font-family: 'Arizonia', cursive; Michael Stichauf - "As I understand it now...'til it changes": The Monopolistic Threat to Net Neutrality

Monday, May 12, 2014

The Monopolistic Threat to Net Neutrality

I just read an article that my friend Mark Thomas from "History as Prologue" posted called "Net Neutrality's Death Could Spark Populist Revolt" by Ron Fournier of the National Journal. It's a very compelling article that poses some serious problems and questions. Here's the link; National Journal- Net Neutrality's Death Could Spark Populist Revolt

I know there are large swaths of the internet community who dearly miss the intoxicating days of the early internet. A time when no one worried about their content being examined by anyone and an era which provoked great experimentation. The internet certainly has come a long way from those days. Nowadays, the internet is basically run by big corporations who charge money just for you to get online, let alone watch whatever it is that others are offering to the masses.

Don't get me wrong, these big corporations have certainly added to the incredible popularity and versatility of the internet. No doubt about it. So many of us would be lost without the ability to, in a couple of quick clicks, call up whatever information we need or our favorite T.V. show. These corporations have opened up whole worlds to people who, sans the net, would never be able to visit them. Just the information and videos that "The Smithsonian Institute" now offers gives kids, and adults alike, the ability to view whatever it is that they want to learn about. Without these corporations, the internet would be a totally different place.

So, just what is "Net Neutrality"? Wikipedia's nice simple definition is; "Net neutrality (also network neutrality or Internet neutrality) is the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment and modes of communication." Another explanation is from the article; "Net neutrality is the principle that Internet service providers can't discriminate among content providers trying to reach you online- they can't block websites or services, or degrade their signal, slow their traffic or, conversely, provide a better traffic lane for some rather than others." 

As it is now, although the ISPs (Internet service providers) have to adhere to the above definitions, they are starting to "bang the drums" for less regulations that would allow them to dictate who sees "what", how they see that "what", and how fast they deliver that "what". The big corporations want to flex their muscles, now that they have the power to do so, to begin to tear down these regulations so they can begin to dictate terms to content providers and consequently, to the public. Whomever controls the access gets to dictate the terms and right now government regulations are the only thing standing in the way of these service providers. 

Advocates and early Internet proponents initially wanted the government to keeps their hands off the Internet. One of their arguments against the government having any regulation over the net was that the net would "police" itself. The Internet didn't need anybody to restrict or regulate the content being "broadcast", if people didn't want to see or watch it, they didn't have to. This is the same theory held by "anti-regulation" economists who believe that Capitalism doesn't need any regulations, the less the better. They believe that Capitalism is, and always will be a self-regulating system and if we just left well enough alone, the economy will always self-correct. In a perfect, Utopian society, that may be true. We don't live in that type of world. The world will always have people who are ready, willing and able, to take advantage of people and situations in order to get an advantage. All we have to do is look back at the Great Depression or the recent financial debacle of 2008 to see that great catastrophes can happen when there are people willing to do illegal or immoral things in order to gain an advantage.

Now, at the heart of this desire to roll-back regulations is money. Actually, it's money and monopolization. Monopolies seek to control their industries from top to bottom. When that happens they stifle competition and when they stifle competition a number of things happen. 

When a corporation, or a scant few corporations, control a whole industry, innovation is one of the things that takes a big hit. It's really just human nature. When there is no reason to continually better oneself, we human beings don't seem to have the initiative to better ourselves. When corporations don't have the worry about some upstart company, with fresh ideas, coming into their industry and threatening their position of power, they have no reason to continually change and grow. There's no need for them to put money into their R & D (research and development) departments. After all, R & D costs can be enormous. The theory is; everything is going along swimmingly, why change it. We control this industry and there's no need to make waves. Competition is paramount for progress in ANY industry. 

Another problem that occurs in a monopolized industry is in the area of price. It's simple economics. When companies don't have to worry about another company starting up and charging lower prices for the same services, they don't need to be competitive in their pricing. For years, companies such as Comcast have fought hard to keep other companies from offering cable services. Comcast has had a virtual monopoly for years in the cable field. It wasn't until the government said enough, that other companies were able to compete and prices dropped. 

So, as you can see, profit and money are at the forefront of this issue. There still is a danger in this industry for the consumer though. Even though there is now what we call competition, there is still the danger of collusion in this business. Collusion is when two or more companies get together and "fix" the prices for their industry instead of the market creating the price point. It's a practice that happens when there are a scant few companies that make up an industry. More than just a few companies makes it extremely difficult to get everyone on board for their collusive actions. It's similar to the law of averages. Eventually, someone with some "moral backbone" speaks up and cries, "Foul"!

On Thursday, May 8, 2014, the House Judiciary Sub-Committee on Regulatory Reform and Anti-Trust Law met and held a hearing on the Comcast-Time Warner Merger deal. You can view the hearing at this link; House Judiciary Sub Committee on Regulatory Reform and Anti-Trust Laws  A couple of interesting facts came out. Mathew Polka, CEO of American Cable Association stated that he's "not convinced that this merger will lower costs". As Mr Polka wasn't allowed to expand on his point, if it's not certain that this deal would lower costs, it shouldn't be allowed to go through. Cogent Communications CEO, Dave Schaeffer stated that "Comcast Cable has refused to upgrade their connections." Of course, no competition, no need to upgrade (innovate). This is a perfect example of the whole "monopolies stifling innovation" point that is so detrimental to the industry and consequently, the public, who are what these Anti-Trust laws are made for. I understand that whether a merger should be allowed doesn't depend upon the sole issue of, "will it lower costs" but that sole issue is the bottom line to the whole Anti-Trust laws of our country. Theodore Roosevelt, the "Trust busting" President went after the Trusts because of the bottom line to consumers- PRICE.

This Anti Trust hearing isn't the only hope consumers have in helping to keep Net Neutrality. The FCC (Federal Communications Commission) oversees the industry. Unfortunately, President Obama's appointee to head the FCC. Tom Wheeler, isn't someone the consumer should place their hopes in. According to Michael Hiltzik of the "Los Angeles Times", Ron Fournier writes in his article that, Wheeler seems to favor the monopolist point of view. Hiltzik writes, 
His proposal would forbid ISPs to block any legal websites or services, but allow them to favor some traffic under "commercially reasonable" arrangements, to be reviewed by the FCC on a case-by-case basis. A deal Netflix recently reached with Comcast to ensure that the video company's content appears bright and sharp on Comcast customers' iPads and TVs – one that Netflix suggests it signed only because it had no alternative – would probably fall well within the rules. 
Arrangements such as this would give some companies an advantage over others, the very thing that consumers expect the FCC to forbid. 

Another practice that needs to be watched is one pointed out by Lawrence Lessig, an advocate of Net Neutrality. Lessig contends that we must not let the broadband providers use their "last mile" infrastructure to block content or competitors. Whether the FCC allows the broadband providers to use this "last mile" as a weapon or they allow providers to charge extra money for better quality transmission, the consumer loses out. It allows the big corporations all the power in the internet world that they can muster to charge more money and higher prices, thus enlarging their bottom line.  

If the FCC allows either of these practices, smaller companies or start-up internet broadcasters won't have the money to compete. A perfect example of this is "The Young Turks" and their new media internet broadcast. "The Young Turks" was started by Cenk Uygur and others when they became frustrated with the pressure from media companies such as MSNBC, who wanted their on air personalities to "toe the Administration line". Fed-up with this pressure, Mr. Uygur started "The Young Turks" network with viewer donations. It is a small start-up network that now has over a billion viewers daily. If these cable monopolies are allowed to charge more for better transmission or block a network such as "The Young Turks", who refuse to "toe ANY Administration's line", they have the power to dictate what they decide they want the viewer to see not what the viewer wants through his own volition. 

The Internet has come a long way since the days when Al Gore started it (What? You're kidding? He didn't?). Okay, since the beginning. Unfortunately, the days of no regulation are over. People might consider that a tragedy, and it is. When you boil it down, in a literal sense, ANY regulation puts a damper on our First Amendment Rights (if you are a purist). Yet, when the consumer sees what the companies that they MUST deal with are willing to do to make more and more money at the consumer's expense, they have NO CHOICE but to scream for Government oversight. That is also a tragedy. Sadly though, that's what it's come to, the consumer NEEDING the Government to protect them from the "Big Bad Cable Monopolies". As I watched the inter-action between the Cable big-wigs and the members of the House sub-committee, it dawned on me... the consumer doesn't HAVE A CHANCE IN HELL of the committee putting the "smack-down" on this deal! I hope I'm wrong!

And that's, "As I Understand it Now...'til it Changes"
Michael K. Stichauf- Writer.