May 2014

[Commentary] If you want a glimpse into what the speed of your Internet connection might look like under the newly proposed Open Internet rules, take yourself back to the last uncomfortable hour of a long plane flight.

You know the feeling. You're back in economy class wondering if seats have actually gotten smaller these past few years (they probably have), and amazed when you glance up front and see how appealing business class has become.

That's what the Internet could look like soon. With all the talk about fast lanes and paid prioritization recently, the Federal Communication Commission's proposed rules could lead us down a path where regular and premium service levels make Internet service look a lot more like air travel.

Tiered service has been common in air travel for years, with airlines offering special amenities and improved service for those who can afford to pay more, while everyone else gets crammed into regular seats. Although almost everyone would prefer to travel more comfortably and wait in faster security and boarding lines, it's often challenging for airlines to convince people to pay the premium for first class: It can cost up to ten times more to fly business instead of economy on a trans-Atlantic flight, and both seats get you to the same destination.

So while airlines try to make first class more appealing with new amenities and personalized attention, they simultaneously have an incentive against improving the quality of "regular" service as a way to protect their higher-end business. And as airlines have struggled financially in recent years, it appears they may even be actively degrading economy class options.

What's more, this tactic has the added benefit of increasing the appeal of premium options while still maintaining the premium price. This nuance is critical because it illustrates the incentives for airlines not only to make more seats available by reducing their size, but to increase the disparity between economy and premium seats to make the premium seats even more attractive to flyers.

[Morris is the Senior Policy Counsel and Kehl is a Policy Analyst at New America's Open Technology Institute]

Faced with difficult questions about his company’s pending takeover of Time Warner Cable -- which would combine the two largest cable Internet providers in the US into a company consumers will likely hate twice as much -- Comcast CEO Brian Roberts made one thing very clear: his company is determined to sit directly in the middle of the tech world.

Roberts said Apple co-founder Steve Jobs once told him that Comcast “should be the best dumb pipe,” a common sentiment in the tech industry that Internet service providers should get out of the way of the content and device industries and just provide reliable broadband service. But avoiding that low-margin fate has been a telecommunications vow for decades, and Roberts made it very clear that Comcast wants to be “the best pipe.” That means it wants to preserve a gatekeeper role.

In a series of analogies, Roberts likened his company’s role to that of a postmaster, pointing out that Netflix pays hundreds of millions of dollars to mail DVDs to its customers but now expects to be able to deliver the same content over the Internet for free.

[Commentary] The Justice Department filed its response to Apple’s appeal of a 2013 price-fixing verdict that found the iPhone maker had brokered a conspiracy among book publishers to fix the price of e-books.

The government brief is 117 pages long and recounts familiar allegations: that Apple helped big publishers create a new pricing scheme in 2012 in order to get books on its new iPad device, and to wrest the e-book market from Amazon.

The new brief contains rhetorical flourishes such as “publishers fear and loathe $9.99 E-book pricing,” and also makes the unlikely assertion that Apple organized the conspiracy because it “cared about iBookstore profits” and about earning a 30 percent commission (unlikely since e-book revenues are chickenfeed to a company that sells hundreds of millions of iPhones).

The most interesting part of the brief, however, may be the Justice Department’s descriptions of Amazon. Even though Amazon is cast as one of the victims of the conspiracy, the brief reveals the immense power the retail giant held over the publishing world in 2011.

This begs the question of why the Justice Department continues to train all of its antitrust fire on Apple, which continues to be an also-ran in the e-book market with a market share reportedly around 10 percent for most publishers. Why not investigate Amazon instead? Section 2 of the Sherman Act holds that a company violates antitrust law if it has monopoly power and uses that power in improper ways.

For the first time, Amazon is publicly acknowledging a long-simmering dispute between it and a major publishing company, Hachette Book Group.

At the heart of the fight is how much money will flow to Hachette from Amazon sales of e-books. But because of the disagreement, Amazon is now playing hardball with the French-based publisher by stocking fewer print copies in its warehouses, ending support for Hachette pre-orders and making it generally more difficult for consumers to read Hachette-linked authors, such as J.K. Rowling.

For titles where there are no copies on hand, customers can still place orders through Amazon, the company said, but they will take longer since Amazon must first order the inventory from Hachette.

"If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors," Amazon said. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.)