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Astroturf Thursday: Group Releases Report Saying Consumers Would Pay More For Broadband

Phillip Dampier July 16, 2009 Astroturf, Editorial & Site News, Public Policy & Gov't 1 Comment
The Internet Innovation Alliance claims to advocate for consumer interests, but has telecom backing.

The Internet Innovation Alliance claims to advocate for consumer interests, but has telecom backing.

The Internet Innovation Alliance released a report Tuesday telling you what you already know (thanks to Stop the Cap! reader ‘Bones’ for sending the link):

(1) Consumers receive more than $30 billion of net benefits from the use of fixed line broadband at home, with broadband increasingly being perceived as a necessity;
(2) With even higher speed, broadband would provide consumers even greater benefits – at minimum an additional $6 billion per year;
(3) Significant broadband adoption gaps exist between various groups of households;
(4) Among those who are connected to broadband at home, there is no significant valuation gap based on race, although there are valuation gaps along other lines;
(5) The total economic benefits of broadband are significantly larger than our estimates of the consumer benefits from home broadband.

Astroturf Thursday

Astroturf Thursday

In simpler terms, the IIA did a study that discovered consumers value broadband in dollar amounts higher than they currently pay for it.  To the general media, it will be interpreted as evidence that broadband is wonderful in the United States and may be underpriced.  That’s music to the ears of providers, who also study the gap between what a consumer would be willing to pay for a product versus what they actually pay.  That gap represents the wiggle room for providers to raise prices and safely predict consumers will not be outraged about it.

The IIA also trumpets the value of broadband in their study, entitled The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households, for the benefit of their benefactors, who stand to gain substantially from broadband stimulus funding.  The IIA, one of the many astroturf organizations out there supported by the telecommunications industry, advocates for a “partnership” between private providers and government to deploy broadband.  In other words, they want the government to hand over tax dollars to private providers to construct broadband networks while preserving the completely deregulated “free market” broadband marketplace.  The “free market” concept now seems to include public taxpayer dollars subsidizing private business, all while providers demand no oversight or regulation to “hamper their innovation.”

Public money funneled to private business with no regulation or oversight = broadband goodness.

Still, it’s not all bad.  Even the IIA understands the obvious — providing faster broadband speeds not only enhances the perceived value of the product, consumers are also willing to happily pay higher prices to obtain it.  They didn’t study Internet Overcharging schemes like usage caps, consumption-based pricing, and other similar pricing schemes, presumably because the results would have shown dramatically dampened consumer enthusiasm.

What Is The Internet Innovation Alliance?

Who They Say They Are: “[A] broad-based coalition …committed to more widespread usage and availability of broadband through wise policy decisions.”
Who They Really Represent: Members include telecom business such as AT&T, and telecom trade associations such as the Information Technology Association of America.
What They Say They Do: “[A]ssist public policy makers to better understand new technologies and to promulgate smart policies that facilitate their growth.”
What They Really Want: To create a tiered Internet and allow broadband providers to charge web sites like Google and Yahoo! for the ability to reach their subscribers.
On the Web: http://www.internetinnovation.org/

The Internet Innovation Alliance runs a slick website dedicated to promoting broadband Internet policies that “will improve Americans’ lives.” While the Alliance claims to include “consumer advocates” in its coalition, no true consumer groups can be found anywhere in its membership list. But AT&T, one of the largest telephone companies in the country, is on the list. As recently as late 2004, the Internet Innovation Alliance (IIA) did seem to be on consumers’ side on the issue of network neutrality – the principle that your Internet service provider shouldn’t be able to block or interfere with your ability to access any content or use any services on the web.

Take a look at IIA’s scathing statement after SBC Communications revealed plans to charge fees to web-based telephone providers (also called Voice-over-Internet-Protocol, or VoIP): “SBC’s charging of higher fees to VoIP providers …is discriminatory in nature and is a dangerous first step toward eradicating the vast array of benefits services like VoIP will provide to consumers. VoIP promises great consumer benefits provided it remains unburdened by regulations and access fees…. SBC apparently missed the memo or chose to ignore it in the face of larger profits.”

So where was the outrage a year later when SBC head Ed Whitacre told Business Week magazine that broadband Internet providers should be allowed to charge fees not only to VoIP companies, but to any web-based company or service? “Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. …We [the telephone companies] and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!,” argued Whitacre.

This time, the Internet Innovation Alliance was nowhere to be found. Why? Maybe because SBC Communications was in the final stages of a merger with AT&T—one of IIA’s “member” groups. IIA does not disclose how much its “members” contribute to the organization, but in the case of AT&T, it appears to be enough to have bought IIA’s silence. — Common Cause

Currently there is 1 comment on this Article:

  1. jr says:

    The astroturfers live in a world where nobody’s browser is ever hijacked with rogue “antispyware” programs that get installed automatically causing the user to have to use a ton of bandwidth trying to find a solution to get it off.

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