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Politics 117 The regulation of the Internet Anti-trust.

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1 Politics 117 The regulation of the Internet Anti-trust

2 How big should anyone on the Internet be? Microsoft on Google Microsoft – "If a single search engine serves as the dominant gateway between consumers and content—there is a greater risk that economic forces will not exert sufficient discipline to prevent the dominant search engine from altering search results to favor its own interests or viewpoint. Also, because consumers will lack competitive options, it may be impossible for them as a practical matter to determine whether the results reflect hidden biases or whether there is other speech that is not being conveyed."

3 “natural” vs. “paid” searches Transparency on “natural” vs. “paid” practices needed – Natural = you search for stuff and some neutral system of finding transpires – Paid = you get results that companies pay for

4 The Sherman Anti-trust Act (1890) "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

5 The Clayton Anti-Trust Act, 1914 Beefed up the Sherman Act, outlawing – price discrimination that effectively turn the discriminator into a monopoly – exclusive deals that harm other companies – mergers that substantially reduce market competition – “Interlocking directorates” that amount to a single company

6 Thomas Edison and the Motion Picture Patents Association, 1908

7 Early Edison films Laura Comstock’s Dog Laura Comstock’s Dog Stealing Dinner Stealing Dinner Princess Raja’s Dance Princess Raja’s Dance

8 Left to right: Jack Warner, Adolph Zukor, Carl Laemmle (center), Louis B. Mayer

9 Three ways to settle an anti-trust suit Fall upon the sword and die Break yourself up Enter into a consent decree in which you engage in a series of reforms short of a breakup

10 Judge Jackson: Microsoft saw Netscape Navigator as a competitive threat (2000) Tethered Internet Explorer to the op system Made it more difficult to install or pre-install Navigator by making Application Programming Interface data less available Orders Microsoft to split in two

11 DC Circuit Court of Appeals throws out decision (2001) Microsoft’s monopoly over OS not a “presumptive indicator of attempted monopolization of an entirely different market“ (web browsers)

12 DoJ settlement (2002) Microsoft must refrain from retaliating against non-Microsoft software vendors Must disclose all APIs to software and device makers

13 2004: European Union hits Microsoft with 497(EU) fine Concludes MS had abused its monopoly power against the RealNetwork RealAudio player Orders MS to release a version of Windows without Windows Media Player

14 EU finds MS tethering Internet Explorer a violation of anti-trust laws Eventually requires Microsoft to create a “browser ballot” system in which you can choose your web browser (2010)

15 Back in USA (2009), DoJ says Microsoft can’t stop OEMs from... Installing shortcuts to non- Microsoft software Adding non-Microsoft middleware Offering other operating systems (eg, Ubuntu Linux) Offering a different browser in the initial boot sequence

16 What you’ve got to do to get a merger approval The Hart Rodino act: big merger applicants must apply for government scrutiny Two agencies oversee the merger, they can be: The Federal Trade Commission The Federal Communications Commission or, The Department of Justice

17 December 2009, Comcast announces merger with NBC Universal Comcast will own 51 percent of new entity General Electric (NBCU’s current owner) will possess the other 49 percent

18 What does Comcast own already? cable video to 24.2 million subscribers, serving 26 percent of multichannel video consumers across the country high-speed Internet to 14.9 million households phone service to 6.5 million VoIP customers.

19 What else? Plaxo! Fandango! Fancast The Daily CandyDaily Candy

20 Comcast channels E! Entertainment Television, 85 million subscribers; E! Entertainment Television Golf Channel, 73 million; Golf Channel VERSUS, sports and leisure programming network, 66 million; VERSUS G4 ("gamer lifestyle programming") with 57 million; G4 Style ("lifestyle-related programming") 51 million.Style Comcast SportsNet system, with branches in the Baltimore/Washington area, California, the Mountain states, Boston, Portland, and Chicago Comcast SportsNet TV Everywhere

21 The Philadelphia Flyers hockey teamPhiladelphia Flyers The Philadelphia 76ers basketball teamPhiladelphia 76ers Philadelphia's Wachovia Center Sports Arena.Wachovia Center Global Spectrum event management company Global Spectrum Front Row venue marketing/advertising firm Front Row New Era ticket processing company New Era A skating production company, a food services company, and several other venturesskating production company

22 Other stuff iN DEMAND TV One (African-American-oriented programming), MGM, SportsNet New York TV One FEARnet (horror Web TV on demand)FEARnet New England Cable News Music Choice, the Pittsburgh Cable News Channel Music Choice PBS KIDS Sprout. (partnership between Comcast, HIT Entertainment, PBS, and Sesame Workshop.) PBS KIDS Sprout

23 Ten television stations Telemundo NBC Entertainment (Jay Leno, etc) NBC News NBC Universal Sports and Olympics Universal Pictures (movies) a big stake in (about 27 percent) Universal Parks and Resorts (Universal Studios Hollywood)

24 Comcast public interest commitments In exchange for the merger, Comcast promises the following:promises – For three years, the NBC O&Os will provide at least the same amount of local news and information programming as today – and will not cut the amount of news programming. – A commitment to provide an additional 1,000 hours of local news and information programming by the NBC O&Os. – An additional 1,500 programming choices for children and families within three years on VOD. – An additional hour of children’s programming each week (above the current three-hour requirement) using multicast channels of NBC O&Os. – Tripling the amount of time that program ratings information appears on the screen, from 5 to 15 seconds at each commercial break, and enlarging the information box. – Launching a new over-the-air multicast channel using Telemundo’s programming library. – A continued reaffirmation of our commitment to keep NBC as a free-over-the air broadcaster with a workable business model in the evolving economic and technological environment.

25 Could merger harm Internet as source for alternative video distribution? Comcast will own strong interest in Hulu Comcast will have more of an incentive to block non-Comcast owned online content Comcast’s TV Everywhere initiative ties Comcast content to Comcast only ventures Ownership of NBC Universal content will create incentive for Comcast to limit that content as well – Mark Cooper testimony Mark Cooper, Consumer’s Union

26 Comcast will still enjoy small share of video market “The Comcast share is meek; combined with NBC‐Universal program assets it will account for only about 12% of total U.S. cable program network revenues. This will yield some economies of scale, or so Comcast hopes, but it hardly moves the needle in terms of the concentration of the industry.” Thomas Hazlett testimony here. here

27 Senator Al Franken on Comcast/NBCU Merger “FinSyn” = Financial Interest and Syndication Rules. Prohibited TV stations and networks from owning the programming they aired in prime time. These rules were largely abandoned in the 1990s.

28 Senator Al Franken on Comcast/NBCU Merger FCC carriage rules prohibit cable companies from unfairly discriminating against non-affiliated cable programs (eg, putting them on a more expensive tier).

29 Possible condition for approving Comcast/NBCU Make Comcast share its broadband lines at wholesale ratesshare its broadband Two ways to encourage openness and diversity – Net neutrality – Maximum competition Line sharing Berkman center report:Berkman center – "The lowest prices and highest speeds are almost all offered by firms in markets where, in addition to an incumbent telephone company and a cable company, there are also competitors who entered the market, and built their presence, though use of open access facilities.“ This is how Canada does itdoes it

30 Is wireless a competitive alternative? FCC: AT&T and Verizon, now enjoy a 60 percent chunk of mobile wireless revenue and subscribers, "and continue to gain share.“ percent chunk Sprint and T-Mobile control most of the rest

31 Ways to keep wireless broadband industry competitive Monitor and control early termination fees, through – Legislation Legislation – Probes Probes End exclusive handset dealsexclusive handset deals Probe key wireless decisions on blocking applications like Google Voice, more here Google Voicehere Launch “bill shock” rules“bill shock” Encourage consumers to keep up with their data use

32 Most Americans are totally clueless about their broadband speed "When asked to specify their home internet connection speed, described as 'the download or downstream speed of your connection per second,' the vast majority of home broadband users in the United States cannot identify it.“ – FCC Report FCC Report 24% say they “always” receive promised speed (which they don’t know) 47% says they receive it “most of the time” (although they can’t identify it) Check your speed

33 Mbps (Megabits Per Second) Stands for "Megabits Per Second." One megabit is equal to one million bits or 1,000 kilobits. Kilobits (Kbps) = 1,000 bits While "megabit" sounds similar to "megabyte," a megabit is roughly one eighth the size of a megabyte (since there are eight bits in a byte). Mbps is used to measure data transfer speeds of high bandwidth connections, such as Ethernet and cable modemsbandwidth So 2,600 Kbps = 2,600,000 bits or 2.6 Mbps

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