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Hey, gang, there's a hot/unknown issue out there -- it's called Net Neutrality! Lots of cool bloggers, interest groups, politicos have jumped on its bandwagon -- a vehicle paid for by big Internet players like Amazon and Google. Just as many would like that bandwagon to run over an IED. These hopeful people work for companies that own the lines and network on which you get the Internet -- firms like Verizon and Comcast. I care not a whit. My purpose here is to show you the what goes on behind the curtain. Why? Because in America, you can create an issue out of anything. You can make a show out of it. The people pushing Net Neutrality have done that, brilliantly. Let's see how. Go to "In This Episode" to see the latest.
Your humble servant, Harry Greene IN THIS EPISODE January 31, 2007
To begin at the beginning . . .
Economists have a slew of awful terms at their disposal. One is "rent-seeking." Perfectly awful. It means using someone else’s resources for your own. Businesses do this all the time to suppliers, competitors and other fish.
The Net Neutrality keflufel ostensibly began when AT&T’s pooh-bah, Ed Whitacre, declared in the hallowed pages of Business Week that he was tired of big content companies using his network for free. Oh no, he declared in his melodious Texas twang. They were going to have to pay for that privilege and stop their rent-seeking. (Chairman Big Ed didn’t actually say “rent-seeking.”)
But every imbroglio has its antecedents. Net Neutrality’s actually began in the late 1990s when a little concept called open access began popular. AOL, alarmed at AT&T’s acquisition of the TCI cable company, worried that it would have to pay to place its content on AT&T’s lines, conducted campaigns in markets where AT&T was trying to get approval for its merger (which was any town where TCI had a cable franchise). With the help of Internet utopiasts from Harvard and Stanford, they crafted the policy notion that any internet service provider (like AOL) should have the natural right to share a cable company’s lines and pay a fair price to that company. What would define a fair price no one knew. It didn’t matter.
Why? Because AOL’s goal was to block, or at least delay, AT&T’s merger with TCI. To that end, AOL enlisted lobbyists, PR firms, and activists who needed a cause. It got academics to chime in; unions, wanting to pressure AT&T into making the TCI workforce into a subsidiary of the Communications Workers of America, came on board; and AT&T’s rivals – Verizon, SBC and the like – under the “enemy of my enemy is my friend” rubric. AOL was pretty successful. Portland, Oregon passed an open access law (later thrown out by both the courts and the FCC). Massachusetts, unbelievably, almost had a referendum on it. The referendum was, of course, pushed by a major AOL shareholder.
Then AOL merged with Time Warner. (Probably the most disastrous merger in the corporate history, by the way.) The Internet met Big Media. Time Warner had lots of cable properties. Open access suddenly wasn’t a winner for AOL and its new consort. It went away.
But the lesson wasn’t lost on other content players.
Next: What Goes On In Those Conference Rooms?
January 30, 2007 Quick! What is Net Neutrality? Who knows? One wacky group thinks it's all about freedom of speech on the Internet. Another opines that it's about protection for the "little" websites, bloggers and entrepreneurs. Dolores, baby, it's about the money. It's always about the money. The telephone and cable TV companies own crucial pieces of the Internet -- the lines that run into your Adobe hut or igloo and McMansion or wherever the hell you live. They've put a lot of investment clams into that network. They want to harvest those clams. One way is by getting the guys who run the big Internet content companies -- the Amazons, E-Bays, Googles, etc. -- to enter into contracts that might give some special preferences and services to them. The Internet companies don't have to do this. But when Internet companies sniff around telecos' and cablecos' marks, they worry, they bark, they bite. You see, the telecos and cablecos have their own content ambitions, particularly when it comes to video. In case you had your head turned away, Google just bought You Tube. Verizon and AT&T are offering TV-like service in selected markets. Gosh, it's kind of like, uh, a rivalry. If AT&T is offering video and I, Google, am also offering video, and AT&T wants to charge me more for using its pipes to pour all those megabytes on the wonks sitting at a screen -- much like the one at which I'm staring -- I, Google, am mightily afraid. Hmmmm...what's the best way to stop a rival in his tracks and make sure I don't have to ever worry about paying him more? Regulate him. How best to do that? Cloak my real goal in some different fabric. Some sort of public policy hot button like freedom of speech, keeping the Net open for access, or neutral for everyone. Neutral? Internet? Ahhhh. NET NEUTRALITY. In our next episode, we'll learn how AOL (remember them?) started the net neutrality bandwagon. |
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