Research Paper Net Neutrality By Brian F. Rose

JOUR 2 Mass Comm Brian F. Rose
Word count 1,525 03/03/ 2014

Net Neutrality

On the Jan 18, 2014 the U.S. Court of Appeals for the District of Columbia struck down parts of FCC Network Neutrality regulations covering broadband telecommunication. (Washington Post, 01/18/2014) The Court of Appeals ruled that anti-blocking and anti-discrimination did not apply to broadband providers because they not common carriers under FCC rules. (Fitch Ratings, Business Wire 01/152014) The ruling will allow top broadband companies Verizon, AT&T, Time-Warner and Comcast greater control over broadband speed, information and access. Net neutrality regulations touch on free speech, control of access, infrastructure upgrades and control of the internet.
In Captive Audience (2013) author Susan Crawford described communication regulation at the turn of the twenty first century as resting on one distinction, transport of information is a common carriage service, subject to oversight to prevent discrimination, oversight to prevent discrimination and required to connect with all networks. Everything else was treated as non common carrier service. (Susan Crawford Captive Audience p) Here is analogy, if you buy a coach ticket on the California Zephyr from Oakland to Chicago the railroad carriers you at the same price as anyone else with a coach ticket, this is common carriage service. The ticket does not give you access to the Pullman sleeping car. The sleeping car is an extra service. But if you paid for it you could not be discriminated against and denied service.
The debate over regulation started in a different form during the Gilded Age. Railroads were the big business of the nineteenth century. They carried the burden of financing and constructing the network. Railroad executives felt that since they built it they were free to charge what the market would bear. William H. Vanderbilt President of the New York Central remark “Let the public be damned” (Mass Media P 332), summed up the view many railroad executives. After numerous court cases attempting the regulate the railroads it was established that railroads were common carriers with natural monopoly between point’s A and B. (The American Heritage History of Railroads in America, 1975) They were subject to regulation via the commerce clause of the federal constitution. And the Interstate Commerce Commission was established in 1887 to regulate them. (Beth, Loren P. the development of the American Constitution, 1877-1917, 1971)
At the turn of twentieth century a related area of controversy were the large trusts and combines being created by Wall Street banker J. P. Morgan. Morgan argued that the competition between business’s in the 1880s and 90s was wasteful and destructive. That large trusts and combines would create a regulated orderly market. The companies were either vertically or horizontally integrated depending on industry. (The Tycoons, Morris, Charles R., 2005) J. D. Rockefeller’s Standard Oil was a leading example of vertically and horizontally integrated company. Ira Tarbell’s History of Standard Oil put the spotlight on Rockefeller and the trusts. (Mass Communications p334)
In the progressive era, President Theodore Roosevelt (Mowry, George E., The era of Theodore Roosevelt, 1900-1912, 1958) argued that the trusts were inhibiting competition. Regulated competition promoted growth and innovation. During Roosevelt term Standard Oil was broken up. His successor William Howard Taft was a firm believer in big business under government regulation and broke up more trusts then Roosevelt.
At this time the telephone network was being constructed. Telephones have allows subject to regulation via the franchise requirements of municipalities. Power and light companies, street railways and interurban railways were subject from the beginning to similar regulation. The franchise holder was providing a public service subject to regulation. Theodore Vail President of AT&T from 1907 to 1919 was a leading proponent of the natural monopoly subject to government regulation. Only a large company could afford to construct and run the telephone network infrastructure. And they had an obligation to innovate and provide the same service to everyone. (Garnet, Robert W., The Telephone enterprise: the evolution of the Bell System’s horizontal structure, 1876-1909)
In 2014 we have moved far from this view. The FCC removed the Financial Interest and Syndication rule preventing networks from owning the programs they broadcast in the 90s. (Captive Audience, 2013 p128) Before the 90s AT & T could not have owned content providers such as wire service or a movie studio. The result is the vertical integration of today (Captive Audience, 2013 p130). The telecom companies have been able to control a greater share of the market through vertical and horizontal integration. This has lead to an unprecedented control of content by the telecom giants. In the wireless world AT&T and Verizon are dominant. In cable it is Comcast and Time-Warner.
There has been a steady moving away from the consensus “that basic, nondiscriminatory, affordable utility communications services should be made available to all Americans is being dismantled, state by state.” In Europe the opposite is happening. The EU is committed to open internet access. (Thomas, Daniel Financial Times, 06/5/2013) In the Europe the view is it is a national priority to give fast internet service to all citizens as soon as possible. Countries are working to replace their copper wire cables with fiber optic cables to achieve this goal. (Captive Audience, 2013 P260)
There are a number of reasons why telecom companies oppose net neutrality rules. Netflix can use up to three fifths of a Comcast’s broadband at peak hours. A broadband provider has a legitimate reason to want to regulate that use. Net neutrality prevents Comcast from charging higher fees for access and faster service to large users of its broadband. (Fitch Ratings, Business Wire, 01/14/2014) Telecom companies argue they built the network. Internet companies such as Google and Yahoo are using it for free. The CEO of AT&T Ed Whitacre commented in strong language we built the system they are using for free, but he is not going to let them do that, Whitacre wants a return on the investment. (Neutrality” Ruling Paves the Way for Internet ‘Fast Lanes’, Gustin, Sam Time.com 1/15/2014)
And if net neutral was a purely technical matter it would not be so important. Verizon Wireless brought suit against the FCC claiming net neutrality violates its free speech rights. Net neutrality touches on free speech and not the way Verizon see’s it. (Verizon: FCC Net Neutrality Rules Violate First Amendment: Albanesius, Chloe, PC Magazine July 2012) Without net neutrality a private company effectively becomes the gatekeeper to the flow of information with no obligation to serving the public. Comcast could favor one of its own subsidiaries over and outside provider. Because they are not regulated as a common carrier they are free to provide whatever service they see fit to the public at the price they dictate. They can also dictate terms to content providers.
One effect is slow transmission of content such as Netflix. Broadband providers solution is to charge end user a premier price for fast service. They are under no obligation to provide fast service to everyone. (Captive Audience, 2005) AT&T and Verizon did not replace their copper wire network in many parts of New Jersey after Hurricane Sandy. Removing a source of redundancy in case of emergency. (Smith, Gerry, Huffington Post 11/09/2012)
There are remedies to this problem. The FCC could classify Telecom companies as common carries subject to regulation. It would be difficult to do in the current climate. The view is that government regulation restrains growth and innovation. However this is often not the case. Under ICC railroads were tightly controlled over rate structures, which did controlled their bottom line. But it was no brake on innovation, by the Forties, several railroads could move a hundred freight cars of California produce at up to one hundred miles an hour to Chicago. By comparison the unregulated US Steel made practically no innovations during this same period. (The Tycoons, Morris, Charles, 2005)
Communities can install their own fiber optic cables and provide broadband as a public service just like water and garbage pickup. Broadband providers are lobbying hard against this and have blocked it in several states. Cities with municipal power have the infrastructure in place. There is nothing to prevent say city of Santa Clara from installing a broadband network. The city of Chattanooga, TN. offers fiber optic service its municipal utility (Captive Audience, 256 2013)
Both the public and communities can take a leave from Henry Ford who used the media skillfully to wage a David v Goliath battle against the Association of License Automobile Manufacturers, and won his case in 1911. (The American Heritage History of the Automobile in America, 1977)
Free and open access to information is a right and not a luxury. The first amendment guarantees the right to free speech for everyone. Verizon concept of free speech is wrong, nowhere in the constitution does not give a company the right to be the gatekeeper of speech. The constitution does give the right to regulate commerce between the states to Congress. The FCC needs to regulate telecom companies as common carries. The amount of concentration they have is too great to allow them too have unfettered control over the access and transmission of information.

Bibliography

Books
Crawford, S. (2013) Captive Audience: The Telecom Industry and Monopoly Power the Gilded Age. Yale U. Press.
In this book, Susan Crawford, a professor at the Benjamin N. Cardozo School of Law discusses the parallels between today’s broadband providers and the 19th century monopolies. How the process of concentration is leading to America lagging behind other developed nations in telecommunications. Crawford discusses the effects of slower service and higher prices effects the end user.

Rodman, George (2012) Mass Media in a Changing World: Fourth Edition, McGraw Hill

Morris, Charles R. (2005) The Tycoons: how Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan invented the American supereconomy. NewYork:, H. Holt and Co.

Beth, Loren P. (1971) The development of the American Constitution, 1877-1917, New American Nation Series. Harper Collins Pub.

Mowry, George E. (1958) The Era of Theodore Roosevelt and the Birth of Modern America: Harper Collins Pub.

Garnet, Robert W. (1985) The telephone enterprise: the evolution of the Bell System’s horizontal structure, 1876-1909, Johns Hopkins University Press, Baltimore

Oliver Jensen (1975) The American Heritage History of Railroads in America, American Heritage Pub. Co.: Distribution by McGraw-Hill

Sears, Stephen W. (1977) The American Heritage History of the Automobile in America, American Heritage Pub. Co.: Distribution by Simon and Schuster

Periodicals and Newspapers
EBSCO HOST source for articles

Powell, Alison and Cooper, Alissa Net Neutrality Discourses: Comparing Advocacy and Regulatory Arguments in the United States and the United Kingdom, Information Society, Oct-Dec 2011, Vol.27 issue 5 p311-325

Thomas, Daniel, Internet providers access pledge, 07/25/2012, Financial Times (London, England)

Thomas, Daniel, Brussels vows to stamp out web ‘throttling’ 06/05/2013,Financial Times (London, England)

Michelle, Maisto, FCC, net Neutrality Lose Out to Verizon in District Court Ruling, 01/14/2014 eWeek, Database: Business Source Elite

Fitch Ratings, Overturned Net Neutrality L/T Positive for Cable/Telecom, 01/15/2014 Business Wire

Gustin,Sam ‘Net Neutrality’ Ruling Paves the Way For Internet ‘Fast Lanes’ Time.com1/15/2014 Database: Business Source Elite

Chloe,Albanesius, Verizon: FCC Neutrality Rules Violate First Amendment. July 2012, PC Magazine

Kirchgaessner, Stephanie, Internet rules stir Republicans, 12/03/2010 Financial Times (London,England)

Strange, Adario, Netflix CEO Attacks Comcast Over net Neutrality Issues. April 2012 PC Magazine

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