Saturday, March 8, 2014

The pursuit of televisual happiness: Public interest, net neutrality, regulation

Significantly serious claims have been made following the announcement that Comcast is planning to buy up and consolidate large chunks of the broadband infrastructure by purchasing Time-Warner for $45 bn. The result is likely to be new price regimes for its customers. ZDNet  The commercial imperatives of Comcast will provoke, say the critics, the end of net neutrality, as Comcast plays favorites with its preferred content providers - mostly NBC-Universal and (maybe) Time-Warner, which it owns or will own. Ah, the luxury of vertical integration.

Here is the snap-shot picture from ZD-Net's Larry Dignan.

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That's part of the business case.

Content providers and public interest activists are outspoken about the ability of Comcast to control the cost and speed of content from innovators such as Netflix and Google, which rely on the cable and internet providers to get their programs to consumers.

The larger point is this: the national communication infrastructure is changing. In fact, it may be accurate to say it is disappearing.

And why? The Internet is the vehicle by which national systems of regulation have been turned on their heads. Historically, as I  showed in Uprising, the business interests of the computer industry operated in an unregulated space. As digital switching devices were gradually incorporated into the telecommunications voice network, the computer industry brought their business approaches to telephony. They expressed an unregulated, market-first approach, not a public interest orientation. The shift away from regulation toward a kind of cowboy communication, where the guy with the fastest business proposition won, was undertaken in a series of commercially driven moves to deregulate. (The Computer Inquiries, 1974, 1984, 1994.) Like ranchers, or silver and gold miners in the wild west, small chunks of the vast telecommunication enterprise could be claimed by entrepreneurs, in a winner-take-all shoot out for digital freedom. ("Information just wants to be free.") Thus the end of the regulated national infrastructure. Thus innovation agility in the market place obsession in computer technology which drives Silicon Valley and its progeny.

If you don't have regulation with a centrally located legal code, you cannot have a national infrastructure in the public interest.

In short, the infrastructure of the US national telecommunication network overseen by national regulators such as the Federal Communication Commission (FCC) has been gradually made redundant against the business logic of American free enterprise.  Originally, FCC regulations were to make voice services universal and affordable - to bring together the entire nation. (Media and journalism academic James Carey showed in Communication as Culture (1989) that the national culture was embodied within communication). Slowly, consistently, (regulated) telecommunication services (voice telephony) became (unregulated) information services (Internet).

With the Comcast acquisition and opposition to it, there is every reason to believe old regulatory theory will be applied to keep the content flowing and to make us happy. The Guardian reported results from a court case, noting that the court "reaffirm[ed] that the commission had authority to regulate broadband access under Section 706 of the Telecommunications Act of 1996, and the FCC will use that authority to review how it can bring back non-discrimination and no-blocking regulations while complying with the order." Italics added.

Bringing back non-discrimination and non-blocking is a way to guarantee televisual equality, in the constructivist language of mainstream US law.

Here's the thing: Everyone agrees that consumers should be happy and nothing is more unhappy-making than not being able to get your favorite TV program. This is an important cultural aspect of telecommunication policy making - the pursuit of televisual happiness. (In the 1936 Telecommunication Act it was the pursuit of audio-telephone happiness.)

Cultural aspects of telecommunication policy express the core of American values, constitutionally codified in that telling, yet ambiguous phrase, "the pursuit of happiness." My view is that happiness as conceived in this regard is unattainable, which is why the phrase is so perfect. It is in the "pursuit" that American culture revels, not the realisation of happiness.

Customers, end-users, will probably have the costs of content of the new Comcast network passed to them. The possibility here is that the price tiering that already exists based on end-users ability to pay, will become more segmented. This is what stands out in the ZDNet report and the Comcast case - how quickly this deal will be profitable as costs are passed to consumers who will pay up, while the business costs of both companies are reduced through the merger and reduction of competition. (Comcast reports EBITDA margins of 41.1% and Time-Warner 36.1%. It's a good business!)

Those in wealthy neighbourhoods and cities will: a. have the ability to pay - be able to accept the cost increases; b. have the infrastructure in their neighborhoods because they are the neighborhoods where people can pay the higher fees. (Quick question on the relationship of the national infrastructure to national culture: how many people are watching HBO specials in minority and poor  neighborhoods, where HBO is not part of broadcast television or basic cable? This split needs more discussion: the culture of the upper middle class and the other.)

There is a third consideration for public interest reasons: the Federal Communication Commission has signalled the introduction of regulations in the new vertically integrated scenario.FCC Chair on regulating The carriers, such as Verizon, hate this. And rightly so. Regulation undoes the cowboys, it can insist on the public interest which becomes a tool for public discourse about the infrastructure, the nation and culture.

One other matter of note: Watch the FCC and its opponents closely in the debate about reintroducing regulation. What happens in the FCC can translate into national infrastructure debates outside the US.