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Stop Congress from Undermining the Open, Nondiscriminatory Internet!

In Competition, Do-Not-Deliver, FCC, FTC & DOJ, Network Neutrality, Rules&Regs, Uncategorized on March 18, 2011 at 6:27 pm

Take Action to Oppose H.J. Res. 37!

Some Members of the House and Senate want to override the modest safeguards finally put in place by the Federal Communications Commission. If successful, their action would say to the handful of major Broadband Internet Service Providers that actually handle the flow of traffic: “The Web is YOURS — Carve it up as you please!” Measures that would amount to a “Congressional Veto” of the FCC, small business and the general public have been introduced on both sides of Capitol Hill. The knee-jerk legislation, H.J. Res. 37 and companion S.J. Res. 6, aim to shred several years worth of diligent policy process at the expert agency and replace it with…nothing. A gaping black hole of uncertainty for every other line of business that is not a monopoly or duopoly ISP.

Members pushing for “Congressional Veto” willfully ignore the exhaustive record in the inclusive, open proceedings at the FCC. But what is worse, from an economic and job creation standpoint anyway, is the blind eye to the current market realities. We noted the lack of broadband competition in nearly all markets in our last post on topic. Here’s another way to look at the sheer market force of the handful of incumbent providers — those who would now be told that our collective internet is really their proprietary internet. While all the rest of us who are dependent on the network are scolded to just click our heels and say competition three times fast, and all evils will just cure themselves.

Even a quick peek through the lens of Moore’s law shows us how the idea of competition gives way to alternate reality in anticompetitive markets. Moore’s law anticipated the technological breakthroughs behind the wonders of computer chip-making. The innovations predicted by Moore, and the numerous corollaries beyond transistors including pixels per dollar, have brought us faster and cheaper computers, cameras, smart phones, tablets and the like. All smaller and more powerful — and cheaper — by the day. Consider the descending arc of the consumer’s cost of a Gigabyte of storage: 1981 = $300,000; ’87 = $50K; ’90 = $10K; ’94 = $1,000; ’97 = $100; ’00 = $10; ’04 = $1…and by 2010 we’re down to tens cents. All thanks to the driving forces of innovation and robust competition.

Now look at your latest Broadband Bill. Compare it to last year and the year before that. The price tag might suggest that the costs of digital data transmission are somehow immune to the otherwise ubiquitous phenomenon predicted by Moore and his innovative peers. But they absolutely are not. Accurate parallels apply to network capacity including Butter’s Law of Photonics — and today the actual bandwidth cost has fallen to an industry average of between 2 and 5 pennies per gigabite. Innovation combined with widespread adoption, has driven down the average cost of digital data transmission to the major incumbent ISPs to a mere $1 per month per customer. That fact that we’re still charged an average between $20 and 50.00 per month for broadband service is proof positive of an anticompetitive market.

But Congress wants to do more than simply ignore the reality that our nation’s wireline broadband markets are so concentrated that they can defy Moore’s law and keep all the savings away from consumers. In pushing this “Congressional Veto” of the FCC — and the rest of America exposed to monopoly or duopoly broadband provider conditions — they are actually signaling to the major ISPs with outsized market power and national footprints to go ahead with plans to set up new traffic-tampering toll booths if the markets will allow. And obviously, a broken market that allows charging up to $50 for something that costs as low as $1 to provide will also “allow” a new profit center built on gatekeeping.

Take Action to Oppose H.J. Res. 37!

The Free Community Paper Industry strongly oppose this “Congressional Veto” of the Federal Communications Commission’s modest safeguards to preserve an Open, Nondiscriminatory Internet. Contrary to some misleading talking points, the FCC’s well-reasoned framework simply establishes Transparency and prohibits Blocking and Unreasonable Discrimination against lawful network traffic. The FCC would have Broadband Internet Access Service Providers clearly disclose to consumers what exactly they are paying for and getting, while guarding against involuntary censorship of their customers’ digital communications. Instead, H.J. Res. 37 would obliterate these most basic rules of the road, scrapping the very conditions which have finally enshrined the longstanding policy and practice that allowed the internet to flourish. This “Congressional Veto” would give the green light to ISPs to launch into the gatekeeping business, and create new profit centers built on censorship and traffic toll booths. In essence, this bill says that after collecting payment for hosting as well as for wholesale and retail connectivity, the limited group of monopoly and duopoly providers can now create a new piggy bank to fill by dictating consumer experience and extorting new access taxes from all content creators including our hometown publishers, or otherwise block content in favor of their own.

The public is clearly on the side of the FCC, and overwhelmingly opposed to this Congressional effort to undermine sound communications policy. For those just entering this important policy debate, please read the latest opinion survey released by CFA and CU, the publishers of unbiased Consumer Reports. Perhaps even more instructive than the data detailing broad public support for Open Internet are the survey questions themselves. Answer them for yourself, as these are the actual network management practices at issue. Doing so, you might note the radical disconnect between real policy substance and distractive talking points on topic. With this understanding of the underlying principles of Open, Nondiscriminatory Internet, you will likely appreciate why this debate has historically been nonpartisan. A broad consensus of consumer and social policy interest groups across the political divide agree on the need to prohibit traffic tampering and corporate censorship. One particularly passionate essay on point was Christian Coalition of America’s “Net Neutrality is Not Some Marxist Plot,” debunking propaganda parroted by pundits on this action issue for them rooted in protecting free speech. Similarly, there is simply no credible reading of the actual FCC safeguards that could confuse network transparency and nondiscriminatory treatment of traffic with a “fairness doctrine of the internet” by any reasonable stretch of the imagination.

Our Industry joins with the broad consensus of job creators that support the FCC policy to preserve our vibrant, interconnected networks. The solid economic case against this “Congressional Veto” has been made universally by innovators, investors and a broad range of job creators operating on the so-called edge of the network. Our collective economic output is orders of magnitude above the solo enterprise of data transmission, and our capacity for innovation is as vast as our lines of business are diverse. Our continued growth and the emergence of new business models are critically dependent on the fair competition fueled by open, nondiscriminatory networks. The “Repeal” offered in H.J. Res. 37 implicitly contemplates a new anticompetitive vision of digital-era commerce, where the game is suddenly changed at halftime. It decides who gets to be the home team, and allows them to make their own new rules while telling the referees to leave the stadium. It’s worth noting that even competitive rivals to the national ISP giants support the FCC’s safeguards for fair competition.

This “Congressional Veto” comes as longstanding policy and practice have been recently undermined by the Courts and demonstrably threatened by implementation of powerful new traffic tampering technologies including Deep Packet Inspection (DPI). It proposes to remove enforceable Open Internet protections in the face of explicit internet carve-up schemes such as the public proposal floated jointly by Google and Verizon, and those buried in the comments of monopoly and duopoly broadband providers filed with the FCC in their exhaustive review. H.J. Res. 37 ignores the record established by the expert agency, and with negligible diligence of its own, torpedos a years-long open and transparent process of consultation, meetings, hearings and countless reams of substantive comments from all stakeholders including our Industry. If Congress moves forward with this ill-conceived and reactionary measure, the participatory internet as we’ve collectively grown it could devolve from a robust information superhighway into a potholed patchwork of fast and slow lanes and new toll booths. Free speech, fair competition, commerce, investment and job creation are all placed in jeopardy by this and similar Congressional proposals to demolish the FCC’s light-touch approach to preserving an Open Internet.

  1. The FCC’s ill advised regulations were not the result of a careful deliberative process, nor would they be beneficial to consumers if they were to take effect. (Fortunately, they will likely never be effective, because they exceed the authority granted to the FCC by Congress.) They were, rather, a sop to Google, which has made more than $1M in monetary contributions to Obama as well as large non-monetary contributions (e.g. free advertising). The regulations were drafted behind closed doors, in defiance of due process and the FCC’s own rules of procedure, in close cooperation with Google. They would raise the price of broadband service, reduce consumers’ choice of broadband providers, deter deployment to unserved areas, kill jobs, reduce the quality of broadband service, and cause our country to fall far behind the rest of the world in broadband. Thankfully, as I’ve mentioned, they won’t ever be enforced, because the FCC enacted them in defiance of the law.

    • Brett, thanks for stopping by and sharing your thoughts…not that I haven’t already seen these 140 characters at a clip in our Twitter debates. For anyone reading not familiar with Mr. Glass, he’s self-described as the world’s first wireless internet service provider and a passionate advocate for the WISP industry. Food-chain-wise, these local, independent providers are to major cable-telcos what hometown free community papers are to consolidated print media chains.

      Brett: Until recently I thought your stance was that all regulations were de facto bad regulations — but now, I understand that you would champion rules that favor fair competition. Going forward, we might look to those policies if we can get past this tired debate. It appears that WISPs got a particularly raw deal under the fixed broadband framework — especially considering the much lighter touch granted to mobile wireless. We both agree competition is key in any marketplace, and these rules do not change the fact that a handful of companies hold all the pipes hostage — your feelings towards big data content notwithstanding.

      We can trace that back to the mid-2000s when the FCC classified broadband as a magically bundled, fluffy information service. Jettisoning bright-line authority over the end-to-end transmission of digital data — the critical communications component — they put thousands of independent ISPs on the short end of the competitive stick. And ultimately out of business. For the sake of fair competition and a level playing field to spur new entrants, we’d all be better off to go back to pre-2002 framework. Which is essentially the structure providing for relatively robust competition in Europe: Requiring major cable-telcos to allow smaller rival retail parties to sell internet service to consumers off the same pipes. Would you agree?

      I’d hoped you would weigh in on the Moore’s law and Butter’s Law of Photonics arguments in this post — instead of the tired talking points on Google (which incidentally was not alone in this fight, where proponents collectively were grossly outspent in combined terms of campaign cash, direct lobbying, advertising and PR. And not incidentally, they forged their own carve-up scheme with Verizon as a self-serving Plan-B). With or without Open Internet, the underlying regulatory regime favors — as in proactively pushes — in the direction of monopoly-duopoly regional players in both fixed and mobile markets. The inelasticity of price on the consumer end is also felt with great pain by small, independent retailers like yourself and your WISP industry peers — all while the actual costs of transit of the regional monopoly pipe owners decreases at near exponential proportions. Are you over a barrel or not?

      Your fundamental problem is that your middle mile bandwidth costs at wholesale continue to rise — even as your monopoly provider’s costs (Qwest/CenturyLink, I believe) demonstrably shrink. This is a Special Access problem — not an Open Internet problem. And I agree, this is a huge issue that needs fixing — urgently — for the sake of real competition. Likewise in any final reform of USF, all rural stakeholder-providers need to be part of the solution — WISPs, co-ops, munis — and not just the same monopoly incumbents. As with the often inequitable implementation of national bband plan. I also appreciate how the growing number of folks beginning to unicast stream data-heavey whatnot across their collection of smart-gadgets, at the same time and 24/7 if they can, will become a disproportionate burden on ISPs reselling connectivity to hostage pipes. But Open Internet does not preclude your offering tiered services tailored to speed and/or data consumption. Whatever competitive disadvantage that seemingly creates is again rooted in the fundamental fact you’re hostage to the monopoly — and the lack of a level playing field, no?

      As for FCC process, I’ve been involved in a few now under both party’s regimes and mostly surrounding media ownership issues. There’s always a lot of window dressing around public input, and the footnotes of final work products offer the appearance that all parties and perspectives were at least considered. The hearing process has generally been inclusive — if you push — and doors to Commissioners and Bureaus are open. The overwhelming majority of “closed door” discussions are covered by and disclosed in Ex Parte filings — but in certain unfortunate instances transparency is waived when all the captains of major industry sit in the same room at the same time. In this rulemaking, a few such instances occurred where Google was there, along with the universe of major cable-telco, and one seat for public interest. Personally, I think ATT was already looking to curry favor on the T-Moblie deal, and that those on the content side would have been happy with their own carve-up, special treatment deals. That’s precisely what my folks cannot afford, new toll booths and/or differential treatment vs. our own outsized media rivals’ content and advertising — and would also ally with real competition as a remedy.

      On one company’s ability to influence: What I saw in the last review of media ownership was one company in particular essentially camping out in front of 445 12th Street SW, evidenced by half a gazillion Ex Partes — and would it shock you that they were granted their long wish-list of waivers found only in the last circulated draft of the R & O released to Commissioners just moments before the actual vote? This transcends the particular regime’s party, money buys power and influence over outcomes — all the more reason that we smaller businesses need to find common ground and push for mutually beneficial change. It can be done, I’ve been there. And on the Courts, your guess is as good as mine. Venue will be hostile, last arguments were flimsy, but their could be something in the expansion of ancillaries exercised in conditions of mergers and auctions.

      Hope to hear more from you on policy we might push together for small business writ large.

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