The War of Internet Democracy

11 May 2006

Robert B. Reich

This week, the House is expected to vote on something termed, in perfect Orwellian prose, the "Communications Opportunity, Promotion and Enhancement Act of 2006." It will be the first real battle in the coming War of Internet Democracy.

On one side are the companies that pipe the Internet into our homes and businesses. These include telecom giants like AT&T and Verizon, and cable companies like Comcast. Call them the pipe companies.

On the other side are the people and businesses that send Internet content through the pipes. Some are big outfits like Yahoo, Google, and Amazon, big financial institutions like Bank of America and Citigroup, and giant media companies soon to pump lots of movies and TV shows on to the Internet.

But most content providers are little guys. They're mom-and-pop operations specializing in, say, antique egg-beaters or Brooklyn Dodgers memorabilia. They're anarchists, kooks, and zealots peddling all sorts of crank ideas They're personal publishers and small-time investigators. They include my son's comedy troop, that streams new videos on the Internet every week. They also include gazillions of bloggers – including my humble little blog and maybe even yours.

Until now, a basic principle of the Internet has been that the pipe companies can not discriminate among content providers. Everyone who puts stuff up on the Internet is treated exactly the same. The net is neutral.

But now the pipe companies want to charge the content providers, depending on how fast and reliably the pipes deliver the content. Presumably, the biggest content providers would pay the most money, leaving the little content people in the slowest and least-reliable parts of the pipe. (It will take you five minutes to download my blog.)

The pipe companies claim unless they start charge for speed and reliability, they won't have enough money to invest in the next generation of networks. This is an absurd argument. The pipes are already making lots of money off consumers who pay them for being connected to the Internet.

The pipes figure they can make even more money discriminating between big and small content providers because the big guys have deep pockets and will pay a lot to travel first class. The small guys who pay little or nothing will just have to settle for what's left.

The House bill to be voted on this week would in effect give the pipes the green light to go ahead with their plan.

Price discrimination is as old as capitalism. Instead of charging everyone the same for the same product or service, sellers divide things up according to grade or quality. Buyers willing to pay the most can get the best, while other buyers get lesser quality, according to how much they pay. Theoretically, this is efficient. Sellers who also have something of a monopoly (as do the Internet pipe companies) can make a killing.

But even if it's efficient, it's not democratic. And here's the rub. The Internet has been the place where Davids can take on Goliaths, where someone without resources but with brains and guts and information can skewer the high and mighty. At a time in our nation's history when wealth and power are becoming more and more concentrated in fewer and fewer hands, it's been the one forum in which all voices are equal.

Will the pipe companies be able to end Internet democracy? Perhaps if enough of the small guys make enough of a fuss, Congress may listen. But don't bet on it. This Congress is not in the habit of listening to small guys.

The best hope is big content providers will use their formidable lobbying clout to demand net neutrality. The financial services sector, for example, is already spending billions on information technology, including online banking. Why would they want to spend billions more paying the pipe companies for the Internet access they already have?

The pipe companies are busily trying to persuade big content providers that it's in their interest to pay for faster and more reliable Internet deliveries. Verizon's chief Washington lobbyist recently warned the financial services industry that if it supports net neutrality, it won't get the sophisticated data links it will need in the future. The pipes are also quietly reassuring the big content providers that they can pass along the fees to their customers.

Will the big content providers fall for it? Stay tuned for the next episode of Internet democracy versus monopoly capitalism.

Robert B. Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written ten books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Reason. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine.