Time Warner Could Strangle the Internet

Date: 3 Jan 2001 | posted in: information, MuniNetworks | 0 Facebooktwitterredditmail

As Time Warner begins the process of renegotiating its franchise agreement with the city of Portland, much of the coverage in the Press Herald has focused on cable television. And for good reason.

City residents have no cable choice but Time Warner, and since 1996 the cost of its service has risen three times faster than inflation.

But a far more serious long-term issue for Portland residents and Maine’s economy is Time Warner’s stranglehold on broadband cable Internet service.

The Internet as we know it developed within a framework of “open access.” That is, people could choose their own Internet service provider (ISP), view any Web site and transmit any information they desired.

Open access did not happen by chance but rather by regulation. Many years ago, the Federal Communications Commission required that, for a reasonable fee, local phone companies allow their wires to be used by rival ISPs to provide Internet service.

The result was robust competition. More than 7,000 ISPs sprang up nationwide. Competitive, low-cost service ushered in rapid growth. Open access ensured that the Internet developed as a diverse, free-flowing and democratic medium.

Today, most people still access the Internet through a dial-up modem. But dial-up is rapidly being supplanted by broadband. Broadband is many times faster and allows users to view high-resolution streaming video, download graphics-rich Web sites and utilize new real-time interactive applications and services.

Broadband service can be provided through a cable network, or through a digital subscriber line (DSL) that runs on the local phone network, or by satellite.

Rather than extend open access rules to broadband, the Bush administration issued regulations last March that allow cable companies to lock out rival ISPs. A few months later, the administration proposed lifting the open access rules for DSL lines as well.

This means that just two companies – Time Warner and Verizon, which offers DSL – could control Portland’s broadband service for the foreseeable future.

The administration says its policies are necessary to ensure that big cable and telephone companies have an incentive to roll out broadband service nationwide. But about 80 percent of all households are already linked to one or more types of broadband infrastructure. There’s no indication that heightened competition will slow deployment.

The administration also argues that people will be able to choose among different kinds of broadband (DSL, cable or satellite) and this will provide sufficient competition. But satellite service has technological limitations that render it less than ideal. That leaves at best a duopoly.

Lack of competition means higher prices. Even worse, the lack of nondiscriminatory open access rules will allow broadband providers like Time Warner to inhibit or block access to certain Web sites.

This is no far-fetched conspiracy theory. Cisco Systems, a leading network equipment manufacturer, issued a memo to providers recently explaining that Cisco tools can “restrict the incoming . . . broadcasts (from competitors) as well as subscriber’s outgoing access to the . . . 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.”

Time Warner could thus transmit its own content and the content of affiliated companies at high speeds while slowing or blocking access to rival sites.

The economic implications are severe. Imagine if a private corporation controlled the highways and allowed affiliated companies to truck their goods in the fast lane while rivals were restricted to a snail’s pace. We would never stand for it – nor should we allow the Internet, another key piece of economic infrastructure, to be similarly hijacked.

The First Amendment implications are even more chilling. While phone companies are prohibited from interfering with a citizen’s right to call(or access through a dial-up modem) anybody he or she wishes, these same protections have not been extended to broadband.

With Time Warner in control, how long will we be able to view sites criticizing big media companies or advocating open access or lower cable rates? Unfortunately, federal laws bar Portland from requiring open access as part of Time Warner’s franchise renewal.

The City Council, however, chould pass a strong resolution calling on the federal government to revise its policies and adopt open access. A resolution could bring attention to the issue and perhaps spur our congressional delegation to action.

Download the PDF

Avatar photo
Follow Stacy Mitchell:
Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.