SCN: Net politics

[Steve]

x-no-archive: yes

====================


(Thomas E. Weber, Wall Street Journal)---Only a few years ago, 
politicians and regulators at least paid lip service to the idea that 
government should stay out of the Internet as much as possible. 
So why is everyone in Washington clamoring to meddle in the 
online world now?  

At the Federal Communications Commission, a new proposal 
would make it easier for the Bells to dominate high-speed Internet 
service. In Congress, the controversial Tauzin-Dingell bill seeks to 
accomplish the same thing. Meanwhile, over at the Copyright 
Office, they're mulling a plan that could kill the fledgling Internet 
radio industry. And if Sen. Fritz Hollings has his way, the personal 
computers of the future will be designed to congressional 
specifications.  

Nothing escapes government entanglement, of course. But this 
current flurry of activity is especially troubling for two reasons. 
First, technology is complicated, which makes these issues easy to 
get wrong. Second, all of the measures directly affect consumers -- 
yet consumers seem to have very little voice in these debates.  

That's most apparent in the Bells' battle. It's a lobbying carnival 
pitting the local phone monopolies against giant long-distance 
providers. At issue is a provision of the landmark 1996 
Telecommunications Act that barred the Bells from offering high-
speed data services -- i.e., the Net -- unless they granted rivals 
access to consumers' phone lines.  

Tauzin-Dingell would lift that restriction, allowing the Bells to 
further monopolize your phone line when it comes to DSL. Though 
the measure passed the House last week, it isn't likely to survive a 
Senate vote. Yet on Feb. 15, the FCC proposed a regulatory 
change that could do the same thing.  

It's all too easy for the Bells' allies to position these moves as free-
market actions -- the opposite of government interference. But 
where a regulated monopoly is concerned, things just aren't that 
simple. You can't turn back the clock on decades of oversight. Any 
change in the status quo ultimately represents meddling.  

So what's behind Washington's new hands-on attitude? The 
recession, and the hope that high tech can reignite the U.S. 
economy. That has granted political cover to anyone who wants to 
interfere with the Net's evolution. "You can do anything you want in 
Washington right now as long as you say you're promoting 
broadband deployment," says Dave Baker, vice president for law 
and public policy at EarthLink Inc., an Internet-service provider that 
opposes Tauzin-Dingell and the FCC proposal.  

Tauzin-Dingell backers would have us believe that loosening the 
Bells' leash will spur them to invest, bringing a brave new era of 
broadband to consumers. Forget for a moment that many 
consumers who could get high-speed Net access have opted 
against it. More power to the Bells will plunge consumers further 
into an Internet duopoly, where their choices for broadband are 
limited to the phone company or the cable company.  

Gerald Faulhaber, a former FCC chief economist who teaches at 
the University of Pennsylvania's Wharton School, supports freeing 
up the Bells -- but not for the reasons embodied in all the Beltway 
rhetoric. He argues persuasively that the Bells have already 
succeeded in destroying DSL competition by hindering rivals that 
wanted to use the Bells' lines. It's time to move on, he says, and 
focus on removing obstacles to cable and phone alternatives like 
wireless broadband.  

In the long run, that could give consumers choice and lower prices. 
But in the near term? Make no mistake: We're in for higher prices 
and mediocre service, courtesy of the cable-phone duopoly. "In 
essence, we're still stuck with these guys," Prof. Faulhaber says.  

Even as politicians and regulators profess their passion for 
broadband, they're busy attacking applications that could increase 
demand for high-speed Net access. The Copyright Office is 
considering an arbitration panel's report that would determine 
royalties for songs streamed to listeners online -- and penalize the 
independent Web broadcasters that give music fans an alternative 
to broadcast stations' endless top-40 fare and inane DJ blather.  

Traditional broadcasters -- radio stations that also stream their 
signals over the Internet -- would pay record companies a royalty 
of 0.07 cent for every song played, multiplied by the number of 
listeners. Web-only broadcasters would pay twice that.  

At Live365.com, which streams broadcasts by hundreds of Web 
DJs, the proposal is a huge blow. The company favors 
compensating artists but wants rates that won't destroy the Web 
radio movement before it has a chance to grow. If you want to 
weigh in, e-mail the Copyright Office at copyinfo at loc.gov.  

While your computer is fired up, you may want to visit the Web site 
of Sen. Hollings (hollings.senate.gov) to ask why he thinks the 
government can design computers better than IBM or Apple. At a 
hearing last week, the South Carolina senator pressed his notion 
that computer makers should be required to build copy-protection 
technology into all PCs, lest Hollywood find itself Napsterized.  

This is such a bad idea that it's scary. For more than two decades, 
the personal computer has been the technological Swiss Army 
Knife, a tool that lets giant companies and individual programmers 
alike invent new ideas and the occasional new industry. Sen. 
Hollings's approach eloquently defends the interests of movie 
studios. But, like all of the high-tech meddling going on in 
Washington these days, it is silent on the needs of consumers.  


Copyright 2002 Dow Jones & Company, Inc.





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