By Matt Stoller, who writes for Salon and has contributed to Politico, Alternet, The Nation and Reuters. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller. Originally published at Medium
In early 2006, AOL and Yahoo announced plans to charge senders of email a small ‘postage fee’ to have their email delivered to AOL and Yahoo customers. This fee would cost roughly one fourth of a penny per email, so small as to be virtually insignificant. While not particularly onerous in the context of real space, where delivering mail has per item costs, this was a potential blow to the emerging politics of the internet world.
At the time, these companies argued that this postage fee was a measure that would help reduce spam and identity theft. It would ensure that legitimate email would be delivered, in the priority that recipients would like. Oh, and it would help email services place themselves as middlemen in the communications space, taking a slice of a penny here or there from senders while serving ads to their users. A quarter of a penny per email sounds like an insignificant sum, but there are roughly 100 billion emails sent every day. So it adds up.
This happened within a particular political context. Organizations that had captured the political energy from controversies over the war in Iraq, 9/11, and the Clinton impeachment had built themselves through large email lists. The organizers quickly realized that move by AOL and Yahoo could eliminate their ability to organize. They quickly make their opposition known, and this plan was beaten back before it had a chance to be implemented. The consequences of this scuffle were enormous, though it’s hard to argue that what is important is what never happened. Yet, think for a moment. Had this attempt at postage pricing succeeded, it is unlikely that Barack Obama would have defeated Hillary Clinton in the Democratic primary, and it’s possible that a whole bevy of interesting and important centers of cultural influence — Kickstarter, for example — would not exist today. I was a peripheral part of the group that worked on this postage fee problem, and it was the first indication I got that pricing laws were essential tools of political power.
Of course, I didn’t think of it this way, because the underlying principle of a political movement takes time to emerge. But this was the first exposure the liberal space got to industrial policy, pricing power, and antitrust. And it trained a bunch of us to recognize the net neutrality problem as a similar, critical threat.
Almost immediately after this long-forgotten controversy disappeared, the net neutrality debate flared up very publicly. The Supreme Court had a few months earlier allowed the Federal Communications Commission (FCC) to deregulate broadband in the Brand X case, which was quickly followed by statements by telecom CEOs that they internet was now theirs. AT&T CEO Ed Whiteacre said this clearly, when he argued that “anybody who expects to use pipes for free is nuts!” He didn’t mean free, what he meant is that if Google wanted to move content through AT&T’s pipes, AT&T would get to determine the price. And if that price happened to be higher that the price charged to a similar competitive product offered by AT&T or by a special favored product by a client of AT&T, well, too bad. Whiteacre wanted to engage in discriminatory pricing, and that was the essence of the net neutrality conflict. This would turn the internet into a cooler version of cable TV, with all content controlled from the center.
The Republican Congress then moved to enshrine the telecom’s vision of a cable-ized internet into law. This is when the first public flare-up happened. Republicans introduced a telecom bill that would have prohibited net neutrality. A Democrat attempted to attach a pro-net neutrality amendment to this bill, but the telecom subcommittee in April of 2006 voted down this provision by an overwhelming bipartisan majority. Prior to this, few except scholars and lawyers really believed the internet itself was under threat, or even that the architecture of the internet itself was political. This vote changed the dynamic entirely. It provoked outrage and awareness of a much broader scope than had commonly accompanied telecommunications legislation. This outrage confused the political establishment. After all, telecommunications deregulation had been going on for decades, without much of a murmur from anyone but nonprofits without deep wallets.
But what the telecoms didn’t realize is that the institutional coalition that undergirded the support for letting them fix prices was falling apart. The public had lost faith in the regulatory apparatus organized to protect them. It was the height of the Iraq War, a war of choice marketed by a pliant media and opposed by millions of protesters. There was deep frustration at attempts to slash PBS funding, and anger at the Federal Communications Commission’s willingness to tolerate increasing media consolidation. This was also the time when liberals began to realize that Fox News was a purely partisan political actor, after having been bludgeoned by the odd Clinton impeachment and 2000 election recount. The oligarchical structure of various media businesses had created policies that were widely disliked, and the public began connecting the dots in a way they hadn’t done before.
From this stew of motivations came a desire to protect the one space which seemingly allowed for actual honest deliberation without gatekeepers — the internet. And for the next three years, writers and activists wrote and organized around the principle that telecommunications companies like AT&T and Verizon should not be able to block entities they did not like from displaying internet content to AT&T and Verizon customers. It was nine years ago, so I don’t remember it that well, but I remember writing about net neutrality incessantly. Adam Green, who had pushed back on the postage fee plan (and then also on an early Facebook privacy violation called ‘Beacon’, which were other industrial policy choices), ran the net neutrality campaign for Moveon. Free Press, with a remarkable crew of talented thinkers and organizers (Ben Scott, Tim Karry, Jen Howard, Marvin Ammori, Craig Aaron, Josh Silver, Adam Lynn, and many others) along with a set of media reformers from earlier generations, began raising awareness of the net neutrality conflict as well. The coalition included Moby, Christian Coalition, Gun Owners of America, Credo (then Working Assets), small business owners, and video gamers. A guy who made a tron costure endorsed net neutrality, and his video endorsing it garnered 5 million views. So did Ask a Ninja.
My particular slice of the fight was to get Democratic Senate candidates in 2008 to endorse net neutrality. They all did, and then most got into office because it was a wave year. The publicity around net neutrality and the wave election helped transform the Democratic Party’s approach to net neutrality, and telecommunications deregulation more generally. I also openly criticized what I perceived as bad faith lobbying by prominent Democratic operatives, and encouraged ‘the netroots’, such as it was, to think about net neutrality as a core agenda item.
It was all part of a really interesting momentum shift in the political approach to regulatory policy. Prior to this fight, the argument seemed to be organized around whether government should regulate an industrial sector, or not. The net neutrality fight saw a changed frame. It was not a question of whether government should regulate, but whether Verizon should arbitrarily regulate internet use or whether there should be clear rules of the road. The momentum seemed unstoppable. Candidate Obama endorsed the concept (as is recapped in this vide0). Senator Ted Stevens gave us a viral moment where he talked about the internet as a ‘series of tubes’. I was actually the first person to write about his rhetoric at the hearing, but I was getting it from a person in the room and I didn’t have the audio. It seemed like we were going to win this fight.
Last week, it looks like we did win, at least on the policy of net neutrality itself (whether we have overcome the centralizing and autocratic tendencies of monopolistic power centers is less clear). It was a much longer and more winding road than expected, and a whole generation of incredible activists, lawyers, historians, and thinkers amplified the fight after 2008, and actually won. And to be clear, this essayisn’t meant to be a comprehensive history of the net neutrality fight. I hadn’t yet been exposed to a lot of the people who had done deep intellectual and political work around net neutrality, and the lonely difficult work of opposing bad telecommunications policy in the 1980s and 1990s. I just named a few actors that I knew at the time. Looking back, though, if there’s one person who really operated with superb strategic insight and tenacity this whole time, it would be superlawyer Marvin Ammori, who is the person that I hope will be a future FCC Chairman.
What I want to note is what this journey has meant, because the actual regulatory policy itself, while obviously a critical tool in terms of structural an open internet, is almost less important than the construction of a new political coalition of industrial interests and the creation of a new and sophisticated political consciousness for millions. This includes, by the way, me. Because while I knew I was fighting for something I thought was important, the actions themselves came before the ideological foundations of those actions.
So here’s what I think the net neutrality fight means.
First, it is the reemergence of populist politics into the industrial sector. For roughly fifty years, the tradition of populism has been organized around important questions of ensuring that women, gays and lesbians, African-Americans, latinos have access to American middle-class institutions. This has coalesced into legislative agendas designed around important issues like pay equity, educational access, taxation, abortion, and so forth. In fulfilling the essential and beautifully meaningful promise to grant the same civil rights to all no matter one’s race, color, creed, sexual orientation, age, or gender, populists did not necessarily understand how to address the crisis presented when the institutional basis for prosperity and property rights (a civil right in and of itself) were clearly falling apart. The New Deal worked to create institutions that supported a prosperous white heterosexual middle class, and a reasonable reform goal was to make sure that all get access to these institutions. But as we helped to build justice for all on top of a solid economic foundation, the foundation itself began to crumble. The middle class itself frayed in the face of increasing corporate power and globalization.
This slow boiling crisis wasn’t entirely ignored, but liberal economists largely focused on macro-economic solutions, the ISLM model of demand management and redistributions of wealth via taxation (check out Piketty for a good example of this). The micro stuff, corporate power and industrial structures, was left wholly unattended. The net neutrality debate is the return to a populist tradition of looking at the specific foundations of our culture, not abstract concepts like GDP but specific institutions like Verizon, Comcast, and AT&T. The net neutrality debate isn’t being argued in isolation, there is also real popular interest in banking structures and in the energy space because of the financial crisis and climate change. Corporate power is no longer seen as monolithic, instead corporations are seen as political actors who must be balanced off so no one actor can be a king among commoners.
Second, the entities who emerged in this populist movement included a whole host of small businesses, internet businesses that have become attuned to power and the need for democratic processes to place checks on authoritarian threats that come from private monopolies. Being able to have a small businesses and use your private property without needing permission from private gatekeepers is an essential civil right and a training ground for political and civic talent. Remember, Harvey Milk, the first openly gay elected official in America, built his political base from his camera store.
Third, and this is connected to my first point about industrial politics, this is the first significant anti-monopoly principle affirmatively put into legal force since at least the 1970s. Net neutrality is a common carriage regulation, part of a tradition that dates back to Roman times, but it also is a historical spinoff of laws that were intended to constrain Standard Oil from destroying its competitors. Once again, this is not being done in isolation. What is “Too Big to Fail” if not cultural resentment at monopolistic corporate actors with too much power? It is not just that telecommunications giants are big companies that can their strategic positions as toll collectors in key bottlenecks of the economy, it is that they are perceived to be dominant politically. Anti-monopoly laws, as Zephyr Teachout notes, enshrine anti-corruption principles as much as they organize markets.
Fourth, and once again this is connected to both industrial politics and to my original opening anecdote, net neutrality is a pricing law. It is a law that says that telecommunications carriers may charge a price, but they may not charge discriminatory prices based on who you are. They can charge you for consuming or sending more data over their network, but they can’t charge you for sending the same amount of data over their networks as someone else. It takes at least part of the ability to fix prices out of the hands of private powerful middlemen. Interestingly, when the FCC came out with its decision, telecom stocks popped up, because the FCC Chairman Tom Wheeler made it clear that ‘rate regulation’, or explicit pricing caps by the government, were not going to be included. I don’t think usage caps are included either. These are both interesting problems, and there are additional possible problems with interconnection charges, which is a related question of sending content over networks. But the basic point remains, millions of people acted to make sure that at least some pricing power would be in the hands of the public rather than in the hands of monopolistic owners of cable and telecommunications networks. That’s a really big deal. And once again, it’s not isolated, you can see the Consumer Financial Protection Bureau coming out with rules on payday lenders and credit reporting agencies. These are also pricing laws. And pricing is about power.
There are many consequences yet to come. Legal precedents are being set, and hundreds of internet businesses have had their first experience in politics, and saw the political system affirmatively do the right thing. Hundreds or even thousands of scholars have looked at question of net neutrality. Some examples of historians whose work was prompted by these questions include Victor Packard’s “America’s Battle for Media Democracy” and Joanna Guldi’s analysis of British history “Roads to Power: How Britain Built the Infrastructure State”. And millions have had a taste of what it means to govern and restore some public claim over the industrial and institutional systems over which flow our resources, capital, information, and goods services.
That’s a big deal.
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Great article. In the ongoing whither the Left debate I think it’s worth mentioning that Ralph Nader is someone who “got it.” Corporations are the enemy, not because the people running them are necessarily evil but because their size and power makes them competitors to government and therefore the will and often the welfare of the public at large. Speaking out for Net Neutrality may be the most liberal thing that Obama has done while in office.
Hopefully the next step will be greater scrutiny of pricing for this “common carrier.” My local library is in the process of expanding their computer area due to the great demand from poor people who can’t afford internet access. But the FCC ruling is a good first step. Thanks to Stoller for laying out the issues.
I would say more of a “glass half full” article. Stoller makes a few leaps that are more hopeful than grounded in reality. Also noticed he did not use the word “neoliberal” once when describing neoliberal actions and agenda.
All in all this was a victory for citizens.
“The net neutrality debate is the return to a populist tradition of looking at the specific foundations of our culture, not abstract concepts like GDP but specific institutions like Verizon, Comcast, and AT&T. The net neutrality debate isn’t being argued in isolation, there is also real popular interest in banking structures and in the energy space because of the financial crisis and climate change. Corporate power is no longer seen as monolithic, instead corporations are seen as political actors who must be balanced off so no one actor can be a king among commoners.”
Sounds like we won and that’s all behind us, but noooo.
These monopolist corporations and the money and power structures behind them still want wht they want, and will keep after their claims to ‘own the internet’ until they get their way written into law. They may need a few years and a few hundred million to move the Democratic Party further to the right on this issue, but it will all be recouped in the end as Compuserve and Prodigy are resurrected from the dead, and everyone who hopes to succeed online pays to be ‘bundled‘ with Google and Yahoo.
Net Neutrality is just one aspect of the progressive fight ahead. Taking the big banks apart is another, and dismantling the Pentagon war machine so we return to being a nation instead of a worldwide empire run for the benefit of weapons makers is another.
This ain’t over.
Thank you. What a lot of interesting ideas packed into one comment.
[Apologies if I post this twice…it didn’t seem to work the first time, so I’m trying again]
Matt…It’s great to see you provide this longer view of the process that led to the FCC’s recent action on net neutrality. As you may remember, I was part of the NN-focused contingent at MyDD and OpenLeft. As I did then, I appreciate your always-insightful perspective. For anyone interested, my own brief historical take on the FCC’s net neutrality ruling, which looks back to the original Communication Act of 1934, is here.
Something I’d add to the picture here is the fact that, on the same day it ruled on Title II/net neutrality, the Commission also moved to preempt state laws restricting community broadband networks. Though it remains to be seen how many more muni-nets will be built as a result of this action, it does shift the dynamics in that space, especially in the roughly 20 states with such restrictions, some of which had the practical effect of outright bans. And it does this at a time when there’s growing evidence that community owned networks can succeed both financially and in terms of supporting local community needs better than incumbent networks. As Marjorie Kelly (now with the Democracy Collaborative) might put it, the latter function with a “financial extraction” model (something NC readers are very familiar with), whereas community-owned networks typically employ what Kelly refers to as a “generative” ownership model. I made an initial stab at applying this “generative vs. extractive” framework to the telecom/Internet sector in this blog post. A leader in the muni-network fight has been the Institute of Local Self Reliance (ILSR) and Christopher Mitchell, ILSR’s point person on this issue.
The fact that the FCC acted as both a regulator of private bottleneck monopolists/duopolists, and an enabler of more democratic ownership models in that same sector strikes me as a big deal, perhaps with broader implications.
A third piece of the communication sector reform puzzle relates to spectrum. What I’d briefly say here is that there’s a pretty good possibility that more spectrum will be allocated to unlicensed use in the next few years. While companies like Comcast are beginning to use this spectrum to augment their market power (as in using in-home routers to create second Wifi channels to serve other Comcast customers without the permission of the customer whose home is being used as a Comcast network extension), an increase in unlicensed spectrum is likely to add competitive pressure on Verizon and AT&T, the dominant wireless providers, while also making more spectrum available to local groups like the Detroit Digital Stewards, who are deploying local neighborhood Wifi networks, with the intention of also developing network-based applications to support the local community’s needs and goals.
I see this “‘regulator of corporate extractors with excessive market power’ + ‘enabler of new bottom-up democratic and empowering models'” hybrid model as being more broadly useful as a reform strategy. Though my expertise is very limited in the financial sector, I can see an effort to crack down on financial corruption and TBTF banks (e.g., per Yves Smith and Bill Black) coupled with a push for an MMT-informed approach to federal fiscal policy (e.g., per Stephanie Kelton, Randy Wray, Pavlina Tcherneva, Bill Mitchell), along with efforts to develop public/postal/state/infrastructure banks at multiple levels, and even including community currencies in the mix at the local level (the latter would be the rough equivalent of the Digital Stewards using open source technology to deploy unlicensed spectrum at the community level).
Politically speaking, I suspect this requires alliances between organizations like the Democracy Collaborative (focused on local and more democratic economic development) and the MMT, public banking and financial reform movements (among others). And it would require a political mobilizing effort sufficient to succeed in the ways that the communication system reform movement recently has, as reflected in the FCC’s twin decisions on network neutrality and community broadband.
How that can be achieved is well beyond my strategic-thinking pay grade, but perhaps it is possible. Certainly like the Internet, money and our financial system is a fundamental component of social and economic infrastructure that we all rely heavily on every day. So, maybe a question for the NC community to consider is whether there’s anything the financial reform movement can learn from the hard-fought success recently achieved in the communication reform sector. Perhaps NC readers with more expertise in the finance sector might have some helpful thoughts on this.
One thing I would point out here is that Tom Wheeler was often criticized for having headed up the cable and cellular trade associations during the relatively early days of those two industries. I also had doubts about him related to this. But someone I respect and trust that knows him reasonably well reassured me that he understands and cares about the issues at a deep level, has the necessary backbone to stand up to threats and political pressure, and wasn’t looking for his next career move back into the industry he was regulating. And though it took a lot of pushing from the grassroots (and public statements from the president) for Wheeler to finally embrace a Title II approach, it did eventually happen. I don’t know if there’s a Tom Wheeler equivalent in the financial sector who could get appointed and approved by the Senate, but perhaps such a person exists.
Another key piece of the puzzle, of course, is political reform, yet another big ugly (and closely related) can of worms. One effort I find intriguing (and am supporting as an advisor) is Reinvent Democracy’s effort to develop an Interactive Voter Choice System (IVCS), which it describes as “a global social network empowering voters to reinvent democracy from the bottom up.”
As with the struggle for an open Internet (and, in fact, making good use of an open Internet), IVCS and other efforts to “empower the grassroots” could be politically aligned with efforts by Larry Lessig and others to achieve legislative reform to constrain the legalized financial corruption that plagues our political system. I think RDI founder Nancy Bordier and co-founder Joe Firestone did a good job explaining the IVCS system and where it fits in the political reform movement at the recent Voting and Elections Summit (see videos here and here).
Ok, the People win this Net Skirmish, but as Obi-Wan liked to say, “They will be back and in greater numbers.”
Now it’s up to the FCC to police the rules. Recall how well the SEC did with enforcement leading to the 2008 crash.
And Cable and phone are still monopolies which no one in govt will acknowledge — since US politicians are whores and not in a good way. But as the deniers will say, no one is making you watch TV or own a phone, so it’s not monopoly. Where’s that Druid guy when you need him.
LM, I must disagree on a small point; politicians are not whores – they are pimps. They sell us out & we get screwed.
Good point. All this faux-democracy is making my butt hurt.
As Bob said, “Don’t get butt-hurt; get even.”
Feudalism & Gravity
As you can see, the nation/state economy, as measured by bank, runs exactly backwards, because the majority runs backwards, historians looking backwards to project the future, assuming that tomorrow will be much the same as today and yesterday, until it isn’t. Funny, giving free money to government confirmed monopolies and then increasing the minimum wage increases rent relative to wages, because none of the ‘money’ is earned and all gets pissed away on make-work, discharging real wealth in growing boom and bust cycles.
Yellen has no idea who to give that money to in order to reboot the economy, and Wall Street is the tail wagging the dog. Another restaurant with 65 units and no growth record shouldn’t have the same valuation as one with 3000 units and a growth record, but, by Fed magic, directed margin leverage, it does. Apple distributes i-phones in a positive feedback loop with credit, to the end of capital control, a function others do much better, but the critters are all in because they are all in to Silicon Valley as the prototype for the future, increasing income inequality and collapsing infrastructure.
When you go into that office, you are a bull in a china shop. Don’t touch anything by accident, until you find the source of the common, the critical path. With a little experience, you will identify the gatekeeper in question the first time across the organization, every time. The rest is just algebra, and there are many mathematical tricks depending upon the application to reduce. After that it’s just prepping your exit, to be destroyed in the empire world.
The majority is reflected out at the mirror, not absorbed into the future, because it doesn’t care about the future. Black voters don’t vote Democrat 90% of the time because they expect a democrat in DC to help them, and they do not represent all blacks. All majorities view their world as a game of Survivor Island, regardless of social event horizon. A moment of thought tells you that equal rights and affirmative action puts real marriage at the greatest possible disadvantage, which is exactly what you don’t want, unless you want distillation to quantum advance.
What you were taught about the Great Depression and WWII in History books is backwards, like everything else in the empire. America, like all nation/states before it, has defined work as stupid over time, a cost to be avoided by employing others. Computer Science is just another form of work, with your mind instead of your hands. Forget the engineering. Similarly, you don’t need a physical brake for Maglev, but you might not want to let the manufactured monkeys throw a wrench into it.
Welfare is like a vice from the bottom and top. If you think about a bucket of water, you will see that pressure is felt from the middle out. Fusion/fission works the same way. The critters only want to see gravity, to confirm themselves. Think about what you learned about investing. Have your children when the majority fears to do so and stop when the majority no longer fears to do so. Feudalism doesn’t work, has never worked, and will never work, but it has its uses.
Family Law is the problemsolution, the law following behavior, the path of least resistance, creating resistance, heat loss, in time. You are not going to penetrate that mirror by joining the herd, or preying upon it, on a ponzi escalator of slave and master steps, all heading to a tax cliff, the empire fountain of automatons. As a young person, you want to focus on jumping time, because once you are married with children there is no time for reflection. Do as the Romans do, with no more than 10% of your time, as habit.
Labor gets married, has children and goes to work. The empire gets a job, marries power and has children only to preserve the chain, surprise. Priorities, trust, is something you earn, only by doing. Assuming that what you see is the universe is ridiculous. The stupid forces of SMART technology will always be arrayed against you, but only in the domain of empire.
A few of you have made it through the Fed’s filter and have an interview coming up, to enter the 1%. The lives of all kinds of people, whether they know it or not, most of whom view you as the enemy, cutting the lead off and placing it in back for propulsion, to maintain the status quo, will depend upon you. What do they want to see?
I was raised of, by and for Navy, but you will have your own perspective. Respect the work and the gate will present itself. Just step forward, with faith earned by doing, when everyone else steps back. The police state is only the hero on empire TV. Building the communication bridge isn’t for everyone.
Matt Stoller is describing the emergence of a new political alliance. One with extremely great power. One which is going to fight to break the previous elite political powers.
And it’s going to win, because the previous elite political powers are *stupid* — they have been practicing uniformly shoot-in-foot policies.
The sooner the new political alliance takes power, the better for everyone. Even the evil old monopolists, who will no longer be allowed to shoot themselves in the foot while shooting everyone else.