U.S. Internet Suffers When the Refs Blow the Calls

FILE - This Feb. 11, 2011 file photo shows the logo on a Comcast truck in Pittsburgh. Comcast reported on Wednesday Aug. 1, 2
FILE - This Feb. 11, 2011 file photo shows the logo on a Comcast truck in Pittsburgh. Comcast reported on Wednesday Aug. 1, 2012 strong second-quarter earnings from cable operations which overcame returns of the box-office flop "Battleship." (AP Photo/Gene J. Puskar, file)

Remember last fall when the National Football League (NFL) began its regular-season schedule? Even if you weren't a football fan, it would have been hard to avoid the public wailing and gnashing of teeth at the dreadful performance of the "replacement" officials stepping in for the game officials who were on strike.

Players and coaches took full advantage of the situation as the replacements lost control of the games, forgetting the rules, making bad calls. Their blundering threatened "the integrity of the game." Finally, the NFL had to back down and bring the regular officials back.

Now imagine that there is a vital national resource that is supposed to be under official control, but in fact is not. It's something much more fundamental to the country and our economy than the NFL -- high-speed Internet access, commonly called "broadband." It is broadband which makes possible watching video online, downloading and uploading Web pages quickly, sending lots of material in just a few seconds. It is important for education and economic development, in addition to the fun aspects.

Descended from an age in which everyone had access to regular telephone service at reasonable rates, broadband access has devolved into an industry that functions at the whim of a few big corporations "regulated" by the equivalent of replacement refs who have allowed an industry to get out of control and allow companies to do what they want regardless of the harm to society.

Who Is The 'Captive Audience'?

That's the unfortunate and sad tale told by Susan Crawford, a Cardozo Law School professor and star of the tech-policy firmament in her important new book, Captive Audience: The Telecom Industry and Monopoly in the New Gilded Age published Jan 8, from Yale University Press. It's a title with a sly double meaning. It could refer to consumers, who, as Crawford demonstrates, are captive to big uncontrolled companies. It could refer just as easily to regulators who wilt in the face of industrial pressure and fail in their duty to protect the public.

In Crawford's book, the focus is on Comcast, a remarkable company that has grown from putting up little cable systems in rural Mississippi to becoming not only the largest broadband provider in the country but also the owner of the NBC network, Universal movie studio (and theme park) and dozens of cable channels.

Comcast will use every advantage it has, and the advantages are considerable, as gatekeeper of what gets on its cable systems and as the sole provider in many areas of essential high-speed Internet access. There is no regulation of cable rates. There is little competition and unfortunately the Federal Communications Commission (FCC) under current Chairman Julius Genachowski has consistently dodged the issue, even though anyone looking at the consolidated market sees the need for drastic action.

Comcast's command of its cable system has been rarely challenged, because small players don't have the lawyers, guns and money to take on a behemoth. Crawford goes through Bloomberg's struggles to force Comcast to get the Bloomberg news channel placed in a "neighborhood" with other news channels, as required by the merger agreement that gave Comcast NBCU. It took years of debate and millions of dollars and Bloomberg came away with most, but not all, of what it wanted.

Unfortunately, Crawford didn't tell the tale of spunky little Tennis Channel, which is even more illustrative. Comcast puts Tennis Channel on a special sports tier for which customers have to pay extra and so has relatively few viewers. Comcast puts the Golf channel on the basic tier that everybody gets and it has lots more viewers. What's the difference? Comcast owns the Golf Channel. Tennis Channel has fought Comcast for years through hearings and bureaus and the whole FCC and won -- only to be stopped dead by a ruling from a Federal appeals court that hates the FCC, even when the Commission on occasion does things right. It's still tough out there for programmers.

How Comcast Got NBC

What Comcast has done isn't right, but it's hard to put all the blame on the company. It, like any other company, will do what it can until it is stopped. Crawford's book is a valuable behind-the-scenes look at how Comcast throws its weight and money around, to make sure it gets what it wants. The book's centerpiece is the purchase of the controlling interest in NBCU. Crawford sets out how the scene was set and the play performed before Congress and regulators, ending with self-congratulatory language from the FCC, and Comcast's statement that none of the conditions imposed on the purchase would change how it does business. Wonderful.

Comcast's purchase of NBCU was the first of three blockbuster deals over the past couple of years. After that came AT&T's attempted purchase of T-Mobile, the second-largest cell company trying to swallow the fourth largest. That one was too much even for the timid Genachowski. Thankfully, the U.S. Justice Dept. stepped up to block the transaction, so Genachowski went along also. After those two came Comcast again, in cahoots with Verizon, to split up the telecom world. Comcast would have domain over the land, through wired high-speed broadband, while Verizon would rule the air. The FCC let it go through. Crawford's dissection of the deals and the background is thoroughly dispiriting.

Goodness knows, regulators have tried to protect the public from gigantic railroad and oil barons. But from the earliest days a century ago, the government was "swiftly overwhelmed by the lobbying efforts of the railway lawyers, and railroad supervision is now largely in the hands of the railway industry."

It's no surprise that, as Crawford says, we have a telecommunications system which has "all the monopolistic characteristics of the old Bell system but none of the oversight or universality." As she points out, the dreadful result for consumers is that we pay more for less than an advanced industrialized country should for telecom services. Even worse, the U.S. is left with a system in which the favored few have good service and the disfavored must settle with less and hardly anyone has a choice of service providers. Crawford isn't alone in that view. Internet pioneer Vint Cerf made that same point in a recent speech.

When 'Replacement' Refs Fail

Industry will always do what it can do. It's up to the designated protectors of the public to stop it. As Crawford describes, that doesn't always work, either because regulators, like former FCC Chairman Michael Powell, oppose regulation or, as in Genachowski's case, are too weak to do it. As Crawford writes about the debate of making telecom companies play fair with content on their networks: "The carriers knew that Genachowski was considered thin-skinned, someone who could not abide the politics of personal destruction that prevail in the telecommunications and media sector; they figured that all they had to do was rattle his cage, and they would probably get what they wanted."

So if you want to pick a villain for this morality tale, it's not Comcast or Verizon or even AT&T. It's the people who should know better who shirk their duty, whether because of political contributions, ideology or because they are just plain chicken.

Crawford's bottom-line solution is to consider broadband as a utility as essential as electricity and water, and have it similarly regulated, although despite decades of federal and state regulation, the old Bell System was still broken up due to massive antitrust violations. And now it's been put back together through a concentrated lobbying and litigation campaign. Utility regulation is not the perfect solution, but it would be better than what we have now, which is essentially nothing -- and the big telecom companies now have a lobbying campaign to get rid of what's left.

Crawford would make a fabulous FCC chairman or commissioner. She is smart, well-informed and passionate about protecting the public. Her book illustrates why that appointment is extremely unlikely to happen. She would be a ref who would make the right calls, and the big players wouldn't stand for that.