Getting a lock on broadband

How the FCC is paving the way for a few big companies to control everyone's high-speed Internet access.

By Jeffrey Benner

Jun 7, 2002 | The Federal Communications Commission is quietly handing over control of the broadband Internet to a handful of massive corporations.

In March, the FCC ruled that cable companies do not have to open their networks to competing Internet service providers, or ISPs. A FCC proposal to extend the same exemption to DSL service is pending. If approved, the proposal will allow local phone companies, now down to four "Baby Bells," to deny other DSL providers access to local phone networks. Currently, all DSL providers are guaranteed access to phone networks under the FCC's interpretation of federal telecommunications law.

Telecommunications, cable, and media companies (increasingly one and the same) and their allies in Congress have campaigned for years to deregulate most aspects of the telecom industry. Under the current administration, and the leadership of FCC chairman Michael Powell, those efforts have finally begun to pay off.

The trend profoundly concerns consumer advocates and some Internet policy experts. They warn that if the FCC goes through with its plans, cable companies and the Baby Bells will quickly establish a monopoly on broadband service over their own networks. Consumers accustomed to thousands of competing ISPs to choose from for dial-up narrowband Internet access will be left with just one or two options for broadband service. One worry is that the lack of competition will yield high prices and poor service. But the far more urgent concern is that media conglomerates will use their control over broadband pipes to restrict access to content, information, or technologies that compete with their own content or otherwise threaten their interests.

"The past two decades on the Internet have been a uniquely consumer-friendly environment," says Mark Cooper, research director at the Consumer Federation of America. "Now that is up for grabs. The essential ingredient of the Internet was preventing the owner of the facilities from dictating content. Now, eight cable companies will decide what the public will be offered, not 8,000 ISPs." The CFA, along with the Media Access Project, the Center for Digital Democracy, and the Consumers Union are challenging the FCC ruling on cable broadband in federal court.

Despite those dire warnings, the FCC's policy on broadband enjoys strong support. Companies with a stake in the matter are gung-ho for it, at least for their own networks, and many independent economists and public policy experts also find the FCC's deregulatory approach to broadband enlightened and long overdue. They scoff at the idea that the freewheeling Internet can be controlled by any company or group of companies. And they argue that the current regulations, particularly the open-access requirements for DSL, actually discourage private investment in new broadband infrastructure and technology. Who wants to build a new network -- whether it's DSL, satellite, or "fiber to the home" -- if you then have to share it with competitors?

If the government steps aside, they say, robust competition will develop between different technology "platforms" such as cable, phone, satellite and local wireless, giving consumers plenty of choices and stimulating a build-out of broadband infrastructure at the same time.

"If you have competition between platforms, consumers will be better off," says Randolph May, a communications policy expert with the Progress and Freedom Foundation. "The problem is that [regulation] impedes investment and new entrants to the market."

Further complicating the picture is the massive consolidation in the media and telecommunications industries that has been building for years. That consolidation is expected to accelerate as the FCC throws out limits on how large and broad media companies can grow. Once those limits are gone -- some have already been eliminated -- it is quite plausible that a single media company could control the broadcast television stations, newspapers, radio and broadband Internet access in a single city.

Even some conservatives worry about this concentration of power among the very companies seeking unregulated control over broadband Internet access. Kenneth Arrow, a Stanford economist who won the Nobel Prize for his free-market theories, supports the deregulation of broadband. But he also expresses concern about pushing reliance on the free market too far. "I am worried about concentration in the media," he says. "That does bother me."

The heart of the anti-deregulation camp's argument is that the narrowband Internet owes its phenomenal success as an engine of innovation, creativity and economic growth to government regulations that guaranteed open competition. Current telecommunications regulations, originally written to break up the Bell telephone monopoly, require open access to phone lines for all ISPs and forbid the Baby Bells to tweak with the content flowing over their networks. If such protections are not extended to broadband service over cable, and are lifted from DSL over the phone lines, those against deregulation fear that the openness, innovation, and creativity that made the narrowband Internet revolutionary will wilt in the tight fist of corporate control. Huge media companies -- increasingly fearful of the threat posed by the Internet to their proprietary content -- will jump at the chance, they say, to lock things down.

"There is a fundamental battle going on," said Larry Lessig, a Stanford law professor and an expert on Internet history and policy. "There is a strong political movement to remove all obligations to keep the network open [and] the Internet as we knew it."

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