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Who Built the Internet, Act II

Analysis of News Events
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In an article last May ("Who Built the Internet, and Is It for Sale?"), I discussed the implications of proposals by the largest ISPs to place usage governors on those sections of the Internet that pass through their routers. This article arrived on the scene just as the term "net neutrality" was beginning to gain public attention.

Now the issue is heating up once more, in a Democratic-controlled congress.

Background: A Trail of Industry Lobbying Efforts

A set of 2005 decisions from the U.S. Federal Communications Commission (FCC) and the U.S. Supreme Court allowed broadband providers that own their networks to stop sharing the pipes with competitors. In essence, the FCC was lobbied by the largest broadband providers to enable these private corporations to more firmly control the protocols and content that pass through their electronic pipelines.

The 2006 Debate on Net Neutrality

An unusual coalition of Internet technology companies and consumer protection organizations feared that such control would hamper or destroy the ability of content providers and content consumers to use the Internet, particularly in the U.S., where competition in the broadband industry is disappearing. These "net neutrality" advocates fear that these regulatory decisions by the FCC would enable large broadband providers to slow or degrade content from competitors.

The protests organized by this coalition of net neutrality advocates succeeded in bringing to world attention the fragile nature of virtual space that was created in the 1970s. However, the broadband industry prevailed in defeating attempts to amend the Communications Act of 1934 in the last Republican-controlled Congress. Compromises were offered: The proposed merger of BellSouth and AT&T—the largest telecommunications industry merger in history—was held up by the FCC until some agreement could be reached about net neutrality.

The FCC-AT&T Merger Compromise

Over the Christmas holidays, the FCC approved the proposed merger between BellSouth and AT&T. The new merged corporation agreed that it would sustain a form of net neutrality for a period of two years in exchange for FCC approval. The compromise impacted only the new AT&T; it doesn't apply to other broadband suppliers.

Now, two U.S. senators have re-opened the debate over net neutrality in Congress by reintroducing legislation that would prohibit broadband providers from content control.

Net Neutrality Reintroduced

Senators Byron Dorgan, a North Dakota Democrat, and Olympia Snowe, a Maine Republican, introduced the Internet Freedom Preservation Act on January 9, 2007. (You can view Senator Dorgan's introduction to this bill by clicking this video link.) This legislation was initially offered last year, but it was defeated in committee by a vote of 11 to 11 in the Republican Senate. The legislators later tried to amend language for net neutrality into a wide-ranging broadband bill in June, but the Senate Commerce, Science, and Transportation Committee did not take action on the larger bill.

The Internet Freedom Preservation Act of 2007

The current Dorgan-Snowe bill would prohibit broadband providers from blocking, impairing, or degrading legal Internet content. It would require broadband providers to allow customers to attach any legal device to the network that does not degrade service, and it would require providers to notify customers of their speed of service and limitations on their network use.

It's still too early to tell how this bill will fare in the newly formulated Democrat-controlled Congress. But the debate will renew questions about how and if the Internet should be subject to regulation.

Historical Parallels in Media Monopoly

The type of concern that net neutrality advocates have raised is not new, though the medium of the Internet is now the current technology in focus. Similar concerns have been raised each time a new communications technology has attracted wide, popular use. The conflicts arise when technology companies begin to leverage their technological prowess into areas of public influence, and the resulting battles rage around questions of ownership, access, and regulation.

The Battle for Radio Frequency

In the early 1950s and 1960s, a company in Bloomington, Indiana, called Sarkes Tarzian (ST) had similar issues with the FCC. The company had been started by an engineer name Sarkes Tarzian who understood the importance of radio technology at the end of WW II.

The story of Sarkes Tarzian is one of those Horatio Alger epics of an Armenian-born kid who came to the United States and became an electronics engineer. He patented, among other things, the FM channel selector that later became the standard tuning device for a burgeoning technology called "television". He created numerous manufacturing facilities, where his employees assembled radios, televisions, and a variety of appliances. In the college town of Bloomington, Indiana, ST became one of the main employers, and it proved itself to be a good corporate citizen. In essence, ST was the Google of the age of radio and television, with strong growth, leading-edge technology, and appreciative employees.

Leveraging the Medium

Earlier, in the 1940s, ST gained permission from the FCC to build radio sets that were technologically superior to the AM sets that were then being created. These sets were called HI-FAM sets, and the company beefed up AM radios to receive signals from a particular radio frequency in what is now known as the FM band. So new was the technology that the company used small ice-cream containers as the housing for these appliances. But what was most unusual about these devices was that they could only receive one radio station: The radio station owned by ST.

Boot-Strap Technology and Regulatory Conflict

Though the technology of Hi-FAM proved to be extraordinary, the FCC prevented the company from bringing the sets into full production. Its concern was that, with the patented technology used by ST, the HI-FAM radio spectrum would be controlled by a single corporation. This fear also conflicted with the FCC's desire at that time to expand the FM frequency for use with a new technology called television. The same frequencies used by HI-FAM were in conflict with the frequencies used by the burgeoning TV technology.

In partial response, ST abandoned HI-FAM technology and shifted its manufacturing to the TV channel tuners, which it sold to Zenith and other TV manufacturers. Then, as the technology of television required a new broadcasting infrastructure in regional facilities, the company saw the opportunity to move into the media arena.

Leveraging Technology into Media

ST bought out small AM radio stations and consolidated them into larger FM radio stations. It then consolidated some of these FM stations into TV stations, renting the rights to old movies from Hollywood and re-broadcasting this cost-effective content to its local markets. As the profits from these ventures poured in, the company then bought the small regional newspapers in southern Indiana and centralized the publishing resources. Legend has it that the news promulgated by this singular entity toed the editorial line of the company's owner, which was generally regarded as highly anti-regulatory and very conservative.

Regulating Broadcast Media in the 1970s

By the 1970s, the FCC became concerned. ST wasn't the only media conglomerate that was piggybacking the technological revolution into media. So the FCC began examining the editorial influence of media conglomerates like ST upon local markets. The FCC's stated concern was not only the lack of media competition, but also the potential power of any single organization to manipulate public opinion in a particular geographical region. Without competition, it feared that a politically active media conglomerate could sway public opinion toward a particular partisan viewpoint using the power of its broadcasting and media services.

By comparison, the views at that time of many media conglomerates—and purportedly ST—were this: "We built the infrastructure, so we have a right to broadcast whatever we see fit."

The FCC Perspective: Then vs. Now

In some respects, this is similar to the view of the large broadband providers of today: They claim they have built the Internet, and consequently feel they should be free of regulations. The FCC of the 1970s thought differently: It maintained that the radio spectrum was a public trust, and that—in the absence of competition—the licensing of those airwaves required regulation to ensure diversity of content and opinions broadcast to captive audiences.

However, advocates of net neutrality claim that today the perspective of the FCC, which is charged with regulating the broadband providers, appears to many to be more pro-industry in its focus.

On the Ground with Regulation

Meanwhile, back at ST in the 1970s, programmers were tasked to write computer programs to document, for the first time, the reach of the company's radio and TV stations, along with the distribution reach of its regional newspapers. In that era of anemic competition, this exercise was the equivalent of "marking out territory," and the company with the largest territory clearly had a competitive edge when dealing with advertisers.

However, what this task revealed to the FCC was that, indeed, the ST organization dominated nearly all news media within most of southern Indiana, parts of Tennessee and Kentucky, and a large section of southern Illinois.

The FCC regulators evidently saw this influence as too pervasive and too geographically concentrated and insisted that the corporation do something to disperse its media holdings.

In the end, ST and other media conglomerates "traded" ownership of broadcast stations in different geographical locations, and today ST owns stations in Chattanooga, Tennessee; Reno, Nevada; Ft. Wayne, Indiana; and Bloomington, Indiana. Today, ST is still a privately controlled corporation, a testament to its forthright and successful response to FCC regulation.

The Market Today

Today, competition from other media organizations has reduced media monopoly in the broadcast media, and cable channels have expanded competition. But one wonders if this scenario might have turned out differently had the FCC permitted ST to market its Hi-FAM devices or had a company like ST succeeded in dominating the media outlets of its original geography.

Lessons Learned

ST and other privately held companies, run by true technology visionaries, embraced the opportunities of technology to create real innovation. Like the large broadband companies of today, they saw the potential of a new communications medium and sought to capitalize and control the channels.

What the radio inventors of old could not foresee, however, was the government's claim that the invisible radio spectrum was, actually, a public space that required regulation for the benefit of its citizens. Without such regulation, the next technology of television could not have been advanced because frequencies like HI-FAM would have consumed the spectrum.

The lessons of the ST/FCC controversy also showed that a technology company's natural inclination was to control the channels of communication for its bottom-line benefit. The natural thing for ST to do with its inventions was to expand into media to bring in greater revenue using the technology it had invented. It believed it owned its channels; in fact, in the case of ST, it had invented much of the technology to access those channels. After all, without radio technology, the radio spectrum was useless.

But the FCC of the 1970s perceived that too much influence could be detrimental to the overall flow of information in a democracy, particularly in the areas of reporting public policy. As a remedy, it persuaded ST and other media conglomerates to disperse its influence.

Closing Parallels

This is much the same perspective of the advocates of net neutrality: Undue control by any large corporation within the realm of the Internet—clearly a public space like the radio spectrum—will lead to undue influence and unfair competition. What is not clear is how today's FCC or Congress actually views this new public space called the Internet.

If Congress and the FCC side with the large broadband providers, the Internet could possibly become a technology of limited potential, controlled by large corporate interests for the benefit of stockholders. On the other hand, no one knows for certain where the Internet will go if net neutrality is maintained.

Is it possible that, without thorough and thoughtful consideration, we might all end up with an Internet appliances that are the equivalent of HI-FAM ice cream cans, listening to truly "canned" content of a single channel?

That's what the net neutrality debate is really all about.

Thomas M. Stockwell is Editor in Chief of MC Press Online, LP.

Thomas Stockwell

Thomas M. Stockwell is an independent IT analyst and writer. He is the former Editor in Chief of MC Press Online and Midrange Computing magazine and has over 20 years of experience as a programmer, systems engineer, IT director, industry analyst, author, speaker, consultant, and editor.  


Tom works from his home in the Napa Valley in California. He can be reached at ITincendiary.com.





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