Over the next year, Federal Communications Commission Chairman Michael Powell will have an opportunity to complete a mission he launched several years ago to free broadband Internet services from the burden of being regulated as common carriers.
Cable and telephone companies, free market advocates and others who are cheering Powell on believe the old English common-law concept of common carriage has outlived its usefulness in the modern world of high-speed Internet services. The deregulators might admit that common carrier regulations, which obligate owners of facilities serving the general public to provide nondiscriminatory access to any customer willing to pay the standard tariff, may have been necessary in the “one-wire world” of decades past, when the telephone lines were the only conduit for telecommunications. But in the fiercely competitive broadband market, in which telephone services are competing with cable and wireless systems to offer high-speed Internet access, Powell and his allies insist market forces will keep any monopolistic tendencies in check. For those who share this view, the liberation of broadband Internet services from common carrier regulations can come none too soon.
An array of opposing interest groups, however, isn’t going to let common carriage principles get chased out of the broadband arena without a fight. Foes of the FCC’s push to deregulate broadband, including Internet service providers, consumer and civil liberties groups and state and local governments, fear that the freedom Powell is offering means freedom for powerful telecommunications companies to exert monopoly power over the Internet. Powell’s critics insist that once the handful of broadband giants are relieved of an obligation not to discriminate, it will only be a matter of time before they start exerting control over content, if that’s what they decide they need to do to advance their economic interests.
These starkly opposing views of broadband classification are currently facing off in two big showdowns that will play out over the coming year. The first concerns the pivotal 2002 ruling by the FCC declaring that cable modem services aren’t common carriers. That declaratory ruling was shot down by a federal appeals court last year in the Brand X case, which is now before the U.S. Supreme Court.
The second showdown is looming over a petition filed in October by BellSouth Corp. The phone company contends that its DSL service is entitled to a level regulatory playing field with cable modem services, so telephone-based broadband service shouldn’t be regulated as a common carrier either.
As groups opposed to deregulation see it, the stakes couldn’t be higher in the two big cases now under review. Mark Cooper, research director for Consumer Federation of America, asserts that if BellSouth successfully deregulates broadband Internet services, “For the first time in the history of this country the dominant means of communication, and some people think commerce, will be entirely in the hands of private carriers with no public obligation whatsoever.”
With the Brand X case now before the Supreme Court and BellSouth’s petition under review at the FCC, Cooper adds, “The entire issue is now teed up. No more playing around. We will have a big debate about fundamental values, an expression I like to use these days. Is open, nondiscriminatory access to the means of communication a social value that we hold dearly?” That is the “central issue” in the debate over the classification of broadband Internet services, Cooper says.
The case for competition
Proponents of deregulation contend that competition is the best way to assure that the means of communication are open to all. And the regulations on Internet services that are hold-overs from an irrelevant past are nothing but costly obstacles that hinder competition, they say.
As BellSouth asserted in its “forbearance petition” asking the FCC to hold off on imposing common carrier regulations on DSL service, “Application of these outdated rules in the current environment effectively insulates cable companies from the most robust facilities-based broadband competition possible. True facilities-based competition will provide the greatest competitive benefits to broadband customers, and those customers lose when regulatory burdens are skewed in a way that protects the market leaders and handicaps investment and innovation by those seeking to compete.”
BellSouth emphasizes that its customers include hundreds of independent Internet service providers who use the phone network to serve their own customers. Wholesale transactions with major ISPs, including EarthLink, are “an incredibly important part of our business,” a company spokesman said. Far from abandoning those customers once common carrier regulations are lifted, BellSouth, relieved of the costs and bureaucratic impediments imposed by the regulations, will be able to offer better service, as the competition is already doing. “While BellSouth is currently required to provide wholesale broadband to competitors under FCC rules, cable companies are free to negotiate private agreements with the same ISP competitors,” the spokesman explained. “Again, BellSouth is simply asking for a level regulatory playing field.”
The phone company’s position echoes the views expressed by Powell in a statement explaining the FCC’s petition in the Brand X case. “This is about ensuring that high-speed Internet connections aren’t treated like what they’re not: telephones,” he wrote. “A successful appeal of this case would ultimately mean lower prices and better service for American consumers. Applying taxes, regulations and concepts from a century ago to today’s cutting-edge services will only stifle innovation and competition.”
Randolph May, senior fellow with the Progress & Freedom Foundation, a market-oriented think tank backed by the cable, telephone and computer companies, adds that competition is already, or at least potentially, vigorous enough to overcome any abuses. “The operators of the broadband services won’t discriminate against people who want access because they have to satisfy consumers or the consumers will go to an alternative,” said May. “Not every place in the United States has an alternative, but we’re moving in that direction rapidly. Competition and potential competition act as a restraint against harmful practices.”
That seems to have been the case in the several years since cable Internet services have been operating free of any common carrier obligations, May added. “I don’t think anyone has been able to cite any real complaints or any instances where there has been denial of access,” he noted. “Even proponents of regulation concede that there haven’t been instances of ‘bad conduct.’ There’s just a fear that there might be.”
Regulation still needed
In a brief filed with the Supreme Court in the Brand X case, a coalition of municipal governments indicated in blunt language that they aren’t going to be fooled by the argument. “That cable operators have, so far at least, voluntarily chosen not to exploit that control more fully by blocking some Internet content — or, more accurately, that operators have made the editorial decision that, at this time, it is in their marketplace (or strategic regulatory) interest to provide unfiltered Internet access content — does not, and cannot, alter the fact they possess such control,” said the brief filed on behalf of the National League of Cities, the U.S. Conference of Mayors and the National Association of Counties.
Cooper agrees. “The simple fact of the matter is that under the cable modem approach there are no obligations to let anybody write or publish anything.” Cooper notes that Powell has proposed “his famous four freedoms,” a set of guiding principles that he has challenged the broadband network industry to voluntarily follow, one of which is the right of consumers to have access to their choice of legal content. “That’s well and good, but if you don’t have muscle behind freedom, it’s useless,” says Cooper. Owners of broadband networks won’t mess with most content. Cooper adds. “If it doesn’t matter to them they may not bother you. But the minute it threatens their economic interest or their control of the network, there is nothing to prevent them from exercising their market power to stifle things that they don’t like, other than the wrath of Michael Powell which doesn’t scare too many people.”
About Mark Thompson
