T-Mobile Forced to Stop Hiding Slow Speeds From Throttled Customers

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Thursday Lunchtime Links: The Startup Bubble

Every Thursday I will try to provide an assortment of links on a prevalent issue in the internet, gaming, and legal areas.

GeekWire:  Yes, Things Are Hot in Startup Land, But This Ain’t No Dot-Com Bubble

The Economist:  The Startup Explosion

CBS San Francisco:  Silicon Valley Venture Capitalists Warning of Tech Bubble Due to Startup Spending

BBC:  Silicon Valley’s Billion Dollar Start-up Failures

Business Insider:  Here’s the Evidence That the Tech Bubble Is About to Burst

The Atlantic:  The View From the Valley

Bloomberg:  Twitter Engineering, Analytics Executives Leave in Reshuffle

Modding: The Relationship Between Gamers and Developers

With the upcoming release of GTA V for PC and next-gen consoles, most gamers would not pay too much attention the port of a last generation game.  However, a new addition has sparked renewed interest in the game, making it a must buy for many gamers.  The new port adds a first-person point of view to the traditional over the shoulder look.  This is the first time Rockstar has taken the lead in adding FPS to its GTA franchise.  Yet, amongst gamers, this is not the first time that FPS (First-Person Shooter) has been added to GTA. Years ago, videos and files emerged showing GTA IV in as an FPS .  These videos didn’t come from Rockstar, though, but from people who loved playing the game.  These people are known as “modders.”

Modders do simply what the name implies: modify video gaming code to alter the structure, look, or gameplay of the video game.  These modifications are simply known as “mods.”  It allows games to live second lives and take on new looks.  In some instances, it even makes games run better.  Modding games has existed as long as games have existed.  From Doom to Skyrim, gamers have always been cracking open the code to changing it.  However, the legal aspect of modding has always been murky.

When dealing with modding, companies have been wary to give their blessing.  Dice and Blizzard have been wary of modders and often refuse to allow access to the source code for the game.  An often cited issue is where copyright laws come in conflict with the distribution of mod packets.  Copyright laws allow the exclusivity and protection of certain works.  Some argue that those works include video games and the stories within them. Rewriting those stories and codes within could potentially breach copyright laws.  Furthermore, it could take control of the game out of developer hands and place them in the hands of gamers.  The result can be a loss of control of the game and its story, impeding future sequels.

Another issue is the control over mod packs.  While gamers develop mods, they often do so with the code and content created by developers, much like writers cribbing from other works or musicians taking riffs from other songs.  However, with mods, gamers have a greater problem than writers.  Large chunks of code, including 3D renderings, gameplay, and soundtracks, are often reused by modders. As a result, true ownership of the mod pack is often in dispute. So when a gamer decides to monetize a mod pack, a developer often has a right to the proceeds of its sales.  Furthermore, should a developer seek to halt the mods distribution, they may have the legal ground to do so.

However, other companies and developers such as Valve, Id (Quake & Doom), Bethseda (Skyrim), and Crytek (Far Cry) have taken a more favorable view of the modding community.  These companies, rather than litigate or restrict gamer access, open their source code up to allow gamers to take control and expand the footprints of games.  One of the biggest examples is Valve and Team Fortress 2.  The game originated from a mod for Quake back in 1996. Valve seized on that gamer centered origin and created Team Fortress 2.  While the game updated every aspect of the previous, the true success of the game lay in the vibrant community modding it allowed and even encouraged.  The tools and equipment unlocked within allowed gamers to design unique outfits and weapons.  Taken in the abstract, the idea of new outfits and weapons seems quite pointless.  However, the game’s popularity has only kept growing, long after the natural lifespan for a video game.  What this popularity does is create strong brand loyalty to Valve.  Valve would further expand on modding with the creation of Steam, an online video game market and modding community.  Steam allows gamers to create and share mods for various games.

It’s encouraging to see Rockstar’s open embrace of the modding community. In the end, it is better for both developers and gamers when they can work together.

A Quick and Dirty Guide to Net Neutrality

For the past month, the internet has been publishing articles, blogs, opinions, and quotes on “net neutrality.”  It effectively blew up last week when the White House released a statement on net neutrality with President Obama throwing his full support behind it.  However, for well over a year, net neutrality has been a concern for gamers, internet users, and business owners that depend on internet “traffic” for revenue.  I touched on it months ago, but now that it is getting the attention it deserves, it’s time to give people a crash course on net neutrality and the potential effects of what the FCC may decide.

How does the internet currently “work”?

To understand net neutrality, we need a basic understanding of how the internet works.  Admittedly, I lack the technical knowledge to describe the transfer of data and packages between computers in a coherent way.  However, the term “information superhighway,” though dated, is aptly suitable to understand how it works.  Essentially your computer/phone/laptop communicates with other devices or servers.  It does this by sending streams of data through cables or routers.  Imagine your computer as a small shack connected to a 2-way road.  Up the road, it connects to a 4-way road, and further on it connects to a 8-lane highway.  The roads all intertwine and connect to each other, but essentially you are sending data out and also receiving data coming in.  At the top-level of this superhighway are the Internet Service Providers (ISPs).  These establish the rules of the road.  Costs, speeds, usage, and access are controlled by them.  We know of them as Comcast, Time Warner, RCN, AT&T, Verizon, etc.

What has changed?

For the longest time, the internet was governed by a simple principle: all content, know matter its size or origin, should be treated equally.  Data from a Google server travels at the same speed as data from a site bought on GoDaddy.  Furthermore, ISPs could not prevent access to competitors.  This rule was formally established in 2011 by the Federal Communications Commission (FCC).  However, Verizon challenged the rule in court and won.  The result was that the FCC could not enforce net neutrality rules against ISPs as they are not “common carriers.”  Skipping through a lot of legal definitions, the practical result was an elimination of net neutrality.  The FCC announced it would establish new rules, but a new chairman and recent events have given rise to concern as to who would benefit from the new rules.

What are the “Special Lanes” I hear about?

The “special lanes” that keep getting tossed around come from the FCC proposed rules earlier this year.  If put into effect, they would allow ISPs to build special lanes allowing faster internet service to customers for certain websites.  Returning to our highway analogy, let’s imagine the internet having a speed limit of 65mph.  The rule would allow the ISPs to build a special lane with a 90mph speed limit.  However, access to this new lane would cost you.  The ISPs would be able to affect the flow of internet traffic to websites depending on the price they set for faster lanes.

Do you have any examples of such actions?

Yes. Yes I do.  Just this past February, Netflix came to an agreement with Comcast on usage rates, paying a much higher level.  At first, the deal was considered just a market-based agreement to deal with Netflix’s higher demand.  However, something stunk.  Netflix speeds were slowing leading up to the deal and then quickly surged afterwards.  While the surge was expected, some began calling foul play.  Sure enough, the data speeds seemed off than just mere congestion.  In fact, it’s becoming clear that Comcast had decided to start “throttling” Netflix’s usage speeds.  Prior to the negotiations, Netflix used a 3rd party provider that had an agreement with Comcast.  As usage increased with the 3rd party, Comcast would adjust the routes to allow more data to flow freely.  However, once Comcast learned that Netflix was the cause of the increases in usage, the adjustments stopped.  What had been an amicable agreement quickly turned sour as Netflix customers could no longer stream content quickly.  Forced to the table, Netflix eventually paid more money for direct connections through Comcast.  While there was no rule against it, the idea of restricting someone’s access to users in exchange for money starts to feel like extortion pretty quickly.

How can this affect me?

If you stream video, work online, or use the internet regularly, the costs of faster lanes will undoubtedly get passed on to you.  Furthermore, once a precedent of charging for usage is set, ISPs could easily turn it back on customers that have high usage rates as well.

However, the bigger issue is the effect on internet businesses.  As the internet becomes an even more necessary part to running a business, greater rates for more access to customers will become a problem.  The costs for owners to run an online marketplace will increase.  Established companies such as Google, Amazon, and Facebook will survive the rate increases, but the sluggish speeds for smaller companies could easily kill their chances to succeed.  Companies that try to pay the higher rates will eventually pass on the costs to consumers.  Such lanes hurt competition, which hurts consumers.

What else could the ISPs do?

There are major concerns about blocking, throttling, and the effect a lack of regulation would have on both the ISP market and internet businesses.  Let’s look at them individually.

  • Blocking:  Blocking refers to the ISPs blocking access to a website for certain consumers.  For example, Comcast provides television, phone, and internet access.  In addition, the company recently acquired NBC Universal.  As an internet provider, Comcast controls the flow of data from Netflix, YouTube, Amazon, etc. to its consumers.  However, as a television provider and network owner, Comcast also has an incentive to increase viewership of NBC and its television properties.  Since internet video providers are a threat to NBC properties, there is an inherent conflict of interests in having to provide internet access to competitors.  What blocking allows is for Comcast to deny their customers access to competitors.
  • Throttling:  Throttling is the purposeful slowing down of data speeds.  The perfect example is the Netflix and Comcast deal above.  Essentially, ISPs can control the speed of websites as a negotiating tactic.  The problem is that the higher prices of those contracts will get passed on to the average consumer at the end of the day.

Won’t competition among the ISPs keep these things from happening?

Short answer: No.  Long answer: No because competition does not exist.  While there are dozens of internet providers across the country, the top 3 (Comcast, AT&T, and Time Warner) cover the vast majority of Americans (almost 50 million customers).  On top of that, Comcast and Time Warner are still seeking to merge and effectively monopolize the internet.  In Chicago, I currently have a choice between Comcast or AT&T in my building.  While RCN and some smaller providers to exist, their service is only found in certain locations.

The fact is that infrastructure costs, existing market shares, and the opposition of current competitors make it difficult to start an ISPs.  So far only Google and small municipalities have been able to start their own internet services.  While regulation is often seen as the bane of a free market, in this situation a free market simply does not exist.

So what is net neutrality then?

Well, net neutrality can mean a lot of things to a lot of people.  But the overarching theme is equal speeds and equal data.  A rule enforcing net neutrality would seek to outlaw throttling, blocking, and special lanes.

The common idea thrown around is establishing the internet under Title II of the Telecommunications act with forbearance to rate regulation and provisions not related to broadband service.  This would effectively establish net neutrality by equating broadband with your phone service.  Under Title II you are allowed access to a phone line and you cannot be restricted in calling someone else who has another provider.  Basically, it would make it illegal to throttle, block, or prioritize data.  What the forbearance line means is that the government will not set rate prices or use regulations that clearly don’t relate to broadband services.

So why are all these politicians getting involved?

Money, youth vote, anti-government, freedom of internet.  You can pick your reason and find an opinion out there to match.  When President Obama made a statement on the issue, it became the forefront topic of politicians for the week.  Some politicians immediately came out against net neutrality, likening it to “Obamacare”.  However, such rhetoric serves no one.

The simple thing you need to remember is that regardless of your politics, 3.7 million people sent comments to the FCC in favor of Net Neutrality, the most comments on any FCC rule.

Admitted to the Illinois Bar

I apologize to my readers for the lack of posts.  Between the Bar, looking for employment, and planning a wedding, this site fell to the wayside.  However, I am back and prepared to get articles out on a more regular basis.  I’ll be rolling out a schedule for topics over the week, but thank you for your support and readership.  Here’s to a new beginning!

-Tim