On June 4, I gave a speech at Personal Democracy Forum (PDF) on Broadband Access As Public Utility (the official Title was The Internet As Public Utility, but my original title and my conception still is about broadband access specifically because “the Internet” has become a very vague term). For those unfamiliar with PDF, it is a truly awesome conference organized by Micah Sifry and Andrew Rasiej that brings together folks from all over the tech world to discuss how tech can make a better world and be an expression of our values. This year’s focus was on how tech can facilitate civic engagement. This year was my first time to PDF, but I am definitely going to do my damndest to come back next year.

I’m pleased to say my speech was well received. I’ve included the video below. (You can find videos of the other speakers in the PDF15 Archive.) My speech turned out to be about 15 minutes long, which means it was 3 minutes over. Even so, there are some significant differences between what I wrote in advance and as actually delivered (which happens to me often), which is why I reprint my original “as prepared” remarks below the fold.

A few basic points I want to make as take aways. As I keep stressing, the term “utility” and “public utility” does not imply any particular mode of regulation or requirement for natural monopoly or market power. The term goes back to the concept first elaborated in Adam Smith’s Wealth of Nations on the purpose of government, including: “the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit would never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.” The Federalist Papers further expands on this idea, justifying the Constitution as necessary to create a government sufficiently “vigorous” to meet the needs of the people.

The innovation of the post-Civil War era was to identify services which, although provided in many cases by the private sector, were too important and too central to society to be left wholly to the dictates of the market and private companies. It is in this sense that Franklin Delano Roosevelt meant “utility” in his letter to Congress calling on creation of the Federal Communications Commission, which begins: “I have long felt that for the sake of clarity and effectiveness the relationship of the Federal Government to certain services known as utilities should be divided into three fields: Transportation, power, and communications.” To use the older statutory language, these services are “affected with the public interest,” and therefore government has a responsibility to ensure their fair, affordable ubiquitous availability.

I argue that broadband, in the tradition of all our previous communications services, now falls into this category of services so essential that they are public utilities. I do this knowing full well that those opposed to any form of government oversight of essential service or opposed to the public provision of critical infrastructure will deliberately misconstrue this to mean traditional rate-of-return regulation. To this I can only say *shrug*. The first step in ensuring proper broadband policies lies in reclaiming the term public utility for what it really means — a service so essential that the government has a responsibility to ensure that, one way or another, everyone has fair and affordable access. We must embrace that fundamental value as firmly as we should reject a return to rate regulated private monopoly provision — or the worse alternative of entirely unregulated private monopoly provision.

Enjoy.





The Internet As Public Utility

As prepared for Personal Democracy Forum, June 4, 2015

Hurricane Sandy wiped away much of the telephone wire on Fire Island. In May 2013, Verizon announced it would not rebuild the wireline network. Instead, Verizon would offer a new product called “Voice Link” which would plug homes into the Verizon Cellular network. Verizon reasoned that since 80% of the phone traffic on Fire Island was already cellular, this would not create significant issues. But unlike wireline, cellular phone was not regulated to require quality of service, universal service, 9-1-1 accuracy, or a wide range of other things we take for granted on the traditional voice network.

Because VZ phone service was still a regulated service in NY, and regulated on the federal level, VZ needed permission from both the NY Public Service Commission (NYPSC) and the Federal Communications Commission (FCC). Because both agencies had proven reasonably compliant with VZ in the past, no one expected this to delay things.

Instead, a firestorm erupted. Nearly all 500 permanent residents and local businesses wrote to both the NYPSC and the FCC to demand VZ restore wireline service. The comments show a wide range of things that had ridden, all unseen, on the open wireline network. Local fire alarms all plugged into the phone network. Medical alert systems depended on the wireline service. One man wrote that he now needed to make a 4 hour trip twice a week to a hospital to have his pacemaker checked, rather than simply hold it to the phone. Some homes were entirely cut off by poor reception. Businesses could not processes credit cards reliably on Voice Link. Etc. The outrage spread to small communities throughout NY fearful that VZ would terminate their wireline service. Hundreds of Municipalities and town officials preemptively wrote to the NYPSC to protect their wireline service. In the end, the public outrage was so impressive that Verizon announced it would bring FIOS out to Fire Island.

But even more impressive was the tone these comments took. People were angry. Angry that something essential to their lives, something that they were guaranteed by law, was being taken from them. “This is America, not some third world country!” And, most importantly, “This is a Public Utility!”

We no longer appreciate the amazing progressive innovation of what is a “public utility.” We think of it as a regulated monopoly. But the concept of public utility has nothing to do with natural monopoly. As University of Indiana Professor Barbara Cherry explained in extensive comments to the FCC in the Net Neutrality fight, the concept of public utility arose as in the post-Civil War era as a curb on corporate power. We did not regulate AT&T as a utility because it was a natural monopoly. Just the opposite. We allowed AT&T to become a monopoly because AT&T persuaded the government (and most of the rest of the United States) that only by allowing AT&T to become a monopoly could we guarantee affordable quality service to all Americans. “One Policy, One System, Universal Service” went the continuous add campaign from AT&T.

Throughout the late 19th and early 20th Century, progressive reformers identified key services in our lives that touch on our fundamental rights, and demanded that government ensure the benefits of these services to all Americans. Water. Power. Access to affordable travel and shipping of goods and services. In all cases, the regulation of these services proved a boon not merely to the quality of life of all Americans, but to our economy. Terms such as “economies of scale” and “network effect” did not yet exist. But we understood one fundamental principle – when we all stand together, when we have access to the same basic tools, we all do better. Protecting the weak and exploitable from corporate power turned out to be more than morally correct. Counter-intuitively, it turned out to be good business.

Nowhere has this basic principle of public utility as essential service proved more critical to citizens and commerce than in communication. Even before we had the words “public utility,” we enshrined the basic concept of communication as an essential service in the Constitution by explicitly giving Congress the power to create a postal service and postal roads. The writers of the Constitution recognized that providing a ubiquitous, affordable means of communication was critical to keeping the new nation whole, and establishing a core principle and responsibility of government to provide this service to the people. “Nothing that facilitates intercourse between the states can be deemed unworthy of the public care” wrote James Madison in Federalist #42.

As communications technology evolved, we carried this fundamental principle with us. Communication has grown from the mail to the telegraph to the telephone to the Internet. In each case, the creation of an open, ubiquitous affordable network, subject to some level of government oversight as a curb on corporate power, has ushered in a new era of civic engagement and economic development. Abraham Lincoln became a national candidate by using the telegraph to spread the transcripts of his debates with Stephen Douglas nationally. Sears Roebuck revolutionized retail by combining the train network, the postal network, and the emerging telephone network. Martin Luther King famously leveraged the national radio and television networks to push for social change.

Which brings us back to Fire Island and the Internet. Consider all the things that run on the phone network on Fire Island and how deeply that 100 year old network – that so many these days associate only with obsolete rotary phones – penetrated into people’s lives and business. Every significant business operation on Fire Island was enabled by, and dependent on, the phone network. The ability of hotels to take reservations, of realtors to receive faxes, of banks to provide ATM service, of restaurants and retailers to reliably and cheaply process credit cards, all counted on the ubiquitous availability of a reliable and affordable communication platform. Every major health and safety system, from the fire alarms at the local elementary school to home security systems to people’s heart monitors blithely assumed they could plug into the network and have it last forever.

Why did so many things run over the telephone network? Why did everyone think they could rely on it? Because the law of public utility works in a virtuous cycle. When something becomes critical to our lives and commerce, it becomes – to use the language of old statutes governing such things – affected with the public interest. The law recognizes this special status by requiring that these essential services be offered in an affordable, dependable, reliable way to all without favoritism or discrimination. That, in turn, allows everyone to find new uses no one ever imagined. Bring in reliable clean water and you not only get drinkable water and basic sanitation but also breweries, restaurants, and other businesses dependent on a clean water and sewage disposal network. Bring in electricity and you get entire new industries of device that run on it.

Nor were the people of Fire Island wrong or foolish to depend so much on this single communications network. Verizon and its free market cheerleaders spent the summer of 2013 arguing with the public and with regulators that the people of Fire Island were basically moochers riding on Verizon’s network. Verizon built the network, they argued, graciously providing service to their customers subject to the whims of the free market. But the whole point of public utility – and why providers so desperately fight it – is that providers are not free to offer the service anyway they like.

Critically when we designate a service as a utility, that means it has become too important to leave to the benevolence of corporations, the kindness of kings, or the cold indifference of the market. We must guarantee fair access for all under a rule of law.

Both the federal government and the state of New York assured the people of Fire Island for 100 years as a matter of law that precisely because the phone network was so essential to their lives, they could count on it being there. And because New York and the FCC kept that promise by requiring Verizon to get permission to turn off their traditional phone service, the people of Fire Island got something better than traditional copper lines to replace the phone network Sandy destroyed rather than something worse. Verizon replaced its aging copper network with FIOS. Instead of a cheap downgrade, the law of public utility forced Verizon to give everyone a needed upgrade to the essential network of the 21st Century – broadband.

When I run through all the things that the Fire Island telephone network supported, all the ways it was essential to peoples’ lives, it’s astounding. But it had worked so well for so long that people didn’t even realize how much they depended on access to the underlying network. Now that basic network, that essential service, is evolving before our eyes into the utility of the 21st Century – the broadband network. Just as the transition from the postal system to the real time communication of the telephone network meant a quantum leap in the capacity of what people could do, so too the transition to the broadband network enables all that relied on the phone network to do and more than we can even imagine at the moment. As FCC Chairman Tom Wheeler said on the day the FCC declared broadband access a telecommunications service: “The Internet is too important to let broadband providers be the ones to make the rules.”

That doesn’t apply only to Net Neutrality. Many people think we declared broadband a Title II telecom service because we cared about net neutrality. It’s other way around, we cared so passionately about net neutrality because broadband has become utterly essential on our lives – too important to let a handful of powerful companies make the rules on who gets served, who doesn’t get served. By classifying broadband as a telecommunications service and protecting the neutrality of the network we recognized legally what we already knew from the experience of our daily lives.

We must therefore make sure that the broadband network reflects the same five fundamental values that have guided or national communications policies since the founding of the Republic: service to all Americans, consumer protections such as privacy and quality of service, reliability and neutrality of the network, public safety, and – where possible – vigorous competition.

But at this very moment, when we most need the concept of utility service to secure our digital future, we find the very concept of public utility under attack. We see water privatization depriving people of what they need to survive. We see electric service privatization transforming our electric grid from the envy of the world to a service so unreliable that one can now pick up home generators at your local Costco – if you can afford it.

Nowhere has this war by private interests against the very concept of public utility become more pronounced than in telecommunications, and we all suffer for it. Given the vital importance of the phone network, and this history of public utility, why did Verizon (and many others) assume they could just end wireline service? Answer, because until Fire Island, they were getting away with it, and are getting away with it.

Consider the example of New Jersey across the river. Sandy wiped out a telephone network on the New Jersey Barrier Islands. As on Fire Island, Verizon sought to replace the wireline network with Voicelink. The state of New Jersey Board of Public Utilities (BPU) told the FCC to wait on further action until the BPU could conduct its own proceeding. To date, the BPU has not conducted any proceeding on Verizon’s request to replace its copper network with Voicelink. As a result, the residents of the New Jersey Barrier Island community of Mantoloking has no wireline phone service. If you subscribe to Comcast, you can get a landline as part of you cable package. Or you can get Voicelink.

Since then, the BPU has generally allowed Verizon to do as it wished, effectively deregulating it for all practical purposes. The result? We have places in New Jersey that not only don’t have broadband, they lack basic phone service. It simply was not worth the cost of putting in fiber, or rolling out DSL, or building a cable system. They have some cell towers, but not nearly enough to provide reliable voice service or LTE for everyone. If you live where you can reach a tower – great. But most folks are just out of luck.

What these people have is the leavings of the last century – copper lines Verizon doesn’t bother to maintain. In one town I read about, the situation was so bad that the local school sent notes home with children to ask their parents to write the BPU. They couldn’t even manage a reliable phone tree anymore!

I want to stress this is not out in some far off hinterland where mountainous terrain or hundreds of miles of prairie cuts off towns from affordable backhaul. I’m talking about New Jersey. I’m talking about towns within two hour’s drive from Comcast headquarters in Philadelphia and Verizon headquarters in Basking Ridge. Last century we put a phone on every farm. Now we can’t get a broadband line a two-hour drive out of Manhattan! In the last century our phone system was the envy of the world. Now we spend out time explaining why its OK that our broadband infrastructure ranks below that of Estonia.

This is why it is so critical to embrace the definition of broadband as an essential utility. In New York, where the state stepped up and regulated the network as an essential service, the people demanded an upgrade – and won! In New Jersey, where the concept of an essential utility has given way to caveat emptor, we see the inevitable result of leaving such decisions to the beneficence of corporations, the kindness of kings, or the cold indifference of the marketplace – an upgrade where it makes economic sense, a downgrade for those unlucky enough to live elsewhere. How did this happen?

All true change is culture change. We have lost so much in the last 40 years because the proponents of Laissez Faire government and Caveat Emptor economics have invested virtually limitless resources to reshape and change the culture from one where we believe – as the authors of the Federalist papers believed – in a government “sufficiently energetic” and “vigorous” enough to meet the needs of the people to one where people repeat the mantra ‘government is not the solution, government is the problem.’ We no longer view ourselves as having a government “of the people, by the people and for the people.” We have learned to turn our backs on the ways of our fathers that served us so well, following instead the prophets of the gods of the market place. We have replaced a Rule of Law that guarantees rights to all with a corporate feudalism that, to paraphrase the Declaration of Independence, is a tyranny unfit to be the ruler of a free people.

“Public Utility” is the ultimate heresy to this culture of caveat emptor our opponents have worked so hard and spent so much to create. It is an affront to the worship of the gods of the marketplace by declaring that a society cannot reach its true potential, morally or economically, without some government oversight and intervention in the marketplace. It is for this reason that our opponents are so desperate to undermine the concept of public utility, and why it is so critical that we embrace it. Our opponents will give us almost anything as one-off legislation: a form of net neutrality, some form of universal service, whatever – as long as we give up the concept of an essential service subject to these protections as a matter of right.

Why? Because anything done as a one-off can be undone. If the idea of public utility still resonates in our society, there will always be uprisings like Fire Island and the net neutrality fight. But if we lose the very concept of public utility, then we go the way New Jersey has gone – accepting whatever the market provides as the best we can hope to get.

Let me conclude with an analogy to World War II. At the end of 1942, he allies had won what we now see in hindsight were critical battles that turned the tide. Midway, Stalingrad, El Alamein had proven that the previously unstoppable forces of the Axis powers could be stopped. But no one imagined at the end of 1942 that the war was over, and the outcome remained very much in doubt.

We have won some key battles. With the win on net neutrality and the win on Comcast/Time Warner Cable we have shown we can stop the unstoppable and turn back the tide of consolidation and industry control. But we have not yet won by any means, and the outcome remains very much in doubt. I don’t say this to ask you all to drop what you’re doing. To the contrary, I ask you all to see what you are doing to make tech responsive to the public interest as part of the same fight. We are all engaged in one big culture war – the question of whether there is still a concept that our communications technology will continue to reflect our fundamental values. And for those of you who join in the fight – on whatever front you may chose to pursue it – I close with a line from my favorite movie of the World War II period:

“Welcome back to the fight. This time I know our side will win.”