Transcript The Impact of Next Generation Television on Consumers and the First Amendment A Presentation at the: 2013 Conference of the Association for Education in Journalism.

The Impact of Next Generation Television
on Consumers and
the First Amendment
A Presentation at the:
2013 Conference of the Association for Education
in Journalism and Mass Communications
Washington, D.C.
August 10, 2013
Rob Frieden, Pioneers Chair and Professor of Telecommunications and Law
Penn State University
[email protected]
Web site : http://www.personal.psu.edu/faculty/r/m/rmf5/
Blog site: http://telefrieden.blogspot.com/
Objectives in the Paper

Provide a basic introduction to Internet Protocol Television
(“IPTV”) also known as Over the Top Television.

Explain how IPTV eliminates “appointment television”
providing consumers with a platform for access anytime,
anywhere and via any device using multiple formats.

Discuss how technological and market convergence prevents
medium-specific legal and regulatory models from working.

Assess whether largely unregulated IPTV can provide a
robust and diverse medium for expression with ubiquitous
access via many voluntary network interconnections.

Offer recommendations on how to balance the interests of all
parties.
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Analogies Used to Explain How the Internet Works

Several analogies and models provide a frame of reference for
understanding how the Internet works.
It’s a cloud:
It’s a network of networks:
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Analogies Used to Explain How the Internet Works

It’s a series of tubes:
It’s part of a broadband communications supply chain:
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Analogies Used to Explain How the Internet Works

It’s a hierarchy of protocols:
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A Working Definition

Consider the Internet as the product of seamless interconnection between
servers, routers and broadband subscribers using the telecommunications
transmission networks of many, often-unaffiliated operators.

We should concentrate on the network links of these operators that go by
several different names: Internet Service Provider (Tier-1, Tier-2, retail)
Content Distribution Network, Peer, Transit Lessee, etc.
Source: George Ou, http://www.digitalsociety.org/2009/11/fcc-nprm-ban-on-paid-peering-harms-new-innovators/
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Source: George Ou, Digital Society, http://www.digitalsociety.org/2010/12/division-of-laborbetween-broadband-and-cdn/
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Four Phases in Internet Development
1) Incubation--government administration, first through the United States
Defense Department and later through the United States National Science
Foundation and research institutes throughout the world (1980s-1995);
2) Privatization--governments eliminate financial subsidies obligating
contractors to assess whether and how to operate commercially (1995-1998);
3) Commercialization—private networks proliferate as do ventures creating
software applications and content that traverse the Internet. The “dotcom
boom” triggers irrational, excessive investment and overcapacity (19982001); and
4) Diversification—after the dotcom bust and market re-entrenchment, Internet
survivors and market entrants expand the array of available services and ISPs
offer diversified terms, conditions and rates, including price and quality of
service discrimination needed by “mission critical” traffic having high
bandwidth requirements, e.g., full motion video content. ISPs and even
content providers can use deep packet inspection to identify traffic for “better
than best efforts,” and other forms of prioritization at one extreme and
blockage/throttling at the other.
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IPTV Access Depends on Interconnection
of Multiple Networks
Until its privatization and commercialization the Internet carriers
typically used a zero charge, “peering” process that assumed a “rough
justice” balance of traffic; even if traffic flows weren’t equal,
governments rather than the carriers usually paid.
Carriers operating in the now fully commercialized Internet pay close
attention to traffic flows and now limit peering to equals in terms of
bandwidth capacity, locations served, subscriber population, etc.
Smaller ISPs now pay for “transit.”
As the nature and type of ISPs proliferate so have interconnection
models; for example a Content Distribution Network will have lots of
traffic to deliver downstream, and possibly very little to handle
upstream. Traffic imbalances can trigger interconnection compensation
disputes.
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Many Interconnection Models Work
in the Current Phase

ISPs consider price and QOS discrimination essential for
generating new profit centers; the Internet largely shifts from
“best efforts,” “one size fits all” into a largely differentiated
medium.

Content providers increasingly trade off maximum market
penetration for smaller shares of paying customers; without
firewalls and effective authentication, premium content won’t be
offered.

Some even end users want and will pay for “better than best
efforts” routing of “mission critical” bitstreams, e.g., movies, pay
per view, full motion video.

But ISPs are tempted to act on their incentives and abilities to
discriminate in anticompetitive ways.
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New Incentives Risk Network Balkanization
and Challenges to the Goal of Ubiquitous Access
Level 3-Comcast Dispute
In late 2010 Comcast imposed a traffic delivery surcharge when Level 3 became the
primary CDN for Netflix.
Level 3 characterized the surcharge as a discriminatory toll while Comcast framed the
matter as a commercial peering dispute.
Comcast is correct if one narrowly focuses on downstream traffic termination.
But more broadly the dispute raises questions about the scope of duties Comcast owes its
broadband subscribers and whether Level 3 is entitled to a good faith effort by Comcast
to abate the traffic imbalances with upstream traffic.
It also raises questions about the flow of compensation due participating carriers
downstream from gigantic sources of traffic.
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Misconceptions (or Misrepresentations)
in the Level 3-Comcast Dispute
Retail ISPs providing the “last mile” delivery of traffic do not directly receive
compensation from upstream sources of content such as Google, Netflix, YouTube
and Hulu.
The peering process traditionally involves directly interconnecting carriers. This
means Netflix has the responsibility of securing the services of a CDN, such as
Level 3, but Level 3 bears the direct interconnection burden with retail ISPs such as
Comcast.
It is untrue to assert that hyper giant sources of traffic, do not pay for delivery of
their content. Comcast enjoys the ability to charge twice in what economists term a
double-sided market: 1) monthly retail broadband subscriptions, now tiered by
transmission speed and amount of content downloaded; and 2) peering/transit with
upstream ISPs and CDNs such as Level 3.
Note that Comcast successfully imposed a surcharge on its peering partner Level-3
when Netflix traffic upset the balance of traffic flows.
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The Cablevision-Fox Dispute
For added leverage in a content retransmission dispute Fox used
deep packet inspection to identify Cablevision subscribers seeking
access to Fox content available to anyone via the Hulu intermediary
web site. Fox denied Cablevision subscribers access and instead
sent this message:
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Good News and Bad News in Dispute Resolution
The Good News: Commercial negotiations can resolve most disputes with limited, if any harm to consumers
and without regulator intervention.
The Bad News: Broadband access has become a near essential. Any access dispute resulting in network
balkanization or blockage can cause significant harm to consumers.
Currently the FCC has no direct statutory authority and questionable jurisdiction even to remedy Internet
interconnection complaints it receives.
The FCC has invoked promotional obligations in the Telecommunications Act of 1996 , e.g., Sec. 706. But the
Comcast case (no statutory support for open Internet initiatives) casts doubt whether the Commission can
intervene even if empirical evidence shows consumer harms.
Unclear how far the FCC can go with “quasi-common carrier” duties affirmed in two recent courts cases:
1)
Cellco (affirming the FCC’s decision to require wireless carriers to provide compulsory data
roaming) and
2)
Arlington (affirming FCC identification of reasonable deadlines for state and local authorities to
act on wireless tower applications).
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Regulatory Status of IPTV Service Providers
Using the OSI stack model, IPTV content lies at the top; content providers qualify as
speakers entitled to maximum First Amendment protection.
On the other hand, Internet Service Providers (“ISPs”) primarily offer lower level conduit
and transmission services. Ventures that blend content and conduit, such as cable television
operators, qualify for conditional speaker rights and protections, e.g., using intermediate
scrutiny the Supreme Court affirmed FCC’s regulations of cable operators including the
“must carry” duty to retransmit local broadcast television signals.
What First Amendment rights do content distributors/aggregators (Netflix/Hulu) have? Can
ISPs participating in the downstream delivery of video content, prioritize traffic, favor
affiliates’ traffic, impose traffic carriage surcharges, or offer premium, “better than best”
efforts traffic delivery options?
Does the FCC have statutory authority to remedy obvious instances of anticompetitive
practices, e.g., deliberately dropping packets?
Can the FCC impose fair dealing requirements like “network neutrality” ?
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Developing Trends
Heretofore private carrier negotiations (peering, transit, retransmission consent) have reached
closure, albeit not always on a timely basis, even as subscribers continue to pay during
negotiations. Expect consumers/voters to complain vigorously if interconnection disputes
don’t get resolved quickly.
Interconnection negotiations may bog down or harm consumers, particularly if compensation
and conduit neutrality issues are triggered. Broadband and telephone subscribers expect their
subscriptions to guarantee ubiquitous, high quality and reliable access not conditioned on
multiple interconnection agreements with upstream carriers.
ISPs and content providers regularly try new interconnection options, e.g., Netflix may install
a large hard drive on subscriber premises; Google and other major content sources have
secured their own Autonomous System identifiers and will pursue direct (and cheaper)
interconnections; interconnection has become less hierarchical.
Regulation arbitrage or avoidance can affect interconnection strategies, e.g., Comcast’s
invoking the FCC’s “specialized network” exception to open access rules when it offered
video on demand via X-Box without debiting an otherwise applicable download allocation.
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Recommendations
Ideally Congress should specify the scope of jurisdiction available to the FCC by creating a
new Internet Services Title in the Communications Act.
The FCC should have clear jurisdiction to fashion fair remedies to complaints. This does not
require a substantial regulatory burden, nor should it limit speech.
ISPs have to accept that their combination of content and conduit limits expression rights.
They can’t expect to invoke conduit neutrality for “safe harbor” exemption from copyright
and tort liability, but also claim unconditional speaker rights when that option appears more
desirable.
The network neutrality debate should migrate away from First Amendment (free expression)
and common carriage models. Instead the FCC should emphasize interconnection and
carriage obligations.
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