Weighing Telecom’s Past Follies and the Net’s Future

I’ll be speaking tonight here in New York at an event marking the 25th anniversary of the federal government’s breakup of AT&T, where I’ll be helping to answer the question — as the event’s title asks — Has Divestiture Worked?.

Many here at the event have strong opinions on the answer.

Event organizer Bruce Kushnick, of TeleTruth, has been arguing for over a decade that the phone companies owe taxpayers money for broken promises, and has been asking state governments and the federal government why they continue to obtain tax breaks and cash.

Representing non-phone company ISPs is Joe Plotkin, director of marketing and DSL at New York City-based Bway.net.

“There are eight brands of bottled water in the supermarket, yet the path to connecting to the Internet, that vital telecommunications infrastructure, is now privatized,” he told me. “The commons don’t have a voice in where it’s deployed, how, and how quickly. We want to talk about what worked, what didn’t work, and what to do going forward. We know what’s going on but we have not yet persuaded the wider public that this is the problem.”

The ideal, Kushnick wrote in the event announcement, is a future of customer choice, lower prices, and innovative services.

The fear, Plotkin said, is what you get from the phone company now.

“If there were dozens of alternatives and one company blocked some apps, you could take your business across the street and make your choice. You could switch from a company that violated your privacy to one that doesn’t. We wouldn’t need legislation for Net neutrality if there was a market. Legislation is only necessary when market forces cannot control the accumulated power of dominant companies.”

The discussion is timely. On Wednesday, InternetNews.com reported that policy groups are pleased with Obama’s choice to head the Federal Communications Commission, Julius Genachowski. My colleague Kenneth Corbin noted that Net neutrality could be a priority of the new FCC, writing, “In the technology plan Obama developed as a candidate, when Genachowski was his top IT adviser, Obama listed Net neutrality — the principle that ISPs should not discriminate against traffic on their networks — as his top priority.”

Burden on the ISPs and the consumers

Organizers of the event — full title: “Has Divestiture Worked? A 25th Anniversary Assessment of the Breakup of AT&T” — hope to inform policy by highlighting the mistakes of the past and presenting a clear path to a better future.

Besides myself, speakers will include Kenneth Levy, who was a lawyer for the FCC when it broke up Ma Bell; Mark Cooper who made a strong showing on the PBS special The Internet at Risk; Dave Burstein of DSL Prime; Dana Spiegel of grassroots wireless initiative NYC Wireless;
regulatory and business consultant Fred Goldstein of Ionary; and CLEC blogger Dean Landsman, among many others.

I will talk about the regulatory failures of the past decade, focusing on two themes: lack of
enforcement of existing regulation and regulatory uncertainty. What rules existed weren’t enforced. When ISPs tried to get them enforced, the legal system proved too expensive and too slow. No ISP was willing to challenge the marketing practices of the phone company customer by customer, when each case could cost tens of thousands of dollars and each customer was worth $50 per month, or less. It was difficult for ISPs to plan ahead, because the rules kept changing.

The result is that most successful ISPs today rely on business services, and many customers are left to deal with a duopoly.

“At best,” Plotkin said, “there’s a cable company and a phone company, but in many areas, there’s only one choice for broadband.”

The new FCC may be ready to try to change that situation, but others have tried and failed. Perhaps the lessons of the past, properly studied, can help us achieve a better future.

Alex Goldman is a recent addition to the staff of InternetNews.com. Alex previously served as the managing editor at ISP-Planet and conference chairman of ISPCON.

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