What We Have Here is a Failure to Communicate

Copyrighted music, credit card numbers, celebrity sex tapes – when it comes to the internet, we're used to hearing about people who share too much. But on March 29, the U.S. Supreme Court will consider whether it's alright to share nothing at all.

It sounds arcane, but the "Brand X" case – named for the tiny Santa Monica ISP that initiated the challenge – will have a profound effect on how you access the internet, how much it will cost, and what you will be able to do when you get there. FCC v. Brand X Internet Service will determine whether cable monopolies can be required to share their networks with other internet service providers.

For most Americans, broadband internet access comes to the home in one of two flavors: digital subscriber lines (DSL) which use traditional telephone wires, and cable modem service which travels the same copper rails that bring you celebrity poker and The Sopranos. Both sets of wires lead to what economists call "natural monopolies." It's expensive and difficult to dig up city streets and plant telephone poles, so cities use one company for phones, another for cable. If all goes well, the negative effects of these two monopolies – lack of consumer choice, price gouging, crappy terms of service, etc. – are managed by government regulations.

Civil liberties groups are quick to point out why those rules are necessary. "A cable company that has complete control over its customers' access to the internet," writes the American Civil Liberties Union in its filing with the Supreme Court, "could censor their ability to speak, block their access to disfavored information services, monitor their online activity, and subtly manipulate the information sources they rely on." In other words, new services like 'voice over IP' (VOIP) and internet TV could find that the digital roads owned by telephone and cable companies – the only roads in town – won't deliver them to your neighborhood.

That kind of bottleneck was supposed to be precluded by the Telecommunications Act of 1996, where Congress decided to encourage competition in the broadband market. If a company offers so-called "telecommunications services" to the public, they said, it must also share its lines with competing service providers like Brand X. A million ISPs would bloom, and every man, woman & child would have internet faster than greased lightning. Failure to share, on the other hand, would mean a hefty fine from the FCC.

But it turns out that ignoring Congress rates lower on the FCC's enforcement scale than naughty words and breasts. Cable companies like Time Warner and Comcast failed to open their networks, but no fines were issued for refusing to share their piece of the information superhighway. The agency justified its failure to act by claiming that cable modems aren't "telecommunications services," but rather "information services" exempt from regulation. The FCC had abdicated its oversight role, and companies like Brand X were left in the lurch.

The move was arrogant, but it is also in line with the FCC's current ideology. The agency is supposed to regulate monopolies, but its approach has been, for lack of a better term, laissez-faire-on-steroids since the Reagan Administration. In a nutshell, the FCC decided that competition between technologies is better than entrepreneurship in the market. According to the agency, radio competes against newspapers, broadcast TV battles cable, and the internet will pick a fight with any conglomerate left standing. This aggressively abstract outlook has led to the "pro-competition" policies that, for example, have helped feed independent radio stations to a bloated Clear Channel for nearly a decade.

Yet despite the FCC's foot dragging, the plucky folks at Brand X decided to force the matter. They asked for legal clarification on the FCC's position, and in the fall of 2003 they got an answer. The Ninth Circuit Court of Appeals ruled that the FCC's stance was just a linguistic shell game, and they ordered the agency to get right with the law. With characteristic respect for authority, the FCC appealed to the Supreme Court, and next week it will try to defend its position.