Net Neutrality Diversion
June 21, 2006
A couple of days ago in an auditorium at George Washington University here in Washington, former Clinton Administration spokesman Mike McCurry trotted out the hottest talking point in the fight against keeping the Internet open. He accused the pro-openness forces of hypocrisy because search engines play favorites.
What Google does, he said, “looks suspiciously to me like exactly the sort of content-discrimination business model that advocates of the network neutrality are foisting off on the telecoms. What is the difference?”
As a logical argument, the issue is just silly. As a diversionary tactic, it is more valuable. For while this is being argued out, the telecom, cable, movie and recording industries are getting away with one big goodie bag.
Google, of course, is a staunch advocate for a fair and open Internet. In his answer to what looked like a planted question during a debate with Amazon’s Paul Misener, McCurry kept in play a great diversionary tactic that surfaced in April during the House Energy and Commerce Committee consideration of telecommunications legislation. Then, Rep. Charlie Gonzalez, D-Texas, who represents AT&T’s hometown of San Antonio, proposed an amendment that would have required the Federal Communications Commission to study “preferential practices of the top five Internet search engines by usage and the top five electronic sites by revenue.”
The amendment was defeated, but the issue has been kept alive as the telephone and cable companies never miss a chance to make Google and other e-commerce companies defend their businesses. Search engine neutrality now comes up in conversations with Hill staff and legislators, requiring Google and others to get away from the main debate to point out that there are many search engines but only at most two broadband providers, that users willingly Google, and that many customers have little choice in how to get onto the Internet.
However, just as the Google non-issue is a diversion from the core of net neutrality, so the net neutrality debate is in a sense a diversion from other major flaws in the telecom bill.
The debate over net neutrality is certainly important, because it will in large part determine whether the free and open Internet will continue to exist as we have known it for the past 15 years or so. But by focusing all of the attention on the issue, many other important features of the telecom legislation the Senate Commerce Committee is scheduled to mark up June 22 will be completely ignored.
There is no meaningful net neutrality language in either the House bill or the current version of the Senate bill, so the telephone and cable companies come out ahead on that score.
The main purpose of the bills was to create competition in the cable business by allowing telephone companies to get into that business more quickly. In theory, prices would be lowered for consumers if the telephone companies didn’t have to obtain permission from 33,000 local areas that award franchises to cable systems to offer video services. And so the “national franchise” was born, in which all the telephone company has to do is fill out a form at either the FCC (House bill) or a local agency (Senate) and, voila, enter the business. No muss, no fuss, no negotiations that bogged down cable companies for years when they were starting out. Cable companies get the same deal when their franchises expire.
There is, of course, one little detail. The newly entered telephone companies are under no requirement to build out their systems to all the parts of a local area.
Unlike the House bill, some states require the new telephone companies-as-cable-operators to build out their systems over an ever-increasing percentage of a state. That type of requirement makes certain that eventually all parts of an area will have access to the new services and, presumably, the price competition that comes along with it. The practice of providing service in some areas and not in others is called “redlining,” a term that first came from the practice of financial institutions literally drawing a red line on the map around some neighborhoods in which they didn’t want to do business.
The House panel rejected the approach of setting build-out requirements. Instead of having an affirmative requirement to serve everyone, the bill instead said a video service provider may not deny access to its video service to any group of potential residential video service subscribers because of the income, race, or religion of that group.
On the surface, that might sound feasible, until you look at the exceptions to the rule. According to the bill, it is not a violation of the anti-redlining language if video service is denied because “technical feasibility, commercial feasibility, operational limitations, or physical barriers preclude the effective provision of video service.” There’s plenty of wiggle room in those exceptions — perhaps call them excuses — if a phone company wants to be ultra-selective in where it builds. All it has to do is to claim that it is not “commercially feasible” to build in areas where the residents might be less well off.
But wait, there’s more. In the Senate bill, the movie companies get a long-cherished goodie, the “broadcast flag.” That’s a bit of code in an over-the-air digital TV signal that tells your set-top box or TV whether a program can be copied, saved, forwarded, or none of the above. Movie companies, which own TV shows, have tried for this clause for five years, and the FCC gave it to them in 2003. The U.S. Appeals Court for the District of Columbia Circuit overturned the regulation in May 2005 (in a case brought by Public Knowledge, the American Library Association and others), ruling that the FCC far exceeded its authority by attempting to control the design of consumer electronics. The ostensible reason for the “flag” is to prevent high-quality digital content from being stolen, and thus giving programmers an incentive to continue producing it. Viacom, in 2002, told the FCC that unless the flag was implemented in 2003, CBS wouldn’t put on any high-definition shows. Right.
Lastly, the record companies get in the Senate a bill a clean shot at satellite broadcasters. Again, the issue is whether consumers can record music they buy, in this case through a monthly fee. XM Satellite Radio has a device that not only stores songs, but allows consumers to listen to the songs in – shock! -- any order they choose, and not as programmed. The recording industry considers such a feat to be a threat to their business because such song-saving represents a lost CD sale. The Recording Industry of America wanted content controls on radio, and got it in an earlier version of the bill. In the latest version, the FCC sets up a commission to come up with audio controls, and the bill makes sure the membership is stacked so that the proper outcome is assured.
Those are the highlights of a 159-page bill produced by Republicans who don’t like big government—except when telephone, cable, movie and record companies come calling.