Tuesday, May 08, 2007

Net Neutrality Matters To You

This is a photo of the Supreme Court building, taken from my phone as I walked to a meeting in the Hart Senate Building with California Senator Dianne Feinstein's office. If you have yet to schedule a trip to see how this place operates, I highly recommend it. Capital Hill is truly a staggering and impressive machine.

Jon Congdon and I are in Washington, DC this week meeting with regulators and lobbyists on a number of issues including privacy, state sales tax simplification, and my focus, the issue of net neutrality. The meetings were organized and attended by the Electronic Retailing Association and fellow E.R.A. members*.

You might not have considered it, but as a customer of Beachbody and Million Dollar Body, maintaining net neutrality is very important to you. It is basically the concept that the Internet "gate keepers" like cable companies and phone companies can continue to charge for all of us to access to the Internet over their wires, but that they won't add a surcharge to content providers for additional bandwidth as the technology expands capacity, or in other words, that public information networks will aspire to treat all content providers equally.

As we look at new ways to deliver health and fitness content and weight loss motivation via the Million Dollar Body community, that's important to us for many reasons. The freedom to innovate is one of the keys. Services like our free WOWY online gym, which we're JUST getting up to critical mass, would likely have to be scrapped if net neutrality were lost. We expect to attract hundreds of thousands of workout participants every day to workout together in WOWY (which stands for Work Out With You). In fact, we're working on changing the configuration so it's easier to use and easily available to both members and non members, as soon as we have improved the capacity of the technology. But feeding those features to thousands of people simultaneously takes massive bandwidth. WOWY is the keystone to getting more and more people to feel accountable to their daily workouts by having online buddies. But it will be impossible to keep it free if we get charged to stream this service.

Likewise, we fully expect to stream video motivation, diet advice, and even live workouts to our community. But if we have to pay both for access to the Internet AND for additional bandwidth to deliver programming to you, that plan is unlikely to come to fruition.

And that would be a shame. The Internet offers unbelievable potential for innovation without the impediment of negotiating and paying a gate keeper. In in our case, it offers potential innovation in an area of current crisis; obesity.

If you look at what is available to you on TV through your cable company, you can see that it's the highest bidder that makes it to your TV, not necessarily the most interesting innovation or bold new start up. The Internet has the potential of letting people get EXACTLY what they want, when they want it, as long it is not controlled by the gate keepers.

We are not asking our regulators to legislate the Internet except that we want to keep it open to everyone. We are asking our government to maintain the status quo.

And if you agree, it would do us all good if you would share your opinion with your Senators and Congressional Representatives.

After spending a day on the hill talking to Ahmad Thomas and Johann Sabbath in Senator Feinstein's office, Ramesh Nagarajan in Congresswoman Lois Capp's office (D-CA), and John Fortune Agan in the office of Congressman Paul Hodes (D-NH), I am confident reasonable minds will remain open to the interests of the public on this and the other issues we raised.

*Interesting footnote: Each time Jon and I attend these ERA industry functions, the proudest moments are when our competitors, vendors, and members of ERA itself approach and give us an update of their progress with our products. Power 90 and P90X are the favorites. People who think infomercial weight loss products don't work, take note: The industry itself actually buys and uses Beachbody's!


HOTI said...

Carl, I understand your concerns given the online components of your business however, I disagree that net neutrality, particularly as defined by Snowe-Dorgan, is either necessary or beneficial. I have been following this debate in my work with the Hands Off the Internet coalition.

We support the four principles of net neutrality: Consumers are entitled to access the lawful Internet content of their choice; Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement; Consumers are entitled to connect their choice of legal devices that do not harm the network; Consumers are entitled to competition among network providers, application and service providers, and content providers.” We even took out a print ad last year to say so. However Snowe-Dorgan would freeze the broadband marketplace exactly where it is, disallowing not just theoretical abuses but new innovations, too. This is why many of the most senior network engineers are strongly warning against "net neutrality."

Also, net neutrality isn't the status quo as it has never applied to cable broadband connections, which account for a majority of all broadband connections in the US.

This American Consumer Institute study that was released today has some interesting perspective on the issue from both the consumer and content provider sides,

"Proposed Internet regulations would deprive consumers of $69 billion in potential benefits over the next 10 years by barring voluntary commercial agreements necessary to bring some new applications and services to the Internet, the American Consumer Institute estimates in a new study released today. The study also says net neutrality regulations would likely raise the cost of Internet connections for consumers and force millions of Americans to drop their broadband subscriptions, particularly lower income consumers.

'Despite proponents' best intentions, net neutrality proposals would be a twofold problem for consumers,' study author Stephen Pociask said.

'Innovations that require a guaranteed level of service won't come to market, and consumers would have to pay more for the services they receive.'

Internet regulations would also prevent multi-sided pricing, where Internet content providers may voluntarily agree to pay a portion of network costs thereby reducing consumer prices. The study estimates that multi-sided pricing allows content providers to absorb a portion of network upgrade costs and would provide consumers $69 billion in benefits over the next 10 years. Such an arrangement also would benefit content providers and online advertisers by stimulating a 40 percent increase in broadband subscribers, which would increase advertising revenues by $6 billion per year.



Carl Daikeler said...

Thank you for your response as I think it underscores how dramatically important it is for everyone in the beachbody and Million Dollar Body community to take a moment and add their name to the petition here: http://www.savetheinternet.com/.

the study you cite is interesting. I wonder who paid for it. Pushing the price of upgrading the network onto the content providers, which I have no doubt is what will happen, will give the gate keepers (phone companies, cable companies) a strangle hold on what products get access and what doesn't.

One of the things Jon and I heard on our trip to Washington was how the telephone companies were spending a million dollars a week on insider lobbying and fake front groups to "convince" the public that what you are arguing was in their interest.

For anyone reading who prefers to get back to your workout though you can watch the quick version of this debate here:


1. Telecom Industry Support of the 4 principles: Prove it – at the end of the day your actions speak louder than words. Let’s put it in writing, sign off on Snowe-Dorgan and demonstrate your commitment to consumers having the ability to choose their content & applications, connect devices of their choice to the network, and have a competitive market of network providers to choose from.

2. Net Neutrality isn’t the status quo as it has never applied to cable broadband: While cable and telecom broadband operated under different regulatory rules for all practical purposes Net Neutrality has been the status quo and the primary reason that consumers have so much choice and freedom on the Internet. In contrast - a closed network like the US mobile networks regulate consumers to applications of the providers choosing. A combination of factors – technological advances in routers and rule changes at the FCC and Supreme Court have created an environment where broadband providers feel that they can make more money by creating a private lane on the Internet – and I am certain that will be a losing proposition for our community and customers.

3. American Consumer Institute (ACI) study: The studies author, Stephen Pociask, is a telecommunications industry consultant and a former chief economist for Bell Atlantic, which these days is known as Verizon. Of course ACI left that little fact off Stephen’s bio but I guess that is what happens when you are also the group’s registered contact for its website. I think instead of responding further on this one, we should hear from the real consumer groups here: http://www.savetheinternet.com/blog/2007/05/09/consumer-group-hides-verizon-link-fails-smell-test/

Anyway -- thanks for the comment.

HOTI said...

Carl, thanks for your reply.

For anyone who wants to watch a non-Save the Internet video on the issue, try this . It's presents the arguments from the other side of the issue, courtesy of the Fiber to the Home Council.

1. As I mentioned we support the four principles, but if you have read Dorgan-Snowe, it goes way beyond those basic principles.

2. Regarding the Save the Internet video you linked to and the disputing the notion that net neutrality is the status quo, I'll direct you to the guys at Kung Fu Quip, who cover my argument and go into greater detail,

"The proponents will tell you that net neutrality has always been - based on a law that applied to 40% of the broadband connections carried by DSL lines. It never applied to cable - which accounts for about 60% of the broadband connections. So NN was never “the founding principle”. It was a hindrance to DSL, and the lack of it allowed cable to arrive on the scene and steal the market (well, that and the fact that cable had faster lines and a $100 billion network investment to make it better)."

3. You can dismiss the Stephen Pociask and the ACI, but the argument she makes are very legitimate. Additionally, what about the strong warnings against net neutrality coming from many of the most senior network engineers such as the socalled father and grandfathers of the internet, Robert Kahn and David Farber? As Farber and Michale Katz, Chief Economist at the FCC during the Clinton Administration, argue,

"Public policy should intervene where anti-competitive actions can be identified and the cure will not be worse than the disease. Policymakers must tread carefully, however, because it can be difficult, if not impossible, to determine in advance whether a particular practice promotes or harms competition. Antitrust law generally takes a case-by-case approach under which private parties or public agencies can challenge business practices and the courts require proof of harm to competition before declaring a practice illegal. This is a sound approach that has served our economy well."


Carl Daikeler said...

HOTI - Thank you for your motivation to make spreading the word on Net Neutrality to other communities a priority. We can go back and forth with names, "facts" and figures, but the bottom line is, it is becoming clear that you represent the Telecom industry (http://actionletterengine.com/blog/member-organizations/) and I am an Electronic Retailer and an advocate of access and opportunity for the little guy. So on this issue of the value of net neutrality, where the big companies want to control the information super highway, and I want to see EVERYONE with a great idea have access, well, my exceptionally over-funded friend, we will simply disagree (until they stop funding your blog trolling, then you'll probably jon me on the side of opportunity!)

For any readers wondering why HOTI is so insistently debating this, check out http://www.savetheinternet.com/ where you will find information on how this issue will affect you and our community. There you will find a broad coalition of businesses, academics and 1.6 million people like us who understand the danger.

PS: This coalition is joined by Vinton Cerf the “founding father of the Internet” as well as Sir Tim Berners-Lee the “inventor” of the World Wide Web (links below).

If you want to see great leaps in technology from all corners of the country and the globe, I encourage your involvement in maintaining net neutrality!



HOTI said...

Carl- Yes, we shall agree to disagree, although I never thought you would change your stance. I merely wanted to point out to others that there are numerous resources on this issue other than just the save the internet site. Additionally, the the debate should be based on the issues raised and not playing on people's fears of what could happen and catch phrases claiming that the big bad ISPs are out to control the world.

Yes, AT&T along with the National Association of Manufacturers, 3M, the National Coalition on Black Civic Participation and many others are member organizations of the HOTI coalition. I never stated otherwise and in fact mentioned my affiliation in the first paragraph I wrote.

Best of luck with the business and thanks again.