Cable and phone companies are not normal market competitors in the sense that they most often have monopolies in given regions (cable) and/or act as sole gateways to services such as the internet. The internet has like the telephone before it rapidly become a necessity like electrical or water service. As utilities they are given certain privileges that other service providers do not have because they are considered essential to the workings of society.
Also, US cable companies and the telcos are enormously profitable and yet refuse to upgrade their infrastructure to meet demand both in terms of technological modernity and customer capacity. Europe and Japan are both miles ahead in this regard, offering many more services and much greater internet speeds for lower consumer costs. Instead, their solution to overcrowding on available bandwidth is to find ways to throttle traffic and/or charge usage premiums rather than expanding and upgrading their lines and equipment to meet demand.
If these companies were non-profit or were working with slim profit margins, charging costumers premium rates to acquire enough capital to invest in such an expansion might make sense. But the fact is that these companies are fat and rich and can well afford the upgrades themselves. They are publicly traded and get their growth capital from investors as well as their charges for service. So why should the consumer be expected to fund their technological expansion ahead of time? You don't charge more for today's single cheeseburger in order to buy the materials to make double cheeseburgers next year. You charge for the added material cost of a double cheeseburger at the time of sale.
A recent decision by the FCC about this idea is heartening:
F.C.C. Vote Sets Precedent on Unfettered Web UsageThe Federal Communications Commission formally voted Friday to uphold the complaint against Comcast, the nation's largest cable company, saying that it had illegally inhibited users of its high-speed Internet service from using popular file-sharing software. The decision, which imposes no fine, requires Comcast to end such blocking this year.
blocking this year.
Kevin J. Martin, the commission's chairman, said the order was meant to set a precedent that Internet providers, and indeed all communications companies, could not keep customers from using their networks the way they see fit unless there is a good reason.
"We are preserving the open character of the Internet," Mr. Martin said in an interview after the 3-to-2 vote. "We are saying that network operators can't block people from getting access to any content and any applications."
The case also highlights the broader issue of whether new legislation is needed to force Internet providers to treat all uses of their networks equally, a concept called network neutrality. Some have urged legislation to make sure that big Internet companies do not discriminate against small companies or those that compete with their video or telephone services.
The legal complaint against Comcast, which is based in Philadelphia, relates to BitTorrent, software that is commonly used by people downloading movies, television shows, music and software. Many, but hardly all, of those files are copyrighted material traded without authorization.
Comcast says that a small percentage of its customers using BitTorrent consume a large share of its network capacity, degrading the Internet access of other customers. So it installed equipment that slowed -- but did not completely block -- file transfers using BitTorrent.
Comcast has already said that it plans to move to a new way of managing its network at times of peak use to avoid singling out certain programs. Nevertheless, the company objected rather strongly to the commission's decision.
"We believe that our network management choices were reasonable, wholly consistent with industry practices," Sena Fitzmaurice, a spokeswoman for the company, said in a statement. "We are considering all our legal options and are disappointed that the commission rejected our attempts to settle this issue without further delays."
Analysts said they expected Comcast to appeal the decision.
The company's blocking received wide publicity last October after The Associated Press ran tests of Comcast's network that substantiated some users' allegations. Two public advocacy groups, Free Press and Public Knowledge, then filed a formal complaint with the commission, which held several hearings into the matter.
Mr. Martin, a Republican, was supported in Friday's decision by the two Democratic commissioners, Jonathan S. Adelstein and Michael J. Copps. The move was opposed by the two other Republican members, Robert M. McDowell and Deborah Taylor Tate.
In a lengthy dissent, Mr. McDowell wrote that the commission did not have the legal authority to take such action because it had never issued formal regulations on the issues in question.
"This matter would have had a better chance on appeal if we had put the horse before the cart and conducted a rule-making, issued rules and then enforced them," he wrote.
Mr. Martin responded that it was common practice for agencies to address new policy issues when dealing with complaints.
Mr. McDowell also wrote that Comcast's systems were a legitimate method of managing the capacity of the network and not an attempt to disadvantage rivals.
"Americans download more than 11 billion Internet videos per month, yet the record contains no evidence that Comcast is interfering with sites like YouTube," he wrote, adding that YouTube does not use the BitTorrent software that was blocked.
Curiously, representatives from other telecommunications companies praised the decision, even though they objected to the commission meddling in how they manage their networks. They said they would prefer such rulings to legislation from Congress, which has discussed enshrining net neutrality principles in the law.
Jim Cicconi, senior executive vice president for external and legislative affairs for AT&T, said in a statement, "Regardless of how one views the merits of the complaint against Comcast, the F.C.C. today has shown that its national Internet policies work, and that they are more than sufficient for handling any net neutrality concerns that may arise."
Edward J. Markey, the Massachusetts Democrat who is chairman of the House Subcommittee on Telecommunications and the Internet, has introduced legislation to mandate network neutrality. He said in a statement that the F.C.C.'s action in fact proved that Congress must act on the issue.
"Vigilance by regulators and policy makers, coupled with a commitment to act when necessary, is vital to thwart the emergence of new bottlenecks to competition and innovation," he said.
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