March 30, 1999


by Andy Oram
American Reporter Correspondent

CAMBRIDGE, MASS.—Plenty of people have an agenda for the Internet. They range from Al Gore asking for more wires in the schools, to conservative Congressmen asking for more wires from Bell telephone companies; from libraries promoting uncensored access, to music studios promoting restrictions on the dissemination of copyrighted material.

But few users realize that the people bringing us the Internet have agendas too. But until three years ago, few service providers followed legislation through Congress or hired lawyers to hang around the Federal Communications Commission. They had enough trouble hooking up enough routers to satisfy the armies of new users hungry for email, keeping lines free from congestion, and fixing poorly configured look-up services.

The Communications Decency Act was a wake-up call to many ISPs. With its vague provisions for assigning responsibility to “interactive computer services,” it made them realize that politics intrudes on the business of providing access.

About the same time (1996-1997), the Bell telephone companies finally realized the Internet was an important market and brought in some serious competition, dragging along with them several decades’ worth of regulatory bureaucracy.

For evidence of awakened ISP attentions, take the Commercial Internet eXchange (CIX)—the largest consortium of ISPs in the world, if you measure by volume of traffic. CIX was founded in 1991 to provide the first commercial access to the Internet backbone, part of the Internet community’s conscious move away from government dependence. Three years ago, its executive director, Barbara Dooley, started a new legislative focus that brought it back to policy tables.

CIX helped to fund the ACLU’s successful challenge to the CDA. Last year, Dooley claims that CIX was a major force in winning a turnaround in the Digital Millennium Copyright Act and reducing its regulation of ISPs and other Web site providers to just about the minimum acceptable to copyright holders. The Copyright Act was a model for this year’s Internet gambling bill, which replaces a bill CIX helped to defeat last year.

According to public policy director Eric Lee, CIX also publicized the problems with a bill called Murkowski-Torricelli, which was advertised as a cure for spamming (unsolicited commercial email) but would actually have legitimized and entrenched it.

Now Internet providers have lawyers who work on bills across the legislative spectrum. Regulatory issues will appear in several panels at the next ISPCON, the major conference for service providers.

The two chairs of the House Internet Caucus, Congressmen Rick Boucher and Bob Goodlatte of Virginia, are planning broad legislation that will cover a number of hot topics. Boucher—who cosponsored a copyright act in 1997 that was widely praised by the technical and research community—told me the new legislation would try to be a “comprehensive solution for the major challenges that confront the Internet today.” For him, these include:

Behind each of those agenda items, of course, lies a world of controversy. (For instance, privacy action groups would like a lot more than “notice” of information collected; they want restrictions on its use.) If the comprehensive bill ever emerges, it will hopefully receive all the debate and public scrutiny that the Telecom Act of 1996 should have had, but did not.

It is over the “last mile” that ISPs are now fighting, perhaps for their very lives. Before a number of regulatory bodies—in states, in cities, and before the FCC—they are demanding access to phone lines and cable services that deliver data to residences. Their representatives are also in some disagreement about how to proceed.

The last mile issue springs from the near-monopoly control over wires going into people’s homes in most communities. Few cities have more than one cable provider, and almost none have a telephone carrier competing with the Bell company for residential service.

Furthermore, mergers are reducing the number of players. This was actually the plan behind the notorious Telecom Act of 1996. Congress hoped to increase competition indirectly by (ironically) decreasing the number of communications companies. In this plan, large companies were supposed build up resources through mergers and then enter each other’s turf. In pursuit of the goal, the Telecom Act deliberately relaxed limits on multiple ownership and entry into markets.

The new regulatory environment may indeed lead eventually to some sort of competition—two or three companies in each locality that can offer you everything from voice to video. But what about the more than 6,500 independent ISPs in this country?

Until the past year, no company could put a roadblock along the information highway. Individuals dialed up ISPs as they did to make appointments at their local hair-and-nail salons.

But then high-speed data became possible through cable modems and Digital Subscriber Line telephone service. If the Joneses got it and you didn’t, you’d be so ashamed you wouldn’t even engage them in Internet Relay Chat.

Phone companies can make life hard for ISPs trying to offer high-speed access over DSL. Mark O’Connor, an attorney representing CIX before the FCC, says, “If the last mile were truly competitive, it is likely that prices for delivering data services would fall and the variety of Internet services offered by ISPs would greatly increase for the benefit of consumers.” Some commentators suspect that Bell pricing is high enough to make it impossible for ISPs to offer DSL at a profit.

Cable is even worse for ISPs, because here there is no effective regulation and not even the fledgling competition provided in telephone service by competing carriers. Now there are rumors that cable service providers @Home and Road Runner may merge (following the recently announced merger of their leading partners, Comcast and MediaOne—a merger they promoted as a way to expand further into the data market). That would leave a single monopoly Internet provider in the cable modem market. The president of AT&T denied that a merger in data services was being discussed, however.

ISPs are mobilizing on many fronts, both national and local, to clear the roadblocks. Nationally, CIX is asking the FCC not to give the Bell companies any new opportunities to enter long-distance markets, or to offer expanded DSL service, till there is competition in DSL.

A newly formed organization called the OpenNET Coalition is putting similar pressure on cable companies. Locally, the DSL issue is fought before state utility commissions that regulate phone companies, while the cable issue appears before city utility commissions that grant licenses to cable providers.

The open access issue has opened a bit of rivalry between ISPs. CIX representatives Dooley and Lee call the cable issue a distraction; to them, tying cable access to DSL access will only slow down DSL access.

In defense of the OpenNET Coalition, the number of cable modem customers is an order of magnitude greater than the number using DSL, and the monopoly of cable companies on their particular segment of data access is much more blatant. Dave Baker of MindSpring, an Internet provider and cofounder of the OpenNET Coalition, says, “Cable bills have doubled in less than 10 years. Is the cable model of pricing and lousy customer service going to become the Internet model?”

It doesn’t help you in sorting out the issues to learn that one founding member of the OpenNET Coalition is U.S. West, the first Bell company to deploy DSL and thus the one most in the thick of battles with ISPs. Correspondingly, CIX counts as one of its members AT&T, the company that kicked off the cable controversy by merging with TCI, promising to vastly increase cable modem coverage around the country, and insisting that all customers go through the TCI service provider @Home for Internet access.

After ensuring access to their customers, the next agenda item of the Internet providers is to avoid liability for what Internet users do on their services. Luckily, U.S. legislators and courts are getting the message, as the outcome of the CDA, the copyright bill, and the gambling act show.

The copyright bill originally included liability provisions that put providers of Web services at risk when anyone renting space on their servers put up infringing material. The final bill includes complex provisions protecting these services, requiring in return only that the administrators register with the Copyright Office. Dooley considers this a very fair exchange and an excellent outcome. (We are considering just the provisions affecting ISPs in this article, not the other controversial provisions of that enormous bill).

The gambling bill originally was “a horror” for ISPs. For instance, it would allow a court to require that an ISP block access from a particular user to a particular site. Current language still places some responsibility on the ISP, but absolves it when blocking is “technically or economically unfeasible.”

Lee says that CIX is “optimistic” about the bill from the ISP standpoint, but adds with some cynicism that their achievement involved making the bills’ supporters reduce their expectations. One attorney general, for instance, went from calling the bill a solution to saying it would be “a statement of policy.” Lee comments, “Legislation that its sponsors know won’t be effective, and can’t be effectively enforced, is an unsound approach to making public policy.”

I am personally wary of the “technically or economically unfeasible” language, which is reminiscent of wishy-washy legislation passed elsewhere. (For instance, a German lawyer pointed it out to me in German regulation of pornography and hate speech on the Internet.) Such nose-in-the-tent language gives prosecutors and judges the notion that they can determine what is feasible, and to drag ISPs into cases where they don’t deserve to be.

Liability problems rear their heads more often in other countries, as for instance in France last month when the ISP was forced to pay for unauthorized pornographic poses put up by an anonymous user, or even more recently in England when the ISP Demon Internet was held responsible for libelous statements that it failed to remove from a newsgroup.

I asked Dooley to define her general philosophy regarding Internet policy, and she said, “Let the market work.” This means a balancing act where regulation does not hamper ISPs, but offers a protective environment for an industry that is still small, where businesses are barely breaking even, and where the surrounding environment is still being regulated.

Thus, she is pleased that the FCC—which has generally been favorable to ISPs—is maintaining the exemption of information service providers from fees and charges levied on telecom providers. It would kill most ISPs to change the rules before they are profitable and stable.

Internet access is an old-fashioned American success story, carried out by thousands of local, minimally financed individuals working with little more than a pair of pliers, a soldering iron, and a vision. Now, according to a brochure circulated by the U.S. ISP Alliance (of which CIX is a member), 96% of Americans can reach at least four ISPs through a local call—that’s competition. And the other 4% can reach at least one ISP through a local call or 800 number.

This is an astounding success, and it was achieved not through regulation or major investment from a huge corporation, but through the efforts of college students, computer administrators, and curious techno-tinkerers, often working part time.

Perhaps the age of Internet innocence is over, at least in the United States. ISPs can now read FCC notices as readily as Cisco router documentation. As we have seen, they’ve found that they have to partner with deep-pocketed players and compromise with entrenched interests on the Hill. But ISPs are going to be heard from now on in policy and legislative circles.

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