that needs to be addressed, a gathering of stakeholders is a solid step towards improving a system where many see the need for improvements.
Conversations should center on creators and how they are effected, to hear ideas on how to enhance the copyright regime to make sure we have and maintain a pro-creator copyright policy. Such efforts reinforce the balance that the drafters of the DMCA tried to achieve, which was that all parties involved, from rights holder to intermediaries to Web site owners have their rights preserved.
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