Unlikely allies gird for FCC battle over free speech, high finance and “Net Neutrality”

By Jen Anderson, Steve Rhodes and Josh Wilson

In an era of market deregulation, concerns over free speech and fair business practices have prompted corporations and activists alike to call for more oversight of high-speed Internet service providers.

Speaking at a press meeting on October 1, Federal Communications Commission Chairman Michael Powell confirmed that broadband is a priority for his agency in 2004.

"There is this set of anxieties," he said. "What can the consumer buy and hook up to the Internet? ... How do you grapple with copyright and content issues?"

At issue is the idea of open access, or net neutrality, an accommodating regulatory doctrine that requires network operators to open their data-transmission lines without favor to all Internet content, as well as small businesses, and competitors' software, hardware and websites.

According to Jeffrey Chester of the Center for Digital Democracy, net neutrality is the foundation of the Internet's success as a communications medium.

"If you look at the qualities that have made the Internet a critical tool for democratic discourse and economic competition," he said, "[i]t benefitted from policies designed to prevent content discrimination, and ensure diversity of access."

But longterm net neutrality is in question: The broadband Internet market is booming -- 50 percent of all U.S. homes are expected to have high-speed Internet access by 2008, according to the Yankee Group marketing consultancy -- and cable ISPs and telephone companies are lobbying to avoid as much regulation as possible.

Who owns the lines?

In a letter to the FCC on August 6, the National Cable & Telecommunications Association wrote that "Regulation is not necessary to ensure the competitive availability of Internet content, applications and services. Its only effects would be to deter investment, interfere with deployment and raise the costs of such services."

Stanford University's Lawrence Lessig, with Tim Wu of the University of Virginia, wrote in a letter to the FCC (PDF) that mandating net neutrality would be the equivalent of preserving a uniform national electrical grid.

"When consumers buy a new toaster made by General Electric they need not worry that it won't work because the utility company makes a competing product," they noted.

Up until recently, net neutrality has been maintained on DSL and dial-up Internet services, which travel on existing telephone lines and are governed by "common carrier" rules that require telephone companies to transmit data without interference.

But cable and fiber-optic networks do not have such oversight, a status that may be extended to traditional telephone networks as well.

"FCC Chair Michael Powell says we don't need common carriage any more," said Mark Cooper of the Consumer Federation of America. "He has excused cable carriers from obligation of common carriage, and will excuse the [large phone companies] from the same obligation."

Rules and regulations

This past August, the FCC granted phone companies exclusive rights to offer services over any future broadband networks that they roll out, such as fiber-optic networks.

In September, the commission announced that it will phase out line-sharing -- a practice under common carrier laws whereby ISPs rent phone lines to offer DSL access and other services.

This came on the heels of the FCC's re-classification of cable ISPs as "information" rather than "telecommunication" services -- a move that could give cable operators exclusive control over what sort of data is carried on their networks.

According to the Small Business Administration, the change would affect an estimated that 7,000 businesses, costing them $8 billion in revenue.

In October, an appeal by to the Ninth U.S. Circuit Court of Appeals in San Francisco overturned the decision, a move that could force cable ISPs to open their networks under common carrier laws.

But the FCC said it would appeal the case, and still has a number of options to support its deregulatory agenda.

"A robust, competitive market"

The Coalition of Broadband Users and Innovators (whose members include Apple, Microsoft, Disney and the Media Access Project) says the issue is one of consumer choice and free speech, and wrote in a November 2002 FCC filing that "the government must ensure that [broadband] operators do not encumber relationships between their customers and destinations on the network."

The High Tech Broadband Coalition -- an alliance of trade associations that represent Apple, Microsoft, Intel and others -- told the FCC that government must "vigilantly monitor" the broadband market to protect consumer freedoms, but also made clear that deregulation is "appropriate" for the cable Internet-access market in general.

According to Bruce Kushnick of consumer advocacy group Teletruth, many corporations are "speaking out of both sides of their mouths," claiming to support consumer choice, but promoting a deregulatory agenda that would clear the way for more consolidation of ISPs, less competition and fewer choices.

In June, FCC Media Bureau chief Kenneth Ferree told the Progress & Freedom Foundation -- a free-market organization whose supporters include Disney and AOL/TimeWarner -- that the term "net neurality" was "sloganeering," and that regulating cable Internet services was not necessary.

"Competitive broadband distribution would allow us to rely upon market forces, rather than government regulation, to govern market structure and service provision," he said.

Fred Von Lohmann of the Electronic Frontier Foundation agrees, in part.

"The best thing for consumers would be a robust, competitive market with lots of broadband and other Internet providers," he said, but "[i]f we have a world where there is not effective competition, then I think a good case can be made [for] appropriate government intervention."

Issues of competitiveness and free speech are subtly intertwined, and put public-interest advocates in a cautious mood.

For Jay Stanley of the American Civil Liberties Union's Technology and Liberty program, regulation is proactive.

"When companies have both strong business incentives and the technical ability to interfere with Web content," he said, "it doesn't take a crystal ball to predict that they will do so. We shouldn't have to wait for train wrecks before we put in stop lights."

The National Cable & Telecommunications Association disputes the need for regulation, calling net neutrality "a solution in search of a problem" and stating that "we agree that consumer access to Internet content is, and should be, full and unfettered."

Multiple lobbying groups

Teasing out the tangled business interests and relationships of the broadband, media and telecommunications industry can be a devilishly difficult task.

Corporations often belong to multiple lobbying groups, some of whom would appear to have conflicting aims.

Microsoft is a donor to the Progress & Freedom Foundation, with its mission of "limited government, free markets, and individual sovereignty," and a Microsoft executive, Maggie Wilderotter, also sits on the board of the pro-deregulation National Cable & Telecommunications Association.

Yet Microsoft is also a member of both the High Tech Broadband Coalition and the Coalition of Broadband Users and Innovators, groups that support varying degrees of net neutrality.

Microsoft did not return phone inquiries about the apparent conflict.

"[S]ome of the chief proponents of what might be called net neutrality, in fact, eschew true nondiscriminatory treatment," Ferree said in his June speech, citing the Yahoo! corporation's favored placement of its Web content on SBC Internet services.

"Their schizophrenic lobbying behavior is a sort of litmus test about where the good public policy lies," said the Center for Digital Democracy's Jeffrey Chester. "I'm not concerned about protecting Microsoft, Amazon or Disney ... I think we have to be worried about those folks who are not in the position to have that kind of lobbying and marketing clout."

For Von Lohmann, the gap between major- and minor-league players is the heart of the issue.

"We don't want to create a world like television where in order to get your voice heard, you really need to have the backing of a major corporate network," he said.

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