Legal Journals

Big Telcos Try to Avoid Being Dumb

For years the big telecommunications companies have been desperately trying to avoid becoming commoditized. If they are reduced to acting merely as providers of “dumb pipes” the logic goes, down go profits. So rather than provide truly high-speed Internet access of the sort seen in many other countries, the telcos have attempted to squeeze as much revenue out of customers as possible.

Some of their techniques are novel and clever. Targeted advertising makes sense if you’re at telco. Monitor user activity, deliver targeted ads, and watch the revenue fatten your coffers. If you’re Charter Communications, you try this targeted advertising and make it opt-out rather than opt-in.

Another approach is to throttle the traffic used in particular types of Internet activities, notably P2P filesharing. Of course, you could tell customers you were engaged in this sort of traffic shaping. But Comcast decided such disclosure wasn’t a good idea. Perhaps they thought nobody would figure it out. Customers did find out, and using (duh) the Internet, they spread the word. Now Comcast faces three class action lawsuits that allege deceptive and misleading behavior by the broadband colossus.

Given their track record at disclosure, is it any wonder Net Neutrality advocates don’t trust the telcos to self-regulate? There are those who argue that since the telcos own the pipes, they should be allowed to charge what they will and shape traffic however they like. But as any first year Property student knows, the concept of “ownership” is a sticky wicket. Here’s how one commenter responded to the above-linked ownership argument:

Private property is private property. So no more eminent domain powers for telcos to install fiber through private property, right? If a farmer owns 40 acres in the path of a 1000-mile cable, can he now charge what the market will bear?

Hook me up with a cable that was installed without using eminent domain, and I won?t ask for net neutrality on it.

The establishment of the American telecommunications industry has never been a purely private endeavor. If the telcos want to get the government out of their hair, they need to stop acting as if nobody will find out what they’re doing, and they can no longer pretend that America leads the world in broadband choice, speed, and pricing.

Maybe, just maybe, if the telcos started thinking about providing customers faster, cheaper, more reliable service and more transparent business practices, Congress and those customers wouldn’t mind giving them more latitude.

Image Credits

A cropped version of high wire by hojusuram is used under a Creative Commons Attribution-Share Alike 2.0 license.

Full post as published by Tech Law Forum on June 08, 2008 (boomark / email).