"Our Top Story Tonight Concerns The Internet"

“Our top story tonight concerns the Internet.” That may sound like us, but, in fact, it is the first line in a 12 minute sketch by comedian John Oliver during the June 1 edition of his new HBO show, Last Week Tonight. And in those 12 minutes, Oliver did what even he said was impossible – he made the network neutrality debate accessible and interesting. Oliver, a long time “correspondent” on Jon Stewart’s The Daily Show, used nearly half his program to highlight the dangers of the Federal Communications Commission proposal to allow broadband service providers to charge content providers “more money for service that isn't entirely awful,” as Jordan Zakarin wrote in The Wrap.

(click on image to see the sketch)

“The cable companies have figured out the great truth of America: If you want to do something evil, put it inside something boring,” Oliver said. “Apple could put the entire text of ‘Mein Kampf’ inside the iTunes user agreement, and you'd just go, ‘Agree, agree.’ That's why advocates should not be talking about protecting net neutrality, they shouldn't even use that phrase. They should call it ‘Preventing Cable Company Fuckery.’ Because that's what it is, and it might actually compel people to actually do something.”

Oh, funnyman, you might be able to get people to laugh at the arcane workings of government policymaking, but you can’t expect to get them to do anything about it. But Oliver tried anyway. He asked the Internet's worst “trolls” to take the "badly spelled vile" they normally pump into YouTube comments and send it the FCC's way — all in the name of net neutrality. He asked commenters to channel their anger for the greater good by taking advantage of the FCC's open comment period. "This is the moment you were made for," Oliver said. "We need you to get out there and for once in your lives focus your indiscriminate rage in a useful direction. Seize your moment, my lovely trolls. Turn on caps lock and fly, my pretties."

Ha ha, funny, funny. No way this impact’s Washington policymaking, right? Well, um… by 3:45 on June 2, the FCC tweeted out: “We’ve been experiencing technical difficulties with our comment system due to heavy traffic. We’re working to resolve these issues quickly.”

Hello. Welcome to the latest lesson in the public’s ongoing education of the Beltway, a course titled “Don’t Mess With the Internet.”

The FCC told Variety that it was “unclear if the high volume was directly related to the John Oliver segment.” OK, sure. More than 47,000 public comments have been filed on the proposal in the past thirty days. But one comment published on June 3 blasted "cable company fuckery," using Oliver's line. Another user cited a claim made by Oliver on the show: "It is embarrassing that Estonia has higher download speeds at lower prices than the USA." One profanity-ridden post concluded with: "John Oliver told me to do this."

Truth is, the FCC has been getting an earful on this issue all Spring -- and from more than just the usual torrent of lobbyists and lawyers who swarm the FCC’s eighth-floor where the Commissioners have their offices. Here’s what their saying:

  • “Eliminating net neutrality is wrong for America,” warned Carolyn from Kennewick, Washington.
  • “Do not change the Internet,” pleaded David from San Antonio.
  • “In fairness to all users,” added Debie from Gaston, Oregon, “do not allow these gluttonous internet providers any more corrupting power.”
  • Ryan from Royal Oak, Michigan, who wrote in his public comment earlier this month that “people making decisions on the internet” at the FCC “know NOTHING about how the internet even works!”
  • “[T]he internet is not a theme park, it does not need a fast pass like 6 flags. [D]o you remember … kids trying to cut in front of you in line in middle school? [T]hat sh— sucked didn’t it?”
  • Tom, from Las Cruces, New Mexico, said the gap in net neutrality protections has “threatened” his scientific research.
  • For Matthew from Waxhaw, North Carolina, and scores of other commenters, it was a fear that FCC Chairman Tom Wheeler’s plan “puts too much control into the ISP’s hands, and not enough in the consumer's.”
  • Wrote Lee, from Timmonsville, South Carolina: “The Internet should be a utility.”

“It’s an extraordinary demonstration of how much people care about the Internet, and how it has functioned for them, and they don’t want that changed,” said Rep. Anna Eshoo (D-CA), an ardent net neutrality supporter. “They’re fearful about it.”

To some, the outcry seemed reminiscent of the Washington frenzy and widespread online protests that greeted two congressional copyright bills — the Stop Online Piracy Act, or SOPA, and the Protect IP Act, or PIPA — back in 2012. “It took a while to get the attention of the public and Internet companies on PIPA and SOPA,” said Sen. Ron Wyden (D-OR), who opposed both measures. With net neutrality, though, “the attention has been immediate.”

But net neutrality isn’t the only nerve Oliver hit in his sketch. Oliver highlighted a recording of Comcast CEO Brian Roberts pointing out that Comcast and Time Warner Cable do not compete in any U.S. markets. Roberts and other supporters of Comcast’s acquisition of TWC frequently point to that fact. The truth remains that somehow these two giants have managed to avoid competition in “the way a drug cartel divides up territories” (to quote Oliver). In recent research, Joshua Gans — the Skoll Chair in Innovation and Entrepreneurship at the Rotman School of Management, University of Toronto — explored just this finding that potential competitors stay out of each other’s turf and divide the market. The point of the paper is that this type of collusion is understudied in economics and, indeed, one of the implications is that it has consequences for mergers. “Why this is relevant is because, if this is the reason Comcast and Time Warner do not currently compete more extensively, then to allow them to merge precisely because they don’t compete seems to be rewarding and cementing that very behavior. Thus, those who say Comcast and Time Warner should merge because they don’t compete should also explain precisely why they don’t now and ought not to compete in the future.”

On June 5, Comcast filed with the FCC the public interest statement, exhibits and license applications for its spin-off of 3.9 million customers, which it promised to do to try and assuage concerns about the size of the combined Comcast-TWC. A key public interest point the company makes is how the creation of the new company, SpinCo, will bring more competition to the marketplace — while the TWC merger will not reduce it.

The complicated system switch consists of:

  • Transfer of cable systems from Charter to Comcast as part of an exchange of systems,
  • Transfer of cable systems from Comcast to Charter as part of an asset sale and exchange of systems, and
  • Transfer of cable systems from Comcast to a new, independent, publicly traded company ("SpinCo").

Of course, the new SpinCo will not compete with the new Comcast-TWC if the deals are approved by federal regulators.

"The SpinCo transaction will create substantial public interest benefits," says Comcast. "While SpinCo will be a new company, it will be larger than all but four other cable companies in the United States and will have a tightly integrated, contiguous service footprint. This scale and geographic scope will facilitate investment in innovation and high-quality services within SpinCo’s footprint. From the outset, SpinCo will be well positioned to compete aggressively in the highly competitive markets for high-speed Internet, voice, and video services."

Comcast will not own shares in either Charter or SpinCo after the closing of the spin-off, the company says, and for the first eight years would not be allowed to own more than 1% of SpinCo shares. "In short, SpinCo will be entirely independent of Comcast," the cable operator told the FCC. As to the public benefit of trading systems with Charter, Comcast says the "geographic contiguity" (clustering) of its system swaps and the "expanded" presence of the combined Comcast/TWC "will produce economies of scale and scope and other efficiencies for Comcast, which will ultimately redound to the benefit of Comcast's residential and business customers."

For its part, Charter says by increasing its scale and better clustering its footprint, it will be "better positioned to compete with regional telco video providers, DBS providers, incumbent local exchange carriers (“ILECs”), and other service providers, while bringing its class-leading services and products to former TWC customers."

This year, we’ve already heard a lot about cable companies/ISPs having too much control over how content is delivered to their customers. Netflix signed a Web traffic deal with Comcast, then complained about it. In April, Netflix signed a Web traffic deal with Verizon. Now it is telling some of its customers that Verizon’s pipes — and, presumably, other ISP’s as well — aren’t up to snuff. Verizon customers may have come across this notice:

Netflix spokesman Jonathan Friedland described the messaging as a way to “keep members informed.” He said the wording was a “test that advises members when their network is congested,” and that it isn’t specific to Verizon. “We’ll see whether they think it is valuable or not.” Verizon has been building out its fiber network specifically to compete with the likes of Comcast and other cable providers. Which means it’s theoretically possible for Netflix’s advisory to cost Verizon some business, if its customers see this stuff enough and decide to do something about it.

Verizon responded by calling Netflix’s action a public relations stunt – “an attempt to shift blame to ISPs for the buffering that some of [Netflix’s] customers may be experiencing.” Verizon’s David Young writes, “The source of the problem is almost certainly NOT congestion in Verizon’s network. Instead, the problem is most likely congestion on the connection that Netflix has chosen to use to reach Verizon’s network. Of course, Netflix is solely responsible for choosing how their traffic is routed into any ISP’s network.” Young continues: “It is sad that Netflix is willing to deliberately mislead its customers so they can be used as pawns in business negotiations and regulatory proceedings.”

Later we read that Verizon is threatening to sue Netflix over the message: A cease-and-desist letter by Verizon calls Netflix's new error message — which blames Verizon's network for laggy downloads — "deceptive" and "false," arguing that Netflix's claims could potentially harm Verizon's business. "In light of this, Verizon demands that Netflix immediately cease and desist from providing any such further 'notices' to users of the Verizon network," wrote Verizon. "We further demand," Verizon's letter continued, "that within five days … Netflix provide Verizon with any and all evidence and documentation that it possesses substantiating Netflix's assertion to [a Netflix customer] that his experience in viewing a Netflix video was solely attributable to the Verizon network." Netflix fired back that Verizon was working to suppress information concerning its network practices. "This is about consumers not getting what they paid for from their broadband provider," wrote Netflix spokesman Joris Evers. "We are trying to provide more transparency, just like we do with ISP Speed Index, and Verizon is trying to shut down that discussion."

And so it was quite a week in the ongoing debate over the Open Internet. We can't leave you without sharing that address to air your net neutrality thoughts with the FCC: you can e-mail them at openinternet@fcc.gov. Maybe you'll end up on Last Week Tonight! But, in any case, we'll see you in the Headlines.

By Kevin Taglang.