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December 18, 2006

Hallelujah! Hands Off the Internet

One of the costliest, blunt-force lobbying attacks in DC relies on carpet bombing 30 and 60-second TV ads aimed around all three major local news slots and the Sunday morning interview shows.  These ads are unique in that they are targeted not at anything close to a meaningful sample of the hundreds of thousands of folks in the viewing audience but instead, exclusively at the undecided  among the 535 voting members of the US Congress.

The Hard Boiled Calculation

Since most votes are pretty much decided in party caucuses, these ads actually are placed to sway a very tiny percentage of the potential voting members, as a tactical component in a full-press lobbying campaign. And though the TV ad leg of these campaigns can run up costs into the multi-millions of dollars,  the actual number of folks they're aimed at can be as low as one or two undecided members of some committee or other.

Unfortunately, for the viewing audience's many collaterals, the ads are produced  by the same breed of hucksters that turn out hard-core election campaigns; in other words, people who bet heavily on a generous dose of up-front obfuscation, and the assumption that if something is said enough, it must have validity. As for us unconcerned viewers,  we're expected to just nod through these ads, in our customary state of undiagnosed TV apnea; after all, the jetsam of undigested ads just ends up in that copious subconscious recycling bin with all the SUV, beer and pharmaceutical pitches.

Nonetheless, targeted or not, when someone makes a pounding plea aimed at keeping somebody's hands off the Internet, we, the denizens of Dymaxia, do perk up.  After all, it's something we relate to in spades, especially when the plea is about a chokehold on the Internet.  We are, you can rest assured, ever vigilant on that front.

Having just suffered through all the recent lapses of the mainstream media, those guys who took three years to figure out that there was something rotten in Baghdad and who, it seems, never cease to get spun.... and spun again --we don't want anybody, government or private, deciding which information or media conveyed across the Internet gets a pass and which gets pushed into the slow or no lane.

So, who, we wondered,  was putting up all this cash to fight this seemingly good fight for Internet freedom?  After all, at first blush, the ads sounded pretty damn reasonable. Here was a dedicated organization warning us there was a menace to our net freedom, and that the enemy, was the government itself! These Hands-Off guys were letting us know that Congress was about to  impose new rules that would hog-tie our ISP's, or Internet service providers.

In Dymaxia, we pride ourselves on being equal opportunity skeptics. We know more than a thing or two about the Patriot Act and its attack on our liberties and we wince when we hear about the spy agency guys with the database tracking our telephone calls or browsing trackmarks, but we've also heard from no less an authority than the CEO of AT&T, himself, that the Telco ISP's are launching their own plan to turn the Internet into slow and fast lanes they get to control. And so, we wondered, who was it, the Hands Off guys were fingering and why? 


So we got on line and googled "hands off the internet" which quickly got us to A click on their "about us" page, turned up sponsors like AT&T, Alcatel and Bell South. Hmmm, we wondered, as our curiosity began to perk with the intensity of a Roman barista at rush hour. Maybe, this massive campaign --it ran daily in September and October-- had something to do with the makeup of Congress as it was and how it might become. After all, Nancy Pelosi happens to represent a district very much linked to Silicon Valley and she had already gone on record as being on the side of net neutrality.

What Hands-Off didn't want, it seems, was rules written by Congress that would once and for all put an end.... yes, to their plan to get their own hands in a stranglehold around the Internet! They were making an all out play for a green light to impose their own rules on Internet traffic. So much for Orwell! What they didn't like, it seems was net neutrality.

When it comes to telecommunications laws, obfuscation comes in multiple forms and layers. The legacy of a century of regulatory laws has made the situation as clear, say, as the IRS's guide to tax deductions. It's an environment that would get Machiavelli's writing juices going.

Given their different business histories, there are certain legacy legal differences between the Telcos and the cable providers, their new major competitors. The Telco's, for instance, as monopolies and common carriers, have always operated under a regime that requires them to provide a level playing field for their customers. The concept, in fact, goes way back into English Common Law governing the operation of canals and highways. Regarding electric communication lines in the US, the roots appear even before the Civil War, when a Federal law subsidizing a coast-to-coast telegraph line stated :

messages received from any individual, company, or corporation, or from any telegraph lines connecting with this line at either of its termini, shall be impartially transmitted in the order of their reception, excepting that the dispatches of the government shall have priority.

—An act to facilitate communication between the Atlantic and Pacific states by electric telegraph. June 16, 1860

Playing under different rules, the cable companies-- purveyors of TV signals who trace their roots nearly a century later to somebody putting up a big antenna and sharing it with their neighbors for a cost--  have generally grown up as monopolies under local and state jurisdictions in which they were granted the rights of way they needed. And since, from the start, their one-way architecture couldn't accommodate unlimited channel capacity, they grew up negotiating contracts with both their content providers and their customers over various levels of service. Consequently, when it comes to the cable business model,  the content providers (CNN, TBS, Disney, etc.) who gain revenues through their advertisers routinely pay the cable companies for access to their customers' eyeballs while play-for-pay providers like HBO negotiate revenue splits. This non common-carrier heritage in Cable flares to the surface every once in a while as it did in New York a few years ago when Time Warner cable kept one of the major local channels off its system for months as contract negotiations stalled. Last year DC residents were told they would have to pay extra to Comcast to see their new home team, the Nationals' games on days when the Orioles were playing.

Lo, the Convergence Cometh

But over the last decade, the cable operators, the only other guys with a physical pipe into the house, have been successfully muscling into the Telcos' ISP space, thus putting themselves into the bidirectional communications space. That has the Telcos calling foul!  What's further shaking up the Telcos, is their diminishing future as monopoly voice carriers. What you see with VOIP (voice-over-IP companies) like Vonage and Skype today, is only the beginning.  Eventually there will be no money in traditional voice for the Telcos. That nightmare is already a reality:  if you've already got cable as your ISP, you no longer need their landline for anything. And even counting their big new cash cow, mobile, they have to deal with a level of real competition that's  bound to erode margins over time. Little wonder, then, that they are actively looking round for somebody else to squeeze.

The Double Pickle

And so, most ironically --and this is something you've got to appreciate if you take any perspective on these happenings-- the very same telephone companies that are lobbying against Congressional intervention in this Hands off the Internet campaign are also simultaneously waging a TV campaign that portrays the present state of mobile phone operations as a tangled mess that only the federal government, yes, Congress, through regulation,  can sort out.  These Tangled Mobile ads where they call for new regulation even sometimes run back to back with their Hands-Off ads! Of course, the audience has no way of knowing who's paying for the ads.

Once again, hiding behind a another shadow group made to look like something grassrooty and consumerish, the tangled-mobile-phone campaign portrays everyday folks complaining about the various webs of local and state rules that the mobile phone operators have to work under, as if any individual would give a hoot. In their own very messy world, they, the Telcos, are, we do not exaggerate, simultaneously and sometimes in back-to-back ads, urging Congress, perhaps the same members, to pass Federal regulations governing mobile phone operations while a minute later they decry government regulations that forbid them to defy net neutrality.  Go figure! As the man used to say, only in Washington do the lobbyist cajones even outsize their disrespect! Jack Abramoff may be gone but his spirit goes marching on.

The Nimble Dinosaur

In the meantime, with their new investments in high speed optic fiber to home, the Telcos are also aiming to get into the cable TV game, themselves. As can only be savored, the Telcos didn't like the regulatory regime that, in this case, they rightly perceive as favoring the cable companies.  And quite naturally they began gearing up a lobbying campaign that aimed at putting the two utilities under what they like to call a single stovepipe of regulations. However, along the way, something quite different happened which brings us back to the Hands-Off campaign.

As the lobbyists began dreaming up new telephone and cable (and mobile) regulatory acts for Congress, they expanded their thinking to enlarge the pie. After all, competition, even with their fellow but now rival monopolists, the cable companies, was going to lead to decreased revenues. So, they dreamed, if we could only get rid of those pesky common carrier regulations protecting Internet applications, we could start squeezing the Internet application providers like Google, eBay and Yahoo, not to mention the next generations of video and interactive game players and providers and whatever other innovations a true high-speed web (Web2) will spawn even further down the road.

With a compliant 109th Congress already feeding out of their hands, the most favorable FCC in years and some ideologically motivated antiregulatory think tanks at their side, and flush with ISP and mobile profits, the Telco's decided to make their big moves.

Every Good Campaign Needs a Boogey Man

Meanwhile back at the K-Street ad agencies the thinking was that any political campaign has to have a gob of mud. This is politics-ville, after all, and these adsters know that when pinch comes to shove, negative trumps.  And so, In one of their strangest twists, the handlers of Hands-Off decided to make everybody's favorite search engine, Google, the boogey man!  Google, they impugned, was taking advantage of the level playing field on their lines and profiting richly (at the expense of their Yellow Page franchise).  It was as if Google wasn't paying them for their huge connections and as if we, the consumers of Internet services like Google, weren't already paying them for our DSL connections!

In one of their grainy negative ads they showed Vint Cerf, one of the true inventors of the Internet but now on the payroll of Google, testifying before a Congressional committee, that if Google were faced with toll booths put up by the Telcos, that Google would of course bend to paying the tolls.  Cerf's quite frank point in this piece of testimony was that the already established players, like Google, Yahoo and eBay, could now afford to pay extra, if Congress failed to protect the status quo. Not shown in the ad, was his follow on that it would be the next generations of innovators, whatever they might be, that would become the real victims, if Congress allowed these toll booths

Ironies Galore.

In their usual retrovative way, the Telcos are now spending billions to enter into the traditional one-way cable business even as the walled in television model it was built on, begins to crumble under the weight of real bandwidth. The connected viewing public, particularly the one the advertisers like to aim at, wearing their mobile phones and iPods etc., has already left  not just the Ozzie and Harriet living room of their grannies but the Seinfeld flats where their older sisters and brothers hung out!

In this case, the Telcos, and you have to suppose, their cable rivals as well, have also subconsciously grocked, at least in their nightmares, that the real bandwidth that will flow out of this fiber-optic conversion, the kind that can come right into the home, will change the Internet video and game picture in ways that neither the cable, satellite, or Telco guys (should they take the multibillion dollar plunge) won't really like. TiVo's, podcasts, content sharing sites like YouTube and whatever comes next, all have one thing in common:  The customers --now become moving targets-- consume the content how and when it suits them, not how and when anybody chooses to position it. The Great Unwired, having shaken off the physical barriers, want to make their own tracks using their own choices.  And, oh, by the way, they may also want to filter out the ads or share the experience with their friends in ways that challenge present copyright laws, not to mention the creative guys who produce the content. The line between cable, upload and download, game and drama, could quickly blur leaving in its place an environment that looks a lot more like an electronic, zero-delay, Netflix mash for friends and families.

A Modern Day Golden Goose Tale?

Once again, it will be the very guys the Telcos are trying to squeeze out of the market that will create the applications that work in this environment and without their innovations the ISP business that Hands-Off is trying to mess with to get an unfair upper hand, might lose its potential to lead the way. Like the auto business that clung to its gas guzzlers and fought seat belts for years, we might see the center of electronic gravity move to places like Korea, Japan or Europe that are, after all, already leading the way in real broadband acceptance.


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Posted by dymaxion at 02:44 PM

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