THE BLOG
08/29/2012 01:11 pm ET Updated Oct 29, 2012

Up in Smoke: California's Broadband Future Is Under Threat (And Your State Is Next)

There's a state of emergency in California that has nothing to do with wildfires or hurricanes. It's called SB 1161, and it wreaks havoc on California's authority to adopt measures that protect consumers when it comes to the cost, service, safety, and availability of access to information, data and entertainment -- all basic inputs into almost everything we do.

How could such a bill pass so smoothly through the California legislature? Because this bill is much more than what it seems.

SB 1161 looks like a bill that deregulates "VoIP," or voice-over-Internet-protocol services (like Skype) that use data connections. But that's not all it does. The bill's language also covers all "IP-enabled services." As previously-separate services (voice, television, data) converge, "IP-enabled services" include everything we do using wires and airwaves. This language will allow the few companies selling comunications services in California to avoid any requirements or obligations -- removing the wires and transmission towers themselves from any oversight.

But, you ask, so what? The Internet is the great democratizer, the platform that has made possible an explosion in information access, personal communication, business, and innovation. It should be as free and open as possible.

What the lobbyists aren't telling legislators is that SB 1161 isn't about keeping the Internet free from unnecessary regulation -- it's ultimately about deregulating the company selling you Internet access. Two different things. We have always regulated the utility providers of water, electricity, and communications, because everyone needs these services at a reasonable cost and because there is only one provider of them in most places; without oversight, they'd gouge the rich and leave the poor unserved.The economics of utilities have not changed just because we now watch YouTube videos. Nor has our need to ensure that the private companies selling these services are obliged to serve public interests.

Because we've had a huge wave of consolidation over the last ten years, there are very few companies selling us Internet access; in many parts of the country, we've got monopolies for the wired speeds Americans will need to keep up with the rest of the world. (Wireless is a separate, complementary market, and we've got just two mammoth players there -- AT&T and Verizon.) Cable gets wires; AT&T and Verizon get wireless. And so we have the worst situation of all: The rich get charged too much for second-class services; many Americans are left behind; and there is almost no oversight.

Now the carriers want to make sure that they run no risk of oversight by California's state regulator. But Californian businesses rely on dependable, affordable, high capacity and content-neutral communication services -- the only thing equally fundamental to these industries is the electricity that powers them. Yet the carriers want to maintain their unregulated freedom at the cost of everyone else's. They want to keep their investments in their network low while charging everyone for everything. They love the idea of a two-sided market where they charge the consumer whatever they want to access the network -- and also charge service providers whatever they want for access to the consumer.

All of this is fine for big companies like Facebook and Google; they have plenty of leverage in these negotiations. But the other players in these two-sided marketplaces -- startup companies, poorer Californians, society as a whole -- won't do well. The carriers will have the power to pick winners and losers and jack up prices (and cut off services) whenever they want.

This deregulatory push isn't just happening in California -- the telecom lobby is sweeping the country with bills like SB 1161, gutting legislative oversight and regulatory authority wherever they can. They would like to get rid of communcations regulation completely. Having an unregulated monopoly over a basic, required input into all economic activity is a great business, and the rewards it generates have the carriers jumping at the chance to pump money into re-election coffers this fall. California is just one example of an overall trend -- but it's a very big and important example of what's happening, often with no fanfare, in statehouses across the country; someday soon, these efforts will reach Capitol Hill.

Governor Jerry Brown can still veto this bill, and that's exactly what he should do - the telecom industry will cry foul, but all the other industries that rely on these "IP-enabled services" should thank him. After all, access to the Internet should be universal, affordable, and fast (both for uploads and downloads), for both individuals and the businesses that want to reach them. The carriers want a deal that is great for them. But it's terrible for California.