PublishedFebruary 22, 2011

Internet Freedom Begins at Home

In the wake of the government ordered shutdown of Internet access in Egypt recently, Washington policymakers are debating various scenarios involving “regulation of the Internet.” The consensus seems to be that government should not be able to act as a gatekeeper or shut off Internet access. In the U.S., dominant private companies also have the ability and commercial incentive to act as gatekeepers, but so far for the most part they have not. That’s the way Americans like it. The Internet itself has never been regulated here, although the underlying local cable TV and telephone access services were regulated until 2005.

While dozens of competing Internet Service Providers (ISPs) from Compuserve to AOL offered e-mail and other apps and content online in the 1990s until 2005, you still bought your Internet access connection separately from the regulated phone or cable company.

Once the telephone and cable companies began offering information services connectivity bundled along with your physical wired connection on a totally deregulated basis, most of the original ISPs disappeared, since they could not compete with offers that included the physical access connection in double or “triple play” packages.  The vertically integrated phone and cable companies won because they were holding the trump card of legacy local networks that were once fully regulated, government protected monopolies.   Now they were the only ones who could bundle together voice telephone, TV video and Internet access.

So no regulation of the competitive ISPs worked well until the market evolved into a duopoly of two Internet Access Providers (IAPs) per market, and in some places, back to a monopoly.  Early in 2010, at the direction of Congress, the FCC completed a National Broadband Plan which recommended that affordable open broadband Internet access be available to all Americans.  About the same time, Secretary of State Clinton began calling for the “freedom to connect” to be included in basic human rights for the 21st Century.

Late last year, after a lengthy and in-depth proceeding with unprecedented public input, the FCC adopted an open Internet rule that establishes Internet end users’ rights in the U.S.  In contrast to critics in the U.S. House of Representatives, the FCC rules require no one to seek permission before launching any new service, application or content service on the Internet.

The FCC has no power to regulate Internet content and is not attempting to do so.  It will not judge, approve or even monitor online content.  Quite the contrary: it has merely ruled, as the agency responsible for the public interest in advanced telecommunications by wire and radio spectrum, that neither the government nor any private company should act as a gatekeeper for other services, applications and content available to its Internet access customers.  The FCC wants all Americans to have the freedom to “innovate without permission” from either their government or their Internet Access Provider.

Since American households and small businesses have so few choices for high speed Internet access, the terms of their access to services, apps and content on the Internet should not be dependent on the identity of their IAP, or the current state of its commercial affiliations and business negotiations with various online services.  So the FCC has prohibited wired Internet access providers from prioritizing delivery of their own content and services over other end user choices.  No one in government will be picking winners and losers among services or content or companies.  The new rule simply says your IAP can’t pick among them for you either.  Along with the right to connect in the first place, that’s the essence of the Internet freedom Americans have come to expect and rely on every day.

If we cannot ensure Internet freedom to connect and access everything (except that ruled illegal by law enforcement/judicial action) at home in the U.S., what hope is there for the people of nations that do not even pretend to uphold such freedoms?

Free market dreamers like one FCC Commissioner have been forecasting more competition for the cable/telco Internet access duopoly since before Amazon, eBay, Google, Facebook, Netflix or Twitter became household names.  Competition and innovation online has been exploding while infrastructure access competition remains unchanged or diminished with industry consolidation.

More access competition has simply not materialized and it is not just around the corner either.  Barriers to entry are way too high and most markets barely support two local broadband infrastructure competitors, some support only one, and some rural areas, none. That’s the harsh economic reality of telecom networks around the world.

Meanwhile, FCC critics argue there’s no clear market failure or crisis that needs solving.  That was certainly true also with home mortgages before the Wall Street meltdown of 2008 and with management of oil rigs in the Gulf before the 2010 BP disaster.  Perhaps we should learn to heed the warnings of experts about brewing market problems before they become a public crisis.  Internet access is simply too important to entrust entirely to the profit motives of a handful of corporations. Or to the whims of government.

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