Purge That Pipe: Nobody Pays Attention to Data Flow - Until It Gets Blocked

Net neutrality is one of those bloodless phrases that sound like no one can be against and everyone should take for granted - until they realize what it means for them personally.

Oh, and until politicians who are 'encouraged' to think about it by those with a financial interest start freighting it with commercially inspired ideological meaning.

The word 'pipes' has come into play as a way of making the systems by which communications flow more comprehensible to those without degrees in electrical engineering or computer science. It's a means of suggesting that a good plumber or technician with some basic skills can fix your problem in a jiffy. The roto-rooter of digital distress.

The reality, of course, that this is one of those issues about which people of good and bad intention can disagree. It's not just a question of wrenches or switches. It's a matter of philosophy - and money. As in who gets what.

In the meantime, those caught in the middle must sometimes suffer without service until agreement is reached, which almost always means access goes down as fees go up. A larger question, along with that of who owns all that data in the first place, is why the government, in its various forms does not do more to assert its authority on behalf of consumers since they and their duly elected and tax-supported representatives created all that capability and ostensibly oversee the right to use it. Just askin.' JL

Jeff Sommer comments in the New York Times:

Studies have shown that when data streams during some peak periods, they slowed down unless companies paid a fee.

I don’t entirely agree with W. Hodding Carter, the author of a quirky history of pipes and drains called “Flushed: How the Plumber Saved Civilization.”

“I like plumbing,” Mr. Carter declared, “the art, the science, the craft and the history — for the simple reason that it is so undeniably important and necessary.”

I don’t like plumbing. And I don’t like to think about it — not until it’s broken, at which point I care about it a great deal.

That’s why, until recently, I didn’t pay much attention to Cogent Communications, either. After all, it’s a modest-size company in an arcane business involving plumbing of a virtual sort. Cogent controls many of the fiber pipes and digital interconnections that make up the basic plumbing of the Internet. But that has made the company’s shares hostage to the net neutrality wars — a battle of principles that, at its most tangible level, involves the ebb and flow of Internet plumbing.

Last week was a great one for Cogent. While stock prices of cable companies fell after President Obama announced Monday morning that he supported stronger regulations aimed at keeping the Internet open, Cogent’s shares climbed; they gained 9 percent for the week. In fact, if any company was an immediate beneficiary of a shift in stock market sentiment on net neutrality, it may well have been Cogent.

“As soon as the market understood President Obama’s suggestion that net neutrality issues would be resolved through regulation, our stock rebounded,” Dave Schaeffer, Cogent’s founder and chief executive, said in an interview. “But a lot of damage was done in February, and our stock is still trading at depressed levels.”

Cogent’s story became part of the net neutrality debate last winter, when a big plumbing problem afflicted the Internet. Thousands of Netflix customers complained that TV shows and movies were being interrupted by slow data transmissions. A report by the independent Measurement Lab Consortium traced those blockages to the interconnections between Cogent’s plumbing and the “last mile” Internet pipes run by cable and phone companies like Comcast and Verizon.

To bypass those blockages, Netflix, Cogent’s biggest customer, announced on Feb. 21 that it would start paying Comcast for an improved connection to the Comcast network — in effect reducing its video traffic through Cogent. Netflix has since made a similar deal with Verizon. Still, Netflix has protested such arrangements, saying the cable and telephone companies violated principles of net neutrality by charging it for adequate access.

Cogent has protested strenuously as well. In a conference call with Wall Street analysts on Nov. 7, the company estimated that it would spend $5 million in legal fees this year to “defend net neutrality,” a cost that has bitten into earnings. It also said the dispute had hurt revenue.

On Feb. 22, despite Cogent’s own efforts to clear up the blockages, its shares began to plummet; they have never fully recovered. But last week produced something of a comeback, said James Moorman, senior analyst at D.A. Davidson. “Its shares began rising once the market got wind of the president’s statement,” he said.

In a video posted on the White House website on Monday, President Obama said the F.C.C. should invoke Title II of the Communications Act of 1934 and use that law’s powers to regulate all parts of the Internet, cellular as well as land-based. The agency, he said, should use a light touch and avoid setting prices. Its main goal, he said, should be to ensure “that neither the cable company nor the phone company will be able to act as a gatekeeper, restricting what you can do or see online.”

It isn’t clear how the F.C.C. will proceed — or how a Republican-controlled Congress might react to stronger regulation. But the hardening of the president’s position heightened market skepticism about the proposed $45 billion merger of Comcast and Time Warner Cable. Their combination would create perhaps the dominant player in the retail Internet.

The net neutrality dispute appears to have disrupted stock market pricing for the two companies. Typically, as a merger moves closer to completion, the adjusted share prices of the betrothed companies converge. But the closing stock prices of Comcast and Time Warner Cable have diverged sharply since September, signaling trouble. Last week, the spread between the two — adjusted because 2.875 Comcast shares would equal one Time Warner share in a merger — peaked near 13 percent, according to my calculations. That compares with a peak of less than 11 percent before Mr. Obama’s announcement.

Brian L. Roberts, the chief executive of Comcast, said last week that the company still expected to complete the merger. In a blog post on Tuesday, Comcast said it favored an open Internet but opposed using Title II regulation.

Several market analysts said Title II regulation could limit the companies’ profitability and might make the merger unattractive. Federal regulators are also reviewing a separate $48.5 billion proposed merger of AT&T and DirecTV.

In a conversation with clients, Craig Moffett, senior analyst at MoffettNathanson Research, said the market hadn’t absorbed the full import of the harsher regulatory climate. “The stocks have not fallen enough yet to conclude this risk is appropriately discounted,” he said.

For companies like Cogent and Level 3, another big Internet infrastructure provider, it’s a different picture. Both view Title II regulation as a means to prevent cable and telephone companies from stifling competition. Most Americans don’t have a choice of high-speed Internet service, the F.C.C. says. And Mr. Schaeffer, Cogent’s chief, said the cable and phone companies that provide broadband Internet to retail customers were “natural monopolies,” though the companies dispute that label.

“You need to know a little bit about the plumbing of the Internet to understand this,” he said, adding that Comcast, which owns the NBCUniversal entertainment conglomerate, had a direct interest in controlling the flow of content from competitors like Fox, Disney and Netflix, all of which use Cogent’s Internet pipes. (The New York Times, it turns out, also uses those pipes.)

Studies have shown that when data streams reached Comcast during some peak periods, they slowed down unless the companies paid a fee. Mr. Schaeffer says that Cogent’s business model is to be “the most ubiquitous, interconnected, efficient and lowest-cost network,” and that the company suffers when traffic slows because “legacy” enterprises are protecting their turf.

When Internet interruptions do occur, independent experts often find it excruciatingly hard to determine the cause. “It’s complicated plumbing,” said William B. Norton, executive director of DrPeering International and author of “The 2014 Internet Peering Playbook: Connecting to the Core of the Internet.” “You sometimes can’t tell where it’s blocked.”

We may not like thinking deeply about the source of plumbing problems, virtual or otherwise. But as Mr. Carter, the plumbing historian (and former State Department spokesman), says, the effort is undeniably important and necessary.