The History of the Internet and Net Neutrality

If you are looking for a single article which will illuminate the evolution of the Internet, the challenges regulators had when policing phone companies, the competition between cable and phone companies and net neutrality, look no further than this article from Fred Goldstein of ionary Consulting titled The Net that Got Away. In about 5-10 minutes you can read this well-written and historical article which describes how the Internet got to where it is today and how the Bell operating companies used regulatory sleight of hand to gain benefits from regulators in turn for promises that weren’t kept.

This article discusses a book The $300 Billion Broadband Scandal by Bruce Kushnick, one of the biggest critics of the phone companies. Kushnick often complains about how the large phone companies have taken advantage of consumers and have broken promises repeatedly.

Here is an excerpt:

Part One: The Diss-Information Superhighway — Driven by the Clinton-Gore Administrations’ desire to fiberize America, the entire country in the early 1990’s went into a techno-frenzy for the “Information Superhighway”, commonly known as the “National Information Infrastructure”, (NII). The Bells claimed they would deliver a fiber optic future.

TELE-TV and Americast, the Bells’ billion-dollar lobbying effort, was designed to pass the Telecom Act of 1996 and allow the Bells to enter long distance more than upgrade America’s networks.

Part Two: What Was Promised? — Using the Bells own words and filings, by 2000, approximately 50 million homes should have been rewired with a fiber optic wiring to the home, capable of 45 Mbps in two directions, which could handle over 500 channels of video and was totally open to competition. About 86 million households should be wired by 2006.

Part Three: Splat — Detailing how the Information Highway was pitched state by state, we discuss the dark secret — the networks couldn’t be built at the time of the commitments. In fact, after the ink was dry, these companies essentially closed down all of the fiber deployments, even though the state commitments were never even close to being fulfilled.

Part Four: The Bell Mergers Killed Broadband and Competition — This series of chapters examines the real story — that the mergers of SBC-Ameritech-SNET-Pacific Telesis- Southwestern Bell, and the mergers of Verizon-Bell Atlantic-GTE-NYNEX essentially closed the fiber optic deployments in 26 states. We also demonstrate that the Bells’ commitments to compete with each other, which was the paramount reason to merge, went unfulfilled.

Part Five: Follow the Money — In order to understand how customers were overcharged for networks they never received, we explain the principles of state “rate of return” regulation and the switch to “alternative regulations”, which were changes in state laws that gave the phone companies billions per state in higher phone rates and tax incentives. We estimate that $200 billion was subsidized for networks that customers never received — about $2000 per household.

Part Six: The States Get Hosed — We have done extensive case studies, some based on previous state filings. Case studies include: New Jersey, (the New Jersey case study is expanded because it as part of the franchise battles), California, Texas, Pennsylvania and Massachusetts.

I get the feeling some Wall Street Bankers got some great ideas by reading this.

Before I end this post I should mention that the system of politicians looking out for the best interests of consumers is broken in the US. Money talks and companies constantly battle to get regulators to favor them or the areas they serve. This is a fact of life.

Having said that can you fault phone companies for getting away with all they can? If they don’t, perhaps the cable companies will be favored instead.

If people wonder why they should be cynical about government run (anything) they should look at telecom and the banking system as examples of areas where the government not only screwed its constituancy but continues to do so. It is worth remembering that all the fancy speeches in the world don’t change decades of broken promises and history.

See Also: Fred Goldstein on Net Neutrality

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