FCC shouldn't tolerate abuses by Internet's corporate gatekeepers

Most of the 100 million Americans with high-speed Internet access likely assume that in return for paying a hefty monthly fee they can use their Internet service privately, for whatever purpose, as long as it is legal. They are wrong.

A bipartisan majority of the Federal Communications Commission recently ordered Comcast to stop blocking Internet access for some of its subscribers and "secretly degrading" their service.

At the heart of the Comcast case are actions euphemistically referred to as "network management." This innocuous term covers a host of troubling practices employed by Internet service Providers (ISPs), including Comcast, Time Warner Cable, AT&T, Verizon, Charter Communications, Cablevision and others.

"Network management" sounds like a good idea. What sounds less appealing is having ISPs secretly block or degrade the Internet service you have paid for, or open and "inspect" the contents of your virtual communications without asking your permission. These, too, it turns out, are "network management" practices.

Republican FCC Chairman Kevin Martin said Comcast's network management amounted to "looking inside its subscribers communications, blocking that communication when it uses a particular application regardless of whether there is congestion on the network, hiding what it is doing by making consumers think the problem is their own, and lying about it to the public. ... "

Civic-minded groups are rightly up in arms about these violations of our rights to privacy, freedom of expression and association. These are core democratic values whose abuse by corporate gatekeepers of our communications infrastructure should not be tolerated.

As important if less remarked, these practices also threaten the Internet as an engine of business opportunity and innovation. If consumers do not believe their personal data is safe on the Internet, digital commerce will suffer. If entrepreneurs with new ideas cannot express themselves freely and share them privately with potential partners on the Internet, innovation will suffer.

So make no mistake, this is not "just" a democratic issue about maintaining a free marketplace of ideas. It is an economic issue about maintaining a free marketplace. This is about safeguarding and promoting competition in the digital economy.

It is also about safeguarding and promoting shareholder value for investors in the companies who provide Internet access. The ISPs noted above are all publicly held companies. And they are rapidly developing and deploying network-management practices that may expose them to considerable financial risk.

In addition to the FCC ruling, four class-action lawsuits have been filed against Comcast in California, Illinois, New Jersey and Oregon.

Comcast is not alone. In the face of congressional and public pressure, Charter Communications last month scuttled a plan that would have employed technology for "deep packet inspection" or DPI. This technology scans the actual content of traffic flowing across a network in order to track the habits of subscribers.

There are numerous related instances of ISPs interfering with subscribers' legitimate Internet usage: AT&T's censoring of political speech on a Pearl Jam Webcast last summer; Verizon Wireless denying NARAL Pro-Choice America use of its text-messaging services last fall. The list is long and will continue to grow.

These incidents reflect management decisions that posed serious financial risks for their firms and their shareholders. Regardless of the legal and regulatory outcomes, each firm has already paid dearly in terms of its brand value and consumer goodwill. These are PR nightmares. Across the board, managements of these firms are tight-lipped about these practices, how they made the decisions to employ them and what, if any, policies they have developed to avoid such problems in the future.

This reticence is unacceptable, as the FCC has now ruled. For ISPs to vouchsafe their network-management practices as "reasonable" without disclosing those practices is meaningless.

The best way for ISPs to ward off further regulatory or legislative intervention also happens to be the best way for them to restore consumer confidence and build brand value. It is called disclosure and, like sunlight, it is the best disinfectant.

As Google has so ably demonstrated, for commerce in the digital era, abundance can prove more valuable than scarcity. The telecom and cable firms that now serve as ISPs must learn a similar lesson: to seek competitive advantage through disclosure and transparency rather than evasion and secrecy. These firms have failed to learn this lesson. As consumers, shareholders and citizens of a democracy, we should insist upon their success.