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Perhaps the most important meeting you never heard of will take place tonight in Minneapolis. It is an FCC hearing about the future of the Internet. Given that the Net is now the main information pipe for all of us, how that pipe is to be regulated, what we will pay to use it and who the players are will be one of the more important decisions that will shape our democratic society for the next half century.
The story behind that hearing is complex one that starts back in the nineteenth century with Samuel Morse typing on a telegraph key and winds through courts, Congress and regulatory agencies with enough twists and turns to set your head spinning. But trust me, if you follow the story you will understand why it is so important.
A Little History I: The Telegraph
People are always searching for parallels to the Net, but probably the two most relevant ones are the telegraph and radio. The role of the telegraph in transforming America is symbolized by an 1844 public demonstration of Samuel Morse’s invention to a distinguished audience in the nation’s capital. The person selected to send the demonstration telegram was Dolley Madison, the widow of the father of the Constitution. In 1866 the first transatlantic cable linked Europe and America in real time at an initial speed of six words a minute.
As for the impact of the telegraph, here is a trivia question for you: why do we have universal time zones? Answer, because of the telegraph. The growth of the telegraph forced the United States to adopt a uniform time system, for without it the sending of messages would have been chaos. Trivia question number two (try these on your friends), what was the main weapon that allowed the United States to capture Chief Joseph on his epic journey? Same answer, the telegraph because it enabled the Army to instantaneously know of Joseph’s movements so they could get troops there quickly. Trivia question three, who introduced the credit card? Western Union created the first charge card in 1914. Trivia question four, what enabled the formation of the modern financial system? By now you have the picture.
There were two problems with the telegraph that have relevance for net neutrality. In the beginning there were many telegraph companies competing for service. In 1851 the Bureau of the Census reported 75 companies with 21,147 miles of wire. The problem with this system was sending messages from one carrier to another. They would get garbled, arrive at the wrong time or not arrive at all. So companies began forming pacts to collaborate with each or started buying up other companies to make sending message easier (think today’s cell phone market).
By 1866 75 companies had been reduced to two, Western Union and the American Telegraph Company. Then there was only one: Western Union. Of course this roused the ire of many Americans who opposed the idea of one company controlling 90% of any market. Trivia fact number five concerns the 1893 Populist platform which contained planks to nationalize the telegraph, telephone and railroad industries. Think how different America would have been had this gone through.
Much like the current fight over Internet access, the Western Union monopoly precipitated a battle over the freedom of the wires in which the press played a leading role (since it depended on the telegraph). The press argued that the only way to ensure freedom of information was to keep the government out of telegraph regulation. When the Populists proposed to nationalize telegraph lines the New York Times editorialized with words that sound remarkably contemporary:
A change of this service from the company, or any other organization like it, to the government, must be a change for the worse. But clerks of the telegraphic branch of the post office would surely partake of the Spirit which characterizes nearly all American government employees. They would be indifferent, unsympathetic, generally supercilious, disposed to shirk work, and would do no more than was necessary to retain themselves in place.
The opposition to Western Union in part came because in the late nineteenth century only the well-off could afford to send a telegram. In 1860 it cost a dollar per ten words to send a message from Chicago to New York and $2.50 to send one from San Francisco. By 1890 the rates were $.40 and $1.00 respectively—still out of the reach of those who made a dollar a day. This early precursor to today’s “digital divide” gave the well-off and business an advantage over the average citizen. For example, take stock trading. Using the telegraph rich people could have instant access to Wall Street while the average citizen had little clue as to what was going on.
Probably the most famous example of this inequity was the 1896 election where under the guidance of the Karl Rove of his day, “Dollar Mark” Hanna, William McKinley ran the “Front Porch Campaign” in which Hanna funneled reporters to McKinley’s home in Canton, Ohio to meet personally with the candidate. They then filed instantaneous reports by telegraph of these conversations, making voters feel like they were right there listening to McKinley. To cope with this William Jennings Bryan broke with precedent and conducted the first whistle stop campaign that would have him travel 18,000 miles, stop in 26 states, average 80,000 words a day, and speak to at least five million people.
A Little History II: Radio
When radio first developed it was a lot like the telegraph. Anybody could set up a radio station and broadcast whatever they wanted. Part of this stemmed from the fact that early radio was not sure what it wanted to be. Some saw it as a communications medium (what we now call short-wave radio), others saw it as an information source and a third group saw it as a great way to broadcast entertainment and make money.
Before the First World War the airwaves were full of chatter, but the military found this chatter interfering with their own communications after the United States entered the war, so they put a gag order on all transmissions until the war was over. After the war several people, most notably David Sarnoff of what would become RCA, conceived of the idea of linking radio stations into networks that provided common programming and were supported by advertising.
By the middle of the Jazz Age, the networks were becoming frustrated with the amateurs whose signals could disrupt their own. This brought about the creation of what has become today’s broadcasting structure with the formation of the Federal Radio Commission in 1926. It was given the power to issue licenses, along with the equally important task of assigning frequencies and power levels “as the public convenience, interest, or necessity requires.”
A decade later the amateurs had gone the way of all those telegraph companies as the networks came to dominate the radio waves and the medium became dominated by entertainment and commercials.
The Fight over Net Neutrality
This history should provide lessons for how communications technology can shape our democracy. That is why the battle over the Internet is so important. There has been much talk flowing through the media and even more through the Net about the possibility of Internet Service Providers charging users by the amount of bandwidth they use. This is usually referred to as net neutrality, meaning the Internet plays no favorites when it comes to how much you use it.
None other Federal Communications Commissioner Robert McDowell broached the idea in an interview with the Texas Tribune back in April. Here is a summary of what he said:
“Net neutrality” is the term for an internet in which everyone pays the same price without regard to use. Companies now can charge more for higher-speed access, but their pricing is neutral when it comes to the amount of bandwidth they actually use. McDowell sides with the companies that want to charge heavy users more money and light users less.
But what has really heated up the fire is the proposed deal between Google and Verizon. If you have been asleep lately—as I have (see below)—here is a brief summary of this rather complex deal. We all know who Google is and we all know Verizon, so what is a cell phone company doing cutting a deal with a search engine? Well, part of it is that Google is no longer just a search engine; its tentacles are reaching out into all sorts of Internet-related fields from software to content. Meanwhile Verizon is not just a cell phone company; it provides regular phone service and also is branching out into content.
What has brought the two together is that anyone with half a brain can see that it won’t be too long before most of us receive a fair amount of our Internet content on cell phones. Google has more than half a brain, so it has been negotiating with Verizon to cut a deal that would basically allow some content to get to users faster if the content provider paid Verizon a fee. In the search engine wars, this means you could get better and faster searches from Google than Bing or some other source.
But the real deal involves YouTube, because as we all know the Net is rapidly becoming the delivery service for visual content. Many futurists, me included, believe the time is not far off when the Net will replace cable and satellite as the way we get video. If YouTube were to get preferential rates from Verizon you can imagine how that will play out. It will also open the door to a host of similar alliances because Bill Gates won’t sit tight and watch Google and Verizon cut Microsoft out of the picture.
Now who will pay for this? Guess? You and me. If we want faster, better Internet or access to Google and its empire we will pay higher fees. The result of this would be an Internet that looks a lot like cable TV with different levels of service costing different prices. For those of you who followed the history, it also begins to resemble radio.
Enter the Courts
In April the DC Circuit Court issued one of the most controversial and important decision of the past few years in Comcast v FCC. The facts are pretty clear: Comcast was blocking some Internet traffic, so the FCC told it to stop. That traffic consisted largely of people who were using services like BitTorrent to download large files. The story of BitTorrent is important because it is part of the battle going on about who will control information in the next millennium.
You may not have heard about BitTorrent but as its web site states, it is turning conventional economics on its head. It is essentially a file sharing technology and it scares the heck out of folks that try to sell DVDs and CDs. Let’s say I have a copy of something you want and vice versa, we can trade, just as if we lived next door to each other or in a college dorm.
Peer-to-peer file sharing, which is what BitTorrent is about, revolutionizes information flow because if there is a piece of information out there that someone wants it can be shared. Trading MP3 files or movies is only the tip of an important conceptual iceberg because it would mean that for the first time in history people could control information flow. Say there is a document the government would just as soon you not see; with peer-to-peer if someone has it they can quickly make it available to everyone. If what passes for radio today won’t play a track—share it. A movie that doesn’t make it into the normal distribution channels and into your local theater or DVD store—share it.
Comcast’s ostensible excuse that file sharing was eating up bandwidth may have some validity, but the real reason is that information providers don’t like file sharing. Remember, Comcast is a cable network so if you share a movie, that means you don’t watch it on Comcast. The FCC ruled Comcast:
Had “significantly impeded consumers’ ability to access the content and use the applications of their choice,” and that because Comcast “ha[d] several available options it could use to manage network traffic without discriminating” against peer-to-peer communications its method of bandwidth management “contravene[d] . . . federal policy,”
Comcast appealed the decision to the DC Court. Much of the argument in this case rests on what is known as the FCC’s “ancillary authority,” which put in plain English essentially says that since services like cable TV and the Internet are not directly spelled out under the FCC’s current charge, they are covered by various provisions that allow it to regulate things like the placement of broadcast stations, content, etc.
One by one, the DC Court waded through the legal precedents for this authority as it pertained to Comcast and struck them down. Essentially it ruled that Comcast could close the door on any content provider. You can hear the shouts from Google-land still because it meant that Comcast or Verizon or any other service could, if they wanted, cut off Google.
It also meant the FCC could do nothing about it.
Where Are We Now
Where we are now is in a mess. We will let the legal scholars ponder whether the DC decision was a fair reading of the law and instead deal with what it has done to telecommunications which is to leave regulation of actions like Comcast’s in a state of chaos. Senator John Kerry put it pretty well:
I know that Congress did not intend for cable and telephone broadband Internet service providers to fall outside the authority of the FCC to protect consumers.
There have been discussions in Congress and at the White House about how to fix this mess, but the issue of the future of the Internet makes the discussions over health care and financial regulation seem relatively simple. In short, if Congress and the White House can’t solve those problems don’t expect miracles on this one.
That is what brought the FCC to Minneapolis this week. Since the Comcast decision it has been meeting with folks like Comcast, Verizon, Google, and Skype to try to broker some agreement on how broadband Internet service should be regulated.
This has predictably set of a war dueling soundbites. David M. Fish, a spokesman for Verizon, stated,
We are currently engaged in and committed to the negotiation process led by the F.C.C. We are optimistic this process will reach a consensus that can maintain an open Internet, and the investment and innovation required to sustain it.
James Rucker, executive director of ColorofChange.org., countered,
We’ve seen what happens when big industry is able to write its own rules — look at the banks, look at BP. We cannot let the same thing happen with the Internet.
One important aspect of this story to point out: be glad we have a Democratic FCC. If you remember back to the last Presidential election, I believe this site was the only one that listed among its top reasons to vote for the Democratic candidate that the winner of the election would be appointing a new Federal Communications Commission. Had John McCain won, the FCC might not have even ruled against Comcast since the GOP has generally not supported net neutrality. The hearing in Minneapolis probably would not have taken place—at least not in the form it will take.
The Minneapolis Hearing
The hearing will take place August 19th at 6:00 Central Time. Since most of you won’t be in Minneapolis, you can watch it live on the Uptake site here. If you have nothing better to do you might want to tune in.
I will follow up with highlights and more commentary.
NOTE: WHERE HAVE YOU BEEN?
This past month my disability finally won the battle–at least for awhile–putting me down with a fractured vertebra I am still recovering from. So essays will continue to be a bit erratic for awhile. Stay tuned for a forthcoming one on the misguided campaign to shut off the filibuster.
Hope all of you have had a good summer.
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