Greetings class. Everyone settle down, please. Can we lower the volume on the media players to a dull roar? OK, thanks.

Well, you'll recall that the original topic of today's discussion was to be "How to fleece your telecom customers and have them begging you for more."

But in light of today's FCC vote regarding net neutrality, I'm going to switch topics for now, and explore something of equal value to all you prospective communications tyrants. We'll see how to write a blog posting that skillfully distorts issues in such a way that most observers will never realize they're being manipulated with false premises and misleading information.

Feel free to interrupt me with questions at any time, as usual!

Let's take a look at this slide -- those of you watching via the Web can visit the URL for FCC Net Neutrality Legislation Impact On Procera.

This is today's corporate blog entry from Procera Networks, a major manufacturer of Deep Packet Inspection (DPI) apparatus for ISPs. Please read it over now.

OK, you all know what DPI is used for, right?

Well, Amy, I don't think it's entirely fair to call it simply "spying." Yes, it can certainly be used to observe any data being sent to or received from any site -- by any customer of an ISP -- when that customer isn't using encryption.

Yes, Phil, I do know that some ISPs have expressed interest in using DPI gear in abusive ways -- and some have actually already done so -- but it can have legitimate network management applications as well -- keep repeating that last part to yourself over and over until it's second nature if anyone should ask.

Go ahead, Bob. Yes, I agree that if everyone was smart and encrypted all their data DPI would be much less useful -- though there are still traffic analysis and other tricks that can be played, but ... yes? ... Well no, actually Procera probably used the wrong wording when they said "Net Neutrality Legislation" -- it was an FCC vote not a legislative package per se. But really now you're splitting hairs Bob, most people don't know the difference, right? Remember, don't tell customers more than they really need to know.

Now, most of the Procera blog entry is sort of bland boilerplate, but I want to draw your particular attention to their paragraph numbered (4). It's a true work of art to explore. Let's go over it piece by piece, shall we?

4) Tiered Services are allowed – although allowing for tiered services might be controversial, the positive outcomes of tiered services should prevail. Service Providers can now create lower cost plans to expand the reach of broadband to those who cannot afford even the lowest cost plans available today, while raising the price for users that consume high volumes of data (and negatively affect the broadband experience for other users).

OK, who wants to go first? Go ahead Steve. Correct, the wording assumes that "positive outcomes should prevail" then proceeds to ignore possible negative outcomes. What did I just say? Only tell 'em what they need to know! There's a good example for you.

A little louder please, Ian? Right you are! The text suggests that the FCC ruling now permits tiered services for financially "disadvantaged" customers, but in reality there's been nothing stopping any dominant ISP from creating low price services with various limits right now. And of course this is already common -- though the main limiting factor in the U.S. is usually the maximum "up to" speed promised, not the total amount of data that can be transmitted or received -- but even the latter wasn't prohibited, and various caps have already been present in some cases.

Would you repeat that please, Bill? Well, yes, that's "up to" speeds. Yes, Bill, I know that most customers rarely see those speeds. You think you're the only one? Do you know how long it's been since I've actually gotten 10 Mb/sec from Time Warner, even though they promised me 15 and are now advertising 20? That's why you always want to use the term "up to" -- right?

Let's move on. Who can point out the real gem of "logical distortion" that comes next?

Susie, go ahead. Bingo! That's it: ... users that consume high volumes of data (and negatively affect the broadband experience for other users).

That's correct. Their statement is organically equating "high usage" with "negatively impacting other users," and asserting that as a major justification for higher prices. In other words, since it's unlikely that an ISP would have a tier with higher prices only for higher volume users who actually negatively impact other users, Procera has skillfully framed the debate to imply that high volume always equals negative impact on others!

Pretty slick, huh?

Yes, Jim. Go ahead. Well of course, ISPs themselves decide how much capacity to provide at every level of their infrastructure, so they have a free hand to determine all metrics. They define what "high volume" is. They define what "negative impact" is, they decide how to place and charge the tiers, they decide ...

Yes, Marcie. Definitely, the ISPs choose the bandwidth allocations. But, well, let me explain it this way. You've seen how lately the examples of "abusive" high volume Internet users we hear about more from ISPs are just ordinary folks watching videos from the Net? You've noticed that we hear less and less about Torrent "pirates" chewing up bandwidth, and more casting of YouTube and such as the villains? Why do you think that is?

What Bob? They hate Google? Well, nothing quite that simple. Yes, Julie. You've got it! Content! That's the key. The dominant ISPs are now big time content providers. Pretty soon after the Comcast/NBC merger goes through they'll be major content producers too.

Now, say you're a giant ISP. You've spent decades and a fortune in lobbying to leverage your original monopoly era franchises, and suppressing effective large-scale competition -- even going so far as pushing through laws to prohibit municipalities from setting up their own public Internet access networks.

Do you want your customers watching movies from Netflix over the Internet, or buying from your own pay-per-view and video-on-demand systems where there's a direct profit center to you? Are you going to sit by quietly while your subscribers spend all their time watching free TV channels from the Net rather than subscribing to your lineup of directly delivered channels?

Gene, go ahead. Right, you're going to structure your network so that the bandwidth allocations, tiers, rates, caps, and everything else will tend to push subscribers into buying content from you, rather than from outside entities. It's just basic business sense, straight off the ol' spreadsheet.

OK, let's move on to the last part of that Procera paragraph: This is no different than utility services in the US, such as electricity and water utilities, that bill based on usage, and there can be penalties for high usage during peak hours.

Yes, Dave. Yep, utilities like electric, water, and gas are enterprises where customers are typically directly consuming physical natural resources in direct proportion to how they're being billed. But someone using twice the data as another user on the Internet isn't, for example, using any more electricity in any realistically measurable sense.

Steven ... well yes, certainly. Overall you need to spend more on infrastructure and supporting functions as your customers use more data. But much the same applies to traditional utility distribution networks. And remember, for gas and water and such when subscribers turn on the gas or the tap, they're consuming actual physical resources. The more electricity people use the more generators you need to run, and unless you're solar or hydro or some such your fuel is gone forever. That's a pretty good justification for charging by the unit for those resources. It's much harder to sensibly argue that bits and bytes should be charged in the same "usage sensitive" manner, as if they were physical items in limited supply.

Harold ... yes, that's a good point too. Traditional utilities don't have the content conflict that drives the dominant ISPs. The gas company by and large doesn't need to game the system to drive customers toward ordering "value added" services from them rather than from some outside firm. The utilities' overwhelming purpose is transport, so distortions like "Netflix vs. ISP pay-per-view" simply don't apply.

Look, we've got to wrap this up, but isn't there one major aspect of Procera's utilities comparison that we've missed?

Larry -- exactly! At least in the U.S., the vast majority of utilities are highly regulated! They usually can't willy-nilly decide to raise rates, change services, make drastic infrastructure changes, or much else without detailed formal approval processes involving government, consumers, sometimes public hearings, and so on. Their charges, rates, and profit levels are often specifically mandated by law.

But any kind of real regulation, no matter how trivial, is exactly what the dominant ISPs and the anti-net-neutrality forces at large have been fighting hardest to prevent. So for Procera to invoke a utilities comparison as they have, takes a lot of chutzpah indeed.

And that's what makes their blog posting today such a gem for you all to emulate in the future.

OK, remember -- closed network quiz on Thursday. Next week we'll cover DMCA financial exploitation techniques.

Class dismissed.

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--Lauren--