The Soft Underbelly of Net Neutrality: How the Comcast-Netflix Deal Shines a Much-Needed Spotlight on Why the Real Issue is Network Interconnection
When policymakers and press reports talk about net neutrality, there has been, until recently, an understandable tendency to focus exclusively on the end user impact: “If Carrier X or Cable Company Y would just stop mistreating its customers by throttling Internet traffic, all would be good in the world.”
This isn’t to say that the end user impact isn’t the ultimate concern – it is. But if you focus only on the symptoms, you can’t diagnose and cure the problem. And because net neutrality is so complex, and because the politics of power surrounding it are so thorny, it’s much easier to latch onto the symptoms, propose “consumer friendly” band-aids and avoid a more detailed analysis of the problems. But superficial steps won’t get us far in solving the real issues.
You can see this in how Netflix’s latest brushes with Verizon and Comcast are shaking out. What Verizon and Comcast have done is smart business and perfectly logical. Even as Verizon consumers in particular have reported problems streaming Netflix, neither Verizon nor Comcast appears, at least based upon current information, to have violated any law or rule or policy in dealing with Netflix. The key seems to be that Verizon and Comcast weren’t doing anything to Netflix; it seems that their beefs were instead with Netflix’s ISP. In other words, even though there was a consumer impact and it looked to some like a net neutrality battle, it wasn’t at all. Instead, this was a plain old interconnection dispute, the kind that used to get resolved relatively cleanly and clearly – even for the smallest carriers or consumers – back when we actually had rules governing how networks talked to one another. Read more
WhatsApp, the mobile messaging service that last week inked an agreement to be acquired by Facebook for $19 billion, announced yesterday that it will offer voice service later this year. The app will initially be available for Apple and Android devices, with subsequent offerings tailored for Microsoft and Blackberry. WhatsApp currently has 465 million users who each pay 99 cents after the first year; unlike its soon-to-be-parent Facebook, WhatsApp does not rely on advertising or pepper its users with ads.
The promised voice offering reveals some of the attraction WhatsApp offered to suitors and, ultimately, Facebook. In a Wall Street Journal report, Facebook CEO Mark Zuckerberg observed that many messaging apps generate between two and three dollars per user. Combined with Facebook’s one billion users, that fact tends to reveal the revenue potential for the Facebook/WhatsApp deal.
Sweetening the deal for Facebook is the fact that the bulk of price will be paid in Facebook stock, not cash; the deal keeps WhatsApp away from Microsoft (which owns Skype) and Google (which, according to some skeptics or paranoids, will one day have a hand in everything).
WhatsApp CEO Jan Koum will join the Facebook board when the deal closes. WhatsApp is expected to operate as an independent unit following the acquisition.
I tried assuring, or rather convincing, my daughter the other day that I really did not grow up in “the olden days.” Or, at least that the years in which I was her age weren’t so long ago (to me, at least).
This is probably the point at which regular readers will probably guess that I am about to take another mawkish turn down the avenue of, “Gee, look how things have changed,” when in reality I haven’t really been around long enough to notice much change at all – unless you count the difference between marveling at a Compaq “carry around” computer and having 6,000-x more memory on my smart phone as a “difference” (1983 Compaq: 128K RAM; my phone: 768MB RAM). So, I’ll offer a spoiler alert – I am not going to get all sentimental on you, or even reference a Tandy computer using cassette tapes for memory. Rather, I am going to mention Facebook’s acquisition of WhatsApp and then offer a link to a delightful article from motherboard.vice.com that explores a series of services we just don’t get anymore. Read more
When my older son was in middle school, my wife and I found out that he had a “girlfriend.” (I put the word girlfriend in quotes because, apparently, having a significant other at that age does not involve partaking in social events together such as movies or trips to the ice cream shop, or even carrying books or sitting together at lunchtime. As best I could tell, it was strictly an honorary title. Also, I say that “we found out,” because this information did not come from our son, but from other parents. It does indeed take a village…)
Not long afterwards, we found out that he and the young lady in question had broken up. Much to my horror, I learned that he had broken up with her…. via e-mail. We had an immediate father-son chat, about respecting the feelings of other people, about the importance of being up front and direct in those circumstances where emotions are involved, and about when it is appropriate to make use of modern technology and when the old-fashioned ways are best. I think he understood—and didn’t have another “girlfriend” (that we were aware of, anyway) until his senior year in high school.
I thought of this story when I read that T-Mobile is offering new customers the equivalent of a quick and easy—if not necessarily well-mannered—means of ending a relationship. The company has offered to pay off the early termination fees of incoming customers, and will even help “to write the break up letter.” Read more
It’s been a while since I’ve touched on the topic of Xbox One and PS4 and the whole “multimedia entertainment hub“ idea. I’ve been going back and forth on which system I want to buy, but for those who may have read about my never-ending quest to buy a new TV, you know I’m not the most decisive consumer in the world.
Since their respective releases, PS4 has outsold Xbox One. According to this Forbes report, PS4 sold about a million more units than Xbox One in 2013 and PS4 sales were nearly double those of Xbox One in the United States in January 2014. Why is PS4 winning so far? I wish I had a definitive answer (since it would help me choose which gaming system to get), but this analysis of the two is consistent with most I’ve read: PS4’s graphics looks much better and it’s $100 cheaper. Read more
‘Coming Soon to Somewhere that Probably Isn’t Anywhere Near You’ – What Does the Google Fiber Experience Tell Us (or Not) About the Challenges of Nationwide Network Deployment?
There continues to be great interest in Google’s efforts to deploy fiber networks, and rightly so. Just in the past several days, the company announced its latest desire to expand Google Fiber to 34 cities in nine metropolitan areas across the country, leading to a new splash of press coverage and renewed praise from some policymakers regarding how Google Fiber’s efforts could serve as a potential model for delivering services to communities longing for better, cheaper broadband. Google’s initiative is noteworthy, and any effort to build fixed wireline networks is commendable in light of the work involved.
But to determine the real instructive value of this effort from a policy perspective, it’s worth taking a closer look at where Google is – and is not – choosing to deploy its fiber networks. Perhaps the most telling words in Google’s most recent announcement to expand fiber installments are “cities” and “metropolitan areas.” Let’s take a closer look at just the primary cities in these metropolitan areas, recognizing that the broader metropolitan areas have millions more in population (all estimates courtesy of Wikipedia): Read more
According to a study recently released by The Diffusion Group (TDG), more than six in 10 U.S. households have at least one television connected to the Internet in order to access content from online services such as Netflix and Pandora.
The study, “Benchmarking the Connected Consumer, 2014,” finds that 63% of U.S. households have at least one net-connected television, up from 53% in 2013.
“Though broadband diffusion may be slowing as the market matures, the expansion of broadband-connected TVs continues at a rapid clip, up 19% in the past year,” said TDG President and Director of Research Michael Greeson.
The study further found that 42% of connected TV owners report having two or more Internet-connected televisions.
“Whether net-to-TV will somehow topple traditional pay-TV service models has been a red herring from the beginning,” said Greeson. “The real debate is the extent to which the growing availability and expanding use of ‘OTT TV’ services will have on the time viewers spend watching traditional pay-TV given the growing array of sources at their disposal.”
In conducting the study, TDG randomly surveyed 1,500 adults that subscribe to a home broadband service. According to a company press release, the study “examines a broad array of behaviors across a multitude of net-connected devices, from net-connected TVs to tablets, and from PCs to smartphones.”