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Building A Better Internet ... Or Not

Whatever Happened to Universal Service?

By Martin H. Bosworth
ConsumerAffairs.com

April 21, 2006

Broadband Access • Congress Passes Broadband Data Improvement Act • Report: Metered Broadband Bad For Consumers, Businesses • FCC Votes to Punish Comcast for Content Blocking • Comcast Tries to Polish Its Image • Communications Industry Urges Congress to Act on Broadband • Comcast Cuts Deal With Vonage on Internet Traffic • Court Upholds FCC's Video Rules • Report: U.S. Broadband Adoption Slowing • Critics: FCC Inaction Slows Economic Development • Few Are Neutral in Net Neutrality Battles • Google Petitions FCC Over Verizon's Use of Wireless Spectrum --- More ...

Over the past two decades, the Internet has become a central touchstone for how people communicate, share information, get services, and live their lives. Everything from keeping in touch with friends to grocery shopping to home buying can be done with the click of a mouse.

A recent study conducted by the Pew Internet and American Life Project found that larger percentages of Americans are using the Internet to help them through major life decisions, such as changing jobs, looking for homes, and coping with illness.

The survey found that 45 percent of America's Internet users, or 60 million Americans, were using resources on the Web to help them make the best decisions.

The study authors postulated that increased access to high-speed broadband Internet access was a contributing factor to the results. Between 2002 and 2005, broadband Internet usage tripled from 18 million to nearly 60 million subscribers, according to the Project's most recent available data.

The study also credited better advertising of Web content to the public, and the "social networking" factor of people recommending Web-based resources to one another.

The accessibility and versatility of the Internet is predicated upon simple principles -- providing affordable Internet access to all subscribers, and ensuring equal access to content for everyone who's got a connection and a service provider available.

But many new technologies are coming down the pike that may fundamentally reshape how we utilize the Internet, for better and worse.

Broadband Boom and Bandwith Buyout

The initial promise made by major telecommunications companies in exchange for long-sought deregulation was that they would roll out low-cost, accessible broadband for all Americans. As a result, the Telecommunications Act of 1996 massively reduced the limits on cross-market media ownership, cable rates, and so on.

Although the major players in the telecom market invested heavily in corporate broadband networks for businesses and enterprises, the "last mile" connections to households did not start materializing until many years afterward, leaving customers to make do with slow dial-up Internet connections or using DSL over phone lines.

Now a wave of interest in new high-speed services like Voice over Internet Protocol (VoIP), Internet Protocol TV (IPTV), and high-definition streaming video is pushing service providers to start buying up bandwith and connections that lay dormant for nearly a decade.

Om Malik, senior writer at Business 2.0 magazine, noted that both heavy consolidation of telecom companies, such as the AT&T-SBC-BellSouth buyout, and heightened consumer demand for broadband-heavy services, were motivating the bandwith buyout.

The ultimate aim for big telcos such as AT&T and Verizon is to provide a "triple play" -- phone service, Internet, cable-style TV -- just as cable companies are already bundling phone service and Internet access with their cable offerings.

AT&T recently finalized a deal with video-on-demand service Akimbo to provide content for its "Homezone" offering. AT&T Homezone would provide on-demand Internet-based television and video through "Project Lightspeed," a massive rollout of fiber-optic lines to homes in order to provide IPTV services to customers.

Verizon is already swimming in the fast-connection waters with its own high-speed FiOS service, which also provides Internet-based television content.

Telecom companies are so enamored of the idea of IPTV that they lobbied hard for provisions in the revised Telecommunications Act to allow them to develop local cable franchises without having to clear the regulatory hurdles that existing cable companies negotiate to do their own business.

Blogger Matt Stoller, who writes for the Web site MyDD, told ConsumerAffairs.com that this was more evidence of the collusive business practices of the telecom industry.

"The telecommunications cartel has seen to it that there is no free market in telecommunications services," he said.

"For instance, only 53% of Americans have a choice between DSL and cable modems, and the telecommunications industry is pushing bills to ban municipal wireless. So the answer is that for many consumers there aren't many good options."

"GoogleNet?"

Telecom and cable companies aren't the only players in the Internet's development. Content providers and vendors such as Google, Amazon.com, and eBay are forming alliances in the effort to ensure their offerings reach as wide a customer base as possible.

Those companies came out strongly in favor of "Net Neutrality," the principle that Internet service providers should not block access to content in favor of their own preferred offerings, and that access should not be based on pricing structures that would require more fees for faster service.

After the Congressional subcommittee handling the update of the Telecommunications Act moved to delete language protecting Net Neutrality from the bill, the coalition wrote a letter in protest saying that the lack of protection for content would "fail the Internet."

Google has not been shy about its efforts to diversify its holdings into becoming a true Internet service provider. The Mountain View, CA search giant has teamed with Earthlink to provide free municipal Wi-Fi access for San Francisco, and is currently in talks with other cities to set up a for-pay Wi-Fi network.

The new "hybrid" model proposed by Google and Earthlink would combine a basic free service supported by Google's ubiquitous ads, and a faster "premium" model that would cost subscribers roughly $20 a month.

If this sounds very similar to the "tiered Internet" model that the content providers are fighting against, no one is talking about it.

Google, for its part, has publicly downplayed any plans to expand its Wi-Fi network offerings beyond San Francisco, while Earthlink is hyping the paid plan in order to draw attention away from its faltering dial-up and broadband business.

There is even speculation that the content providers fighting for net neutrality may be putting in bids for available wireless spectrum, in order to create their own wireless broadband networks and operate separately from the current Internet.

The battle between telecoms and content providers for the Internet isn't just about the new technology.

Supporters of net neutrality believe that if the ability to access Internet content freely isn't codified, independent business owners, bloggers, developers, and many others will have to pay extra money to every service provider just to get their content viewed.

"It's a problem for anyone with a Web site, or any entrepreneur who wants to create a new technology or product for the Web," Matt Stoller said. "All of a sudden you have to ask the cable and telecom company's permission to effectively get on the Internet, or you'll be relegated to an unusable low bandwidth."

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