Politics 117

The regulation of the InternetAnti-trust

How big should anyoneon the Internet be?

• Microsoft on Google– "If a single search engine serves as the

dominant gateway between consumers and content—there is a greater risk that economic forces will not exert sufficient discipline to prevent the dominant search engine from altering search results to favor its own interests or viewpoint. Also, because consumers will lack competitive options, it may be impossible for them as a practical matter to determine whether the results reflect hidden biases or whether there is other speech that is not being conveyed."

“natural” vs. “paid” searches

• Transparency on “natural” vs. “paid” practices needed– Natural = you search

for stuff and some neutral system of finding transpires

– Paid = you get results that companies pay for

The Sherman Anti-trust Act (1890)

• "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

The Clayton Anti-Trust Act, 1914

• Beefed up the Sherman Act, outlawing– price discrimination that

effectively turn the discriminator into a monopoly

– exclusive deals that harm other companies

– mergers that substantially reduce market competition

– “Interlocking directorates” that amount to a single company

Thomas Edison and the Motion Picture Patents Association, 1908

Early Edison films

• Laura Comstock’s Dog

• Stealing Dinner

• Princess Raja’s Dance

Left to right: Jack Warner, Adolph Zukor, Carl Laemmle (center), Louis B. Mayer

Three ways to settle an anti-trust suit

• Fall upon the sword and die• Break yourself up• Enter into a consent decree in which you

engage in a series of reforms short of a breakup

Judge Jackson: Microsoft saw Netscape Navigator as a competitive threat (2000)

• Tethered Internet Explorer to the op system

• Made it more difficult to install or pre-install Navigator by making Application Programming Interface data less available

• Orders Microsoft to split in two

DC Circuit Court of Appeals throws out decision (2001)

• Microsoft’s monopoly over OS not a “presumptive indicator of attempted monopolization of an entirely different market“ (web browsers)

DoJ settlement (2002)

• Microsoft must refrain from retaliating against non-Microsoft software vendors

• Must disclose all APIs to software and device makers

2004: European Union hits Microsoft with 497(EU) fine

• Concludes MS had abused its monopoly power against the RealNetwork RealAudio player

• Orders MS to release a version of Windows without Windows Media Player

EU finds MS tethering Internet Explorer a violation of anti-trust laws

• Eventually requires Microsoft to create a “browser ballot” system in which you can choose your web browser (2010)

Back in USA (2009), DoJ says Microsoft can’t stop OEMs from . . .

• Installing shortcuts to non-Microsoft software

• Adding non-Microsoft middleware

• Offering other operating systems (eg, Ubuntu Linux)

• Offering a different browser in the initial boot sequence

What you’ve got to do to get a merger approval

The Hart Rodino act: big merger applicants must apply for government scrutiny

Two agencies oversee the merger, they can be:The Federal Trade CommissionThe Federal Communications Commissionor, The Department of Justice

December 2009, Comcast announces merger with NBC Universal

• Comcast will own 51 percent of new entity

• General Electric (NBCU’s current owner) will possess the other 49 percent

What does Comcast own already?

• cable video to 24.2 million subscribers,

• serving 26 percent of multichannel video consumers across the country

• high-speed Internet to 14.9 million households

• phone service to 6.5 million VoIP customers. 

What else?

• Plaxo!• Fandango!• Fancast• The Daily Candy• Comcast.net

Comcast channels

• E! Entertainment Television, 85 million subscribers; • Golf Channel, 73 million; • VERSUS, sports and leisure programming network, 66

million; • G4 ("gamer lifestyle programming") with 57 million; • Style ("lifestyle-related programming") 51 million.• Comcast SportsNet system, with branches in the

Baltimore/Washington area, California, the Mountain states, Boston, Portland, and Chicago

• TV Everywhere

• The Philadelphia Flyers hockey team• The Philadelphia 76ers basketball team• Philadelphia's Wachovia Center Sports Arena.• Global Spectrum event management company • Front Row venue marketing/advertising firm • New Era ticket processing company• A skating production company, a food

services company, and several other ventures

Other stuff

• iN DEMAND• TV One (African-American-oriented

programming), MGM, SportsNet New York• FEARnet (horror Web TV on demand)• New England Cable News• Music Choice, the Pittsburgh Cable News Channel • PBS KIDS Sprout. (partnership between Comcast,

HIT Entertainment, PBS, and Sesame Workshop.) 

• Ten television stations• Telemundo• NBC Entertainment (Jay Leno,

etc)• NBC News• NBC Universal Sports and

Olympics Universal Pictures (movies)

• a big stake in Hulu.com (about 27 percent)

• Universal Parks and Resorts (Universal Studios Hollywood)

Comcast public interest commitments• In exchange for the merger, Comcast promises the following:

– For three years, the NBC O&Os will provide at least the same amount of local news and information programming as today – and will not cut the amount of news programming.

– A commitment to provide an additional 1,000 hours of local news and information programming by the NBC O&Os.

– An additional 1,500 programming choices for children and families within three years on VOD.

– An additional hour of children’s programming each week (above the current three-hour requirement) using multicast channels of NBC O&Os.

– Tripling the amount of time that program ratings information appears on the screen, from 5 to 15 seconds at each commercial break, and enlarging the information box.

– Launching a new over-the-air multicast channel using Telemundo’s programming library.

– A continued reaffirmation of our commitment to keep NBC as a free-over-the air broadcaster with a workable business model in the evolving economic and technological environment.

Could merger harm Internet as source for alternative video distribution?

• Comcast will own strong interest in Hulu

• Comcast will have more of an incentive to block non-Comcast owned online content

• Comcast’s TV Everywhere initiative ties Comcast content to Comcast only ventures

• Ownership of NBC Universal content will create incentive for Comcast to limit that content as well – Mark Cooper testimony here. Mark Cooper, Consumer’s

Union

Comcast will still enjoy small share of video market

• “The Comcast share is meek; combined with NBC Universal ‐program assets it will account for only about 12% of total U.S. cable program network revenues. This will yield some economies of scale, or so Comcast hopes, but it hardly moves the needle in terms of the concentration of the industry.”

Thomas Hazlett testimony here.

Senator Al Frankenon Comcast/NBCU Merger

“FinSyn” = Financial Interest and

Syndication Rules. Prohibited TV

stations and networks from owning the

programming they aired in prime time.

These rules were largely abandoned in

the 1990s.

Senator Al Frankenon Comcast/NBCU Merger

FCC carriage rules prohibit cable companies from unfairly discriminating against non-affiliated cable programs (eg, putting them on a more expensive tier).

Possible condition for approving Comcast/NBCU

• Make Comcast share its broadband lines at wholesale rates

• Two ways to encourage openness and diversity– Net neutrality– Maximum competition

• Line sharing Berkman center report:– "The lowest prices and highest speeds

are almost all offered by firms in markets where, in addition to an incumbent telephone company and a cable company, there are also competitors who entered the market, and built their presence, though use of open access facilities.“

• This is how Canada does it

Is wireless a competitive alternative?

• FCC: AT&T and Verizon, now enjoy a 60 percent chunk of mobile wireless revenue and subscribers, "and continue to gain share.“

• Sprint and T-Mobile control most of the rest

Ways to keep wireless broadband industry competitive

• Monitor and control early termination fees, through – Legislation– Probes

• End exclusive handset deals• Probe key wireless decisions

on blocking applications like Google Voice, more here

• Launch “bill shock” rules• Encourage consumers to

keep up with their data use

Most Americans are totally clueless about their broadband speed

• "When asked to specify their home internet connection speed, described as 'the download or downstream speed of your connection per second,' the vast majority of home broadband users in the United States cannot identify it.“ –FCC Report

• 24% say they “always” receive promised speed (which they don’t know)

• 47% says they receive it “most of the time” (although they can’t identify it)

• Check your speed here.

Mbps (Megabits Per Second)

• Stands for "Megabits Per Second." • One megabit is equal to one million bits or 1,000

kilobits.• Kilobits (Kbps) = 1,000 bits• While "megabit" sounds similar to "megabyte," a

megabit is roughly one eighth the size of a megabyte (since there are eight bits in a byte).

• Mbps is used to measure data transfer speeds of high bandwidth connections, such as Ethernet and cable modems

• So 2,600 Kbps = 2,600,000 bits or 2.6 Mbps