Mark Cooper, Director of Research for the Consumer Federation of
America guest-blogs with the following response to the Washington
Post's fact-challenged Monday editorial:
In a June 12 editorial titled "The Internet's Future: Congress Should
Stay Out of Cyberspace," the Washington Post regurgitated the cable
and telephone companies' spin on Network Neutrality, cautioning that
Internet freedom supporters want to "burden the Internet with
preemptive regulation."
This statement is wrong as historical fact and public policy. Network
Neutrality has existed throughout the history of the Internet and
created the most dynamic environment for innovation and competition
the nation has seen in generations. Good government policy decisions
created an open, neutral communications platform over the objections
of the telephone companies. It is the opponents of Network Neutrality
who would burden the Internet with network discrimination.
The Post brushed aside concerns about network discrimination with
statements like "the Internet will always be relatively democratic"
and "the extra barriers to entry would probably be small because the
pipe owners know that consumers want access to innovators." Network
discrimination alters the fundamentally open architecture of the
Internet and forces innovators to negotiate with network operators
before they can get into business - ending the era of "innovation
without permission," as Vint Cerf, one of the fathers of the Internet
calls it. The implications of the loss of Network Neutrality deserve
more careful consideration than the Post's platitudes and weak
assurances.
The Post also repeated telephone and cable company claims that "the
weakest aspect of the Network Neutrality case is that the dangers it
alleges are speculative." The concerns about discrimination are far
from speculative; the Post simply has not or does not care to look at
what network operators have been doing and saying they plan to do.
Cable operators, who were excused from Network Neutrality by the
Federal Communications Commission, force consumers to pay twice if
they want a different Internet service provider than the one they
provide. They discriminate against Voice Over Internet Protocol (VOIP)
providers in quality of service (Comcast refuses to guarantee the same
quality of service to unaffiliated VOIP providers), against content
(Time Warner blocked letters to subscribers of its AOL subsidiary with
which it disagrees) and against applications (Cox is blocking
craigslist while it promotes its own classified advertising Web site).
For years, the FCC let the telephone companies force consumers to pay
twice if they wanted VOIP from an unaffiliated provider (i.e. they
refused to sell "naked" DSL). Even when the practice was banned as a
merger condition, the companies continued to make it difficult for
competitors. When the North Carolina ISP Madison River blocked
competing services, the FCC made them stop but then repealed its own
authority to prevent blocking in the future by reclassifying broadband
access as an information service. The telephone companies have been
the most aggressive in demanding the right to make exclusive
deals. And we cannot overlook the brutal campaign of foreclosure and
discrimination they conducted against the Competitive Local Exchange
Carriers (CLECs) after the passage of the Telecommunications Act of
1996.
Thousands of ISPs, who were strangled by the network operator policy
of forcing consumers to pay twice, and hundreds of CLECs who lost tens
of billions of dollars without ever gaining access to the
telecommunications network are evidence enough that network operators
will not hesitate to abuse their market power. This anti-consumer,
anti-competitive discrimination took place while its legality was
being challenged. If discrimination becomes legal, it is likely to get
much worse.
Even more ominous is the fact that consultants funded by the cable and
telephone companies have already begun a drumbeat to get rid of the
open protocol altogether. This is an attempt to return the nation to
the pre-Internet environment of proprietary communications networks
that may or may not interoperate at the discretion of the operator, an
environment in which network operators have much greater leverage.
The Post editorial tells us not to worry about discrimination because
"more than 60 percent of the Zip codes in the United States are served
by four or more broadband providers that compete to give consumers
what they want." This Zip code data has been criticized extensively
by the GAO. A single customer in a Zip code tells us little about the
actual nature of competition. And the FCC definition of broadband --
200 kilobits in one direction -- is a ridiculously low speed compared
to what high-speed Internet access actually is.
More importantly, in the economic analysis of market structure and
industrial organization, markets with the equivalent of fewer than 10
equal-sized firms are considered concentrated by the Department of
Justice and the Federal Trade Commission. Markets with fewer than six
are considered highly concentrated. Four very unequal-sized
competitors do not represent sufficient competition to prevent
anti-competitive and anti-consumer abuses.
Yet 98 percent of high speed Internet subscribers use either the
telephone network or the cable modem service. Their market share has
been rising, not falling, and as broadband becomes even higher speed,
the chances that there will be more than two full service broadband
platforms decreases. A duopoly is not enough for to ensure vigorous
competition. The cozy duopoly will not compete on price and will spend
more time protecting franchise services than innovating. This is why
U.S. prices are so high and the take rate of high-speed Internet is so
low compared to the rest of the world.
The Post editorial laments "the fact that the U.S. broadband
infrastructure lags behind that of East Asia and Europe." It advocates
network discrimination as the solution, but it fails to note that
those nations did not get ahead by allowing network discrimination. On
the contrary, the nations who have surpassed us have done so because
they adopted national policies to promote broadband deployment and
forced the network operators to run neutral networks, relying on
competition for services, unimpeded by network gatekeepers and toll
collectors, to drive adoption.
The magnificent success of Network Neutrality in providing innovative,
competitive environments in other nations, the track record of past
abuses of market power by U.S. network operators in the U.S., and the
loud declarations of intent to discriminate in the future make it
clear that the advocates of network discrimination have it
backwards. Network Neutrality is a proven, successful reality; network
discrimination is a hypothesis, a theory in search of support that
does not exist, which will impose a severe burden on the Internet. If
Congress does not step in to restore Network Neutrality, tollbooths
will raise consumer costs and gatekeepers will slow innovation,
destroying the fundamental character and architecture of the Internet.
For more details see Coopers report, ECONOMIC ANALYSIS AND NETWORK
NEUTRALITY: SEPARATING EMPIRICAL FACTS FROM THEORETICAL FICTION.
Various writers (net@telecom-digest.org)