I thought Payola Was Supposed to Be Illegal

Word on the street is that the FCC is about to undo the concept of net-neutrality, for the benefit of large telecom monopolies and to the detriment of everyone who uses the internet, which would be, oh, ALL OF US.

In a ruling earlier this week, the Federal Communications Commission abandoned its wavering commitment to Net neutrality and handed control of the Internet over to Verizon, AT&T and Comcast. This spells trouble all around for content companies, for the Internet and, ultimately, for American competitiveness. It is a mistake that will cost us for decades to come.

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Most consumers face a monopoly or near-monopoly when it comes to choosing a connection company, as they have only one or two connection companies serving their area. As a result of the lack of meaningful competition, Americans pay more for their Internet and get less connection speed than customers in many other developed companies. (A few rare local markets – like San Francisco, where I live – have genuine competition. I can get my Internet from a company called Astound that offers about four times the speed that AT&T provides for the same price.)

But the connection companies are not content with getting consumers to fork over higher fees for slower service. No, the connection companies want to force consumers to buy their bundles of entertainment content (television, mostly) from them as well. And that means the connection companies want to shut off or raise the price of competing content services such as Netflix, Vudu, Hulu and Amazon, plus the online offerings of HBO, Comedy Central and dozens of other cable channels. And they want to raise the cost of TED Talks, YouTube and any other online video that might tempt customers to “cut the cord.”

Under the new FCC ruling, the connection companies are free to mug the content providers. In effect, Comcast and the other connection companies can say to Netflix and others, “You wanna get your video to consumers without it skipping or stuttering? Well now you gotta pay us another few hundred million bucks a year.” So content providers need to raise the prices, and that gives connection companies an advantage in promoting their own proprietary bundles of cable content. 

In addition to this ruling, connection companies are rigging the game on a whole other level not even dealt with by the net-neutrality rules:

President Obama pledged to support net neutrality on the campaign trail in 2007. But many Obama supporters have felt let down by Obama's choice to lead the Federal Communications Commission, Tom Wheeler.

Last week Wheeler announced a new set of network neutrality regulations. The details haven't been released yet, but press accounts indicate that Wheeler's proposal will allow internet service providers to offer a "fast lane" for online services, a concept that's anathema to network neutrality stalwarts.

Yet Wheeler's decision to water down network neutrality regulations isn't even the biggest threat to the open internet right now. The internet itself is changing in ways that threatens to make the conventional net neutrality debate almost irrelevant. In recent weeks, Netflix has agreed to pay first Comcast and then Verizon for private connections directly to their respective networks. Netflix signed these deals under protest, charging that it had been coerced to pay "tolls" just to deliver content to their own customers.

That might sound like a net neutrality violation, but the practice doesn't actually run afoul of the network neutrality rules advocates have been pushing for the last decade. Those rules ban "fast lanes" for content that arrives over the internet backbone, the shared information super highway that carries the bulk of the internet traffic today. But what Netflix paid Comcast and Verizon for amounts to a new, private highway just for Netflix traffic. Conventional network neutrality rules don't regulate this kind of deal. 

These private connections are going to be increasingly important to the American internet in the coming years. That might force net neutrality proponents to go back to the drawing board. Otherwise they might win the battle for net neutrality and still lose the war for a level playing field on the internet. 

Why on Earth, you may be asking, would the FCC allow giant telecom companies to break the internet just to make (another) buck?

The CTIA Wireless Association today announced that Meredith Attwell Baker—a former FCC Commissioner and former Comcast employee—will become its president and CEO on June 2, replacing Steve Largent, a former member of Congress (and former NFL player).

Largent himself became the cellular lobby's leader when he replaced Tom Wheeler—who is now the chairman of the FCC. Wheeler is also the former president and CEO of the NCTA (National Cable & Telecommunications Association), which… wait for it… is now led by former FCC Chairman Michael Powell.

To sum up, the top cable and wireless lobby groups in the US are led by a former FCC chairman and former FCC commissioner, while the FCC itself is led by a man who formerly led both the cable and wireless lobby groups. 

I have to admit, this whole issue was something that I paid almost no attention to until recently. Knowing that President Obama had made a number of statements supporting net-neutrality, and counting on Senator Franken's very visible fight to keep the internet a level playing field, I thought this was really nothing to worry about.

Sounds like I was completely wrong. NEVER, EVER underestimate the power of corporate money and influence on absolutely everything.