How Regulation Created the Internet Service Provider marketplace )Re: Microsoft's fear of free software

Nathan Newman nathan.newman at yale.edu
Thu Nov 5 21:20:56 PST 1998


-----Original Message----- From: Enzo Michelangeli <em at who.net> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com>
>Not only is a call to an
>Internet Service Provider just as cheap as any other local phone call,
>typical users of the Internet are online far, far longer than the typical
>phone call- so Internet users, disproportionately upper income, get
>subsidized by the general customers of local phone service for those
>calls.

-This is what the local telcos say, but it does not hold water. In first -place, the fact that Internet users are in upper income brackets is -totally irrelevant: telephony is a business, not a form of social work.

No, telephony is the lifeline for social interaction and basic access to a range of services in society. Anything that systematically drains resources from lower income services to subsidize higher-income services- that is neither business nor social work, but reverse robin hood government.


>Besides, jacking up the costs of Internet would price it further out of
>reach of the less wealthy, keeping them in a cultural ghetto that would
>perpetuate their disadvantage.

Not really. Right now, email and most basic uses of the Internet take up only a small fraction of the resources used by "power users." If the Internet was not based on massive subsidies to those hogging hte most resources at an "all you can eat price", it would be relatively simple to include basic Internet services under the already existing Lifeline telephone package- funded by proper costs shouldered by those currently sucking resources out of the local telephone service.


>Secondly, the duration of the calls is not matter for discrimination: if
>they feel that long calls are unprofitable, the local telcos should
>switch to metered service - if they can get away with that. In some place
>they do.

Actually, the problem goes beyond just long local phone calls (which under local regulation, most Baby Bells cannot turn into metered calls- again another government regulatory benefit for ISPs).

A number of companies have entered the local phone business specifically to service ISPs. It's a complicated game, but these local phone companies are given essentially free access to the local phone infrastructure, sell local service to the ISPs who cost almost nothing to service, since they make no outgoing calls, and then under the byzantine FCC rules, actually collect shitloads of money from Baby Bells who have to pay these ISPs' phone companies for the privilege of these long local phone calls that are already costing them so much.

It is an absolutely astounding racket for all involved as they pick at the carcass of basic phone services to the benefit of upper income ISP users.


>Third: even if the local telephone network could be considered public
>infrastructure (which is not) accusing ISP's of getting a free ride on it
>is like saying that, say, shopowners abuse the existence of the roads to
>build up their business.

If such businesses were having massive tractor-trailers causing traffic jams throughout the city while destroying the roads, that is quite a good analogy. Most such trucks have to pay higher fees for use of the roads and are barred from many roads in order to preserve that infrastructure.

A similar set of rules for ISPs is quite in order.


>In a normal, unregulated market, the Baby Bells would be charging ISPs
>tremendously higher rates for access. So ISPs have spent a lot of time
>lobbying the FCC to keep the regulations in place.
-No, they wouldn't: in an unregulated market there would be no monopoly.

AT&T without government regulation created monopoly phone service across about half the nation in the first decades of this century. Small phone companies found themselves cut off from other phone users in the AT&T system and that problem of interconnection was what led to the present regulatory system of today. AT&T's monopoly profits were put under regulation and they were forced to give access to any phone company.

Without government regulation, the whole ISP industry would disappear and the only Internet service would be through the handful of giant telecom companies left.


>Remember, most of Linux was created
>by programmers on the government dole, including Linus himself who was
>generously supported at his Finland university.

-I'm not sure his university paid him so "generously" :-) But anyway, very -few (if any) of the developers were paif _for writing Linux_. And many -universities are not government-owned at all.

Most universities are government-owned, especially when looking worldwide, and even the private universities got most of the money for their computer science departments from government contracts and grants.

It is just libertarian denial to ignore the fact that the Internet, like most of the computer industry, is the product of the government dole.


>What the Left should recognize and trumpet loudly is the success of the
>Internet as a product of government planning, government spending, and
>government regulation.
-All of those are of questionable importance, but none more than -"planning".

Really? In 1960, J.C.R. Licklider at MIT wrote a research paper that pretty much laid out the principles of the Internet. A couple years later, he established the office at the Advanced Research Projects Agency (ARPA) that would direct the Internet for the next twenty-five years. That agency systematically funded computer projects at MIT, Stanford, UCLA and a host of other universities to support the emerging computer industry and Internet technologies, established the initial Internet linkages, designed the protocols, funded the UNIX operating system to enhance computer compatibility, and funded university departments across the country to get Internet hookups.

Which part of this is not government planning?

--Nathan Newman



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