33 Years of the Digest ... founded August 21, 1981
Copyright © 2015 E. William Horne. All Rights Reserved.

The Telecom Digest for Jan 1, 2015
Volume 34 : Issue 1 : "text" Format
Messages in this Issue:
Happy New Year [nfp] (Telecom Digest Moderator)
Re: Verizon says it will charge NetFlix no matter what the FCC decides(Garrett Wollman)
Re: Verizon says it will charge NetFlix no matter what the FCC decides(HAncock4)

In no other land could a boy from a country village, without inheritance or influential friends, look forward with unbounded hope. My whole life has taught me what America means. I am indebted to my country beyond any human power to repay.  - Herbert Hoover

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Date: Thu, 1 Jan 2015 20:05:25 -0500 From: Telecom Digest Moderator <telecomdigestsubmissions@remove-this.telecom.csail.mit.edu> To: telecomdigestsubmissions.remove-this@and-this-too.telecom-digest.org. Subject: Happy New Year [nfp] Message-ID: <20150102010525.GA1589@telecom.csail.mit.edu> Well, we've made it through another year, and more-or-less intact. I have a tradition of telling the readers what things I'm going to work on in the year ahead. This year, I break with tradition, and ask you what you'd like to see here. The Telecom Digest will remain focused on telecommunications, but I want to read from you where you want that spotlight to shine. In addition, I'd like to read ideas about the subjects that you'd like to see which I haven't published in the past, such as tariff rules, rate-setting actions, corporate strategies, or other stories about telecom which aren't technical in nature. Please send in your ideas. Thanks. I wish you and your loved ones the best of the coming year. Bill -- Bill Horne Moderator
Date: Wed, 31 Dec 2014 22:07:37 +0000 (UTC) From: wollman@bimajority.org (Garrett Wollman) To: telecomdigestsubmissions.remove-this@and-this-too.telecom-digest.org. Subject: Re: Verizon says it will charge NetFlix no matter what the FCC decides Message-ID: <m81s39$c83$1@grapevine.csail.mit.edu> In article <m812ic$861$1@dont-email.me>, Fred Goldstein <fg_es@ionaryQRM.com> wrote: >Verizon's wire rates should be regulated, as they are monopoly owners >of local loop plant. The present vertically-integrated model is broken >and cannot be fixed, though fixing it is unthinkable in captured >Washington. Nonetheless, I am distinguishing between the lower-layer >telecom portion of Verizon's business and the Internet itself. Netflix >is trying to blow up the unregulated higher-layer Internet for its >advantage. I think most of the people (as opposed to firms paying Washington lobbyists) who care about net neutrality are not particularly interested in defending Netflix as they are in defending the vast array of small-time small-business and not-for-profit content providers out there -- the people who don't account for 60% of the US's Internet traffic. As you and I both know, the dispute between Verizon and Netflix is merely about how the existing revenue pie ought to be split up (Verizon thinks it deserves more because its customers are at least as valuable to Netflix as Netflix is to Verizon's customers) -- which is an issue that has been bubbling for fifteen years now, since the first CDNs came into being, because the architects of the Internet didn't build money-routing protocols to go along with the packet-routing protocols. (Dave Clark, who I used to work for, is working on fixing this, or at least understanding the consequences, now -- most of the people who work in his research group are economics and public-policy wonks now rather than hackers.) The issue, as always, is whether the solution that's in some sense objectively "right" for a dispute between two fairly large, powerful, and legally sophisticated companies will result in a harmful effect on everyone else (small customers who provide as well as consume Internet services). Today's Internet is not the one we thought we were building a decade ago, where content production and consumption was closer to balance. Given the oligopoly status of the last-mile business, some amount of regulation would certainly seem to be necessary. But most poeple would, I think, be happy with regulation that requires no more than true neutrality, with interconnection rates published and available to all content providers under substantially similar terms. It's not like the telecoms aren't used to operating in such a world, even if they would much rather be free to extract as much of the producer's surplus, in secret, as they can get away with. Certainly the deals that Netflix is able to negotiate will not be available to any would-be competitor, under current policy, and that should be a matter of some public concern. I'll give Netflix credit for not taking the path of least resistance, which would probably be more economically favorable for them (in terms of disadvantaging potential competitors). -GAWollman --
Garrett A. Wollman
Opinions not shared by
my employers.
What intellectual phenomenon can be older, or more oft
repeated, than the story of a large research program
that impaled itself upon a false central assumption
accepted by all practitioners? - S.J. Gould, 1993
Date: Wed, 31 Dec 2014 08:16:00 -0800 (PST) From: HAncock4 <withheld@invalid.telecom-digest.org> To: telecomdigestsubmissions.remove-this@and-this-too.telecom-digest.org. Subject: Re: Verizon says it will charge NetFlix no matter what the FCC decides Message-ID: <91cf768f-05d2-408d-98fb-04a08fc76183@googlegroups.com> On Tuesday, December 30, 2014 12:36:45 PM UTC-5, Bill Horne wrote: > On Tue, Dec 30, 2014 at 09:48:57AM -0500, Fred Goldstein wrote: > > This is the "but the network is there, my Blue Box call didn't cost > > them anything" argument. The short-run incremental cost of any one > > unit of demand tends to be zero, unless it hits the next incremental > > point and becomes very high. Hence costing and pricing tend to > > smooth out the curves and use averages. > I disagree with your premise: Blue Box calls not only didn't cost "Ma > Bell" anything, they made money for her! After all, the method used > was to dial an 800 number and then trick the network into rerouting > the call - but when the diverted connection was completed, the company > that had the 800 number WAS CHARGED FOR *THE* *CALL*! ... >From the book, "Exploding the Phone", it is my understanding that Blue Box users dialed a free phone company number, such as 555-1212, and accessed the network from that point. http://explodingthephone.com/ > That might seem a small matter, unless we consider that the underlying > method did not create an incentive for Ma Bell to fight Blue Box > fraud: she was, after all, getting paid! In that respect, the pheepers > were acting as employees of the phone companies, since they generated > revenue for those firms. A problem created by many Blue Box users was tying up multiple trunks in the network. Part of the game for phone phreaks was to call a distant toll center, seize a trunk there, and call another distant location. They would repeat the process as far as they could, using multiple trunks in the process and causing problems in the network. This wasn't just the domestic network, but overseas trunks as well, and back then overseas trunks were still limited. Further, they would use social engineering to call an inward operator or repair technician and request access to a special trunk, such as busy-verification access trunks where they could tap into calls in progress. Another game was multiple phreaks calling into test lines and having a long lasting conference call. The Bell System, independent companies, and the government went to considerable effort to track down and stop Blue Box users. > In like manner, there is a division of interest between Verizon's > customers and the corporation vis-a-vis "High speed Internet" > services, since Verizon seems to resent actually being asked to serve > a "Sunday afternoon load" when it priced its services at fixed rates > to attract consumer-grade customers. I think the capacity is there. > Verizon's claims boil down to "We didn't see this coming", and to > wishful thinking about the good-ol-days when every regulatory agency > rubber-stamped every rate increase. Those days are gone, and Verizon's > corporate culture can't adapt to a world where there are other > providers and other competitors. It's not the "blue box" argument - > it's the "We're the phone company!" claim. In my opinion, there are two sides to this issue, and it's tough to know what the actual facts are. We should note that, unlike the old days, a very substantial part of Verizon is not regulated at all, and the company is free to charge whatever it wants for whatever services it chooses to offer. Further, unlike the old days, I don't believe it has to answer to anyone about its internal capacities. Anyway, on the one hand: "Unlimited" usage has a very different meaning than in the old POTS days. Back then, the phone company had a pretty good idea how much service the average residential customer would use on an unlimited line. Obviously, a few customers would run a business out of their house and make many calls, but most didn't. In contrast, today, Internet usage could vary widely from one customer to another. One could use their computer only an hour a day mostly for text transmissions, which is relatively low bit transmission. But another could be streaming movies all day long, which is relatively high bit transmission. How to charge for these differences is a tough question. On the other hand: Verizon is an aggressive a for-profit unregulated business and wants to make as much money as possible. So, they're gonna charge the most that the traffic will bear, and cry poverty when people complain about rate increases. All the carriers do that*. So does Netflix. It seems to me more regulation is needed to protect the public from price gouging and insure adequate service. The question of capacity and charging for it should actually be very easy to answer--if we (the public) knew in fact how much capacity a company truly had and how much new services (like video transmission) will consume and cost, we could answer the policy questions. *So do some government agencies, like highway toll authorities. Some demand ever higher tolls to "pay for road improvements", but instead use the money for other purposes unrelated to transportation. The Delaware River Port Authority has been criticized for spending a ton of toll money on "economic development" grants.

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