The Internet as we know it developed within a framework of "open access" or “common carriage.” That is, people could choose their own Internet service provider (ISP), view any web site, and transmit any information they desired. The phone company owned the phone lines but had to offer wholesale access to competitors.
Open access did not happen by chance, but rather by regulation. Many years ago, the Federal Communications Commission (FCC) required that, for a reasonable fee, local phone companies allow their wires to be used by competing ISPs. This follows the ancient principle of common carriage – which recognizes that everyone benefits from rules that make infrastructure available to all on the same terms. Common carriage is a check against monopoly power.
In the late 1990s, several cities mandated that their cable providers open their lines to competing ISPs. Recognizing they would lose the advantages of their monopoly, the cable providers appealed. Federal courts ruled that cities do not have the authority to impose open access rules on cable companies. (See Portland, Oregon, federal court ruling.)
Then, in March 2002, the FCC issued a ruling declaring Internet service through a cable modem is an "information service," not a "telecommunications service," and therefore is not subject to open access requirements. The ruling allows cable companies to lock out rival ISPs and maintain local monopolies over broadband cable Internet service. On June 27, 2005, the U.S. Supreme Court upheld the FCC’s ruling in FCC v. Brand X.
On August 5, 2005, the FCC eliminated open access rules for DSL lines as well. A 2004 FCC decision had already exempted telephone from common carrier requirements for their next-generation networks (fiber-to-the-home/-curb/-neighborhood, as well as advanced ADSL technologies).
These decisions ensure thousands of communities have little or no competition among ISPs. The costs of building a network are tremendous – which is why open access was previously mandated. A new competitor (overbuilder) not only has to raise sufficient capital to build a citywide network, it also must compete against an entrenched opponent that will temporarily lower prices and lock customers into long term contracts to prevent the new entrant from gaining the necessary market share to meet debt payments. As soon as the overbuilder goes bankrupt, the incumbent will again raise prices to make monopoly profits.
Lack of competition is not only about higher prices. An even greater concern is that, without rules requiring non-discriminatory open access, broadband providers may inhibit or block access to certain web sites, or prohibit certain web applications. For instance, Comcast deliberately slowed and blocked the connections for some programs that subscribers used. Comcast claims it slowed those connections to prevent “bandwidth hogs” from slowing the connections of others (cable networks share a connection between 250-750 homes typically). Others noted that Comcast was blocking companies that used the technology to distribute video – cutting into Comcast’s profits. Either way, Comcast was not accountable to the community when it came to making network rules.
Further, Comcast arbitrarily enforced an unknown bandwidth cap on some users – shutting down a connection after some unspecified monthly volume was used. It has since officially enacted a 250GB cap, but this example highlights the danger of a community being dependent on a network owner which can effectively lock competitors out of the market.
The FCC has show some interest in preventing the more egregious abuses of network monopoly power, but its power to intervene is limited.
Communities that own their own networks can choose open access. Though a federal rule mandating open networks – sometimes called “unbundling” – is a good idea, public networks can make and enforce the same rules if they choose.
- FCC Ruling on Sharing Telephone Lines
A link to the FCC ruling that requires equal access to telephone lines as a way to encourage competition.