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Art Brodsky

Art Brodsky

Posted: June 10, 2009 04:22 PM

GM's New Chairman -- You Won't Drive on My Roads for Free


Who says there is no cosmic irony in the bland world of telecom? On the day after thousands and thousands of pages were filed with the Federal Communications Commission (FCC) on a new national broadband plan, General Motors announced its new post-bankruptcy chairman -- Ed Whitacre, the former chairman of AT&T.

It was Whitacre who set off the Great Net Neutrality Storm of 2005-2006, when he took control of the Internet on behalf of AT&T, putting forth the unique view of the world that Google, Yahoo and other Internet companies were using his company's telecommunications network "for free," and he wasn't going to allow that. The fact that those, and many other, companies were paying millions of dollars for telecommunications didn't seem to matter.

The issue was one of control -- Whitacre had it, and he wasn't going to give it up without a fight. Of course, with General Motors, Whitacre will be able to get back to his original model. Not only Google and Yahoo, but others are using his roads for free. Heaven help the gearheads who want to change out parts in their new post-apocalyptic GM models. Under the Whitacre model, they can forget that after-market new carburetor or the dual exhaust. Even new hubcaps, would be on the no-no list.

Whitacre could gin up a few new revenue streams as GM tries to recreate itself. Cars could be sold with speed caps, so customers would pay extra monthly fees for engines that allowed you to drive faster, but only for certain distances between particular destinations. (That might not be a bad thing, come to think of it.) Lauren Weinstein suggested car owners might face mileage caps, or would have to pay to start their cars. Those are his cars, and don't forget it.

Sad as it is to mention, the ghost of Whitacre prevails over the current proceeding, much as it hovered over the past. Of course, the language used now is more diplomatic than Whitacre used. Instead of accusing companies of being "nuts" if they think they can use "pipes for free," the industry has refined its approach. They still want control over users and how users employ networks. That kind of idea should sink, "like a rock," as it were.

Telephone Companies Want Internet Control

That's how the thousands of pages of comments break down. On one side are the network providers and their eco-system of suppliers, much like the auto companies and the companies dependent on them to make the parts. They roll out every rhetorical device/threat they can think of to stave off the fact that the companies owning the networks shouldn't play favorites. On the other side are just about everyone else -- the consumers and their advocates, who want the government to make certain that Internet policy benefits everyone.

AT&T, for example, wants to make sure that: "Among other things, the Plan should make clear that policymakers will not allow ancillary debates about 'net neutrality' and theoretical concerns about potential market developments to eclipse the importance of enabling investment in and use of robust network management capabilities to meet critical public-safety needs." For a company that in its comments urged the FCC to think outside the box, this comment certainly meets the test. Now, for the first time, having a neutral, non-discriminatory Internet will hamper public safety. Funny, for all those years that the network was neutral and non-discriminatory under the Communications Act, no one found a public-safety issue. Only in the last couple of years, it seems, has this become an issue.

Not only is a non-discriminatory Internet potentially harmful to public safety, it will also make service less affordable, AT&T argued. Just think this is a company intent on putting bandwidth caps on its customers, and yet finds the time to worry about affordability, even as it cuts down on deployment and forces public-access channels into the channel 99 oubliette. The message is simple, and constant: do it our way or we won't invest. (Speaking of which, iPhone fans, which company is it that's keeping the new phone from using some of its best new features? Not Apple. Oh, yes, AT&T.)

Verizon, too, takes the hard edge off of the Whitacre logic, through such terms as "consumer empowerment," and "consumer choice framework." Verizon is all for those concepts, when it provides the empowerment and the choices. Heaven forbid that the FCC requires wholesale or line-sharing access to Verizon's services. Those might be the regulatory burdens that would inhibit innovation or investment. Instead, one must give network operators the "flexibility" to offer "managed" services. Verizon Executive Vice President, Tom Tauke, trotted this horse out of the barn a couple of weeks ago, when he said, "Our view is, in the future, consumers ought to have the ability to choose between the wild, wild West of the Internet or to choose a different experience."

In its filing, Verizon made that argument: "Some customers may prefer more highly managed Internet access services that provide additional layers of security to shield themselves or their children from certain sites or from online security threats, while some tech-savvy users may prefer a less-managed service without those protections." That's a fine idea -- for 1998. If Verizon wants to get into the walled-garden business, I'm sure it could buy AOL, or purchase the rights to Prodigy's name. One of those companies is hanging by a thread; the other no longer exists, because access to the Internet at large killed them both. Consumers preferred the Wild, Wild West and the broad array of features and services.

Instead, consider the "managed" network to be the total control network, providing protections that the company doesn't provide now -- it depends on Yahoo!. Of course, Verizon could do that now, and it could manage its network to optimize traffic in a non-discriminatory way. But what fun would that be, when the company could guarantee a better quality of service for just a little more money every month? And perhaps some sites, like a video service, would rather be carried on that "managed" network than on the old, dirt-road Internet.

Verizon opposed "backward-looking regulation" like neutrality as killing investment. On the other hand, Tauke not four days before the comment was filed, said he was open to considering a non-discrimination (the so-called Fifth Principle) to be added to the existing FCC Internet Policy. As quoted in Broadcasting and Cable, " 'I'm not saying I am inviting a fifth principle," Verizon Executive VP Tom Tauke told reporters Thursday at a press briefing, 'but I wouldn't want to say that we couldn't find a way to live with a fifth principle.'"

All of those companies support widespread deployment of broadband, except of course when they sell off rural exchanges or won't spend money to provide the service. AT&T is all for ubiquitous broadband, yet it fought in the North Carolina legislature to prevent the town of Wilson from building its own network. Verizon is all for ubiquity, but is allowing Frontier the pleasure of serving these areas.

Consider these two sentences: 1) "Notwithstanding the widespread competition in most parts of the country, certain high cost, hard-to-serve areas currently remain completely unserved by any forms of Internet access other than dial-up or satellite. These are the areas where the business case for private investment is most difficult to make." 2) "The extension of [service] to territory not now served is, in general, impeded by the cost of such extension."

The first is from Verizon's filing of June 8, 2009. The second is from a Department of Commerce report of Jan. 23, 1934, talking about the Bell System extending telegraph service to rural areas.

There Is A Better Idea

On the other hand, Public Knowledge and others, Free Press, Consumer Federation of America/Consumers Union and many others advocated a different approach, a realistic approach that recognizes the essential nature of the Internet, the lack of choice for consumers and our falling standing in the world for the Internet and for innovation.

We want an open network that benefits everyone. The truly open network is an anathema to not only the telephone and cable companies, but also to those who want the network used for their own purposes -- such as futile mandatory filtering of copyrighted material.

We want to reverse course and turn back to the pre-2005 days, when thousands of Internet Service Providers flourished, when the Internet was developed, to make sure that the Internet remains free of discrimination and control (not management, control. There is a difference.)

Is it regulation? Yes. Has it proven to support and give opportunities to entrepreneurs and developers? You bet. That's the better idea.