Thanks to NBC, we now know who would be most endangered by a free and open Internet – our nation’s corn farmers. If that argument seems a bit illogical, here’s the reasoning.
In a filing with the Federal Communications Commission calling for far more regulation of the Internet than even the most vociferous advocate of Net Neutrality, NBC Universal (the combo network and studio) painted a picture of an Internet overflowing with evil peer-to-peer traffic carrying pirated movies that lead to losses of money and jobs in the movie industry. Now the money shot: “Because of our nation’s interlocking economy, two-thirds of the lost earnings and lost jobs are in industries other than motion picture production.
For example, in the absence of movie piracy, video retailers would sell and rent more titles. Movie theatres would sell more tickets and popcorn. Corn growers would earn greater profits and buy more farm equipment.” This is what NBC recommends to the Commission: “The Commission should make unmistakably clear, as part of its regulations governing broadband industry practices, that broadband service providers have an obligation to use readily available means to prevent the use of their broadband capacity to transfer pirated content, especially when such use represents huge percentages of their capacity and reduces the quality of service to other subscribers.”
And of course, NBC said it “goes without question” that use of any of those would not be prohibited as discriminatory or as violating the already weak FCC’s Internet principles. In the theoretical sense that might be true. If every packet is searched for contraband, then it’s not discriminatory. Perhaps we could have the U.S. Postal Service and other carriers search every envelope also. There must be some stolen goods floating around. On the other hand, there might be a couple of other problems with that approach. The first is the absolute invasion of privacy that such an approach would require.
As the Sixth Circuit U.S. Court of Appeals ruled recently, if law enforcement wants to look at an email, they need a warrant. Wholesale packet inspection with no probable cause is way out of what should be normal bounds of discourse. In this instance, of course, when the entertainment industry wants every branch of government to do its bidding, perhaps there are no bounds.
The second is a matter of jurisdiction. NBC has to know that the Commission, for better or worse, has backed away from any regulatory actions in broadband, including removing consumer protections. The FCC tried once before to be the Copyright Cops when it promulgated the ill-fated broadcast flag regulation. That effort failed, thanks to Public Knowledge and allies. Finally, those claims of “losses” have always been open to question. Can a sale be considered “lost” if a movie shows up in an unauthorized place? Only if someone would buy it to begin with. The other “losses” of jobs, for example, flow from that faulty premise.
But If NBC wants to stage a show in the Theatre of the Absurd, that’s fine. But perhaps a review of the production is also in order. Corn farmers are doing just fine, thank you. According to the June 20 Wall Street Journal, corn sold at $3.83 per bushel this morning, up from $2.08 a year ago. Corn futures are even higher — $4.03 for the December crop. And don’t worry about the popcorn guys. According to the Popcorn Board, Americans consume 17 billion quarts of popcorn each year. Of that total, 70 percent of popcorn is eaten at home, and the remaining 30 percent is divided up among all the other places – movie theatres and sports stadiums, among other venues.
These figures don’t appear to reflect the impact of the rampant piracy that NBC posits. Could there be anything else in NBC’s program that is questionable? NBC tells the FCC that “As much as 60-70% of traffic on the Internet consists of P2P file transfers by a very small minority – fewer than 5% — of users. P2P thus outstrips every other communication and distribution protocol on the Internet and continues to grow exponentially.” NBC calls P2P users “bandwidth hogs,” and says 90% of the transfers are “in knowing and flagrant violation of our nation’s copyright laws.” NBC must know that P2P is a more efficient way of distributing content, and that users aren’t “bandwidth hogs” that clog the tubes for everyone else.
It was only a few months ago, Nov. 17, 2005 to be exact, that NBC had quite the different view of P2P technology when it announced a deal to distribute movies and TV shows over Peer Impact, a P2P network. This is what the Peer [press release](http://www.peerimpact.com/community/p11-17-05-pi.html) said: “NBC Universal and Wurld Media, the creator of the legitimate Peer to Peer (P2P) service Peer Impact, today announced an agreement that will make Universal movies and NBC Universal TV events content available to Peer Impact customers on demand. This agreement marks the first ever license of major studio content to a legitimate P2P service. Titles will be available for rental for a 24-hour viewing period after purchase. “‘NBC Universal has a long history of embracing technology to better serve our viewers,’ said Bob Wright, vice chairman of GE and chairman and CEO of NBC Universal. ‘This agreement is a significant step forward in our goal to capitalize on the myriad possibilities of new digital-media services, in a way that allows us to safeguard our content from illegal distribution.'”
The canard about P2P taking over the Web was popular a couple of years ago when Grokster was a hot issue. Now, not so much. Ellacoya, the maker of deep-packet inspection routers, reported on June 18 that the trend of P2P traffic taking over the Web has been reversed. Now, basic Web traffic, mainly streaming audio and video, accounts for 46% of traffic, while P2P takes up 37%. Traditional Web page downloads are 45% of the basic (HTTP) Web traffic, with streaming video at 36%. Just for the record, how is the movie industry doing these days? Let’s see what MPAA President Dan Glickman wrote just the other day on Huffington Post: “From long-awaited summer sequels to smaller films that make us laugh, think, or both, the movies are enjoying a revival. Everyone is heading to the movies.”
Consumer spending on home video (sales and rental) was $24 billion for 2005, according to the Entertainment Merchants Association. Meanwhile, box office revenues keep climbing as well, even as ticket prices keep going up, according to the National Association of Theater Owners. Perhaps things aren’t as bad as NBC would have us believe. What we are left with is a call for a radical policy change based on bad, or at least questionable, information alleging millions of dollars of “lost” revenue and “lost” jobs. That’s a recipe for disaster, as policy choices on larger world stages have shown.
Why propose this, then? It will probably be only a matter of time before Hollywood’s friends on the Hill, probably some Democrats, start sending letters to the Commission, in the name of the intellectual property protection. Like NBC’s filing, those letters will be the source of great amusement.