Some truth about Comcast - WikiLeaks style

Steve Schultze sjs at Princeton.EDU
Fri Dec 17 11:07:13 CST 2010

On Dec 17, 2010, at 11:46 AM, Dave Temkin wrote:
> George Bonser wrote:
>>> What I think George's
>>> comment
>>> does not completely appreciate is that (ideally) cities are imposing
>>> such requirements at the behest of and for the benefit of the (local)
>>> public, whereas private constraints on local access are (by design)
>>> motivated by profit.
>> I wasn't really talking about franchise agreements as those are
>> different and in many cases stipulate things like there can be no
>> monopoly, etc.
>> What I was talking about was what if a city simply decided to charge an
>> Internet provider an "access fee" to the city's people.  An "eyeball
>> fee".  The city says, "hey, you are making millions selling ads that
>> these people view and the more eyeballs you have the more money you
>> make, so we are going to charge you for those eyeballs".  Which is
>> basically what Comcast is doing ... charging content networks for access
>> to eyeballs.  What if they themselves got charged for the same thing.
>> Would they think that is "fair"?  And what if the city had its own
>> community high speed internet that paid no such charge?
> They do already.  It's called HBO, Showtime, HDNet Sports, etc.  - they get charged per eyeball for those networks, and so they pass the charge on per eyeball to the customer.
> Nothing is new here.

Sure, the content providers charge Comcast per eyeball, but localities do not.

Part of nearly every franchise agreement is a percentage of gross revenue from video services that is paid to the city.  In recent years the FCC has capped this at 5% and subsequently introduced further constraints on what counts and how it is collected. Cities typically use these funds to support public resources related to video (public, educational, and governmental video channels, equipment, and networks).  However, I think they have the freedom to use it to fill potholes if they so choose.

None of this implicates the revenues from broadband service, because the 2002 Cable Modem Order removed those from the purview of localities.  What about bundled "triple-play" style services?  This is a mess, and I believe someone has to arbitrate what the percentages are.  What about people playing video over their internet connection?  Not included.  As you can see, if the regulatory dichotomy between video and broadband services ever made sense, it clearly doesn't today.

George's concern about a last-mile provider competing with municipal broadband parallels the most common argument made against such efforts: Although private companies do not have to pay any local fees that municipal broadband does not have to pay, the companies argue that  municipal efforts have the unfair advantage of being built on taxpayer support and existing outside of the competitive marketplace.  Of course if the "competitive marketplace" is a natural near-monopoly, these arguments are less compelling.

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