Blocking the power of the Internet

The Internet succeeded because no one in the traditional telecom industry believed in its underlying technology or its design philosophy. They still do not, but are being backed into a corner, and in response are trying to change the Internet into something that they can better control.

Executives from AT&T, which was the U.S. telecom industry at the time, were present at the first major demo of the ARPANet in 1972. The ARPANet, like its successor, the Internet, was a connectionless packet-based network – a technology that few in AT&T believed would ever be useful. According to Ethernet developer Bob Metcalfe, the executives were pleased when the demo crashed. Two years later AT&T turned down the offer to run the same ARPANet. A few years later the International Organization for Standardization, one of the major standards-development organizations for the traditional telephone industry, turned down a formal offer to adopt TCP/IP as basis for future telecommunications.

AT&T was happy to sell wires to the silly geeks building these packet-based networks, but saw no future in such technology. This attitude meant that the Internet was left alone by the telecommunications industry. It also was largely left alone by U.S. regulators, until quite recently.

This neglect meant that developers were free to experiment with new applications over the Internet. There was no carrier telling users what applications they could or could not run, no carrier that you had to get permission from before you were able to deploy a new Internet-based service. The Internet was just a collection of wires, most of which were bought from the telephone companies by ISPs, who paid what the telephone companies determined was a reasonable fee for use of the wires. The cost of the wire did not depend on what Internet services were running over it, just like the cost of your car does not depend on whom you transport in it. ISP customers paid the phone companies for the wires and paid ISPs for Internet service based on the size of the wire they were using. Everything was simple.

But some of the telephone companies want to change this. They want to charge Google and others to send packets to you. The fact that you have already paid for the wire and the Internet service that Google is using to send those packets is ignored. The phone companies say that they want to let Google pay more to make Google’s packets get to you “better,” but this is the blunt end of the camel well into the tent.

The only way for the telephone company to get Google to agree to pay again for what its customers have already paid for is to threaten, directly or indirectly, that if Google does not pay, its packets will not get to its customers. It’s a very small step for the telephone company to refuse to transport – or to badly impair – traffic from companies or people that have not paid the phone company an extra fee. It would be rather hard to innovate under these rules. In most situations this is called extortion, but the phone companies are asking us to believe that it’s a service improvement.

Disclaimer: Extortion is not a normal Harvard course topic (as far as I can tell), so the above view is my own.