Wednesday, May 10, 2006
What's driving the next telecom law
[This article appears in today's issue of the Berkman Center's monthly publication, "The Filter"]
What’s Driving the Next Telecom Law
-- by David S. Isenberg
The COPE (Communications, Promotion, and Enhancement) bill in the House of Representatives, and a similar, but more detailed Senate telecommunications bill are racing towards enactment by summer. The likely new law is propelled by the nation’s big telephone companies’ perceived business need to deliver video entertainment along with voice telephony and Internet services. The triple-application formula fits the old telco/cableco business model, i.e., collecting fees for delivering established applications and using these fees to subsidize the delivery network. This old model is threatened because today’s Internet can support voice and video, and infinitely more, delivered from its edges by third-party application providers. Indeed, third parties like Skype and Vonage are breaking out all over and rudimentary video services are popping up like dandelions. National TV franchising will replace thousands of local city-by-city agreements to ease telco entry into video services. This will institutionalize the voice, video and Internet service bundle so only big players, "rational competitors," as cablecos and telcos like to call themselves, can participate.
Telephone companies have been weakened by the onslaught of new technology. The number of dial-up lines, which are the foundation of their business, has been falling since 2001. In 2003, the number shrunk by 4%, and the trend is accelerating. Meanwhile, telcos have not figured out how to make money selling simple Internet connectivity, so they need de jure preservation by Congress.
Until this decade, law has treated the telephone network as a public accommodation, meaning that non-discriminatory access to the network, known as network neutrality in the current policy debate, was assured. On the Internet, though, non-discriminatory access leads straight to the erosion of the telco/cableco business model by third parties that would not behave as "rational competitors." This is why telephone companies are fighting fiercely against non-discriminatory access. Recently they have been successful in the courts and the FCC, and the current House bill contains ineffectual, hard-to-enforce non- discrimination provisions. The Internet succeeded largely due to non-discriminatory access. That is what permitted third parties to create (and find markets for) e-mail, the Web, e-commerce, chat, online music, blogging, and virtual-world gaming. With it, there’d be more of the same tomorrow. An Internet that is made discriminatory to save the telcos is likely to remind us of Bruce Springsteen’s song, "57 Channels (and Nothing On)." The problem we should be solving is not how to change the Internet to save the telcos, but how to have a growing and innovative Internet without them.
What’s Driving the Next Telecom Law
-- by David S. Isenberg
The COPE (Communications, Promotion, and Enhancement) bill in the House of Representatives, and a similar, but more detailed Senate telecommunications bill are racing towards enactment by summer. The likely new law is propelled by the nation’s big telephone companies’ perceived business need to deliver video entertainment along with voice telephony and Internet services. The triple-application formula fits the old telco/cableco business model, i.e., collecting fees for delivering established applications and using these fees to subsidize the delivery network. This old model is threatened because today’s Internet can support voice and video, and infinitely more, delivered from its edges by third-party application providers. Indeed, third parties like Skype and Vonage are breaking out all over and rudimentary video services are popping up like dandelions. National TV franchising will replace thousands of local city-by-city agreements to ease telco entry into video services. This will institutionalize the voice, video and Internet service bundle so only big players, "rational competitors," as cablecos and telcos like to call themselves, can participate.
Telephone companies have been weakened by the onslaught of new technology. The number of dial-up lines, which are the foundation of their business, has been falling since 2001. In 2003, the number shrunk by 4%, and the trend is accelerating. Meanwhile, telcos have not figured out how to make money selling simple Internet connectivity, so they need de jure preservation by Congress.
Until this decade, law has treated the telephone network as a public accommodation, meaning that non-discriminatory access to the network, known as network neutrality in the current policy debate, was assured. On the Internet, though, non-discriminatory access leads straight to the erosion of the telco/cableco business model by third parties that would not behave as "rational competitors." This is why telephone companies are fighting fiercely against non-discriminatory access. Recently they have been successful in the courts and the FCC, and the current House bill contains ineffectual, hard-to-enforce non- discrimination provisions. The Internet succeeded largely due to non-discriminatory access. That is what permitted third parties to create (and find markets for) e-mail, the Web, e-commerce, chat, online music, blogging, and virtual-world gaming. With it, there’d be more of the same tomorrow. An Internet that is made discriminatory to save the telcos is likely to remind us of Bruce Springsteen’s song, "57 Channels (and Nothing On)." The problem we should be solving is not how to change the Internet to save the telcos, but how to have a growing and innovative Internet without them.
Technorati Tags: F2C, NetworkNeutrality
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