The astroturfers remain hard at work trying to convince conservatives the best way to oppose Obama Administration telecommunications policies would be to adopt industry-friendly views opposing Net Neutrality.

The latest to buy in is The American Spectator, publishing a piece this morning titled, “The Great Regrouping.”  In it, The Prowler casts Net Neutrality as part of the Obama Administration’s plot to impose government controls on the Internet, representing a “grave threat … to free speech and conservatives’ ability to organize and mobilize politically.”

During the last day the House was in session before leaving for its August recess, Rep. Ed Markey’s staff introduced HR 3458, the so-called “Internet Freedom Preservation Act,” which would essentially enable government control of the Internet, treating the networks as a government-managed utility. (For more information about “net neutrality,” read this interview that one of the key “net neutrality” supporters gave to a Canadian socialist publication.) The Markey legislation is considered the last piece of what some conservatives consider to be Democrat and progressive attempts to control the Internet and limit citizens’ ability to use the networks to organize and oppose their agenda.

The bill was introduced the same week it was revealed that the Obama Commerce Department was demanding from the phone and cable companies highly detailed data about private citizens’ Internet and broadband connections as part of plans of “map” broadband networks across the country.

Stop the Cap! readers will recognize the source of the link The Prowler promotes — it’s from the very same Heartland Institute astroturfer we chased last week, who was arguing Net Neutrality was a tool to achieve “socialist utopia.”  I pulled a muscle just reading that overreach.

My direct response can be found below the fold.  Suffice to say, this is an example of classic astroturfing at work:

1. A company’s government affairs department recognizes a potential threat to their business model through government oversight or regulation, or sees a financial benefit from industry-favorable legislation or deregulation.  It considers a range of options, including direct lobbying, consumer outreach, and hiring experienced “inside the beltway” expertise.
2. The company approves a plan of action and frequently hires a Washington-based public relations firm.  That firm usually either has direct contact or close associations with astroturf organizations.  As part of the PR firm’s fee, they assure the company its message will be delivered in ways that help steer any public policy debate towards their corner, using astroturfers to reach both consumers and media suspicious of a direct industry appeal, but will listen to an “independent” group.
3. Suddenly, supposedly independent “public interest” groups start beating the drums.  Some speak directly to consumers raising doubts and fears about regulatory matters, others attempt to suggest the public needs to get behind industry-friendly positions for their own benefit.  Press releases and interview opportunities are made available to the media.  Astroturfers with a known political angle wrap industry positions in ideological shells, using them to illustrate a broader ideological point.
4. Most importantly, carefully avoid exposing the direct industry connection.  Industry executives don’t want to admit they are paying for these campaigns.  PR firms help shield the source of the industry money that flows into astroturf groups, and astroturfers work hard to avoid disclosing where the money is coming from.  Even elected officials who take an industry friendly view do not want to directly reference the companies writing big campaign contribution checks.  They’ll cite those supposedly independent “consulting” and “research” and “public interest” groups when reading the talking points.

Unfortunately for them, this convenient public interest shell game has been exposed.

In today’s case:

Industry opposed to Net Neutrality -> Astroturfer Groups -> Outreach to fuel opposition to Net Neutrality for “consumer” or “ideological” reasons.

… Continue Reading

Tim Karr from Free Press dropped me a note alerting me that the Heartland Institute had responded to the comments from both Karl Bode at Broadband Reports and myself in regards to their transparent anti-consumer Net Neutrality is Bad position the telecommunications industry and their fellow astroturfing friends have been spouting as of late.

Free Press occasionally reprints some of our content on the Save the Internet! blog, which I always appreciate.  But James Lakely wanted to take issue with several points, so the cross-blog debate begins.  Free Press has already responded, but now it’s my turn.  The quoted sections come from Lakely’s piece:

The general theme of the responses is: Government regulation always good, wise and beneficial; the market responding to consumers’ needs always nefarious, short-sighted and harmful. It goes without saying that we here at The Heartland Institute disagree. And here are my rebuttals to the rebuttals.

My rebuttal to the rebuttals to the rebuttals begins with calling out this sweeping generalization which actually doesn’t represent my view at all.  In fact, it’s wildly against what I believe personally.

Government regulation is not always good.  In fact, I’d like to see as little government regulation as possible.  I’d prefer robust, healthy competition on a level playing field, because as a consumer (and this site is 100% consumer, with absolutely zero industry/special interest money) I and my friends stand to benefit from that.  But unlike my “free market is always right” friends who cannot say they are 100% free of industry/special interest money, I also recognize that in the absence of a healthy, free market, the abuses are sure to follow without oversight.  And they have.

Let’s be honest.  The broadband industry in the United States is a duopoly for most Americans.  One telephone company and one cable company.  Wi-Fi and wireless broadband service remains either unavailable, uncompetitive from a pricing standpoint, or heavily limited by usage caps.

Since the late 1990s, the choice for broadband has been simple – DSL from the phone company or a cable modem from the cable company.  Pricing competition for most comes only for new customers in the form of promotional sign-up offers that quickly expire.

The marketplace has been stable for a decade with the business model of DSL competing mildly on price, a recognition of its often slower speed service, and cable bashing the phone company over the head for not offering “blazing fast speeds” and charges slightly more to deliver them.

Customers have made choices accordingly.  When a customer doesn’t care about a speed race, gets a competitive bundle offer from the phone company throwing in something like a free netbook, and still has phone service from their local phone company, DSL can make sense for them.  For those who want the fastest speeds, already dumped the phone company for a cable “digital phone” product, and got an attractively priced bundle offer from the local cable company, they’re likely using a cable modem.  For a lot of Americans in rural areas it’s “take whatever you can get.”

That marketplace worked well for a decade for more populated areas with the loudest clamoring for any change coming from underserved rural areas just looking for any broadband service.

Then things began to change.  In November 2005, SBC-AT&T decided it wanted to change the model.  Instead of providing connectivity for customers, they decided there was more money to be made by doing away with the founding model of the Internet — providers treating all traffic equally — and pondered forcing content providers to pay for transporting that traffic across their “pipes.”  Companies with no business relationship with AT&T were told they could no longer use “AT&T’s pipes for free.”  Now, under AT&T’s new model, if they wanted assurances of fast speed to their customers, those independent providers would have to pony up.

That sounded like a grand idea to Wall Street who trumpeted the potential earnings enhancements a new revenue stream would provide, and several other service providers with dollar signs in their eyes yelled “me too, me too!”

Predictably, some of the loudest outrage about this came from consumers — the ISP’s own customers.  They had the apparently-mistaken notion that they were paying for broadband service to build and maintain a network to serve their needs for fast, reliable, broadband service for any site they visited.  Apparently not.  Consumers were often unmoved by a lobbying effort that suggested other big corporations were raking in profits on the backs of service providers “forced” to deliver their traffic.  Good old common sense speaks volumes.  Consumers don’t want their Internet service throttled, or see the content they want to access fiddled with just to fatten industry profits.  The industry didn’t listen to consumers and are back yet again fighting Net Neutrality legislation.

The reason for the fight against Net Neutrality is simple: companies answer first and foremost to their shareholders, the supporting culture of Wall Street analysts and the media that trumpets their views.  Short term results matter more than long term strategies.  Monetizing broadband traffic, a growth industry to be sure, was a golden opportunity, even if the companies originating the traffic already pay hosting companies to deliver it.

From there, the story is always the same.  In a healthy, competitive market, abusive practices are checked when customers flee a provider that stops listening to them.  In a duopoly or limited competitive market, with reduced risk of customer defection, and in the absence of any other force to check unrestrained behavior, customer opinion becomes a low second in importance.  It is the government that provides the necessary oversight and protection mechanism from market abuse running wild.  Oversight does not limit competition.  It can actually encourage it.

The players have assembled:

• Consumers like myself who are fed up with the abusive practices some bad actors in the broadband industry are engaged in and have no reason to obfuscate, lie, or hide the facts;
• Providers like cable and telephone companies that actively lobby to keep regulation and oversight at bay in hopes of continuing their free-wheeling ways, even if it harms consumers;
• Lobbyists and astroturfing organizations that receive a substantial amount of funding from those providers to bolster industry opinions on issues, create fictional, biased studies to prove industry theories, and whose very existence relies on the generosity of the corporations that pay their expenses;
• Employees of astroturf organizations whose paycheck comes from “sharing” the same positions on issues as their benefactors, and whose credibility would fall seriously into question should the direct financial link between providers and their paid mouthpieces be exposed to the public.

The most absurd part of this play is that I, as a consumer, am paying for all of it, and am the only one in the group not getting anything from it.  Providers are paid. Lobbyists are paid. Astroturfing groups are paid.  Mr. Lakely is paid.  I am not paid.  In the end, that makes me the guy that can walk down any street day or night and never fear that someone driving by will roll their window down and ask “how much?”

Pretend? C’mon. By even the Federal Communications Commission’s own research, the vast majority of consumers in this country have several choices of broadband providers. I have AT&T’s DSL service, a technology that is fine for me (at the moment), but is largely considered pedestrian. Cable is better. And fiber is better still. If I’m living in a fictional world, I’d love to ask the author of my fate for a few revisions — none of which has anything to do with how fast my connection is.

Most Americans have the following choices for broadband service:

1. Cable company
2. Telephone company (DSL or fiber in limited areas)
3. Clearwire WiMax (significant ownership interest by cable and mobile/cellular industry)
4. Mobile broadband (owned by cellular industry)

Cable and telephone companies are the two wired providers capable of providing broadband at the fastest speeds.  Clearwire WiMax is being leveraged by the cable industry to offer wireless broadband to their existing customers.  What are the chances Clearwire is going to bash their cable investors while competing for customers?  Mobile broadband remains useful only for web browsing and e-mail because of onerous usage caps, speed issues, and pricing (which virtually every provider sets at the same level: $50/5GB per month).  I didn’t even bother with satellite, because current providers offer service only slightly better than dial-up when used in real world conditions.

Your choice in broadband technology has everything to do with speed.  In “broadband backwaters” where competition is exceptionally light and increasingly in areas where a fiber or advanced DSL product is not forthcoming, there is simply no competitive pressure to increase speeds no matter how loudly customers demand them.

The horror! ISPs earn “healthy profits” by providing a desirable service. It is here that Free Press and the rest of the net neutrality crowd reveal an ingrained anti-capitalist sentiment. We’re to believe that an ISP, earning healthy profits (which please both the company and its shareholders) are upset that demand for their services increases. In response, they do not see a great opportunity to expand their business and attract even more customers, but to “actively reduce investment.”

No. Instead the logical response is to be “neglectful,” and let rival ISPs in an ultra-competitive market swoop in and steal away their disaffected customers. That makes no sense to anyone who has any knowledge of how free market capitalism works. Verizon announced in 2006 that it planned to invest $18 billion in building out its fiber ViOS product by 2010. Why? Because it wants to (gasp!) pursue profits by serving more and more customers. I could care less about Verizon’s business plan — other than to note that without any government funding or “plan,” it seems to be moving quickly to bring more broadband options to more people.

The only thing Lakely avoids in this dramatic overreach is calling me a “socialist.”

Two important points here.  Lakely should take his free market crash course to companies like Time Warner Cable who are doing exactly what he proclaims makes no sense:  Broadband customers up.  Demand for bandwidth up.  Investment to upgrade networks to handle increased demand… down!

Lakely’s mistake is to assume that free market capitalism is always benevolent towards consumer interests, presuming they are first on the minds of providers when making any strategic changes in their business plans.  But, for those who have lived under a throttled and capped broadband regime, like in Canada, or those in four American cities that were to be subjected to an unwarranted, unwanted pricing “experiment” on the part of Time Warner Cable to engage in all of the classic Internet Overcharging schemes – usage caps, consumption billing, overlimit penalties and fees, what the consumer wanted was completely irrelevant to the provider.

Time Warner Cable answers to investors, who howl over increased capital and upgrade costs in a normal economy.  In this one, spending on virtually anything is scrutinized.  Indeed, Wall Street even shudders at the thought of financing a competitor’s efforts to overbuild into another provider’s service area because it might launch a price war — a disaster for the Wall Street guy even if it’s a boon for consumers.

Lakely brings up Verizon, but leaves out the hostile reception many on Wall Street continue to have about the construction of that fiber optic network they call overspending:

FiOS has been very popular with consumers because it offers faster Internet service, more high-definition video channels and more bells and whistles than most cable systems. But Mr. Moffett’s argument is that what is good for customers is not good for investors.

“If I were an auto dealer and I wanted to give people a Maserati for the price of a Volkswagen, I’d have some seriously happy customers,” said Craig Moffett, an analyst with Sanford C. Bernstein. “My problem would be whether I could earn a decent return doing it.”

Verizon thinks so, but has to spend an inordinate amount of time trying to convince short-term-thinking investors and skeptical darlings of the Wall Street media like Moffett that serving your customers with excellent service keeps them as loyal customers generating reliable returns.

Other companies, like Time Warner Cable, are much less interested in “seriously happy customers” when it launched its “experiment.”  Of course, it limited its exposure by choosing markets where customers lacked a safety valve alternative providing equal levels of service.  In Rochester, Frontier Communications retains a 5GB usage limit in their Acceptable Use Policy (currently not enforced) for broadband service and relies on traditional DSL service.  In other nearby cities from Buffalo to Syracuse, and further downstate, Verizon FiOS is merrily wiring fiber optic service that does not have hostile customer policies, much faster service, and subscribers can freely switch.

When “experimenting,” it’s probably safer to choose a market that doesn’t have a powerful company like Verizon just waiting to pounce.

Where lower speed DSL prevails and the upgrade frenzy is nowhere to be found, it’s been much easier to simply maintain the same service year after year.  No major upgrades.  No market-changing shakeups.  Just keep cashing the checks.

In some communities in the United States, such as Wilson in North Carolina, the duopoly simply refused to upgrade service no matter how often people begged and pleaded.  The city finally decided to run a bond issue to finance the construction of their own municipal fiber optic network, and the incumbent providers did two things — try and stop it at all costs, and when that failed, finally made plans to upgrade their own networks to compete.

Lakely and I do agree: competition is wonderful.  But I always add “when it exists.”

What happens when that competition doesn’t appear is an issue Lakely prefers to tap dance around, misstating my own position in hopes his readers won’t notice:

Super. Hurray! I wish the petitioners luck. But why, in a free-market economy, must the government force Verizon to “overbuild” in Rochester? Or why is it essential that taxpayer money be used to fulfill the wishes of some Rochester petitioners?

No reader here has ever seen me advocate the government “force” Verizon to overbuild my community.  In fact, I’ve always been skeptical Verizon could be attracted to compete here legislatively or with $10 bribes would-be customers mail to Verizon corporate offices to show there is demand here.  That’s because the telecommunications industry is loathe to overbuild in someone else’s territory.  Phone companies and cable companies will nominally compete, but two traditional phone companies and two cable companies going head to head is something else.  Nor have I advocated taxpayer money be given to Verizon to build a network in Rochester.  In fact, it’s the providers themselves who want the government handouts without oversight of what they do with that money.  By the way, does the Heartland Institute oppose broadband stimulus funding?

The tapdance continues when Lakely attempts to connect two different ideas to suggest they are contradictory:

There’s a lot to unpack from Dampier’s post, including the following contradictory passages:

The only thing Net Neutrality protects IS the status quo, a free and open Internet.

Followed shortly by …

… in a world without codified Net Neutrality protections — the free market at work under today’s reality — we’re seeing continued evidence of price increases and a decline in investment in networks, and some providers continue to drag their feet on upgrades.

So which is it? Is “today’s reality” worth preserving? (My view.) Or are government controls needed to protect the “status quo.” Can’t really have it both ways — unless your not really being clear about what it is you advocate.

Nice try.  A law codifying Net Neutrality protects the free flow of traffic on the Internet tomorrow from the “monetize and control everything” mentality customers are already fighting providers about on pricing and usage limits today.

A foreshadowing of broadband service in America without Net Neutrality principles protected by law can be found in Canada.  Do as Lakely suggests and it’s only a matter of time before broadband providers begin throttling speeds of undesirable online applications, favor traffic from paid content partners over those who didn’t pay for that privilege, and use traffic management to delay necessary infrastructure upgrades to meet the needs of paying customers.  Customers will discover “blazing fast speeds” only from those websites that ponied up the money to guarantee that.  In short, an online protection racket.

Provider mentality under “the free market at work under today’s reality” tells the story of what broadband customers are facing today in this country — Internet Overcharging schemes, astroturfing propaganda efforts to bolster claims that “controls” are necessary to balance traffic, and financial reports illustrating a pervasive lack of willingness by some providers to upgrade their networks.  All this makes selling those “controls” to a frustrated public waiting for a web page to display much easier.

Be it trying to fiddle with the traffic passing through a network, or overcharging for access to it, the only reason consumers are increasingly calling for government oversight and protection is because providers have engaged in practices which demand such a response.

And those who want to impose their vision of how the Internet should work under the guise of “net neutrality” want to change it. I don’t think they make a very good argument for messing with a market that has brought the world the online wonders we take for granted.

Lakely has it entirely backwards.  The Internet’s vision has, since inception, been one where legal content traveled freely without foe or favor.  It was the providers that sought to change the “vision” (or as they would see it, their “business model”).  Lakely and I agree that the Internet has brought online wonders we take for granted.  But I know that is threatened when providers decide to control and monetize it.  That’s about as acceptable as charging your aunt in San Francisco for a long distance call you made at your own expense, all because it traveled across the phone company’s wires.

Although Lakely did some pretty serious taffy pulling to stretch my arguments to fit his premise, his most recent hit piece on Free Press was a site to behold:

McChesney is an avowed socialist/Marxist. Through Free Press, he is promoting an agenda that would replace the free market system that has led to once-unimaginable advances in information technology — including freedom of communication — with a state-controlled system directed by government on behalf of “the people.” In short: McChesney and Free Press see the Internet as the last, best realm to finally usher in the long-dreamed socialist utopia.

Establish net neutrality principles by force of law, and the socialist/Marxist revolution (at least online) is underway.

Part two will follow shortly.  Stay tuned.

Oooh, can’t wait for that.  (Make sure you throw in some Hugo Chavez references.  No self respecting “socialism under every rock” rant is worth reading without some Chavez sprinkles on top.) I just hope Lakely gets it written before he and his industry friends get their way.  Otherwise, he’ll discover providers at his door demanding some ‘scratch’ to protect the Heartland Institute’s position as a “preferred content partner.”

What I am sure really upsets Lakely and his astroturf friends is that the Internet has allowed individuals to determine the merit and value of content based on its quality and integrity, not based on how much money is blasted into the amplification process.  The proof of this in action exists right here, right now.  Stop the Cap!, funded by me out of my own pocket and run in my spare time, with the help of other consumers volunteering to contribute their own content here, can stand toe to toe with an industry-funded Heartland Institute trying to create a right-left divide on an issue that is neither.

That leaves groups like theirs forced to respond to ordinary consumers like myself capable of blowing astroturf fluff out of the water with the most basic research and application of common sense.  To think, a consumer website without the six or possibly even seven figure annual budget astroturf groups blow through can get as much attention and exposure as even the most well-financed industry propaganda festivals, all because of a free and open Internet.

That burns up the special interests to no end.  That’s not a people-powered “socialist utopia.”  That’s consumers fighting for their rights, organizing consumer-powered activism, and taking on, and hopefully eventually taking out, the special interest lobbyists that work against our best interests, and are well paid for doing so.  No wonder Net Neutrality represents a threat so serious, it can provoke rhetoric invoking the Red Scare.

Earlier this year, some Stop the Cap! readers in North Carolina who attended the hearings on a pro-telecom (actually it was written by them) piece of legislation designed to stall statewide municipal broadband competition encountered strange protests from conservative groups arriving on buses.  They were there to stop “Obama’s government takeover of the Internet.”  The communities of Wilson and Salisbury, which have municipal broadband projects in progress, also encountered resistance from outside groups.  Salisbury residents even began receiving biased phone polls that turned out to be sponsored by a conservative political action group that was also involved in the conservative “tea party” movement.

These groups loaded mostly retirees, recruited from talk radio and websites, onto buses and sent them to the state capital with generic anti-government talking points and signs.

FreedomWorks, which is currently in the news for organizing protests at town hall meetings over what they call “Obamacare” health care reform, has also been busy adopting the industry-friendly position of opposing government involvement in broadband.  They oppose anything resembling regulation, any government involvement in the pricing or availability of broadband service, and recite industry talking points about the free market assuring Americans of the world’s best Internet service.  Unfortunately, these talking points come at the same time the United States slips further and further behind in international broadband rankings, and true competition in most markets is limited at best.

FreedomWorks’ position on broadband policy will sound eerily familiar:

The broadband market is dynamic and fast paced; new FCC regulations could hamper this growth and reduce the vital capital investments required to expand the nation’s broadband networks.  Rather than attempting to apply old monopoly based models to today’s competitive markets, the FCC should focus on removing barriers to competition, implementing competitive solutions to policy questions, and allowing the private sector to more effectively allocate scarce broadband resouurces [sic] to the most highly valued uses.  In addition, efforts to establish “net neutrality” should be avoided, because they threaten the ability to manage dynamic networks effectively.

That is paraphrased directly from the talking points the industry has presented about broadband policy for years.

Now many of these groups are attempting to recruit those who dislike the current administration to provide free shilling services for the broadband industry’s agenda, supporting positions that are directly opposite  consumers’ best interests.

FreedomWorks is hardly new at this.  Back in 2006, Fiona Morgan, writing for the Independent Weekly (North Carolina), covered another bandwagon of protesters who showed up at an arcane meeting of the North Carolina House Revenue Laws Study Committee, all wearing FreedomWorks t-shirts:

The details of telecom legislation like this are wonky, complicated and jargon-filled. But that hasn’t dampened the passions of citizens fed up with the de facto monopoly of TimeWarner, with its astronomical rates for “packages” of unwatched channels. Dozens of people from across the state showed up to a meeting in April of the House Revenue Laws Study Committee wearing T-shirts for FreedomWorks, a group clamoring for the proposed state franchises. FreedomWorks, which is connected with the anti-tax conservative group Citizens for a Sound Economy, is funded by telephone companies pushing for the bill–what you might call an Astroturf (phony grassroots) organization, but the passion of its members is very real.

With astroturfers like FreedomWorks, deregulatory principles that might garner legitimate debate and consideration are tainted when it turns out that advocacy is bought and paid for by directly connected business interests who have a dog in the fight.  That’s why FreedomWorks hardly represents the “grass roots.”  It’s an astroturfer that has a corporate-sponsored agenda, but hides behind good American conservative citizens who find themselves proverbially loaded onto buses and taken for a ride.

Those consumers had a right to be fed up with paying for unwatched cable channels, but their appearance at that meeting was the lowest form of manipulation, because the legislation under review had nothing to do with the issue those people were concerned with.

Instead, their presence was used by the telecommunications industry as illustrative of consumer discontent, and de facto support for their real agenda, which was removing oversight of the video service franchising process from local government and turning it over to an industry-friendly state body.  That would have created statewide cable and “telco TV” franchises that take away local control and oversight.

Chad Johnston of the People’s Channel, Chapel Hill’s public access station said all the passion around TV service is being used to mislead the bill’s supporters. “It’s funny, because many of the comments that the FreedomWorks folks brought up in this meeting were things that aren’t even included in this bill, like being able to chose your channel lineup–that’s a whole different issue,” Johnston says. “This notion that it’s going to bring us gobs of choices and lower prices it totally false, based on everything we know about deregulation and the telecom industry.”

Now, another astroturf group that shares “researchers” with FreedomWorks, the so-called Heartland Institute, has an Op-Ed Tuesday in the conservative Philadelphia daily The Bulletin.  Of course, the Heartland Institute also has close ties not only to big telephone companies, but is a dependable friend of big cable as well.  Those close ties are, predictably, omitted from the article.

A typical horror story involves an ISP, at peak usage hours, gently slowing down a tiny number of bandwidth hogs so the vast majority of its customers can surf the Web and send emails at the speed they expect. Insisting such a policy is unfair is not only counterintuitive, it’s counterproductive to demand the government stop it.

The Internet Freedom Preservation Act of 2009 is poorly named because it would do nothing to preserve freedom. HR 3458 would strip ISPs of the right to manage traffic on the networks they have spent billions to build, market and manage. In their place would emerge a cadre of detached government bureaucrats—hardly an improvement on the status quo.

The takeaway word from the first section is “story,” as in fiction, because that is what that talking point represents.  Once again, the Us vs. Them strategy reveals itself, with stories of some guy next door sucking the neighborhood Internet lines dry downloading.  The true horror is some providers continue to earn healthy profits on their broadband revenue, complain about the growth of traffic on their networks, and actively reduce investment to expand that network.  That, of course, helps build the case for “controls” when consumers notice the slowdowns created by those neglectful policies.

The Heartland Institute advocates the provider be given the enviable role of the fox guarding the hen house.  Providers manage profits quite effectively, and just as some try to tweak pricing models to extract extra revenue from consumers, you can count on those same providers creating new revenue streams from “premium” prioritization of Internet traffic, for a price, while leaving everyone else in the slow lane.  Their own products and services carried on those lines will enjoy beneficial priority for free while direct competitors find they can’t obtain that level of service at any price.

The so-called “cadre of government bureaucrats” is anything but.  The truth is, there will be one set of clearly defined standards that will protect the level playing field the Internet deserves.  The piece makes it sound like there will be a government court to render judgment on every policy and practice, which is false.  The only thing Net Neutrality protects IS the status quo, a free and open Internet.

Today, if a broadband customer does not approve of the way an ISP manages Web traffic, he can readily switch to a competitor more to his liking. ISPs have an enormous financial incentive to retain existing customers and attract new ones, so the free market encourages best practices.

Tell that to Canadians who are enduring not only Internet Overcharging schemes like usage caps and consumption billing, but also throttled speeds that artificially reduce (by up to 99%) the advertised speed for certain applications, all for “good network management.”  Don’t like the throttle from Bell on your DSL line?  Switch to Rogers Cable and get more of exactly the same thing.  A free market cannot truly exist from the monopoly most rural residents face for broadband, and the duopoly most of the rest of us endure.  The current market doesn’t encourage “best practices;” it encourages informal collusion by providers who learn not to rock the boat, especially on competitive pricing.

ISPs have an enormous financial incentive to find ways to increase profits, which is precisely what Internet Overcharging is all about.

But under HR 3458, if a broadband customer is not satisfied, what near-instant recourse will he have? None after government forces every ISP to operate “equally” by replacing market-based incentives with bureaucratic mandates. This would ensure an inevitable slide to “equally” shoddy service.

One would assume a provider would want to make their service as robust and up to date as possible, yet in a world without codified Net Neutrality protections — the free market at work under today’s reality — we’re seeing continued evidence of price increases and a decline in investment in networks, and some providers continue to drag their feet on upgrades.  The only market based incentive at work here is the demand from Wall Street for greater revenue and return from providers, who face challenging times in their video and telephone businesses, but can always leverage the success of the broadband division.  Broadband continues to maintain customer loyalty, and the potential for greater return from price increases and forcing costs down by limiting service.

Net neutrality advocates want the government, not “the public,” to control the fate of the Internet. The ordered chaos of market forces may scare those who don’t understand it. But the market is efficient, quickly responsive to the needs and wants of consumers, and—in the proper sense of the word—free.

Actually, Net Neutrality advocates want the government to protect the “chaos” of the online world as it exists today.  Those who want to “organize” or “order” the online world aren’t Net Neutrality advocates, they are providers who don’t want people using “my pipes for free,” or cable interests who want to “organize” online video around a model they own and control, or who simply want to throw a Money Party by inventing new ways to charge people more money for exactly the same service they get today.

The claim that the market is “quickly responsive” to the needs and wants of consumers is demonstrably false for any consumer living in Wilson or Salisbury, North Carolina, where a duopoly of providers refused to provide the level of broadband service consumers and small business clamored for, so local municipalities finally threw up their hands and decided to build networks themselves.  Residents of Rochester, New York are threatened with a broadband backwater because the incumbent telephone company Frontier Communications has shown little interest in providing a fiber optic based 21st century broadband platform similar to one being constructed in virtually every other city of size in New York.  Customers even signed petitions begging Verizon to overbuild the Flower City to provide the service Frontier will not.

In April, Time Warner Cable “responded to the needs and wants of consumers” by attempting to ram an Internet Overcharging experiment down the throats of customers in four American cities, where not one consumer either needed or wanted such massive price increases.  Over a period of weeks, this provider did everything but respond to customer needs, until a wholesale consumer revolt erupted and Congress intervened.

The free market is working well for groups like FreedomWorks and The Heartland Institute, who enjoy healthy support from the telecommunications industry.  In return, finding where the telecommunications industry positions end and FreedomWorks’ positions begin is like staring into a mirror and trying to ascertain the differences between the reflection and yourself.

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.

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