Sunday, October 22, 2006

Should AT&T Decide the Future of the Net?

YouTube's video site beat out Google's because the Internet provided a "level playing field" upon which a video-sharing startup could compete with a major player based on its merits alone.

Stanford Law professor Larry Lessig wrote in yesterday's Financial Times that "the owners of pipes delivering video content to users on the internet did not prefer one service over the other. The owners of pipes simply passed the packets of data to users as the users chose."

Lessig, who is a charter member of the Coalition, describes this as a perfect example of the ways the free market is nurtured by Net Neutrality. Net users are free to pick the product of their choice based on the quality of the service and NOT on the discrimination of their network provider.

YouTube beat out Google Video because of its superior video technology and social networking tools, NOT because its executives had struck a special deal with AT&T to favor its Web site over others.

It's simple. Provide a better product and let the customers decide.

Isn't that one of the most basic tenets of a free and competitive marketplace? Not according to AT&T, Verizon, Comcast and their well-heeled army of legislators, lobbyists and shills.

Network owners want to tip the Internet balance towards themselves and their corporate allies. They want to charge select companies a “premium” rate to have their sites flow more efficiently to customers. Those who can't pay the proposed telco tax would be shut out. Their Web gatekeeper scheme allows companies like AT&T – and not the consumer -- to pick which sites and ideas succeed in the online marketplace.

Do you want AT&T to decide the future of the Internet?

Writes Lessig:
"[I] f network owners are permitted to set up internet toll booths, imposing a special tax on providers of content and applications, then it will be the new innovators who bear the burden of these taxes most heavily. The point is obvious when you think about the history of YouTube. Had network owners been charging an access premium, investors in an upstart like YouTube would have had good reason to think twice. All taxes are a barrier, but this tax would be a particularly high barrier to innovation."
If we had real competition among broadband providers, the free market would sort these sorts of things out. Providers that discriminate would lose customers to those that protect Net Neutrality. But in the US broadband landscape competition is dying.

Lessig cites figures from Free Press' recent report "Broadband Reality Check II," which shows that there are fewer competitors offering broadband connectivity today than there were just six years ago. According to the report, four companies account for a majority of all consumer broadband; 10 account for 83 per cent of the market.

Another study by the Government Accountability Office found that the median number of providers available to a given household is just two. That's right. Most Americans have access to two or less broadband providers. That's all. Cable and DSL systems dominate, holding more than 98 percent of the broadband market.

There simply is not enough competition between different technologies to produce any kind of deterrent to discrimination. Without Net Neutrality, the telephone and cable duopoly will leverage its market power over the network to gain control over the content and application markets, establishing a handful of giant companies as the gatekeepers of the Internet.

Net Neutrality legislation "will make sure that the one bright spot in the internet economy – the one place where vigorous competition continues – will be protected," Lessig concludes. "Congress needs to remove the incentive to keep broadband in its currently hobbled state. A thin rule of network neutrality could help do just that."

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