Tales of the Marketplace, Vol. 3

Has anybody else noticed something like this?

I've had a series of increasingly strange "coincidences" lately with co-payments on my health insurance. (Yes, I know I'm lucky just to have health insurance.)

The coincidence: I pay the co-payment – by credit card, if I can, and insisting on a receipt, the better to create a paper trail. Then I get billed, anyway.

In years of dealing with co-pays, I'd only had one such experience before. The Hospital of the University of Pennsylvania was convinced that I hadn't paid a $5 doctor's visit co-pay – my, that was a long time ago – and tried to collect. Fortunately, though I'd paid cash, I had a receipt.

These latest experiences, mostly with an institution I won't identify here, could simply be a result of sloppy record-keeping. But I wonder whether there could be a systemic failure, or worse. I wouldn't be the first to observe that medical billing is so confusing to most people that a percentage of those who are misbilled undoubtedly pay such dual billings without challenging them.

If it's an occasional error, it's frustrating but understandable – better in the billing department than in the OR, right? But that brings me back to my initial question: Has anybody else noticed evidence of a pattern?

The Internet Model or the Cable TV Model: Why 'Net Neutrality' Is Crucial to the Internet's Future

Today in Congress, primary attention will be on immigration, which everyone agrees is crucial to the future of our society and economy (even if they can't agree how, why, or what to do about it). But elsewhere on Capitol Hill, action will begin to unfold on other legislation - much less well-known - that could be equally crucial to our economy, because its fate could prove critical to the future of the Internet.

The proposal is a legislative guarantee of "net neutrality," which has been gaining steam in recent weeks despite bitter opposition from the telecom and cable companies that own virtually all the "last-mile" fiber-optic or cable links to office buildings, universities and homes.

Various proposals crowd the field - for a detailed rundown on the proposal, see this piece by CNet's Declan McCullagh. The Senate Commerce Committee will address the issue during the second of two hearings on a broad-based telecom bill sponsored by its chairman, Sen. Ted Stevens (R., Alaska). So far, that bill lacks such a guarantee and instead calls for that classic congressional delaying tactic: a new study.

But the real action to watch today on net neutrality may occur in the House Judiciary Committee. The House panel is scheduled to begin debate on H.R. 5417, “The Internet Freedom and Nondiscrimination Act of 2006,” a bipartisan proposal that supporters say would do what its title promises. Its primary sponsor is the Judiciary Committee chairman, F. James Sensenbrenner Jr., a Wisconsin Republican.

[This just in: The House bill was approved, 20-13, this afternoon.]

A lot of voices have been raised on this issue. Still, many people without technological backgrounds continue to steer clear, perhaps because they find it too tough to grap, or too esoteric to try. Trust me: It may be esoteric, but it matters to you, to your children, and probably to any company you work for or own.

One metaphor I find useful is that the two industries that own key network infrastructure are pushing for "the cable model." They want to preserve their right to control what services are delivered over their network - much as cable-TV companies now pick and choose which channels to offer, and bundle them in tiers that you can buy or not buy. They say they have no intention to block any sites or services, though they acknowledge that some might work better than others based on financial deals they negotiate.

Many other companies that don't own key infrastructure - as large as Google and as small as Joe's Amazing New Internet Startup - want to preserve and protect "the Internet model." They want Internet users to be able to choose their services directly, using the telecom or cable company's pipeline that they already pay for but without having to pay extra tolls or suffer degraded service simply for choosing to do business with a company that competes with one favored by the pipeline owner.

Why has this subject come up now? Because technologists, Internet companies and some Congress members have finally grasped the implications of the Brand X decision last year by the U.S. Supreme Court, which declared that cable companies did not have to offer competing companies access to their broadband pipes, as phone companies were required to do under the Telecommunications Act of 1996.

As I and others predicted at the time, the FCC quickly moved to "level the playing field" by giving telephone companies the same right to keep their broadband facilities to themselves.

The result put the Internet model - which evolved under an open-access obligation that still exists for dial-up service - at risk in the broadband future that's rapidly arriving. Good legislation can ensure its survival. With it, the Internet can continue to serve as an extraordinary engine for innovation and entrepreneurial growth.

It's fair to ask why you should care which group of companies wins this battle. Perhaps you work for or own shares in one of our pre-eminent Philadelphia institutions, Comcast Corp., or for Verizon Communications, which are leaders of the lobbying effort against net neutrality legislation, alongside hardware companies and conservative think tanks that call it - wrongly - a new layer of government regulation. Perhaps you think it's only fair that they profit freely from the networks they've built, any legal way they can.

No question, the cable and telecom companies are acting as any business probably would in similar circumstances: They want to maximize their profits - in their case by marketing bundles of services, including television programming, phones, and Internet access, and by developing new services that will leverage additional profits from the data pipelines they own. Their lobbying aims at protecting that business model.

From that perspective, they're not much different the Googles and Amazons and Joes of the world: Those companies want to maximize their profits by inventing or growing services that can be delivered to homes and offices over the same pipelines. How can that be fair?

On this point, I'll defer to Professor Lawrence Lessig of Stanford University Law School, probably the nation's leading expert on the laws governing technology and the Internet, who has urged Congress to essentially put "fairness" out of its mind on this subject.

In February, Lessig told Stevens' committee that "there is something especially wrong with network owners telling content or service providers that they can't access a meaningful broadband network unless they pay an access tax." Then he added:

"I don't mean 'wrong' in the sense of immoral, or even unfair. My argument is not about the social justice of Internet access. I mean 'wrong' in the sense that such a policy will inevitably weaken application competition on the Internet, and that in turn will weaken Internet growth."

It comes down to this: The cable model will stifle competition. And vigorous competition - with winners and losers and constant innovation - is one of the obvious keys to the Internet's tremendous success.

An open-access Internet is crucial for the United States to stay competitive in a global economy. As even Stevens noted in a statement when he introduced his bill, “the United States is less than 16th in adoption of broadband worldwide. We are not only behind most of the developed world, we even lag behind some of the less developed parts of the globe.” (We also lag in the speeds that we define as broadband - but that's a subject for another post.)

The Internet model or the cable-TV model? It's our choice to make, so tell your Congress members what you think. (Click here to contact U.S. senators. Click here to contact U.S. House members.)

PS: I'm not normally impressed by joint letters to Congress, but one that crossed my desk yesterday was an exception - mostly for its huge list of signatories, which illustrates the agreement among Internet behemoths and pipsqueaks. So here it is in full:

May 24, 2006

The Honorable F. James Sensenbrenner, Jr.
Chairman, Committee on the Judiciary
United States House of Representatives
Washington, DC 20515

Dear Chairman Sensenbrenner:

We would like to thank you, Ranking Member Conyers, and the Members of the Judiciary Committee for your recognition of the importance of Net Neutrality for the protection of American consumers, competition and our global competitiveness. H.R. 5417, “The Internet Freedom and Nondiscrimination Act of 2006” addresses the need for meaningful and enforceable Net Neutrality legislation to ensure that the Internet continues as a vital force of innovation and economic benefit for all Americans.

We are a broad and diverse group of Internet companies, public interest organizations, innovators and entrepreneurs, trade associations, consumer groups, individual content providers, and family groups who make our livelihoods on the Internet and depend on its open architecture to innovate, create and evolve the Internet for the future. We strongly believe that your Committee has a clear obligation to protect the original and fundamental laws that govern the Internet. These principles, embodied in the historic legal framework that today is known as Net Neutrality, have been present from the Internet’s inception, and have benefited all of us until very recently when the Federal Communications Commission acted to eliminate them for the first time in the Internet’s history. As a result, Congress must act to reinstate this framework to prevent discriminatory behavior on the Internet, maintain consumer safeguards against monopolistic practices and preserve an innovative spirit of competition that has kept America as the leader in the global marketplace.

We greatly appreciate the Committee’s actions in the interests of the millions of Internet users who depend upon the open Internet. The Committee has played a long, historical role in ensuring that our nation’s communications policies preserve the competitive telecommunications landscape and we hope that legacy will continue as Congress protects the Internet with meaningful Net Neutrality legislation.


Sincerely,


Acopia Networks
Adaptive Marketing LLC
Adobe
Advancedmultimedia.com
Aegon Direct Marketing Services, Inc.
Airespring
Amazon.com
American Association of Libraries
AnalogZone
AngleBeds.com
Ask.com
Association of Research Libraries
Awow Communications
Bandwidth.com
Bloglines
Borsetti & Co.
Business Software Alliance
CALTEL
Cendant
Chemistry.com
Christian Coalition
CinemaNow
Circumedia LLC
CitySearch
CommPartners Holding Company
COMPTEL
Comunicano, Inc.
Consumer Federation of America
Consumers Union
Corliant
Cornerstone Brands, Inc.
Dagdamor Media
Data Foundry
Dave Pettito Direct
DiMA
Domania
Downstream
Dreamsleep.com
Dresses.com
EarthLink
eBay
eBrands Commerce Group
Economics & Technology, Inc.
Educause
Elaine P. Dine
Electronic Retailing Association
Entertainment Publications
Evite.com
Excite
Expedia
Free Press
Free World Dialup
GetSmart
Gifts.com
Google
GotVoice, Inc.
Graceline Canada
Hawthorne Direct
Home Shopping Network
Hotels.com
Hotwire
HSE24
IAC/InterActiveCorp
Iceland Health Inc.
iFreedom Communications
iNest
InPulse Response
INS
Intel
Interactive Travel Services Association
InterMetro
Internet2
Interval International
Intervox.com
IntraISP
Invens Capital
Isen.com, LLC
IVR Technologies
iWon
J. Arnold & Associates
JohnnyZip
Lafayette Group, Inc.
LendingTree
Lingo, Inc.
Listyourself.net
Livemercial
Match.com
McFadden Associates
MCM Telecom
Media Access Project
Media Partners Worldwide
Mercury Media
Merrick Group
Microcom
Miller & Van Eaton
National Retail Federation
Nationalblinds.com
NetCoalition
Objectworld
Pac-West
PointOne
PRC
Primus Telecommunications
Product Partners LLC
Public Knowledge
Pulver.com
RealEstate.com
ReserveAmerica
Rifftone.com
S & B Technical Products
Savatar
Savvier
ServiceMagic
Shelcomm
Shoebuy.com
Skype
Sling Media Inc.
SOHOlutions
Sonus Capital Management
Sony Electronics Inc.
SunRocket
Symantec
Symercy Financial Corp.
Techviser
Telekom Austria
Telephia
TELLO
Ticketmaster
Tier1Research
TiVO
TNS
Tonystickets.com
Tranquilitymattress.com
Travelocity
udate.com
VI Technologies
Vivox
WCW Networks
Yahoo!

Would Senate bill liberate cable sports but squash the Internet?

When you’re the chairman of the Senate Commerce Committee, and you’ve just introduced the first major overhaul of telecommunications law in a decade, you can clearly expect prompt action.

Just 16 days ago, Sen. Ted Stevens (R., Alaska) introduced S. 2686 — formally, the “Communications, Consumer’s Choice, and Broadband Deployment Act of 2006.” (To read the 135-page bill, click here.)

Tomorrow, his committee begins the first of two hearings on the bill — which Stevens immediately relabeled “the Telecommunications Act of 2006.”

One week later comes the next hearing. Two weeks after that, on June 8, markup is scheduled. In other words, a near-finished draft of this complex, controversial legislation could reach the Senate floor in less than a month.

It’s almost an understatement to say that after a decade of revolutionary change in telecom technology and business strategies, it's time to address serious concerns that have arisen since Congress passed its even-more-ambitious predecessor, the Telecommunications Act of 1996.

Stevens deserves credit for taking a stab at some of the biggest, including the Baby Bells' push for permission to bypass local-franchising processes so they can more quickly introduce pay-television service that competes with cable and satellite companies. The vast majority of cable customers would welcome any competition, but the changes — the first subject at tomorrow's hearing — are bitterly and vocally opposed by the cable industry and its allies.

Other big devils lurk in the bill's details. Here’s a quick preview on two key issues that aren't on tomorrow's agenda and that may get short shrift unless consumers speak up. One is of national interest; the other seems to particularly affect Philadelphia residents of Comcast Country:

* Net neutrality. Despite the urgings of Democrats such as Sen. Daniel Inouye of Hawaii, the bill’s co-sponsor and the committee’s minority chairman, S. 2686 does nothing to guarantee against what many consumer advocates and technologists fear: that the broadband Internet will be duopolized by Big Cable and Big Telecom, which will charge high prices and squeeze out competition from companies that want to provide alternative services over networks that the cable and phone companies control.

* Comcast’s stranglehold over most of Philadelphia’s local sports telecasts, which it has achieved because of a 1992 law that allows it to withhold Comcast SportsNet from competitors — a tactic Comcast hasn't employed elsewhere but that other cable companies are starting to use. Stevens’ bill, as drafted, would stop new attempts to monopolize local sports and hinder competition by relying on what's known as the “terrestrial loophole.” But it would grandfather in contracts in place before July 1, 2003, and is at best ambiguous about what happens when they run out. (When were the current contracts signed that allow Comcast to withhold most Phillies, Flyers and Sixers' telecasts? When do they expire? Comcast won't disclose the terms of its SportsNet agreements, says spokesman Tim Fitzpatrick. About S. 2686, all he'll say is this: "Chairman Stevens and co-Chairman Inouye have put a broad legislative proposal on the table, and we are studying their bill, including the provisions related to sports and video content.")

Stevens calls the bill “a working draft intended to stimulate discussion," and says he "is open for comments and suggestions for change.” (You can offer your comments to Stevens via the Web by clicking here.)

Inouye says it needs major changes — especially when it comes to net neutrality. (Got ideas? Contact Inouye by clicking here.)

If you want more information on the growing campaign by consumer groups, media-rights advocates and technologists to persuade Congress to adopt net-neutrality standards, visit the Web site of the Save the Internet coalition.

Meanwhile, all I can say is stay tuned. I’ll try to keep you posted.