Net neutrality is a necessary deterrent to protect users from the predatory impulses of the oligarchs who seek to carve up the Internet among themselves, says Robert McChesney.
Robert Waterman McChesney is Gutgsell Endowed Professor in the Department of Communication at the University of Illinois, Urbana-Champaign. An author, activist and journalist, he is a co-founder of Free Press, a national media reform organisation, and was one of the leading voices in the decade-long campaign to make net neutrality a statutory provision in the United States. That battle was won in January, with a landmark ruling by the Federal Communications Commission, but the greater war for a public Internet, one that serves the interests of all users rather than those of a select few, is still being fought. In an interview with Ajachi Chakrabarti, he recounts the struggle against some of the most influential corporations in America, explains how the current monopolist model of the Internet is unsustainable, and why nationalising Facebook isn’t as crazy an idea as it sounds.
Professor, India began talking about net neutrality only about a month or two ago, while this has been a reasonably long debate in the US, for more than a decade now. Could you start by explaining what net neutrality is, why it is important and what really is at stake in this debate?
Sure. Every country has a very different experience here, and it also depends on how the telecommunication system is organised in a country: the ownership, the rules, the regulations. In the United States, a company called AT&T had a monopoly over telephone services for most of the twentieth century. And part of the deal that gave AT&T the monopoly was that it had to promise to serve everyone in the country. It had to give poor people access to the telephone service as well rich people, rural people as well as city people, and it also could not discriminate against users. Everyone got to use the telephone at the exact same price. That principle of universal service, known as “common carrier”, was the foundation of the telecommunication service. It was a crucial concession the public wrung out of the deal.
The reason why this is important is that the telephone companies became the central Internet Service Providers (ISPs) when the Internet came along, and that principle of common carriage was brought along with it, the idea that anyone who uses the Internet has the same right to use it as everyone else. The phone company or the cable company—the ISP—could not discriminate against its users. They could not set up toll booths and charge certain users more than others. That was one of the reasons why the Internet exploded in the United States in the 1990s and the first decade of this century. People assumed the technology was magical, that it didn’t allow anything to censor them. They could automatically go on and instantly you have access to anyone in the world—this was something that was magical about the technology, that it is impervious to government regulation or corporate interests.
So, no one really understood this was an issue; it all seemed really abstract. But in fact, the telephone and cable companies, which dominate broadband in the United States, understood that if they could effectively privatise the Internet and say, “We get to pick who uses our network and who doesn’t,” then there was a chance of making even more money than they were already making. That’s why net neutrality emerged as an issue. It was not an attempt to make the Internet different, but to protect it from being radically transformed or privatised. And that was the difficulty in organising around this issue in the United States: because people assumed again that it was a natural thing to be open and uncensorable, they did not understand that it was policy that made it that way. That was the challenge that faced us in the United States, starting about a decade ago when it became clear that this was the direction the phone and cable monopolies were going in.
That was the difficulty in organising around this issue in the United States: because people assumed again that it was a natural thing to be open and uncensorable, they did not understand that it was policy that made it that way.
Now, The Economist and the University of Chicago’s Economics Department—a full deck of conservatives—their argument on this was that the solution to the privatisation of the Internet and censorship by commercial forces is economic competition: if some ISP is selectively censoring some websites and favouring others, the customers will no longer go to that ISP; they’ll select another company. I guess in Milton Friedman’s fantasy world or some economic textbook that is an understandable theory, but in the real world—in real existing capitalism—it’s preposterous because in the United States Internet service is provided by a cartel. Five or six companies have divided up the whole country for both Internet service provision and cellphone access. That’s why having regulations on these firms are crucial. If they aren’t regulated, like any cartel, they will do whatever serves their interest, and privatising the Internet is exactly what serves their interest.
These companies are not free-market companies in the understanding of the term free-market. They were all created by getting government monopoly laws passed; they never won a competition in the marketplace. In fact, in almost all surveys for decades, these are the most hated companies of America! They’re arrogant, they’re abusive, they rip people off, and they now make enormous amounts of money and provide nothing of value. You have no choice and you pay a lot more for very bad service, compared to most countries in the world.
In fact, one of the striking things about Internet service provision in the United States is that, you know, twenty years ago we founded the Internet, it started here. As recently as 2000, in terms of cost of Internet access or speed of service, we were on top of the world, ranked one to three in every survey. Today we rank, in almost all international surveys, at best 15th or 20th, usually lower and falling. Americans pay much more for much lousier service. The reason for this is obvious. These companies have no incentive to take their massive profits and improve their network. Why would they do that? It is difficult to exaggerate how corrupt the system is. Their competitive advantage, as economists say, is not in the quality of their service but in their ownership of politicians. So they invariably keep their monopoly licenses; they never face any onerous regulations. The regulators, at the end of their stint in so-called public service, proceed to a seven-figure income working for these guys for the rest of their careers. The corruption is thick, it’s palpable, it’s appalling, but it’s the name of the game.
It is difficult to exaggerate how corrupt the system is. The ISPs’ competitive advantage is not in the quality of their service but in their ownership of politicians.
For that reason, as recently as a year ago, it was thought that we would lose the battle for net neutrality. It was especially the case since President Barack Obama was elected in 2008. One of the two issues that had really distinguished him from his competition, including Hillary Clinton, was his extremely strong commitment to net neutrality. He said he’d take “a back seat to no one” in protecting net neutrality, so he got much of the younger, digital-minded people to support him, because they thought he was with them. But he backtracked almost immediately upon getting into office. Everyone saw the heavy hand of the phone and cable lobby reasserting their control over Obama, just like they controlled all the other Democrats in power and the Republicans, who they really completely own. It looked like Obama would make a deal with these guys. I understood President Obama’s calculation. He said, “Look, I’m fighting on a lot of different fronts; I have a lot of issues I’m concerned with. I really don’t want to have to fight these guys too. I’d rather let them continue to own the Internet and do what they want, so I won’t have to worry about them coming after me politically.” It’s not good, but I understand his thinking. These guys are scary dudes! You don’t want to tangle with them.
That’s what makes what has happened in the last year in the United States really extraordinary. Two things, basically, have happened. A popular campaign has developed in the last year and a half to really force the Federal Communications Commission (FCC) to assert network neutrality as a core value that cannot be violated in the United States. The second thing was that although the ISP monopolies were very committed to privatising the Internet and making it their private plaything, the rest of the corporate community had no interest in that. That created an opening for the activists to mobilise and have political leverage. It was not like the united front of the people of the country versus the corporations of the country. It was three grotesque monopolies, which were screwing other businesses as well as everyone else, versus the country. And put that way, it was possible to mobilise the support of the business community, which is very influential and owns the American government, to get them to understand that they don’t really benefit from this cartel either.
Google, really, is the classic example of this. It’s an enormous company, you know, one of the most valuable companies in the United States economy. And Google is so frustrated with how crappy American Internet access is that they’ve actually gone into Kansas City, Missouri, and set up their own broadband system that provides speeds that are a hundred to a thousand times faster than you can get anywhere else in the United States, at a lower cost. What they were trying to do was to show America and say to the cartel, “Look, we know you can actually do it if you’re willing to spend money. We could have the same sort of service people get in Korea, or France, or Germany, or Sweden.” It’s indefensible that we don’t.
It was not like the united front of the people of the country versus the corporations of the country. It was three grotesque monopolies, which were screwing other businesses as well as everyone else, versus the country.
So the campaign was successful. We were able to—I don’t want to go deep into the roots of the American telecommunications system policy; I don’t think people in India need to know the details—but we were able to get the FCC to thoroughly reclassify the Internet as a telecommunication service which allowed it to institute net neutrality, instead of being just a traditional information business. This was the crucial thing that took place this year and it made it possible to have full net neutrality. It’s a great victory.
About six years ago, Vint Cerf, who was one of the founders of the Internet, was working at Google as one of their visionary officers. He was in a conference, where he was asked how bad the Internet service provision is in the United States, how corrupt it is, and he said that what we ought to do is have the government take it over and offer it to everyone for free and give businesses ubiquitous access without any tollbooths on it. If you think about it, it makes the most sense. We wouldn’t have an interstate highway system set up for three companies to put up tollbooths all over the place. He had to walk it back later, though, and say, “Oh well, you know, I had too many drinks. Sorry I said that.” But everyone knows that’s the truth. I mean, in a rational world, you wouldn’t have private companies, which have done none of the work to develop the Internet in the first place, being given monopoly control of the central nervous system of your society. It’s preposterous.
The real solution is in net neutrality, in setting up municipal, non-commercial, non-profit, ubiquitous free broadband. That, to me, is what a rational society does. How you get there depends on the country. In the case of Holland, it might be a national system, since it’s a small country. In the United States or India, it makes most sense to have a municipal or locally run system. But at any rate, there is no reason to allow private tollbooths to Internet access, any more than there is for roads.
In India, the argument goes that we don’t really have a monopolist ISP sector, that instead we have too much competition for too little spectrum, and that there is a danger of confusing “anti-competitive practises with legitimate price discrimination”. Telecom companies say that usage habits have changed in a way that hurts their bottom lines, which deters them from investing in core technology. Is that a valid argument?
So they need to not have net neutrality in order to find places to make money. I understand their perspective. If I were an investor in one of those companies, I would agree. I would say, “Yes, net neutrality harms our ability to find profitable places to make money on our investment.” That’s a perfectly rational argument. Now the question is whether the primary purpose of Internet access and telecom services is to serve the people of the country or to serve the investors in these companies. And that’s a pretty valid question.
I think you know what my belief is. I believe that telephone or Internet service provision primarily is to be judged by how well it serves the entirety of the population, and its commitment to the whole of the country. The concerns of the investors are really rather minor, because we know that investors have no particular loyalty; they’re just out to make money. If they don’t make enough money in that industry, they’ll find other places to invest. That is their privilege; no one is forcing them to invest in this industry. But I think the public has every right to set the minimal terms they expect for something central to the life of their country. It’s not their private plaything just because they are rich.
Another common argument is that all data aren’t created equal, that certain types like emails require different treatment from something like a Skype call. Telecom companies argue that absolute net neutrality hurts the quality of their service. How do you respond to that?
There may be some truth to that. I’m not dogmatic in that regard. I think that can be negotiated. But in the American experience, that was used as a Trojan horse to sneak in all sorts of scams to make a lot of money out of the public. That’s the reason I’d be very careful about that argument, because to the extent it is true, it’s a legitimate concern.
The question is whether the primary purpose of Internet access and telecom services is to serve the people of the country or to serve the investors in these companies.
It has to be imperative to put into place exceptions that actually deal with the problem, and don’t allow [ISPs] to sneak in all sorts of other ways to scam people. In America, that’s really hard to do because these companies are really smart and they own the politicians. It is very hard to fight them. Economists have come up with a term for this in the United States—Joseph Stiglitz is most famous for it—and that is “information cost”. If you’re a consumer and your ISP starts smuggling all sorts of hidden costs, it’s a nuisance, but you’re busy. You don’t have a lot of time to go down and hire a lawyer over a small amount of money. So they know they can nickel and dime you, and if you’re doing that to a country of a billion people, you can get a lot of money for it and you know the individuals can’t do much about it.
Eric Schmidt called the Internet our largest experiment in anarchy, the first thing we’ve ever created that we don’t really understand. Do you agree with this view? I ask because what seems to be at the heart of the net neutrality debate is an attempt by rentier forces to exploit the lack of regulation of the medium for their own ends. Your own successful attempt to get the FCC to change their rules has been challenged on the grounds that it imposes unfair regulation on the Internet. You have been accused in one article of “seeking to take control of the information means of power”. Is it desirable, and possible, to completely regulate the Internet?
It’s such an absurd idea. The Internet is the result of government spending and policy. I mean it’s not like that you have the government and public over here, and over there in some garage in California ten really smart dudes invented the Internet. It doesn’t work like that. The Internet received, literally, hundreds of billions of dollars in government subsidies from the 1940s to the 1990s before it became commercially viable. It is a testament to public-sector spending. It’s a testament to socialism.
It would be completely irrational for any private sector firm to build the Internet. There was no way to make money out of that. Even when it exploded in the 1990s into prominence in the United States, for much of that decade no one could figure out where you could make money; everyone was running around wondering “How do you get rich out of this thing?” There was all sorts of speculation about trying to corner the market, but they usually just lost their shirts. No one could figure it out.
The Internet is the greatest creator of monopoly in the history of any economy, not just capitalism; there is no middle class on the Internet. You are a Rockefeller or a peasant. There’s nothing in between.
I think what has happened is that in the last 10 or 15 years people it’s been clear that people have figured out how to make a lot of money on the Internet. There is a number of places that are hugely profitable, one of which is Internet service provision. And the other thing that has happened internationally is that we have seen that it became a source of great economic profitability as soon as became clear that it allowed for the creation of global monopolistic networks. That’s where the money is. The Internet is the greatest creator of monopoly in the history of any economy, not just capitalism; there is no middle class on the Internet. You are a Rockefeller or a peasant. There’s nothing in between. The three most valuable companies in the United States, by far, are Apple, Google and Microsoft. Nine of the 25 most valuable companies in our economy are Internet monopolies. I think it’s 13 of the top 35, and after 35, there are no more Internet companies to speak of; just one or two in the next thousand. All the money is in the hands of a very small number of companies.
It’s never been like that before. In the 19th century you had Rockefeller, Carnegie and Vanderbilt—these huge monopolistic trusts—but there were also a whole range of smaller companies, in places like Dayton, Ohio, serving the big companies, rounding off the industrial economy. This is a whole different thing. This is just the big guys. There is no middle-class or mid-sized capitalistic farms. The Internet is crystallised as an economic entity, with these huge companies which have monopolistic powers and dominate the Internet. They make sure that there is no future competition; they buy out any prospective competition. They have global sites, global empires. The US government acts as their private army to represent their interests around the world, including in India.
So the idea that’s it’s anarchy, for Eric Schmidt of all people to claim that there is anarchy on the Internet when he’s basically carved it up with his buddies in Silicon Valley and Seattle and Wall Street, is self-serving propaganda. I’d like to have the sort of anarchy that makes my company worth $500 billion. That’s not anarchy. That’s capitalism. Sheer monopoly capitalism.
For Eric Schmidt of all people to claim that there is anarchy on the Internet is self-serving propaganda. I’d like to have the sort of anarchy that makes my company worth $500 billion.
And so, the real question facing the people all over the world is that the Internet, which dominates our economies, dominates our cultures, is it going to be the unregulated plaything of a few dozen enormous companies that make a lot of their money by spying on everything we do, or is it going to represent the public interest? It’s the the public who created the darned thing. That’s the fundamental question. That’s where net neutrality comes in.
The real impetus of net neutrality simply is that even the various Googles, Amazons, Apples and Microsofts don’t benefit by having this sort of private cartel of ISPs—they are getting ripped off too. They actually probably benefit by having it be socialised and ubiquitous. It would help their business models to a large extent, as long as they can continue with their surveillance.
You mentioned Rockefeller and the trusts in the 19th century. Now, the struggle for public carrier status for railroads, for instance, was primarily fought by Midwestern farmers and industrialists, along with labour unions and other progressive forces, against middlemen operators. The debate over net neutrality, like you said, has relied on the support of the actual producers of web content, the tech companies of Silicon Valley, who are being screwed by the system just like normal consumers. But can activists like you really trust these corporations to be as ideologically committed to net neutrality if, say tomorrow, their self-interest wasn’t aligned with it? For instance, if Google’s venture into broadband wasn’t just a case of “Look, we can do this better than you”, but an actual commercial venture into broadband Internet service provision, would you trust them to keep their commitment to net neutrality?
No, of course not. In fact, what was surprising about the corporate development in the last year is that between 2008-09 and probably last year, it looked like the ISP cartel had worked out private deals with Google, Microsoft, Apple and Amazon that they wouldn’t oppose net neutrality and then those guys would be cut special deals. It looked like they had worked out a behind-the-scenes agreement. If Google, Microsoft, Apple and Amazon can work out their own deals with Comcast and Verizon and AT&T, then they can work it out in such a way that even if net neutrality goes, their position is locked in and they don’t have threats. They were negotiating along those lines, and I guess the negotiation just didn’t get far enough to lock it in. Or maybe the companies just realised that they didn’t really benefit that much to keep the cartel alive.
The real impetus of net neutrality simply is that even the various Googles, Amazons, Apples and Microsofts don’t benefit by having this sort of private cartel of ISPs—they are getting ripped off too.
To get to your point, if I am an investor in a company my job is to make as much money as possible, or I’ll invest in another company. I don’t want them worrying about the public interest. I want them worrying about my interest. Of course, I’ll hire some public relations firm to convince me that my interest is the public’s interest and I’ll hire some economist to tell the world that. Google’s no different than any other company; they are probably a lot better at it. They’ve certainly negotiated a great monopoly, a series of them, so they are all set.
What would you say was the biggest obstacle to the fight for net neutrality in the US, and what lessons should activists in India take from the debate there?
Well, the biggest obstacle by far was the power of the lobby, the corporate lobby for telecommunications, which can’t be exaggerated in the United Sates. To give some example of how strong it is, AT&T has so many lobbyists, it literally has one lobbyist for every member of Congress, full-time. It’s just absurd! The story goes that a few years ago they convened all their Washington lobbyists for a sort of a pep talk and they couldn’t find a room in Washington DC that was big enough to hold them all. They’re just swimming in lobbyists. What they do is that they buy up all these right-wing think-tanks that are desperate for money. And anyone who challenges them is the victim of a huge Red Scare campaign. I have been accused of being a Stalinist, a Nazi, a fascist, a communist—as if speaking up for net neutrality is equivalent to being in favour of death camps for minorities.
It’s just absurd the kind of propaganda that we have to suffer through in this country as a result. So they did all that. The crucial thing is that these companies—and it seems elementary, but people forget it—they’re out to make as much money as possible, and if you are in their shoes you understand why they want to get rid of net neutrality, just like you understand why many manufacturing companies in India would want to get rid of child labour laws. There is a lot of money there. They’ll dress it up in nicer sounding words, but basically they are wolves in sheep’s clothing. That’s how capitalism works. It’s not that they are bad people; it’s just the nature of the system. They can’t be honest about their intentions because they know that no one will accept that. No one will accept a private monopoly to control the Internet, so they can’t put it in those terms. They have to cook it up in all sorts of BS, like “You’re getting more choice.”
I have been accused of being a Stalinist, a Nazi, a fascist, a communist—as if speaking up for net neutrality is equivalent to being in favour of death camps for minorities.
Is the net neutrality ruling really the end point for the struggle for a public Internet? What remains to be done, other than protecting the ruling against legal challenges?
It’s just the beginning. This is not sufficient. It is necessary, but not sufficient. We still need strict prohibitions on surveillance by both the government and by commercial entities. Right now in the United States—pretty much worldwide, but certainly in the United States—everything we do online is being surveyed by the government and commercial interests, by multitudes of them. Most Americans have no idea of the extent of it. It’s outrageous. We should have the same privacy online as we have in with the letters in the mails. No one has the right to open my letters, no one has the right to listen to our phone calls. It’s a core principle; it should be non-negotiable. This should be our business and no one else’s. That has to be won.
I think we have to have free, ubiquitous Internet access. This digital divide is a very serious problem. It can’t be allowed; it’s absurd. It’s like not giving public education to half of the population, saying “You’re all equal, but you’re not allowed to read.” I think it’s a big fight.
I think that ultimately, even after net neutrality, even after you take the profit out of being an ISP, it’s hard to reconcile the sort of monopoly power that dominates the Internet in the world today with anything remotely close to a free and democratic society. I think the lessons of not just history but of the present too are that concentrated economic power is incompatible with egalitarian political power. It’s really not a complicated issue. Going back to ancient Greece, they sort of understood right in the beginning that if we’re going to make this democracy thing work, people without property have to be able to have the same power as people with property. If some people have all the property, it’s not working.
I think that ultimately, even after net neutrality, it’s hard to reconcile the sort of monopoly power that dominates the Internet in the world today with anything remotely close to a free and democratic society.
It’s certainly the case in America. At some point we’re going to have to look at companies like Google, Apple, Microsoft, Amazon, Facebook and say, “Do we really want the social networks, like Facebook or YouTube, to be the private domain of companies that are not accountable to anyone, that can do with them as they please?” To me, the answer is no. To me, the logical assumption is that if companies of this size are natural monopolies due to network effects, we have to look at ways to make them public, accountable, non-profit.
Now, I am not pro-capitalism, but this isn’t an anti-capitalistic argument. In fact, that argument was made most persuasively by Henry Simons, who was Milton Friedman’s mentor at the University of Chicago, who vehemently opposed trade unions, he hated the New Deal in the United States. He actually believed the stuff about competition and free markets that they used to believe—but now it’s just propaganda—he actually believed that stuff they wrote in economic textbooks about free markets, about how competitive markets are good and oligopoly or monopoly is bad. He said that if you’ve got a company that’s a monopoly, and is therefore screwing over consumers and small businesses that are forced to pay high prices, then you have three choices. One, you can break it up into smaller pieces and have it compete like they tried to do with the oil companies, making it ten companies rather than one monopoly. Two, you can regulate it like with the phone companies in America for decades, where you have a private monopoly but it is heavily regulated to prevent abuses in terms of pricing and behaviour. But sometimes you can’t break companies up because of network effects. You really can’t break Facebook into 20 different companies. The idea that you could get the government to regulate these monopolies, he said, is absurd. The monopolies are so strong that they invariably take over the regulations and regulators work on their own behalf, rather than against them. He said that in most cases like this when you can’t break them up, effectively you have no choice but to make them municipally run or government-run; nationalise them, take them out of the hands of the private sector. And that, he said, was a capitalist argument, because genuine capitalists are actually competing, not a bunch of fat-cat monopolists. They’re setting up businesses and hiring and innovating; it would be better for them if there wasn’t this parasitic sponge gouging them from the top to create this crony capitalist world of corruption. Take them off the table and you have a genuine free market, without political corruption.
That was his argument, as a conservative. I think it holds true. If you’re a genuine conservative, that should be your position. And that was the position of genuine conservatives in the United States until they got close to power. Starting in the ’60s and ’70s, when they could smell they were about to go to political power, they began saying things like “A monopoly is not that bad” or “We know advertising is propaganda, but it’s still good”. Suddenly they lost anything that was critical of the established order and became its pawns and defenders.