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Memo to Heritage’s James Gattuso: The era of trickle down media economics is over

For too long, conservative media and communications advocates have supported a policy regime that has failed the public. Just give (fill in all or your favorites) the broadcasters, the cable companies, the phone companies, the technology companies a “free” rein, and all of our needs for a diverse, competitive, and democratic system will flourish. Technology, if left unfettered, will fulfill its potential (see his blog entry at Technology Liberation Front). Like the trickle-down economists, Mr. Gattuso and colleagues have held sway with many politicians and FCC commissioners. But—media history has proved them wrong. That’s why we are not going to let them do to the Internet what they have done to commercial broadcasting and cable communications.

Just leave us alone, eliminate all public interest policies, and the technology will fulfill its democratic potential. That’s what commercial radio said in the early 1930’s. Broadcast TV echoed it during the 1950’s. Cable used it to win “deregulation” in 1984. Consequently, we have a homegenous system of broadcasting and cable where there is no real diversity, little in-depth journalism, barely any competition. Such a laissez-faire media environment has harmed the country, principally through undermining the potential for serious journalism.

The rhetoric of Mr. Gattuso and many of his anti-network neutrality allies is wrapped around a decades old critique of communications policy. In their world—the public are just consumers. They are not citizens or other active members of the community. They espouse that the interests of the network provider should be paramount. We believe it’s the interests of everyone: teachers, parents, children, journalists, the poor and countless others that must be taken into account when conceptualizing policy for communications. Democratic expression—not corporate profits—must come first. The market will still have plenty of room (and will do even better if it treats people fairly and helps build a stronger U.S.)

I am amazed that many so-called experts ignore what’s really going on in the commercial marketplace—let alone behind the scenes in the policy sphere.
First, there are clear plans to change the way the Internet works. It’s not about generating revenues to build out the network. It’s about greed—money for a few telecom giants. At the expense of a communications system that serves all—for other commercial giants, small businesses, non-profit corporations, and the average Jane and Joe. AT&T, Verizon, and Comcast want to seize what they are already calling their “pipes” to give themselves the monopolistic advantages they have lost as a result of technological change.

We all know that competition law—and the FCC—are not effective tools to protect either competition or [more importantly] public discourse. Conservatives have railed against government for years—esp. the FCC. Now they are saying, don’t worry, if there are problems—our bloated, corrupt and ineffective governmental institutions can take care of you. I don’t believe in buying the digital equivalent to the Brooklyn Bridge—nor should conservative media advocates argue for one.

The cable and phone lobby have used their collective political power to gain dominant control over U.S. broadband distribution. They went to the FCC and wiped out competition via other ISPs (there were thousands in the U.S. during the dial-up era). Phone and cable companies have lobbied side-by-side to prevent municipal or non-profit competition. They deliberately eliminated the policy requiring non-discriminatory treatment of content—a sure sign in my view they intend to discriminate (but come to our website to read white papers and other documents that show how such discrimination online will be done).

Both the cable and phone industry have the same business model—a souped up broadband video on demand kind of service filled with data collection, interactive ads, and other elements from our popular culture. They don’t need the network to differentiate—because they are the same. The vision they have for the future of the Internet is television. We deserve better.

Net neutral rules would enable new entrepreneurs to emerge and help protect free speech. Yes, Mr. Gattuso. It would lead to lobbying and lawsuits. The big cable and telephone companies will do anything to control the future of the U.S. media marketplace. But with net neutral rules, other voices will have a better chance to be heard. Voices—we hope—interested in building a better democracy and an Internet that serves all equitably.

PS: I’m sorry that Mr. Gattuso doesn’t like our pointing out some of Heritage’s funders that raise a potential policy conflict over network neutrality. But disclosure is very important. So when AT&T is a premium sponsor of Heritage—it behooves Mr. Gattuso to say so clearly. He also should have identified where Prof. Yoo—whom he quotes/cities frequently—gets some of his money as he attacks network neutrality (the cable lobby).

Why are Conservative Leaders, such as Grover Norquist, Fearful about Individual Freedom Online?

We are astonished at the reaction of all the so-called conservative/”free market” groups that have rushed to side with the telephone and cable monopoly in the network neutrality fight. This is battle between those who want to ensure our individual freedom to travel online wherever we wish to go, versus those who wish to create a private Internet toll-road. The Internet should not be a gated community. It’s the public square—with plenty of convenient shopping nearby.

So why oh why are the groups backing AT&T, Verizon, and Comcast—such as the Heritage Foundation, Americans for Tax Reform, CATO, the Competitive Enterprise Institute, the National Taxpayers Union—doing this? They claim that network neutrality supporters are either liberals desiring to “regulate” the web or that companies such as Google and eBay are looking for competitive advantages. But—they are simply wrong. And the public will pay dearly for their foolhardy bad judgement.

The phone and cable companies have plans to dramatically change the wide, open spaces of online into their private property. They want a digital monopoly—like they have had either in the phone or cable TV business.
It’s a land grab of the Internet in the U.S.—with restrictions on our freedom to travel online, new threats to our privacy, and lack of consumer choice. These so-called conservative groups have been badly misinformed—or are on the financial dole from the phone and cable lobby. Whatever the reason, it’s evident that they’re not well serving their members by selling out the Internet to a tiny handful of monopolists. (They should all identify whether they have taken money from the communications lobby and how much).

They are also unaware of the phone and cable plans for the Internet. When the Heritage Foundation’s James Gattuso says network neutrality would prevent “network owners…[from using] scare Internet capacity more efficiently” he ignores there plans to impose a pay as you go Internet toll road. That would mean that a phone or cable company could make it harder for us to access the website of our choice because they have given themselves priority. In other words—the public gets to stand or lumped into cramped digital economy class, while the phone or cable company puts itself in first class (paying for that service with the money they get from our bills each month).

Shame, shame on “Americans for Tax Reform” and the other groups. Why are they putting hard-working families last and the Internet `super size us’ media companies first?

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Two-Bit Torrent—Selling Out the ‘Net to give us “Dukes of Hazzard”

BitTorrent Bram Cohen made a stir recently when he questioned the reasoning behind the push for network neutrality. He told the BBC that he was concerned that net neutrality safeguards could “result in an absurdity like making it so difficult so ISPs can’t drop spam…or stop [hacker] attacks. The BBC said Cohen was “in the pantheon of Internet Gods” like Berners Lee.

But Cohen’s business deals with big media require closer scrutiny. BitTorrent is now working to develop “integrated monetization for paid and ad-supported content,” according to Interactive TV Today. Its new deal with leading anti-network neutrality company Time Warner will enable the cable giant to use BitTorrent technology to sell us such content as “National Lampoon’s Vegas Vacation, Natural Born Killers, and—“Dukes of Hazzard.” No doubt Mr. Cohen views the launch of what is called the “legal BitTorrent online video service” as his ticket to vast personal riches. (As part of its settlement with MPAA, BitTorrent is also working to remove what it considers illegal content from its service, including its search engine).

Mr. Cohen has made his deal—to get on the fast lane. What he should remember is that the Internet is more than a fancy digital distribution system for Hollywood. It has a role to play to ensure a equitable global civil society. That requires a internet where people and content are treated equitably—even if it means less profits for BitTorrent.

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Not-So Smart Mobs: The Wireless Industry War Against Net Neutrality

It’s not just the biggest phone and cable companies opposing a open Internet (net neutrality). It’s also the wireless industry—including companies providing cellular and mobile communications. One of the principal characteristics of our expanding ubiquitous digital media environment will be its reach—on the street, in transport, and everyplace else. New forms of political action and cultural expression could evolve if the U.S. can have a non-discriminatory mobile environment.

But that’s not what the CTIA-The Wireless Association wants. They are opposing network neutrality safeguards. In testimony before the Senate Commerce Committee earlier this month, CTIA’s chief Steve Largent warned of “many of the unintended consequences that would flow from some of the Net Neutrality regulations being considered [that] would have a particularly negative impact on wireless consumers.” What Largent really meant was that the wireless industry hopes to impose the same kind of toll booth regime for mobile communications. In their vision, ads and content supported by a McDonalds, P&G soap, Fox News or Disney will have preferential access. CTIA’s board includes T-Mobile, Cingular (AT&T), Sprint Nextel, Verizon Wireless and most of the key manufacturers. As we mentioned in yesterday’s entry, CTIA is also a member of the anti-open Internet group called netcompetition.org. (It’s time, by the way, we had a real anti-trust investigation of the mobile industry).

The united front of cable, wireless phone and wireless/mobile companies fighting against network neutrality is a good example of why we need serious policy safeguards (going beyond network neutrality) to protect freedom of communications in the U.S. Without such rules, the civic potential of Howard Rheingold’s Smart Mobs will be thwarted by powerful commercial forces.

NetCompetition.org: Distortions and Cable/Telco Flackery

We are disappointed that Scott Cleland would act as “chair” and chief advocate for this anti-open Internet group. Its “members” (really its financial backers) are a rogue’s gallery of some of the most powerful and avaricious big media companies: Verizon, Time Warner, Comcast, Advance Newhouse, and AT&T. This front-group also includes industry lobbying heavyweights NCTA, CTIA, USTA, and ACA. In other words, it’s a cable and Telco joint lobbying venture. The role that the cellular lobby (CTIA) plays here illustrates how both the wireline and wireless industries wish to jointly create a cash and carriage broadband distribution system.

But the “research” and information on netcompetition.org is shoddy and reflects a vision promoting monopoly power and greed. Mr. Cleland and his allies should know better. Net Neutrality is about democracy—removing barriers to the distribution of content essential for a civil society to function. That’s why nearly all the consumer and good government groups support network neutrality. It’s not about the corporate welfare of a Google or Microsoft. It’s about ensuring there are as few gatekeepers as possible for content promoting such applications as political speech, civic engagement, non-profit arts and culture, education, life-long learning and everything else we require in a digital society. I don’t have time here to rebut all their assertions (they all all shamefully misleading). This is a mean-spirited, propagandistic website. Mr. Cleland should have the group change its name to more honestly reflect what they are about: netmonopoly.con

NSA, the FCC and White House Martin’s, and Sen. Stevens: Beyond Cover-up

It’s not surprising that FCC chair Kevin Martin refused to investigate how the phone companies he oversees have turned over our personal records to the National Security Agency. Martin—who is supposed to be running a so-called “independent agency”—said he was obeying “the representations” of Director of National Intelligence (DNI) John Negroponte and NSA chief Keith Alexander. In a letter to Rep. Ed Markey (who has been doing a terrific job all around on communications issues), Kevin Martin said that the DNI and NSA had warned him that such a study would require the FCC to examine “highly sensitive classified information.” Kevin Martin, of course, is part of the Bush White House conservative cabal that is behind the violation of all our privacy. Martin’s wife Catherine is an assistant to President Bush. Before that, she was an assistant to Vice President Cheney. Her relationships with Texas allies of Pres. Bush go back a number of years as well.

Meanwhile, Senate Commerce Committee chair Ted Stevens, who termed the call for an FCC investigation “misguided,” revealed once again how out of touch he is. Stevens is quoted in Communications Daily (May 24, 2006) saying that he had been briefed on the NSA phone record collection effort. The newsletter reports that Stevens “believed the information the companies gave the NSA was equivalent to creating a database of the names and phone numbers in a phone book.” And Stevens thinks that fine! Can’t wait until he helps wreck U.S. broadband/digital media with his forthcoming bill.

Meanwhile, Kevin Martin should be asked to resign. He isn’t running an independent agency; it’s now just a creature of the defense intelligence establishment

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U.S. Broadband and the Public Interest: A Deafening Silence? Now is the Time to Raise the Stakes

As the Senate considers legislation that could set the framework for U.S. digital communications for years to come, we are disappointed about the narrowness of the debate. Network neutrality, while vitally important, should not be the “end-all” in terms of addressing how the public interest must be served in the emerging digital era. Public interest groups and others should be pressing members of Congress and other allies to address how, for example, broadband communications can generate financial and other resources for Americans trapped in poverty. We should be asking now how phone and cable high-speed systems can be used to improve public education. Where are the calls for policies that would break open the lock that cable, phone, and broadcast companies will still have over digital television services? The time is also ripe to address campaign reform in the era of targeted digital advertising (where big money will still largely determine one’s political reach). Privacy, including protections from both government and commercial surveillance, should also be on the agenda.

Two weeks ago, NY State Attorney-General Eliot Spitzer decried the “lack of vision and investment” when he released a “universal broadband access” plan for New York. Spitzer was referring to his state. But we believe there is overall a “lack of vision” coming from those who care about the future of the country. Everyone who knows digital media recognizes that it will be one of the most powerful forces shaping our society. We will be defined as a culture by what we do with the ubiquitous, interactive, personalized, and virtual system that is about to unfold.

Network neutrality has justly generated a tremendous response—thanks to the good folks at Free Press, Common Cause and many others. But it is the `no-brainer’ of broadband politics. Stopping a Bell/cable takeover of the Internet is clearly required. But so are policies that ensure that today’s network neutrality proponents—such as Microsoft, Yahoo! and Goggle—aren’t just allowed to privately prosper. They and the phone and cable companies ultimately share the same business model—a broadband system where consumerism plays the dominant role in our lives. We must demand more than just an Internet that can deliver interactive ads.

Once legislation passes, our U.S. broadband system will quickly evolve. Market structures will be created. It will be harder to make changes. We understand that with a heavily business captured Administration, Congress, and FCC, a public interest agenda would be impossible to get. But it would set the stage for what should be raging and passionate action in the years to come to create a digital media system that nurtures free speech, civic participation, and social justice. With Senate Commerce Co-chair Daniel Inouye now in support of net neutrality and greater community control, groups may have an ally to begin such a call.

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Verizon’s “Community Studio”—Civil Rights Digital Tokenism?

Last week’s announcement of a “new pilot program” from Verizon’s FIOS digital TV service that it will offer on-demand “public interest and civil rights content” needs to be seen in the context of U.S. media history. It’s not surprising that as Verizon and the other phone companies lobby to change U.S. media law—including sweeping away the open and non-discriminatory nature of the Internet in the U.S.—they would make such tentative promises (notice the word “pilot” in its release). Call us cynical. But we can’t really believe that the phone giant’s announcement, which “emerged in discussions between Verizon and more than 35 civil rights leaders” wasn’t timed to undermine the growing public opposition to its plans for a privatized and `command and controlled’ digital communications system. After all, Congress is about to vote—as early as next week—on new national broadband media communications laws.

As we all know, at each point in the 20th Century as a new media technology emerged, corporate interests made many public interest promises. But once the industry had successfully won its political agenda (having disarmed or overwhelmed critics), such commitments were ignored. Commercial broadcasters back in 1934 promised that radio would be a “classroom of the air,” among many other public interest services. Broadcasters were able to split the educational community and win a 1934 Communications Act without any specific public interest mandates. Of course, what Verizon is doing now is lifted entirely from the cable TV industry political playbook. Cable was going to be—its leaders promised back in the 1970’s—a “community communications” service. There were going to be many channels for all, reflecting the nation’s diversity, at the local and national level. Eventually, as we know, cable broke those promises and used its political power (and a conflicted opposition, such as today) to make certain (via the 1984 Cable Act) that it would be able to focus its resources on national, commercial programming. (There were many remarkable and dedicated civil rights activists who fought to make cable truly diverse, including Charles Tate).

We can understand the frustration many groups have with cable TV. After all, the two leading African American channels are either owned or controlled by conglomerates (Viacom runs BET; TV One is a creature of Comcast). Many Spanish-language channels are also owned by giants or major media investors (GE/NBC/Universal runs Telemundo; Univision is run by A. Jerrold Perenchio and gets much of its programming from Latin America).

The Time to Ensure a Diverse Programming Landscape is Now

The stark lack of ownership by persons of color of programming content must be rectified in the emerging digital era. New local and national programming services should emerge that offer a range of meaningful and truly diverse content—including news, public affairs, and culture. In order to ensure this, such programming needs to be within the foundation of the new telephone company deliver system.

That will take a serious and significant long-time commitment in terms of funding and distribution support. Instead of a “pilot” program offering up a rotating monthly assortment of content from 35 groups, our telephone giants should be expected to `pony’ up and do something significant in terms of programming diversity. Otherwise, African-American, Latino/Hispanic and many others will primarily be addressed as consumers—not as citizens and community members (see the Cable Advertising Bureau site for how the African-American and Latino communities are viewed as a marketing bonanza). [Since Verizon makes, according to the same release announcing the “pilot,” some $90 billion in operating revenues, we think they could afford more than a tentative, VOD plan].

There is, of course, a perversity with Verizon calling its new venture “Community Studio.” Verizon, AT&T, Qwest and others are about to destroy much of “community” media, as they get Congress to kill off community oversight of cable/phone digital media (the Barton-Rush bill, for example). Since both the phone and cable industry also seek to permanently eliminate the Internet’s non-discrimination safeguard, online community voices will likely face new obstacles as well.

Behind Verizon’s negotiations with the groups, we understand, was Kathryn C. Brown, a Public Policy VP. Ms. Brown was a former chief of staff to Clinton-era FCC head William Kennard. It was Ms. Brown who replied, when asked to support public interest policies for broadcast digital TV, to tell her what the “low-hanging fruit” was on the issue (meaning some meaningless quid pro quo). Also working with Ms. Brown, we were told, was B. Keith Fulton, head of Verizon’s “Strategic Alliance Group” (“responsible for the company’s outreach to multicultural, senior citizen and disabled organizations”). Mr. Fulton first came to Washington as a National Urban League staffer interested in addressing the digital divide. He was soon scooped up by AOL Time Warner (its foundation) and began his career helping the communications lobby.

Finally, it’s worth noting that on the same day Verizon announced its civil rights and new media pilot, the National Association of Hispanic Journalists blasted the Bush Administration for its plans to not investigate the sorry state of minority broadcast ownership. The last federal report, in 2000, showed that people of color owned less than 3.8% of all broadcast stations. We wonder what a study will find—if one is done a few years from now—of how much major digital content will be truly diversely owned?

Telco/Cable TV lobbying Blitz Costing Nearly $1 Mil Per Week in DC Market/ Big Bucks Spent to Pave Way for Broadband Monopolies

Everyone has seen the TV ads from both the phone and cable lobby urging Congress to support their plans to control the future of the broadband Internet in the U.S. Companies such as Qwest, Comcast, Time Warner, and AT&T want to be broadband barons—with all other content providers and users reduced to serving as merely consuming digital surfs.

How much is the PR blitz costing? Well, intrepid media consultant Gary Arlen of Arlen Communications has done the math. “About 975K is being spent on Washington-area media buying,” he told us. That sum is mostly for local broadcast TV expenditures. According to Mr. Arlen, the U.S. Telecom Association has been spending $250 K/week (and so far has run-up a six-week $1.5 million ad tab). AT&T is forking out $600K per week (for its “Choice” campaign). TV4US, a telco “Astroturf” group, is spending $75k per week for at least a four-week air time buy. The NCTA, meanwhile, has gone through at least $ 1 million nationally in a year, spending 50K a week in the DC market as Congress meets. [Arlen is one of the most insightful people working in the media biz—and keeps an eagle-like eye on where the business is heading.]

Of course, once Rep. Joe Barton and Sen. Ted Stevens pass legislation giving control over broadband to the country’s cable and phone giants, they will be able to give themselves preferred high-speed interactive video treatment at rock-bottom (free!) rates.

Question: With next week’s House floor vote on Barton-Rush—will Microsoft, Yahoo!, Amazon, Google, eBay, and IAC spend the necessary dough to sound the alarm?

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Sen. Stevens’ Broadband Bill: Building A Digital Bridge to Nowhere

What do you say about a supposed update of the nation’s basic communications laws in the digital era that first starts off discussing low cost calls to home for the armed forces fighting a “war on terrorism.” Or that the 135-page draft released this week is principally about an old technology: TV. What it says is that the chair of the Senate Commerce Committee—and his legion of lobbyist’ allies– can’t be trusted to oversee our nation’s digital future. Let’s remember—Senator Stevens supported the last major media industry give-away: the disastrous and lobbyist written 1996 Telecommunications Act.

His proposed new law doesn’t address how to harness the power of broadband communications to foster civic discourse, democratic participation, or even the arts. Sen. Steven’s bill is primarily about permitting the Bell and cable companies to reap enormous profits from selling captive consumers interactive video services. Under the bill, broadband transmission speeds are set absurdly low (anywhere from 200 kbs to 3mbs per second)—at a time when the rest of the industrialized world offers users blazing fast distribution. Instead of boldly declaring that every U.S. resident should have affordable broadband access [which will soon be a necessity], Stevens asks the Census Bureau to add an “American Community Survey Residential Internet Question” that will ask “what technology…households use to access the Internet from home.” It will take years with such an effort to develop a serious approach to equitable Internet access. In another blow to low-income Americans, the proposed law effectively fails to prevent Bell Co. network redlining. Stevens creates a complaint procedure at the FCC that will ensure discriminated consumers won’t be served for many years.

This legislation turns over the Internet to the cable and phone lobby. It does nothing on network neutrality, save a meaningless study by the toothless and in-the-industry-pocket FCC. Here we can see Stevens and Co.’s close ties with AT&T, Verizon, Time Warner, etc. K-Street crowd. Is it a coincidence—or just a bad joke—that network neutrality is only mentioned in a “Broadband Deployment” bill at the very end of the draft (right after the section of the bill attacking video porn). The bill also breaks the ability of local government to ensure residents reap the benefits of broadband networks (it guts franchising). A more thoughtful piece of legislation would have ensured some serious local oversight and access to broadband capacity, while simultaneously requiring an open network.

But this bill is more about video programming and sorting out the various show-biz industry political wish lists than a forward-thinking, democratically-inspired piece of legislation. It’s time that Sen. Inouye, the so-called co-chair of the Commerce Committee, do a shout-out for the Internet and the public interest in the broadband era (it will help make up for his yea on the 96 Act). We all need to help him listen.