Entertainment ‘Consumers Association Testimony of Jennifer Mercurio, Vice President & General Counsel of the Entertainment Consumers Association, Before ‘The New York City Council Committee on Technology in Government Regarding Resolution 712-2667 - Seeking Stronger Net Neutrality Rules From the Federal Government November 20, 2009 Good morning Chair Brewer and members of the Committee on Technology in Government. Thank you for hosting this hearing on Resolution 712A-2007 and the very important issue of Network Neutrality, and for inviting us to testify. | am pleased to speak on behalf of our members regarding Resolution 712-2007, which seeks stronger Network Neutrality rules from the federal government, and the importance of Network Neutrality on video game consumers. My name is Jennifer Mercurio and I'm the Vice President & General Counsel at the Entertainment Consumers Association (ECA), which is the non-profit membership organization representing consumers of interactive entertainment in the US and Canada. The association was founded to give gamers a collective voice with which to communicate their concems, address their issues and focus their advocacy efforts. As such, the ECA is committed to a host of public policy efforts, empowering and enabling the membership to effect change. Additionally, the organization provides members substantial affinity benefits including discounts on games-related purchases and rentals, as well as community and educational initiatives. For additional information on the ECA, including affinity benefits, member discounts and joining the association, please visit: www.theECA.com, 1 ECA is strongly in support the proposals you've outlined in Resolution 7124-2007 and of the concept of Network Neutrality, the principle that protects one’s choice of content and equal opportunity on the Intemet. Like President Obama, who has pledged to make Network Neutrality the law of the land, we believe that Network Neutrality is a key right for consumers, insuring continued enjoyment and use of the Internet for a variety of At Oarbur Road Suite 700 Win, CT 06897 Phare: 203) 754-680 fox (20) 76-6484 owapplications including recreation, creativity and economic expansion. This is especially true for video game players (gamers), because our hobby is increasingly tied to the Intemet. Of the 117 million active gamers in the US, 56 percent play games online, accounting for over 65 million Americans. With online components of game play becoming more the rule than the exception; the Intemet is increasingly important in how video games are played. Gamers play online in a variety of ways: * Popular massively multiplayer online (MMO) games such as Activision Blizzard's World of Warcraft hosts more than eight million users worldwide; * Both Xbox Live® and PlayStation Network® connect tens of millions of console users in the United States and abroad in hundreds of games online; ‘* Video game streaming sites like Gaikai allow players to connect to an extremely high quality remote server to play so that they experience the game as if the expensive server is sitting in their home; ‘+ Games such as Farmville are currently being played by millions of gamers on their social networks such as Facebook, Myspace and HiS; * Thousands of games are available via the iPhone and Zune stores and through other wireless providers; and * Wellliked gaming websites like PoGo.com and PopCap Games also serve millions of users on their web browsers. All of these game play methods require constant and high bandwidth. Gamers are acutely aware of inconsistent or choppy bandwidth rates, where a 150 millisecond ping rate, would yield a delay in the display (like a skipping record or CD), and can ruin game play. As I'm sure you know, a 150 millisecond ping is quicker than saying the word “ping”. Imagine playing Pac-Man and suddenly you lose the game, not because you've run into a ghost, but because a ghost catches you while your screen is temporarily frozen. To the gamer, such an action would seemingly happen instantaneously, as. though their Pac-Man jumped into a ghost for no reason. While this may sound trite, to 56 million Americans spending over $5 billion annually, this would be an unnecessary annoyance. Too many of these annoyances would encourage gamers to stop spending their money on games, money which helps keep our economy afloat. Game hardware producers such as Sony (PlayStation) and Microsoft (Xbox) are also making a concerted effort to use the Intemet more, transitioning their consoles from just video game playing boxes to multi-media entertainment systems. Xbox Live users can listen to music via the inteet radio service “last.fm” and just this week, Xbox Live added the ability to access and use Facebook and Twitter on the Xbox 360. Sony is following suit and will make Facebook available to users soon, with their next firmware update. Netflix is also available on both the Xbox 360 and PS3. Even some games, such as MTVIEA's Rock Band, which is available for most systems, have sold over 60 million song downloads. CA 68 Danbury Road, Suite 700 Witon, CT 06887 Phone: (208) 781.6180 Fa: (203) 761-6184 ht //uw.theecacomDigital distribution is also an increasing trend with games, allowing users to download the game directly to their platform of choice and bypass the need for physical media, such as DVD-ROMs, entirely. In an interview earlier this week, Thomas Bidaux, CEO of ICO Partners, a prominent consulting firm specializing in developing and servicing online games and virtual worlds, stated that physical distribution of games as packed goods products is quickly becoming primarily an exercise in marketing, with the primary distribution of games occurring through online play and distribution. Thousands of games, from The Sims 3 to Dragon Age: Origins, can be purchased and downloaded directly to one's PC through services such as Steam, Direct2Drive, Impulse and Gamersgate. ‘As touched on above, one of the fastest-growing avenues of digital distribution is in the wireless arena. The iPhone App Store and other wireless providers are selling thousands of games to consumers on their mobile devices, but are also urging that principals of Network Neutrality should not apply to them. From a gamer’s perspective, wireless providers must be treated the same as any other service provider to insure the same gaming experiences exist across platforms. Indeed, some new services like Gaikai allow the customer to play the same game on any platform, so a gamer would require consistent Intemet speeds cross-platform in order to enjoy a seamless gaming ‘experience. These aren't technologies of the future; these are the realities of the video game business today. All of these applications, services and software depend upon Network Neutrality to insure that carriers cannot price discriminate against gamers, or eliminate or limit access to another provider's content. While the Internet has traditionally been a place of relative freedom, several recent actions by service providers concem the ECA. Under current law, or the lack thereof, Intemet service providers can block websites, content, users, services or applications they don't like. And they have, most notably, when Comcast secretly interfered with users' ability to access popular video, photo and music- sharing applications; or AT&T and Apple deciding which applications can be downloaded to iPhones. Both of these activities could easily be aimed at games to limit our hobby online. Earlier this year, Time Wamer began testing a “consumption based billing” structure for its broadband intemet service in certain markets in New York, North Carolina and Texas, with bandwidth being capped at 5-, 10-, 20-, and 40-gigabyte levels ranging from $30 to $55 per month plus $1 per gigabyte over. We were told that these caps were to be cumulative. With the average full length video game being anywhere from 2 gigs to 7 gigs, one would quickly go over this limit. ECA successfully fought the effort, and worked with one of the affected Congressmen, Rep. Eric Massa (D-29NY), as he drafted legislation (H.R. 2902) to specifically combat such tiered and capped pricing structures. Since then, we have been running a campaign for our members and the general public, where folks can contact their Members of Congress to support the bill. {CA 64 Danbury Road, Sute 700 Witton, CT 06897 Phone: (203) 761-5280 Fox: (202) 761-618 tp farmer thewea comWe are seeing more troubling behavior in the marketplace. Internet service providers have stated their intention to deploy discriminatory “deep packet inspection” technology that would allow them to monitor and control the Intemet. This dangerous technology would give network providers unprecedented power over Internet users, and it presents a serious threat to online privacy and to consumer rights — which could be eroded at an alarming rate. For these and many other reasons, the ECA supports Network Neutrality and the sentiment behind Resolution 712A-2007. We have also asked that the FCC take action now to affirmatively safeguard the free flow of information on the Intemet before it's too late. Thank you for your time and consideration, and I'd be happy to answer any questions you may have. {CA 64 Danbury Road, Suite 700 Witon, CF 05897 Phone: [203) 72-6180 Fa: (203) 763-6184 hip /aan thee. com