News Center

Netflix Exploited a Gaping Loophole in Net Neutrality Regulations

By: Mike Montgomery

Netflix hasn’t looked this bad since the whole Qwikster fiasco.

The streaming video company recently admitted that is has been throttling data speeds for customers watching Netflix on Verizon and AT&T-powered devices. If you’re one of those unlucky Netflix subscribers, like me, and were wondering why your video stream wasn’t as glossy and smooth as it should have been, now you know the reason.

Apparently, this has been going on for five years. So while Netflix was not only lobbying the Federal Communications Commission (FCC) and demanding that Internet Service Providers (ISPs) be prohibited from a litany of items that most everyone agrees are bad for the digital era, the streaming giant alleged that certain ISPs (such as Verizon) were throttling Netflix’s video traffic to their customers. The FCC relied on that misrepresentation as a basis for their regulatory intervention.

Netflix is defending itself by saying that it wasn’t trying to hurt customers. In fact, it was trying to help them because video uses a lot of data so they were just trying to save customers from the expense of exceeding their data limits. But secretively slowing traffic on its own network to a large base of its subscribers while blaming others is simply abhorrent behavior from a previously trusted brand.

And terribly hypocritical.

The Netflix story should teach everyone even remotely interested in the Net Neutrality debate that there are entities in the Internet ecosystem, beyond ISPs, that have the ability and power to impact the future of an Open Internet.

I’d like to say I’m surprised but I’m not. When the FCC decided last year to regulate the Internet under Title II of the Communications Act, I wrote that this wasn’t the end of the fight. Although many supporters felt they had won a major victory, I pointed out that the rule was not going to be enough.

While ISPs are now required to treat all data equally, “edge providers” like Netflix do not need to abide by those same rules. So while Netflix argued that companies like Verizon were throttling its content, Netflix was lying to regulators, the press and consumers.

Read the full article here.

How We Can Close California’s Digital Divide

By: Kish Rajan

California is the center of technological innovation. Our state is home to tech companies that are changing people’s lives all over the world. But there is still a small sliver of Californians, about 1.3 percent of the population, who live in areas where there isn’t access to the Internet, according to a recent study.

And about one in five people who have access don’t use the Internet. There are many different reasons why people don’t go online. According to a study by the Pew Research Center, 34 percent of adults who don’t use the Internet say they don’t find it relevant to their lives. Another 32 percent say they find the Internet too difficult to use.

This points to a real problem. The Internet today is about so much more than cat videos and social media. Don’t get me wrong — those things are great. But people can now use the Web to apply for jobs, sign up for health care and stay in touch with loved ones. People who believe the Internet is irrelevant, or too difficult to use, are increasingly isolating themselves from their communities and society as a whole.

This is the modern digital divide or as we call it, Digital Divide 2.0. Almost everyone has access to the Internet. Even people who may not have a broadband line to their house can access the Internet through their schools and libraries. According to a recent study by James E. Prieger, an associate professor of economics and public policy at Pepperdine University School of Public Policy, access isn’t the biggest problem. He writes: “… the main barrier to increased adoption is not access but the value proposition for consumers.”

So what can be done to improve the value proposition of the Internet for the select few who are abstaining? One good fix would be to modernize our communications policies to focus on closing the Digital Divide 2.0. California’s communications laws actually encourage people to stay isolated on phone lines, which keeps them shut away from a wide world of information. We have to re-imagine the goal of communications policy, which in the 1950s began and ended with making sure people had access to a phone.

Read the full article here.

California PUC Overhaul Needed

By: Mike Montgomery

California is a complex state with diverse needs to fit its changing demographics and economy. As we think about how best to prepare our state and its people for our collective future, it’s worth reexamining the regulatory agencies that are entrusted with keeping Californians safe and are responsible for crafting and enforcing important rules that impact millions across the state.

In wake of the recent safety concerns with California’s electricity and gas-line infrastructure, the head of the state’s Public Utilities Commission, Michael Picker, has suggested that perhaps California would be best served if his agency spun off some of its regulatory functions to other agencies.

“In my own judgment, maybe we shouldn’t be doing telecommunications anymore,” Picker said, questioning whether or not the PUC can “do these things effectively” in the face of massive technological and regulatory change.

Clearly, the PUC has a lot on its plate. In addition to supporting California’s infrastructure as we transition to cleaner, renewable forms of energy, it also regulates sectors as diverse as gas, telecommunications, limousine drivers, water, railroads and transit to name but a few.

Assemblyman Mike Gatto, the chair of the Assembly Utilities Committee, has proposed a measure that would break up the PUC. It’s a proposal worth considering, but more importantly, it is time for state lawmakers to consider a thoughtful review and complete airing of the issues that are driving the push for this change.

By embracing a more effective and modern regulatory approach, California can improve public safety while helping our state’s economy grow.

Read the full article here.

Cutting Down the Nets: How the FTC Can Take Consumer Privacy Defense to the Next Level

By: Tim Sparapani

It’s late in the college basketball season and just as the best teams have to improve their defense in order to win a championship, it may be time for our privacy regulators to try increasing their defensive intensity in order to deter and prevent additional consumer privacy violations. Just like in basketball, sometimes it takes switching up your tactics and your defense to take your team’s game up to a new level.

The challenges for policing misuse of consumers’ data are getting harder, not easier for regulators on the privacy beat. Those regulators – chiefly the Federal Trade Commission and the state Attorneys General – have performed admirably during an age when accidental or clumsy data breaches are now daily events, and cyber attacks – many successful – are now the norm, not the exception. The FTC like a 7 foot-tall center is well-practiced at swatting away the easy, slam dunk cases where companies deceive consumers about their privacy practices ranging from neglect, to poor cross-company coordination, to outright lies. Yet, as a longtime privacy and consumer advocate I’m eager to see more done. I want to shout “De-Fense!” – or, maybe “Un-Fair-Ness!” and exhort the FTC to do more for consumers and in a new way.

Let’s be honest, however, the FTC has resource constraints; it simply cannot police every violation of consumer trust or misuse of consumers’ data by a corporation. Nor is privacy defense the only role assigned to the FTC. The FTC is statutorily required to enforce dozens of consumer protection statutes, and its work on consumer data privacy, while it has lead to groundbreaking and important results, is limited by a lack of staff and intricacies of sophisticated new scams. The FTC’s data privacy work is also limited by the fast-moving pace of technologies. New systems are brought to the public and then obviated by subsequent iterations often within months, not years.

Read the full article here.

The Next Shared Economy

By: Mike Montgomery

Economist Paul Krugman has pointed out that in the future, as computers start to handle everything from tax law to driving, the jobs that will be most in demand are the ones that can only be done by humans: things like gardening, house cleaning and plumbing. A higher value will be placed on jobs that a computer can’t do.

But talk to entrepreneurs in those kinds of fields today and they’ll tell you their biggest challenge to building a business is finding customers. For skilled laborers who want to work on their own, time spent chasing leads and marketing is time they’re not getting paid for their work. Also, these entrepreneurs still have to worry about things like inventory management, invoicing and sometimes payroll, but because time is money, the time involved in those tasks can make growing a sustainable small business incredibly challenging.

Enter the next phase of sharing-economy platforms, gig economy, or what I like to call the personal enterprise economy. Thumbtack, a San Francisco-based company that has raised $125 million and is valued at $1.3 billion, connects skilled workers with customers, taking a big burden off of the backs of these entrepreneurs. While most sharing-economy companies are creating platforms that give people ways to earn money between jobs or on the side, Thumbtack is trying to help professionals build full-time companies. According to a new report from the company, two-thirds of the professionals on its site are running their businesses full time.

“Tech helps liberate and empower people,” says CEO Marco Zappacosta. “It helps them build on a business and lead their lives the way they choose.”

Read the full article here.

Verizon Sees The Light On Net Neutrality But It’s Too Little Too Late

By: Mike Montgomery

Verizon’s most recent statement on net neutrality is really the height of hypocrisy. To be clear, I completely agree with the no blocking and no throttling principles outlined in the post. Yet their sudden enthusiasm to ban zero rating services and grant the FCC power to chill innovation through antiquated regulation will ultimately harm broadband investment and consumer access to modern 21st century Internet-based services and applications. It’s curious that Verizon has recently found religion on this single-most divisive and long-lasting tech public policy issue of this century.

For the past six years my organization has been pushing for a third way on net neutrality: laws that support an open, free Internet but are affirmatively enshrined into law by Congress instead of mandated by the FCC and are subject to change every 4–8 years. Unfortunately, we’re currently in legal no-man’s land, and, as we predicted, the rules are now going through the legal meat grinder as we are essentially legislating through litigation.

As we predicted, the FCC has set in motion a process where tech policy is set through litigation, rather than through collaborative and publicly vetted legislation. This creates many problems. Waiting means incredible uncertainty for anyone building a business that might be affected by changing net neutrality rules (in other words, everyone building a business on the Internet).

No one knows what the courts will decide. The legal process is, by definition, uncertain. And we’re in the middle of a heated presidential race.

Read the full article here.

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