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March 2016

Netflix Throttles Its Videos on AT&T, Verizon Networks

Netflix, a leading proponent of open-Internet rules, has been lowering the quality of its video for customers watching its service on AT&T or Verizon wireless networks. The popular video service said that for more than five years it has limited its video speeds to most wireless carriers across the globe, including AT&T and Verizon, to “protect consumers from exceeding mobile data caps,” which may discourage future viewing. Netflix said it caps its streams at 600 kilobits-per-second—much slower than what should be possible on modern wireless networks. It hasn’t previously disclosed the practice. The issue came to light after T-Mobile’s chief executive said Verizon and AT&T customers were receiving lower-quality Netflix streams. The carriers denied throttling Netflix videos.

Netflix said it doesn’t limit its video quality at two carriers: T-Mobile and Sprint, because “historically those two companies have had more consumer-friendly policies.” When customers exceed their data plans on Sprint or T-Mobile, the carriers usually slow their network connections, rather than charge overage fees. “We’re outraged to learn that Netflix is apparently throttling video for their AT&T customers without their knowledge or consent,” said Jim Cicconi, AT&T’s senior executive vice president of external and legislative affairs. Netflix also said it is also exploring “new ways to give members more control in choosing video quality.” It is working on a mobile “data saver” to be rolled out in May that would allow consumers to “stream more video under a smaller data plan, or increase their video quality if they have a higher data plan.”

How YouTube is shaping the 2016 presidential election

In the years since Sarah Palin’s sound bites and the “Obama girl” cemented 2008 as America’s first “YouTube election,” the world’s most popular video site has proven even more spellbinding — and powerful — than political campaigns ever imagined. In January, a political ad — actually, three — ranked among YouTube's 10 most-watched ads for the first time in history, delivering millions more views to campaigns than to the best commercials corporate America had to offer. And in the early caucus and primary states of Iowa, New Hampshire, South Carolina and Nevada, the streaming giant's open pool of reserved ad time did something it had never done: It sold out, a sign that candidates yearned so deeply to reach voters’ cell phones that they wanted to snatch up every YouTube second money could buy.

Google’s video giant has become not just the Web's biggest petri dish for the funny, weird and astronomically popular. With its 1 billion viewers and cultural omnipresence, it now offers campaigns a breadth no hometown TV network can match. "Anybody at this point who doesn’t get it’s a part of everyday life ... is myopic at best and malpracticed at worst," said Chris Wilson, founder of WPA Opinion Research and the director of research and analytics for the Ted Cruz campaign, whose border-jumping "Invasion" ad ranked among January's most-watched. YouTube and digital advertising have played key roles in past campaigns, Wilson said, but "this is the first cycle where if you’re not doing it, you're going to lose."

What Donald Trump gets wrong about money in politics

[Commentary] Donald Trump thinks he knows what's ailing our political system — corrupt lobbyists buying off politicians in exchange for government favors. "Their lobbyists, their special interests and their donors will start calling President Bush, President Clinton," Trump has said. "And they’ll say: ‘You have to do it. They gave you a million dollars to your campaign." He usually goes on to state that since he doesn't need this money, he'll be freed from this corrupting influence. "I'm self-funding my own campaign," he's said. "It's my money." (That's not entirely true — Trump has raised several million dollars in unsolicited contributions, but he has loaned his campaign far more of his own cash.) But according to several campaign finance experts, Trump's analysis doesn't account for money's true impact on our politics. The real problem with our campaign finance system, they say, is not that it creates a quid pro quo in which donors are transactionally rewarded for their gifts, but that it elevates the priorities of the wealthy across the board.

"The influence is not nearly as crude as he puts it," says Richard Skinner, a policy analyst at the Sunlight Foundation, which tracks money in politics. "It is certainly accurate to say that these large donors are going to get better access to have their voices heard, but I think people give predominantly because they share the views of the candidates or are strong supporters of the party." Trump seems to imagine a direct line of influence from lobbyist to politician. But the real problem is a lot more complicated — and requires a different solution than the one he advances.

Alternative perspectives on the Internet of Things

This first post in the Brookings Institution "TechTakes" series features contributions from Scott Andes, Susan Hennessey, Adie Tomer, Walter Valdivia, Darrell M. West, and Niam Yaraghi on the Internet of Things.

In the coming years, the number of devices around the world connected to the Internet of Things (IoT) will grow rapidly. Sensors located in buildings, vehicles, appliances, and clothing will create enormous quantities of data for consumers, corporations, and governments to analyze. Maximizing the benefits of IoT will require thoughtful policies. Given that IoT policy cuts across many disciplines and levels of government, who should coordinate the development of new IoT platforms? How will we secure billions of connected devices from cyberattacks? Who will have access to the data created by these devices? Brookings scholars contribute their individual perspectives on the policy challenges and opportunities associated with the Internet of Things.

Exclusionary strategies and the rise of winner-takes-it-all markets on the Internet

[Commentary] The success of late entrants in many digital markets suggests network and lock-in effects, albeit important market forces in most digital markets, do not confer sustainable first-mover advantages. In our analysis we suggest exclusionary practices may play a major role explaining the rise of “winner-takes-it-all” markets on the Internet.

The entry deterrence literature has extensively analyzed incumbents׳ strategic moves in order to make market entry unprofitable or, at least, to minimize the harm that entry causes. In our paper we propose a richer theoretical framework allowing both the incumbent as well as a new entrant to carry out strategic investments. Those allow the incumbent to deter market entry, but also the new entrant to squeeze the incumbent out of the market. We find that competitive advantage and strategic interaction determine a “winner-takes-it all” or a duopoly market outcome. If neither player enjoys a clear-cut cost or demand advantage, a duopoly market outcome will emerge. However, for both incumbent and new entrant there is a strong incentive to complement a possible competitive advantage with exclusionary practices in order to monopolize a market and increase profits. This result suggests “winner-takes-it-all” market results on the Internet may result from exclusionary practices, nourishing antitrust concerns with today׳s major Internet players’ market dominance.

[Björn Kuchinke and Miguel Vidal are associated with Bauhaus University in Weimar, Germany]

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