Open Excess

Federal judges perform miracle, make broadband policy worse

Judges of the U.S. Court of Appeals for the 9th Circuit took one very long look at the Federal Communications Commission's policy on broadband providers and couldn't make heads or tails out of it. Having one set of rules for telephone companies who sell broadband and another set of rules for cable companies who sell broadband is not fair, the court found. Cable providers should have to labor under the same open access requirements that the phone guys are stuck with.

And with that the court applied impeccable, deadly logic to the most illogical of regulatory realms. As a result, real honest-to-goodness competition between giant communication conglomerates may grind to a halt and the rollout of new—and potentially much cheaper—technologies like voice over Internet protocol may be stalled.

The court essentially bought the argument that without an FCC-enforced open access requirement the cable companies would lock consumers into services they did not want. (Never mind that so-called "consumer groups" who agitated for open access regs do not want to pitch the one thing that hands captive consumers over to cable companies—exclusive cable franchise agreements with localities.)

The idea that the cable industry—or the phone guys for that matter—want to control or "wall off" the online world is some dark fantasy. No cable exec schemes to sell a shell account to every Tom, Dick, and Linus with a kernel to grep. The big money lies elsewhere; hence, niche markets will always survive.

Cable guys want to do what they have always done, charge as much as possible for the programming they shove down the pipe to your home. If the pipe is bigger and it is possible to charge by the program rather than by the month, all the better. Everybody's welcome. In fact, many consumers might prefer a la carte pricing for programming and services.

A greater range of services might follow as well. The recent history of pay-per-view offerings is not one of restraint. Mike Tyson, Howard Stern, soft-core porn, and even crappy football teams enjoy the embrace of quad-shielded coax. Exactly what demand is going to go unfulfilled as the pipe widens and PPV and video on-demand tech expands is a mystery.

In fact, the bigger pipe and the use of new technology brought us the open access issue in the first place. Cable could have just said no thanks to piggybacking Net service on top of traditional TV offerings. But it didn't because consumers wanted Net service. So much for walling them off. That desire for high speed Net, in turn, helped fulfill FCC's fervent wish that the phone guys and the cable guys would compete against each other. Such competition has one sure winner: consumers.

You can really feel for FCC wonks in the wake of this decision. Here they are with a tidy little competition going on and here come the courts to foul it up. Of course, the lack of any open access mandate for cable guys looks unfair when the phone guys have one. But in the big picture the FCC knows that the phones guys already hold all the best cards, the ace being they already operate as telephone common-carriers.

The phone companies would dearly love for every wired service under the sun to be found to be an Official Telephone Service, with all the heavy regulation that entails. That would mean the future of broadband would be hashed out under phone company house rules.

The FCC knows that would tilt things too far in the direction of phone guys, but is handcuffed by its own definitions. Wires either carry telephone service or information service. But today's bits do not subscribe to this false dichotomy.

The reason the regulatory state is flummoxed by the digital world is because digital delivers cheap multi-function tools to the masses to do with what they will. Single-purpose appliances are easy to regulate. You may not operate an iron smelter in your yard. A radio transmitter must be licensed by federal authorities. Telephone service providers must provide for 911 service, collect universal service fees, and subsidize politically favored groups, like rural populations and residential service.

However, the world has changed. New devices make a mess of the old rules. No cameras allowed. Oh, your phone is a camera. No phones allowed, then. Except phone phones.

The FCC or the courts cannot bring the old world back by fiat. What they can do is be disgusted by clumsy, ancient regulations. Welcome to the club.