All Things Digital

Comcast is apparently too busy drafting its “P2P Bill of Rights and Responsibilities” to bother attending the daylong hearing into its dubious “network management” practices. An odd decision for a company so intent on “clarifying” the practices ISPs should use to manage P2P applications running on their networks. But according to a company spokesperson, Comcast (CMCSA) “felt the issues specific to us were well covered at the first hearing, and the focus of this event should be broader than any individual company’s issues.”

Broader issues? Like reasonable network-management practices? The responsibility to deliver traffic fairly? Service disclosures? The sort of issues that might figure prominently in a “P2P Bill of Rights?”

Guess not.

Anyway, Comcast has already scrapped its policy of deliberately slowing some traffic flowing over BitTorrent and other P2P networks, so there’s really no need for Federal Communications Commission Chairman Kevin Martin to bust its chops anymore. As Mitch Bowling, Comcast’s senior vice president and general manger of its Internet service, told the New York Times, Comcast’s new policy is to slow traffic based on usage pattern, not application. “[Our new technique] will be based purely on individual consumption by consumers,” Bowling said. “Anything in addition to that is outside the scope of what our network management goal is.”

So the company plans to throttle traffic to the customers that use the most bandwidth. Hmmm. I wonder who those might be? The folks who use the Internet for email and Web browsing or those who use it for downloading digital media?

It’s quite a road-to-Damascus conversion Comcast (CMCSA) is having these days, isn’t it?

Back in February the cable company claimed it was perfectly reasonable for it to throttle or degrade the performance of peer-to-peer file-sharing services on its broadband network. But when Federal Communications Commission Chairman Kevin Martin suggested the agency was mulling action against it, Comcast had a moment of clarity. In March, it said it would work with BitTorrent to develop P2P-friendly network capacity-management techniques. And today it announced plans for an industry-wide effort to create a “P2P Bill of Rights and Responsibilities.”

The document–which is to be created with the help of other Internet service providers, P2P companies and content providers–would specify how ISPs should manage P2P applications running on their networks and how consumers should use them. Said Tony Werner, Comcast Cable’s Chief Technology Officer, “By having this framework in place, we will help P2P companies, ISPs and content owners find common ground to support consumers who want to use P2P applications to deliver legal content.”

And by announcing its plans to create this framework right before the FCC hearing on its P2P-throttling techniques to be held at Stanford (in Palo Alto, Calif.) Thursday, Comcast is hoping the agency won’t take action against it for violating its Net neutrality rules.

Back in 2000-2001, when the Recording Industry Association of America was still trying to recover from its CD price-fixing scheme with poorly reasoned justifications for CD price inflation (”Listen, if CD prices were governed by the Consumer Price Index, you’d be paying $33.86 for them instead of $12.75!”), a little company called Napster came calling. Napster had pioneered a new Internet distribution model for digital media that was revolutionizing the music industry, and it hoped to partner with RIAA member labels to create a subscription-based service.

At the time, Napster had some 20 million users worldwide and was essentially the de-facto file-sharing standard. Had the RIAA labels agreed to the alliance, they might have turned peer-to-peer distribution into a new and powerful business model, one with low distribution and marketing costs and a fast developing user base. But they didn’t. They chose another route.

Big mistake. Along came Gnutella. And increased broadband penetration and cheaper storage. Along came Kazaa. And then came BitTorrent. And, well, look at the industry now.

Given such history, it’s difficult to look at the recording industry’s plan to have a monthly fee added to consumers’ internet-service bills and not shake your head in wonderment.

Portfolio.com reports that Edgar Bronfman Jr.’s Warner Music Group (TWX) has indeed hired veteran industry consultant Jim Griffin (no relation to Peter, right?) to quarterback a plan under which consumers pay an Internet-access surcharge of $5 a month for the collective right to freely share music. Those fees would be pooled and divvied up among artists and their labels.

“Ideally, music will feel free,” says Griffin. “Even if you pay a flat fee for it, at the moment you use it there are no financial considerations. It’s already been paid for.”

Ah- charge everyone for all music. So it is Monetization Without Representation. OK. But what gives the music industry the right to tax all broadband users because it suspects some of them might illegally share its content? And if the music industry deserves that right, then doesn’t the film industry deserve it as well? And the publishing industry? And any other industry that might benefit from such a tax?

As David Barrett, engineering manager for peer-to-peer networks at Web content-delivery giant Akamai (AKAM), notes Griffin’s plan is problematic. And desperate.

Said Barrett:, “It’s too late to charge people for what they’re already getting for free. This is just taxation of a basic, universal service that already exists, for the benefit a distant power that actively harasses the people being taxed without offering them any meaningful representation.”

If the Motion Picture Association of America is so intent on shuttering BitTorrent trackers, perhaps it should set its sites on the really big offenders, like say … Google (GOOG). It’s going to have to sooner or later, because some day there won’t be any smaller operations left for it to sue.

After a prolonged, and quite nasty, legal battle with the MPAA, TorrentSpy is shutting down. “The legal climate in the USA for copyright, privacy of search requests and links to torrent files in search results is simply too hostile,” reads a statement posted to the site’s front page by founder Justin Bunnell. “We spent the last two years, and hundreds of thousands of dollars, defending the rights of our users and ourselves… [W]e now feel compelled to provide the ultimate method of privacy protection for our users–permanent shutdown.”

It’s a Comcastic day for BitTorrent. This morning the cable provider, under fire for degrading the performance of the peer-to-peer file-sharing service on its broadband network, announced plans to develop better ways to manage peer-to-peer traffic. To that end, Comcast (CMCSA) will work with BitTorrent to develop a network capacity-management technique that is protocol agnostic.

Said Tony Werner, Comcast’s chief technology officer, “This new architecture would enable many new and emerging applications and will be based upon an open, nondiscriminatory framework that could interface with or support multiple technologies. We believe that P2P technology has matured as an enabler for legal content distribution, so we need to have an architecture that can support it with techniques that work over all networks.”

Of course you do. You just didn’t realize it until FCC Chairman Kevin Martin pointed it out, right?

Anyway, like most such corporately altruistic pledges, this one has the potential to do more good than bad–or more bad than good. “… We must recognize that these are two commercial entities whose goals are, in the end, to make sure that their networks and technologies are as profitable as possible,” writes Public Knowledge’s Jef Pearlman. “One can conceive of a world where an ISP and an application developer band together to make a proprietary system in which sanctioned application data gets preferred treatment, the ISP gets greater control of the application running on your computer, and both companies are happy in the exact situation we want to prevent. Time will tell what this partnership actually means.”

The Federal Communications Commission isn’t buying Comcast’s (CMCSA) argument that throttling or degrading the performance of the peer-to-peer file-sharing service BitTorrent on its broadband network is a necessary traffic-management technique.

Speaking at the Stanford Law School Center for Internet and Society, FCC Chairman Kevin Martin said he’s considering taking action against the cable operator for violating the agency’s network-neutrality principles. Seems Martin was troubled by Comcast’s dissembling around the BitTorrent issue, not to mention its efforts to pack an FCC hearing on Net neutrality with its own employees.

“A hallmark of what should be seen as a reasonable business practice is certainly whether or not the people engaging in that practice are willing to describe it publicly,” said Martin, adding that the incident offered the commission a good opportunity to establish a precedent for future cases of this kind. “I have said in the past the commission is ready, willing and able to take action on individual complaints,” he said. “I think that is what we are going to end up doing, and I think that will end up setting an important precedent going forward: that we are willing to address individual complaints when they come in.”

We compete with Comcast with delivery of content over the Internet. What we have here is a horse race and in this contest, Comcast owns the race track, in fact, the only track in town. They also own a horse. We are being told they are only slowing down our horse by a few seconds.”

–Gilles BianRosa, CEO of video provider Vuze

The network-management hearing at Harvard University this morning is turning out to be something of a comcastrophe for Comcast (CMCSA). Called before the Federal Communications Commission today to explain why it has been “throttling” or limiting BitTorrent traffic on its network, Comcast was criticized out of the gate for the practice.

Seems some folks don’t buy the company’s claim that throttling is necessary to prevent file-sharing traffic from consuming too much bandwidth. And others–specifically, advocates of Net neutrality–feel it’s outright discriminatory. “The Internet is as much mine and yours as it is Verizon’s and AT&T’s and Comcast’s,” said U.S. Rep. Edward Markey (D-Mass.) in his opening remarks to the commission. “The commission should be wary of the need of a significant network management position. Perhaps if we had competition, this wouldn’t be such an issue.”Such intercession into a user’s access to the Internet should not result in … the transformation of BitTorrent into BitTrickle. That’s a problematic result … whether it is purposeful or purely circumstantial.”

Comcast, for its part, insists results like those described by Markey aren’t problematic at all, but necessary. The company must “shape” file-sharing traffic to ease the strain on its network. “Independent research has shown that it takes as few as 15 active BitTorrent users uploading content in a particular geographic area to create congestion sufficient to degrade the experience of the hundreds of other users in that area,” David L. Cohen, an executive vice president of Comcast, explained in written testimony. “Bandwidth-intensive activities not only degrade other less-intense uses, but also significantly interfere with thousands of Internet companies’ businesses. Far from managing our network in a discriminatory way to benefit our own offerings–other than managing our network to make our high-speed Internet service faster and better–our limited network-management practices ensure that everyone else’s applications and services, even those that may compete with our services and use P2P protocols, work.”

As Sun Tzu once wrote, “Keep your customers close and your enemies closer, and should someone be both, kick them off the Internet.” At least that’s what he appears to have written in the recording industry’s well-worn copy of “The Art of War.”

Earlier this year, the British Phonographic Industry suggested that the British government pass “three strikes” legislation that would require Internet service providers to terminate the accounts of casual file-sharers. And now the government seems to have taken it to heart. This morning it said ISPs have until April of 2009 to curb illegal downloads of music and films occurring on their networks before they are slapped with legal sanctions. Said Culture Secretary Andy Burnham, “Let me make it absolutely clear: This is a change of tone from the government. It’s definitely serious legislative intent.”

Britain’s ISPs are, as one would imagine, a bit put off by the idea of being used as entertainment-industry heavies. “Using BitTorrent isn’t illegal,” said an Internet Service Providers Association rep. “We prefer to go with self-regulation because it’s generally seen to be more nimble than legislation.”

But as the BPI notes, with self-regulation comes litigation. Given the option of lawsuit or loss of connectivity, what would the average music pirate choose? “The three-strike process is far better then landing someone with a great big lawsuit,” says Matt Phillips of the BPI. “Surveys we’ve done suggest that 70% of consumers would stop sharing on their connection if they knew it was being done illicitly. And it’s got to be better than taking them to court, where they’ll face a legal bill of at least £3,000.”

Well, Comcast founder Ralph Roberts has at least one thing in common with Apple CEO Steve Jobs: an annual salary of $1. Bowing to shareholder criticism, the bandwidth-throttling cable company is slashing Roberts’s pay from $1.85 million to a buck and has amended his compensation package so that he will no longer be eligible for bonuses or stock options. Comcast also scrapped a clause in its proxy statement that had allowed for Roberts’s beneficiaries to receive his salary for five years after his death.

The moves come at a time of growing institutional shareholder dissatisfaction with Comcast (CMCSA). The cable operator’s shares are down nearly 40% in the past year and off by 25% since it gave disappointing 2007 financial guidance in the fall. Suffice it to say, the company’s shareholders are not happy. In a Jan. 14 letter to Comcast, investment firm Chieftain Capital Management accused management of strategic missteps and called CEO Brian (son of Ralph) Roberts’s stewardship of the company over the past decade a Comcastrophe. “The management of this company and supervision by its board have been a ‘Comcastrophe’ for shareholders over the past decade,” Chieftain wrote. “We want and deserve the best CEO Comcast’s board of directors can find–and, based on his record, Brian Roberts is not it.”

Will the concessions Comcast has made to its shareholders silence calls for Roberts’s head? Perhaps. It’s tough to shout epithets at management when the company’s just posted a better-than-expected 54% jump in fourth-quarter net income and announced plans for its first dividend in nearly a decade.

The cheeky folks at the Pirate Bay may need a peg leg or two when Sweden’s legal sharks are done with them. A Swedish prosecutor filed charges today against the popular BitTorrent tracker’s proprietors, accusing them of “promoting other people’s infringements of copyright laws.”

“The operation of the Pirate Bay is financed through advertising revenues,” said prosecutor Hakan Roswall. “In that way it commercially exploits copyright-protected work and performances. … [This case is] a classic example of accessory–to act as intermediary between people who commit crimes, whether it’s in the physical or the virtual world. [The Pirate Bay] is not merely a search engine. It’s an active part of an action that aims at, and also leads to, making copyright-protected material available.”

Pirate Bay’s defiant operators, predictably, disagree. Though they acknowledge the site maintains an index of BitTorrent files, they say no copyrighted material is stored on their servers. They colorfully describe the charges as “idiotic,” and have so far refused to take the site offline. “In case we lose the pending trial (yeah right) there will still not be any changes to the site,” they wrote in a recent post to the site’s blog. “The Pirate Bay will keep operating just as always. We’ve been here for years, and we will be here for many more.”