7 ms·

Comcast gets big tax break that was designed for Google Fiber

123 points by pavornyoh 11y ago

ikeboy 11y ago
Reminds me of http://dealbreaker.com/2013/07/electricity-market-rules-were-not-a-worthy-opponent-for-jpmorgans-brainpower/ http://dealbreaker.com/2013/07/electricity-market-rules-were... >FERC built a terrible box, and the box had some buttons that were labeled “push here for money,” and JPMorgan pushed them and got money. You can understand the category mistake very easily: >FERC thought the box was for generating electricity at market prices but with a robust backup system to ensure reliable supply, and >JPMorgan thought the box was for dispensing money. >It’s a perfectly understandable mistake to make if you have spent your career building and operating boxes that dispense money, as JPMorgan global commodities head Blythe Masters has. What else could the box be for?
- shostack 11y ago
  That was a really interesting read, but I'm not familiar with a lot of the terminology so it was a bit hard to follow. Any chance you might be able to explain a bit more of what was happening there? I get that they found a loophole that rewarded them for producing more of the less efficient energy, but I'm a bit unclear on what the actual rules were, the roles of the various players in this, and how the transactions were taking place.
  - ikeboy 11y ago
    The rules say that they choose the best rate that satisfies demand, then pays all accepted bids that rate. But bids change over time, and you can't just buy one hour's energy: plants take time to "boot up" which have costs. So they pay in 3 hour increments. If your bid for time t is accepted, they pay you for t,t+1, and t+2. JPMorgan set prices at {Good price, outrageous price, outragous price} JPMorgan got an average of 2/3*outrageous price, which made them an obscene amount of profit. The stupid system didn't notice. As I understand it the players submit bids to a central computer that decides who to order from.
    - shostack 11y ago
      Thanks for clarifying. Just to make sure I'm following then--the system was essentially looking at the bid price for just the first hour, and ignoring hours two and three despite the fact that time needed to be sold in three hour commitments due to the boot up time, which let JPMorgan jack bids two and three up and have them automatically accepted since the bids for hours two and three were never considered in the bid selection logic? If so that's one major oversight for whomever built the system. I honestly could see why JPMorgan would be going "so...you're sure these are the rules? Really? Mmmm...ok....well, if you say so." I'm sure they didn't exactly telegraph how they would abuse this, but I find it a bit hard to hold them responsible for what is essentially negligence on the behalf of whomever was in charge of designing the system logic.
      - ikeboy 11y ago
        Legally, they seem to have lied at one point when asked, and anyway this is a settlement which doesn't mean their actions were found illegal. I'm not sure if it's the previous two hours or the next two hours, but either way yields the same result. Also, they may not be doing 3 hour increments, but just having a buffer time. I only know what the article says. Whoever built the system probably assumed that bids represented people's actual intentions, and tried to get the cheapest power given the inputs. They missed a loophole, yes. Note that there are other strategies that did similar but different things.
      - ikeboy 11y ago
        There's also >As set forth below, Enforcement has determined that, through the 12 strategies investigated here, JPMVEC violated the Commission’s Anti-Manipulation Rule, 18 C.F.R. § 1c.2, by intentionally submitting bids to CAISO and MISO that falsely appeared economic to CAISO and MISO’s market software but that were intended to, and in almost all cases did, lead CAISO and MISO to pay JPMVEC at rates far above market prices. http://ferc.gov/EventCalendar/Files/20130730080931-IN11-8-000.pdf http://ferc.gov/EventCalendar/Files/20130730080931-IN11-8-00...
omarforgotpwd 11y ago
Why shouldn't all service providers benefit from the tax break? Is it ethical to give a tax break that unfairly gives one corporation a competitive advantage against another?
- bksenior 11y ago
  Not sure you read the article. Comcast as expected created a new tier of service to qualify that was grossly expensive. They abused the system and the intent to spur investment in infrastructure was sidestepped.
  - RealCasually 11y ago
    I was expecting to see a far higher figure. 2Gbps for $300 is certainly high, but not a joke in and of itself. What was the main intention of this law? If it was to spur higher bandwidth connections, it did so. If it was to lower costs, it seems obvious there should have been a cost factor to the law.
  - mikeash 11y ago
    I have a hard time seeing this as "abuse." If the people who wrote this law were so completely stupid that they didn't even specify a price requirement, well, what did they think was going to happen? What's more, $300 for 2Gbps is not bad at all. It's not super cheap like Google's offering, but it's about what Verizon charges for 500Mbps, for example. I propose an alternate headline: "Oregon legislators attempt to spur investment, fail to think through legislation, accidentally grant tax break to incumbent."
    - SilasX 11y ago
      Right, but you can't really anticipate all the ways that people might technically comply with a law while eviscerating the purpose of it. So let's say they specified a minimum price. And then Comcast "complies" by offering the cheap gigabit service, but in order for it to work more than just on Tuesday and Thursday, you have to pay a huge premium. Okay, so you say it has to be available 24/7 to comply, but then even Google can't meet that so you add another requirement. Or maybe you have to anticipate legitimate cases of hyperinflation... At some point you have to just step back and say, "stop being a dick, that's pretty clear not what the law meant and you're just abusing it".
Cheezmeister 11y ago
Lawmaker logic astounds me. If they wanted to spur fiber laying in Oregon, why not (wait for it) incentivize fiber laying in Oregon. Nah, let's just introduce a wacky indirect property tax loophole.
- qaq 11y ago
  It's very logical "someone" payed for this loophole to exist in exactly this form.
- ocdtrekkie 11y ago
  Another article on this actually mentions a bit more detail about the tax break, and the hilarity that ensued. They built the tax break specifically for Google, so Google would build there. Problem is... the law they wrote excluded Google. So they had to go back and REWRITE the law, to ensure Google, the company they made the break for, qualified for it. And then they're getting upset another provider is trying to get the advantage they wrote for Google to use. When tax laws are being written specifically for a company, our government has a problem. Sauce: http://www.oregonlive.com/silicon-forest/index.ssf/2016/02/oregon_created_a_tax_break_for.html http://www.oregonlive.com/silicon-forest/index.ssf/2016/02/o...
  - toomuchtodo 11y ago
    > When tax laws are being written specifically for a company, our government has a problem. The government could've pursued the alternative: build out municipal broadband, and allow anyone to provide you service (competitively) at the CO/meetup room. But that's "socialism!" The problem is not government. The problem is apathetic, uneducated, uninvolved knee jerk voters. And voters get what that deserve for being so.
    - rayiner 11y ago
      Voters just don't care as much about wired internet as people on where would like to believe. My parents contemplated getting rid of their FiOS internet and going back to cable because the latter has a better selection of indian channels. Nobody in my building subscribes to FiOS because Verizon doesn't have a TV license here. If you had a rock-solid 50 mbps LTE-A service here in the U.S. that for licensing reasons couldn't access Facebook, nobody would subscribe to it.
jeremyt 11y ago
For the life of me, and for this exact reason, I can't understand the net neutrality movement. It's a bunch of people arguing that we have a problem and the most likely party to fix it is the government. But this article is an example of exactly what the government does when you give them power to control things. They write in loopholes, pork, or they just flat out do a half assed job of drafting legislation. And then we see the deluge of unintended consequences Wake up, People! The government is not here to fix your problems.
- pachydermic 11y ago
  >Wake up, People! The government is not here to fix your problems. And private firms with monopoly power aren't either.
  - jMyles 11y ago
    Well, to use the current example, the monopoly can be broken with buildouts of wireless mesh networking. By contrast, government intervention might well make wireless mesh networking, as a methodology for reconstructing the internet, far less plausible.
    - guelo 11y ago
      No, wireless mesh networking is never going to displace fiber providers.
      - jMyles 11y ago
        For final mile applications, I assert that it will. For longer transit, I agree.
    - rrmm 11y ago
      Either can exert good and bad influences. Neither business nor government is your friend. Both can be large and unwieldy, and large entities often step on smaller ones even if inadvertently. Unfortunately, we just have to be vigilant and exert our own influence to push things in a favorable direction. No one else will.
ck2 11y ago
WTF does even Google need a tax break. We've got to stop corporate welfare in this country, it is getting carried away. Google can certainly compete against a $300/mo monopoly.
- skykooler 11y ago
  It's to encourage Google to build their gigabit service in that area first, rather than elsewhere in the US.
  - ck2 11y ago
    If they are giving them taxpayer money, what is the savings then? Basically everyone is funding it for the percentage of them that will actually use it. How about telling google, we'll guarantee X $$$ of account from low income people that we'll fund, instead of just throwing them free money for nothing.
dantillberg 11y ago
I'm actually quite surprised to read that Comcast's offering is symmetrical: 2Gps upstream and downstream. According to http://www.xfinity.com/multi-gig-offers http://www.xfinity.com/multi-gig-offers: "Will this be a symmetrical 2 Gbps service? Yes it will be symmetrical: Up to 2 gig download and up to 2 gig upload speeds."
- rconti 11y ago
  I'd be more than happy to pay for this if it was available in the Bay Area! Instead I pay, what, 1/3 the cost for 1/40 the bandwidth?
  - shostack 11y ago
    Is there any good reading on why it isn't in the Bay Area yet? I think Google and Comcast both know a large % of the population here would switch overnight. I'm assuming there's weird laws that prevent progress like most of our other issues out here.
HillaryBriss 11y ago
Corporation B has stolen the tax break the impartial government created specifically for corporation A!!! Oh God, why is this happening!? Where is the justice for this foul crime against man and nature!?
manav 11y ago
Comcast residential Gigabit service is basically the same as their Enterprise Metro-E product rather than GPON with Google Fiber, hence the higher cost/install fees. Comcast gives a 10 Gbe fiber hand off at the home. There's no reason Comcast shouldn't benefit from it.

123 points by pavornyoh 11y ago

Reminds me of http://dealbreaker.com/2013/07/electricity-market-rules-were-not-a-worthy-opponent-for-jpmorgans-brainpower/ http://dealbreaker.com/2013/07/electricity-market-rules-were... >FERC built a terrible box, and the box had some buttons that were labeled “push here for money,” and JPMorgan pushed them and got money. You can understand the category mistake very easily: >FERC thought the box was for generating electricity at market prices but with a robust backup system to ensure reliable supply, and >JPMorgan thought the box was for dispensing money. >It’s a perfectly understandable mistake to make if you have spent your career building and operating boxes that dispense money, as JPMorgan global commodities head Blythe Masters has. What else could the box be for?

shostack 11y ago
That was a really interesting read, but I'm not familiar with a lot of the terminology so it was a bit hard to follow. Any chance you might be able to explain a bit more of what was happening there? I get that they found a loophole that rewarded them for producing more of the less efficient energy, but I'm a bit unclear on what the actual rules were, the roles of the various players in this, and how the transactions were taking place.
- ikeboy 11y ago
  The rules say that they choose the best rate that satisfies demand, then pays all accepted bids that rate. But bids change over time, and you can't just buy one hour's energy: plants take time to "boot up" which have costs. So they pay in 3 hour increments. If your bid for time t is accepted, they pay you for t,t+1, and t+2. JPMorgan set prices at {Good price, outrageous price, outragous price} JPMorgan got an average of 2/3*outrageous price, which made them an obscene amount of profit. The stupid system didn't notice. As I understand it the players submit bids to a central computer that decides who to order from.
  - shostack 11y ago
    Thanks for clarifying. Just to make sure I'm following then--the system was essentially looking at the bid price for just the first hour, and ignoring hours two and three despite the fact that time needed to be sold in three hour commitments due to the boot up time, which let JPMorgan jack bids two and three up and have them automatically accepted since the bids for hours two and three were never considered in the bid selection logic? If so that's one major oversight for whomever built the system. I honestly could see why JPMorgan would be going "so...you're sure these are the rules? Really? Mmmm...ok....well, if you say so." I'm sure they didn't exactly telegraph how they would abuse this, but I find it a bit hard to hold them responsible for what is essentially negligence on the behalf of whomever was in charge of designing the system logic.
    - ikeboy 11y ago
      Legally, they seem to have lied at one point when asked, and anyway this is a settlement which doesn't mean their actions were found illegal. I'm not sure if it's the previous two hours or the next two hours, but either way yields the same result. Also, they may not be doing 3 hour increments, but just having a buffer time. I only know what the article says. Whoever built the system probably assumed that bids represented people's actual intentions, and tried to get the cheapest power given the inputs. They missed a loophole, yes. Note that there are other strategies that did similar but different things.
    - ikeboy 11y ago
      There's also >As set forth below, Enforcement has determined that, through the 12 strategies investigated here, JPMVEC violated the Commission’s Anti-Manipulation Rule, 18 C.F.R. § 1c.2, by intentionally submitting bids to CAISO and MISO that falsely appeared economic to CAISO and MISO’s market software but that were intended to, and in almost all cases did, lead CAISO and MISO to pay JPMVEC at rates far above market prices. http://ferc.gov/EventCalendar/Files/20130730080931-IN11-8-000.pdf http://ferc.gov/EventCalendar/Files/20130730080931-IN11-8-00...

omarforgotpwd 11y ago

Why shouldn't all service providers benefit from the tax break? Is it ethical to give a tax break that unfairly gives one corporation a competitive advantage against another?

bksenior 11y ago
Not sure you read the article. Comcast as expected created a new tier of service to qualify that was grossly expensive. They abused the system and the intent to spur investment in infrastructure was sidestepped.
- RealCasually 11y ago
  I was expecting to see a far higher figure. 2Gbps for $300 is certainly high, but not a joke in and of itself. What was the main intention of this law? If it was to spur higher bandwidth connections, it did so. If it was to lower costs, it seems obvious there should have been a cost factor to the law.
- mikeash 11y ago
  I have a hard time seeing this as "abuse." If the people who wrote this law were so completely stupid that they didn't even specify a price requirement, well, what did they think was going to happen? What's more, $300 for 2Gbps is not bad at all. It's not super cheap like Google's offering, but it's about what Verizon charges for 500Mbps, for example. I propose an alternate headline: "Oregon legislators attempt to spur investment, fail to think through legislation, accidentally grant tax break to incumbent."
  - SilasX 11y ago
    Right, but you can't really anticipate all the ways that people might technically comply with a law while eviscerating the purpose of it. So let's say they specified a minimum price. And then Comcast "complies" by offering the cheap gigabit service, but in order for it to work more than just on Tuesday and Thursday, you have to pay a huge premium. Okay, so you say it has to be available 24/7 to comply, but then even Google can't meet that so you add another requirement. Or maybe you have to anticipate legitimate cases of hyperinflation... At some point you have to just step back and say, "stop being a dick, that's pretty clear not what the law meant and you're just abusing it".

Cheezmeister 11y ago

Lawmaker logic astounds me. If they wanted to spur fiber laying in Oregon, why not (wait for it) incentivize fiber laying in Oregon. Nah, let's just introduce a wacky indirect property tax loophole.

qaq 11y ago
It's very logical "someone" payed for this loophole to exist in exactly this form.
ocdtrekkie 11y ago
Another article on this actually mentions a bit more detail about the tax break, and the hilarity that ensued. They built the tax break specifically for Google, so Google would build there. Problem is... the law they wrote excluded Google. So they had to go back and REWRITE the law, to ensure Google, the company they made the break for, qualified for it. And then they're getting upset another provider is trying to get the advantage they wrote for Google to use. When tax laws are being written specifically for a company, our government has a problem. Sauce: http://www.oregonlive.com/silicon-forest/index.ssf/2016/02/oregon_created_a_tax_break_for.html http://www.oregonlive.com/silicon-forest/index.ssf/2016/02/o...
- toomuchtodo 11y ago
  > When tax laws are being written specifically for a company, our government has a problem. The government could've pursued the alternative: build out municipal broadband, and allow anyone to provide you service (competitively) at the CO/meetup room. But that's "socialism!" The problem is not government. The problem is apathetic, uneducated, uninvolved knee jerk voters. And voters get what that deserve for being so.
  - rayiner 11y ago
    Voters just don't care as much about wired internet as people on where would like to believe. My parents contemplated getting rid of their FiOS internet and going back to cable because the latter has a better selection of indian channels. Nobody in my building subscribes to FiOS because Verizon doesn't have a TV license here. If you had a rock-solid 50 mbps LTE-A service here in the U.S. that for licensing reasons couldn't access Facebook, nobody would subscribe to it.

jeremyt 11y ago

For the life of me, and for this exact reason, I can't understand the net neutrality movement. It's a bunch of people arguing that we have a problem and the most likely party to fix it is the government. But this article is an example of exactly what the government does when you give them power to control things. They write in loopholes, pork, or they just flat out do a half assed job of drafting legislation. And then we see the deluge of unintended consequences Wake up, People! The government is not here to fix your problems.

pachydermic 11y ago
>Wake up, People! The government is not here to fix your problems. And private firms with monopoly power aren't either.
- jMyles 11y ago
  Well, to use the current example, the monopoly can be broken with buildouts of wireless mesh networking. By contrast, government intervention might well make wireless mesh networking, as a methodology for reconstructing the internet, far less plausible.
  - guelo 11y ago
    No, wireless mesh networking is never going to displace fiber providers.
    - jMyles 11y ago
      For final mile applications, I assert that it will. For longer transit, I agree.
  - rrmm 11y ago
    Either can exert good and bad influences. Neither business nor government is your friend. Both can be large and unwieldy, and large entities often step on smaller ones even if inadvertently. Unfortunately, we just have to be vigilant and exert our own influence to push things in a favorable direction. No one else will.

ck2 11y ago

WTF does even Google need a tax break. We've got to stop corporate welfare in this country, it is getting carried away. Google can certainly compete against a $300/mo monopoly.

skykooler 11y ago
It's to encourage Google to build their gigabit service in that area first, rather than elsewhere in the US.
- ck2 11y ago
  If they are giving them taxpayer money, what is the savings then? Basically everyone is funding it for the percentage of them that will actually use it. How about telling google, we'll guarantee X $$$ of account from low income people that we'll fund, instead of just throwing them free money for nothing.

dantillberg 11y ago

I'm actually quite surprised to read that Comcast's offering is symmetrical: 2Gps upstream and downstream. According to http://www.xfinity.com/multi-gig-offers http://www.xfinity.com/multi-gig-offers: "Will this be a symmetrical 2 Gbps service? Yes it will be symmetrical: Up to 2 gig download and up to 2 gig upload speeds."

rconti 11y ago
I'd be more than happy to pay for this if it was available in the Bay Area! Instead I pay, what, 1/3 the cost for 1/40 the bandwidth?
- shostack 11y ago
  Is there any good reading on why it isn't in the Bay Area yet? I think Google and Comcast both know a large % of the population here would switch overnight. I'm assuming there's weird laws that prevent progress like most of our other issues out here.

HillaryBriss 11y ago

Corporation B has stolen the tax break the impartial government created specifically for corporation A!!! Oh God, why is this happening!? Where is the justice for this foul crime against man and nature!?

manav 11y ago

Comcast residential Gigabit service is basically the same as their Enterprise Metro-E product rather than GPON with Google Fiber, hence the higher cost/install fees. Comcast gives a 10 Gbe fiber hand off at the home. There's no reason Comcast shouldn't benefit from it.