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Free the Internet : Monopolies, the FCC and Net Neutrality

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The Internet is becoming a hostage to corporate monopolies.   Just as an individual needs electricity or gas, the Internet should be considered a utility.  Currently a hot debate is brewing about the Internet.  Should it be a utility?  Should the Internet be free?  Should large cable, media or cell phone carriers have the ability to merge and hence, garner no competition for the customer?  Finally, does the FCC have a responsibility to every American to ensure that the Internet is accessible and fast for all?  These questions will be answered in this essay.

What is Net Neutrality?  It is a “network design paradigm that argues for broadband network providers to be completely detached from what information is sent over their networks.”
(UC Berkeley) Basically, no web traffic, hits or any type of information should take precedence over another.  In fact, the ACLU states that the danger of not allowing a “free” Internet is that companies “can’t play favorites because they disagree with the message being delivered or want to charge more money for faster delivery.”  (American Civil Liberties Union)

If in fact that there is such a concern that the Internet will be pieced apart by companies and be allowed to charge higher fees for more traffic, then why doesn’t the U.S. government make it a utility?  Actually the F.C.C. (Federal Communications Commission) actually can make the Internet a utility.  In fact, it has the absolute power to just that.  Tim Wu, a professor at Columbia University states that for years “consumers have been waiting for serious competition to arrive, yet there is now less competition than ever.” (Wu and Szoka) Wu goes on to further state that “classifying broadband as a ‘common carrier’ under the 1934 Telecommunication Act would allow the FCC to use the full extent of its authority to prevent broadband providers from extracting tolls that damage the broader economy.”

In the past ten years, providers such as AT&T, Comcast, Verizon Wireless and Telus have tried and been successful in “interfering with the Internet.” (American Civil Liberties Union)  AT&T blocked Eddie Vedder, of the band Pearl Jam from singing “leave this world alone” by pulling the sound plug. (American Civil Liberties Union) Comcast was accused of throttling “online file sharing” through torrents  (American Civil Liberties Union) and the list goes on and on.  In fact, Google, Microsoft and Yahoo have been lobbying to pass legislation to stop these practices altogether to make a free internet – hence “Net Neutrality.”(Guo)

Regular citizens have been joining the ranks by signing petitions such as Freepress.net to stop the Comcast-Time Warner merger   (freepress.org), or other sites such as savetheinternet.com, fightforthefuture.org, moveon.org have joined the movement as well.  The FCC has been taking comments from the American public at fcc.gov/comments.  At last count, there are 52,930 comments ranging from “free speech should not be bought and sold” to “we want net neutrality.” (FCC.gov) Even Al Franken, U.S. Senator from Minnesota gave an impassioned plea that if this is implemented “mom and pop stores would lose even more ground to corporate giants.  Big media companies will be able to get their version of the news to consumers faster, and would end up paying for it with higher rates.”(Franken) So, with this many Americans responding to this issue, why isn’t this cut and dry?

Enter the FCC Chairman, Thomas Wheeler.  He was confirmed in October 2013 as the new head of the FCC.  Wheeler was the “managing director at Core Capital Partners” and had been a “top lobbyist for the wireless and cable industries.”   (Snider) From “1979 to 1984, Wheeler was the president of the National Cable Television Association and a CEO of Cellular Telecommunications and Internet Association.”  (Snider)  There has been concerned that Wheeler has had the interests of the cell and Internet provider companies more at heart than the average American citizen.

Case in point is the pending merger of Comcast-Time Warner.  As Tim Wu stated earlier that “consumers have been waiting for competition to arrive”  (Wu and Szoka) and clearly it has not.  The pending merger of Comcast-Time Warner has the tell-tale signs of a Monopoly.  What is the true definition of a Monopoly?  “A monopoly is free to set any price it chooses and will usually set the price that yields the largest possible profit.”    (Stigler)  Monopolies stiffen competition, driving other smaller competitors right out of the market.  Concerns about monopolies date back to the creation of the Sherman Act in the Progressive Era.  “The concern in the Progressive Era with protecting consumer welfare called for prohibitions on predatory business tactics and on horizontal mergers aimed at creating monopolies and cartels.”  (Calabresi and Leibowitz)

What does the merger offer the each company?  The tab to pick up Time Warner is $42.5 billion.  Comcast would have “30 million U.S. homes; 30% of all of the cable households and 40% of the high-speed Internet market.” (Macke)  Of course, Comcast states that as a result that it would be “faster internet speeds and more reliable service.” (Macke) However that was not the case earlier this week when Ryan Block, head of Product at AOL called Comcast to cancel his service.  It was a relentless call to customer retention that wound up becoming viral on the Internet. (Hu)  It further showed that maybe becoming too big could become a problem for all individuals who use the Internet service provider.

Thomas Wheeler, head of the F.C.C. touts “not so fast” on his blog recently.  (Gustin) Wheeler states that he intends to “prohibit companies from blocking or degrading Internet services until 2018.”(Gustin) He further states that the “Internet will remain like it is today, an open pathway.” However, there is the proposal that would allow some companies “preferential treatment” such as Netflix but it would be on a “case-by-case” basis. (Gustin)  Remember that Netflix made a deal with Comcast and Verizon regarding bandwidth usage and that is not “covered by the new rules.” (Gustin)

Another individual who believes that the FCC is doing the right thing is Berin Szoka who is the President of TechFreedom, a think tank in Washington D.C.  He states that more federal regulations and placing the Internet as a utility is futile based on how Washington D.C. operates.  He believes that the FCC should allow “phone companies transition to Internet protocol-based networks” which could save “billions of dollars” to make a “second pipe faster.”  (Wu and Szoka) He believes turning the utility into a utility would freeze competition and make the process “slow and messy.”   (Wu and Szoka)  Interestingly, he does support antitrust and consumer protection laws and believes “that’s a better model for regulation.”   (Wu and Szoka)

What is clear is that most individuals want a free Internet and there are good points to consider on each side of the issue.  What is paramount is that all Americans and individuals throughout the world have access to the Internet in order to communicate, consume and learn.  Whether the Internet will become a utility or not is yet to be seen and it is unclear what the ramifications will be if the Comcast-Time Warner merger is approved.  Hopefully when the F.C.C. makes their decision about “Net Neutrality” soon that decisions are made that benefit the masses fairly and equally.

Works Cited

 BIBLIOGRAPHY American Civil Liberties Union. What is Net Neutrality? 19 July 2014. Website : https://www.aclu.org/net-neutrality. 19 July 2014.

Calabresi, S.G. and L.C. Leibowitz. “Monopolies and the Constitution: A History of Crony Capitalism.” The Federalist Society for Law and Public Policy Studies (2012): 989-1073. Journal.

FCC.gov. Open Internet. 19 July 2014. Website: fcc.gov/comments.

Franken, A. U.S. Senator. Net Neutrality: The Free Speech Issue of Our Time. 6 May 2014. YouTube – .

freepress.org. Join the Fight o Stop the Comcast-Time Warner Merger. 19 July 2014. Website: http://www.freepress.net/resource/105883/join-fight-stop-comcast-time-warner-cable-merger. 19 July 2014.

Guo, H, Bandyopadhay, S, et al. “Net Neutrality and Vertical Integration of Content and Broadband Services .” Journal of Management Information Systems Vol 27, No 2. (Fall 2010 ): 243-275. Journal.

Gustin, S. “FCC Chairman Tom Wheeler Hits Back at “Net Neutrality” Critics.” 2 May 2014. Time.com. Website . 19 July 2014.

Hu, Elise. Don’t Fire The Comcast Guy, Says Caller Who Tried To Cancel. 16 July 2014. <http://www.npr.org/blogs/alltechconsidered/2014/07/16/332010645/dont-fire-the-comcast-guy-says-caller-who-tried-to-cancel&gt;.

Macke, J. Comcast Time Warner Merger would create customer service nightmare. 16 July 2014. Website: http://finance.yahoo.com/news/comcast—time-warner-merger-would-create-customer-service-nightmare-122949247.html. 19 July 2014 .

Snider, M. Wheeler confirmed as head of FCC . 29 October 2013. Website: http://www.usatoday.com/story/tech/2013/10/29/tom-wheeler-confirmed-fcc-chairman/3309333/. 19 July 2014.

Stigler, G.J. The Concise Encyclopedia of Economics: Monopoly 2nd Edition. n.d. Website : http://www.econlib.org/library/Enc/Monopoly.html. 19 July 2014.

UC Berkeley. Network Neutrality. n.d. Website: http://www.ocf.berkeley.edu/~raylin/whatisnetneutrality.htm. 19 July 2014.

Wu, T and B. Szoka. Should the U.S. Regulate Broadband Internet Access as a Utility? . 11 May 2014. Website: http://online.wsj.com/news/articles/SB10001424052702303939404579532054229366092. 19 July 2014.

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