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Net Neutrality: Lessons from the Past

An Internet without net neutrality might become as fragmented as U.S. mobile phone networks, say some observers. But history may hold even richer lessons.
August 3, 2006

Critics claim that without net neutrality, the Internet will be plagued by the same problems as the cell-phone networks: an oligopoly will emerge, innovators will be edged out, and technology will stagnate.

But some experts say history offers even more compelling lessons for those envisioning an Internet where content providers can pay to get their messages to customers as fast as possible.

Transformations in the telegraph industry in the mid-19th century provide one scenario for what can happen when owners of large networks extend their influence. During the Civil War, Western Union began controlling telegraph trunk lines across the country, and, by acquiring competing companies, achieved a near-monopoly by 1866. Rivals continued to rise up – even the U.S. Post Office stepped forward, proposing to run telegraph lines to underserved communities along postal roads. But Western Union simply bought up its rivals, and manipulated prices to undercut popular and Congressional support for a postal telegraph system. While the company continued to expand its telegraph network throughout the 1870s and 1880s, it focused on serving business customers, forgoing innovations that would have made it more affordable for the press or private citizens to communicate by telegraph.

“There does seem to me to be a historical analogy” with the current telecommunications marketplace, says Paul Starr, a social historian at Princeton University, who wrote about telegraphy and other early forms of telecommunications in his 2005 book, The Creation of the Media. “In both cases, the incumbents that dominate networks have tried to exploit their existing position rather than innovating.”

The current net neutrality debate stems from a similar tension between open innovation and monopolistic control. Under a principle dating to the beginning of the Internet, all bits are created equal. Your friend’s blog is delivered to you over the same connections, and at the same speed, as the home page of the New York Times; and startups have the same ability to reach potential customers as big business.

But the companies that own the main Internet connections in the United States, including AT&T, Verizon, the other Baby Bells, and cable TV providers, want to offer businesses access to faster, private connections for a premium.

All cellular connections occur over privately owned networks, of course, so the analogy between a non-neutral Internet and the mobile-phone network is a provocative one. The comparison has drawn plenty of discussion on the Internet since July 21, when an anonymous essay attacking the telecom industry appeared on NewsForge, a site for user-contributed news. The writer used the pseudonym “James Glass” and called himself a discouraged developer of software applications for mobile phones. He argued that the cellular carriers – who control which handsets consumers can buy, what software can run on those handsets, and how data gets to them – are so protective of their networks, and impose so many arbitrary requirements on outside developers trying to make their software available to cellular subscribers, that many innovators walk away in frustration.

“It doesn’t take much imagination to imagine Verizon treating their Internet property just like their cell phone network – short-sightedly milking it for all it’s worth, at great expense to the public, and to the future,” Glass wrote.

Mark Donovan, a senior analyst at M:Metrics, a Seattle market research firm that monitors mobile commerce, agrees. “The cable and long-distance companies would like to look a little more like mobile phone companies, in terms of their ability to control traffic on the Internet,” he says.

How would that change the way the average Web surfer experiences the Internet? Donovan gives one example: “In a world where the Internet looked like the mobile phone world, Google might be really fast on Comcast’s cable Internet service, but would no longer be a ‘premium’ experience on a network where they don’t have a commercial arrangement.”

But in other ways, comparisons between the Internet and mobile phone networks are inaccurate. For one thing, mobile phone networks lack a common platform, such as the Web browser on a PC, Mac, or Linux machine, to which content can be delivered; instead, hundreds of handsets run a half-dozen incompatible operating systems. And government-imposed decency standards for data transmitted over the airways mean mobile phone companies are obliged to screen and filter data traffic, while Internet routers can let it pass through regardless of content.

“James Glass,” when contacted by Technology Review, acknowledged important differences between the Internet and cellular systems. (Glass asked to be identified only by his pseudonym in this piece, to avoid possible retribution by cellular carriers.) “People want to draw distinctions between the two networks, and that’s fine,” he says. “But the main thrust of my argument – that the owners of networks want to maximize short-term profits and don’t really care about anything that doesn’t help them with the profits – stands.”

To back up his point, Glass offers his own historical analogy. In the 1950s, he notes, “It was illegal to attach anything to the phone network that wasn’t owned by AT&T. So third parties couldn’t make any devices that attached to the phone system.” AT&T’s control slowed the development of the telephone and computer industries, Glass argues. “Notably, they used their power to make it difficult for anyone to make a good modem,” he says. “How much did this set back the development of the Internet? We don’t know. Possibly years. It definitely made things more expensive for the consumer, which meant that fewer people tried to use them, which meant that fewer people tried to innovate.”

Ironically, innovation is also cited by the telecommunications industry as an argument for abandoning net neutrality. Industry leaders say tiered pricing of Internet services would give them more incentive to innovate, introduce new services, and complete the broadband Internet infrastructure by running fiber-optic cables into more homes.

However, compared with the computing industry, telecoms invest little money in actual research and development. Here, again, history is instructive, say Princeton’s Starr and others. “Even in its heyday, [Western Union] also devoted little to research,” Starr says. The incumbents in the telecommunications business “invest more in politics than in technology – indeed, they are downright frightened by innovation, whose ultimate effects they can’t control.”

The most important effect of net neutrality has been to ensure an “even playing field,” says Craig Aaron, communications director at the Free Press in Washington, DC, which hosts the net-neutrality advocacy site “Most of the big ideas on the Internet haven’t come from the telecom companies; they’ve come from the garage.”

Indeed, it is safe to say that nothing resembling today’s Internet economy could have arisen under the Western Union regime in the 19th century or the old AT&T monopoly in the 20th century. And that’s the main reason net neutrality should be preserved, says Aaron. “It’s less about what happens to Google and Amazon and eBay – they are big enough they could buy themselves a spot in the fast lane. The problem is, where do we get the next Google, the next eBay, the next blogging revolution?”

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