By Stephen N. Brown
Like an unstoppable 18-wheel rig, AT&T-TCI's
broadband mega-merger rolled through the Federal
Communications Commission's (FCC's) regulatory gates and
on to the open highway without picking up the roadside
hitch-hikers who were shaking their fists and demanding a
lift. Rather than accept their fate, the hitch-hikers
formed a coalition, dug into their pockets for $2000 each
a month, and walked across town to Congress and the White
House to urge both institutions to send out their
troopers and force that speeding, souped-up bandwidth
mega-merger to slow down before it kills consumer choice,
which was last seen getting in the cable guy's broadband
truck.
Thus, the members of the coalition, called OpenNet,
say, "We are at a critical point in the development of
the Internet with the move from narrowband,
circuit-switched services to broadband, packet services
[but]...consumer choice is
threatened....TCI,...with AT&T, [is] seeking
to change the Internet into a corporate "Intranet" by
controlling almost all facets....Consumers are being
offered a 'take it or leave it' package....The
threat...is that the broadband network will be a closed,
proprietary network, and will differ dramatically from
the open, nondiscriminatory access [on telephone
networks]." The coalition says consumer choice can be
saved if AT&T-TCI allows its cable network to be used
as a common carrier by OpenNet's members to sell their
Internet services.
OpenNet's care for consumer choice is laudable, but
the coalition's membership thus far does not include
organizations commonly thought of as working for the
little guy, such as the Consumer Federation of America
and Consumers Union. In fact, OpenNet's ostensible leader
is Washington insider Greg Simon, the founder of Simon
Strategies and a long-time veteran of Vice President Al
Gore's staff. Just before leaving the federal government,
Simon managed the Clinton administration's efforts to
relax its export policy towards encryption devices. He
has the contacts and skills to achieve OpenNet's goal.
But US West's membership in the coalition has already
caused friction between OpenNet and one company that
received an OpenNet solicitation for $2000, Cottonwood
Communications (Omaha, NE).
David attacks Goliath and loses
Cottonwood is a multimedia and Web site development
company that brought suit against US West, claiming the
telephone company unlawfully prevented Cottonwood from
gaining access in Omaha to US West's video dial-tone
service, TeleChoice. Cottonwood lost its case but is
appealing it.
Cottonwood president Richard Dahlgren told Simon that
it was disingenuous for US West to advocate open access
on cable networks while stifling open access on
TeleChoice. Dahlgren wrote to Simon, "We completely agree
with your mission and have signed up to be a member. As
your newest member, I would like to propose expulsion of
US West."
According to Cottonwood's press release, Simon
responded, "OpenNET...is not about any one company, it is
about giving consumers choices in their ISP's over cable
broadband networks. Every one of our members...has
somebody who is unhappy with them...and some of them have
fought each other and may still be fighting each other.
What is important...is that each of our member companies
is willing to argue for consumer choice of ISPs over the
cable broadband network. That is all we ask of them. We
do not ask that they prove they are unblemished or free
of controversy in their businesses."
This was a perfectly fair answer, except that Simon
did not extend the same fairness to Dahlgren, telling him
instead that OpenNet did not want his membership: "I
would further appreciate it if you would remove my name
and email address from your [Cottonwood's] Web
site." Dahlgren complied, saying, "I will remove the link
to your organization from our site and will not contact
you again." Apparently his complete agreement with
OpenNet's mission mattered less than his opposition to US
West.
It looks as if small businesses will be shut out of
OpenNET if they run afoul of the big players. Thus,
OpenNet appears to be shaped by the desires of big
business to retain market control, as much as it is
shaped by a desire to protect consumer choice.
The market-control theme permeates a recent book, The
Unauthorized Bio of the Baby Bells, by Bruce Kushnick.
The author dredges through years of company annual
reports, utility commission reports, and media stories to
conclude that incumbent telephone companies have had
enough revenue and profit to have already built a
door-to-door fiber network, if they had wanted to. "You
paid for and did not receive the new fiber-optic future,"
writes Kushnick, who is unabashedly critical of the
incumbent phone companies. Perhaps in anticipation of a
charge that the book is unfair or a diatribe, it is
dedicated to Vice President Gore and begins with a
forward by Robert Metcalf, the inventor of Ethernet and
founder of 3Com, who says "reliable sources do confirm
Kushnick is credible."
Kushnick documents the incumbents' decade-long pattern
of stalling tactics and broken promises that have delayed
a fiber infrastructure. He sees this as perfect
preparation for the incumbents' strategy of offering
"broadband" services through digital subscriber line
technology, instead of building fiber-in-the-loop (FTL).
Contrast this pattern with the very large fiber purchases
being made by cable operators today, and the result is a
different view of OpenNet. It runs a risk of being
perceived as a shill for companies wedded to narrowband
technology and trying to slow down a better one. AOL,
Mindspring, and the others have yet to show a history of
urging, cajoling, pleading, or pressuring the incumbent
phone companies into FTL. Until the ISPs do that,
reasonable people may conclude the ISPs are just
expressing sour grapes.
Worrywarts
For now, OpenNet's worries are exaggerated and hasty
because consumer choice did not jump into the cable guy's
truck. The best comment that applies to the coalition's
anxieties comes from Tennessee Republican Sen. Fred
Thompson, who said of the Democrats' fears during the
Clinton impeachment trial, "They're squealin' before they
been stuck." OpenNet's members still have their bacon
because @Home, the company that offers Internet service
over the cable operators' networks, recently suffered
from enormously bad press about its service
agreements.
In February, @Home imposed an oppressive new service
agreement on outraged customers, who feared violations of
privacy and misuse of personal information. In the
agreement, @Home reserved the right to share their
subscribers' data and usage patterns with other
companies, to limit its subscribers to nonbusiness
activity, and perhaps to police users' traffic to ensure
that they were not using it for business. The protests
were so strong that the company withdrew the agreement to
rework it.
The company's interest in separating residential and
business applications flows from the increasing use of
cable networks to form virtual private networks (VPNs)
through the Internet. VPNs are used primarily by
businesses, and their traffic is likely to be more
lucrative than residential traffic. Thus @Home exposed
itself to charges that it would let the quality of
residential service stagnate while upgrading business
service. For that strategy to work, @Home has to know
whether the traffic is residential or business, and that
can be achieved only by snooping on the traffic's
content.
Marvin Sirbu, professor of engineering and public
policy at Carnegie-Mellon University in Pittsburgh, PA,
and a member of the FCC's technological advisory council,
said, "If @Home's IP transport service were held to be
common carriage, they wouldn't be allowed to discriminate
on the basis of the content of the consumer's packet.
Perhaps we will soon see them bar the subscriber's use of
[encryption software] because it would prevent
[@Home] from checking packets for banned
content."
The cable guys created a public relations problem for
themselves by placing control concerns above consumer
concerns, exactly as OpenNet predicted. The net result is
a blow to consumer confidence in @Home and a help to
OpenNet's members. But this series of events does not
mean consumer choice is about to collapse or that it
needs OpenNet's protection.