Net Neutrality’s Death Could Spark Populist Revolt

With echoes of the Gilded Age, Washington coddles moneyed, monopolistic internet barons.

From left: John Rockefeller, Andrew Carnegie, Cornelius Vanderbilt
National Journal
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Ron Fournier
May 6, 2014, 6:25 p.m.

In the Gil­ded Age, wrench­ing eco­nom­ic and tech­no­lo­gic­al change hardened life for the vast ma­jor­ity of Amer­ic­ans while an elite few prospered. In­nov­at­ors like John D. Rock­e­feller, An­drew Carne­gie and Cor­neli­us Vander­bilt dis­rup­ted old in­dus­tries, cre­at­ing news ones, and ce­men­ted their for­tunes via gov­ern­ment-ap­proved mono­pol­ies. The most per­ni­cious of these were rail­road trusts.

In our times, wrench­ing eco­nom­ic and tech­no­lo­gic­al change hardens life for the vast ma­jor­ity of Amer­ic­ans while an elite few prosper. In­nov­at­ors like Bill Gates, Steve Jobs and Mark Zuck­er­berg dis­rupt old in­dus­tries, cre­ate news ones and “¦.

We know how the Gil­ded Age ended ““ in a pop­u­list up­ris­ing against mono­pol­ies, sparked by muck­rak­ing journ­al­ists and har­nessed by a trust-bust­ing pres­id­ent named Teddy Roosevelt. Who will be our era’s T.R.? Well, a lead­er needs a cause. A bet­ter ques­tion might be, what will be the mod­ern-day trust ““ a force so de­struct­ive and dis­tant and deeply en­grained that a sleepy pub­lic is stirred to re­volt?

If his­tory is a guide, our gen­er­a­tion’s Stand­ard Oil, the pop­u­lists’ boo­gey­man, may be Com­cast, Ve­r­i­zon and/or AT&T ““ the sprawl­ing in­ter­net pro­viders who, like Rock­e­feller and his rail­road co-con­spir­at­ors, could mono­pol­ize the price and qual­ity of in­dis­pens­able goods.

Yes, net neut­ral­ity could be the is­sue that in­spires a Tech Age polit­ic­al re­volu­tion

First, some back­ground from Mi­chael Hiltzik of the Los Angeles Times.

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.

That’s im­port­ant be­cause con­trol over traffic flow gives ISPs tre­mend­ous power, es­pe­cially those that con­trol the last mile of ac­cess to end-users ““ cable op­er­at­ors such as Com­cast and tele­com­mu­nic­a­tions firms such as Ve­r­i­zon and AT&T. Without reg­u­la­tion, they’d have the abil­ity to force con­tent pro­viders to pay up for un­res­tric­ted trans­mis­sion to their cus­tom­ers.

While Pres­id­ent Obama has pledged to de­fend net neut­ral­ity, his ap­pointee to the Fed­er­al Com­mu­nic­a­tions Com­mis­sion, Tom Wheel­er, ap­pears to be sid­ing with the would-be mono­pol­ists. Hiltzik con­tin­ues:

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. 

There is no ques­tion that al­low­ing such ar­range­ments would be a ma­jor re­treat for the FCC. Wheel­er con­tends that bar­ring “com­mer­cially un­reas­on­able” deals that “harm the In­ter­net” or hurt con­sumers will be pro­tec­tion enough for the open In­ter­net. His pre­de­cessor as chair­man, Ju­li­us Gen­achow­ski, dis­agreed.

In 2010, Gen­achow­ski’s FCC ex­pli­citly re­jec­ted “the ar­gu­ment that only ‘an­ti­com­pet­it­ive’ dis­crim­in­a­tion yield­ing ‘sub­stan­tial con­sumer harm’ should be pro­hib­ited by our rules.” That stand­ard, the FCC held, “could al­low dis­crim­in­at­ory con­duct that is con­trary to the pub­lic in­terest.” The rules must be broad­er, the com­mis­sion wrote — they must for­bid ISPs to “pick win­ners and losers on the In­ter­net.”  

Yet that’s ex­actly what Wheel­er’s pro­pos­al would al­low. 

What’s worse is the pro­posed mer­ger of Com­cast and Time Warner Cable. This em­pire of con­tent and dis­tri­bu­tion would rival Rock­e­feller’s hold on both oil pro­duc­tion and rail­way ac­cess. Timothy B. Lee of warns that the end of net neut­ral­ity means “smal­ler com­pan­ies with less cash and few­er law­yers are go­ing to be at a com­pet­it­ive dis­ad­vant­age.”

The mir­acle of the in­ter­net is that any­one can set up a web serv­er, any­where in the world, and in­stantly reach every­one else, no mat­ter where they are or what net­work they’re us­ing. But if broad­band pro­viders star­ted di­vid­ing their net­works up in­to fast lanes and slow lanes, things could get more com­plic­ated. To get sat­is­fact­ory ser­vice for your web­site, you might have to ne­go­ti­ate fast-lane agree­ments with thou­sands of ISPs all over the world. Com­pan­ies that didn’t have the money — or the man­power — to do that would be at a com­pet­it­ive dis­ad­vant­age.

There’s also a danger that large in­ter­net ser­vice pro­viders will ab­use their mono­poly power. Most of the lead­ing Amer­ic­an broad­band com­pan­ies also sell paid tele­vi­sion ser­vices that com­pete dir­ectly with on­line stream­ing ser­vices such as Net­flix and Amazon In­stant Video. Net­work own­ers might be temp­ted to re­leg­ate on­line video ser­vices to the slow lane to pre­vent them from be­com­ing a com­pet­it­ive threat to their luc­rat­ive paid tele­vi­sion busi­nesses. Or they might charge com­pet­ing ser­vices a big markup for ac­cess to the fast lane, en­sur­ing that they won’t be able to un­der­cut them on price.

A fi­nal prob­lem is that a multi-tiered busi­ness mod­el could give ISPs per­verse in­cent­ives. An ISP might be temp­ted to make its slow lane slower — or at least not up­grade it very quickly — to en­cour­age con­tent com­pan­ies to pony up for fast-lane status.

Where is the out­rage? I asked that ques­tion of a half-dozen tech­no­logy ex­perts, in­clud­ing Obama ad­min­is­tra­tion vet­er­ans who wit­nessed the de­rail­ment of the Stop On­line Pir­acy Act, or SOPA, a 2012 copy­right pro­tec­tion bill that tech­no­logy act­iv­ists feared would un­der­mine in­ter­net ac­cess an in­nov­a­tion. Two years after an on­line in­sur­gency over­whelmed the gil­ded in­sti­tu­tions of Wash­ing­ton, the grass­roots are re­l­at­ively quiet.

“The in­ter­net pro­viders lost the battle and won the war,” said a former Obama ad­min­is­tra­tion of­fi­cial who re­fused to be iden­ti­fied while cri­ti­ciz­ing the ad­min­is­tra­tion. “They’ve got their hooks in­to most mem­bers of Con­gress and both ma­jor parties.” Said an­oth­er: “God­speed to the Amer­ic­an con­sumer. We could be screwed and not know un­til it’s too late.”

If net neut­ral­ity dies and the in­ter­net “rails” sud­denly be­come more ex­pens­ive and less re­li­able via mono­pol­ies, the protests will be loud. Cheap, easy ac­cess to in­form­a­tion, en­ter­tain­ment and e-com­merce are as en­grained in mod­ern Amer­ic­an life as the tele­graph and trains had be­come in early 20th cen­tury. Take that away, and the elites will pay. 

That brings me back to the Gil­ded Age, when in­nov­at­ive en­tre­pren­eurs morph­ed in­to mono­pol­ists who cor­rup­ted Wash­ing­ton and ex­ploited work­ers. They were cor­ralled by the era’s “new me­dia,” so-called muck­rakers like Up­ton Sin­clair, S.S. Mc­Clure and Ida Tar­bell. It was Tar­bell who wrote a series of magazine art­icles on Rock­e­feller and Stand­ard Oil that put an ugly hu­man face on the trusts, gal­van­iz­ing the na­tion be­hind Roosevelt’s fledgling pop­u­lism.

In one in­stall­ment, Tar­bell wrote of the struggles of in­de­pend­ent oil pro­du­cers whose freight rates were sud­denly doubled by the rail­way trusts. It had long been un­der­stood that since “the rail­road held its right of way from the people,” it must “be just to the people,” she wrote, “treat­ing them without dis­crim­in­a­tion” re­gard­less of the volume of busi­ness.

If she were alive today, would Tar­bell write the same of Com­cast, Ve­r­i­zon and AT&T? She would cer­tainly con­clude that, in an echo of the Gil­ded Age, great for­tunes are be­ing made and tough de­cisions await. Too much reg­u­la­tion hurts eco­nom­ic growth and new in­dustry. Too little reg­u­la­tion stifles eco­nom­ic and so­cial mo­bil­ity.

The ques­tion that cuts across the dec­ades is wheth­er Amer­ic­an so­cial in­sti­tu­tions ““ in­clud­ing lead­ers of gov­ern­ment, the busi­nesses com­munity and, yes, the me­dia ““ are smart enough and cour­ageous enough to re­spond. The an­swer, more than a cen­tury ago, was yes ““ and not without un­cer­tainty and struggle. But first, a sleepy pub­lic must stir.