Saturday Open Thread [2.22.2014]

Filed in Open Thread by on February 22, 2014

Here are a few long reads for today:

Michael Tomasky has taken to the NY Review of Books to speculate about A New Populism in the Democratic Party. He sees signs of the party “soft-shoeing” its way leftward:

For example, the Center for American Progress (CAP), under its new president Neera Tanden, has pushed “middle-class” or “middle-out” economics as the left’s alternative to supply-side, trickle-down economics. The idea of middle-out economics is that the government, instead of investing in the top 2 percent by means of tax and other privileges, should instead invest in the broad middle through a number of left-leaning policy choices from which the bounty would radiate out to all sectors of the society. These would include a much higher minimum wage, paid family leave, and improvement of decaying infrastructure. Obama’s Knox College speech on inequality is one expression of the middle-out view in the way it ties middle-class investment to growth.4 CAP has been pushing the White House to take up these arguments, not the other way around.

John Podesta, CAP’s former president, helped launch a new think tank, the Washington Center for Equitable Growth, devoted specifically to issues related to inequality. Podesta is now a White House counselor, which gives these issues respected representation in debates in the Roosevelt Room and the Oval Office.

This is all a welcome shift in emphasis, but of course it doesn’t mean that populist policies are going to become reality anytime soon. There is opposition to them within the Democratic Party and its broader policy solar system. Not nearly as much as there once was; the radical rightward shift of the Republican Party has, perhaps inevitably, moved the Democratic center of gravity leftward. But the opposition to populism continues.

This is intriguing to think about. Certainly I think that plenty of Americans feel the impact of income inequality, even if most of them can’t quite articulate why they are running so fast to be so far behind. And as Tomasky notes, pretty much everything Elizabeth Warren has to say about how the system has its thumb on the scales for wealthy corporations and people is incredibly compelling an d popular. Bill Clinton’s achievement was to plug Democrats into the corridors where the wealthy corporations and people live AND write checks for campaigns. Populism is going to be about getting the thumb off of the scales for the people who need it least and put it back on the middle class scale, where long term financial growth and security live. And I wouldn’t bet that Hillary would take this up, either.

Have you been binging on the new season of House of Cards? (Are you done yet?) How was the streaming experience of that for you? I’ve heard plenty of folks noting (if not outright complaining) about alot of buffering issues while watching Netflix recently. It seems that there might be a reason for some of that perception:

And that drop isn’t uniform across internet service providers (ISPs), as this chart from The Wall Street Journal shows. The slowdown has been particularly egregious for customers of Verizon, one of the country’s largest ISPs due to its FiOS fiber-optic broadband service.

Nobody’s really accusing Verizon of outright “throttling” Netflix service — that is, treating streaming movies differently from say, news articles once they’re in the Verizon pipeline — but it appears Verizon has found other ways to slow down Netflix traffic without, technically, violating its stated commitment to net neutrality.

Verizon and other large ISPs are in a long-running dispute with Netflix over whether the movie-streaming powerhouse — the single largest user of internet bandwidth, followed by YouTube — should pay extra for its heavy usage, and how. Verizon wants to charge Netflix outright — a big reason it successfully sued the Federal Communications Commission to overturn its net-neutral Open Internet rules.

Google Fiber announced that it is expanding into 30+ more cities this week. Please Google, come to Wilmington!

How Dark Money Flows Through the Koch Network. This is not so much of a read as it is an incredibly informative infographic that shows how Koch Brothers money gets funneled to their various mouthpieces. I can’t copy the graphic here,because it is interactive, but do go and see how another group of wingnuts are trying to buy your government. Recipients of Koch money include the US Chamber of Commerce, Club for Growth and a variety of tea party groups. So that whole grass roots thing for teajhadis — that can die a death now, right?

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  1. Davy says:

    The government should allow Comcast and Time Warner to merge. The problem in this industry is not horizontal integration. The problem (if any) is vertical integration, specifically the combination of content production/provision and content delivery.

    Verizon + Redbox.

    Comcast + NBCUniversal. [Note: Hulu is a joint venture of NBC, ABC, and Fox.]

    Verizon therefore has an incentive to throttle, directly or indirectly, traffic between Redbox’s competitors and Verizon’s customers.

  2. cassandra_m says:

    The merger of Time Warner and Comcast wouldn’t help this problem. That merger is all about a better bargaining position with cable content providers — not better internet access for anyone. Especially since Comcast is also demanding more money from Netflix.

    Verizon wants to ditch the “settlement-free” peering model and get money from Cogent, arguing that it has to accept far more traffic from Cogent than vice versa because of high-bandwidth applications like Netflix.

    Cogent has refused to pay. As negotiations stall, Netflix performance has dropped measurably for months on both Verizon and Comcast. Cogent claims this is because Verizon and others—but especially Verizon—are refusing to upgrade the connections between networks. Cogent points out that Verizon offers its own streaming video services, such as Redbox Instant, and thus has an incentive to harm Netflix traffic.

    There are about 11 Cogent/Verizon peering connections in major cities around the country. When peering partners aren’t fighting, they typically upgrade the connections (or “ports”) when they’re about 50 percent full, Cogent says. They can do this by adding ports, adding capacity to ports, or peering in new locations.

    With Cogent and Verizon fighting, the upgrades are happening at a glacial pace, according to Schaeffer.

  3. cassandra_m says:

    And here’s an interesting factoid — Google Fiber is about to roll out its service in Austin, TX and Time Warner ups its broadband speeds to customers in Austin.

    This doesn’t quite address the Cogent problem above, but does show serious competition makes the giant wake.

  4. Davy says:

    @cassandra_m:

    You are correct: Comcast and Time Warner do want to improve their bargaining position versus content producers/providers, including “traditional” ones like ESPN. But more firms is not always better:

    (1) Non-price differences exist among content. In fact, these differences are substantial (e.g., Fox News vs. MSNBC). Content producers therefore wield at least some monopoly power.

    (2) Netflix, Hulu Plus, and Amazon Prime provide third-party content and produce their own content. They are producing original content (e.g., House of Cards, Orange is the New Black, and Alpha House) to differentiate their products and gain monopoly power.

    (3) According to Bertrand’s model, the consumer-facing market is very competitive because: (a) in most places, at least two firms deliver the same content to consumers (e.g., Verizon vs. Comcast); (b) once a firm enters an area, nothing constrains the firm’s capacity; and (c) firms cannot collude (at least easily).

    (4) (n) firms can collude more easily than (n+1) firms, but the government can monitor (n) firms more easily than (n+1) firms.

    (5) Firms that deliver content likely enjoy economies of scale (and scope) because their fixed costs are divided over more subscriptions (and products).

    (6) In general, Comcast and Time Warner do not operate in the same places.
    A combined Comcast-Time Warner would face the same competition in each area as Comcast and Time Warner face today .

    (7) Even if Comcast and Time Warner merge, content producers/providers still have their monopoly power. A combined Comcast-Time Warner would have 30 million subscribers (almost 30% of U.S. subscribers), but only HBO has Game of Thrones, and only AMC has the Walking Dead.

    Of course, Comcast and Time Warner seek to increase their profits; however, you are too quick to conclude that their merger would hurt consumers.

  5. cassandra_m says:

    in most places, at least two firms deliver the same content to consumers (e.g., Verizon vs. Comcast);

    This certainly is not true in Most Places. FIOS stopped their build out years ago and there are no plans on the horizon to restart that I can see. In Most places, your choices are the cable company or the dish people. Also, consider that the cable operators are stuck in a trend of losing customers (and the whole pay TV model is a net loser of customers).

    And since I didn’t say anything about more content firms, I have no idea what you are blathering on about. A Comcast/Time Warner deal provides the merged company better bargaining position vs the content they have to buy. This isn’t so much about the premium channels (that’s why they are premium!), but the normally bundled content. If they can get any savings, they certainly won’t be passed to subscribers — they’ll be passed to shareholders. They certainly won’t invest in better delivery infrastructure, because they are the only game in town in Most Places.

  6. Davy says:

    @cassandra_m:

    (1) Thank you for proving my point. As you said, “In [m]ost places, your choices are the cable company or the dish people.” Satellite is a mode of content delivery. Comcast and Dish Network compete. Verizon and DirecTV compete. And so on.

    (2) Further, I noted, “A combined Comcast-Time Warner would face the same competition in each area as Comcast and Time Warner face today.” In other words, the new firm would not monopolize any new areas. Areas that Comcast or Time Warner already monopolized would be no worse off.

    (3) So ESPN, AMC, TNT, USA, and A&E, among others, do not have monopoly power?

    (4) So the Comcast and Time Warner should not merge because only shareholders would benefit? Even if a merger would not hurt consumers? Also, you have no idea whether the new firm would re-invest savings, slow price increases, pay dividends, or buyback shares. You’re correct that the answer would differ among areas and depend on what competition the new firm faces in each area. However, the merger would not reduce the number of competitors in any area.