When asked whether he was concerned about Google, MSN, Vonage, and other companies plans to get into broadband services, the CEO of the telco giant let slip his plans to create a "walled garden" where your freedom to surf is sacrificed at the altar of SBC profits:
How do you think they’re going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes?Americans take for granted the diversity of information and services they find at the click of a mouse. Whitacre is working to change this. His company -- along with the "duopoly" of cable and DSL providers that provide access to more than 90% of Americans -- are working overtime to horde your access to high-speed internet.
The internet can’t be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!
The threat to our ability to surf beyond the confines of content they approve – and profit from -- looms large. They’ve waited for years for a return on their investment in fiber and cable infrastructure. They now want payback, at the expense of consumer choice.
Public interest groups are joining with consumer advocates and online activists to fight gatekeepers like Whitacre’s SBC from shutting down internet freedoms. But those who regulate the internet are more likely to rule for the cable and telephone giants than on behalf of the public they are supposed to defend.
In the early days of internet, most of the largest access providers swore to honor “net neutrality” -- or open access to everything online. But as new broadband services, such as voice over internet protocol (VOIP) and on demand video, promise revenues in the tens of billions, big media are changing their tune. Whitacre is just the first to confirm it in words. His cohorts at Verizon, Comcast and elsewhere are licking their chops and laying the groundwork for a broadband age that’s theirs alone.
The 'Walled Garden'
Blocking content is the most high profile example of a net neutrality violation. The most common form so far is blocking VOIP traffic. DSL companies that also have local phone service don't like their broadband lines to be used by other companies to undercut phone rates.
"But content blocking probably won't be as significant as content disruption and prioritization," says Ben Scott, policy director (and my colleague) at Free Press. "If you block content, it's apparent immediately. If you slow it down, it may not be noticed right away."
Under Scott's scenario, the preferred services, applications, and websites of the network owner will download faster, run smoother, and work better than a competitive service. So if Comcast has online video services and Verizon has online video services, they'll make sure that their system works better on their own networks than those offered by AOL, Yahoo, MSN, Google or smaller independents.
"If everything works smoothly in the portal and all of their forays outside the portal work poorly, then they will simply stay in the portal," says Scott. "That's a disaster for anyone trying to push content outside the proscribed limits of a 'walled garden.'"
There are early signs that they may be testing the waters for more restricted content services in the realms of on-demand video, a potential revenue earner that would supplant the billion dollar advertiser driven model of broadcast television. Only the Federal Communications Commission stands in the way of their desire to restrict VOIP access to their services alone.
By requiring consumer safeguards, the FCC could foster more internet competition and innovation at lower costs to end-users. But FCC commissioners haven't always taken such a principled stance on behalf of the public.
Guarding the Gatekeepers
In late 2002 several major software and e-commerce firms formed the Coalition of Broadband Users and Innovators to petition the Republican controlled FCC to adopt rules ensuring that cable and telephone industry broadband operators will not use their control of high-speed networks to disrupt access to websites or other users. They were soon joined by public interest advocates including Public Knowledge, the Center for Digital Democracy, and the Electronic Frontier Foundation and Consumers Union.
In June 2003, then 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 to preserve an open internet for all.
“Competitive broadband distribution would allow us to rely upon market forces, rather than government regulation, to govern market structure and service provision," he said.
Throughout this year FCC Chairman Kevin Martin has echoed this belief. Market forces alone will continue to keep the internet "open," Martin has said on several occasions. This is no surprise coming from a man who’s ruled hand in glove in favor of the same big media companies that are spending tens of millions to lobby rule makers against making rules. But it may not convince many champions of net neutrality to give up on seeking an open access mandate from the FCC.
This group argues that the FCC must adopt preemptive "nondiscrimination safeguards" to ensure Net users open and unfettered access to online content and services in the future. Such preemptive, prophylactic regulation is necessary because the current market is characterized by a cable-telco "broadband duopoly" that threatens internet users.
In August 2005, the FCC adopted a policy statement containing four principles it claims will preserve the open and interconnected nature of the Net:
- consumers are entitled to access the lawful internet content of their choice;
- consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement;
- consumers are entitled to connect their choice of legal devices that do not harm the network; and
- consumers are entitled to competition among network providers, application and service providers, and content providers.
The best thing for consumers would be a robust, competitive market with lots of broadband and other internet providers. In a world dominated by too few access providers, a good case can be made for proactive government intervention to keep the net open.
Without FCC oversight, Whitacre’s dream of broadband paradise could become a nightmare for the rest of us.