When they announced yesterday that the Department of Justice was beefing up the antitrust division, the first likely target I thought of was cable TV. How about it, guys? We can't take much more of these monopolies' skyrocketing prices:
Last month, the nation's No.2 cable company Time Warner Cable announced plans to test a new billing system known as "metering" that charges Internet customers depending on how much they download. Customers who exceed their limit--say, by viewing online videos--would face steep penalties on top of their subscription rate.
Time Warner Cable's usage penalty would take the unlimited service we enjoy today (albeit slow compared to other nations), and make Internet more like cell phones, where you get overcharged by companies making record profits. It is the latest version of the Net Neutrality debate: should the companies that deliver Internet be allowed to block it, slow it down, or in this case, overcharge for it?
Here's why this issue threatens the Internet as you know it: Cable companies Time Warner and Comcast, and phone giants AT&T and Verizon sell the vast majority of high-speed Internet service in the United States. Phone and cable companies like these have no other competition in 97% of US markets, thanks to corrupt policies passed by the Bush Administration at the companies' behest.
These duopolies are betting on the future of their "triple-play" phone-Internet-TV service, so that you'll pay them more than $100 per month and they can keep earning record profits. They know that if you start downloading video from online innovators like Hulu.com and Roku.com, eventually you won't need their expensive, advertising-ridden television service. If you decide to use online phone providers like Skype, you won't need their expensive phone service. The answer? Jack up the cost of Internet, and once again eliminate the competition. This is exhibit A for when we need government to establish and enforce consumer protections; the same brand of policies we needed to prevent the financial meltdown and protect New Orleans.
Fortunately, Time Warner Cable's pricing scam was met by fierce opposition from consumers, public interest groups and members of Congress. Rep. Eric Massa (D-NY) and Sen. Charles Schumer (D-NY) spoke out against the scheme, and Time Warner Cable scuttled the plan in four of the five test cities. Beaumont, Texas, was the city left as the lone petri dish, and Congressman Massa has promised legislation to curb the price-gouging. Yesterday, Rep. Massa told the Philadelphia Inquirer he is looking for a Republican co-sponsor for the bill: "This is bigger than a college kid surfing the Internet. Anything that limits access to the basic Internet is a threat to the economy."
Time Warner Cable is regrouping, and says it is planning a "customer education process" to teach the public that high prices and Internet caps are good for us. And while the company tries to get its messaging right, other phone and cable companies are dipping a toe in the metering pool. AT&T is already testing a billing scheme that caps Internet use, and other Internet service providers are preparing to do the same.
There are a host of other reasons why we should be worried about Internet service providers' march toward overcharging for high usage: First is journalism. We continue to learn about Madonna's adoption problems and Ms. California's old photos, but if you want substance in your news, you'll have to look beyond corporate media's steady stream of sensationalism, celebrity gossip and product placement. We need fast, neutral, affordable Internet that can deliver video, audio and other multimedia to enable efficient production and distribution of journalism and other educational content.
Another is access. Today, some 40 percent of American homes do not have high-speed Internet, according to the U.S. Census Bureau. And high-speed Internet access in the US is already far more costly and slower than in 21 other developed countries. Time Warner's pricing plans would put the Internet even further out of reach for tens of millions of Americans.
Time Warner Cable and other Internet providers say they need to penalize users to slow down an impending "Internet brownout"--a day when we run out of bandwidth. That bandwidth doomsday, however, isn't about to happen anytime soon. Even one of Time Warner Cable's own executives offers evidence that bandwidth scarcity is a ruse: "Cable is like the Federal Reserve of bandwidth...we can practically print the stuff!" said Mike LaJoie, the company's chief technology officer. LaJoie has also said that supplying consumers with more bandwidth is "basically free" for his company.