Category Archives: Gadgets and Technology

Sociologist says Oprah has been in front of media trends

Posted on by

Oprah has been moving her operations to her own television network, OWN (the Oprah Winfrey Network). A sociologist discusses this move:

I see OWN as a smart move for two reasons. First, Oprah is only one person. She has been working nonstop in front of the camera for nearly 30 years. It may be time to think about how to develop her brand in a way that is not completely dependent on her as a frontwoman. Second, the move to cable may be a good choice in a media context where the center of gravity is shifting away from network television premised on the existence of large mass audiences.

In further comments, it is suggested that Oprah’s popularity is partly due to her positioning within the media landscape:

Oprah is an icon for many reasons, but surely one is that her career trajectory has closely mapped changes in the larger media landscape. Beginning in the daytime television talk show format, pioneered by Phil Donahue, Oprah fully realized the potential of the genre as she leveraged her fame on multiple media platforms including, radio, television, film, Broadway, books, magazines, and the Internet. In addition to her work in daytime talk, some of her most recognizable products are her highly successful lifestyle magazine O, her roles in high-end dramatic works for film and stage, like The Color Purple and Beloved, and her ill-conceived philanthropic project for girls in South Africa (also a documentary). Although these projects did not all succeed equally well, they have cemented Oprah’s cultural prominence and sheer ubiquity. They also demonstrate Oprah’s ability to take risks.

I would also note that Oprah is a global media phenomenon. Unlike other big celebrities in the United States, Oprah has taken advantage of the increasingly expansive syndication of the digital era to build a mass international audience.

This sort of perspective is a broader one, moving beyond Oprah’s personality or the atmosphere of her show and emphasizing how Winfrey has been very effective at working at the forefront of the changing media. Particularly in expanding to newer platforms, Winfrey has built her brand beyond just a talk-show.

I wonder how much of this is post-hoc analysis. When Oprah was building her show and audience, just how risky was she? Looking back, we can see that she has been successful. But there must have been other personalities and celebrities that attempted to follow similar paths. How exactly did Oprah get ahead or leverage these particular technologies? How risky were her decisions compared to others? Was she a first-adopter or just in the opening waves of certain changes?

Consider not getting the Bluetooth option

Posted on by

A post in MIT’s Technology review today reminds us why embedded computing is not always a good thing:  the modern car is hackable:

Researchers who have spent the last two years studying the security of car computer systems have revealed that they can take control of vehicles wirelessly.

The researchers were able to control everything from the car’s brakes to its door locks to its computerized dashboard displays by accessing the onboard computer through GM’s OnStar and Ford’s Sync. [emphasis added]

Maybe you should seriously consider opting out of Bluetooth connectivity on your next vehicle.

Update: Stewart Baker over at the Volokh Conspiracy points out that some cars can be hacked via CDs or MP3s acting as a Trojan horse, which suggests a new RIAA business model:

Considering the clout they’ve already demonstrated on Capitol Hill, it may just be a matter of time before the industry persuades Senator Leahy to introduce the “Steal Our Music, We Steal Your Car” Act of 2011, authorizing copyright owners to introduce car-hacking code into Limewire and Bittorrent networks and then take possession of the music thieves’ vehicles.  No doubt, they can produce studies showing that the act would create thousands of exciting auto repo jobs, and a tie-in with CarMax would help share the lobbying burden.

He’s kidding, of course.  But it’s a little sad that you had to wonder for a second, isn’t it?

The iPad as magic

Posted on by

Sales of Apple’s iPad have been impressive. Virginia Postrel argues that the appeal of the iPad is in its magic:

When Steve Jobs appeared on stage last week to unveil the iPad 2, which hit stores Friday, he said, “People laughed at us for using the word ‘magical,’ but, you know what, it’s turned out to be magical.”

Apple has long had an aura of trend-setting cool, but magic is a bolder—and more provocative— claim…

With its utterly opaque yet seemingly transparent design, the iPad affirms a little-recognized fact of the supposedly “disenchanted” modern world. We are surrounded by magic…

“Between a wish and its fulfillment there is, in magic, no gap,” wrote the anthropologist Marcel Mauss in “A General Theory of Magic.” Effortlessly, instantly, the magical alters reality with a tap of the finger or wave of the hand. Sound familiar?

This argument reminds me of Max Weber’s claims about the rationalization of the modern world. On a broader scale, Weber argued that bureaucracy, efficient for dealing with large groups of people, would lead to a “iron cage” where everything would be routinized. Postrel argues that even though the iPad is the product of modern bureaucracies (even Apple is a bureaucracy though it positions itself as the anti-bureaucracy, usually referring to Microsoft, with a charismatic leader), it is magic in that the user has little idea of how it all works, is unable to open it up and “look under the hood,” and it is like an extension of oneself.

This could be one explanation for the iPad as magic. There could be some other reasons as well: its size, the vibrant screen, the Apple brand, and its positioning as the most popular (and the first mass-market product?) of the burgeoning tablet market. Another explanation could be this: the iPad brings joy or happiness to its users in a way that many modern products do not. While laptops are often intended for work and new cars are functional transportation options, the iPad is there for enjoyment. In a disenchanted world, this is an re-enchanting product in the same way that the Microsoft Kinect (with its own impressive sales) is magical: it is meant to be used for fun.

Will the magic decline over time as more products offer the same possibilities? Probably. But for now, the iPad may have just cornered the short-lived market on magic and re-enchanting its user’s worlds.

Whether Facebook increases the number of divorces

Posted on by

You might have seen certain figures bandied about how often Facebook is cited in divorce cases: this story says, “Two-thirds of the lawyers surveyed said that Facebook was the “primary source” of evidence in divorce proceedings.” But is it fair to then say that Facebook is a primary driver of divorce proceedings? Carl Bialik says the numbers are more complicated than many news stories would lead you to believe:

Some lawyers do say that they see Facebook playing a bigger role in divorce these days, that doesn’t mean the site destroys marriages…

“Correlation is not causation,” Thomas Bradbury, professor of psychology at the University of California, Los Angeles, wrote in an email. “Divorce has been around for a long time, long before these sorts of possibilities were present; the newly available information does add a new flavor to relationship maintenance and dissolution, but I don’t think it changes the basic processes that underlie change and deterioration in relationships.”…

These issues are symptoms of a larger issue in divorce research: “It’s very hard to separate out the causes” of divorce, says Andrew Cherlin, a sociologist and divorce researcher at Johns Hopkins University.

“To do this kind of research requires a huge amount of persistence,” said George Levinger, professor of psychology emeritus at the University of Massachusetts.

Part of the reason is that it is hard to pinpoint a single reason or even a set of reasons for any marital split…

Some researchers have asked divorcees why they divorced, and gotten conflicting results from men and women. Others have looked for factors that predict whether couples divorce. “There are many social, cultural, and behavioral predictors of divorce,” W. Bradford Wilcox, director of the National Marriage Project at the University of Virginia, wrote in an email.

Other academics examine couples’ behavior, seeking clues that might predict marital dissolution.

It sounds like this a more complicated methodological issue that still needs to be worked out by researchers: how exactly can one identify the primary cause or causes of divorce? Just because Facebook is mentioned as contributing to a divorce does not mean that it causes the divorce. As you might expect, Facebook itself says this argument is silly:

A spokesperson for Facebook said: “It’s ridiculous to suggest that Facebook leads to divorce. Whether you’re breaking up or just getting together, Facebook is just a way to communicate, like letters, phone calls and emails. Facebook doesn’t cause divorces, people do.”

It is no surprise that lawyers would want to use Facebook data for a divorce case (or other types of cases such as fraud – one example here). Facebook is often fairly public information and people often post on there without thinking about the potential consequences of sharing such information. It would be interesting to hear more about how this data from Facebook is presented in court and the reactions to it from both judges and the participants in the case.

But I wonder if these sorts of figures and ideas about Facebook and divorce have gained notoriety because they may fit some larger narratives about privacy and information sharing on Facebook as well as voyeurism on the Internet. These figures from lawyers could be presented as evidence that people lead dual lives, one in the offline world and another one in the real world. Whether this is actually the case doesn’t matter as much; what does is that the hot company of recent years, Facebook, can be linked to negative behavior.

Strong IP

Posted on by

Techdirt points to a story illustrating how strong IP enforcement comes around after going around:

We’ve been talking about how ridiculously aggressive Sony has been lately in enforcing its intellectual property rights concerning PS3s, so it seems like there might be a bit of karmic retribution in the fact that a shipment of PS3s has been seized in Europe as part of an ongoing legal fight with LG over patents covering parts of the PS3. I’m always amazed at how frequently companies who push for stronger and stronger enforcement of IP laws never seem to consider the consequences when those laws are directed at their own activities.

There’s been a lot of talk this week about patent reform since the Senate passed a bill 95-5 that would, among other things, move the U.S. to a first-to-file system similar to what most of the rest of world uses.  Some commentators think the proposed statutory reforms wouldn’t amount to much, though others suggest that the FTC’s recent report suggest that administrative reforms may be on the way.

Quick Review: Catfish

Posted on by

Perhaps we could consider the movie Catfish a companion to the more publicized film The Social Network (reviews from Brian here, Joel Sage here): both films consider the effects that Facebook and other digital technologies have on our world. But while The Social Network was a stylized retelling of the founding of Facebook, Catfish covers the lives of more ordinary people as they use these technologies to search for love. Here are a few thoughts about this film:

1. The story revolves a guy, Nev, from New York and a girl from Michigan, Megan, who build a relationship built around a Facebook friendship, IM chats, text messages, and phone calls. Both parties are looking for love though why they are doing this ends up being the plot twist of the film.

1a. I think what makes this film work is that Nev is an appealing character. Even though he hasn’t met Megan in the early stages of the film, he falls hard and ends up giggling and swooning like a teenager. But when things turn out to be more complicated than this, he still finds a way to make sense of it all.

2. More broadly, the film presents a question that many people wonder about: can two people really build a lasting relationship through Facebook?  While this is an interesting question, research on Facebook and SNS (social networking site) use suggests most younger people are not looking to meet new people online. Rather, they are reinforcing existing relationships or reestablishing past relationships. And this film deserves some credit: whereas a film like You’ve Got Mail suggests that email and other electronic communication work the same way as traditional dating (and the typical romantic comedy happy ending), this film introduces some complications.

3. The Social Network seems to suggest that technology helps keep us apart. (A side note: this seems to be an argument from the older generation talking about younger generations. One thing I wonder about The Social Network: was it so critically acclaimed because it fed stereotypes that older people have about younger people? How much did the characters in this film resonate with the lives of younger film-goers?) In that film, Zuckerberg founds Facebook in order to join the in-crowd, is being sued by two people after arguments related to developing community-building websites,  and at the end, he is shown still searching for a connection with a girl he lost years ago. Catfish seems to make an opposite argument: despite the imperfect people who try to connect online, the film suggests there is still some value in getting to know new people. When Nev’s love becomes complicated, he doesn’t just withdraw or call it quits – he tries to move forward while still getting to know Megan.

4. This film claims to be a documentary though there is disagreement about whether this is actually the case. Regardless of whether the film captures reality or is scripted, it is engaging. (The presentation seems similar in tone to Exit Through the Gift Shop, reviewed here.) Have we reached the point in films where the line between what is real and what is written doesn’t matter? And should we care or do we just want a good story?

Overall, this film seems more hopeful about the prospects of Facebook and other digital technology. With a documentary style and an engaging storyline, Catfish helps us to think again about whether people can truly get to know each other online.

(This film was generally liked by critics: it has a 81% fresh rating, 109 fresh out of 134 total reviews, at RottenTomatoes.com.)

Infrastructure, beware the solar flare

Posted on by

Concern has grown in recent years about how much of our infrastructure, electricity, wireless technology, and more, would be affected by solar flares. National Geographic suggests that if we experience a solar flare like Carrington Event of 1859, we would be in trouble:

[T]the biggest solar storm on record happened in 1859, during a solar maximum about the same size as the one we’re entering, according to NASA.

That storm has been dubbed the Carrington Event, after British astronomer Richard Carrington, who witnessed the megaflare and was the first to realize the link between activity on the sun and geomagnetic disturbances on Earth…

In addition, the geomagnetic disturbances were strong enough that U.S. telegraph operators reported sparks leaping from their equipment—some bad enough to set fires, said Ed Cliver, a space physicist at the U.S. Air Force Research Laboratory in Bedford, Massachusetts.

In 1859, such reports were mostly curiosities. But if something similar happened today, the world’s high-tech infrastructure could grind to a halt.

“What’s at stake,” the Space Weather Prediction Center’s Bogdan said, “are the advanced technologies that underlie virtually every aspect of our lives.”…

But the big fear is what might happen to the electrical grid, since power surges caused by solar particles could blow out giant transformers. Such transformers can take a long time to replace, especially if hundreds are destroyed at once, said Baker, who is a co-author of a National Research Council report on solar-storm risks…

“Imagine large cities without power for a week, a month, or a year,” Baker said. “The losses could be $1 to $2 trillion, and the effects could be felt for years.”

An event even close in scale to the Carrington Event would quickly remind us of how much we take this infrastructure for granted.

Although I don’t wish for something like this to happen, it would make for a fascinating natural experiment. If there was no electricity for an extended period, how would governments and people respond? Would we end up in scenes reminiscent of Hollywood apocalyptic thrillers or could we survive and make do? Such movies tend to built around the idea that there will be widespread destruction, not the loss of vital electricity. And if everyone is affected, who would lead the way forward?

h/t Instapundit

Using a sociological approach in “e-discovery technologies”

Posted on by

Legal cases can generate a tremendous amount of documents that each side needs to examine. With new searching technology, legal teams can now go through a lot more data for a lot less money. In one example, “Blackstone Discovery of Palo Alto, Calif., helped analyze 1.5 million documents for less than $100,000.” But within this discussion, the writer suggests that these searches can be done in two ways:

E-discovery technologies generally fall into two broad categories that can be described as “linguistic” and “sociological.”

The most basic linguistic approach uses specific search words to find and sort relevant documents. More advanced programs filter documents through a large web of word and phrase definitions. A user who types “dog” will also find documents that mention “man’s best friend” and even the notion of a “walk.”

The sociological approach adds an inferential layer of analysis, mimicking the deductive powers of a human Sherlock Holmes. Engineers and linguists at Cataphora, an information-sifting company based in Silicon Valley, have their software mine documents for the activities and interactions of people — who did what when, and who talks to whom. The software seeks to visualize chains of events. It identifies discussions that might have taken place across e-mail, instant messages and telephone calls…

The Cataphora software can also recognize the sentiment in an e-mail message — whether a person is positive or negative, or what the company calls “loud talking” — unusual emphasis that might give hints that a document is about a stressful situation. The software can also detect subtle changes in the style of an e-mail communication.

A shift in an author’s e-mail style, from breezy to unusually formal, can raise a red flag about illegal activity.

So this second technique gets branded as “sociological” because it is looking for patterns of behavior and interaction. If you wondered how the programmers set up their code in order to this kind of analysis, it sounds like some academics have been working on the problem for almost a decade:

[A computer scientist] bought a copy of the database [of Enron emails] for $10,000 and made it freely available to academic and corporate researchers. Since then, it has become the foundation of a wealth of new science — and its value has endured, since privacy constraints usually keep large collections of e-mail out of reach. “It’s made a massive difference in the research community,” Dr. McCallum said.

The Enron Corpus has led to a better understanding of how language is used and how social networks function, and it has improved efforts to uncover social groups based on e-mail communication.

Any sociologists involved in this project to provide input on what the programs should be looking for in human interactions?

This sort of analysis software could be very handy for sociological research when one has hundreds of documents or sources to look through. Of course, the algorithms might have be changed for specific projects or settings but I wonder if this sort of software might be widely available in a few years. Would this analysis be better than going through one by one through documents in coding software like Atlas.Ti or NVivo?

More follow-up: Netflix, sewage, and net neutrality

Posted on by

I’ve been hosting a discussion here at Legally Sociable that is turning into a long-running net neutrality debate.

To recap so far:

A.  Alan Roth, a USTelecom Senior Exec VP, wrote an article over at the Hill drawing an interesting analogy between the economics of Netflix/ISPs/home Internet users and the economics of sewage customers/municipal sewer lines/”pooled” sewage processing in the D.C. metro area.

B. I replied with a post questioning the applicability of Alan’s sewage analogy because it didn’t seem to correlate to the Netflix facts (i.e., sewage customers paid just their municipalities directly whereas Netflix customers pay both their ISPs and Netflix directly).

C.  Alan defended his application of the analogy and clarified his position, stating that he was using the analogy of sewage to highlight “the issue of equitable cost-sharing among the users of a network” and noting that “whatever you might want to say about who provides how much ‘value’ and to whom, the fact is that the data bits in question here are largely flowing in one direction, just as the sewage [flows] in one direction” toward the analogical, pooled-cost sewage processing station in D.C.

D.  I replied that we were still at an impasse because

All ISPs are providing here is a connection to the wider Internet (to the “regional front doors”). Retail customers then pay Netflix for the rest because Netflix is providing the rest. On what basis do the ISPs challenge Netflix’s contention that it “should pay only to transport its bits to a regional gateway, after which the costs of delivery to the end point would fall on others”? Doesn’t that precisely reflect how retail customers are being billed?

The only justification I can see for your position is if subsidies are involved-in other words, ISPs are somehow lowering their retail customers’ bills for Internet service because they are paid by content providers. If that’s true, however, that is very different situation from the D.C. sewage situation to which you analogize.

E.  Alan has just replied here.  Please follow the link to get the full text; however, most of Mr. Roth’s response gets reproduced below as I respond to each of his points in turn.

Argument:

I sense this will probably be the final round of my exchange with Mr. Roth on this issue, so I want to begin by thanking Alan for engaging with me.  I certainly appreciate his creativity in drawing upon his experience as a member of the Board of Directors of the District of Columbia Water and Sewer Authority to help think about the economics of Internet content delivery.

In short, however, Alan and I do still (strongly) disagree.  I will take his latest points one at a time.

1) A small fraction of Internet users are consuming a huge portion of the available bandwidth on any given evening by downloading and/or streaming Netflix video content. See this article — http://www.wired.com/epicenter/2010/10/netflix-instant-accounts-for-20-percent-of-peak-u-s-bandwith-use/ — for confirmation of that phenomenon.

My analysis: Agreed — lots of people use Netflix, and that generates at lot of Internet traffic.  Alan and I don’t disagree on the facts; we disagree on the conclusions to be drawn.

I look at this situation and note that (a) home Internet users are paying their ISPs for Internet access and (b) home Internet users are (separately) paying Netflix for access.  Separate companies are providing separate services (connection and content, respectively), and they are both being paid directly by the people (home Internet users) who are consuming them.

Under these circumstances, I think it is irrelevant that 20% of Internet traffic is consumed by Netflix.  It could be 100%, and the fact would remain that home Internet users are paying ISPs for the connection and Netflix for the content.

In the real world, of course, Netflix isn’t the whole Internet.  100% of Internet activity is caused by 100% of Internet content providers — blogs, YouTube, Hulu, Skype, Netflix, and innumerable other web sites and services.  But so far as I can see, home Internet users pay 100% of their ISP’s bills for their Internet connections, and they pay 100% of their content providers’ bills for the content they enjoy, either directly (as with credit cards in the case of Netflix) or indirectly (as eyeballs for advertisers on ad-supported websites like Hulu).

If (a) ISPs maintain networks that allow home Internet users to connect to the broader Internet and (b) Netflix pays Internet content delivery networks (CDN’s) to deliver traffic right up to the “regional front doors” (where those ISP’s networks begin and the broader Internet ends) and (c) each bills customers accordingly, the fact that Netflix is 20% of Internet traffic is completely irrelevant.  What is relevant is that Alan thinks ISPs should be able to charge twice — even though Alan never really explains why Netflix should also have to pay the ISPs.

2) Enormous amounts of capital investment on the part of both ISPs and backbone providers are required to deliver that Netflix service reliably, while also providing adequate bandwidth for the other 98% of Internet users who are logged on simultaneously for their own various reasons. And as more and more users begin using their broadband connections for streaming video, satisfactory service will require even more investment. And that doesn’t even begin to take into account the huge sums needed to bring broadband to the (mostly very rural) areas of the country that are currently unserved and that presumably would like to enjoy the same online benefits that we city dwellers have.

My analysis: Alan and I also agree that enormous amounts of capital investments are necessary to run the Internet.  Again, however, home Internet users pay ISPs and Netflix pays CDNs, and the two networks meet at the “regional front doors.”  The fact that a lot of money is spent to make such networks possible doesn’t explain why ISPs should be able to charge Netflix for access to its customers any more than it would explain why Netflix should be able to seek reimbursement from ISPs for Netflix’s own CDN bills.  To my mind, what is “fair” is that each business pays its own costs.

To be sure, the economic arrangement between ISPs and Netflix could be different.  For example, ISPs could buy Netflix’s service (content and delivery to the “regional front door”) on a “wholesale” basis and then “retail” it to their customers.  ISPs could do this either as “included” with their Internet service or on an “a la carte” basis.  (Indeed, this is similar to what happens with a service that goes by the name “cable TV”:  “included” services are called “basic cable” and “a la carte” services are sometimes referred to as “premium channels”.)

While Netflix could follow such a model, that’s clearly not what they do.  Netflix has an innovative business model that competes with cable TV (and also the myriad of services vying for consumers’ entertainment dollars).  And so long as home Internet users are paying both their ISPs and Netflix directly, it seems logical to me each should only bill customers for the specific service each is providing.

Alan’s citation of the high capital costs of building the physical Internet is a true fact but an irrelevant argument.  Whether networks are expensive or not, ISPs are paid by their customers to provide connections to the broader Internet, and Netflix delivers content right to the point where the broader Internet starts.  If ISPs feel like the prices they are charging their customers don’t adequately cover their capital costs, they can change those prices.  But it eludes me why Alan thinks the ISPs somehow deserve money from Netflix.  Justifying that sort of double-dipping seems complex at best and unfair at worst.

(As for expanding service into rural areas, Mr. Roth seems to be implying that urban Internet users should be willing to subsidize rural Internet users.  We can debate that point as a separate policy matter, but it seems hardly related to the issue of whether Netflix should be paying the ISPs.)

3) Creating a sound business case for those enormous capital investments requires that someone pay for them. In my view, requiring 98% of end users to subsidize a small handful of mega-users isn’t the right way to generate those capital funds, especially when price is already one obstacle to greater broadband adoption. (About one-third of people who could access broadband now don’t take it!) Admittedly, some form of usage-based pricing might solve that problem — but based on what I’ve seen from my vantage point here in DC, you can bet that howls of protest from that tiny group of bandwidth hogs will drown out any rational discussion of what’s fair to the other 98%.

My analysis: I think Alan and I both agree that Netflix’s CEO was extremely self-serving when he stated that he didn’t want to see ISPs move to metered, per-GB Internet pricing.  It is understandable that Netflix would love people to be able to get cheap access through ISPs (a service Netflix doesn’t provide) to Netflix’s licensed content (a service Netflix does provide).  If Netflix’s customers don’t have to think about a running meter, so much the better.

But let’s not pretend that ISPs don’t also play this self-serving game.  Alan’s employer, USTelecom, is “the nation’s premier trade association representing broadband service providers, manufacturers and suppliers providing advanced applications and entertainment.”  It is in USTelecom’s members’ interest — the very ISPs we have been discussing — to charge as much as possible for Internet connectivity.  Now, there’s nothing wrong with that.  ISPs do incur “enormous capital investments”, and it only makes sense that they want to be compensated.

I think Alan’s deployment of the “fairness” argument at this juncture, however, is quite telling.  As he admits, ISP’s bills could be fair and avoid cross-user subsidies by following true usage-based pricing.  But we all know that this is not what happens.  Perhaps ISPs don’t offer usage-based pricing because market competition will not allow it (which presumably means the market is working).  Or perhaps ISPs like the current system precisely because it allows them to charge $60+/month (or higher in many markets) to individuals who barely use the Internet (which would imply that ISPs are benefiting from the fact that many home Internet users do not have a choice of ISPs).

But either way, let’s not pretend that ISPs — most of which operate under monopoly or duopoly market conditions — are avoiding usage-based pricing on the mere prospect of “howls of protest.”  If ISPs wanted to offer usage based pricing, they would.  But they apparently don’t.  Given this undeniable fact, it’s hard to see how Alan’s position in favor of the ISPs he represents is any less self-serving than Netflix’s position.

Moreover, any unfairness that exists because “98% of end users…subsidize a small handful of mega-users” is completely on the ISP side of the “regional front door”.  If ISPs want to address a perceived unfairness in pricing among their users, they can try charging more for more use.  But it’s hard to see why Netflix — on the other side of that “regional front door” — should pay money to ISPs just because the ISPs own customers don’t all consume exactly the same amount of bandwidth.

4) It isn’t just me who sees Netflix as conducting this unfair “subsidization” campaign. See this analysis too — http://www.digitalsociety.org/2011/01/netflix-lobbying-for-broadband-consumers-to-subsidize-netflix/.

My analysis: I note at the outset that Alan’s view of “subsidies” cuts both ways — he doesn’t want to “requir[e] 98% of end users to subsidize a small handful of mega-users” (point #3), but he does want “to take into account the huge sums needed to bring broadband to the (mostly very rural) areas of the country that are currently unserved and that presumably would like to enjoy the same online benefits that we city dwellers have” (point #2).

It’s perfectly understandable that Alan wants subsidies that will help USTelecom’s ISP clients and not subsidies that don’t.  But it’s a little much for him to be shocked when Netflix also wants a subsidy.  And whatever rhetorical games ISPs and Netflix are playing, the fact remains that ISPs are in the driver’s seat on Internet connection pricing.  If they think the current arrangement is unfair because “unlimited access” means some people use way more, they can change their pricing structure (see #3, above).  But again, there’s no discernible reason to pull Netflix, a third party, into this issue.

As far as the Digital Society article is concerned, I’ll let my readers look at it for themselves.  From what I can tell, this is the most relevant excerpt:

Netflix and their CDN partners want’s [sic] the government (the FCC in particular) to declare this peering negotiation as a Net Neutrality violation and force broadband providers to give away thousands of Gbps of broadband capacity for free.

I direct readers’ attention to the comment by Jeremy Stench at the bottom of the page, which is more fully explained in his linked blog post over at Packet Life:

If Comcast [an ISP] were charging Level 3 [one of Netflix’s CDN’s] for transit service [i.e., passing data through the Comcast network on the way to some other final destination], this would be business as usual, not even worth commenting on. But this situation is markedly different as Comcast is demanding payment for traffic terminating on its own network. The traffic in question ultimately must traverse Comcast’s infrastructure, regardless of who the immediate peer is. Comcast effectively is charging two parties for a single service: it wants Level 3 to pay for sending data, and its own subscribers to pay for receiving that same data.

In an ideal economy, Comcast should be able to charge what it likes. And Level 3 should be able to decline. And Comcast subscribers should be able to switch to another provider if they want to watch Netflix. Sadly, this is not the situation of Internet access in the US. For millions of residents, Comcast is their only choice for broadband Internet access. Terminating peering with Comcast would mean an inability to deliver Netflix to those millions of potential customers, and Comcast knows it. [emphasis added]

This is well said (and illustrative of the monopoly/duopoly pricing power of many broadband ISPs discussed at #3, above).

5) When Netflix has been paying $600-700 million annually to the US Postal Service to deliver DVDs through the mail, one would think they would see some value to sharing in the costs of building out that expensive broadband infrastructure by agreeing to share in a fair proportion of the costs their own service is imposing. But instead, they seem to want to offload all those costs onto the 98% of consumers who AREN’T using their services, as the same time as they work on getting out of the mail delivery business — thereby saving themselves hundreds of millions of dollars each year.

My analysis: Of all Alan’s points, this seems the flimsiest.  Other than the subsidy issues already discussed above, Alan’s argument reduces to the mere assertion that (a) because Netflix used to pay the USPS a lot of money to mail DVD’s (“$600-700 million annually”), (b) Netflix should have to pay ISPs a lot of money to deliver those movies digitally (rather than the ~$35 million they actually pay to CDN’s like Level3, according to the Digital Society article).

First, this is misleading.  Netflix may only pay $35 million to its CDN’s to deliver content to those “regional front doors”, but Netflix’s 20 million+ customers pay their ISPs hundreds of millions (if not billions) of dollars for Internet service (which, in practice, means a connection to those “regional front doors”).

Second, why a company’s previous cost structure is relevant to its current business model escapes me.  Netflix’s prior, significant expenses in using the postal service to send DVD’s by mail seems as irrelevant as it would be for FedEx to argue that L. L. Bean should pay more to ship its packages than Amazon.com because L. L. Bean was founded in 1912 (when shipping was more difficult and expensive) and Amazon.com was founded in 1994 (when shipping was relatively cheaper).  It’s hard to see the logic in that.

[6] Joel, it seems you and I should be able to agree on the end result we both want — a strong, robust, and high-capacity broadband infrastructure that serves everyone’s needs. But instead of working to figure out how best to get there, we find ourselves arguing about a subsidiary question that reminds me of that famous dialogue from an old Marx Brothers film, where Groucho finds himself negotiating with a beautiful woman over how they might spend the night together:

Groucho: Would you sleep with me for a million dollars?

Pretty lady (laughing): Of course I would!

Groucho: Would you sleep with me for $10?

Pretty lady: Certainly not! What do you take me for?

Groucho: We’ve already established that. Now we’re just haggling over the price.

My analysis: Yes, of course, price is all Alan and I have been arguing about.  It would be disingenuous to suggest otherwise.  Alan argues that Netflix should pay some (unspecified) amount to ISPs in addition to what ISP’s customers pay; I have been arguing that ISPs should not be able to double-dip.

At this point, I will let our respective arguments speak for themselves.

Federal budget issue: increased fuel effiency, reduced revenues from the gasoline tax

Posted on by

Amidst discussions about infrastructure and the price of gasoline, Obama’s administration has called for an increase in transportation spending. But where exactly the money will come from to fund this increase is unclear:

[Transportation Secretary Ray LaHood] said Obama is not in favor of raising the gas tax in a “lousy economy.”

The new tax would be necessary, in part, because the gasoline tax used to fund the highway trust fund is collecting less revenue than projected due to increasing fuel efficiency.

The exchange between Sessions and LaHood degenerated into a shouting match, with the Transportation secretary emphasizing that infrastructure can be improved and jobs created while paying down the debt.

This is one negative consequence of increased fuel efficiency: less gasoline will be purchased so without a gas tax increase, revenue from this source falls. This might call for some new ways to derive tax revenue from driving. How about more tolls? Or taxing drivers per mile driven?