Net Access: Hands Off, for Now
They're campaigning hard, lobbying aggressively, forming coalitions, and spending lots of money. Gore and Bush running for President in 2000? No, high-tech companies battling it out in Washington and in cities across America over access to the Net through broadband cable systems. The issue is one of the most important facing the New Economy--how best to ensure openness and competition over the Net (page 24).
America Online Inc. is fighting to get regulators to force AT&T to open its cable pipes to all competing Internet service providers. AT&T, fresh from spending $120 billion to gain access to 60% of U.S. homes with cable, wants the government to keep out. A federal judge in Portland, Ore., just agreed with AOL. The city of Los Angeles may side with AT&T. Federal Communications Commission Chair William Kennard thinks it's nuts for every town in America to have its own telecom policy. And consumers just want fast, cheap access to the Net. What a mess. What to do?
Maybe nothing. AOL and many entertainment, financial, and retail companies doing business on the Web are afraid that AT&T will favor its own portals and business sites. They have a point. Cable, after all, is a bunch of local monopolies. Until recently, so was the telephone business.
Yet AT&T's cable lines will carry video, Internet, and telephone services and provide the Baby Bells with their first real competition in local phones. AT&T also says its high-speed cable modems will pressure the Bells to finally promote their own high-speed Internet digital subscriber lines.
The truth is no one knows what will be the best way to deliver Net access. AOL just signed a $1.5 billion deal with Hughes Electronics Corp. to deliver high-speed Internet service over satellites through television. If that works, satellite TV could trump cable and phones for Net access. Who knows?
Be it taxes, privacy, or free speech, Washington has so far taken a hands-off policy toward the Internet. The Net's explosive growth is testimony to the success of this strategy. Like it or not, local governments should follow Washington's example. If the monopolistic tendencies of cable and telephone begin to reassert themselves, the federal government can always step in. But with technology changing and the future of Net delivery to the home still in flux, right now the best government policy remains no policy. That's as true in Los Angeles and Portland, Ore., as it is in Washington.