In re )
Request for Comments ) Docket No. 011109273-1273-01
Deployment of Broadband ) RIN 0660-XX13
Networks and Advanced )
COMMENTS OF CONSUMERS UNION, CONSUMER FEDERATION
OF AMERICA, CENTER FOR DIGITAL DEMOCRACY
AND THE MEDIA ACCESS PROJECT
For over three years, Media Access Project (MAP), Consumers Union, Consumer Federation of America (CFA), and the Center for Digital Democracy (CDD) (collectively, CU, et al.) have accumulated and presented evidence to the FCC and the federal courts on the need to apply a basic, non-discriminatory access provision ("open access") to broadband Internet service. In January of 2000, CU, et al. submitted detailed comments to the Federal Communications Commission in its pending proceeding on open access. CU, et al. respectfully attach those comments here for consideration in this proceeding.
In addition, CU, et al. wish to make several points of particular relevance to this proceeding:
First, the collapse of Excite@Home provides an object lesson in the perils of placing all the broadband eggs in one basket. A policy allowing a single entity to hold captive a substantial percentage of the cable subscribers placed the majority of residential broadband users at risk of losing their service. Even now, many subscribers will experience interruptions of service.
For those small, home-based businesses that rely on broadband for their livelihood, even a temporary interruption can cause serious financial loss, and for a business close to the edge, can be the difference between surviving and failing.
By contrast, when the DSL provider Northpoint declared bankruptcy and ceased service unexpectedly, competing ISPs stood ready to take up Northpoint's stranded customers. Indeed, the atmosphere in that crisis was one of cooperation and network assistance, rather than the antagonistic atmosphere created by Excite@Home's abrupt departure and concomitant in-fighting among the stranded cable networks.
In other words, open access to broadband provides more than competition benefitting subscribers. It also creates increased network stability and reliability.
By analogy, consider as an agriculture built on a single genetic strain of a single crop, as compared to a field of many crops and genetically diverse strains. While experts may agree that the single genetic strain is the best "cash crop" and most efficient, a single blight or unpredicted catastrophe can wipe out the entire crop and devastate the local economy. By contrast, a genetically diverse crop, and an agriculture based on multiple diverse products, may be less efficient. Indeed, it may be that some strains may fail. But the overall stability and reliability of the economy increases. No single catastrophe or disease is likely to devastate the local economy.
Open access permits such "techno-diversity." If a single access provider, or even a number of access providers, suffers failure, other access providers stand ready to assume the stranded customer load. If a provider experiences regular outages, a subscriber can switch to a more stable platform. In a closed, proprietary system, the subscriber must simply suffer or do without broadband entirely.
Second, NTIA's NOI fails to address two important issues: the impact of open access on First Amendment expression and the impact of open access on innovation.
Open Access Serves First Amendment Values
As the Supreme Court has observed, the content of the Internet is "as diverse as human thought." Reno v. ACLU, 521 U.S. 844, 870 (1997). The occurs because the Internet is an open and interactive medium, facilitating communication by anyone to everyone. Id. Most importantly, unlike conventional mass media such as television and cable, the Internet is not simply a pipe through which programers pour content into passive viewers and telemarketers hock their wares. It is a medium that supports and enhances the free expression of citizens, thus enriching us all and serving as an engine to democracy. Congress and the Supreme Court have consistently recognized that promoting diversity in the market place of ideas is a "compelling government purpose" and part of the government's responsibility in a democratic society.(1)
This interactivity and corresponding First Amendment expression did not happen by chance. It occurred because at the dawn of the Internet, the FCC imposed an open access condition on the incumbent telephone networks. See United States v. Western Electric Co., Inc., 673 F. Supp. 525, 585-86 (D.D.C. 1987). See generally, Lawrence Lessig, Code and Other Laws of Cyberspace (Basic Books 1999). See also Jason Oxman, The FCC and the Unregulation of the Internet, FCC Office of Plans and Policy Working Paper #31, at 5 ("Open access accross the telecommunications network has driven the deployment of innovative and inexpensive Internet access services").
It is also worth noting in this regard that open access facilitates parental supervision. Many ISPs offer server-based filtering, but small independent ISPs offer family controls that foster religious or ideological values. For example, parents can subscribe to Christian ISPs or Jewish ISPs for filtering that fosters their particular religious values. Parents can pick and chose their service, and need not subscribe to any service at all. Open access thus facilitates the ability of families to raise their children as they wish, or avoid content that they wish to avoid.
Open Access Fosters Economic Development and Job Creation
In addition to fostering the creation of new avenues for news, art, and educational and political speech, the open access of the narrowband Internet also fostered entreprenuerism, innovation, and deployment.
In the market for deployment alone, thousands of access providers sprang into existence in the early 1990s, while the telephone companies with control of the network dithered about deploying services. These ISPs created hundreds of thousands of jobs and fueled the development of whole new industries. Indeed, the major ISPs of today, AOL Time Warner and Earthlink, the nation's Number 1 and Number 3 providers, could never have come into beiung under a closed regime where only the baby bells could offer service.
The roll of these ISPs in deploying the Internet and facilitating its use cannot be overstated. In the early 1990's, the incumbent phone companies failed to market their early broadband services, ISDN and Frame Relay, aggressively, although both were available for customers who knew and wished to subscribe. Nor did the incumbents market to residential customers, focusing instead on what they perceived as the more lucrative commercial market. It was the start up ISPs that marketed aggressively to residential subscribers and small businesses.
Small ISPs continue to play an important role in the ecology of the Internet market. Small ISPs are uniquely positioned to service niche markets considered marginal by large ISPs. AOL has a Spanish language service, but a small ISP can tailor itself to the unique needs of the Cuban community in Miami, or the Mexican community in Texas or the Honduran community in New York City. This positive feedback loop creates jobs and encourages deployment, which in turn creates more demand throughout the entire Internet economy for e-tailors and e-content (and further empowers and enhances the First Amendment expression and diversity of ideas available on the Internet). This extends not merely to marketing. Local ISPs can and do provide technical support in a way larger ISPs cannot, such as actually going out to physical locations to assist users.
Furthermore, thanks to the openness of the system, thousand of innovators set up shop in their garages and basements, free to put any innovation they could conceive on the system without seeking approval of the network gatekeeper, who might deny entry of any rival offering. For example, it is doubtful that Internet telephony could have been conceived if the phone companies that owned the lines had anything to say about it. Indeed, any venture capitalist would have refused to even consider funding research into such a project as a waste of time and effort. Nor could the deployment of so basic a tool as the web browser have taken place if its inventors has been required to convince those who owned the system that this unproven technology was (a) worth deploying, and (b) no competitive threat to the network gatekeeper.
Finally, the value of openness to the development of home based businesses must be considered. The availability of dial-up Internet access has allowed thousands of would be entrepreneurs, from those with dreams of becoming the next E-Bay to those who simply wish to earn more money to supplement their income, to take their chance. By contrast, monopoly cable providers have discouraged home use. Cable MSOs seek to replicate the cable television model, with no interest in facilitating the development of small businesses or home based businesses. Typically, cable MSOs have required home businesses to sign up for more expensive commercial services, such a @Work rather than @Home.
In an open system, it is rational to expect small ISPs to facilitate home businesses in the same way that they have on the narrowband Internet, to the benefit of the economy as a whole. Conversely, if the current closed environment continues, it is rational to assume that the cable MSOs will continue to treat home businesses with indifference, if not hostility.
Impacts for the Economy As a Whole
Industry analysts and the Administration all agree that speedy deployment and adoption of broadband is a keystone to revitalizing the economy. This revitalization will take place not merely from extending broadband lines to customers, but by encouraging a new wave of innovation and entreprenurism similar to what occurred when the broadband Internet deployed. It therefore behoves the administration to replicate the regulatory environment in which these developments took place.
Third, it goes without saying that support for policies deregulating the provision of DSL, such as those proposed by Representatives Tauzin and Dingell, would take the existing stable, robust, competitive environment of DSL and destabilize it. The arguments presented for opening the cable system apply with even more vigor to maintaining the existing status quo in DSL.
Indeed, to the extent the Administration needs to examine its DSL policy, it is in the realm of enforcement. Provisioning small businesses and residential customers with DSL was a niche market many new entrants hoped to fill. This both facilitated deployment and created new jobs and economic opportunity. Repeatedly, these new entrants have complained that the incumbent providers do not comply with their obligations. The incumbents respond slowly - or not at all - to the requests and complaints of competitors connecting to the system, then blame all connection problems on their competitors. Competitors also report that when customers call incumbents request DSL hook-up, as they must, the incumbent's sale representatives try to dissuade customers from using the requested competitor and subscribing instead to the incumbent.
Regulators and enforcers, however, have generally turned a deaf ear to these complaints. Recently, the FCC has commenced a proceeding to set standards for interconnection. See FCC Initiates Review of Unbundling Requirements, http://www.fcc.gov/Bureaus/Common_Carrier/ News_Releases/2001/nrcc0150.html (December 12, 2001). The Administration should take a firm stand in favor of enforcing existing rules that foster competition, innovation, economic growth and First Amendment expression.
As users migrate from the open narrowband network to the new broadband networks, the character of the Internet is again in flux. Will the government perpetuate the tried and true policy of encouraging free speech, innovation and economic growth through a mandatory non-discrimination provision? Or will the government abandon this policy in favor of a discredited "laissez faire" approach that condemns the emerging broadband Internet to replicate the cable and telephone monopolies? For the future of our nation's economy, the government should learn from the past and support open access in the broadband Internet.
Andrew Jay Schwartzman
Cheryl A. Leanza
MEDIA ACCESS PROJECT
950 18th St., NW
Washington, DC 2006
December 20, 2001
COMMENTS OF CU, ET AL. IN
THE FCC'S OPEN ACCESS PROCEEDING
FEDERAL COMMUNICATIONS COMMISSION
Washington, DC 20554
In the Matter of )
Inquiry Concerning High-Speed ) GEN Docket No. 00-185
Access to the Internet Over )
Cable and Other Facilities )
COMMENTS OF CONSUMERS UNION, CONSUMER FEDERATION OF AMERICA, CENTER FOR MEDIA EDUCATION AND MEDIA ACCESS PROJECT
Cheryl A. Leanza
Andrew Jay Schwartzman
Harold J. Feld
MEDIA ACCESS PROJECT
950 18th St., NW
Washington, D.C. 20006
December 1, 2000
TABLE OF CONTENTS
I. Open Access is a Constitutionally Dictated
and Socially- Important Policy Goal
[¶¶ 32-36]. 2
A. Open Access Will Serve First Amendment Values. 3
1. The Recent Broward County Decision's First Amendment Analysis is Flawed. 6
2. Absent Open Access, Bandwidth Management Technology Combined with Financial Incentives Will Endanger the Free Flow of Ideas, Non-commercial, and Civic Content on the Internet. 9
B. Open Access Will Preserve the Innovation that is the Hallmark of the Internet
and Encourage Competition Among Various Providers of High Speed Access Services. 11
C. Open Access Will Preserve Consumer Choice in Areas such as Niche
Marketing, and Filtering Through Competition Among Providers. 13
D. Open Access Will Encourage Deployment of Competitive Facilities to Provide High Speed Internet Access. 15
II. Open Access is Consistent with Computer II and Computer III Policies [¶¶ 11, 42] 16
III. Cable Broadband Internet Access Meets Objective Criteria Defining When Regulatory Intervention is Appropriate [¶¶ 41, 42, 44]. 17
IV. Proposed Elements of Open Access [¶¶ 26-31.] 19
V. So-called "Market-Based" Agreements are Not Sufficient [¶¶ 37, 39]. 22
A. AT&T/Mindspring 22
B. AOL/Time Warner 25
This long-awaited Inquiry arrives during the throes of a debate that has proceeded much too long without active Commission involvement. A full rulemaking proceeding on open access is needed now. These comments demonstrate that significant time and talent has been developed within the economic, legal, and policymaking communities on these issues. Examples abound from which open access principles and policies may be developed. The Commission must capitalize on these efforts immediately to avoid the harm that has already begun to set in as corporate actors make business plans and cement technology decisions through the purchase and installation of equipment and infrastructure.
Because this Inquiry does not analyze any of the significant material available to the Commission in the several proceedings before it considering the issue, Consumers Union, Consumer Federation of America, Center for Media Education and Media Access Project, ("CU, et al.") take this opportunity to provide Commission staff with a synthesis of our and others' pleadings available in the public domain or submitted thus far in other dockets to provide a sound footing upon which to develop proposed rules.
CU et al. shows that open access
is a constitutionally mandated and socially-desirable policy goal for several
reasons. Open access will:
• Serve First Amendment values--fostering
citizens' ability to speak and to be heard-- by preserving competition
among independent content providers, including those providing and facilitating
non-commercial and civic content.
• Preserve the innovation that is the hallmark
of the Internet and encourage competition among various providers of technical
high speed access services.
• Through competition among providers,
preserve consumer choice in areas such as niche marketing and filtering
• Encourage deployment of competitive facilities to provide high speed Internet access.
The Commission must not forget that decisions with respect to the Internet must include consideration of First Amendment values. Essential to the value of the Internet is the ability of citizens to speak to one another, to be publishers and broadcasters as well as readers and listeners. Alone among federal agencies, the Federal Communications Commission has a unique statutory and constitutional obligation to preserve and promote diversity of viewpoints in the Nation's electronic media.
CU et al. also demonstrate that the recent federal court decision in Broward County holding an open access ordinance violated the cable operator's First Amendment rights is fundamentally flawed and does not bind the Commission's First Amendment analysis. It is not supported by law or fact, and unlikely to be adopted by other courts.
First Amendment fears are not unwarranted. The technology necessary to target and eliminate certain content has been developed, and will be used to alter citizens' ability to reach the content they both wish to find and to distribute. Equipment manufacturers have developed technology that is able to target specific content, to favor certain content and slow down access to disfavored content, regardless of whether a particular user types in a web site address he or she wishes to visit. Quality of Service controls it offers can be used to restrict the incoming push broadcasts from competitors as well as subscriber's outgoing access to the push information site to discourage its use. Although these technologies and features are not, of themselves, contrary to the public interest, they become so when the choices inherent in those technologies are foisted upon users without options to go elsewhere.
The Inquiry wrongly implies that the Commission's current inaction in the area of cable broadband open access is consistent with its historic decisions in the Computer Inquiry proceeding. While the FCC may believe such inaction simply continues its "unregulation" of the Internet, we should be clear that non-intervention constitutes instead a fundamental policy reversal. For thirty years the consistent FCC policy has been to foster competition, in particular cost-oriented access to essential local network facilities, and to promote an open network architecture.
Relying on AT&T's and AOL's own filings, CU et al. demonstrate the economic need for open access with respect to the cable industry. The key characteristics include: (1) vertical integration between access and content, (2) market power in related markets, (3) paucity of alternative facilities, (4) the essential nature of access, (5) a need to ensure openness in the design of the architecture of the network, (6) stimulation of investment by increasing services, (7) the high cost to consumers of switching technologies, (8) bundling of monopoly and competitive services.
CU et al. review and synthesize the suggestions we have submitted to the Commission that could be used as a basis for defining open access. These suggestions demonstrate that a highly complex understanding of the policy and regulatory elements necessary for open access have already been developed and are ready for full analysis in a rulemaking.
Finally, CU et al. critique what the Commission terms "market-based" open access initiatives. CU et al. are compelled to point out that none of the initiatives mentioned are "market based," rather each was the product of regulatory intervention. Relying on our prior analysis and that of ISPs who were offered Time Warner's term sheet, CU et al. show that so-called voluntary agreements are insufficient both substantively, and because without enforceable rights, the unaffiliated ISPs party to these agreements are unlikely to be able to compete vigorously for customers against the cable-affiliated ISPs.
This long-awaited Inquiry arrives during the throes of a debate that has proceeded much too long without active Commission involvement. It begins two years after first requests for the Commission to consider the important policy and legal questions arising from the advent of new high speed Internet access technology and the emergence of business and technological models that may undermine the very characteristics of the Internet that many Americans value.(2)
Ironically, despite the Commission's refusal to help resolve market-paralyzing uncertainty, the trend towards open access policies is rapidly gaining momentum. The evolution of open access has not occurred because the marketplace is forcing that outcome. Rather, private parties, federal courts, local municipalities, state regulatory bodies, and the Federal Trade Commission have been involved in unnecessary and time-consuming proceedings litigation while the FCC remained on the sidelines.
The Commission's inaction is not only damaging but perverse, as the it has insisted that a single federal policy should govern and because the FCC is the instrumentality best suited to analyze and implement policies that will assure that the Internet continues to foster free speech, technological innovation, and economic growth. The FCC has the power--and the duty--to intercede to mandate clear and enforceable non-discriminatory access to the cable platform
Unfortunately, the Commission's first solid steps in this area are not only late, but constitute a very limited beginning. Through initiating an Inquiry, the Commission ensures that another step, a Notice of Proposed Rules, must occur before it can take any binding action. In addition, this Inquiry does not analyze any of the significant material available to the Commission in the several proceedings before it considering the issue. Therefore, Consumers Union, Consumer Federation of America, Center for Media Education and Media Access Project, ("CU, et al.") take this opportunity to provide Commission staff with a review of our and others' pleadings available in the public domain or submitted thus far in other dockets to provide a sound footing upon which to develop proposed rules.
A full rulemaking proceeding on open access is needed now. These comments demonstrate that significant time and talent has matured within the economic, legal, and policymaking communities on these issues. Examples abound from which open access principles and policies may be developed. The Commission must capitalize on these efforts immediately to avoid the harm that has already begun to set in as corporate actors make business plans and cement technology decisions through the purchase and installation of equipment.
I. Open Access is a Constitutionally Dictated and Socially- Important Policy Goal
In paragraphs 32-36, the Commission asks generally whether open access is a desirable policy goal, whether new future services will require open access, and whether the presence of competing local facilities sufficient to provide open access.
Open access is a desirable policy goal for several reasons. As elaborated upon below, open access will:
• Serve First Amendment values--fostering
citizens' ability to speak and to be heard-- by preserving competition
among independent content providers, including those providing and facilitating
non-commercial and civic content.
• Preserve the innovation that is the hallmark
of the Internet and encourage competition among various providers of technical
high speed access services.
• Through competition among providers,
preserve consumer choice in areas such as niche marketing and filtering
• Encourage deployment of competitive facilities to provide high speed Internet access.
Adoption of open access policies will achieve these goals without heavy-handed government intervention. Opponents recognize Commission reluctance to involve itself in complex and heavy-handed regulatory schemes. They therefore argue that open access will require just such steps. In fact, the contrary is true. Only inattention to these goals, which constitute the bedrock of communications policy in the United States, will result in detailed regulations to break apart institutionalized technical and business practices. In the same way that structural safeguards allow us to achieve goals with a small amount of regulation, open access principles will operate with the least amount of governmental intervention.(3)
A. Open Access Will Serve First Amendment Values.
Totally absent from the Commission's Inquiry is a discussion of the value most unique to the Commissions jurisdiction and unique role in the regulatory regime. While the Commission asks about whether open access is necessary to achieve competitive and pro-consumer goals, NOI at ¶ 32, it does not ask about First Amendment values. The Federal Communications Commission, alone among federal agencies, has a unique statutory and constitutional obligation to preserve and promote diversity of viewpoints in the Nation's electronic media.(4)
The Internet affirms the promise of combining the best attributes of traditional common carrier and media policy. As the Supreme Court has found, when granting Internet communications the highest protection under the Constitution,
The Internet ... now enable[s] tens of
millions of people to communicate with one another and to access vast amounts
of information from around the world. The Internet is "a unique and wholly
new medium of worldwide human communication."
Reno v. ACLU, 521 U.S. 844, 845 (1997). Essential to the value of the Internet is the ability of citizens to speak to one another, to be publishers and broadcasters as well as readers and listeners. It is this unique characteristic that, up to this point, has freed it from the type of regulation necessary to preserve content diversity and civic discourse in other mass media. See, e.g., 47 USC §§ 312(a)(7), 315 (political broadcasting obligation); 47 USC § 335 (direct broadcast satellite public interest set-aside and political broadcasting obligation); 47 USC §§ 531, 532 (cable PEG access and leased access). But without federal action, this unique characteristic will disappear. The Internet will become controlled, just as other media has been, not by government regulation, but by private corporate policies designed to favor content on the basis of financial agreements. See generally, Lawrence Lessig, Code and Other Laws of Cyberspace (Basic Books 1999) (arguing that software code and Internet architecture make public policy). Without intervention now, significantly more intrusive rules or legislation must almost certainly follow.
In language that appears prescient today, the Commission's open access policies of yesteryear withstood First Amendment challenge by the common carriers who opposed them, first by AT&T, see United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131,184-85 (D.D.C. 1982) aff'd sub nom Maryland v. United States, 460 U.S. 1001 (1983), and then from the Regional Bell Operating Companies, see United States v. Western Electric Co., Inc., 673 F. Supp. 525, 585-86 (D.D.C. 1987). The court rejected these challenges, holding instead that absence of open access requirements would threaten the values of the First Amendment. Western Electric, 673 F. Supp. at 585-86. The findings of the court are as true today as they were then:
That the ability for abuse exists as does
the incentive, of that there can be no doubt. As stated above, information
services are fragile, and because of their fragility, time-sensitivity,
and their negative reactions to even small degradations in transmission
quality and speed, they are most easily subject to destruction by those
who control their transmission. Among more obvious means of anti-competitive
action in this regard are increases in the rates for those switched and
private line services upon which Regional Company competitors depend while
lower rates are maintained for Regional Company network services; manipulation
of the quality of access lines; impairment of the speed, quality, and efficiency
of dedicated private lines used by competitors; development of new information
services to take advantage of planned, but not yet publicly known, changes
in the underlying network; and use for Regional Company benefit of the
knowledge of the design, nature, geographic coverage, and traffic patterns
of competitive information service providers.
Id. at 566.
For these reasons, the Court concluded that "[c]ontrol by one entity of both the content of information and the means of its transmission raises an obvious problem" that "enable [the network provider] to discriminate" and "thus pose a substantial threat to the First Amendment diversity principle." Id. at 586.
This reasoning applies with equal vigor to the next generation broadband Internet. Cable network providers have the same capacity and incentive to discriminate, and control by them of both content and conduit "raises an obvious problem." Only imposing an open access requirement can solve this problem, and protect the First Amendment principle of diversity.
This diversity of content and unlimited access must be preserved as we move from the narrowband Internet era into the broadband era. As explained by the Department of Justice and others, content that is usable and attractive when accessed over slow Internet connections will quickly become obsolete as new advanced content for high speed connections is developed.(5) The digital divide in the United States may soon come to have a new meaning--the divide between those who obtain the full benefits of broadband technology and those who must wait as they peer at increasingly bandwidth-intense applications through the narrow peephole of a traditional telephone line.
1. The Recent Broward County Decision's First Amendment Analysis is Flawed.
In October 2000, the United States District Court for the Southern District of Florida held that a Broward County, Florida ordinance requiring nondiscriminatory access to cable systems offering broadband services violated the cable operator's First Amendment rights. Comcast Cable Vision v. Broward County, Case No. 99-6934-Civ-Middlebrooks (November 8, 2000). This decision directly contradicts the United State District Court for Oregon, which held that a similar ordinance by the city of Portland did not violate the First Amendment. AT&T Corp. v. City of Portland, 43 F. Supp.2d 1146, 1154 (D.Ore 1999) rev'd on other grounds 216 F.3d 871 (9th Cir. 2000). It also contradicts the explicit findings of other courts, that similar access provision do not violate the First Amendment. See, e.g., Turner Broadcasting System, Inc. v. FCC, 520 U.S. 180 (1997) (requirement that cable operator "must carry" local programming); Time Warner Entertainment Co., L.P. v. United States, 211 F.3d 1313 (D.C. Cir. 2000) (channel occupancy limits, which require cable operator to carry unaffiliated programming).
In reaching its erroneous conclusion, the Broward County Court makes numerous misstatements of fact and law. For example, the opinion states that "In Turner I [Turner Broadcasting v. FCC, 512 U.S. 622 (1994)], the Supreme Court held that cable operators are generally entitled to the same First Amendment protection as the print media." Slip Op. at 21. This statement, given without citation, is simply false to fact. While the Supreme Court did hold that the standard applied to television broadcasters did not apply, the Court explicitly rejected the argument that cable operators are given the same protection as the print media, observing that "the First Amendment's command that government not impede the freedom of speech does not disable the government from taking steps to ensure that private interests not restrict, through physical control of a critical pathway of communication, the free flow of information and ideas. See Turner I, 512 U.S. at 657.(6)
The Broward County court also supported its reasoning with dubious factual assertions contrary to the findings of other courts. For example, the court asserted that users would attribute potentially offensive speech provided by an alternative ISP to the cable operator, and that all 5,000 ISPs in the country could potentially seek access to the cable operators system. Broward County Slip Op. at 23. This miscomprehends how the Internet works or what the ordinance required. Internet Access is not like a cable channel: some affirmative action on the part of the user is required to obtain content, including offensive content. See Reno v. American Civil Liberties Union, 117 S. Ct. 2329, 2342-43 (1997). Given that the Internet subscriber must affirmatively chose an alternate ISP, and affirmatively seek objectionable content, it surpasses belief that the subscriber would then attribute any offensive content to the cable system operator. Furthermore, the cable operators have consistently maintained that they exercise no editorial role in limiting a user's access to content; just the opposite, cable operators have pledged not to discriminate against any outside content. See City of Portland, 43 F. Supp.2d at 1154; In re Application of Tele-Communications, Inc. and AT&T Corp., 14 FCC Rcd 3160, 3206-07 (1999). Indeed, the only other district court to address the "forced speech" argument rejected it. City of Portland, 43 F. Supp.2d at 1154. See generally Harold Feld, "Whose Line Is It Anyway? The First Amendment and Cable Open Access," 8 Commlaw Conspectus 23 (2000).
If the Commission determines that the Broward County court is correct, it must abolish all other structural limitations on cable systems, many of which are far more intrusive and more likely to be mistaken for the speech of the cable system operator. For example, if open access unconstitutionally abridges a cable operators First Amendment rights, the channel occupancy limits must likewise fall. That the courts have upheld the constitutionality of the channel occupancy limits should likewise reassure the Commission that open access is similarly constitutionally acceptable.
Finally, the Broward County court's determination that open access must fail even under intermediate scrutiny is flawed and does not bind the FCC. In the first instance, the court relied on FCC staff reports (which are not binding authority) as well as data (but not policy judgements) issued by the full Commission to draw its own conclusion that little harm is caused by closed cable Internet offerings. Broward County, Slip Op. at 25-26. Nothing prevents the agency from fully considering the policy questions at issue for the first time in this proceeding, using its predictive powers to determine that open access is necessary to preserve the diversity of voices on the Internet. See, e.g., FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775 (1978) (wide latitude to revisit policies, impose structural rules and order divestitures, to further interests of diversity).(7)
In short, the recent decision in Broward County is not supported by law or fact, and unlikely to be adopted by other courts. The existence of this case should not dissuade the FCC from imposing an open access regime consistent with the long line of cases supporting structural rules and access requirements to promote diversity. See Turner II, NCCB, Red Lion, NBC v. United States, 329 U.S. 190 (1943).
2. Absent Open Access, Bandwidth Management Technology Combined with Financial Incentives Will Endanger the Free Flow of Ideas, Non-commercial, and Civic Content on the Internet.
The technology necessary to target and eliminate certain content has been developed, and will be used to alter citizens' ability to reach the content they both wish to find and to distribute. As described by CU et al. in a June 1999 letter to Chairman Kennard, equipment manufacturers have developed technology that is able to target specific content, to favor certain content and slow down access to disfavored content, regardless of whether a particular user types in a web site address he or she wishes to visit. For example, a document used to market equipment made by Cisco Systems, states that the Quality of Service controls it offers can be used to:
restrict the incoming push broadcasts
[from competitors] as well as subscriber's outgoing access to the
push information site to discourage its use. At the same time,
you could promote and offer your own or partner's services with full-speed
features to encourage adoption of your service, while increasing
Controlling Your Network - A Must for Cable Operators, Cisco Systems, 1999 at 5 (emphasis added) (cited in Letter From Jeffrey Chester, Center for Media Education, et al. to Chairman Kennard (July 29, 1999) ("July 1999 Letter")). Moreover, these controls can "isolate network traffic by the type of application, even down to specific brands, by the interface used, by the user type, and individual user identification, or by the site address." Id. These technologies allow cable operators to limit content from specific sites, by specific users, and to target specific content.(8) Another description of content control is available in Prof. Jerome H. Saltzer's unpublished paper "'Open Access' is Just the Tip of the Iceberg" (October 22, 1999) available at web.mit.edu/Saltzer/www/publications/ openaccess.html.
Similarly, AT&T's policies have worked to disable users who wish to transmit high-volume content. As CU et al. explained in its July 1999 letter, AT&T's "ONAdvantage Upstream Enhancement," for example, will restrict members of the public rom uploading materials faster than 128 kbps when previously they could do so at speeds up to 1 Mbps. July 1999 Letter at 2.
These technologies and features are not, of themselves, contrary to the public interest. They become so, however, when these choices inherent in those technologies are foisted upon users without options to go elsewhere. In such a case, the previously open, competitive, and diverse Internet becomes a limited-choice medium. Users become more like cable television viewers, hoping that their cable company will carry their favorite channel, despite the fact that without a financial link between their cable company and the content provider, such hope will likely remain futile.
Similarly, without enforceable open access, noncommercial Internet providers may well be eliminated. Hundreds of community "FreeNets" provide "access to information to everyone in the community."(9) In particular, FreeNets act as low-cost ISPs by purchasing connectivity from telephone companies and providing connections to individuals and social service groups for free or at cost, and maintain web pages for non-profits.
Without open access policies, FreeNets are unlikely to obtain high speed connectivity because FreeNets provide services that the cable industry might well perceive as directly competitive. In addition, FreeNets are not likely to be replaced in the commercial marketplace. FreeNets often offer information services--particularly of local interest--without "banner advertising" and merchandising offerings. Just as many citizens, especially parents, may prefer non-commercial radio or television to commercial offerings, they may prefer to access--or have their children access--local information sources that do not come bundled with ads providing "click through" access to merchandise.(10)
B. Open Access Will Preserve the Innovation that is the Hallmark of the Internet and Encourage Competition Among Various Providers of High Speed Access Services.
CU et al. and many others have described the benefits to technical innovation that an open high speed Internet will bring. Specifically, as CU et al. noted in its Petition to Deny the AOL/Time Warner Merger, economists at Berkeley have described why the current Internet has been so productive:
Open infrastructure policy fostered user-driven
innovation. This meant that the principal sources of new ideas driving
economic growth emerged from a long-term process of experimentation and
learning, as business and consumer users iteratively adopted and shaped
application of information technology and E-commerce.
Bar, et al. "Defending the Internet Revolution in the Broadband Era: When Doing Nothing is Doing Harm," E-conomy Working Paper No. 12 at 2 (Berkeley Roundtable on the International Economy August 1999) (footnotes omitted) found at: //e-conomy.berkeley.edu/publications/wp/ewp12.pdf. (cited in Consumers Union et al. Petition to Deny AOL/Time Warner Merger, CS Docket 00-30 (filed April 26, 2000) at 79 ("Petition to Deny")) They further explain:
Diversity of experimentation and competition on an increasingly open network were key, since nobody could foresee what would eventually emerge as successful applications. Openness allowed many paths to be explored, not only those which phone companies, the infrastructure's monopoly owners, would have favored. Absent policy-mandated openness, the Regional Bell Operating Companies (RBOCs) and monopoly franchise CATV networks would certainly have explored only the paths of direct benefit to them. It is doubtful that without such policy-mandated openness the Internet Revolution would have occurred.
Bar et al. at 8.
Similarly, in an ex parte filing at the Commission in the AT&T/MediaOne proceeding, Professors Lessig and Lemley state:
The effect of these Internet design principles--including,
but not exclusively, End-to-End--has been profound. By its design, the
Internet has enabled an extraordinary creativity precisely because it has
pushed creativity to the ends of the network. Rather than relying upon
the creativity of a small group of innovators who work for the companies
that control the network, the End-to-End design enables anyone with an
Internet connection to design and implement a better way to use the Internet.
By architecting the network to be neutral among uses, the Internet has
created a competitive environment where innovators know that their inventions
will be used if useful. By keeping the cost of innovation low, it has encouraged
an extraordinary amount of innovation.
Lemley & Lessig at ¶ 21.
Lemley and Lessig describe the disincentives
Innovators are less likely to invest in
a market where a powerful actor has the power to behave strategically against
it. Innovation in streaming technologies, for example, is less likely when
a strategic actor can affect the selection of streaming technologies, against
new, and competitive systems.
* * * *
Whether, as a software designer, it makes
sense to develop ... applications depends in part upon the likelihood that
they could be deployed in broadband cable contexts. Under the End-to-End
design of the Internet, this would not be a question. The network would
carry everything; the choice about use would be made by the user. But under
the design proposed by the merged company, AT&T affiliates would have
the power to decide whether these particular services would be "permitted"
on the cable broadband network. Cable has already exercised this power
to discriminate against some services. They have given no guarantee of
non-discrimination in the future. Thus if cable decided that such services
would not be permitted, the return to an innovator would be reduced by
the proportion of the residential broadband market controlled by cable.
Lemley & Lessig at ¶¶ 59,
C. Open Access Will Preserve Consumer Choice in Areas such as Niche Marketing and Filtering Through Competition Among Providers.
Closed cable broadband systems will eliminate consumer choice such as server-based filtering systems and variations among service offerings in important areas such as privacy.
Filtering software can help assure parents that their children will not be exposed to undesirable content.(11) It is most consistent with First Amendment values to allow parents as much control as possible over that choice. Closed access cable systems, however, deny parents the option of using "server-based" filtering, a technology which may prove to be the most effective mechanism to control what material is available to their children on the Internet. Development of such devices can, in the view of many, promote free speech by protecting children while permitting the Internet to provide unfiltered access for those who wish to receive constitutionally protected material which is offensive to others.(12)
While cable-affiliated ISPs offer their own software filtering option, this does not provide the same degree of security as a server which does not let targeted material through for any customer. For example, Dotsave.com, one of the increasing number of server-based filtered ISPS's, each of which varies in taste and philosophy, explains that "Filtering is done at our servers, making it difficult, if not impossible, for even the most advanced computer user to 'hack' through...." http://www.dotsave.com/faq.html. Families have a fundamental right to chose the protections for their children that best comport with their own moral and religious standards. In an open model, parents can chose server-based filtering that best matches their particular beliefs.(13)
Moreover, competitive ISPs will open up broadband services to a broader range of users. They can market to, and provide better customer service for, citizens who might otherwise be left on the wrong side of the digital divide. For example, Cuban-Americans have different needs than Mexican-Americans and citizens of Puerto Rico. Cultural impediments may mean that a single ISPS with one Spanish language marketing staff will miss many of these new customers, leaving others outside the digital environment.
D. Open Access Will Encourage Deployment
of Competitive Facilities to Provide High Speed Internet Access.
Not only does the closed access model restrict deployment of the leading technology, but Scott Cleland, a prominent industry analyst, argues that it prevents intermediate technologies that could fill market needs.
And why is broadband service deployment
so slow? Well, government policy only fosters convergence investment within
industries (i.e., within regulatory regimes). It discourages cross-industry
convergence investment by competitors. For example, the government inadvertently
is discouraging the deployment of ISPS-marketed, hybrid modems that could
rollout broadband service faster and cheaper to the national mass market
than either cable modes or DSL. Hybrid broadband modems use the best of
both plants' existing capabilities--cable's high speed downstream
path with the telco's reliable upstream path … but only if regulators allow
competitors access to both duopoly last-mile facilities, not just the telco
pipe. Schizophrenic broadband policy if unchanged, preordains a duopoly
market where most American consumers will have to wait years unnecessarily
while cable upgrades its one-way broadband plant for two-way and telcos
upgrade their two-way narrow band plant for broadband.
Scott C. Cleland, Convergence Diverted, (Legg Mason Precursor Research March 30, 1999) (cited in Petition to Deny at 96).
Moreover, the FCC's failure to act thus far has inhibited the deployment of other broadband technology. For example, as we explained in the Petition to Deny the AOL/Time Warner Merger, AOL's fear that it would be prevented from obtaining high-speed access to its customers prompted it, at least in part, to purchase Time Warner. AOL's deals with xDSL providers, obtained under the Commission's open access policies, were expected to drive deployment of this service. Petition to Deny at 27. For a thoughtful and important discussion of the how open access is more profitable for cable operators and for the economy as a whole, see Jeffrey Mackie-Mason, "Investment in Cable Broadband Infrastructure: Open Access is Not an Obstacle" (Nov. 5, 1999) found at http://www.opennetcoalition.org/press/jmmwhi.pdf.
II. Open Access is Consistent with Computer II and Computer III Policies [¶¶ 11, 42].
In paragraphs 11 and 42, the Inquiry wrongly implies that the Commission's current inaction in the area of cable broadband open access is consistent with its historic decisions in the Computer Inquiry proceeding. As demonstrated clearly by several economists at Berkeley, and described in the CU, et al. Petition to Deny the AOL/Time Warner Merger, the inaction of the Commission is completely inconsistent with the Computer Inquiry decisions. See Petition to Deny at 79, n. 90 (citing Bar et al. ).
In response to FCC Chairman Kennard's explanation that inaction was part of a "high tech" Hippocratic Oath to do no harm, these economists explain:
While the FCC may believe such inaction simply continues its "unregulation" of the Internet, we should be clear that non-intervention constitutes instead a fundamental policy reversal. For thirty years the consistent FCC policy has been to foster competition, in particular cost-oriented access to essential local network facilities, and to promote an open network architecture. Far from non-intervention, this has required sustained policy intervention to keep the US communication infrastructure open. Having misread its own history, the FCC now risks misinterpreting Hippocrates: "First, do no harm" is not quite the same as "First, do nothing" and in this particular case, doing nothing is doing harm. The FCC's decision not to open a formal proceeding on access to high speed Internet service constitutes in effect a decision to permit access foreclosure. As such, it does not continue, but reverses 30 years of consistent policy direction.
Bar et al. at 3 (emphasis added).
[Internet] innovations were possible because
the Federal Communications Commission decided in the 1960s that the emerging
world of data networking should not be treated like telecom services. therefore,
it exempted all forms of computer networking from much of telecom's regulatory
baggage.... As a result it prevented telephone companies from dictating
the architecture of data networks. .... Regulatory policy forced open access
to networks whose monopoly owners tried to keep closed.
Bar et al. at 1.
They conclude, "The situation we face now is essentially similar to these past episodes. The question is obvious. The successful policy trend of the past thirty years has been to force competition and assure open access to the incumbent infrastructure. Why, now, reverse that successful policy?" Bar et al. at 10.
The Computer Inquiries are sometimes
criticized for their difficulty of application. This difficulty arose because
the definitions were technologically based, and did not include an economic
component. But, at bottom, the technical definitions of enhanced and basic
service were proxies for economic questions--which facilities or functionalities
were owned and operated by monopoly providers with no incentive to supply
those facilities on an economically rational basis? Was availability of
these facilities or services necessary to promote competition in other
important areas?(14) These questions remain
crucial today, and find voice in the policies inherent in recent decisions
by Congress, in adopting Section 251 and 272 of the 1996 Act, and in decisions
of the Common Carrier Bureau and the Commission prior to the 1996 Act.
See, e.g., 47 USC § 251(d)(2)(B); IDCMA Petition for Declaratory
Ruling that AT&T's Interspan Frame Relay Service is a Basic Service,
MO&O, 10 FCC Rcd 13717 (1995). The Commission's authority to
impose obligations such as those imposed under the Computer Inquiry proceedings
remains intact to this day.
III. Cable Broadband Internet Access Meets Objective Criteria Defining When Regulatory Intervention is Appropriate [¶¶ 41, 42, 44].
In paragraphs 41-42 and 44, the Commission asks how it should identify the appropriate circumstances under which to intervene with open access policies. In CU et al.'s Petition to Deny the AOL/Time Warner merger, CU et al. discussed, using principles articulated by AOL and AT&T, the circumstances under which intervention is appropriate. Relying on AT&T's and AOL's own filings, we demonstrate the economic need for open access with respect to the cable industry, embodied in the particular analysis applicable to Time Warner. See Petition to Deny at 56-75 (quoting extensively from America Online, Open Access Comments, before the San Francisco Department of Telecommunications and Information Services (October 27, 1999) and AT&T Canada Long Distance Services Comments before the Canadian Radio-Television and Telecommunications Commission, Telecom Public Notice CRTC 96-36 (February 4, 1997).) Based on AT&T's and AOL's filings CU et al. described the factors that would justify intervention:
(1) vertical integration between access
and content, (2) market power in related markets, (3) paucity of alternative
facilities, (4) the essential nature of access, (5) a need to ensure openness
in the design of the architecture of the network, (6) stimulation of investment
by increasing services, (7) the high cost to consumers of switching technologies,
(8) bundling of monopoly and competitive services.
Petition to Deny at 10.(15)
In that Petition, CU et al. explain in detail the various economic harms wrought by that merger. In particular, at pages 49-76, CU et al. discuss the problems caused by vertical market power, the market power held by Time Warner as a cable company with significant interests in content, and the related problem of bundling monopoly and competitive services, items (1), (2). In that Petition we also explain the high cost to consumers of switching technologies, item (7):
Closed proprietary products such as e-mail,
instant messaging, buddy lists, calendar management and keyword search
engines, have become the basic utilities of Internet communications and
usage. Consumers hesitate to give these up, since changing ISPs requires
significant changes in identification (e-mail address), cuts the consumer
off from communities of interest (IM and buddy lists), or requires significant
learning costs (new keyword searches and calendar management routines).
These interfaces are the sticky features that glue the customer to the
Petition to Deny at 31 (footnotes omitted); see also Bar et al. at 16-20 (providing quantitative and qualitative analysis demonstrating the difficulty of switching broadband providers).
In these comments, supra, we review how open design principles are critical to the success of the Internet, item (5), see section I.B, and how open access will stimulate investment, item (6), see section I.D.
CU et al. discuss the essential nature of access and its similarities to other Commission policies, particularly those in the Computer Inquiry proceedings above, at section II. Of particular relevance to this point is that, in its review of the AT&T/MediaOne merger, the Department of Justice has found that broadband access and narrowband access are not substitutable for one another, relevant to items (3) and (4), the paucity of alternative facilities and the essential nature of access. The Department of Justice found that the relevant product market for analyzing the AT&T/MediaOne merger was the "market for aggregation, promotion, and distribution of broadband content and services." DOJ AT&T/MediaOne, Amended Complaint at ¶ 25. DOJ found that narrowband content and services was not substitutable for narrowband content and services. Id. at ¶¶ 22, 25-27. As explained above, the Internet's content cannot be segregated to second-class status as the new market for broadband content takes precedence.
IV. Proposed Elements of Open Access [¶¶ 26-31.]
In paragraphs 26-31 the Commission generally asks for a definition of "open access" and asks whether voluntary agreements negotiated in the free market will produce open access. The CU et al. Petition to Deny the AOL/Time Warner Merger laid out a number of policies that could be used to keep communications networks open. See Petition to Deny at 12-19, 145-154. These suggestions demonstrate that a highly complex understanding of the policy and regulatory elements necessary for open access have already been developed and are ready for full analysis in a rulemaking. Many of these proposals draw upon principles embodied in Sections 251 and 252 of the Communications Act.
The harms that these policies are intended to address are evident from our critique of the agreements already negotiated by AT&T and Time Warner, as addressed in the next section, see infra section V. Synthesized from the Petition to Deny and other documents referenced specifically below, the critical elements of open access to consider are:
• Network owners shall provide any requesting
Internet Service Providers nondiscriminatory access to its broadband Internet
transport services (unbundled from the provision of content) on rates,
terms and conditions that are at least as favorable as those on which it
provides such access to itself, or its affiliates, or to any other person.
This nondiscriminatory access must extend to:
• all business and operational support
systems and/or interfaces so that performance levels and processing time
will not favor the affiliated ISPS
• all ISPs regardless of affiliation, content,
applications, functionality or type
• adopting caching or replication policies,
installing firewalls, protocol masking, extra routing delays or bandwidth
restrictions that will affect the content a customer may access
• timely notification of any new network
or operational interface
• Network owners must allow competitors
nondiscriminatory access to their broadband distribution network any technically
feasible point, in the most efficient manner possible, and on terms that
are at least technically and economically equivalent to those provided
by the network owner to itself or affiliates or partners in terms of scope,
quality, and price.
• Network owners must not implement any
non-standard, proprietary interfaces; technical limitations must be adopted
according to an agreed-upon standard.
• Network owners must provide "broadband
Internet access transport services" which is the transmission of data between
a user and his Internet service provider's point of interconnection with
the broadband Internet access transport provider's facilities.
• Open access also should include policies
that will promote diversity of content, robust competition, and localism:
• The network operator should ensure that
at least one "unrestricted" ISPS (an ISPS that does not provide content)
is available on its network.
• Access for local and noncommercial ISPs
should be made available in proportion to network capacity.
• Network owners should make access available
on a variety of terms and conditions to meet the needs of ISPs of different
types who have different needs and business models.
• The network operator shall support as
many ISPs as technically possible and shall commit to the research, development
and deployment of technologies to maximize the functionalities available
and the number of ISPs that can be supported by the network.
• ISPs should be able to compete effectively
against the network owner:
• Pricing must allow consumers to choose
any ISPS they want without being required to pay for or go through the
• rates for ISPS access must prevent network
owners from engaging in predatory pricing or cross-subsidization of their
• The Commission should require a cost
basis for charges from network owners to unaffiliated ISPs. The Commission
can utilize the existing leased access rates for cable channels, not to
exceed $10 per month. (See NorthNet Filing at 12-13)
• Unaffiliated content providers should
be allowed to resell (and therefore bundle) the cable programming to create
a complete bundle.
• Network owners that are affiliated with
or have joint marketing arrangements with other providers should also be
required to enter into non-disclosure agreements with nonaffiliated ISPs
to preserve confidential data.
• Network owners should not interfere in
the relationship between the unaffiliated ISPS and its customer in any
way, including the boot screen, billing, marketing, electronic transactions,
privacy and customer termination policies.
• The open access guarantees should be
enforceable through a right of action by an aggrieved competitor or by
a state or local regulatory agency. The Commission must explicitly reserve
the right to prevent discrimination on its own motion.
V. So-called "Market-Based" Agreements
are Not Sufficient [¶¶ 37, 39].
In paragraphs 37 and 39 the Commission seeks comment on what it terms "market-based" open access initiatives. CU et al. are compelled to point out that none of the initiatives mentioned are "market based." Each of these agreements was adopted specifically in response to a regulatory initiative or inquiry. Specifically, the AT&T/Mindspring discussions were initiated at the request of Chairman Kennard; the AOL/Time Warner Memorandum of Understanding was drafted in order to speed regulatory review of that merger at the FCC; and the recent spate of AOL negotiations are in response to the Federal Trade Commission's apparent position that it will not approve the AOL/Time Warner merger until such agreements, presumably with competition-enhancing terms, are achieved. John R. Wilke, "FTC Seeks AOL-Time Warner Conditions Sealed With a Contract, Not Assurances" Wall Street Journal at A3 (Nov. 10, 2000) (stating that the Federal Trade Commission will not approve the AOL/Time Warner merger without at least one signed contract between Time Warner and an independent ISPS).(16) Each of these agreements posses significant flaws.
Media Access Project President and CEO Andrew Schwartzman participated in the discussions leading up to the AT&T/Mindspring agreement. When that agreement was announced, Mr. Schwartzman explained the flaws in that agreement in a December 6, 1999 letter to Chairman Kennard. In addition, in the Petition to Deny the AOL/Time Warner merger, CU et al. described additional flaws with the AT&T agreement. The agreement makes several concessions, also incorporated in the Time Warner/AOL MOU. It:
• Promises consumers a choice of ISPs,
without having to subscribe to an affiliated ISPS.
• Promises to offer ISPs a range of Internet
connections at different speeds and prices with functionality that is comparable
to other high speed systems, "subject to any technical constraints particular
to, or imposed upon, all ISPs using AT&T's cable system to deliver
high-speed Internet access."
• Promises cable modem service will support
Internet protocols and customers will be able to configure the service
to support the customers' own choice for a "first screen" and bypass all
proprietary content of a network affiliated ISPS.
• Promises that consumers have access to
all content and ISPs, subject only to reasonable technical limitation that
may be necessary to preserve a reasonable level of service for other customers
that are also using the service (i.e., limitations on "bandwidth hogging").
See Petition to Deny at 143-45.
Unfortunately, it also:
• Allows to hide behind an "exclusive contract"
to delay introduction of broader access for up to two and a half years,
and perhaps much longer, AT&T owns 58% voting control of Excite@Home.
Its failure to provide open access more quickly is like saying that on
January 1, 1984, the day AT&T divested the local phone companies, there
was competition in long distance services.
• Limits open access to merely a choice
among ISPs, and does not guarantee that unaffiliated ISPs have access to
the cable network under the same terms and conditions, and at the same
rates, that access is available to affiliated ISPs.
• Allows AT&T to restrict offerings
to those which its affiliate chooses to provide.
• Requires ISPs to use AT&T transport facilities thus permitting content-based discrimination in favor of preferred content providers and commercial partners, which is utterly at odds with what the Commission expects of all other telecommunications services. Moreover, it particularly penalizes ISPs which own, or have long-term leases for, transport facilities, and which may have built their own regional nodes.
• Fails to guarantee that customers can
purchase Internet access at commercially reasonable rates without having
to buy a bundled "package."
Letter from Andrew Jay Schwartzman, President & CEO, Media Access Project to Chairman William E. Kennard, Federal Communications Commission (Dec. 6, 1999).
In addition, AT&T was less forthcoming on the commercial relationships. AT&T will negotiate prices for different levels of speed, but provides no principles for arriving at a reasonable price and no enforceable assurances about the quality of service. AT&T will give independent ISPs the opportunity to offer service to consumers over AT&T's facilities, but it retains immense control over the nature, quality and cost of the services it will allow to be sold and the manner in which they will be marketed to consumers. For example, AT&T declares that any such opportunities will be subject to terms and conditions to be agreed upon by the parties covering: pricing, billing, customer relationship, design of start page, degree of customization, speed, system usage, caching services, co-branding ancillary services, advertising and e-commerce revenues, and infrastructure costs.
AT&T will allow independent ISPs to market to cable customers who have not designated an ISPs. However, AT&T requires the ISPs to negotiate with AT&T how that will take place by stating that the opportunity to market must be "through means mutually agreed upon." It is not clear that independent ISPs would be allowed to compete for AT&T's Internet customers.
Most recently, a description of AT&T's current market trial in Boulder, Colorado demonstrates AT&T's lack of commitment to true competition by ISPs leasing space on the AT&T network. See Peter S. Goodman, "AT&T Puts Open Access to a Test" Washington Post at E1 (Nov. 23, 2000) (describing AT&T icon that appears on competing ISP screens, among other open access concerns).
B. AOL/Time Warner
In its Petition to Deny the AOL/Time Warner Merger, CU et al. critiqued the AOL/Time Warner MOU. See Petition to Deny at 141-142. The AOL Time Warner commitment can be summarized roughly as follows:
• AOL Time Warner commits to provide consumers
a broad choice among multiple ISPs, consistent with providing a quality
consumer experience and any technical limitation.
• AOL Time Warner pledges to negotiate commercial agreements with unaffiliated ISPs that will not discriminate in terms of access or operation of the network against ISPs who are not affiliated with AOL Time Warner.
The MOU offers some details of the non-discriminatory commercial relationship it contemplates:
• Consumers will not have to purchase service
from an affiliated ISPS in order to obtain broadband Internet access over
AOL Time Warner systems.
• Unaffiliated ISPs will be allowed to
have the only direct relationship to the customer for broadband Internet
• Unlike AT&T, ISPs will be allowed to connect without purchasing broadband backbone transport.
AOL's offer to conduct commercial negotiations will cover nondiscrimination in additional area of commercial relationships and operation of the network including speed of service, marketing commitments, nature of service, tier of service and whether an ISP wishes to "partner" with AOL/Time Warner. AOL/Time Warner also recognizes that in addition to nondiscrimination in commercial and operational relationships, there are also potential problems in discrimination against applications and it agrees not to prevent the provision of streaming video by unaffiliated ISPs.
AOL/Time Warner appears to recognize the legitimacy of civic discourse goals. AOL/Time Warner have made two commitments in this regard.
• They commit to partnering to promote
national, regional or local services in order to facilitate the ability
of consumers to choose among ISPs of different size and scope.
• They will not allow selective offering
of service that "redlines" a portion of an AOL/Time Warner cable system.
Although the AOL Time Warner commitment goes beyond any made by other cable companies, it falls well short of what is necessary to preserve the open communications that has typified the narrowband Internet:
• The policies, terms and conditions offered
by AOL Time Warner are inadequate and AOL Time Warner continues to insist
that this is all voluntary, which means that there is no effective enforcement
• Details of implementation are totally
• Without legal enforceability of the agreement
its commercial interests make them untrustworthy. AOL Time Warner is shutting
competitors out wherever the law does not prevent them from doing so.
Moreover, the details of Time Warner's proposals recently came to light in a detailed filing submitted by NorthNet. This filing demonstrated significant flaws with the "voluntary" negotiation process. NorthNet explained the flaws with the Time Warner term sheet:
• Despite promises to negotiate in good
faith, the term sheet explicitly eschews any obligation to negotiate in
good faith by Time Warner.
• In order to obtain a term sheet, an ISPS
was forced to disclose information about itself:
- product offering
- whether they are currently offering broadband services
- the number of subscribers currently served
- how long company in business
- ownership of company
- basic financial information
- current service areas
• The term sheet required a non-refundable
$50,000 deposit. Total costs of contracting for necessary infrastructure
at Time Warner's headend, transport, and backbone services total $700,000.
• The home page is subject to Time Warner's
approval and Time Warner has the option for an "above the fold" "prominent
availability" without limitation as to content, applications, service or
• Time Warner must agree to alter its privacy
policies to the extent that an ISPS's privacy policies are inconsistent
with and in some way a limitation on Time Warner's current and anticipated
business use of information.
• "Each of ISPS and TWC will sell the Service
and will determine the pricing of the Service when sold by it."
• Time Warner will have sole discretion
over subscribers termination policies, include without limitation for non-payment.
• Time Warner will not be required to provide
QoS [Quality of Service] support for telephony or video streaming for the
service. QoS may be provided upon request and at an additional cost.
• To the extent an ISPS wishes to offer
any functionality which is outside the scope of the Network Architecture
or requires an operator to acquire equipment or software or implement a
change in the way the operator processes, TWC shall have the right to approve
such functionality, and the ISPS shall be obligated to reimburse Time Warner
for its direct, out-of-pocket costs in implementing such new functionality.
• Time Warner's requires 75% of revenue, or a minimum of $30 per month, for Time Warner.
• Time Warner may package its ISP's service
with others but competing ISPs may not.
• Time Warner's will only optimize other
ISPs' services for personal computers, but not for other devices, such
as set top boxes.
• Time Warner does not allow ISPs to bundle
their offering with cable television service.
• Time Warner takes 25 percent of all ancillary
revenues generated by the ISPS for "advertising, transactions, communications,
premium services, e-commerce, web hosting, and other fees."
• Time Warner keeps all revenues generated
by the independent ISPs for Time Warner.
NorthNet Filing at 4-8.
Even under regulatory duress, cable operators have not demonstrated a willingness to negotiate agreements with unaffiliated ISPs that serve competitive and First Amendment goals.
CU et al. believe a full rulemaking
proceeding is long overdue. The harm and uncertainty from the Commission's
delay is only increasing. CU et al. look forward to participating
in a full proceeding where the significant progress that has already been
made in developing economic, legal and regulatory models can be used to
serve First Amendment values, protect consumers, and preserve the open
character of the Internet.
Cheryl A. Leanza
Andrew Jay Schwartzman
Harold J. Feld
MEDIA ACCESS PROJECT
950 18th St., NW
Washington, D.C. 20006
December 1, 2000
1. - § " " -
2. See Letter from Cheryl A. Leanza and Andrew Jay Schwartzman, Media Access Project to Chairman William E. Kennard, Federal Communications Commission (September 15, 1998).
3. See Lemley & Lessig, Ex Parte Filing, CS Docket 99-251 (filed Nov. 10, 1999) at ¶ 68.
4. See, e.g., 47 USC §257(b) (purposes of Communications Act include promoting "diversity of media voices"); Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385 §2(b)(1) (policy to "promote the availability to the public of a diversity of views and information through cable television and other video distribution media"); Turner Broadcasting System, Inc. v. FCC, 117 S.Ct 1174 (1997) ("Federal policy ... has long favored preserving a multiplicity of broadcast outlets regardless of whether the conduct that threatens it is motivated by anticompetitive animus or rises to the level of an antitrust violation."); FCC v. National Citizens Committee for Broadcasting, 436 U.S. 774 (1978); Red Lion Broadcasting Co., Inc. v. FCC, 395 U.S. 367, 386-392 (1969).
5. In its consent decree with AT&T and MediaOne,
the Justice Department found that:
[M]any firms are developing content that
will be particularly attractive to residential broadband consumers. ...
broadband service allows customers to access content that contains much
larger quantities of data, such as high quality "streaming" video and various
forms of interactive entertainment. Much of this broadband content will
not be readily accessible or attractive to narrowband users, because of
the much longer times that are needed to transmit the data through narrowband
United States v. AT&T and MediaOne, Amended Complaint, Case No. 1:00CV001176 (RCL), (D.C. Cir. May 26, 2000) at ¶ 22, available at www.usdoj.gov/atr/cases/f4800/4840.pdf ("DOJ AT&T/MediaOne, Amended Complaint").
6. Moreover, lower courts have consistently rejected the attempts of cable operators to limit Turner to its facts and require strict scrutiny for access regulations. See, e.g., Time Warner v. United States, 211 F.3d at 1317-18; Time Warner Entertainment Co., L.P. v. FCC, 56 F.3d 151, 181-84 (D.C. Cir. 1995). In general, courts have frowned upon exclusivity agreements, such as those used to bar other ISPs from access to the cable plant. See, e.g., Amsat Cable Ltd v. Cablevision of Connecticut L.P., 6 F.3d 867 (2nd Cir. 1993); Warner Cable Communications, Inc. v. City of Niceville, 911 F.2d 634, 638?40 (11th Cir. 1990).
7. CU et al. note that the Broward County Court also erred in regarding narrowband and broadband services as identical, despite the Justice Department's determination that the two constitute separate markets. See In re Applications of MediaOne Group, Inc. and AT&T Corp., 15 FCC RCD 9816, 9866-67 (2000).
8. According to one influential commenter, "the trouble with this vision is it is not the Internet ..." Kevin Werbach, "The Architecture of the Internet 2.0" Release 1.0 at 5 (Feb. 19, 1999) found at: www.edventure.com/release1/cable.html.
9. For a list of FreeNets nationally, see http://www.y4i.com/accessusa.html; see also "The Case for Community Networking," Oregon Public Network, Inc., http://www.opn.org/cn/ index.html.
10. This discussion of the importance of Free Nets has been presented to two U.S. Courts of Appeal. See Amicus Curiae brief of Citizens Utility Board of Oregon, et al. in AT&T v. City of Portland, 9th Cir., Docket 99-35609 (filed Sept. 14, 1999), available at www.mediaaccess.org/ filings/portlnd.pdf.; Amicus Curiae brief of Virginia Citizens Consumer Council, et al. in MediaOne v. County of Henrico, No. 00-1680 (L) (4th Cir. July 10, 2000) found at: www.mediaaccess.org/ filings/henrico.pdf.
11. This technology is not without controversy, especially when it has been employed in public fora. See, Mainstream Loudon v. Board of Trustees of the Loudon County Library, 24 F. Supp.2d 552 (E.D. Va. 1998) (rejecting public library's imposition of filtering software).
12. There are some 30 "server-side" ISPs's listed on one prominent directory. See, http://dir.yahoo.com/Business_and_Economy/Business_to_Business/Communications_and_Networking/Internet_and_World_Wide_Web/Network_Service_Providers/Internet_Service_Providers__ISPs_/National__U_S__/Filtered_Access/
13. For example, Christian parents concerned about access to sites they consider not merely pornographic, but also blasphemous, may use any of a number of Christian ISPS services offering server-based filters. See, e.g., http://www.angelsonline.net, http://www.1lord.net. Mormon parents will likely prefer filtering more in line with their own religious beliefs, see http://www.lds.net. There is at least one service designed to meet the needs of Orthodox Jewish parents. See, http://www.thekosher.net. By contrast, others may desire filtering with no religious orientation. See, e.g., http://www.netjava.com/ChoiceNe.htm (offering non-sectarian filtering).
14. See Lessig & Lemley at ¶33 ("The fundamental economic goal of the FCC in deregulating telephony is to isolate the natural monopoly component of a network--the actual wires--from other components in which competition can occur.")
15. In the Petition to Deny we included an additional item "the inability of narrowband to compete with broadband" but this item is subsumed within item (3), paucity of alternative facilities, and item (4), essential nature of access.
16. The agreement announced between Juno and Comcast, see Goodman & Klein, "Comcast, Juno Make Deal to Sell Net Access," Washington Post at E4 (Nov. 29, 2000), does not contradict this assertion. Not only did this agreement occur only a few days before the comments in this regulatory proceeding are due, but its confidential terms give CU et al. no comfort that Juno will not alter its behavior and strategic efforts because it will be fully dependent upon Time Warner's good grace for its continued success. Without regulatory guarantees, Juno will most assuredly agree to many terms and conditions that will undermine its independence from Comcast.