In addition to our ongoing concerns about Internet Overcharging schemes like usage allowances and caps, Stop the Cap! is a strong advocate for Net Neutrality protection.  As part of yesterday’s unveiling of the Federal Communications Commission’s National Broadband Plan, FCC Chairman Julius Genachowski spent 30 minutes answering questions from CitizenTube participants about broadband policy.

Among the 18 questions asked was one from yours truly, taking on broadband industry lobbyists who make evidence-free claims that Net Neutrality will somehow kill investment in broadband expansion.

Pointedly, I pressed Chairman Genachowski about whether we had to sacrifice the Internet’s openness in order to bring broadband service to the presently unserved.  We sure don’t think so.

Based on the answer, which appears about 24 minutes into the video, he doesn’t think so either.

The false argument providers make to scare legislators is little more than hollow rhetoric, especially when you accept their claim they are not engaged in the kinds of activities today that Net Neutrality would ban tomorrow.  How exactly does prohibiting what providers claim they are not doing anyway harm investment?

Answer: it doesn’t.

What it harms are further efforts to monetize broadband from every angle in an effort to further fatten already engorged profits.

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Dampier

Yesterday, the Federal Communications Commission formally introduced its omnibus National Broadband Plan to America, Congress, and the telecommunications industry.  The FCC seeks nothing less that a transformation of broadband to better meet the needs of Americans for years to come.

The 376-page plan recognizes broadband is no longer a novelty.  It’s now becoming one of the essential utilities of life — joining power, telephone and water service as something virtually every American will eventually have in their home.  But while the Commission lays the general groundwork for future regulatory policy to help achieve that goal, it ignores the historical reality that made universal service for utilities possible.

I am a strong believer in reviewing past mistakes to avoid repeating them in the future.  That is why Stop the Cap! occasionally turns back the clock and reviews history.  Railroad robber barons, telephone company monopolies, and electric service providers all abused their positions and consumers paid through the nose for service until the government finally broke up the anti-competitive trusts that limited competition.

Just like today’s broadband players, in the early 20th century, electric companies asked for and received favorable treatment by Congress.  The industry argued such treatment was required to make investors comfortable with the enormous amount of investment required to construct power generation facilities, run wiring to homes, and obtaining easy access to American streets and backyards.  Regulations must be kept to a bare minimum, providers demanded.  Anything else, they claimed, would discourage critical private investment, would create job losses, and slow deployment of service to millions of Americans.  Sound familiar?

By the time the American public realized electric companies were abusing their monopoly positions to charge outrageously high prices, the half-measures legislators proposed to control rates and improve service were often ineffective.

Just as with electric service, any broadband plan that seeks to tinker around the edges of the problem will not solve the problem.  Providers will find loopholes, lobbyists to help water down the provisions they dislike, and lawyers to mount endless legal challenges to stall reform.

The warning signs are already apparent in the FCC plan.  The agency seeks to cooperate with some of the biggest players in the industry that are responsible for what the FCC calls “the critical problems that slow the progress of availability, adoption and utilization of broadband.”

That ultimately means working with existing providers instead of creating the right conditions to welcome new players into the market.

America's broadband duopoly - just four percent of Americans have more than two providers to choose from

The anti-competitive, de facto duopoly pricing power available to cable and telephone companies has created an enormous digital divide for rural Americans who cannot pass “Return on Investment” means tests, prices broadband service out of reach for many, and seeks even higher pricing while proposing to limit service with Internet Overcharging schemes like “usage-based billing” and “usage limits.”

Where one lives is often the most important factor when considering broadband speed and service quality.  It’s the luck of the draw.  A customer on one side of the street may have the option of Verizon FiOS, a true fiber-to-the-home service providing equal upstream and downstream speeds far higher than the national average.  Across the street, a customer may only be served by another telephone company offering 1Mbps DSL with no alternatives.

Other Americans live within viewing distance of a utility pole where cable or telephone broadband service stops, giving them the choice of paying $10,000 to extend service, or living with dial-up or satellite fraudband.

Few phone or cable companies will ever consider invading another’s turf, even if customers begged.

But it gets worse.

The service customers can obtain from a provider varies even within its service area.  Verizon FiOS and AT&T U-verse is available in some neighborhoods, but not others.  What stops or slows service expansion?  Anything from a management decision on a whim to concerns by private investors, market conditions, cost controls, or changing revenue expectations that inhibit uniform service across the community.  Local governments used to manage this problem with franchise agreements that made approval conditional on supplying service across an entire community, but companies like AT&T lobbied their way to statewide franchising reforms that can eliminate local oversight.

The cable television industry has a better track record of providing uniform broadband service to customers in their respective service areas, but at what cost?  Time Warner Cable COO Landel Hobbs recently told a group of investors pricing for its Road Runner service can be increased at the company’s whim.  Comcast has already increased prices on its broadband service. Both companies have either tested or implemented usage limits and restrictions on their customers.

What makes these things possible?  Limited competition and insufficient oversight.

The FCC’s solution to limited competition includes vastly expanding wireless frequencies available to mobile broadband providers.  But here’s the problem.  The government will auction those frequencies off to the highest bidders, which are most assuredly the dominant industry players AT&T and Verizon.  For millions of Americans, that means no extra competition at all because their phone, broadband, video, and wireless service all come from these two companies.  The only way smaller players can compete in a bidding war is through consolidating mergers, which reduce the number of competitive choices in many cities.  If the government wants competition, it should provide incentives to spur its development.

Wall Street certainly won’t help much.  They loathe heavily competitive markets now, because inevitable price wars limit their returns.  Getting initial investment to construct new networks is problematic because investors don’t want excessive competition.  Providers howl it’s unfair for government to help their competitors, but their incumbency provides them with built-in benefits unavailable to new entrants.

The FCC recognizes the importance of broadband service as America’s next utility, but is afraid to regulate them as such.  They may have good reason not to try.  Comcast is presently suing the Commission in federal court, claiming they don’t have jurisdiction over broadband policy.  Should Comcast prove its case, the National Broadband Plan could be just another thesis for improved broadband, with no backing authority to implement its recommendations and regulatory changes.

That brings us to Congress.  While the FCC may bring its best intentions to the table with the National Broadband Plan, it’s very likely lobbying will force changes to what finally gets implemented, if anything.

The telecommunications industry never has a problem finding financial resources to hire lobbyists and spread lavish campaign contributions all over Washington.

They’ve already bought and paid for an enormous astroturf group called Broadband for America with 200 member organizations, virtually every single one backed by AT&T or Verizon money or personnel, or equipment providers who stand to earn substantially from broadband improvement.  They are running TV ads telling viewers private providers should be left alone to get the job done, something they’ve had a decade to accomplish with insufficient progress in key areas.

Many in Congress, especially on the Republican side of the aisle, will agree with BfA’s “hands-off” advocacy.  Early reaction from Republicans regarding the Broadband Plan is not favorable.  Rep. Cliff Stearns (R-Florida), the ranking Republican on the House Energy and Commerce communications, technology and the Internet subcommittee, told the Washington Post he wants the agency to stay focused on bringing access to people who don’t have it.

“I am concerned, however, that the plan may contain stalking horses for investment-killing ideas, such as so-called net neutrality mandates or a return to outdated, monopoly-era regulation,” he said.

Many Democrats with large telecommunications companies headquartered in or near their districts are likely also to advocate caution.

Regardless of what the FCC recommends, Congress will ultimately control the outcome.

Here are our recommendations you should consider sharing with your elected officials:

Congress and the FCC must be willing to stand up to the telecommunications industry which is not delivering world-class broadband service.  The United States is falling behind in access, pricing, and speed.  Simply accepting the provider argument that they should be left alone in an unregulated, duopoly marketplace is not an option;

Congress must deliver to the FCC clear authority to regulate broadband service and enforce Net Neutrality.  Recent court cases argue the Commission presently lacks that authority.  Congress should take every possible step to ensure the courts this isn’t the case.

Increased oversight of the broadband industry is essential.  Why does an industry making billions in profits need to consider usage limits and usage-based billing designed to deter residential use of broadband service?  Such limits are designed to protect cable-TV revenue that could disappear if Americans dump their television channel packages in favor of watching everything online on their existing broadband account.

Congress should not stand for an unregulated duopoly controlling a service that is becoming as essential as water, energy, and the telephone.  As broadband becomes an essential utility, why is the government not stepping in when the COO of the nation’s second largest cable company — Time Warner Cable, tells investors he can raise broadband prices on a whim?  Is this the 21st century version of the Robber Baron Era?  Robust competition guarantees no executive can make such a statement.  Congress must act to bolster competition, including financial and tax savings incentives for new providers willing to enter markets of all sizes;

Wireless mobile broadband spectrum auctions do not promote competition because the biggest incumbent players are sure to win the bulk of the frequencies, guaranteeing more of the same anemic competition.  Some of the newly available blocks of frequencies should be reserved for bidders who do not currently serve the market where those frequencies are available.  Only that guarantees new competition in wireless;

Free or deeply discounted access to basic Internet service at broadband speeds should be a part of any National Broadband Plan, to ensure access to every American who wants it.

An article from McClure magazine, circa 1906, has a lot to say about today's broadband regulatory battles. We've been here before.

Yesterday, while browsing through some of the sources I review for story ideas, I encountered yet another one of those tired “free market solves everything” pieces from Randolph May, filled with the usual memes about keeping government regulation and oversight out of broadband.  May, like his pro-business friends, always believes that markets are self-correcting, and that providing checks and balances for the de facto duopoly most Americans have for broadband service would ultimately harm them.  Besides, if a provider gets out of hand, its competitor will pounce on the opportunity.  Sometimes that happens, but often it does not.  For investors, there is more money to be made going along to get along avoiding price and service wars.  Indeed, when competition gets too hot and heavy, Wall Street brays that “consolidation” is required to deal with all of the revenue-losing-harm healthy competition causes.  Just today, those calls are heard in the prepaid wireless market as analysts continue their relentless pounding that Leap Wireless’ Cricket must merge with MetroPCS to create cost savings, and stop price erosion (your savings).

I want to focus on May’s unintended, but disastrous comparison of American telecommunications regulation with that of the railroad industry of the 1800s:

“This form of regulation was first adopted at the federal level in the Interstate Commerce Act in 1887, which created the Interstate Commerce Commission to regulate the railroads. In 1910, the ICC was given authority to regulate newly-emerging telephone companies as common carriers, and this authority was transferred to the FCC when it was created in 1934.

By the 1980s, the railroads were largely deregulated and the ICC was abolished in 1995. And towards the end of the last century, with the emergence of competitive choices, the FCC began to relax even the regulation of POTS, or plain old telephone service, provided by formerly monopolistic telephone companies. So it was no surprise when the FCC decided to reject public utility-style regulation for the then new broadband Internet service providers.”

May is obviously no student of history, and the introduction of railroads into this argument gives me my “free market” ability to pounce on his out of hand rhetoric.  The irony is that this debate takes place over the open and free Internet that May and his friends are willing to entrust to a handful of corporate providers who provide most of the connectivity in this country.  They wouldn’t interfere with traffic if it meant making a pile of extra profits selling “preferred partnerships,” would they?

There are obvious metaphors between the railway industry of the 1800s and the broadband industry of 2010s.  Many of the challenges are remarkably similar, especially if one considers broadband a sort of digital railroad that is becoming increasingly important to the economy and job growth.

May is lucky that nobody but those who love studying history are likely to notice he completely ignored the rationale for the Interstate Commerce Act of 1887.  Railroad robber barons had by this time put such a stranglehold on the industry, entire cities prospered or withered based on what a railroad executive decided was the appropriate price for service on a schedule good enough for that community.  If you lived in a city with a strong railroad system with fast lines, competition, and a healthy choice of destinations, your city generally enjoyed economic success. If you lived in an uncompetitive city deemed a railroad backwater by a provider, you paid extortionist pricing to move your goods on a limited schedule that sometimes was followed, other times not.

By the time America had caught on to these abusive practices, railroad barons were secretly charging lower prices and quietly providing rebates to their preferred partners, mostly big businesses, and overcharging everyone else.  They even charged completely different rates for different products.  If you transported tobacco you paid more than transporting flour.  Farmers paid one price to transport crops, lumber suppliers paid something entirely different to move wood.  If you were a friend of the railroad industry, and important to their lobbying efforts, you got a pass to travel fare-free.

It took years for Americans to finally achieve the railroad equivalent of Net Neutrality.  That’s because the railroads were politically savvy, and maintained their own version of astroturfing — an army of business leaders and supporters provided favors and money to parrot railway talking points in the media and before Congress, all while claiming they were ordinary Joe’s.  Railroads supplied generous campaign contributions to members of Congress, and so much money was spread around, it eventually turned into railroad industry graft with the Crédit Mobilier scandal of 1872.

An entire class of “ordinary citizens” and business leaders pleaded in the printed press not to regulate the railway system.  It would create “unintentional consequences,” would “hurt jobs,” “ruin the economy,” and would be contrary to the laissez-faire policies of the time, which allowed a completely unregulated railway system to “prosper.”  Besides, railroads had “transformed the transportation infrastructure” of America and created economic benefits, all from “millions railways invested to improve railway lines.”  Regulation would “discourage that investment.”

Americans might have believed that had the record of abuse by the railway industry not grown into a bulging dossier of unfair pricing and anticompetitive activities. Rural communities were charged high prices for slow, erratic railway service because they rarely had a second choice.  Businesses refused to locate in communities where a monopolistic railway charged high prices and provided poor service.

But even legislative reform in 1887, designed to stop railway abuses and charge fair pricing, left enough loopholes in place for the railroad industry to continue its ways for years to follow.  Court findings of wrongdoing were ignored by the industry, at least until they could successfully appeal them to federal district courts, which tended to favor business points of view in their rulings.

Sound familiar?

Ray Stannard Baker

But one need not take my word for it.  In 1906, McClure’s magazine published the story of Danville, Virginia and its railroads by Ray Stannard Baker, a popular investigative reporter (known then as a ‘muckraker’) for the magazine.  While you may be unfamiliar with Danville, located in south-central Virginia, history dealt it several interesting cards in the 1800s.  Its Richmond and Danville Railroad was immortalized in the song “The Night They Drove Old Dixie Down,” telling the story of how the Confederate army’s hopes of defending Richmond in the waning days of the Civil War were dashed when the Union cavalry destroyed the railroad tracks.  General Lee’s army retreated to Danville — the last declared capital city of the Confederate States of America.

As the era of Reconstruction began, Danville threatened to become as well known as Richmond to the east and Lynchburg to the north.  All three communities enjoyed the benefits of competitive railways — providing stable, affordable, and plentiful service between all three cities and points beyond.  With excellent railways, an economic boom followed, and the communities prospered from manufacturing, cotton, and tobacco products, all transported on the railway system to eager buyers.  What was once a city of 5,000 rapidly grew to 20,000.  Danville because a world leader in tobacco production and distribution and built what was once one of the world’s largest textile mills — Dan River Industries, which survived until 2008 when the company declared bankruptcy.

Yet Danville remains completely unknown to most, a forgotten city whose early boom ended when a railway monopoly arrived and strangled the community to a former shadow of itself, perhaps never to completely recover.  The effects were long-lasting.  Today, Danville is a challenged city of 44,000 and declining.  Lynchburg, in contrast, prospered through the manufacturing era, often called the “Pittsburgh of the South,” and has successfully transitioned into one of America’s “top 10 digital cities,” supporting its population of 73,000.  Richmond towers over both, with 200,000 city residents in a community well-known nationwide.  Both of those cities enjoyed competition from railways and built a substantial economic base from that that paid dividends in the decades that followed.

Of course, in 1906, the final chapter of America’s annoyance with railroad robber barons had yet to be written.  Fights over pricing and service continued for years, as communities depended on railroads for their economic well-being.  Ultimately, the Eisenhower Administration’s decision to undertake a national highway system, built by and supported with public funds, was symbolically the end of an era that allowed a handful of corporate executives and railroad trusts to determine the fate of entire communities, all based on the kind of railroad service they would enjoy.  The highway system gave rise to the trucking industry, with air service from municipally-backed airports picking up some of the more urgent business.  Railroads had to compete like they never had before.

The article, lengthy yet surprisingly accessible for contemporary audiences, is provided below in a slightly condensed form.  The more you read, the more you realize those who refuse to learn from history are doomed to repeat it.  Folks like Randolph May are counting on America’s ignorance of the challenges faced by our great-great grandparents, who would find familiar themes in today’s competitive and regulatory broadband battles, and who ultimately wins control of the lines and the traffic that crosses them.

The railroad industry asked people to trust them, and said notions of discriminatory pricing and access were nonsense, because they didn’t make economic sense.  But they very much did, especially when alternatives were limited, if they existed at all.

At Danville, Virginia, the railroad has ceased to be a nebulous public problem, important but distant, and has become the vital concern of every citizen.

Last spring two different delegations of citizens appeared before the Interstate Commerce Committee of the Senate to explain what was the matter with the town. The first asserted with earnestness, and showed by statistics, that everything was wrong in Danville, that the railroads had ruined the town, and that stringent new laws were necessary to control them; the second with equal ardor asserted that the town was all right, that the railroad “had done a great deal for Danville,” and that legislation giving the Interstate Commerce Commission the power to change rates would be injurious, if not disastrous. These two radically opposing views were typical of the positions taken by delegations from every part of the United States: one side fighting the railroads, the other supporting them. And the impression left upon the ordinary listener was usually one of doubt and confusion as to what, after all, had been the real effect of the railroads upon the town or the industry represented.

It was with the keenest curiosity, then, that I visited Danville to discern, if I could, what really lay behind the arguments of the opposing delegations, and what, after all, had been the influence of railroads, good or bad, upon the town. If we can understand a city like Danville, which differs from other American towns only in the variety and extent of its railroad experiences, we shall go far toward understanding, broadly, the meaning of the railroad problem in this country.

Notable Signs of Decay and Growth

I feel sure that no city could give a first impression more suggestive, or convey outwardly a clearer intimation of its inward conditions. Here were evidences of both decay and growth. On many streets of the town loom with hulking relics of multiple stories built of brick, scores of them, many now vacant and out of repair; some in total ruin, burned and never rebuilt; some used part of the year for storage. Huge and grim, they present a curious picture of decay. On the other hand, almost side by side with them, bright new tobacco houses have arisen, much fewer in number but equally as large as the old — for Danville is, and has been for years, the greatest leaf tobacco market in the world.

Decay is also evident in vacant or partly vacant stores in the business part of the town, and in the lack of such prosperous jobbing houses as one ordinarily expects to find in a city of twenty thousand people. A number of wholesale merchants continue to survive but few of them are successful. On the other hand, nothing could exhale a more vaunting air of well-being than the cotton mills along the Dan River — all bright and new, prosperity beaming from every one of their thousands of windows. Within a few years Danville has come to be one of the most important cotton-milling centers in the South. Other manufacturing concerns, flour mills, a busy furniture factory, a knitgoods enterprise, also give an impression of growth and welfare.

Two Parties In Danville

A further acquaintance soon reveals the fact that the people of the town are divided into two opposing parties. The first includes a very large portion of the population — ninety-five per cent at least — and is led by the city government, the Business Men’s Association, and by prominent citizens like Judge A. M. Aiken of the corporation court, and Eugene Withers, a lawyer and former member of the legislature. This party is anti-railroad and anti-trust. It asserts that the Southern Railway has injured the growth and checked the prosperity of Danville.

The other party is small in numbers, but it represents much of the wealth of the town. It is headed by James I. Pritchett, a wealthy miller, doing a business of $900,000 a year; by R. A. Schoolfield, the president and controlling spirit of the cotton mills; by W. P. Boatwright, a prosperous furniture manufacturer; and by James R. Kopling, president of the First National Bank. This party of wealth and power stands with the railroad.

Now, it is common enough in every town to find a few rich men and many not so rich, but it is uncommon for the two interests to be so clearly conscious of their relative positions and to discuss so frankly the causes which they believe have operated in producing such remarkable contrasts of decline and prosperity. In many communities the visitor discovers an unrest which sometimes relieves itself with unreasoning attacks upon what is vaguely known as the “trust evil” or the “money power;” but in few towns will he find the people, as in Danville, calculating with exact figures, facts, even maps and diagrams, the causes which lie behind their business failures and successes. And that is what makes the conditions there so interesting.

Few sections of the South recovered from the prostration of the Civil War more rapidly than southern Virginia, for the reason, chiefly, that its principal crop — tobacco — was abundant and brought ready cash. Danville, Lynchburg, and to some extent Richmond, were the energetic centers of the industry. Danville, especially, owing to its excellent location, attracted able men, and gave promise of becoming a large city. The town then had two railroads, one reaching to Richmond, where the water shipping facilities of the James River connected it with the outside world, and the other, built during the war by the Confederate government, running into North Carolina. Its nearest and only threatening rival was Lynchburg, sixty-six miles to the northwest. Both towns had good water powers, both had tobacco markets, and both did a thriving business upon practically even terms.

How Danville Helped Build Railroads

Shrewd men in Danville, as everywhere else, recognized transportation facilities as the key of industry and the chief cause of city growth. In every part of the country during the 187o’s and 188o’s the people were mortgaging their cities and counties to help private railroad builders. When the Virginia Midland Railroad was projected to run from Washington City to Danville, the citizens, eager for this new outlet into Northern markets, contributed no less than $400,000 in cash ($100,000 by the city, $300,000 by Pittsylvania County), to the projectors of the enterprise. When the railroad was completed in 1874, Danville immediately felt its vivifying effects. The town grew rapidly both in population and in wealth.

If such was the effect of railroads, said Danville, why not have more of them? The reasoning seemed good, and when the Danville & Western was projected in the 188o’s to run to the coal-fields, (where it never arrived) the city cheerfully presented the private builders with $110,000 in cash. In these years of free competition the town outstripped its rival to the north and became a thriving commercial center.

By this time the country was reaching the era of combinations, consolidations, and trusts. Short railroad lines were being connected under single ownerships. Great trunk lines took form. And one day in 1886, Danville awakened to the discovery that its two competing railroads — its only outlet to the markets of the world — had been swallowed up in the system afterwards known as the Southern Railway, which now spreads a network of lines from Washington to the Gulf of Mexico and the Mississippi River.

Danville thus found itself in 1887 at the mercy of a railroad monoply ; the competition which had been the life of its trade had wholly disappeared.

In the Grasp of Monopoly

What was the remedy? Danville did just what scores of other monopolized cities were doing at the same time. It reached out eagerly in search of new competing lines. Promoters suggested a railroad to Norfolk on the sea and Danville was so anxious to have it built that another contribution of $150,000 was raised by the town — more than enough to build outright the part of the new railroad which ran through Pittsylvania County.

The private promoters, having got all the money they could out of the people, finally completed the line — as bad a job of railroad building as they dared to do — and in the early 188o’s it was opened for business. But this new competition was not long to be enjoyed. When the Atlantic and Danville began to be a real competitor of the Southern, J. Pierpont Morgan and his associates acquired the company under a long term lease, and it became, and is now, a part of the Southern system. Since that time every railroad facility of Danville has been absolutely controlled by the Southern Railway.

When monopoly closed down upon them again, the first instinct of the people of Danville was to encourage new railroads. Their experience in the past had been bitter. They had contributed (with the county) over $700,000 in past efforts to build competing lines. The railroad companies in each case had given stock to cover the amount of money raised, and then they had failed, or reorganized — as they intended to do beforehand — and not one cent of the money voted by Danville, or by Pittsylvania County has ever been returned, or ever will be. And Danville is still paying interest on $290,000 of the money borrowed to encourage railroad competition which it does not now have. Nearly a quarter of the entire debt under which the city today struggles, is made up of these old railroad loans. “We are paying for our dead dog,” is the way one of the citizens put it to me.

These facts may seem extraordinary and unusual, but they are not. Such has been the common experience of cities and counties in every part of the United States. The people of the United States have indeed contributed enough in cash, in bonuses, and in lands (by millions of acres), to build a large proportion of the railroads of the United States. All this money and land has been given to private individuals — the owners of the railroads — and these private individuals now not only regard the railroads as their private property but deny the right of the people to a voice in the control of the vast systems thus built up.

But hope springs eternal! Danville, in spite of its former bitter experiences, was willing in 1901, by popular vote of the people, to promise $250,000 more in cash to help build another competing railroad — a project called the Mount Rogers & Eastern Railroad, which, however, from causes unknown, died before it was born.

Results of Railroad Domination

Let us examine now what railroad monopoly has done in producing the curious contrasts of decline and prosperity in Danville. Fortunately we have all the facts fully set out in hearings and court cases.

A brief study of Danville rates shows two remarkable things:

1. Rates on practically all goods shipped into Danville have either remained flat or increased since the Southern Railway began its monopoly service.
2. Rates on practically all goods shipped out of Danville, with one significant exception, have been greatly reduced by the same railway.

The reasons for this apparent greediness with reference to one sort of freight, and this apparent generosity regarding another sort, when explained, will make clear many of the fundamental whys and wherefores of the railroad problem.

A shoe merchant in Danville buys stock in New York. It is shipped by sea to Norfolk and by rail to Danville. He pays 66 cents per hundred pounds. In the same car maybe an exactly similar shipment for a Lynchburg merchant. The railroad company hauls the car 66 miles further, and then charges the Lynchburg man only 54 cents per hundred pounds, or 12 cents less for 66 miles more.

Why? Lynchburg has railroad competition, while Danville has not.  Danville is at the sole mercy of the Southern Railway, while Lynchburg enjoys service from Southern, as well as Norfolk & Western and the Chesapeake & Ohio, any of which could have transported those shoes.

Even more remarkable examples of rate disparity exist.

Take sugar from New Orleans for example.  Shipped by Southern, sugar destined for Lynchburg goes through Danville, but Danville must pay 43 cents per hundred pounds, while Lynchburg 66 miles further only pays 32 cents.

Pork shipped from Chicago to Lynchburg, a trip of 1,000 miles, costs even less!  It’s just 27 cents per hundred pounds.  But Danville shipments cost 40 cents.  If a Danville merchant first shipped his pork order to Lynchburg, hoping to realize some savings, he’d still have to book a shipment from Lynchburg to Danville, at a price of 13 cents per hundred pounds, nearly half the price Southern charges to ship goods from Chicago some thousand miles distant, than it charges to ship between two cities only 66 miles away.

In short, railroad rates from every direction to Danville, and on almost every sort of merchandise — the only exception I could find among thousands of commodities being barreled apples — are from thirty-three per cent to one hundred per cent higher than they are to Lynchburg, and that in spite of the fact that many, if not most of the shipments for Lynchburg pass through Danville.

Curiously, Southern charges different rates for different goods, which would seem illogical for freight charged by the weight.

Story of Two Kitchen Stoves

W. R. Guerrant, a hardware merchant, showed me freight bills on two steel kitchen stoves weighing eight hundred pounds. The rate from Cincinnati to Lynchburg, five hundred miles was $1.76 while from Lynchburg to Danville, sixty-six miles, the rate was $1.84. In other words the Lynchburg merchant would have paid only $1.76 on his two stoves while the Danville merchant paid $3.60. How much chance would a Danville merchant have in competing for trade with a Lynchburg merchant?

Horses shipped from the West by the Southern can be shipped to Richmond, 141 miles further than Danville, at much less freight. There have been instances in which Danville dealers actually had their shipments billed to Richmond, and when the horses reached Danville, they took them off — secretly of course — and let the cars go on empty to Richmond.

Of course Danville has also experienced many of the lesser impositions of monopoly. Shippers have had trouble in getting cars when ordered, they have had long delays in receiving freight, and they have also suffered exasperating passenger train arrangements and poor service in other ways. With no danger of any competitor getting the business the railroad could do as it liked.

As a result of high and discriminating freight rates the wholesale business of Danville, once thriving and prosperous, has been injured and the retail business has also suffered. Jobbers in other Virginia cities have taken away practically all of Danville’s trade, even selling to merchants in smaller villages almost in the environs of Danville. Every commodity in Danville is higher in cost than in other cities, therefore no farmer or any one else trades in Danville if he can avoid it. And every citizen pays the tax of monopoly upon every pound of sugar, loaf of bread, ton of coal, every hat, every foot of lumber, all shipped by Southern Railway.

After a careful investigation the Interstate Commerce Commission said in its report:

Danville began twenty years ago with a population of 3,ooo people, and rapidly developed to substantially its present size; but in recent years and at the present time it finds further development seriously impaired, if not absolutely checked by this rate discrimination. Its wholesale merchants are deprived of most of their profitable territory by competition with Lynchburg and Richmond. Every new industry which considers the advisability of locating there is confronted with the fact that it must pay in freight rates a sum from Danville over and above what must be paid from Lynchburg large enough to afford a handsome profit upon many enterprises. Every inhabitant and every property owner of Danville is to an extent injured by this discrimination.

All this accounts for the vacant or partially vacant stores, it also accounts for the rise of the anti-railroad party among the people, and the fact that the city government, the Business Men’s Association, and many prominent citizens are waging a hard fight for new laws to control railroad rates.

Where the Railroads Smiled

While the railroads extract a high price for goods shipped into Danville, the reverse is true for many goods heading out of town.

In Danville, most freight consists of cotton goods, furniture, flour, and tobacco.

A railroad seeks to build up industries on its own line.  It also favors the big shipper who can assure so many carloads every year.

Cotton mills, for example, would not be built at Danville unless the railroad first gave favorable rates. And we find that Mr. Schoolfield has built up huge mills because he can ship his cotton at rates which permit him to compete with other cotton mills in the South.

Mr. Pritchett is given a milling-in-transit rate on wheat — in other words, he is allowed to stop wheat in Danville, grind it in his mill, and send the flour on at the remainder of the rate. If he had not that rate he couldn’t thrive – but he is highly prosperous.

Both of these gentlemen chiefly use water from the Dan River for their power, not the coal which bears such high freight rates.  The railroad does not have a monopoly on water.

Mr. Boatwright gets good rates on his furniture, so he is prosperous. Here is a curious fact: furniture can be shipped from Mr, Boatwright’s factory at Danville, to Northern cities, much cheaper than it can be shipped from the North to the retail merchants at Danville. In other words, by the favor of the railroad, Mr. Boatwright is enabled to get his furniture out of Danville at a low rate so that he can compete with other manufacturers; but furniture shipped in and bought by the people of Danville (who can’t escape) must pay the high rates.

The one exception to this rule in tobacco, which costs the same high price to ship into town as it costs to export it.  That’s because the local farmers that grow it often live on subsistence wages, ill-equipped to follow Mssrs. Boatright, Pritchett, and Schoolfield out of town in a snit over railway rates.

Many a dollar can be made off the plight of farmers, who often must borrow money to advance to the railways, hopefully recouped upon sale of their goods in distant cities.  Bankers provide the loans, and support for the current railway arrangements that provide them a profitable side business.

It is plain, now, why the rich men of Danville — the manufacturers and to some extent the bankers — stand with the railroads. It is purely selfish: They get favoring rates and they stand by the monopoly. If they did not, a very little change in a rate might destroy their business. And the friendlier they are, the more favors they are likely to get.

Mr. Pritchett said to the Senate Committee :

“In my past experience of twenty odd years in business I have found the officials of Southern Railway always willing to listen to our troubles and in a great many instances to take care of us.”

Mr. Pritchett not only gets favorable rates, but he is a director of one branch of the Southern Railway.

Thus the two contrasting groups went to Washington last spring. The committee of citizens went at its own expense, to complain of the oppression of the monopoly. The committee of rich manufacturers and bankers was called together by a director of one of the branches of the Southern Railway, and the members traveled on free passes.

The Costs Go Beyond the Railroads

The citizens of Danville show by accurate figures that while Lynchburg has grown rapidly the population of Danville (not counting suburbs admitted), has increased comparatively little since the railroad monopoly fastened upon the town. Another barometer of prosperity is the valuation of real estate: up to 1887 — the year of monopoly — the increase in value was rapid. In 1885 it was $5,511,097. In 1890 it had decreased to $5,170,928. In 1900 it had increased to $6,828,760, but this was caused largely by the addition of over $1,000,000 of cotton-mill property which had been exempt for ten years from any taxation whatever. In 1904 the taxable values had decreased again to $6,521,005.

At the same time that values decreased the tax rate has gone up steadily — for the city must still, in addition to many other expenses, pay interest on its contributions toward the building of the various branches of what is now the Southern Railway.

“We hear the argument of the railroads,” says Eugene Withers, one of the spokesmen of the citizens’ committee, “that governmental rate regulation will confiscate railroad property, but we don’t hear anything at all about how the railroads now confiscate the people’s property.”

Who Are Really Prosperous in Danville?

It will thus be seen that every moneyed interest concerned in the Danville situation — the railroad owners, the tobacco trust, and the favored manufacturers — have been highly prosperous, while the producer and the consumer — in other words the people who do the actual work — have had to bear heavy burdens of excessive freight rates and of prices manipulated by the trusts, to say nothing of constantly increasing taxation.

The manufacturers at Danville assert that the enterprises of Danville are larger than ever before, that more money is invested there, that the profits are greater, that more freight-is being shipped every year, and that the banks do a more extensive business. This is probably true to the last word. The same view was presented by the manufacturers at Washington last spring, and to one unfamiliar with actual conditions it looks like a rosy picture.  But that isn’t true with the common man in Danville.

I was greatly struck with the words of Judge Aiken upon this very point. Perhaps no man in Pittsylvania county has a wider acquaintance with conditions and men.

” The long continuance of this condition has affected our citizenship,” he said. “I have been on the bench for twenty years, and I can perceive it in the selection of juries.”

We may now begin to see why the great proportion of people in Danville, led by the city government, are anti-railroad and antitrust, and why they sent a committee to Washington to protest and demand laws to control railroad monopoly. On the other hand we can see why the few rich men, who are growing richer every year, went to Washington and supported the railroad monopoly, and declared that Danville was more prosperous than ever before. And it is more prosperous — for six, or twenty, or perhaps even one hundred men, but for the remainder of the population it is far less prosperous.

When the news came to Danville that six manufacturers and bankers had gone to Washington to support the railroads, the people were so much stirred that they called a great mass-meeting at the court-house — one of the most remarkable gatherings in the history of the town. So bitter was the feeling aroused, that it was only the council of cooler heads that prevented severe denunciations of abuse. Here was the town trying to escape from the burden of railroad monopoly; and here were six citizens of the town, who, because they received favoring rates, and were personally prosperous, were willing to prevent their neighbors from obtaining any relief. One of the speakers at the meeting, Mr. Withers, thus expressed it:

“It is not a question between the two committees. If certain businesses are satisfied with the rates given them by the Southern Railway, why should they interfere with those who are not satisfied with the rates?”

One of the first things  a visitor at Danville is prompted to ask is, “Why don’t you complain to the Interstate Commerce Commission? Why don’t you carry your grievances into the courts?”

That is exactly what Danville has done: few other American cities have conducted a longer or a more persistent fight. No part of the Danville story, indeed, is more important or significant than this.  Twice the city achieved legal victory before the Commission, and twice the railroads ignored the ruling.

Indeed, through changes in classification about that time, rates were actually increased on many commodities. The Southern Railway paid no attention whatever to the Interstate Commerce Commission, and Danville continued to pay the high freight rates. The next year, 1901, the Commission went into the courts to enforce its order. A railroad is perfectly at home in the courts; it has trained, high-grade legal talent and plenty of money, and the more delay the better, because in a few months time a town like Danville would pay in extortionate rates more than enough to cover any amount of litigation. The case dragged, therefore, until August, 1902, when the federal court decided in favor of the Southern Railway and overturned the decision of the Commission. The case was then carried to the Circuit Court of Appeals where nearly a year more of time was consumed, and the railroad again won the case. At this point the Interstate Commerce Commission stopped fighting and the rates are unchanged today at Danville.

What Is the Railroad Position?

Now, I do not wish to infer that the Southern Railway has adjusted the Danville rates out of spite. The Southern Railway is on its part and in its way a victim of competitory conditions, and it was the setting forth of these conditions which won the case in the federal courts. Rates at Lynchburg are forced down by competition and are therefore beyond the control of the Southern Railway, acting alone. In order to make up for low rates at towns where competition exists the Southern Railway exacts high rates at towns where it has a monopoly. In other words, Danville must be made to help pay Lynchburg’s freight. Considering only the dividends of the railroad this sort of an adjustment may be necessary, and the courts may sustain it; but does that make it right or just either to Lynchburg or to Danville? Are towns created for the profit of highway owners, or are highways built to serve the towns? The railroad asserts that it is powerless to adjust present conditions so as to do justice between such towns as Danville and Lynchburg, but when it is proposed to create a government tribunal with power to secure that justice, the railroad fights the proposition, as it is fighting it now in Congress.

What Of Our Elected Leaders?

The time is coming when the people will insist upon knowing, not only the personal qualities of its governors and congressmen, and especially its United States Senators, but it will also find out definitely and exactly who these men propose to represent — the railroads and the trusts, or the people. If Senator Martin, of Virginia, for example, is not right upon the railroad questions from the point of view of Danville, isn’t it largely the fault of Danville? Until the people in each state follow up their senators and find out what they stand for, and then hold them to their positions, they will get little progressive legislation in Congress. When Minnesota elected Senator Clapp — who had for years been a railroad attorney — they not only asked him what he stood for, but got his promise in writing that he would support a rate regulation law.

Of course the railroad has great influence within Danville, as in other towns. Several of the branch lines of the Southern Railway still maintain a corporate existence. They must have Virginia directors — merely nominal officers, of course, without power. Eight or ten of these directorships are scattered among the citizens of Danville, presumably where they will do the most good. Each director gets an annual free railroad pass. Here, at the start, is a nucleus of a railroad party in Danville. The head of the cotton mill company is one of these directors, the head of the flour mill company is another; both were members of the committee which went to Washington to tell the Senate that railroad conditions in Danville were all right, and that no more legislation was needed.

Conclusions From the Danville Case

I have thus endeavored to give a clear idea of what conditions are in Danville. A few points in conclusion, should be emphasized.

Is it right that the Southern Railway, having a monopoly, should charge high rates at Danville to make up for the low competitive rates at Lynchburg? Should Danville help to pay Lynchburg’s freight rates? The Southern Railway admits making a profit on its Lynchburg business, even at the low competitive rates: why, then, should Danville be required to pay from thirty to one hundred percent more profit?

Is it right that the very life of a town in Virginia should be in the hands of private individuals in New York city or elsewhere, who have no sympathy with Danville, and are working, not for justice, but for private profit?

Railroads are public highways which all people have a right to use upon equal terms. Is it right for the Southern Railway, upon any excuse whatever, to deny the people of Danville this equality upon the public highway?

Is it right that the Southern Railway, having deprived Danville of competition, should now plead its own wrong in defense of high rates at Danville and low rates at Lynchburg? If the beggar on the streets has no right to steal money because he is a beggar, has the Southern Railway a right to do a wrong merely because it needs revenue?

Is it right that a railroad which objects so strongly to the confiscation of its property, should be allowed to depreciate the value of property in towns where it has a monopoly?

The railroad says that such adjustments as those between Lynchburg and Danville are fixed by competitory conditions beyond its control. If the railroad cannot itself cure such injustice, why should not the governmental commission be empowered to do it?

Is it right, finally, that there should be no power in this country strong enough to prevent railroad injustice and railroad discriminations like those existing in Danville?

If you would like to read the article in its entirety, as well as read other articles from McClure’s in 1906, you can download this PDF copy (32 MB) of the magazine, which includes several issues.  The article regarding the railroad industry begins on page 131.

America’s established cable and telephone companies are pulling out every stop to impede the Obama Administration’s broadband stimulus program.

Comcast alone, the nation’s largest cable company, has filed thousands of objections to proposed broadband projects in communities large and small, claiming those projects have the potential of introducing competition in their service areas, whether or not actual broadband service is being provided to residents in those communities.

Most large providers like Time Warner Cable, Comcast, and many national phone companies have steered clear of applying for broadband stimulus money.  They don’t like requirements that could force them to adhere to Net Neutrality provisions, sharing equal access to their networks.  But they don’t want anyone else on their turf getting funding either, and they’re spending enormous amounts of time and money objecting to anything and everything that seeks funding in their respective service areas.

It’s nothing short of a Broadband Blockade, and it is dramatically slowing the government’s ability to pour over thousands of applications.

Settles

Dan Hays, from consulting firm PRTM, told USA Today as a result of the delays, there’s significant doubt as to whether the monies can be awarded before the end of September when the funding authorization expires.

Could that be part of the plan all along?

“They aren’t leading, they aren’t following, and they won’t get out of the way,” said Craig Settles, a municipal broadband expert. “They’re not going to put proposals on the table because they don’t like the rules. Yet they’re not going to cooperate with the entities that are going after the money.”

“There are 11,000 public comments (about the funding applications), and I’m willing to bet that 9,000, at least, were a challenge or protest of one sort or another,” says Settles.

“We’re at a point where it’s the general public’s interest vs. the entrenched incumbents,” Settles added.

When giant telecommunications providers are threatened, they run to lawmakers for special protection, and they’re getting it.

National Public Radio ran this report about the problems awarding broadband stimulus grants. (5 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Coming next…

FairPoint – Bankrupt And Soaking in Failure – But Still Has Enough for Lobbyists, Attorneys to Fight Broadband Projects On Its Turf

For months now, several groups purporting to represent the interests of minorities have busily been attacking Net Neutrality as beside the point for the poor and unserved consumer who has been left out of the broadband revolution.  To varying degrees, several of these groups have been spouting broadband industry talking points to the Federal Communications Commission, members of Congress, and the public at large.

For them, and the profitable broadband industry they indirectly represent, providing access at affordable prices is much more important than making sure providers don’t lord over the network they provide to customers.

Access vs. Openness

Consumers are perplexed by this either/or proposition.  For us, both issues are vitally important.  In urban, income-challenged areas, affordability is a crucial issue.  In rural areas, access to anything resembling broadband comes before worrying about the price.  For all concerned, making sure the Internet is not subject to corporate content control, either through direct censorship or through the far-more-common practice of pricing and policy controls, is just as important.

Providers have their self-interest on display when they promote broadband expansion — they want to receive the public dollars available from the broadband stimulus package to pay for that expansion.  Of course, every step of the way they have their fingers all over the process, from broadband mapping that protects incumbents from potential competition, defining what constitutes broadband to be as slow and as cheap to provide as possible, to implement usage rationing through Overcharging schemes like usage limits and usage-based billing, and to advocate for public policy that keeps the Money Party of fat profits running as long as possible without oversight.

The entry of minority interest groups into the debate is nothing new.  Groups of all kinds, including many who one would think wouldn’t have an opinion on Net Neutrality, are all part of the discussion.  Debates ensue, statements are fact-checked, back and forth discussion ensues.  What disturbs me is the small handful of groups who are willing to deal the race card when their own views and statements are challenged and they are threatened with losing the argument. Ill-equipped to argue the merits of their case in detail and withstand the scrutiny of fact-checking, some have introduced race into the debate to obfuscate the issues.

While I don’t doubt their sincerity and passion advocating for increased access and affordability, too many of these groups hurt their own case by accepting generous contributions (or advisory board members) from the telecommunications industry.  Consumers who witness the near total alignment of views between these groups their corporate benefactors are right to be concerned.  Many are asking if those views represent true conviction or “a dollar a holler” advocacy.

The Black Agenda Report, which created this graphic, ponders the same questions many consumers are asking

As Stop the Cap! documented just a few months ago, Broadband for America is a great example of industry-funded astroturf in action.  Large numbers of groups with no apparent connection to the broadband policy debate have found their way onto the roster of members.  From a cattle association to a Native American group that also has a burning interest in sharing their views about corporate jet landing rights, the one thing in common with virtually every last one of them was a financial contribution and/or board member working for big cable or telephone companies.  Thus far, debating a cattle association has not brought charges of being anti-cow, although I suspect consumers are anti-bull.  Debating the merits of Net Neutrality with Native American groups has not brought charges of anti-Native American bias.

Stop the Cap! itself has been on the receiving end of racial rhetoric offered by one of the anti-Net Neutrality advocates out there, Navarrow Wright.  Wright is a former corporate executive at Black Entertainment Television, and spends his days now as a self-proclaimed social media and branding expert. Last year, after exiting as CEO of Global Grind, a hip hop social network, Wright launched Maximum Leverage Solutions, which claims to be a full service consulting firm specializing in social media strategy and Internet Consulting.

Just a few months later, Wright suddenly discovered a big interest in the concept of Net Neutrality.  While he doesn’t disclose his client list, would it surprise anyone if a telecommunications company hired his services for their own “social media strategy?”

Since last fall, Wright has been generating a mix of provider talking points, Google bashing, and attacking groups that support Net Neutrality.  He’s called supporters of an open Internet “digital elites,” the FCC a player of “dangerous games” by ignoring the anti-Net Neutrality public, Free Press a group that wallows “in crazy claims and race-dividing rhetoric,” and tries to connect support for Net Neutrality as somehow representing opposition to increased broadband adoption.

Challenging and debunking his talking points isn’t difficult — they are precisely the same ones the broadband industry has used for several years now.  We invited Wright to a full, in-depth discussion about the merits of Net Neutrality and broadband adoption.  We even got the discussion started, but that’s exactly where it ended.

Wright is also incredibly defensive about the issue of industry-backed mouthpieces and astroturf efforts in general.  Suggesting Wright’s views are inaccurate brings his resume in response, which I suppose was designed to impress readers with suggestions of his built-in expertise, belied by his silence on these issues prior to last year.  In Wright’s original comment, he took our comments about economically disadvantaged Americans and made it an issue of color:

Our piece:

The letter represents the groups’ concerns that broadband for many in America is simply not available, especially for the economically disadvantaged.  They’ve been swayed by industry propaganda to characterize Net Neutrality as a threat to addressing the digital divide by making service ultimately even more expensive.

His response:

Phil, I know (at least I hope) your intent wasn’t to suggest that people of color have been “swayed by industry propaganda” and aren’t capable of thinking for ourselves on technology issues.

James Rucker, executive director of Color of Change added to the debate in late January, wondering why some civil rights groups are only too willing to support discredited industry talking points and advocate against Net Neutrality.

Rucker discovered the same thing we did.  Challenging these groups to explain their positions brings forth repetitious inch-deep talking points and total silence when a rebuttal is offered.  If pushed, they obfuscate with claims their views are being disrespected, when in reality they are only being fact checked.  Perhaps inconvenient, and even slightly embarrassing, but it’s completely appropriate for consumers to ask whether a conflict of interest exists when a group advocates for the positions of the same industry that is sending them big contributions.

The risk, of course, is to tie an organization’s good name to demonstrably false provider propaganda that some groups are willing to repeat, nearly word for word.

Take for instance Wright’s claim that Net Neutrality will force providers to spend money they would otherwise invest for the benefit of the rural, the downtrodden, and the unserved:

That brings me to the other corporate interests: the Internet service providers. It is the ISPs who must invest in, upgrade, maintain and build out the networks that allow us to receive these cool applications. While I don’t find the network side as sexy as the content side, I do know that we have to have it and ISPs need capital to build and maintain it. So the question remains who is going to pay for maintenance and upgrades to the network if Google gets a free ride? Basic economics tells us that if government requires ISPs to give Google a free ride, there’s only one other place to look for the money: consumers like you and me. What’s more, there are those who want to make it even more unfair by insisting that your big-bandwidth-using neighbor should not have to pay more than you, even if all you want to do is check email and watch some YouTube. Who will all of this hurt the most? Low-income consumers.

The only color that really matters here is green

Wright doesn’t know his American telecom history.  Let’s discuss this fiction:

1. Bruce Dixon, a writer for the Black Agenda Report says it better than anyone: “Phone companies invented the digital divide more than a century ago as their core business model, preferring to extend service to affluent areas where they could levy premium charges, rather than building networks out to reach everybody.”  The cable television industry “franchise” requirement came as a direct result of cable industry redlining, the practice of wiring wealthy neighborhoods for cable while bypassing urban and rural areas deemed “unprofitable.”  It’s the same story for broadband, and Net Neutrality is beside the point.  The number crunchers look for Return On Investment (ROI) when considering who gets on the right side of the digital divide.  If they can’t make a killing on you, they’re not going to provide you service.  If you can’t afford their asking price, which is increasing regardless of Net Neutrality, why serve you?  Ultimately it is consumers who overpay for these networks, priced well above cost, generating literally billions in profits.  Why ruin a good thing with altruistic broadband expansion at a fire sale price?
2. Regardless of what Google is doing, providers are seeking new ways to further monetize broadband service, enriching themselves even further.  Prices go up even as the costs to provide the service go down.  The old chestnut about the next door neighbor being a usage piggy is just more of the same “us vs. them” propaganda from providers who want consumers to fight amongst themselves while they run to the bank with the money.  Grandma doesn’t want her broadband service limited either, and she’s way too smart to believe a provider promising dramatic savings for less service from companies that jack up her rates year after year.
3. The best way to guarantee affordable access to broadband service is to develop a national broadband plan that provides the same kinds of “lifeline” services already available for economically disadvantaged phone customers, legislative policies that force markets open to additional competition, government oversight to ensure providers are required to provide service throughout their respective service areas, and stimulus or Universal Service Fund assistance for projects that assure access to those who simply will never pass ROI tests.  Or we can solve everything by not passing Net Neutrality?  Please.
4. Google doesn’t have a free ride.  First, consumers -pay- providers for connectivity.  Ultimately, they are the customers — content producers are not.  Nothing prohibits an ISP from offering hosting services to content producers at competitive prices.  If Google, Amazon, Netflix, or Hulu want to host their content on servers owned by Verizon, Comcast, Time Warner, or AT&T, nothing stops them.  Google pays for its own connectivity to the Internet.  Customers pay for accessing it.  Now providers want to get paid again.  It’s like triple-charging for snail mail – you pay for a stamp to mail it, the person you wrote pays to receive it, and the airline that flew the letter cross country has to pay to transport it.

Remember, it’s the content that drives broadband adoption. ISP’s honestly don’t fret as much about traffic as they claim.  They just care whether they can own it, control it, and profit from it.  The evidence to back this up comes from cable and phone companies in a big hurry to stream video content over their TV Everywhere projects.  Nothing consumes bandwidth like online video, yet there they are enthusiastically embracing it.  They have to, because if they don’t control it, it could eventually lead to people dropping their cable TV subscriptions in favor of online viewing.

Wright’s blog promotes another industry favorite — the dreaded phony “exaflood” which threatens to bring chaos and disorder to our online world… unless we totally deregulate broadband and let them do whatever they want to “solve it.”  That’s more of the same.  We’ve seen the results of that for more than a decade now, and the very digital divide that Wright complains about comes as a direct consequence to letting broadband providers serve, or not serve customers as they please at the prices they want.

Wright and other civil rights groups can throw as many race cards as they like against consumers who see right through their corporate-backed agenda.  That’s because consumers know Net Neutrality isn’t an issue of black or white.  The only color that really matters here is green.