The digital divide

At a hearing before Sen. Tom Daschle, D-S.D., two weeks ago, a string of high-level incumbent carrier executives decried the development of the "digital divide" that could arise in this country if their companies aren't given some type of regulatory relief.

In most cases, the executives sketched out a future in which only subscribers living in metropolitan and well-heeled suburban areas would have access to advanced services, including high-speed Internet access. Subscribers in rural markets and economically depressed areas would be relegated to access only to the most basic services.

Those same executives declared victory a week later when the FCC struck DSL service off the unbundled network element list. In part, regulators reasoned that anti-trust laws could be used to prevent telcos from abusing their incumbent position.

However, when combined with its recent inaction on open cable access, the commission is creating exactly what telco executives warned the Senate panel of - a digital divide - some claim. And though the divide may not be between urban and rural or wealthy and poor, the effect may be just as devastating.

Last week, the Consumer Federation of America and the Consumer Action released a report claiming that unless all carriers are required to provide non-discriminatory access, all consumers will lose out. According to "Transforming the Information Highway into a Private Toll Road," both telcos and cable operators are moving toward the "cable" model. Under that model, the distribution arm (the cable operator or telco) controls exactly whatcontent will be seen and heard. The cable industry has worked this way since its inception, controlling networks and channel lineups.

AT&T Broadband & Internet Services is in a position to have even more control over broadband content.

"One of the real concerns we have is [that] they are creating a cable monopoly," said Ken McEldowney, executive director of Consumer Action and president of the CFA, which has filed its opposition to AT&T's MediaOne buy with the FCC. "Built into that is a discrimination in favor of its other corporate partner, @Home."

Regardless of the claims that AT&T BIS makes in its press releases and regulatory pleadings, the company certainly has the opportunity to be the dominant player in cable access.

And while I don't buy all of the arguments that the two consumer groups made, I fear that we are already starting to see a hint of that day - AT&T recently limited upstream bandwidth for @Home customers, a move designed to prevent users from becoming content providers on the cheap. More sinister is the very real possibility that any cable operator can intentionally slow down a customer's access to non-affiliated and competing content providers' Web pages. No one has been accused of such yet, but the technology is available.

On the other side of the competitive divide, telcos themselves are making progress toward the same model, though many analysts believe they won't get all the way there. Many RBOCs welcome multiple ISPs to connect to their DSL lines - the RBOCs just want to control the infrastructure.

Incumbent telcos like to claim that unless cable operators are also forced to connect to multiple ISPs, the incumbents will have little incentive to invest in DSL.

While I certainly understand the concern of competitive disadvantage, the disincentive argument strikes me as more of a veiled threat to keep control of the infrastructure. Both maneuvers - cables' attempt to control content and the telcos' play to corner the infrastructure business - are shortsighted. The high-speed Internet access cat already is out of the bag. Any telco - no matter how small - not deploying, testing or at least formulating a business plan for DSL service is denying the inevitable and providing a disservice to its subscribers. Cable operators that think they can direct users only to pre-selected sites misunderstand the basic nature of openness and the Internet.

The power users who have a crying need for high-speed access, and who are willing to pay handsomely for it, have already gotten a taste of the future. Denying them access to content and infrastructure of choice of service provider is too dangerous a game for any carrier to play.