TBT: The Brutal Truth

Friday, June 16, 2006

Net Neutrality Neutered

Dover Bitch at Firedoglake just made an oopsy:

The belief in an open exchange of ideas is a key thread in the fabric of our national identity. It is part of the competitive spirit that makes us world leaders in industry and technological innovation. It is a symbol of the faith our Founders had in us and the trust we have in ourselves to work collectively to overcome whatever challenges face us.


What I find offensive in this paragraph is that the buzzphrase "an open exchange of ideas" is usually a euphemism for "capitalistic marketplace" and it raises a red flag with me.

The second sentence entirely is just simply mindblowing at how factually wrong and misguided it really is. First, the "competitive spirit" is exactly what people believe Capitalism honestly champions when in reality Capitalism -- like religious fundamentalism and Microsoft -- loathes and absolutely despises competition because it views competition as a regulative measure against it's own self-righteous entitlement to not only exist but to hold dominion over everything in its craven pursuit of its agenda -- emassing large quantities of money. Capitalism hopes to bullshit the masses into thinking the "competitive marketplace" or the "competitive spirit" is actually a friendly, chivalrous, and civil environment when nothing can be further than truth.

As far as Capitalism is concerned, the ends always justifies the means, thus in a complete mockery of friendship, chivalry, and civility, it tries to KILL any and every sort of competition. Wants it all completely swept from the board, even if it means Capitalism itself survives and gets to stand tall and proud as a peacock at the end of all competition -- especially at the expense of America's leadership on the world stage and the expense of people's lives, careers, and families.

Capitalism cares not one whit for such things as ethics, national pride, and morality because, like competition, ethics and morality are also viewed as a regulative threat that either must be turned on its head (and thus have its definition turned around so that those traits are allied with Capitialism) or destroyed completely if it refuses to play the game by Capitalism's belligerent, sanctimonious, self-serving "rules" -- rules it gets to convenient make up as it goes along.

Therefore, it should not be a total surprise to embarrassingly discover that America are "world leaders in industry and technological innovation" that the UN's International Telecommunications Union (ITU) ranks us at 16th place and falling faster than a Hanson pop single:

Through most of the 1990s, the United States led the world in high-speed connectivity. Yet according to the International Telecommunications Union (ITU), the United States, despite having the most broadband connections, has stumbled to 16th in broadband technology and continues to fall.

This situation has directly harmed this country’s technology edge, and makes the U.S. a backwater compared to South Korea, Japan and even Slovenia.


America used be world leader, but since 1996, we've been swirling down the hopper and what happened in 1996 that marked the downward trend? A corruptive mixture of Enron-style highway robbery of the American tax-payers on the part of telcos with President Clinton's Deregulation Act tossed in for good measure followed by Micheal Powell (son of Colin) turning the FCC into a rubber-stamp corporate merger approval office instead of a regulatory commission it was always meant to be:

By 2006, according to telecommunication companies’ own documents, 86 million customers in the United States should have received 45 Mbps service. In fact, South Korea and Japan do even better: they routinely offer 100 Mbps connections in both directions, uploading and downloading, for around $40 per month. But in the United States, the best connections top out at 1/3rd this speed and cost 400% more — and very few places even have access to the new fiber-optic services being offered. The United States once led the world in Web technology. What happened?

The answer is, the merger of the phone companies that control the phone networks decreased competition. Instead of deploying the high-speed fiber-optic lines they promised, they were content to collect profits, tinker with existing copper connections instead of rewiring, and roll out inferior DSL services. The FCC defines anything above 200 Kbps as broadband (1000 Kbps = 1 Mbps), allowing them to claim that Americans have broadband access. However, this definition is a politically-driven embarrassment for technologists, the equivalent of two tin-cans with string.

Yet — and here is the most troubling part — the phone companies got paid anyway. Through tax breaks and increased service fees, Verizon and the old Bells reaped an estimated $200 billion since the early 1990s to improve subscriber lines in the United States. And what have American consumers received? The most common DSL Service over the old copper networks tops out at 768 Kbps in most areas—a hundred times slower than routine connections in other countries. (There are faster, more expensive versions of DSL, but most have a top speed of 1-3 mbps in one direction, and it varies based on how far a person lives from a network hub.)

In order to pay for these new networks, the phone companies lobbied state governments for financial incentives to upgrade their fiber-optic plants. The plans vary by state, but the methods used were similar: increased rates for certain services and tax breaks. In addition, “rate-of-return” regulation—laws which monitored phone-company profits—were replaced with either price caps or alternative regulations. The former cap the prices of certain products; unlike before, however, no regulator would examine the profits to see if they were out of line. While this provides benefits to customers, the price-freezes were accompanied by cuts in staff and cuts in new construction, allowing the companies to increase profits. Some services were also deregulated, including Call Waiting, which costs less than a penny to offer and yet earns $4-5 a month per customer.

About the promises of fiber-optic lines, there's been a collective amnesia. Few, if any, remember the decade-old promise of upgrades. In most states, customers funded the networks and the costs are still included in local service charges as a de facto broadband tax. Overall, using a 20-year analysis of major revenues and expenses, we found that once deregulation laws went through, the Bells became a cash machine.

Phone companies were once regulated like other utilities, under the “rate of return” model. Profits were essentially capped somewhere between 11-13% (as a percentage of revenues) and monitored by regulators. Under “alternative regulation” (i.e., deregulation), phone-company profits were no longer required to undergo the same scrutiny. Many services have very high profit margins and with a lack of examination, Bell profits (return on equity) jumped to 30%, more than double the original. The companies also received massive tax write-offs on the promise they would build fiber-optic networks (over $25 billion).


The next few paragraphs blow the lid on the whole mess, displaying a bait-and-switch not seen in this country since the passing of the Copyright Lawyers Forever Employment Act DMCA in which entertainment conglomerates -- including the same rotten, theiving, ambulance chasing bastards that own and control the entire mainstream media apparatus -- promised to deliver gigabytes and terrabytes of streaming content only to turn around and use the DMCA to silence academia from releasing reports that blew the whistle on Hollywood's anti-piracy copy-protection schemes and rootkits (even if they caused data damage or jeopardized security) and terrorize private citizens guilty of the evils of Napster:

The phone companies argued for deregulation in part because they said it would allow them to use the extra profits to construct new services, including fiber-optic lines. In fact, however, such “capital expenditures” dropped from 24% of Bells’ total expenses in the early 1980s to just 14% of expenses in 2004. Instead of deploying fiber-optic lines to homes, the money was diverted to everything from overseas construction to increased pay for senior executives to funding for long-distance service and DSL and wireless connections. If the phone companies had kept up their original capital expenditure rates, an additional $92 billion would have gone into new construction and thus, high speed networks could have been built.

The primary difference today between the United States and other countries is that instead of diverting funds away from upgrade commitments, Japan and Korea and other countries made sure the money went into ground wiring and other upgrades. The U.S. lacked the regulatory will for enforcing the agreements, and thus, the phone companies were able to simply spend less and not be held accountable.


They deliberately kept the price low in order to score the Deregulation win as well as gorge themselves on billions of tax-payer dollars. When the true price tag became known, they balked at the expense even if they could get away with hiring illegal Mexicans instead of Americans, and instead reneged on their promises of a 45 Megabit fiber optic network, poured a pittance of the money into xDSL, merged with other telcos, and gave the rest to their own cronies and lobbyists:

What ever happened to the networks? The dark secret was that the networks couldn't be built at the costs being quoted by the phone companies. The Bell companies submitted cost analyses to the public service commissions, such as the New Jersey Board of Public Utilities, which were supposed to outline the actual costs of doing the upgrades. These “actual costs” models were intentionally kept low so the commission would approve. The original cost models showed costs of about a thousand dollars a customer; the actual cost in an installation in Dover, New Jersey, as reported by the New York Times, was $17,000 a line. The low figures ensured that the law would go through, by making upgrades seem more feasible.

DSL was a bait-and-switch. The service was considered inferior as far back as 1992, because it travels over the old copper wiring. In fact, providers originally rolled it out only as a stop-gap, since the Internet craze that had been raging since 1995 led to immediate customer demands for fast products.

More importantly, various mergers meant the death of fiber-optic deployment in 26 states. Upon merging, companies either wrote off or closed down many assets, including fiber optics projects. In short, the Bell companies gamed the regulatory system: after the state deals went through and the mergers were completed, they simply closed everything, even though they had commitments under state laws. SBC had promised to be competing in 30 states by 2002, while Verizon claimed that it would be in 24 cities in 18 months. Neither of those commitments was fulfilled. It is now clear that in most states companies did minimal work, and the public was scammed as a result.


After all this sordid and enraging history, we find the telcos and ISPs championing the idea of abolishing Net Nuetrality in favor of a two-tiered "pay-to-play" toll booth so that they can filch even more money - not from Microsoft, Google, or whatever the "Public Relations" excuse is, but from the end user. How? Simple: They oversold their nodes and capabilities, thus the network is being stressed by gamers and internet file sharers.

It wasn't that much of a problem early on when the fastest broadband speed was 1-2 Mbit down and 256k-512k upstream even though their infrastructure was capable of rolling out 6 Meg connections all along. They simply charged you $30-$40 for that 1-2 MB connection knowing full well nobody would be using all of their bandwidth constantly. The demand for faster speed kept coming and they slowly rolled their 3MB then 5MB and now 6-8MB packages but the prices have either stayed relatively the same or rose $10-$15. The network is now stressed to the hilt as people are daring to use what their paying for -- using their total bandwidth capacity at a near constant rate. But they're also demanding faster upload while cable companies keep offering faster downstream packages and keeping the upload capped at 256k-512k. This has caused people to dump their 6-Meg/256-512k cable service for slower 3-Meg DSL packages that give 1-2MB upload bandwidth. They're "lossing money" and getting piggish, hence the cry to abolish Net Neutrality.

Another reason for them filch the end user is the fact that cable-based ISPs such as Charter and Comcast want to roll out their own proprietary form of VoIP. If Net Nuetrality is abolished, Charter and Comcast will have to pay extra to AT&T for priority access, which means a rise in the monthly bill for subscribers. Charter and Comcast will then hammer smaller companies such as Vonage to pay extra, which Vonage will do to "remain competitive" despite the fact that Charter and Comcast will give priorty to their own VoIP solutions anyway, so Vonage turns around and raises their monthly rates. Thus, Charter and Comcast subscribers with Vonage will get hammered with a double whammy -- once by their ISP and again by Vonage.

This wouldn't be a problem if the telcos would've delivered the 45Mbit fiber optic networks they promised in the first place. And those A-List liberal bloggers that accepted "those Ads" by the telcos in favor of abolishing Net Neutrality are the epitomy of all unmitigated fools and gullible hypocrites. The revenue they collect from that Blog-Ad comes from the same $200 billion the telcos filched from them as tax-payers. In other words, they need look in the mirror and ask themselves how good it felt to essentially be used as pawns to take back a mere pittance that was stolen from them and they're readers in the first fucking place, and the American people's reward for it is to be ranked 16th by the ITU.

It should make them ashamed. It should make them guilty as hell. But ultimately it should make them as mad as Howard Beale having an epileptic fit on top of a nest of swarming hornets because -- once again -- the only winners in America's Capitalist society are the capitalists; specifically the capitalist telcos that fucked the American tax-payers out of over $200 Billion and a $20 a month 45Mbit fibre-optic network for over 10 years, and the capitalists within the Hollywood entertainment industry that owns all the movie studios as well as our sorry mainstream press since the lack of that 45Mbit fibre optic network (along with the DMCA) has granted them a virtual moratorium on any large-scale innovations in our internet superhighway in the near future.

Why is that?

Because their lobbiests will argue that if the telcos were forced to deliver that 45Mbit fibre optic pipe, it will only result in more piracy and theft. Our "centrist/Capitalist" Democrats will once again go along to get along, accepting their corporate bribes and selling us out once again, leaving America's spayed and neutered internet to lead nothing but the only two things we're good for anymore: imported flag-waving nationalism and exported self-righteous jingoism. At 6 megabit down and 512k up at $60 a month.

In other words, Jack and Shit ... and Jack left town.

Paddling up shit creek on top his $100,000 freezer.


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