The internet is fucked
by Nilay Patel, theverge.comFebruary 25 12:30 PM
Here’s a simple truth: the internet has radically changed the world. Over the course of the past 20 years, the idea of networking all the world’s computers has gone from a research science pipe dream to a necessary condition of economic and social development, from government and university labs to kitchen tables and city streets. We are all travelers now, desperate souls searching for a signal to connect us all. It is awesome.
And we’re fucking everything up.
Massive companies like AT&T and Comcast have spent the first two months of 2014 boldly announcing plans to close and control the internet through additional fees, pay-to-play schemes, and sheer brutal size — all while the legal rules designed to protect against these kinds of abuses were struck down in court for basically making too much sense. “Broadband providers represent a threat to internet openness,” concluded Judge David Tatel in Verizon’s case against the FCC’s Open Internet order, adding that the FCC had provided ample evidence of internet companies abusing their market power and had made “a rational connection between the facts found and the choices made.” Verizon argued strenuously, but had offered the court “no persuasive reason to question that judgement.”
Then Tatel cut the FCC off at the knees for making “a rather half-hearted argument” in support of its authority to properly police these threats and vacated the rules protecting the open internet, surprising observers on both sides of the industry and sending new FCC Chairman Tom Wheeler into a tailspin of empty promises seemingly designed to disappoint everyone.
“I expected the anti-blocking rule to be upheld,” National Cable and Telecommunications Association president and CEO Michael Powell told me after the ruling was issued. Powell was chairman of the FCC under George W. Bush; he issued the first no-blocking rules. “Judge Tatel basically said the Commission didn’t argue it properly.”
In the meantime, the companies that control the internet have continued down a dark path, free of any oversight or meaningful competition to check their behavior. In January, AT&T announced a new “sponsored data” plan that would dramatically alter the fierce one-click-away competition that’s thus far characterized the internet. Earlier this month, Comcast announced plans to merge with Time Warner Cable, creating an internet service behemoth that will serve 40 percent of Americans in 19 of the 20 biggest markets with virtually no rivals.
And after months of declining Netflix performance on Comcast’s network, the two companies announced a new “paid peering” arrangement on Sunday, which will see Netflix pay Comcast for better access to its customers, a capitulation Netflix has been trying to avoid for years. Paid peering arrangements are common among the network companies that connect the backbones of the internet, but consumer companies like Netflix have traditionally remained out of the fray — and since there’s no oversight or transparency into the terms of the deal, it’s impossible to know what kind of precedent it sets. Broadband industry insiders insist loudly that the deal is just business as usual, while outside observers are full of concerns about the loss of competition and the increasing power of consolidated network companies. Either way, it’s clear that Netflix has decided to take matters — and costs — into its own hands, instead of relying on rational policy to create an effective and fair marketplace.
In a perfect storm of corporate greed and broken government, the internet has gone from vibrant center of the new economy to burgeoning tool of economic control. Where America once had Rockefeller and Carnegie, it now has Comcast’s Brian Roberts, AT&T’s Randall Stephenson, and Verizon’s Lowell McAdam, robber barons for a new age of infrastructure monopoly built on fiber optics and kitty GIFs.
And the power of the new network-industrial complex is immense and unchecked, even by other giants: AT&T blocked Apple’s FaceTime and Google’s Hangouts video chat services for the preposterously silly reason that the apps were “preloaded” on each company’s phones instead of downloaded from an app store. Verizon and AT&T have each blocked the Google Wallet mobile payment system because they’re partners in the competing (and not very good) ISIS service. Comcast customers who stream video on their Xboxes using Microsoft’s services get charged against their data caps, but the Comcast service is tax-free.
We’re really, really fucking this up.
But we can fix it, I swear. We just have to start telling each other the truth. Not the doublespeak bullshit of regulators and lobbyists, but the actual truth. Once we have the truth, we have the power — the power to demand better not only from our government, but from the companies that serve us as well. “This is a political fight,” says Craig Aaron, president of the advocacy group Free Press. “When the internet speaks with a unified voice politicians rip their hair out.”
We can do it. Let’s start.
THE INTERNET IS A UTILITY, JUST LIKE WATER AND ELECTRICITY
Go ahead, say it out loud. The internet is a utility.
There, you’ve just skipped past a quarter century of regulatory corruption and lawsuits that still rage to this day and arrived directly at the obvious conclusion. Internet access isn’t a luxury or a choice if you live and participate in the modern economy, it’s a requirement. Have you ever been in an office when the internet goes down? It’s like recess. My friend Paul Miller lived without the internet for a year and I’m still not entirely sure he’s recovered from the experience. The internet isn’t an adjunct to real life; it’s not another place. You don’t do things “on the internet,” you just do things. The network is interwoven into every moment of our lives, and we should treat it that way.
Yet the corporations that control internet access insist that they’re providing specialized services that are somehow different than water, power, and telephones. They point to crazy bullshit you don’t want or need like free email addresses and web hosting solutions and goofy personalized search screens as evidence that they’re actually providing “information” services instead of the more highly regulated “telecommunications” services. “Common carrier rules are basically free speech,” says the Free Press’ Aaron. “We have all these protections for what happens over landline phones that we’re not extending to data, even though all these people under 25 mostly communicate in data.”
It’s time to just end these stupid legal word games and say what we all already know: internet access is a utility. A commodity that should get better and faster and cheaper over time. Anyone who says otherwise is lying for money.
THERE IS ZERO COMPETITION FOR INTERNET ACCESS
None. Zero. Nothing. It is a wasteland. You are standing in the desert and the only thing that grows is higher prices.
70 percent of American households have but one or two choices for high-speed internet access: cable broadband from a cable provider or DSL from a telephone provider. And since DSL isn’t nearly as fast as cable, and the cable companies are aggressive in bundling TV and internet packages together, it’s really only one choice. And that means the level of innovation from these providers has almost completely stagnated, even as prices have gone up.
Why are cellphones so much cooler now than they were in 2000? Because Apple and Google and Samsung all had to fight it out and make better products in order to survive. They’re competing. Comcast hasn’t had to fight anything, at any time. It is fat and lazy and wants nothing more than to get fatter and lazier. That’s why Comcast is spending $45 billion on Time Warner Cable instead of integrating Netflix into its cable boxes and working with Apple and Google and Microsoft on the real next generation of TV: when you’re the only real choice in 19 of America’s 20 biggest markets, you get to move real slow and still make a lot of money. It’s not clear Comcast even knows what real competition looks like.
“Unless the FCC thinks that there is a realistic chance that the deal will reverse two decades of rising prices, it should stop the merger,” writes Columbia Law School professor Tim Wu. “Passing on savings has never been part of Comcast’s business model.” Monopolies are nice like that.
Despite the innovation in phones, the same is true for mobile internet. There are only four major national carriers, most of whom run incompatible networks and all of which are stronger in various regions. If you hate your Sprint or Verizon service, switching to AT&T or T-Mobile is anything but simple and probably requires paying off a two-year contact of some kind. (Even T-Mobile, which is aggressively eliminating contracts for service, maintains a number of device payment plans that require a contract.) Chances are once you’ve chosen a wired broadband carrier and a wireless carrier that works well in your area, you’re stuck: there are few other places to go, and even if you have choices the high costs of switching mean you’re not very likely to leave at all.
(And if anyone tries to tell you that ultra-expensive mobile broadband is somehow competitive with wired service, ask that person to buy you a nice dinner and tell you the story of when they realized dignity had a price. You’re talking to a cable industry lobbyist; they can afford it.)
What happens in countries where there’s real competition? In the UK, where incumbent provider BT is required to allow competitors to use its wired broadband network, home internet service prices are as low as £2.50 a month, or just over $4. In South Korea, where wireless giants SK Telecom and LG Uplus are locked in a fierce technology battle, customers have access to the fastest mobile networks in the world — up to 300Mbps, compared to a theoretical max of 80Mbps on Verizon that’s actually more like 15 or 20mbps in the real world.
And Americans pay more for these slower wireless speeds than anyone else in the world: in Germany, where customers can freely switch between carriers by swapping SIM cards, T-Mobile customers pay just $1.18 per Mbps of speed. In the US, our mostly incompatible wireless networks lock customers in with expensive handsets they can’t take elsewhere, allowing AT&T and Verizon to charge around $4 per Mbps each and Sprint to clock in at an insane $7.50.
American politicians love to stand on the edges of important problems by insisting that the market will find a solution. And that’s mostly right; we don’t need the government meddling in places where smart companies can create their own answers. But you can’t depend on the market to do anything when the market doesn’t exist. “We can either have competition, which would solve a lot of these problems, or we can have regulation,” says Aaron. “What Comcast is trying is to have neither.” It’s insanity, and we keep lying to ourselves about it. It’s time to start thinking about ways to actually do something.
NO INTERNET PROVIDER DESERVES SPECIAL TREATMENT
Mobile carriers like AT&T and Verizon love to pretend they are special flowers, the magicians who managed to fill our thin, empty air with the magic of wireless broadband. Mobile is so difficult, they argue, and spectrum so scarce, that any sort of check or oversight on their behavior would crater their delicate business and derail the entire industry.
This is nonsense, of course. If anything, we need to keep a sharper eye on the endless shenanigans of mobile carriers, because they pose a constant and growing threat to the overall health and innovative potential of the internet. The bad behavior is real, and it’s been happening for years: AT&T blocking FaceTime and Hangouts and Verizon knifing Google Wallet is just the tip of the iceberg. These industry behemoths also wield the wireless spectrum they lease from the public like a weapon, denying both competitors and potential competitors the most fundamental tool they need to get into the game.
Wireless executives will tell you they need to own as much wireless airspace as they possibly can, going on about a so-called “spectrum crunch” that has never really materialized: networks haven’t been brought to their knees by an apocalyptic wave of iPads with a voracious appetite for streaming video. In fact, cable companies bought a wide swath of prime spectrum in 2006, only to let it sit unused for years before flipping it to Verizon years later. Even the inventor of the cellphone denies that the crunch is a real phenomenon.
This shit is insane. It is unacceptable. The smartphone revolution was about putting a powerful computer and an internet connection in everyone’s pocket; it was not about creating a new class of economic gatekeepers with the unchecked power to control and destroy markets with zero oversight and little true competition. Famed venture capitalist Fred Wilson at Union Square Ventures has called the net neutrality situation a “nightmare” for startups trying to get funded, saying that he expects telecom companies to “pick their preferred partners, subsidize the data costs for those apps, and make it much harder for new entrants to compete with the incumbents.”
And allowing these companies to get away with these antics has repercussions we’ve barely even begun talking about: a recent Pew survey found that 45 percent of the poorest Americans use a mobile phone as their primary internet device. Same with nearly half of all Americans aged 18-29, and particularly among minorities and the less-educated. Young, poor, not white: let’s definitely make sure we put them in the ghetto internet of corporate control.
THE FCC IS WEAK AND INEFFECTIVE
The Federal Communications Commission is ostensibly in charge of managing broadband deployment and regulating companies like AT&T and Comcast, but it’s shown no actual ability to do so in a focused and effective way — and when it tries, it does so in such a half-assed way that it gets smacked around in court and loses.
Part of the problem is historical: before former Chairman Julius Genachowski released the first National Broadband Plan after taking office in 2009, the FCC wasn’t even completely focused on the internet, and was mostly known for enforcing indecency rules on radio and TV stations, a role that reached the pinnacle of absurdity in 2004 when Janet Jackson’s nipple was exposed for just over half a second during the Super Bowl halftime show. The agency under then-Chairman Powell responded by wildly issuing indecency fines, ultimately resulting in ABC stations across the country declining to air Saving Private Ryan on Veteran’s Day for fear of government reprisal and yet another major loss in court when its indecency rules were found unconstitutionally vague in 2012.
Genachowski succeeded in shifting the agency’s entire focus to the internet, but he instantly crumpled in the face of high-powered telecom lobbying. Genachowski’s first attempt at net neutrality rules were framed the right way and classified internet service providers as common carriers, but the industry succeeded in utterly killing that plan by stoking political outrage at the idea of “regulating the internet” — resulting in the half-baked rules that just got thrown out because the FCC didn’t call broadband providers common carriers. “Comcast and Verizon have so much clout in Washington that they’ve taken all the reasonable options off the table,” says the Free Press’ Aaron. “Regulators come at things sideways.” Genachowski had the right ideas, but his soft-pedal tactics led to inherently weakened regulations — Cardozo Law School’s Susan Crawford called his approach a “house of cards.”
The FCC also sat in the back seat when AT&T tried to buy T-Mobile, has remained virtually silent about the rumored linkup between Sprint and T-Mobile, and has offered little public comment about the Comcast / Time Warner deal — instead letting the Department of Justice take the lead in opposing these obviously anticompetitive mergers. The FCC’s stunning lack of presence and leadership during these watershed moments in communications history is an extraordinary failure for an agency that is officially tasked with protecting the consumer interest.
The FCC “doesn’t seem to have the confidence to stop a merger,” says Columbia’s Wu. New FCC Chairman Tom Wheeler has “to be willing to take the heat,” if he’s going to get involved, says Aaron. “If you’re going to take this job, you have to lead,” he says. “The whole reason we have an independent agency is to shield it from Congress.”
But there are no rules shielding the FCC from the companies it’s supposed to regulate, leading to an uncomfortable pattern: FCC commissioners are drawn from the ranks of industry lobbyists, while industry lobbyists are drawn from the ranks of FCC commissioners. Current Chairman Wheeler has served as president and CEO of both the NCTA cable lobby and the CTIA wireless lobby; former Chairman Powell is now the current president and CEO of the NCTA; former Commissioner Meredith Baker, who voted in favor of the Comcast / NBCUniversal merger, is now the head of Comcast’s DC lobbying office. “I think for the top jobs the industry can veto people who they might think would be too hard on them,” says Wu. “After all, it’s their agency.”
This cozy relationship leads to the repeated insistence that consumer protections are too difficult to implement, even when they’re not complicated. “Somehow when they’re pushing through unpopular things that a few big companies want, the FCC can do it,” says Aaron. “But when it’s things the people want that the corporations don’t, it’s suddenly impossible.”
But not all hope is lost. “The FCC is scared of one thing: actual people,” says Wu. “When they sense that something is a popular issue suddenly the FCC is terrified.”