Access and Speed: The New Currencies of the Digital Era (excerpt)
Broadband Access: An Increasing Digital Divide
Despite its giant role in propagating the Internet and its technologies, the United States now ranks 16th in the world in broadband penetration (broadband subscribers per capita) behind such countries as Israel, Hong Kong and South Korea, according to “Broadband Reality Check II,” a report conducted by Free Press, Consumer’s Union and the Consumer Federation of America. Cable and telephone companies hold a duopoly over broadband services accounting for a 98 percent share of the residential market, providing Americans little choice in service providers and forcing them to pay higher prices for slower connections. According to a Government Accountability Office study, the median number of providers available to American consumers is two, with nearly one in ten consumers having access to no providers at all. Consumers in other countries like South Korea enjoy broadband connections through fiber optic networks (versus the copper wire cable and DSL networks most widely available in the U.S.) that are 20 or more times faster and half as expensive.
Less than one tenth of one percent of U.S. connections are faster than 25 megabits per second (Mbps) and only 4 percent of all U.S. connections are faster than 10 Mbps, with monthly broadband fees ranging from $37.95 to $54.95, according to the Free Press, Consumer’s Union and Consumer Federation of America report. In comparison, Japanese consumers can get a 100 Mbps connection for less than $35 per month, South Koreans can enjoy the same for around $32 per month, and 24 Mbps connections are widely available throughout Europe for similarly low prices. In addition, many Europeans can get triple play services in which broadband Internet access, cable television and telephone services are bundled into packages that cost less than most U.S. standalone broadband services. Why are Americans paying more for slower connections? The answer is simple. With incumbent cable and telephone companies dominating the broadband market, there is no competition that exists to foster better, faster services and the reduction of prices.
Suggested measures to increase competition such as local loop unbundling and open access policy are deemed unfair by the incumbent cable and telephone companies, and they claim they are a hindrance to investments in new network technologies, and therefore innovation and competition. In contrast to the U.S. and according to the Organisation for Economic Co-operation and Development, most OECD nations have based their policies for expanding broadband infrastructure and services on a non-discriminatory and open access framework that ensures new Internet service providers can compete with incumbents. This is made possible by the policy of local loop unbundling (LLU), which the OECD explains, “is built upon the recognition that incumbent carriers have a dominant position in the provision of local communication access by virtue of their control over the local loop,” and requires incumbent carriers to lease wholly or in part a segment of their network to competitors through bit stream, line sharing or full unbundling.
LLU requires regulation to ensure incumbent providers have incentives to keep the market open, leading to the oft-cited argument by media and telecommunications corporations that regulation leads to less competition, rather than more and fair competition. It is the classic free market myth that government regulation necessarily hinders competition and that the market will always correct itself; the OECD found that in the broadband market, it is extremely difficult for new entrants to compete with incumbent service providers without open access policies like LLU. With the U.S. broadband market existing as a series of regional duopolies, big cable and telephone companies intensively lobbying congress for more and more deregulation, and the August 2005 FCC decision to remove open access requirements from DSL service, the U.S. is clearly heading in a different direction in broadband policy than most other developed nations. According to the OECD, “broadband has been viewed as important from the perspective of economic growth and productivity, and provides one of the key foundations for the development of a knowledge-based economy.” As the U.S. continues to fall further behind in broadband speed and access, the public might consider the implications this has toward America’s technological and economic future.
In addition to the growing international divide, there is an increasing domestic digital divide based on income level and geographic location, with FCC data reporting that over 40 percent of U.S. zip codes have one or no DSL/cable modem providers reporting service. People living in urban areas are nearly twice as likely to have home broadband access as their rural counterparts, and according to the GAO, families with incomes of less than $30,000 are four times less likely to have broadband Internet access than families with incomes of $75,000 or above. A third of American households still have 56k modem dial-up as their only option for Internet access.
Broadband essentially refers to high-speed Internet access, and with web content becoming increasingly sophisticated with its inclusion of video and audio applications, the need for speed has become increasingly important. Rep. John E. Peterson (R-PA) said in April 2006 that, “lack of broadband leads to a lack of access to information, which leads to fewer economic opportunities, which leads to lower incomes, which leads to fewer broadband options. If equal access and opportunity are what our society seeks to provide, perhaps it's time we work to close the real digital divide before it swallows a large section of our country.” Peterson was addressing the domestic digital divide between urban and rural Americans, but the argument carries over to the global arena.
Network Neutrality: Cable and telephone companies as gatekeepers of the digital era
The issue of network neutrality has recently received wider recognition thanks largely to the efforts of the media policy group Free Press, as well as progressive and public media outlets such as Mother Jones and PBS. Net neutrality is essentially the non-discriminatory or neutral treatment of all content over the Internet. Net neutrality allows users to pick and choose what content they want to access and guarantees that no matter what content they choose, whether it be a large corporate website or small niche blog, they will be able to download it at the same speed and without the intermediary role of a gatekeeper.
There is still a large debate in Congress over the importance of net neutrality. As it is, the telecommunications companies – namely Comcast, AT&T, BellSouth and Verizon – plan on implementing a two-tiered traffic system for the Internet which would operate much like a toll booth, in which those content providers who pay a premium will be relegated to the “fast lane”; in other words, their content will download faster, while those who do not or cannot will remain in the “slow lane,” in which their content may take significantly longer to download. As bandwidth intensive web content becomes the norm, the telecommunications companies argue that a tiered system with bandwidth limits and prioritized Quality of Service (or fast and slow traffic lanes) will provide a solution to the network congestion continuous high bandwidth applications cause, and will recoup their costs for providing higher quality services, as well as encourage network investment and development. An opponent to net neutrality, Adam Thierer, director of telecommunications studies at the Cato Institute, argues in his “Ten problems with net neutrality proposals” that Internet service providers have certain property rights over their services; that if they can’t expect to offset the costs of technological progress and innovation (as well as turn a profit) then there might not be any service providers to begin with, since business services to the public are ultimately there to make a profit. His contention then is that business interests augment public interests, and are therefore just as important.
Advocates of net neutrality and its protection remind the cable and telephone companies of their unfulfilled promise to consumers for wider access and better technology, and their negligence in instituting that technology (i.e. higher quality fiber optic networks) which has been available to them for some time, but would drive down current broadband prices and reduce the companies’ colossal profit margins. Net neutrality advocates argue that if non-discriminatory policies like net neutrality are not preserved, the telecommunications companies will not only take on the role of Internet-gatekeeper, but the tiered system will act as a caste system in which only those who can afford the best access and distribution will get it. Additionally, it will be at the cable and telephone companies’ discretion as to which content providers will receive priority. Stanford Professor of Law Lawrence Lessig and media critic, activist and Professor of Communication at the University of Illinois at Urbana-Champaign Robert McChesney write in their Washington Post article “No Tolls on the Internet”: “Without net neutrality, the Internet would start to look like cable TV. A handful of massive companies would control access and distribution of content, deciding what you get to see and how much it costs. Major industries such as health care, finance, retailing and gambling would face huge tariffs for fast, secure Internet use -- all subject to discriminatory and exclusive dealmaking with telephone and cable giants.”
According to a report by the Congressional Research Service, there is legitimate potential for a multi-tiered network where Internet providers act as gatekeepers, to limit competition and consumer choice, raise consumer prices and discriminate freely among content providers. The counter-argument is that in a competitive market, if a broadband provider charges unreasonable fees or blocks certain content, users can just go to a competing service provider, and the market would therefore correct itself. The CRS notes however that, “this scenario assumes that every market will have a number of equally competitive broadband options from which to choose, and all competitors will have equal access to, if not identical, at least comparable content.” The fact that the current U.S. broadband market is dominated by a few major cable and telephone companies serves to complicate this free market response to the risks of eliminating net neutrality and other open access initiatives.
A tiered system in which the haves get better and faster service than the have-nots will potentially hurt the little guy, the small business owner, the blogger, the non-profits, the independent and public media outlets, and the consumer who is trying to access them. Supporters of net neutrality argue that its replacement by a discriminatory system will ultimately demolish the democratic system the Internet has historically operated by, and once again, put the public interest at the mercy of corporate interests. The issue here again has much to do with access and speed.
Telecommunications Legislation: A Call for Reform
On June 8, 2006 the House of Representatives passed the “Communications Opportunity, Promotion and Enhancement Act of 2006,” known as the COPE Act (H.R. 5252), a large telecommunications bill with four major provisions addressing national franchising for video providers, network neutrality, VOIP/e911 and municipal services. Although the provision for municipal services serves the public by allowing communities to set up their own high-speed Internet networks, the bill fails to address key issues concerning open and democratic access to the Internet, including protections for net neutrality, local government and consumers. Common Cause points out that the provision for national franchising transfers the power to enforce consumer protections from local and state government to the FCC, which does not have the appropriate resources or authority to completely address consumer concerns and complaints. The provision also does not include build-out requirements which require providers to build their systems in all parts of their media markets, preventing companies from “redlining” or focusing on “high value” areas and customers at the expense of rural, low-income or minority neighborhoods. The bill provides no legal protection for network neutrality or consequences for violations of the FCC’s net neutrality policy statement, which outlines network ethics guidelines for the cable and telephone companies to follow voluntarily.
The bill has been reclassified as the “Advanced Telecommunications and Opportunities Reform Act” to go before the Senate, after a nonpartisan amendment to the bill by Senators Olympia Snowe (R-Maine) and Byron Dorgan (D-N.D.) that would have provided protections for net neutrality was defeated. The political climate surrounding net neutrality has changed significantly however since the COPE bill was passed in June, thanks largely to the Save the Internet Coalition (www.savetheinternet.com), the Free Press sponsored public grassroots campaign that began last spring and has gained considerable momentum since, attracting 1.2 million petitioners and a large public following from all ends of the spectrum, including Moveon.org and the Christian Coalition. The campaign sparked public debate about the issue despite millions of dollars in telecom lobbying and very little coverage in the mainstream news. Net neutrality was named the number one uncovered news story in 2006 by Sonoma State University’s Project Censored, which puts out an annual top ten list of important news stories that fail to make it into the mainstream news. Private organizations in support of net neutrality have joined the debate as well, starting their own campaign called It’s Our Net (itsournet.org), with such large companies in tow as Google, Yahoo and eBay, all of which owe much of their success to an open, democratic Internet.
After the recent midterm elections in which Democrats won control over both the House and Senate, things may look better for net neutrality supporters. While Sen. Ted Stevens (R-AK), author of the ATOR telecom reform bill waiting Senate approval, and other Republicans have tried to make the issue a partisan one in Congress, according to WebProNews.com, now that Democrats are the majority in Congress, more Republicans may be willing to take a bi-partisan stance. The incoming Congress will make Rep. Ed Markey (D-Mass.) the new chair of the House Telecommunications and the Internet Subcommittee and Rep. John Dingell (D-Mich.) the new chair of the Energy and Commerce Committee, which oversees phone, cable operators and Internet companies. Both Representatives are staunch supporters of net neutrality, Dingell already announcing plans to make changes to the telecom reform bill that will clearly address net neutrality, among other things. New Speaker of the House Nancy Pelosi (D-CA) has also added net neutrality to her list of important issues. While this bodes well for net neutrality advocates, the Save the Internet coalition and others are still watching closely for any action that might be taken during the lame duck Congress.