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The Supreme Court issued a couple of crucial technology-related rulings at the end of its term in June. One got most of the publicity. The other may, in the end, have been more important. The more celebrated matter, the copyright infringement case called Metro-Goldwyn-Mayer Studios Inc. vs. Grokster Ltd., pitted the entertainment industry against file-sharing software companies. The judges demonstrated good intentions, and clearly were worried about slowing the pace of progress.
But the court awarded the entertainment companies well more than half a loaf. Entrepreneurs, lawyers and venture capitalists will now pause before risking time and money on technological innovation that might be used for copyright infringement. No one with common sense wants to promote wholesale infringement. But this ruling is bound to be a deterrent to good ideas, not just bad ones.
In a second ruling, this one called the Federal Communication Commission vs. Brand X Internet LLC, the court was essentially showing deference to a regulatory agency doing the bidding of Congress.
In the process, however, the court affirmed a principle that largely benefits a few big companies - incumbent telecommunications carriers whose advantages were already exceptional.
Brand X was the challenge by a small Internet service provider (ISP) in California to a Federal Communications Commission ruling that cable television companies providing data services don’t have to open their lines to competing ISPs. In the arcane world of telecoms regulation, the FCC has ruled cable Internet service is an information service, not a telecommunications service. And therein lies a big difference.
A telecommunications service has what is called “common carrier” status. This brings many obligations, one of these is that the carrier must allow other people and companies to plug into the lines. An information service has no such obligations.
There are several potentially damaging outcomes from the court’s ruling. Susan Crawford, a law professor at Cardozo Law School in New York City, says the FCC’s powers have been made disturbingly broad. The commission “can call anything that processes information an ‘information service,’ including any application you can think of,” Crawford wrote in her weblog. “And it can impose any rules it wants to on that information service. We’ll be relying on the Commission’s self-restraint from now on.”
The FCC’s intentions in the Brand X case seemed more deregulatory than invasive. But even granting that intent, the effect is even more pernicious. It endorses what the big telecoms companies have been wanting: absolute control over the data that flows in the lines they control not just the provision of data access.
America is rapidly heading toward a time when a typical community has at most just one or two serious broadband data providers: the cable company and the phone company. Apologists for this trend say it will bring prices down. It will, for a time.
But does anyone really believe that a duopoly will lead to serious competition in the long run? How would we like a world with just two airlines? We wouldn’t, especially if both of those carriers had been created and built via government-granted monopolies.
The threat to the free flow of information is alarming. When people talk about media consolidation, they should think about a future when companies with monopolist backgrounds decide what data flows, at what speed and in what order, on their pipes. They deny such intentions but their business interests inevitably will lead to discrimination of content.
Improbable? Not at all. Last year, customers of a company providing a “Voice over Internet Protocol” service found they couldn’t complete voice calls, because their broadband provider was blocking it.
We worry about media consolidation in America and the shrinking number of big media companies producing news and information is truly a concern. But the prospect of one or two companies in a given community deciding what data gets delivered is much more alarming.
Perhaps the emerging broadband wireless industry can salvage the situation, via competition. But until then, governments should step in to ensure open competition on data lines. That will be as important tomorrow as roads are today.