We have been talking more and more about the arbitrary limits that ISPs (both wired and wireless) have been imposing on consumers’ internet connections.  These limits are arbitrary because they do not seem to be based on any sort of technical evaluation.  AT&T wireless and Verizon wireless impose a 2 GB limit on their standard data packages – why 2GB as opposed to, say 1 GB or 3 GB?  Similarly, AT&T (wired) imposes a 150 GB limit on customers [update: AT&T imposes a 150 GB cap on DSL customers and a 250 GB cap on U-verse customers].  Comcast’s limit is 250 GB.  Where did these limits come from?  No one (outside of the company) has any idea.  For all we know, the companies just spun a big wheel to choose the cap.  In this murky world the only thing that is clear is that, while AT&T and Comcast’s network supports hundreds of TV channels, their internet limits prevent you from getting rid of their pay-TV offering and replacing it with a competing internet video service.

As you may have noticed, Public Knowledge spent some time at the Consumer Electronics Show this year. While we wandered the floor with the best of them, we also found time to talk with some of the people who are trying to bring Internet video to your TV.

Syabas (Popbox)

For the past couple of days, I've been in South Korea, attending the OECD's Ministerial on the Future of the Internet Economy. Rather than try to give a blow-by-blow account, I've tried to package some of my thoughts in a series of posts. Here's one:

• Verizon's new set-top boxes are still packaged with integrated security instead of removable CableCARDs, violating the FCC's July 1st deadline to make the switch to CableCARD. Verizon is betting that the FCC will grant them a waiver, as it has with six other companies.

Gartner analyst Patti Reali said the issue for Verizon is that the hybrid Motorola QIP set-top uses traditional cable quadrature-amplitude-modulation technology for linear TV channels, but uses Internet protocol to access video-on-demand and similar services. Therefore, she added, Verizon couldn't use an ordinary cable set-top with a CableCARD in its network without disabling at least some of its features.

However, Cable companies have been making these sorts of arguments for years. You can read all about it here, here, and here.

• EU regulators have approved a new plan by NBC and News Corp. to build a web broadcasting service that rivals YouTube. The new service would broadcast clips from NBC, Universal Pictures, 20th Century Fox, CNBC, Telemundo, and others.

• EFF reports that Sony may soon ax it's music service, Sony Connect. The site, which sold Drm-encrypted music and a proprietary music format (ATRAC) could only be played on Sony music players. This, one week after EMI announced strong sales of its DRM-free songs.

• A proposed amendment to DVD's copy protection license would ban all DVD backups and prevent users from playing back a DVD without the disk present in the drive. It would also ban 'virtual drives,' which could run an image of a DVD off a hard disk. The Copy Control Association (CCA) began pushing the amendment after it unsuccessfully sued the DVD Jukebox company Kaleidescape that stored electronic copies of movies for home use. Michael Malcolm, CEO of Kaleidescape, wrote to members of Congress that,

  "The real purpose of this proposed amendment is to put Kaleidescape out of business by excluding the Kaleidescape System from the DVD playback devices authored by the CSS License Agreement...You should be aware before you vote on the proposed amendment that you expose yourself, your employer and the DVD CCA to serious and substantial antitrust liability if you vote for this amendment. Both state and federal laws outlaw anticompetitive conduct by businesses joining together to put a competitor out of business."

Note: A version of this article appeared on tompaine.com

It's never over until it's over, and it's never over. That's a primary rule of thumb for those who try to follow the various policy debates in Washington, D.C. Exhibit A for that rule occurred Dec. 19 when the Federal Communications Commission (FCC) approved a draft proposal to speed up the methods by which local governments grant franchises for video services, usually provided by cable.

The Commission's action is a reflection of what AT&T and Verizon failed to achieve during the last couple of years in Congress. Telecommunications legislation would have "streamlined" the franchise process for those two telecom giants who want, to one degree or another, to offer cable service. That legislation failed to pass, for some very good reasons. Of course, that wasn't the end of the debate. It's not even the end in Congress, but at least that next phase will wait to start up again in January.

If you're an XBOX Live online subscriber, did you receive your download of Battlestar Galactica? NBC Universal thought out-of-the-box (no pun intended) to focus on the gaming community, and worked a deal with Microsoft to distribute a catch-up episode to a target audience before season three of BSG begins (btw: I can't wait!).

To me, stories like this are what net neutrality is all about--opening up new distribution and business models.

Yes, the video may have been transmitted over cable's wires and onto your TV, but not through cable's traditional, walled-garden network. It was distributed to a device that was allowed (but wasn't always in the ISP's eyes) to freely connect to the network to receive data-bits that were likewise allowed to freely flow. That's what real IPTV is supposed to be about, and here's a live (or Live) test of a working model for it. Very exciting.

In this interview from today, Brooklyn-based telecom analyst Bruce Kushnick insists that big telecom has systematically failed to deliver on its promises to the public and to policymakers.

In the early and mid 1990's, telecommunications companies promised to build networks that could allow them to compete with cable. We were all supposed to get high-speed fiber optic cables (light pipes) right to the house, and they were supposed to carry voice, data, and video. There would be tons of competition, and 86 million homes would get 45 Megabits per second of two-way data capacity.

Its summer and time for old habits to kick in. It might be going to camp, or taking a vacation, or working at a summer job or just hanging around. Even Congress has its summer habits. Much like TV, Congress from time to time uses the summer for re-runs, bringing back some old classics of years past - like giving the telecom and entertainment industries a bag of goodies all nicely wrapped up.

It's not just Net Neutrality. There's lots more at stake.

Stop me if you've seen this one. The big media and telecommunications industries persuade Congress to write a bill that gives them anything they want, while consumers get little or nothing.

Does the plot sound familiar? It should, and it's on yet again, in the form of the new Senate telecom legislation (S 2686) to be marked up this week in the Senate commerce Committee. We've seen this show before. In 1996 Congress passed the Telecommunications Act. That one took price controls off of cable service, allowed broadcasters to build up huge empires and let the telephone companies buy out each other while putting the screws to competitors.

It was such a success that the act was brought back in modified form in 2001 and 2002. The bill known for its sponsors, then-Rep. Billy Tauzin (R-La.), chairman of the House Commerce Committee and Rep. John Dingell (D-Mich.), the committee's senior Democrat, would have lifted the restrictions on telephone companies to share their lines with competitors and deregulated their prices. That bill passed the House, but died in the Senate during the time when Democrats had control, but the Federal Communications Commission implemented many of the policies without Congress. (We note for the record, however, that Dingell has seen the light and altered his views and become a backer of Net Neutrality, a pro-consumer Internet concept the phone and cable companies oppose.)

Now it's time for another appearance, and the real, big industries, as opposed to the relatively nascent Internet companies, have had their shopping lists enshrined in legislation. We've seen one version of the act over in the House, where the telephone and cable companies got their wishes heard, for a streamlined national system of getting or keeping cable licenses without any pesky requirements that would keep the Internet as open and free as today's Internet.

On Thursday, the Senate Commerce Committee will mark up an even bigger, more ambitious bill that has more goodies for more industries and arguably next to nothing for consumers. Read on for details.

Fed Chairman Ben Bernanke's remarks yesterday that inflation is at the outer limits of Fed tolerance, even as the economy slows, raises the spector of 70's "Stagflation". The existence of both inflation and economic stagnation is not one they teach you in Economics 101, and in both the 70's and our current crisis it is due to the outsized influence of oil prices on all sectors of the economy. It was only a matter of time before plastics manufacturer and industrial agriculture had to raise prices because oil prices were a major input to their products. As St. Louis Fed President William Poole, one of our country's the most prescient economists, pointed out yesterday once the public starts to expect inflation it becomes a self-fulfilling prophecy.

However, as I pointed out in an earlier post there is a major section of the economy that does not have the possibility of built in inflation expectations and that is the Digital Economy. Think of your personal expectations of buying a new computer. You expect it to be cheaper (or at least more powerful for the same price) than your last computer. The cost of bandwidth, broadband service, server memory and all the other components of the Digital Economy continue to drop. There is only one part of this ecosystem that resists Moore's Law and that is Digital Television service, whether delivered by cable or satellite. Speaking yesterday in Chicago, FCC Chairman Martin noted that while other communications services, such as broadband, cellular and long distance phone services, have dropped in price over the past 10 years, cable rates have actually increased 80 percent.

As we move into an increasingly On Demand television universe it seems critical that we need more competition in the Digital Television service market and for that reason it is critical that AT&T, Verizon, Bell South and Qwest be given a simplified regulatory path to new market entry. It is actually quite reasonable for AT&T to state that they don't need a local franchise whatsoever, as they are delivering an IPTV service from remote servers. As long as the new entrants respect the existing local franchise tax of 5% on basic services and provide adequate local public service access to bandwidth, they should be able to enter any market without the bureaucratic nightmare of the local franchise bidding process. And local authorities should not hold the cable companies hostage to this process either. Only when we get robust competition in the interactive TV market will consumers finally get to take advantage of Moore's Law in the Digital TV market.

Verizon Communications said Tuesday it has asked the Federal Communications Commission to step into an ongoing battle with Cablevision Systems over the cable operator's refusal to negotiate with Verizon for carriage of three Cablevision-owned regional sports channels on Verizon's new video service.

Link By: Jay Sherman, TV Week via Yahoo! News