

The Federal Communications Commission, America's telcoms regulator, has formulated a plan to allow internet service providers (ISPs) to charge companies for the right to "premium" access to its customers. This is the worst internet policy news imaginable. It should strike terror into the heart of anyone who cares about fairness, politics, the widening gap between the rich and the poor, fair trade, entrepreneurship, or innovation. The FCC now stands as the world's foremost symbol for "regulatory capture," and its chairman – a former cable executive lobbyist – is the poster child for an unhealthy relationship between industry and its regulators.



What's at stake is "network neutrality," which is the simple principle that your ISP should give you the bits you ask for, as quickly as it can, and not deliberately slow down the data you're looking for.

(There are valid arguments to be made about network management techniques that try to slow down some customers' connections in order to ensure that other customers get their fair share of the internet, but anyone who brings up those arguments in this context is just trying to sow confusion by changing the subject. Whatever network management is, it's not an ISP discriminatorily slowing down Netflix streams and delivering its own, competing streams with less jitter and delay because Netflix hasn't paid protection money this month.)

The ISPs say they only want to get paid for the use of their service, but the problem is, they're already getting paid. You pay your internet bill every month. Netflix, Google, Yahoo, the Guardian and Boing Boing all pay their internet bills every month. The ISPs aren't seeking to get paid, they're seeking to get paid twice: once by you, and a second time because you are now their hostage and the companies you want to do business with have to get through them to get to you.

There's a useful analogy to the phone company that I've written about here before: you pay for your phone service every month. The pizza place on the corner also pays for its phone service every month. When you want to order a pizza from Joe's Corner Pizzeria, you call their number. If their phone isn't engaged, it rings and you get to place your order. If they get more orders than they can handle on one line, they buy a second line, a third, even 10 lines to take their orders. Provided one of those lines is free, your call goes through to someone when you ring.

But what if your phone company decided that the way to bring in higher profits was to go around to all the pizza places and shake them down for "premium" access to "their" customers? If Joe's Corner Pizzeria turned them down, your call to Joe's might get a busy signal, even if there were plenty of free lines at Joe's place. Meanwhile, an order to the monied, tasteless sultan of global cardboard pizza-ite, that is, the company who has plenty of money for "premium" access – is easy to reach, because your phone company has promised them that every call will be put through.

The thing is, Joe's is paying for its lines. You're paying for your line. The phone company exists solely to connect people to the numbers they dial. But because there are "natural monopolies" in phone service (because there are only so many mobile frequencies and underground cable space), they can abuse their position to extort additional payments from the services you want to talk to. And the more popular a service is, the better it is, the more the ISP stands to profit from this racket.

Historically, the FCC has stopped just short of comprehensively prohibiting this practice, which would have involved classing ISPs with the more strictly regulated telecoms businesses. Instead, the FCC tried to keep telcoms lobbyists happy by classing ISPs with less-regulated businesses, but insisting that the FCC could still order net neutrality rules. By January 2014, this pretense collapsed when a DC circuit court ruled that the FCC couldn't enforce net neutrality on ISPs while keeping them in the less-regulated category.

The FCC promised a fix, and here it is: FCC chairman Tom Wheeler, an Obama appointee and former cable lobbyist, has drawn up rules to allow ISPs to decide which communications you can see in a timely, best-effort fashion and which services will be also-ran laggards. In so doing, Chairman Wheeler sets the stage for a further magnification of the distorting influence of money and incumbency on our wider society. Political candidates whose message is popular, but who lack the budget to bribe every ISP to deliver it in a timely fashion, will be less equipped to reach voters than their better-financed rivals. A recent study looked at 20 years' worth of US policy outcomes and found that they exclusively responded to the needs of the richest 10% of Americans. Now the FCC is proposing to cook the process further, so that the ability of the ignored 90% to talk to one another, network and organise and support organisations that support their interests will be contingent on their ability to out-compete the already advantaged elite interests in the race to bribe carriers for "premium" coverage.

If you think of a business idea that's better than any that have come before – if you're ready to do to Google what Google did to Altavista; if you're ready to do to the iPod what the iPod did to the Walkman; if you're ready to do to Netflix what Netflix did to cable TV – you have to start out with a bribery warchest that beats out the firms that clawed their way to the top back when there was a fairer playing-field.

The FCC and its apologists will shrug and say that the ISPs are businesses and they own their lines and can do what they want with them. They'll say that we can't expect the carriers to invest in next-generation networks if they can't maximise their profits from them.

But this is nonsense. The big US carriers are already deriving bumper profits from their ISP business, while their shareholder disclosures show that they're making only the most cursory investment in new network infrastructure (Americans have been waiting for fast "fiber-to-the-kerb" connectivity for decades, mostly what they're getting is "fiber-to-the-press-release" puff pieces from ISPs who gull uncritical reporters into repeating their empty promises of fast networks, just around the corner).

And the networks are not the carriers' alone. The carriers may pay to dig the trenches and drop the conduit and copper, but they run their wires through our dirt. If carriers had to negotiate for every linear metre of roadway, pavement, and car-park in order to run their wires, the legal bills alone would bankrupt them, to say nothing of the actual fees land owners and cities would be able extract from them. We're talking trillions, here. The only viable way to build a telcoms network infrastructure is by securing a priceless public subsidy in the form of free access to rights-of-way.

The ISPs want to have it both ways. They want to shower themselves with trillions in public largesse, but treat the profits from that largesse as entirely their own business. They want to get public benefits, but they draw the line at benefiting the public in return.

Wheeler could say to the ISPs: "If you want to run your networks as private enterprises, then you can build them privately. You've got 60 days to get your copper out of our dirt, or we'll pay you scrappage rates and turn it over to a company that will give people the bits they want, not the bits that pay you the most."

Instead, he stands ready to oversee the merger of Comcast and Time-Warner, ensuring that there is virtually no competition in the telcoms sector, while simultaneously handing these massive businesses a blank cheque in the form of permission to extract ransom from everyone you want to talk to on the internet.