Theodore Roosevelt on net neutrality
“Above all else,” President Theodore Roosevelt admonished Congress in 1905, “we must strive to keep the highways of commerce open to all on equal terms.”
Roosevelt could not have imagined digital computers and fiber-optic cables. He was talking about railroads, the highways of commerce in his day.
But though the technology has changed, the principle TR expressed remains as essential as it was a century ago. We ignore it at our peril.
Until now, our digital highways of commerce have been open to all on equal terms. Media conglomerates and big-box retailers transmit information through the same pipes as bloggers, startups and boutiques. This principle of equality, known as net neutrality, has stimulated competition and spurred innovation since the Internet began.
In the future, companies with deep pockets and financial leverage would likely be able to deliver more content faster than their competitors. They could exploit their advantages — squeezing out and absorbing smaller companies just as the trust corporations did in Roosevelt’s day.
FCC Chairman Tom Wheeler, a former fundraiser for President Barack Obama and cable industry lobbyist, dismisses such concerns. “Reports that we are gutting the Open Internet rules are incorrect,” he told the National Cable and Telecommunications Association last week. Promising to hold broadband providers to a “commercially reasonable” standard, he declared, “If someone acts to divide the Internet between ‘haves’ and ‘have-nots,’ we will use every power at our disposal to stop it.”
Wheeler, who has written two books on Abraham Lincoln, describes himself as a history buff. He would do well to consider the example of another iconic American president.
In Roosevelt’s day, federal regulations prohibited railroad companies from charging “unjust and unreasonable” shipping fees. The railroads complied with the letter of the law by charging standard rates. They circumvented the spirit of the law, however, by offering special rebates to influential customers, including the behemoth Standard Oil and Armour & Company, a member of the beef trust. Smaller companies paying full price could not compete. Trusts eventually swallowed them up.
The railroad industry consolidated as well. Robber barons like Cornelius Vanderbilt and investment bankers like J. P. Morgan amassed huge rail holdings. They shielded themselves from government interference by financing the campaigns of friendly politicians or even serving in office themselves — like Leland Stanford, the president of the Southern Pacific Railroad who became governor of California and then a senator.
By the early 20th century, a handful of corporations effectively controlled America’s highways of commerce. “It is terrible power to place in the hands of a few men,” warned Ray Stannard Baker, the famous muckraking journalist, “fewer every year — about 10 men, now, sitting in Wall Street.”
Is the situation so different today? From e-commerce to communications to news and entertainment, the Internet has become one of America’s largest commercial mediums, and despite Silicon Valley’s entrepreneurial myths, the space is increasingly dominated by vast corporations. Google, Facebook and Amazon may not be viewed as predatory, the way Standard Oil was, but they are just as determined to absorb the competition.
Meanwhile, as broadband supplants satellite and cable television, the entertainment and news industries have consolidated into media empires like the Walt Disney Company, which owns ABC, 20th Century Fox, which owns Fox News, and Viacom, which owns MTV and Comedy Central.
An elite club of national Internet providers — Comcast, Time-Warner Cable, AT&T and Verizon — could stand in for the old railroads. If Comcast merges with Time-Warner, the club would become even smaller. In a few years, a handful of corporations could control the information superhighway — just as a handful of ruthless trusts once controlled the rails.
It would be nice to think that these emerging e-trusts would rule our highways of commerce with wisdom and generosity of spirit. But that is not how capitalism works. The broadband providers would likely amplify differences between fast-lane and slow-lane content delivery to justify higher fees for the fast lane. Web and media corporations seeking advantage over competitors would not discourage them.
Given these incentives, Wheeler’s vow to enforce “commercially reasonable” behavior is hardly reassuring. Bandwidth is not like a faucet that delivers a steady, easily measurable stream. It is like a congested highway, ebbing and flowing in ways that can be infuriating when the connection is poor.
How will the FCC monitor volatile slowdowns and erratic service interruptions? How will it compensate companies that lose business because their competitors deliver faster, smoother content? How will it escape the pernicious influence of corporate political contributions — underscored by Wheeler’s own background as an industry lobbyist?
This is not an experiment worth trying. As the history of U.S. railroads demonstrates, once the inequality bottle is open, it can be difficult to reseal.
Congress outlawed shipping-rate discrimination in 1887, but it failed to give enforcement powers to the new Interstate Commerce Commission. In 1903, Roosevelt called for a ban on the rebates that railroads were using to circumvent the 1887 law. Following an all-too-familiar script, however, congressional leaders worked with industry lobbyists to draft a watered-down bill, which the trusts easily evaded.
Three years later, Roosevelt tried again. When conservatives in his own Republican Party rallied against the bill, he was forced to accept a weak compromise. Serious railroad regulation would not pass Congress until 1910, two years after Roosevelt left office, 23 years after Congress prohibited “unjust and unreasonable” shipping rates.
Let’s not make the same mistake again. The Internet has sparked one of the most dynamic bursts of entrepreneurship since the invention of the railroad. We must not take it for granted. Though multibillion-dollar buyouts in Silicon Valley may beguile the public, technology and media industries are rapidly consolidating.
If we sacrifice the principle of net neutrality, the process will accelerate. Once the financial incentives driving consolidation become entrenched, it will be much harder to repair the damage.
As TR said, “Above all else, we must strive to keep the highways of commerce open to all on equal terms.”
PHOTO (TOP): President Theodore Roosevelt addressing a crowd from a flag-draped podium, October 23, 1906. Courtesy of LIBRARY OF CONGRESS/J. Horace McFarland
PHOTO (INSERT 1): Federal Communications Commission Chairman Tom Wheeler testifies before a Senate Appropriations Financial Services and General Government Subcommittee hearing on Capitol Hill in Washington, March 27, 2014. REUTERS/Jonathan Ernst
PHOTO (INSERT 2): Leland Stanford in the 1870s. Wikipedia/Commons
PHOTO (INSERT 3): Theodore Roosevelt, 1905. Courtesy of LIBRARY OF CONGRESS