August 2008

[Commentary] In the wake of the Federal Communications Commission's decision that Comcast interfered with "Internet users' right to access the lawful Internet content and to use the applications of their choice," network providers such as Comcast will likely turn to one of two models to manage their networks: metered access or QoS (quality of service). Metered access would give network providers the capability to charge more if you use more. The QoS model would create service tiers from which customers could choose.

One of the nation's top authorities on global Internet traffic growth says his latest data show no reason to fear network capacity shortages, as traffic growth may even be slightly decelerating. Updating data collected from Internet exchanges around the world, professor Andrew Odlyzko, director of the University of Minnesota's Interdisciplinary Digital Technology Center, reported late last week that Internet traffic rates in the US and globally are continuing to grow at a rate between 50% and 60% (largely unchanged from recent years) -- rapid growth that nonetheless belies dire predictions of an escalation that would clog today's networks. Among the factors limiting Internet traffic growth, Odlyzko said, are the pace of broadband deployment, which he said is "not that fast" in some countries, including the US. But in other places, such as Hong Kong, where deployed bandwidth is much greater, traffic growth rates are slowing. Odlyzko now estimates average US monthly Internet traffic to be between 900 and 1550 petabytes per month, up from 750 to 1250 petabytes at the end of last year. Though traffic growth tends to be higher in the second half of each year than the first, Odlyzko said the industry might consider focusing more on stimulating traffic growth rather than fearing it.

Federal Communications Commission member Deborah Taylor Tate, the swing vote for the FCC's approval of the Sirius Satellite Radio-XM Satellite Radio merger, issued a nearly 3,000 word justification of her vote on the deal two days later than other Commissioners. She said that the decision to back the merger was one of the most difficult in her two years on the FCC. While she justified the affirmative vote with the conditions set by the FCC, Commissioner Tate revealed her preference throughout the process for more stringent merger terms. Commissioner Tate said she would not even consider the deal until the companies agreed to pay $19.6 million in a consent decree to terminate the agency's inquiries into certain satellite radios with FM transmitters and the compliance of some terrestrial repeaters. Commissioner Tate, who met with state attorneys general and broadcasters in early July about their opposition to the deal, sought for the combined XM-Sirius to divest some of its 25 MHz of spectrum but came to the conclusion it would disrupt service to millions of satellite listeners. She found the companies' agreement to set aside 8% of their spectrum, or 24 channels, for minority and public interest programming to be an acceptable compromise. The former chairwoman of the Tennessee Regulatory Authority also said XM and Sirius agreed to not air local programming and advertisements, a vital part of satellite radio's business model. But that is not all. She expressed fears about the company's three-year price cap. As a Nashville (TN) native, she sought assurances the merged company would not reduce royalty payments to artists "through gamesmanship of these new programming tiers."

The beating of two Japanese journalists by police in western China drew an official apology Tuesday, but Beijing also set new obstacles for news outlets wanting to report from Tiananmen Square in the latest sign of trouble for reporters covering the Olympics. The International Olympic Committee, which last week only partially succeeded in getting China to unblock some Internet sites after journalists raised a furor, said it would look into the new rules that require reporters to make appointments to do reports at Tiananmen.