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The telecommunications industry moves to seize control of the Internet and force consumers to pay dearly for online freedoms they now take for granted

By Jeffrey Chester

The Internet’s promise as a new medium—where text, audio, video and data can be freely exchanged—is under attack by the corporations that control the public’s access to the Net, as they see opportunities to monitor and charge for the content people seek and send. The industry’s vision is the online equivalent of seizing the taxpayer-owned airways, as radio and television conglomerates did over the course of the 20th century.

To achieve this, the cable industry, which sells Internet access to most Americans, is pursuing multiple strategies to closely monitor and tightly control subscribers and their use of the Net. One element can be seen in industry lobbying for new use-based pricing schemes, which has been widely reported in the trade press. Related to this is the industry’s new public-relations campaign, which seeks to introduce a new “menace” into the pricing debate and boost their case, the so-called “bandwidth hog.”

But beyond political and press circles is another equally important development: new technologies being developed and embraced that can, in practice, transform today’s open Internet into a new industry-regulated system that will prevent or discourage people from using the Net for file sharing, Internet radio and video, and peer-to-peer communications. These are not merely the most popular cutting-edge applications used by young people; they also are the tools for fundamental new ways of conducting business and politics.

These goals and objectives are visible to anyone who cares to look at the arcane world of telecommunications policy and planning, either in the industry trade press or government documents. The bottom line is the industry wants to kill the Internet as we know it.

Take a minute and wade through this bit of arcana—and ponder its implications.

“The IP Service Control System from Ellacoya Networks gives the Broadband Operator ‘Total Service Control’ to closely monitor and tightly control its subscribers, Network and offerings.” So reads the Web site of Ellacoya.com, a relatively new firm, describing the business-to-business service that it is selling to large Internet service providers.

Ellacoya is backed by Wall Street investment powerhouse Goldman Sachs, which sees a major opportunity to turn around the red-ink-plagued broadband sector. The Web site explains, “Establishing Total Service control enables operators to better manage traffic on the Network, [and] easily introduce a range of tiered and usage-based service plans. . . . Talkative applications, especially peer-to-peer programs like KaZaA and Morpheus, tend to fill all of the available bandwidth. . . . The IP Service Control System allows operators to identify, limit and report on these aggressive applications.”

The fundamental character of the Internet today is that it lacks precisely these kinds of tolls, barriers and gatekeepers. But technology like Ellacoya’s hardware and software is not just an enticing idea; it’s more of a silver bullet for beleaguered telecom executives. It’s being tested in industry trials, and it points to the kind of Internet the industry would like to develop over the next few years. The way telecom corporations get from today’s open-access Internet to their version of the future starts by changing how people pay for the Net.

Most people now pay a flat fee for online access. But the big media companies offering Internet service—Comcast, AT&T, AOL—would like to change that, and already have in a few test locations. The broadband industry’s plans to institute tiered pricing have been widely reported in its trade press. There are numerous articles about replacing today’s open Net environment with industry-self-described versions of “walled gardens” or “Internet Lite.” (See “Cable Operators Seek to Corral Bandwidth Hogs,” Cable Datacom News, Oct. 1, 2002.) The central feature of these proposals is much like telephone companies: There’s a price plan for everyone.

To make the case to regulators that such pricing is fair and overdue, cable operators have begun a PR effort, spinning that a small percentage of users accounts for a disproportionately large amount of bandwidth used on broadband networks. They’ve created and embraced the pejorative term “bandwidth hog” to describe those—such as music-obsessed college students—who find robust uses for high-speed connections. Already, major news sources such as the BBC, and technology journalists are using the term in their reports.

To deal with this “problem,” the companies are considering a variety of approaches to ensure that they remain in full control of their bandwidth—unless consumers can afford to pay the hefty access fees. Under a typical plan, a user would be allotted a limited amount of bandwidth per month, and would be charged extra fees for going over this amount. This approach isn’t very different from the software industry, where the free versions of an application are intended to frustrate and prompt people to buy the ‘better’ version.

Bandwidth caps have already been implemented in Canada by major Internet service provider Sympatico, Inc., and observers have been quick to note that the limit—5GB per month—would effectively restrict regular use of emerging applications such as Internet radio, streaming media and video-on-demand.

Consider this excerpt from an article about Sympatico’s bandwidth caps in the May 6 edition of the Toronto Globe and Mail by reporter Jack Kapica: “A classic conflict has arisen over streaming media, especially of radio. In a recent letter to globetechnology.com, Andrew Cole, manager of media relations for Bell Sympatico, defended the 5GB bit cap, saying that ‘In my experience, Internet radio stations usually transmit at approximately 20 Kbps. This equates to 1.2MB per minute, or 72MB per hour. At this rate, a HSE customer could enjoy 70 hours of Internet Radio per month and remain within the bandwidth usage plan.’”

But a 20-Kbps stream is considered poor quality by many people who tune into Internet-based radio stations for such things as classical music concerts. For these people, audio quality streamed at 20 Kbps has been described as “pathetic at best, somewhat akin to AM radio,” by Tony Petrilli of Ottawa’s Level Platforms Inc. “Decent audio quality starts at 56 Kbps to 64 Kbps, and really gets acceptable only around 100 Kbps,” he says. This alone “will blow the cap, let alone any other form of surfing, such as looking at movie trailers or even reading Web-based news. Heaven forbid that someone listens to 90 minutes a day of quality Internet radio. That way we’d blow the cap in 20 days.”

When you consider the fact that the largest American telecommunications firms are often part of the same mega-corporation with music, video and/or movie-producing entertainment divisions—such as AOL-Time Warner—you can see how an industry-regulated Internet would handily end music- and movie-industry worries about Napster-like file swapping by people who don’t want to pay industry-monopolized retail prices for content. Thus, the strategic and technically feasible solutions embodied by companies such as Ellacoya are obviously why Goldman-Sachs was keen to invest in the firm, as it offers the actual means to monetize the Net and turn around the revenue-poor broadband sector. According to Ellacoya’s technical datasheet, operators can create “up to 51,000 unique policies that can be combined to generate limitless numbers of subscriber policies.” Such rules, they explain, can either permit, deny, prioritize queues, apply an address lock or a rate limit, or redirect access. The same technology also poses new concerns over privacy, since Ellacoya’s technology “collects usage statistics for subscribers and applications, capturing service events, session details, and byte counts. . . . Operators can ‘stamp’ the subscribers identity on all records.”

The cable industry will argue that such ubiquitous control systems and restrictive pricing structures are necessary to resolve bandwidth backups. But the fact is, this cannot be the case, because cable systems are constructed to avoid bandwidth shortages. But don’t take my word for it. Mike LaJoie, vice president for advanced technology at AOL-Time Warner, told MultiChannel News in September, “The way that the HFC (hybrid fiber coaxial) architecture works, we never run out of bandwidth. We can always split or do other things that will give us the bandwidth that we want, so it really ends up being a desire to provide the best and highest experience for our customers.” What these statements make clear is that the cable industry’s goal for broadband is to monetize bandwidth. By charging a toll for every bit, the industry can simultaneously extract great profits from the new applications that it allows on its networks, as well as restrict access to those that it finds problematic, i.e., those that compete with its own content offerings. In short, the industry finally sees a way to make money online.

Of course, these calculations are utterly self-serving, ignoring the fact that the Net was developed with tax dollars and has been an incubator for an array of innovations that extend far beyond creating new profit centers for big media companies. The envisioned control structures will inhibit robust Internet use by early broadband adopters, and discourage development of new high-speed applications such as Internet-based telephone and video-on-demand, thus slowing overall broadband growth. Worse, this business model will erect high economic and technical barriers to entry for noncommercial and public-interest uses of the high-speed Internet, threatening civic discourse, artistic expression and nonprofit communications. In moving to implement this highly centralized vision for broadband, the cable industry does not simply ignore the democratic and competitive history of the Internet—it is actively hostile to it. Consumption-based pricing and other restrictive access controls contradict the spirit of openness and innovation that built the Internet in the first place, and will do irreparable harm to its future as a medium for small business initiatives, noncommercial users and democratic discourse. New threats to privacy are also clear, given the intrusive nature of the technology to closely monitor all online use. If you think spam is bad now. . . .

And Where Is The FCC? This new threat to online communications is a direct consequence of recent Federal Communications Commission policies by chairman Michael Powell that permit cable companies to operate their broadband platforms in a “discriminatory, non-open access” manner. This legalese means the FCC, the historic guardian of the public interest in the communications field, has abdicated its founding charge: to serve the public interest before private interests.

In sum, the Internet as we now know it—and its revolutionary promise—may soon pass into the history books. In the absence of public-policy safeguards, the emerging pricing and control structures will fundamentally change the kinds of information on the Internet, along with the way it’s delivered. The ramifications extend far beyond the quarterly reports and shareholder earnings for the nation’s telecommunications corporations.

The consequences are cultural and will affect the pace and character of progress in the early 21st century. If the communications companies impose tolls, roadblocks and dead ends on the information “superhighway,” they will be robbing public trust resources in much the same way 19th-century mining companies pilfered public lands, and 20th- century radio and television networks privatized the public’s airwaves.


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