The threat to the net

Who owns the Internet? If you think the answer is "nobody," you’re right – for now.That’s why it has been such an astonishing innovation that has flourished so vibrantly at the grass roots.

But this pioneering era may end badly, with an all-too-familiar finish: Big business tames a giddy and experimental phenomenon and turns it into a nice, tidy, ever-so-profitable moneymaker. And why not? That’s what happened with phones, with radio, with TV. The difference this time may be that too many people have sampled an open information environment to settle for less.

The thugs of the story, who want to fence in the Internet, are the cable companies, led by communications conglomerates such as AT&T. They now have something many of us want: broadband Internet service. But they plan to make us pay for it in more ways than one. And the stakes have risen dramatically since the largest of the Internet service providers, America Online (AOL), announced a merger with Time Warner in January.

The fight is about closed access vs. open access to broadband.

Broadband just means faster transmission of more data. For Web users, that’s a lot. It’s the Internet squared: no waiting, no loading. With broadband, Web pages fly by like the flicked pages of a book, and Web video looks just like TV. In fact, it may be TV, and your phone, and your spreadsheet program, and your fax – and anything else that can attach to the sophisticated transmission system. That’s because broadband is not simply the future of the Internet. It’s the future of our communications systems.

Anyone familiar with the World Wide Wait is itching for broadband service. And cable companies would love to get it to you. But they want control over how you use it, and who gets to you through it, and they want to charge you for the privilege. That could turn the Internet of today, the open-to-anyone-for-anything system, into cable on steroids.

Fight for free flow

Now, as cable companies are beginning to offer broadband, local governments are demanding open access: the ability to get on the broadband using any Internet service provider on the same terms as anyone else’s. The cable companies are fighting for closed access: They want to force everyone who uses their broadband service to go through their preferred Internet service providers.

Until the announced merger, America Online had been one of the leaders in the battle for open access. But, with its merger pending, that could change. Time Warner, along with owning TV networks, movie studios, magazines and music companies, is also the second-largest cable operator. AOL executives proudly pledged their continued commitment to open access. But if the merger goes through, AOL Time Warner will have to decide whether it’s still for open access or whether it will opt instead for closed access.

"AOL benefited from an open access business plan and still does," says Andrew Schwartzman, head of the public interest law firm Media Access Project, based in Washington, D.C. "But there are always attractions to monopoly. We hope the open access model prevails."

What AT&T does may be very important in that story. It’s now the largest cable provider in the country, as well as the largest long-distance phone company in the world. Back when AT&T was Ma Bell, before 1982, the phone company was an easy target for resentment. It’s an easier target now. It became the largest cable company in the world last year when it bought TCI, which has had its own image problems. Before the merger, TCI was the largest cable company in the United States and was looked upon with all the fondness people held for Darth Vader (Al Gore even referred to TCI’s chairman by that epithet). Now, the two reviled giants are joined at the bottom line.

Almost two decades after government lawyers broke up the old phone monopoly and AT&T abandoned local service, the company owns a pathway to many of us again.

Cable wires reach out and touch three-quarters of U.S. homes. Digital cable wires could also handle phone traffic. AT&T has gone on to buy other cable systems and awaits Federal Communications Commission (FCC) approval of a merger with the third largest cable company, MediaOne. Factor in MediaOne’s 25 percent interest in – you guessed it! – Time Warner, and AT&T has access to more than half of America’s homes once more. It may even be interested in joining forces with AOL Time Warner in some formal way down the line.

Right to choose?

What these mergers do is threaten the freedom to access the Internet.

Today, you can choose from thousands of Internet service providers, and you can make that decision based on whether they offer quick hookups or whether they design nice chat rooms or whether they’re run by your neighbor’s teenager. If you want broadband service, though, cable companies will steer you to their own Internet service providers (AT&T’s is Excite@Home). They’d be happy to connect you to any other provider but only through theirs, which would mean you’d pay double to get to your neighbor’s teenager’s service.

The independent providers hate this. The biggest of them may be able to buy their way out of the problem, but most others see it as a death warrant.

Most of us ordinary users of the Internet are plodding along at about the same speed, sometimes transmitting gobs of information and sometimes dribs and drabs. This rough equality has given a lot of people the idea of creating their own Web sites, e-businesses, e-zines, and nonprofit enterprises such as charity clearinghouses. But this equality may be fading fast.

Cable companies want to determine the speed at which any user might send information or receive it, and the Internet hardware company Cisco Systems is already selling the equipment to let them do so. AT&T, for instance, won’t let you send more than ten minutes of video at a time via Excite@Home.

Since cable companies such as AT&T are the first ones out of the chute with broadband, they are in a position to set terms. And they want to discourage potential competition by strangling it at birth. They have no interest in allowing anyone else to offer the equivalent of a channel over their cable lines on the same terms they offer to their own Internet service providers. They want people to come to cable itself for that content or to the Internet for that content, as long as it’s through their system.

The cable companies’ nightmare is that a content provider might turn into a competitor, someone who would offer programming that draws people away from the cable menu. For instance, AT&T doesn’t want Disney hooking up some hip preteen channel and making it available on the Net, thereby letting the preteens skip around AT&T’s own bundled offerings that include Disney channels.

Content providers – be they Disney, Fox, progressive news groups, the PTA, or consumer guide services – all may lose an opportunity to reach citizens on the Net directly and to create programming that would find its own audience without paying a gatekeeper and submitting to that gatekeeper’s terms.

The slow squeeze

The content providers that stand to lose the most are those without financial clout, and especially the nonprofit organizations that keep our civic culture alive. They could become second-class citizens on the Web. Their material could be transmitted at a slower speed or not at all. And if the cable companies succeed, the grassroots innovation and creativity that has characterized the Web may vanish.

Today, the Net environment is pretty chaotic, and many consumers have become accustomed to using search engines and portals and filters to find their way around. You choose the selectors; you can pick a provider that simply hauls your data around and lets you go where you want to go, or you can hook up with a more commercialized provider. These providers may have an arrangement, for instance, with Amazon.com, which recommends a source that has paid them a fee for promotion.

But are you ready for an Internet where you have no choice but to go through a provider that tailors your searches according to the profit-sharing deals it can cut? And are you ready to hand over to the cable company the power to determine whether to deliver your material and at what speed?

This is not some science fiction story. The battle for control over the Internet is already raging. And it is taking place on the unlikely field of local regulation, as cities and counties face off against the cable companies. Free speech and public interest advocates, along with the Internet service providers, joined forces to support these local officials, who confront cable companies as they apply to open or renew local franchises.

What’s at stake here is not just the kinds of problems we face with cable services. That would be bad enough. On cable today, we have content problems, like having them decide for us which channels are on our systems, which news services they’ll carry, and whether we can see C-SPAN II. We also have monopoly pricing problems. Cable companies give us stations we don’t want and make us pay for the whole bundle. If we get only the broadband services that cable companies find it convenient and lucrative to give us, we’ll certainly have these problems.

But we may have a much bigger problem: the killing of opportunity – political, social, economic – before it’s even been imagined.

No one imagined the burgeoning of freedom of expression on the Net, or the skyrocketing of Net businesses, or the way that Internet communication has changed the operations of nonprofit groups, which can now instantly alert members to a zoning hearing or create an online public record of parents’ complaints about school issues or post their grant applications on the Net.

The original design of the Web was responsible for its dynamism, and if the cable companies are allowed to dictate the design of broadband, the Web will take a much different shape in the future.

Why foreclose futures that stimulate competition, benefit consumers, foster innovation, boost the economy, and nurture civic life?

"The reason the Internet has been such an engine for creativity and growth is the way it was built, its architecture," Lawrence Lessig, a Harvard law professor, explained at a late-December briefing in Washington, D.C., held by public interest advocates and underwritten by what was then America Online. Lessig’s new book, Code and Other Laws of Cyberspace (Basic Books, 1999), explains the link between this architecture and politics. Closed access services, by the way, can easily discourage unprofitable transactions. If you had wanted to see a video transmission of Lessig’s presentation (which was available through nogatekeepers.com), you couldn’t do it on Excite@Home.

How it works

The Internet was designed for researchers to be able to work together cheaply and easily, so it was open to any use by any user. The Net is really nothing more than the set of open and public agreements among computers about how to reach each other’s code. Any computer can use the same simple software to "speak" to any other, often sending its packets of digitized data over phone lines. So long as your machine knows how to talk to all the other machines, and it has a pathway to send its data, you’re part of the network. You’re on the Net. You are the Net. Users make the Net; the system evolves with the users.

When most of that data was simply in the form of text, phone lines worked perfectly to get ordinary users hooked up to the Net. Voice takes 10 times as much space as data does, so there was lots of extra room.

"We’ve been lucky. Today’s Internet ecology required no effort of design," Lessig explained. But images, especially moving images, take up gargantuan amounts of space when turned into digital code, and the great wads of data they send clog up the whole system.

So the next stage of the Net can’t piggyback on existing networks. It must be built. And the way it is built will determine how it is used, and what it is used for. AT&T wants to design the system so that it controls the technology, making it closed from the start.

Broadband is not entirely the province of cable companies. In fact, local phone companies are developing what are called DSL (for digital subscriber line) services – vastly speeded-up data transmission over phone lines. They are legally required to make their facilities available to anyone who wants to provide DSL service. But they are lumbering far behind in offering rapid Internet service, partly because they aren’t any more eager for competition than the cable companies are, and partly because the cost of laying new wires is high.

Cable companies, which have no legal requirement to share their broadband, have told policymakers that they’ve paid a lot for these systems, so why should they give access away free? As Daniel Somers, the new head of AT&T’s cable operations, said recently, the company didn’t spend $56 billion to get into cable "to have the blood sucked out of our vein."

On the front lines

Portland, Ore., has led the way for open access. But the battle with AT&T, which began in late 1998, took City Commissioner Erik Sten by surprise. He’s in charge of utilities, and he went head-to-head with AT&T.

"In Portland, we had two cable companies: Paragon and TCI, and AT&T bought both of them," Sten recalls. "When they came to us for approval of their franchise license, we said that they had to offer open access, which is also called nondiscriminatory broadband service. There are about 100 Internet service providers in the Portland area, and we wanted them to be able to offer access to broadband on the same terms as Excite@Home. If you don’t have competition with Internet service providers, you ultimately hand over control of the Internet to AT&T. Plus, our 100 local companies, which pay local taxes, would go out of business."

But there’s more to it than that. "Access to the Internet should be as open and reasonably priced as possible," he says. "Allowing AT&T to have closed access would be just one more step in the homogenization of the information industry. It goes against the free flow of ideas, and it doesn’t allow competitive pricing."

Sten cites the case of Powell’s Books in Portland, a prominent local store. He says when a Washington Post reporter went to Powell’s and asked a store manager whether he cared about access, the manager said, "You bet," and took the reporter to a computer and showed him how Amazon.com always comes up on Excite@Home when searching for books.

"If you’re in Portland, Ore., you should have Powell’s Books show up sometime," Sten says. "Closed access would make Portland a different place. Independent booksellers would close. You could still buy books, but it would not be the same city."

Sten attended the December briefing in Washington with Professor Lessig and explained the decision to confront AT&T. "This did not look like a tough issue for us," he said. "We thought the question was, why wouldn’t you require open access? I was astonished at AT&T’s reaction. We had an amicable hearing, we saw nothing to stop us from requiring open access, we laid out the reasons, and AT&T’s response was: ‘We hope you have a large legal budget.’"

Sten didn’t. But the city of Portland still won its first court battle.

Since then, 11 other local jurisdictions have followed suit. But in Portland, rather than knuckle under and actually provide broadband service, AT&T has ordered its lawyers to appeal. And AT&T has plenty of money to spend.

"We’re winning one in 10 of these fights," says Schwartzman of the Media Access Project. "And that’s because AT&T is buying its way through the process."

Digital doorways

To Ron Sims, the county executive who stared down AT&T in the Seattle area, the issue is uncomplicated. It’s about control of content; it’s about free speech; it’s about choice. He says advocates, consumers, and public officials can and should stand up to AT&T. "No single entity should control content," he says. "We live in the heartland of high-tech development. We know high speed access is the doorway to innovation.

"Don’t slam that door."

But how long will the door stay open? Part of the answer depends on the fate of AOL and Time Warner.

"AOL’s been one of the biggest supporters of open access so far," says Sten. "My fear is they’ll soften considerably now. This is a pretty ominous deal for people who care about open access."

But it’s not a done deal. The merger depends on federal regulators, who can demand a policy of open access.

Part of the answer also lies with AT&T. It could move toward open access itself. As a result of pressure from regulators and activists, last year AT&T signed an agreement in principle with the large Internet service provider, MindSpring, permitting access to AT&T’s broadband service in Seattle. The agreement was widely excoriated by open access advocates because it merely shows that anyone who pleases the gatekeeper can get a deal. "The agreement doesn’t go far enough," Sims says. "But at least they can’t say anymore that open access is not technically feasible, or that they can’t afford to deploy if they have it."

The FCC has the authority to decide whether cable should provide open access, and it has a new opportunity to advise the Federal Trade Commission and the Justice Department about the AOL Time Warner merger.

Unfortunately, with AT&T, it has declined to decide. Instead, it has adopted a policy of "watchful waiting," in the words of FCC chairman, Bill Kennard.

"The real sad thing is that the FCC has just sat on its hands while a big company is trying to buy up something that should be publicly available," says Sten.

The problem with "watchful waiting," says Lessig, is that not mandating open access comes down to supporting closed access. And if the cable industry gets to build closed systems, it will be expensive and perhaps impossible to crack open later or to nurture the innovation that has been stifled. It’s like saying you don’t need to use seat belts, Lessig told the FCC, because people can always go the emergency room if they get hurt.

Under the 1996 rewrite of the nation’s basic communications law, the FCC is required to streamline its regulations and phase out any that aren’t conducive to competition. The FCC has argued that any regulation will stop broadband deployment. This is just what the biggest cable-telecom companies want it to say.

While the FCC treats AT&T like a tender flower of innovation, local officials are aggressively pursuing its competitors. "Innovative broadband companies are coming to Portland now, in spite of the fact that we’re a pretty small market," Sten says. "That’s a result of our open access decision."

Sten worries that the AOL Time Warner merger could just mean another giant with its own closed access system. "From the open access perspective, that’s not any better," he says. "We should have a federal policy role here."

And the message that regulators need to hear is simple: Protect what we’ve got, and make sure we can build on it. Make open access the terms of doing business.