Why American Internet Should Be a Public Utility


NEW ATTACKS COMING ON YOUR INTERNET--Back in June, when the insanity of the election and the chaos to follow was simply a glistening bomb lingering on the horizon, the United States Court of Appeals in the D.C. Circuit made a huge decision regarding the future of how America looks at the Internet. In the decision, the court upheld the Federal Communications Commission’s rules over net neutrality, which require Internet service providers (ISPs) to treat all traffic equally.

At the very least, it kept the lid tight on the can of worms that would allow ISPs to offer preferential treatment (read: faster load times, more bandwidth for video streaming) to websites that chose to pay whatever money the ISPs wanted, deregulating the Web into a purely capitalistic experiment that also, weirdly, gave the power to the near-monopolistic gatekeepers. It would probably have been really bad.

But more than the specifics, the case moved the needle in the minds of those considering how the Internet should act. Should the Web be a battle of private enterprises butting up against one another to, theoretically at least, provide consumers with the fastest, most reliable, most affordable service? Or should it be thought of as a public utility, something like electricity or sewage, owned by singular communities?

The biggest argument for keeping the Internet as it currently exists is that its “free market” incentivizes innovators to invent new products. The other pathway would lead toward a bureaucratic mess that takes over any public institution. But the failure with this line of thinking is that the Internet marketplace was never really a free market. Most of this has to do with its history.

At first, the Internet was a dial-up service, in which computers talked to one another by piggybacking onto the pre-existing copper wires of telephonic infrastructure that was already in place throughout America. As such, this Internet was essentially just a visual version of a phone system: It was slow and unwieldy, sure, but it also could be turned off and on as you would a phone call. When broadband Internet came around — in the form of either cable or DSL — the entire concept of the Internet suddenly shifted from a portal into a 24/7 link into this other world.

The Internet marketplace was never really a free market.

Since the demands of this connection far outpaced what dial-up wires would allow, this development necessitated a whole new infrastructure. Luckily, one was already in place: cable television.

In the eight years following the Telecommunications Act of 1996, cable companies spent upwards of $65 billion laying down additional broadband networks that were able to “provide multichannel video, two-way voice, high-speed Internet access, and high definition and advanced digital video services all on a single wire into the home.” And because of this initial investment in infrastructure, the cable companies have had close to full control.

The market, therefore, was never really free, as much as those who succeeded were able to do so because they had an initial leg up. As a result, only a few massive companies have been able to compete with one another, and a majority of those competitions have ended in a kind of stalemate where they just end up carving up the marketplace block by block, or building by building, and forcing the residents to either choose their service or choose nothing.

Maybe your own place isn’t like that. Maybe you have multiple choices when it comes to deciding where you want your Internet from. If so, that puts you in the minority. According to a 2015 report by the American Consumer Satisfaction Index, 61 percent of U.S. households have either one or zero choices when it comes to high-speed broadband providers in their area.

But this kind of thing already happened in American history a little over a century ago with this newfangled thing called electricity. As Susan Crawford writes in her book Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age:

[P]rivate electrical companies consolidated, wielded enormous influence in state and national legislatures, cherry-picked their markets, and mounted huge campaigns against publicly owned electrical utilities, calling them “un-American.” At the beginning of the twentieth century, private power companies electrified only the most lucrative population centers and ignored most of America, particularly rural America. Predictably, the private utilities claimed that public ownership of electrical utilities was “costly and dangerous” and “always a failure.

This practice ended in the middle of the 20th century, when electricity was soon considered a “natural monopoly,” meaning that the high barrier of cost of entry — you can’t just pool together money and construct a power plant and transmission wires — meant that it didn’t make sense for competitors to invest money in this business. Other examples like public water and garbage collection work the same way. One publicly owned company is good enough for each district to handle its own business; there are hundreds of electric utility companies in the U.S., each servicing a relatively small chunk of the country.

Many would argue this is the direction American Internet should head.

As it stands, there is not only no incentive for the cable companies to not only expand far beyond the metropolitan areas where there are residences — it doesn’t make fiscal sense to go much further, which is why 43 percent of rural California residents have no broadband access— but there’s no real incentive for them to even innovate their products to provide better service for their existing customers. They’re getting their $50–80 a month for their substandard service anyway, as the only other choice is cutting the cord entirely. 

Perhaps the dissonance is one of first impressions. When the Internet was introduced, it was a strange portal into a hidden “other” world. There was an entry point — PC computer screen, dial-up modem — so there was a division between being online and off. That has completely changed, not least because of the smartphone. Now, if you don’t have the Internet at home, you miss out on connecting with peers and culture, sure, but also the ability to bank, work, or do homework.

In the 20 years since the Telecommunications Act of 1996, the Internet has gone from optional to obligatory. It is now a part of the world. It only makes sense to change the way it’s delivered.

(Rick Paulas writes for Pacific Standard Magazine … where this report was first posted.)