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The robber barons of the information highway - telecommunications industry claims about interactive communication

Washington Monthly - June 1, 1995

Six American kids on a basketball court. They run hard, weaving in and out of one another, and slashing to the basket. "Tres bien," one says to another. "Tres bien."

"Some kids are practicing French outside the classroom," intones the voice of James Earl Jones, "thanks to Bell Atlantic's interactive video distance learning." The ad cuts to a classroom, where a teacher calls out from a television screen at the head of the class: "David! Le chapeau si vous plais!" David, fresh from the basketball court, looks up from his desk confused. "Your hat," says the kid behind him loudly, and they laugh. The teacher's stem visage gives way to a smile. "Merci."

In living, breathing reality, this commercial shows the true potential of "the information superhighway." Maybe those four students live in a rural district. Maybe their school can't afford a full-time teacher's salary. In the world to come, the commercial says, deserving kids will have an easier time finding good teachers. Another Bell Atlantic spot shows doctors working from remote locations - "telemedicine." Still another shows a tiny community on isolated Tangier Island, Virginia. A fisherman talks face-to-face with people in Norfolk ("I can let you have 25 bushels of number-one hog crabs.") In Tangier, too, the kids learn from a teacher on a TV screen:

TEACHER: When you understand the culture, you understand the what? James? JAMES: You understand the people. TEACHER: Good. And what does that help us do? Cara. CARA: Understand each other.

Technology that brings people together and brings out their best: that is the future promised by companies like Bell Atlantic, AT&T, and Time Warner. Their promises matter because it is private investors, not the government, who will finance and build the coaxial cable and fiber-optic "roads" that will make up the superhighway network.

But when I looked for signs of dedication to learning and civic improvement at Bell Atlantic's interactive demonstration project in Arlington, I was disappointed. I was shown a computer screen with the image of a small city, with an elegant town hall, a school, and a hospital. But point and click and ... not much happens. The real action is in the virtual shopping mall - with dozens of catalogues and video games. "Ultimately," insists spokesperson Joan Rasmussen, "there will be communication from house to house and education and all that."

Yet as Congress works on the first major telecommunications bill since 1934, Ramussen's words ring hollow. Telecom reform does have its pitched turf wars - long distance companies like AT&T and MCI, for example, want to keep the Baby Bells out of the long distance business for as long as possible. But the real story is where industry is firmly united: against the two basic concepts that would ensure that the public, not a few huge info-conglomerates, can decide what will be on the information superhighway. The first, known as "common carriage," would require companies to serve everyone for the same price, preventing them from forcing folks they don't like off the roads by spiking prices. The second is known as "open architecture," and it would prevent the private builders from running all the roads through a central hub that they control.

Industry has a very different vision in mind. As Bell Atlantic's demonstration center indicates, the money isn't in schools or health care, but home shopping, movies, and video games. Interactive TV, Bell Atlantic chairman Raymond Smith has said, "will turn us from a nation of couch potatoes into wheeling, dealing video-jocks. Click! Order a pizza. Click! Order a Cindy Crawford video."

And, with thousands of lobbyists on Capitol Hill, industry is winning the argument. Their extraordinary financial clout - telecommunications companies gave Congress $50 million in PAC money from 1984 to 1993, according to Common Cause - combined with poor leadership has pushed the important issues to the side.

"The public interest vision - the potential of this network - has been driven out as a subject for legitimate policy debate," says Andrew Blau, chairman of the Benton Foundation, which works with non-profit groups on telecommunications technology. "The conversation is structured as a horse race between various businesses. There's a hand-waving that goes on, `Oh, don't worry about that. Benefits will flow to everyone.' But there's no evidence that that's the case here."

One of the industry lobbyists' greatest assets is that the public understands so little about what is at stake. American communications has historically been divided up by mediums, each with its monopolies. AT&T ("Ma Bell") controlled all phone service practically from the beginning, until federal courts split the company into a long distance company and smaller "Baby Bells" to provide local service. Cable television is a series of monopolies regulated by local commissions. Cellular communications has two providers in each market.

Recently, though, advances in technology have blurred distinctions among these mediums. With increasing ease, television can be transmitted digitally through telephone wires, telephone service can be delivered by satellites or cable, and so on. Telecommunications law, based on the assumption that each separate industry should have its own regulated monopoly, is outdated. That's why Congress is planning to pass a major telecommunications bill this year: The industry needs to be reregulated the logical response to the crumbling walls that once separated industries is to phase out the monopolies altogether and usher in an era of competition. Instead of one choice for local telephone service, for example, we'd have two or three - or six.

Now, consider the quantum leaps information technology has been making: Computers are getting faster, cheaper, and easier to use. New compression techniques let us send more information over existing wire, and higher-capacity wire is being laid all the time. Then, imagine marrying these advances with the hypercompetitive environment that restructured telecommunications regulations would create: The result would be businesses vying to use this technology to offer more and better services. Soon, as commonly as we pick up the telephone, we could send each other massive computer files and talk by interactive video. That, in essence, is the information superhighway.

Over the next 10 to 15 years, though, the only companies with the infrastructure to build the "highway," and the range of interactive services it promises, are the phone and cable companies which already have wires going into every home and business in the country. The question for Congress is this: How do you work against the forces of monopoly? Since technology is always developing, it's a moving target.

It seems daunting, but we've faced similar challenges before. Each time a new technology has emerged - telephones, radio, broadcast television, cable - government has tried to balance profit and the public interest. Take the American experience with railroads. For most of the nineteenth century, the rails were controlled by a handful of rich men, such as Cornelius Vanderbilt and Andrew Carnegie. Virtually unrestrained by government, they formed monopolies and charged what they pleased. For example, Carnegie, also a steel magnate, could charge his competitors stiff prices to ship their steel, and keep the upper hand.

Eventually, the anger of farmers, merchants, and rail travelers rose to a fever pitch and Congress stepped in to guarantee that everyone - from huge conglomerates to small-time merchants to ordinary folks - could use the rails at a non-discriminatory rate. Under common carriage, as it was called, owners could still make large profits - and still had plenty of incentive to jay more track - but the larger public interest was preserved as well. Railroads, after all, were a vital public resource.

As telephone technology emerged in the late nineteenth century, the common carriage principle guided the construction of a national network. Again, building two phone systems - so that competition could keep prices down and preserve nondiscriminatory access - would be expensive and wasteful. So we settled for one regulated network.

Common carriage has been vital in the past, and it will be even more so in the future. We are shifting to an economy where much more of our lives will consist of transactions transmitted in digital form over electronic "roads." When the day comes - and it's coming soon - that we send video and other data over wires as commonly as we now use interstate highways, it will be crucial to keep those wires open to everyone.

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