Netflix As Cables Whipping Boy: Oligopoly And Oligarchy Energy At Work

The documented discount in high quality of Netflix video delivered to Verizon and Comcast clients since October 2013 illustrates the hazard of having infrastructure controlled by the same firms that generate profits while you view their content. This form of market energy can only occur in a trade that is highly concentrated, an oligopoly or monopoly.

Comcast and Verizon have successfully positioned this battle of the bits as one between firms. This framing implies that Netflix is “pushing” content and, thus, should need to bear its prices.

But that’s not what’s taking place.

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Netflix isn’t pushing content material. We, the folks, have chosen to watch Internet-streamed video quite than live “tv.” We’re pulling these bits; Netflix isn’t pushing them. However our Internet suppliers have satisfied the media that this conflict is Netflix’s fault quite than admit that they’re dropping out there referred to as “attention.”

A retired econ prof as soon as instructed me that Karl Marx predicted market consolidation: oligopolies and monopolies. So when the Comcast/Time Warner Cable merger proposal hit the Interwebs, I went trying to find a reference.

I let Google’s auto-complete rule after typing , so I didn’t get search results associated to oligopolies. Instead, I found myself staring at oligarchy.


In case your political science glossary is as rusty as mine, oligarchy is rule by the few, whether or not it’s a state, country or enterprise. Encyclopedia Britannica elaborates: “particularly despotic power exercised by a small and privileged group for corrupt or egocentric functions.” The entry continues:

Karl Marx and Friedrich Engels insisted that, all through capitalism, the key capitalists had managed the federal government; they coined the dictum, “the state is the executive committee of the exploiting class.”

A peak at the revolving door that’s Comcast, the cable trade and the federal government suggests Marx and Engels had seer-like powers. The “revolving door” is shorthand for moving again-and-forth between jobs in trade and authorities in roles that confer or shape policy on the affected industry or business.

According to OpenSecrets analysis, the communications/electronics sector (10.4 percent) is second only to finance/insurance/actual estate (12.1 percent) sector which “most continuously [uses] lobbyists who have spun by means of the revolving door of federal politics and authorities.” In addition, OpenSecrets identifies 50 individuals affiliated with Time Warner (TWC was spun off in 2009) who’ve “been by means of the revolving door,” which they constrain to lobbying. One other 18 are affiliated with and at present employed by Comcast.

Advocacy / National Cable & Telecommunications Affiliation

Michael Powell: NCTA President & CEO (2011-current). Powell was the chair of the FCC (2001-2005) through the Bush Administration. Throughout his tenure, the FCC dominated that cable firm Internet companies have been exempt from frequent carriage and that phone company DSL companies were as well, thus ending the requirement that telephone corporations share their copper with different service providers.
James M. Assey, Jr.: NCTA Government Vice President (2008-present). Assey was Senior Democratic Counsel to the U.S. Senate Committee on Commerce, Science and Transportation, the committee accountable for cable business oversight. He had previously been the Senior Democratic Counsel on Communications and Media Issues for the Committee chaired by U.S. Senator Daniel Ok. Inouye (D-Hello) and Telecommunications Counsel for former U.S. Senator Ernest F. Hollings (D-SC).
Ok. Dane Snowden: NCTA Chief of Employees (2011-present). Snowden was the FCC Consumer & Governmental Affairs Bureau Chief (2001-2005). In both positions, his responsibilities included technique.


Senator Chuck Schumer (D-NY): A member of the Senate Judiciary Committee sub-committee on antitrust, competition policy and consumer rights; Schumer spoke highly of the deal when it was announced but didn’t disclose household ties until media reviews let the cat out of the bag. His youthful brother, Robert Schumer led Time Warner Cable effort within the merger;
American Lawyer dubbed him “dealmaker of the week” in response (and, likewise, did not note that his brother was a U.S. Senator).

By the end of the week, Sen. Schumer had recused himself. On condition that his younger brother had worked on Time Warner mergers since 1989, Sen. Schumer’s assertion that he had “no information his brother was engaged on the deal” does not cross the straight-face test.

Federal Communications Commission

Chairman Tom Wheeler: became chairman November four, 2013, a pinnacle in a revolving door path. He has an in depth profession in cable and telecomm, both as an entrepreneur and advocate. He served as president and CEO of the Cellular Telecommunications & Web Association (CTIA, 1992-2004) as well as president and CEO of the Nationwide Cable Television Affiliation (NCTA, 1979-eighty four). He has publicly supported the FCC’s role in maintaining an “open Web.”
Commissioner Ajit Pai: appointed in 2012 for a time period ending in 2016. In accordance with his official biography, Pai “served as Associate Basic Counsel at Verizon Communications Inc., the place he dealt with competition issues, regulatory points, and counseling of enterprise units on broadband initiatives.” He worked with the Division of Justice Telecommunications Job Power “on proposed mergers and acquisitions and on novel requests for regulatory relief following the enactment of the Telecommunications Act of 1996.”
Former Commissioner Meredith Attwell Baker: served as an FCC commissioner for less than two years (2009-2011). She resigned her position on the FCC to go to work for Comcast as senior vice president for government affairs for NBC Common. Baker, a Republican, was one of 4 commissioners to approve the controversial merger in January 2011.

Federal Trade Fee

Republican Commissioner Maureen Ohlhausen: An Obama appointee, Ohlhausen is serving a 5-yr time period that expires in 2018. Hers is a true revolving door career. Earlier than turning into an FTC commissioner in 2012, Comcast was considered one of her purchasers; she was a accomplice at Wilkinson Barker Knauer, LLP, “where she targeted on FTC points”, in line with her official biography. And previous to that? A protracted-time FTC staffer, together with a stint from 2004-2008 main the FTC’s Web Access Activity Power. She not too long ago had a Reddit AMA.
Republican Commissioner Joshua Wright: An Obama appointee, Wright is serving a 5-year term that expires in 2019. Previous to this appointment, he was a professor at George Mason University School of Law and was the FTC”s first Scholar in Residence from January 2007 to July 2008. Since 2009, he was a senior consultant with an economic consulting firm, Charles River Associates. RepublicReport notes that Wright was on a CRA group concerned in securing “antitrust clearance from the DOJ and FCC” for the Comcast/NBC Universal merger. He “earned nearly $900,000 in outdoors revenue consulting for varied Charles River Associates purchasers.” Wright’s educational and public writing (Twitter, blogs) positions him on the “professional” facet of consolidation and mergers.

White House / Division of Justice, Anti-Belief Division

William J. Baer: Assistant Lawyer Basic for the Antitrust Division for barely more than a year. He helped orchestrate the Comcast merger of NBC (representing NBC and GE) whereas working with Arnold & Porter. And he headed the Nationwide Cable Television Affiliation in the early 1980s.

Is now a great time to point out that the anti-belief division broke up Hollywood”s vertically built-in film-making/film-house system more than 60 years in the past? In U.S. v. Paramount Photos, et al., the U.S. Supreme Courtroom dominated that the eight movie studios had violated the Sherman Anti-Belief Act. The courtroom compelled them “to divest themselves of their very own theater chains.”

It is most likely a very good time to point out that NBC/Universal is greater than NBC, over the air television. It is MSNBC/CNBC and Weather Channel cable news in addition to other cable channels like SyFy, E!, USA Network, Bravo, Oxygen Media and Sprout. It’s NBC Sports (Olympics) and the Golf Channel, among others.

It is a number of content material. And a very huge distribution.

White Home / President Obama

In 2011, Politico reported that President Obama “raised eyebrows this weekend when he visited Comcast CEO Brian Roberts’ Martha’s Vineyard home.” OpenSecrets famous at the time that Comcast workers had donated $200,000 to the Obama Victory Fund, making them “the top organizational donors.” Comcast employees beat out Goldman Sachs, Dreamworks, Sony and Disney. The Obama Victory Fund was an Obama marketing campaign/Democratic National Committee joint fundraising committee.

From David Carr at The brand new York Occasions: the President rubs elbows with Comcast executive vice president David L. Cohen, the man in charge of Comcast”s presence in DC. Cohen and his wife raised $1.2 million for Obama at an occasion in their Philadelphia home in 2011.

Money and agenda-setting

But Marx and Engels went further, as Yale lecturer John Stoehr points out: those who rule additionally set the agenda. This can be a varient on George Orwells’s commentary: “Historical past is written by the winners.”

Of their 1846 book The German Ideology, Marx and co-creator Frederick Engels took a look at human historical past and made a plain however controversial remark. In any given historic interval, the ideas that individuals generally think are the perfect and most essential ideas are often the concepts of the people in cost. When you’ve got a lot of money and personal a whole lot of property, then you’ve gotten the ability to propagandise your worldview and you have incentive to keep away from showing as if you’re propagandising your worldview. Or, as Marx and Engels would put it: The ruling ideas of every epoch are the concepts of the ruling class.

How has Comcast formed the ideas around cable regulation and legislation within the U.S.?

Comcast is the biggest player in cable when it comes to lobbying

In 2013, Comcast spent $18.7 million in lobbying, in response to studies compiled by OpenSecrets. Add to that, $12.9 million in 2010, $19.Three million in 2011 and $14.Eight million in 2012. Complete this decade: $65.7 million.

Time Warner Cable? About $31 million this decade.

Comcast is the biggest participant in cable in the case of campaign contributions

Every election cycle since the Comcast/AT&T Broadband merger (November 2002), Comcast was the number one donor, handing out more political contributions than the NCTA (which was normally number two).

In 2011, ninety seven members of Congress signed their names to a letter endorsing the NBC/Universal. Comcast executives or its PAC had contributed cash to 91 of those ninety seven members, in response to an analysis by The new York Times.

– 2014 election cycle: $1,228,809
– 2012 election cycle: $3,664,926
– 2010 election cycle: $3,474,839
– 2008 election cycle: $3,012,154
– 2006 election cycle: $1,985,863
– 2004 election cycle: $1,398,985
– 2002 election cycle: $615,622
– 2000 election cycle: $730,809

– Comcast gave $853,525 to members of the House Subcommittee on Communications and Technology
– Comcast gave $6,678,446 to members of the Home of Representatives (January 1, 2001 – December 31, 2012)
– Comcast gave $fifty three,000 to the Chairman of the Subcommittee on Communications and Technology, U.S. Representative Greg Walden (R-OR)
– Comcast gave $a hundred,775 to U.S. Representative John Dingell (D-MI), member of the Subcommittee on Communications and Expertise. This is more than Comcast has given every other member of the House of Representatives over the identical interval.

Comcast cultivates organizational advocates through its charitable foundation

Just like football coaches watch game films to get ready for upcoming opponents, we are able to look at the current Comcast/NBC Universal merger as a foreshadowing of tactics for this one. A current New York Times analysis, carried out with the center for Public Integrity, revealed that the Comcast Basis had contributed a minimum of $eight.6 million (2004-2012) to a minimum of 54 “exterior teams” that lobbied for the merger.

Sure enough, “within hours” of the proposed Comcast/TWC merger, the U.S. Hispanic Chamber of Commerce was publicly lauding the proposal. Comcast has given greater than $three.9 million to Hispanic advocacy teams since 2004.

But what the Hispanic Chamber of Commerce didn’t point out in its statement praising the transaction was that it had collected at the very least $320,000 over the past 5 years from Comcast’s charitable foundation, which is run in part by David L. Cohen, the Comcast government who oversees the company’s government affairs operations.

The Comcast foundation has distributed $140 million in grants since its inception.

1. Nationwide Council of La Raza, $2.2 million
2. Nationwide City League, $835,000
three. Congressional Black Caucus Basis (11 members wrote in support, not the affiliation), $350,000
4. Hispanic Federation (N.Y.), $345,000
5. U.S. Hispanic Chamber of Commerce, $320,000
6. Congressional Hispanic Caucus Institute, $300,000
7. League of United Latin American Residents (LULAC), $260,000
eight. National Hispanic Caucus of State Legislators, $250,000
9. Women in Cable Telecommunications, $245,000
10. Nationwide Affiliation of Latino Elected and Appointed Officials, $220,000

What can we do?

– Be taught in regards to the industry structure and how it came to be that the United States is suffering from a lot infrastructure competition, unlike most of the rest of the world which relies on regulated infrastructure with competitors for services.
Write or name your Congressional representatives; send letters to the local offices.
Write or name the FCC and, after they open any of those points for public remark: remark. Their next assembly is March 31.
Write or call the President.
– In your correspondence, document costs and the extent (or lack) of competition for high pace Internet the place you live. Do not let Comcast focus the conversation about this merger on entry to television programming! Web access is a a lot way more important consideration.

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