Tightening the web 

Despite the idealistic promises, the information superhighway may turn out to be nothing like an open road full of boundless possibilities and countless destinations. Such limited access looks to be the case for the digital highway, at least in its newest, broadband incarnation. The high-speed cable networks that will likely prove the most popular means for Americans to access the Internet from their homes in the 21st century are turning out to be anything but broadly public thoroughfares. Under current regulations, in fact, cable Internet access will turn out to be as tightly controlled -- and as unfriendly to consumer choice -- as cable television has been over the past two decades.

At present, it is true, the vast majority of Americans with online connections (about one-third of all households) use standard dial-up connections, getting their service from one of more than 6,000 Internet service providers (ISPs). America Online may dominate the field, with some 18 million subscribers, but the ISP market, in the words of the New York Times' Matt Richtel, "remains a diverse industry with wide-open possibilities for competition, including mom-and-pop operations."

The future of this market, however, clearly belongs to those companies that can provide much faster connections than the 56 Kbs speed limit of standard dial-up service. Telephone companies (offering the new digital subscriber line, or DSL, service), satellite operators, wireless services and utility companies are among those who will be vying to establish high-speed connections to the home. But the leading candidate to deliver such service, given its current presence in two-thirds of all American homes, is the cable industry, which is already in the process of upgrading its system to accommodate two-way, broadband Internet access, at speeds of up to 100 times that of dial-up ISPs.

Central Florida last month welcomed another high-speed Internet provider when Sprint joined BellSouth, MPInet and Time Warner's Road Runner, all of which launched their services this past summer.

Unfortunately, the world of cable Internet offers nowhere near the choice of service that dial-up users enjoy. Instead of a full menu of ISP options, broadband customers will be forced to subscribe to a service provider of the cable company's own choosing (either Excite@Home or Road Runner at present).

More important, the architecture of the new broadband networks will give unprecedented control to the cable ISP, making possible tiered levels of service that will discriminate according to the nature of the content, the affiliation of the sender or the fee-paying status of the recipient. The cable company's own content, for example, along with that of its sponsors and business partners, will be accorded preferential treatment. (Sprint has announced an agreement that taps the Orlando Sentinel as an exclusive content provider; Orlando Weekly is among several content providers working with Time Warner's Road Runner service.) Under the kind of managed-delivery system that the cable networks will make possible, in short, the "open road" of the Internet will become something more closely resembling an obstacle course. And, given the growing concentration of ownership within the cable industry, with AT&T having spent $90 billion to acquire both TCI and MediaOne, a single company may turn out to be the chief architect of that obstacle course, ultimately defining the Internet for a sizable percentage of the nation's households.

How did we arrive at this troubling state of affairs, with a broadband monopoly looming on the horizon? Curiously, it is in the interest of competition -- or so the arguments run -- that AT&T has been given the potential to become the Internet's primary gatekeeper. But the battle over the control of the Internet is by no means over.

The race to connect

Because Time Warner owns most of Central Florida cable systems, AT&T -- which is the primary owner of Excite@Home, a consortium of several cable operators not including Time Warner -- is not available to users in this market. Yet the company's influence over broadband's future will likely be felt everywhere.

By all accounts, the "open-access" fray has been one of the most expensive, hotly contested policy disputes since the passage of the Telecommunications Act of 1996. Nominally pitting AT&T against AOL (the two companies that stand to gain -- and lose -- the most), the broadband battles will have no less of an impact on those on the other side of the network equation: the millions of Americans who will connect to the Internet from their homes. The race to build the broadband "last-mile" connections into the home is a significant one, for it will largely shape how we communicate in the 21st century. It will determine both the nature and range of the information and entertainment we receive and the extent to which we will be able to participate actively in that system, exchanging information and sharing our views with others. The race's winner will enjoy enormous market leverage, and an opportunity to reap the tremendous financial benefits of electronic commerce.

Neither cable ISPs (with about 1.2 million subscribers and growing) nor DSL providers (around 200,000 customers) has sufficient marketshare to claim precedence in this initial stage of broadband deployment. But the broadband market is expected to grow rapidly, reaching more than 11 million households by the end of 2002, according to Jupiter Communications. And, given cable's presence in two-thirds of the nation's homes and lingering questions about the feasibility of a full DSL roll-out (since homes must be within three miles of a telephone company substation), cable would seem to have the inside track in the race to capture that market. Nevertheless, that track includes a number of hurdles that must be cleared, primarily in the form of local franchise agreements that AT&T must negotiate in the process of completing its TCI and MediaOne acquisitions. Already, in a number of instances, including communities in Oregon, Florida and California, AT&T has encountered strong opposition to its cable broadband plans.

The city of Portland, Ore., and surrounding Multnomah County led the way in the spring of 1999, when authorities there voted to require AT&T, as part of its request to transfer the local franchise from TCI, to carry Internet competitors on its cable lines. In response, AT&T sued the city and lost in federal court in June, and the case is now on appeal. In court this week, both sides heard a judge question whether the lines should even be regulated locally as a cable service, or whether they are indeed a telecommunications service, and therefore fall under the reach of the federal government. That issue alone could end the case quickly; if not, a decision is expected early next year.

Meanwhile, in Fort Lauderdale, the commissioners of Broward County arrived at a similar conclusion as their counterparts in Portland, in this instance requiring AT&T to open up its MediaOne network (which, unlike Portland's TCI franchise, had already begun to offer cable Internet service).

San Francisco and Los Angeles have attracted perhaps the most attention thus far in the high-stakes broadband battles, and the matter has yet to be resolved in either city. While the Los Angeles City Council approved an AT&T/TCI merger in January 1999, it also mandated that the city's Information Technology Agency examine the open-access issue. That agency released its report in June 1999, and in perhaps the clearest testimony to the strong passions that the cable-broadband issue has aroused, three of the four members of the Information Technology Board resigned rather than endorse a closed cable-broadband proposal. That left the city council and the mayor of Los Angeles to make the final determination on the open-access issue, and their decision is expected soon.

The matter proved equally contentious in San Francisco, where the board of supervisors, under intense lobbying from both sides, finally voted in July to approve AT&T's transfer application, with the understanding that the board would review the open-access question again in December, following the resolution of the Portland case and/or a possible ruling by the Federal Communications Commission on this matter.

Other communities have adopted similar wait-and-see positions, deferring either to the final resolution of the Portland case or to a possible ruling from the FCC (whose chairman, at least, has spoken out against local open-access requirements).

The open-access movement gained additional momentum in July, when the National Association of Counties (NACo), representing 1,800 county governments across the country, passed a resolution in support of open access at its annual meeting in St. Louis.

For all of the action at the local level, however, both for and against open access, it seems likely that the matter will ultimately be resolved at the federal level, either through legislation, FCC rule making or both. Ironically, the FCC appears to have adopted a wait-and-see attitude of its own, while the Congress, always slow to act in matters that attract high-stakes lobbying, is not likely to break the regulatory log jam anytime soon. And the rhetoric surrounding the issue in Washington is anything but clear.

Open market, closed system

FCC Chairman William E. Kennard is fond of referring to his agency's "unregulation" of the Internet, crediting that hand-off policy with being largely responsible for the online medium's rapid growth and development. "The best decision government ever made with respect to the Internet," Kennard told the National Cable Television Association at its annual meeting in June, "was the decision that the FCC made 15 years ago not to impose regulations on it." That was precisely the philosophy, Kennard added, that guided the agency in its approach to the emerging field of high-speed telecommunications: "with competition and deregulation as our touchstones, the FCC has taken a hands-off deregulatory approach to the broadband market. We approved the AT&T-TCI deal without imposing conditions that they open their network."

What many observers find paradoxical in the chairman's broadband position is the conflation of competition and exclusivity, offering an endorsement of an essentially closed system by invoking a "deregulatory, competitive approach to our communications structure." Curiously, even while declaring that "it is the FCC's job to implement and cultivate this competitive environment; to open up previously closed marketplaces to competitors; and to set the framework for a vigorous competition," Kennard has supported AT&T's effort to maintain a closed cable Internet marketplace. Instead of establishing a framework in which ISPs are granted nondiscriminatory access to the new cable networks -- not free access, but simply access under the same terms and conditions that the cable companies extend to their affiliated ISPs -- the FCC chairman has lent his support (even to the point of filing a friend-of-the-court brief in the Portland case) to AT&T's monopolistic control of its extensive cable broadband holdings.

The irony of supporting monopoly in the interest of competition was not lost on the openNET Coalition, a consortium of ISPs (including heavyweights AOL and GTE) that are among those that will effectively be excluded from cable broadband if AT&T's controlling position is upheld. "The FCC has been able to avoid regulation of the 'Net precisely because the underlying network is open and market forces can serve the interests of business, consumers and the economy," observed Rich Bond, co-director of the openNET Coalition. "We believe AT&T's plan for a closed, noncompetitive system will create exactly the kind of 'bottleneck' that the FCC has tried to avoid. We encourage the FCC to require AT&T to open its cable network and then leave the Internet to the market forces that have created the medium we now enjoy."

At issue, quite simply, is whether the coaxial cable that AT&T will be using to deliver a variety of services into the home (including cable television, telephone service and Internet access) should be regulated in the same fashion as cable-TV lines are today or rather as telephone lines are governed. One simple solution to this puzzle (which is not expected to find acceptance any time soon, however) is that of Rep. Ed Markey (D-Mass.), who circulated a draft legislative proposal in July calling for the FCC to treat broadband companies like any other telecommunications company, and to hold them to the open-access provisions of the Telecommunications Act of 1996.

In the absence of such a policy, however, our telecommunications policy will remain bifurcated. The regulatory policy for cable TV in which the cable operator is permitted to have near-total control over both the conduit and the content that flows through those pipes contrasts sharply with federal rules for local telephone service, in which the Baby Bells are currently required to provide open access to ISPs and other competitors.

But while the argument for open-access requirements may seem compelling, Kennard and the FCC have chosen to focus instead on another aspect of the broadband equation, on what Kennard calls his "vision for broadband in America: Multiple broadband pipes serving America's homes. At least four or five facilities-based competitors. Digital Subscriber Line (DSL), cable modem, terrestrial wireless and satellite." Right now, the pressing need (in Kennard's eyes, anyway) is to stimulate investment in the upgrading of existing cable systems to accommodate full, two-way digital communications. And that funding, he is convinced, will come from Wall Street investors who must not be discouraged by meddlesome federal policies.

If that position sounds surprisingly beholden to marketplace interests, it also reflects Kennard's conviction that in the case of broadband Internet service, at least, it's simply too early to initiate new regulatory policies. "Sometimes people talk about broadband as though it is a mature industry," Kennard observed in his June address. "But the fact is that we don't have a duopoly in broadband. We don't even have a monopoly in broadband. We have a NO-opoly. Because, the fact is, most Americans don't even have broadband. We have to get these pipes built. But how do we do it? We let the marketplace do it."

By "letting the marketplace do it," Kennard means rewarding certain participants in that marketplace (namely cable operators, most notably AT&T) with exclusive control of their systems, even to the point of blocking competitive access to these networks and limiting consumer choice in the process. It's not unreasonable of Kennard to assume that the quickest way to ensure the build-out of broadband networks is to grant favored, protected status to a corporate giant such as AT&T. But to mistake such corporate self-interest and supply-side economics for sound public policy is another matter entirely, and the public-interest advocacy community has led a chorus of dissent in response to the FCC chairman's position. "We're at a fork in the information superhighway," observed Andrew Schwartzman, president and CEO of the Media Access Project. "One way leads to open access, boundless innovation and free expression. The other has us follow the same path that made cable TV the closed, unresponsive and overpriced monopoly Americans have grown to hate."

The openNET Coalition has been equally vocal in its opposition to Kennard's stance. "The FCC helping AT&T to oppose competitive services is like a referee taking sides in the middle of a fight," charges openNET co-director Greg Simon.

The openNET Coalition itself, of course, is not without its own brand of corporate self-interest. But as others without a vested interest in the outcome of the broadband battles have made clear, Main Street as well as Wall Street should have a say in this matter. An open, competitive, democratic broadband Internet is simply too important, not only for average Americans, but also for the educational, civic, social and cultural organizations that serve them.

Not-so-free expression

In this battle, the real issue at hand -- more philosophical than financial -- tends to be overlooked. For this is a battle over the future of the Internet, over the basic character of the online world. As such, the outcome of this battle will have more to do with the health of our democracy than with the speed of our downloads. However important controlling costs and expanding consumer choice may be, these issues are probably of lesser importance than the overall quality of the online environment in which those choices are made and those costs are incurred. As the Media Access Project observed in its petition to the FCC in favor of open broadband access, "Offering Internet access under the closed cable-TV system model will, quite literally, change the character of the Internet as an engine of creative technological and marketplace innovation, open entry, economic growth and free expression."

The cable industry's plans for controlled broadband access will, in fact, alter the access that people currently have to online information. Under the cable model, content owned by the cable companies and their partners will receive top priority, delivered to our homes at what will become the standard for high-speed access, while other programming will receive less favorable handling. The cable industry has already started to display these tendencies on both ends of the information pipeline. At their end, they are building local, high-speed storage facilities across the nation to provide quick and convenient access to their own entertainment and information products. And at the consumer's end (in the case of Excite@Home's broadband households), both the amount of streaming-video material that can be downloaded as well as the speed with which data can be uploaded are subject to strict limitations.

Under such a system of differentiated service, if a nonprofit or small commercial content provider wanted to have its information included in this new delivery platform, for example, they would be forced to seek approval and pay fees to the cable companies. The same constraints that currently affect other delivery systems, in other words, most notably the film, broadcast, publishing and recording industries, would now effectively limit the Internet, creating distribution bottlenecks in a system through which all manner of material once flowed freely.

And even where direct control is not exercised, cable companies (and other telecom giants) will wield considerable power in their manipulation of the "home screen" -- that is, the all-important search and menu interface through which we will navigate the new broadband delivery system. Having already invested millions of dollars in new interactive content services, these companies now plan to place their holdings in prominent positions in their online network menus.

Who gets left behind?

Even without all of the monitoring, metering and merchandising that will likely characterize the cable industry's handling of Internet access, a more fundamental question remains unanswered: Access to what? As MIT dean of architecture William J. Mitchell observes in "City of Bits," "`T`he most crucial task before us is not one of putting in place the digital plumbing of broadband communications links ... but rather one of imagining and creating digitally mediated environments for the kinds of lives that we will want to lead and the sorts of communications that we will want to have."

Part of that "imagination and creation" process, clearly, is a frank assessment of what is missing in the existing online environment, starting with those communications services and information resources that our democracy needs in order to thrive. A number of worthy civic and cultural websites already exist, many of them the work of nonprofit organizations and educational institutions. But most of these are scattered across a rapidly expanding online universe that is increasingly marked by distinct, commercial galaxies. Those sites outside the orbit of AOL, Yahoo and other dominant content providers are unfortunately not likely to shine very brightly. And the entrance of other media and telecommunications conglomerates into the online universe will only increase these centralizing trends.

So, too, in any assessment of the online environment, must we account for those segments of the population that remain outside of the digital loop. This gap can be measured in any number of ways: Approximately half of all households now own computers, for example, but the percentage of white children with computers at home is triple that of black and Hispanic children. Similarly, while fully half of the families with annual incomes over $75,000 have Internet access, only 10 percent of the rural poor use the global computer network. In affluent communities, 78 percent of schools have access to the Internet; in low-income areas, barely half do.

Curiously, for all of the glowing reports on the benefits of broadband access (which includes not only cable systems but also DSL technology and potentially wireless and satellite delivery systems), rarely mentioned is the contribution of broadband to meeting the goals of universal service in the digital age. In fact, the new high-speed systems, priced beyond the reach of many households, might exacerbate the problem of inequitable access to the new information technologies. The cable industry's gain will be American society's loss.

As MIT's Mitchell advises, it is not too late to begin imagining new online environments and communications services -- insisting, in effect, on social gains as well as industry profits. In many respects, this is largely a matter of ensuring that those institutions and activities that we value in the real world are helped to establish themselves in the virtual world. In an environment that is increasingly "mediated," the information and communications needs of nonprofits pose as big a challenge as their finances, lest this sector be pushed even further into the margins of American life.

Unfortunately, we've grown accustomed to adopting a passive stance in relation to digital technology, sitting back and awaiting the next scientific breakthrough to deliver yet another product that is smaller, faster, cheaper and more powerful than its allegedly obsolete predecessor. In the future, a much more active, participatory approach is needed in the telecommunications arena if we expect to develop vital news services, and if we hope to produce as well as consume online content. Ironically, an open broadband system could foster new types of citizen involvement, but not if it turns out to be the same top-down, market-driven affair that cable TV has become.

"Properly launched, broadband access stands to transform how Americans learn, work, and engage in civic life," a group of public-interest advocacy organizations wrote Sen. John McCain, chairman of the Commerce, Science, and Transportation Committee on the eve of its April 1999 hearings on Internet access. But ultimately that transformation depends in significant part on whether broadband services are deployed in an open and nondiscriminatory manner, a struggle for media democracy that has just begun, and that many are hoping is not too late.



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