Common Carriers

A key to understanding 2019 will be the issue of common carriers.

In just one decade the “Cloud Czars” – Apple, Microsoft, Google, Amazon and Facebook – have replaced the telecommunications and broadcast industries with a new system, using their infrastructure.

We don’t make overseas calls anymore. We Skype. We don’t watch TV. We stream.

The cloud was built without government subsidy or interference, in a competitive free for all in which the winners invested while the losers did not. The industries replaced by this infrastructure were built as monopolies, under systems of regulation controlled by the Federal Communications Commission and, when necessary, courts.

This made sense, in terms of both capital preservation and technology, at the time.

It made no sense in the 1900s for dozens of carriers to serve downtown while no one in the countryside had a phone. So, the Bell System introduced “universal service,” exchanging monopoly for rate regulation. Someone had to hold a separate license for each local radio frequency band by the 1920s or interference would have made broadcasting impossible. Thus, the FCC, which could also control the content of broadcasts.

It’s not just industry that has lost power in this decade. It’s also government. The West Coast Law of Facebook and Google has replaced the East Coast Law of AT&T and the FCC.

Lots of people dislike this new status quo, and 2019 will see enormous efforts expended to dethrone the Czars using excuses like competition or the “public interest.” But it’s really all being done in the name of the incumbents, the companies that held power through Washington for a century and have now been dethroned by the market.

As 2019 opened AT&T, the largest phone and cable network provider, was worth about $208 billion. Facebook, the smallest of the Czars, was worth $376 billion – it had been worth nearly $600 billion at its peak in July.

Follow the money.

AT&T is now proposing a “text tax,” a “small” fee placed on every Internet bill aimed at providing “rural broadband” service. This movement is starting in California, because AT&T still has vast power in state capitols, including Sacramento, and if it can pass a tax there it can quickly spread. Supposedly, the revenue would be spent by AT&T developing rural broadband.

The “text tax” is an effort to take money from those who’ve invested in the future and give it to those who haven’t. The argument is carefully structured around “fairness,” and “equity.” But Facebook, or Google, which have both worked hard on low-cost rural Internet access schemes over the last decade, aren’t being told to invest the cash. They’re being told to pay, because AT&T is a “common carrier,” while they are not.

This is the crucial point. Common carriers take responsibility for telecommunications systems. Internet companies do what they want. Nothing scares Google or Facebook so much as the idea that they might be deemed common carriers and thus face government intrusion in their businesses. Internet Service Providers have been fighting this for 25 years, ever since the Web was spun, before Google or Facebook even existed. The argument was that the new Internet needed room to develop, that regulation would stifle it in the cradle.

The Internet is no longer in the cradle. It’s a mature industry. It’s Godzilla. Google opens for trade January 2 with a market cap of $724 billion. That’s more than AT&T, Verizon, and Comcast combined. The argument the Internet made against regulation two decades ago no longer seems to make sense.

New arguments are needed. The argument needs to be made because the Internet can’t stand the kind of regulation incumbent industries are subjected to routinely.

You still can’t use George Carlin’s “7 dirty words” on NBC. There are no cable porn channels. In Europe and Asia, standards for broadcasters are even stricter. Government, whether democratic or autocratic, is the arbiter for what can be said to the multitudes.

The Czars have upset this applecart, letting everyone have their say, but the result hasn’t just been the “freedom” the Czars envisioned, but a digital anarchy in which thieves and dictators are free to destroy liberty and democracy. The Constitution is a system for ordered liberty. The Czars’ liberty is entirely disordered, with power going to those who are most technically proficient. The Czars have done nothing to fix what is broken. They have done nothing to stop Trump, or his copycats around the world, who can “flood the zone” with their lies before truth has a chance to get its pants on.

The Czars haven’t taken responsibility for what they created, giving that power to people who do not have the interests of the global Internet at heart, only their own parochial interests, only their own lust for power. Poor man wants to be rich, rich man wants to be king, and a king ain’t satisfied until he rules everything.

Thus, West Coast law must be fixed, and East Coast law claims it can fix it. A call to impose broadcast-like regulation over the Internet, and over the people who use the Internet, is getting a favorable hearing.

Already, Europeans can have their crimes erased from Google’s metadata, their evil deeds ignored, under a “right to be forgotten.” This year Europe will try to impose a “link tax” on the Czars, and then on everyone else, so that incumbent newspaper chains and broadcasters – most with close links to government – will collect money whenever their content is even being referenced. Nothing could be more destructive to the Internet’s original purpose of sharing information than this.

Many supposedly “democratic” countries, from England to Australia, have also moved to impose “broadcast standards” on Internet content, even building firewalls to filter out content they don’t like. This movement is coming to America, the largest Internet market. As 2019 opens the Czars appear to be impotent in the face of all this government, and the public anger that backs common carrier and broadcast standard regulation. The Internet is unsafe. The government claims it’s here to help.

The Internet is being destroyed by its own anarchic impulses and straitjacketed by governments whose standards for “ordered liberty” would destroy liberty on behalf of order.

How the Czars react to this will determine whether our grandchildren have any access to the gifts this Internet gave them. The incumbents are going to do all they can to take the Czars down, and the record of the Czars’ time in power, as seen by voters, doesn’t guarantee they will win this fight. 

But if they lose, all I know is Ludd wins, and this is the heart of the generational crisis that 2019 brings. Can there be cyber peace? Can there be ordered liberty on the anarchic Internet?

Stay tuned.