Total Information Consolidation: The FCC’s Perfect Storm

After a summer in which the FCC saw protests on its front steps over its moves to consolidate the nation’s media ownership and rebukes from Congress resulting from an angered electorate, it might be thought that the storm has passed, and the agency will tread more carefully in the future. Unfortunately, those events were nothing more than a midsummer squall. The FCC’s perfect storm is well on its way.

That storm is the Commission’s next ruling, the one in which it looks as though the FCC is inclined to classify the fast Internet access delivered over the nation’s phone networks (broadband DSL) as an information service rather than a telecommunications service. This move will fully cement the DSL market under Bell telephone monopoly control and deprive consumers of competitive options.

Yet even as the storm has been brewing, an unusual sailor has stepped forward to suggest that we need not all be swept away, and there is in fact, safer, higher ground. That courageous sailor is FCC Commissioner Michael Copps. Speaking publicly, he warned of the dangers of corporate Internet consolidation, and offered a few striking examples: “Think about what could happen if your broadband Internet provider could limit or retard your access to, say, certain news sources or political sites. Or what if your provider decided that you couldn’t make use of new and improved filtering technology to prevent your children from cruising unprotected through the more obscene alleys of the Internet because it wasn’t their filter?”

It’s not hard to see that consumers are already forced into a corner when it comes to broadband choice. Where they have abundant options for dial-up service, even in most rural areas, their broadband choice remains far more limited--usually a choice between the local cable offering or the local phone company. This is a result of the vicious price squeezes the Bells engage in against small ISPs in order to drive them from the market, as well as the near total refusal of the cable companies to deal with small ISPs at all. Some small ISPs offer a more expensive broadband, coupled with premium service, in order to keep a foot in the door. But the truth is, their Internet options are narrowing all the time, which means that consumer options are shrinking. And as Commissioner Copps pointed out, it’s a dangerous path.

The argument some FCC Commissioners are finding compelling enough to sail straight through the hurricane’s path? Mainly, it’s being promoted by your local Bell monopoly, and they like to call it “regulatory parity.” They say, “The cable companies don’t have to interconnect with ISPs, so why should we?” (The 9th circuit recently disagreed, but that’s another story). The point remains that the argument is weak on its face. Not only were the phone networks constructed over nearly a hundred years of government protection and subsidization, it is now clear that, faced with the option of offering customers a variety of choices in Internet access by engaging in private agreements with ISPs, the cable companies have opted for monopoly control. Why would the Bells view it any differently?

But there is another reason for concern. A phone company that is free to restrict ISP access to fast Internet connections can also restrict access to slow ones. Seventy-four percent of Americans still rely on dial-up service (price being one reason, but choice undoubtedly another). ISPs in areas without adequate phone competition (and unfortunately, there are too many of those) could see their prices skyrocket, while their options for holding the Bells accountable for their brazen discrimination disappear.

It’s a recipe for disaster: Higher prices, fewer paths to the Internet and, finally, an information consolidation that will widen the gulf between those with access to information and those without. All of the Washington think tanks whose bold proclamations about media consolidation being nothing to worry about because citizens still had Internet access have some explaining to do. James Madison once said “A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy.” By the evidence, the FCC is already two thirds of the way there.

Sue Ashdown is the executive director of the American ISP Association.