Net Neutrality's Death Could Spark Populist Revolt

With echoes of the Gilded Age, Washington coddles moneyed, monopolistic internet barons.

In the Gilded Age, wrenching economic and technological change hardened life for the vast majority of Americans while an elite few prospered. Innovators like John D. Rockefeller, Andrew Carnegie and Cornelius Vanderbilt disrupted old industries, creating news ones, and cemented their fortunes via government-approved monopolies. The most pernicious of these were railroad trusts.

In our times, wrenching economic and technological change hardens life for the vast majority of Americans while an elite few prosper. Innovators like Bill Gates, Steve Jobs and Mark Zuckerberg disrupt old industries, create news ones and "¦.

We know how the Gilded Age ended "“ in a populist uprising against monopolies, sparked by muckraking journalists and harnessed by a trust-busting president named Teddy Roosevelt. Who will be our era's T.R.? Well, a leader needs a cause. A better question might be, what will be the modern-day trust "“ a force so destructive and distant and deeply engrained that a sleepy public is stirred to revolt?

If history is a guide, our generation's Standard Oil, the populists' boogeyman, may be Comcast, Verizon and/or AT&T "“ the sprawling internet providers who, like Rockefeller and his railroad co-conspirators, could monopolize the price and quality of indispensable goods.

Yes, net neutrality could be the issue that inspires a Tech Age political revolution

First, some background from Michael Hiltzik of the Los Angeles Times.

Net neutrality is the principle that Internet service providers can't discriminate among content providers trying to reach you online "“ they can't block websites or services, or degrade their signal, slow their traffic or, conversely, provide a better traffic lane for some rather than others.

That's important because control over traffic flow gives ISPs tremendous power, especially those that control the last mile of access to end-users "“ cable operators such as Comcast and telecommunications firms such as Verizon and AT&T. Without regulation, they'd have the ability to force content providers to pay up for unrestricted transmission to their customers.

While President Obama has pledged to defend net neutrality, his appointee to the Federal Communications Commission, Tom Wheeler, appears to be siding with the would-be monopolists. Hiltzik continues:

His proposal would forbid ISPs to block any legal websites or services, but allow them to favor some traffic under "commercially reasonable" arrangements, to be reviewed by the FCC on a case-by-case basis. A deal Netflix recently reached with Comcast to ensure that the video company's content appears bright and sharp on Comcast customers' iPads and TVs "“ one that Netflix suggests it signed only because it had no alternative "“ would probably fall well within the rules. 

There is no question that allowing such arrangements would be a major retreat for the FCC. Wheeler contends that barring "commercially unreasonable" deals that "harm the Internet" or hurt consumers will be protection enough for the open Internet. His predecessor as chairman, Julius Genachowski, disagreed.

In 2010, Genachowski's FCC explicitly rejected "the argument that only 'anticompetitive' discrimination yielding 'substantial consumer harm' should be prohibited by our rules." That standard, the FCC held, "could allow discriminatory conduct that is contrary to the public interest." The rules must be broader, the commission wrote -- they must forbid ISPs to "pick winners and losers on the Internet."  

Yet that's exactly what Wheeler's proposal would allow. 

What's worse is the proposed merger of Comcast and Time Warner Cable. This empire of content and distribution would rival Rockefeller's hold on both oil production and railway access. Timothy B. Lee of warns that the end of net neutrality means "smaller companies with less cash and fewer lawyers are going to be at a competitive disadvantage."

The miracle of the internet is that anyone can set up a web server, anywhere in the world, and instantly reach everyone else, no matter where they are or what network they're using. But if broadband providers started dividing their networks up into fast lanes and slow lanes, things could get more complicated. To get satisfactory service for your website, you might have to negotiate fast-lane agreements with thousands of ISPs all over the world. Companies that didn't have the money — or the manpower — to do that would be at a competitive disadvantage.

There's also a danger that large internet service providers will abuse their monopoly power. Most of the leading American broadband companies also sell paid television services that compete directly with online streaming services such as Netflix and Amazon Instant Video. Network owners might be tempted to relegate online video services to the slow lane to prevent them from becoming a competitive threat to their lucrative paid television businesses. Or they might charge competing services a big markup for access to the fast lane, ensuring that they won't be able to undercut them on price.

A final problem is that a multi-tiered business model could give ISPs perverse incentives. An ISP might be tempted to make its slow lane slower — or at least not upgrade it very quickly — to encourage content companies to pony up for fast-lane status.

Where is the outrage? I asked that question of a half-dozen technology experts, including Obama administration veterans who witnessed the derailment of the Stop Online Piracy Act, or SOPA, a 2012 copyright protection bill that technology activists feared would undermine internet access an innovation. Two years after an online insurgency overwhelmed the gilded institutions of Washington, the grassroots are relatively quiet.

"The internet providers lost the battle and won the war," said a former Obama administration official who refused to be identified while criticizing the administration. "They've got their hooks into most members of Congress and both major parties." Said another: "Godspeed to the American consumer. We could be screwed and not know until it's too late."

If net neutrality dies and the internet "rails" suddenly become more expensive and less reliable via monopolies, the protests will be loud. Cheap, easy access to information, entertainment and e-commerce are as engrained in modern American life as the telegraph and trains had become in early 20th century. Take that away, and the elites will pay.

That brings me back to the Gilded Age, when innovative entrepreneurs morphed into monopolists who corrupted Washington and exploited workers. They were corralled by the era's "new media," so-called muckrakers like Upton Sinclair, S.S. McClure and Ida Tarbell. It was Tarbell who wrote a series of magazine articles on Rockefeller and Standard Oil that put an ugly human face on the trusts, galvanizing the nation behind Roosevelt's fledgling populism.

In one installment, Tarbell wrote of the struggles of independent oil producers whose freight rates were suddenly doubled by the railway trusts. It had long been understood that since "the railroad held its right of way from the people," it must "be just to the people," she wrote, "treating them without discrimination" regardless of the volume of business.

If she were alive today, would Tarbell write the same of Comcast, Verizon and AT&T? She would certainly conclude that, in an echo of the Gilded Age, great fortunes are being made and tough decisions await. Too much regulation hurts economic growth and new industry. Too little regulation stifles economic and social mobility.

The question that cuts across the decades is whether American social institutions "“ including leaders of government, the businesses community and, yes, the media "“ are smart enough and courageous enough to respond. The answer, more than a century ago, was yes "“ and not without uncertainty and struggle. But first, a sleepy public must stir.

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