Barrel Strength

IN 1860, when the Confederate States of America established themselves, a constitution was passed that had several interesting features. “Congress was forbidden to pass a protective tariff or to appropriate money for internal improvements.” So wrote Shelby Foote in his magnificent “the Civil War: A Narrative” (at page 42). Now what could that mean, no appropriations for internal improvements? The pressing need was to settle the West. Railroads needed incentives to build out their infrastructure, as we would call it today. In the North, the withdrawal of the Southern Democrats, the then conservative party, freed the northern Yankee improvers to grant land to railways, endow colleges with state land, and to pass the Homestead Act, which gave 150 acres in freehold to any man or woman who settled and farmed a piece of land in the western states for three years. All these statutes were first passed in the years 1860-1865 when the South seceded. The Southern bottleneck that opposed the passage of progressive legislation voluntarily withdrew.

The Republicans were then the party of the North, of New England and its western colonies, such as Kansas, Ohio, Michigan and Minnesota. They were the progressive party. They were the ones pushing the slaveholding states into secession, by electing that Republican radical abolitionist (so the South thought), Abraham Lincoln. The colours of the parties were then appropriate to the traditional connotations of red and blue. Democrats - blue -conservative: Republicans - red - liberals. More than people care to recall these days, the US Civil War was a battle between progressive Republican New Englanders against conservative Southern Democrats. Can we agree that people who believe in the right to own slaves are conservative of an extreme interpretation of private property?

The South persists. Every serious study of the United States will show the persistent patterns of violence, warrior ethic, and many other more agreeable cultural traits inherited from the beginning from the parts of England from which the Southern colonies drew their settlers. Kevin Phillips in his American Theocracy (2006) , and in The Cousins’ Wars(1999) explores the continuing regional cultural differences. Philips is but a footnote to David Hackett Fischer’s Albion’s Seed, Four British Folways in America (1989), which explores these matters exhaustively.

Hackett Fischer shows that, starting with the 1960’s, the party identifications which had withstood a century after the Civil War began to flip. The traditional Republican bastions of the North flipped into the Democrats’ hands, and the Solid South of the Democrats flipped into the Republicans’. Yet the environing cultures in North and South remained continuous. (Hackett Fischer, p. 882) The counties in New York state that had voted Republican and opposed slavery in 1860 voted Democratic and supported civil rights in 1964, for instance.

This brings me back to the prohibition in the Confederate Constitution against appropriating money for “internal improvements”. It may be a long stretch but I have come to the conclusion that the Republicans, being Southern-dominated, and being strong defenders of the rights of private property, even at the expense of the common good, have engineered the state of affairs complained of: higher prices and lower penetration of broadband than many other OECD countries. You could call it Republican telecom policy, but that fails to capture why telecom policy has turned its back on collective action. I call it Confederate telecom policy. No money for public improvements is a Confederate policy, not a Yankee one.

In the past ten years in the United States a series of court decisions and failure to appeal them by the Republican administration has resulted in the gutting of its Telecommunications Act of 1996, which was predicated on competition being fostered through the ability of new entrants to lease facilities from the incumbents, the large telephone and cable companies. The disappearance of MCI and the folding of AT&T in to Bell South resulted from these decisions, as a leased facilities strategy became untenable.

The public interest group Educause has just published a study showing US broadband is slower, more expensive, and less ubiquitous than many other OECD countries.

It says:

The failure of the United States to keep pace is the direct result of our failure to adopt a national broadband policy. The United States has taken a deregulatory approach under the assumption that the market will build enough capacity to meet the demand. While these steps may have had some positive influence, they are not sufficient. The profit/loss statements of individual firms fail to take into account the positive externalities from a widely deployed broadband network, including economic growth, lower‐cost health care, and higher‐quality education. In contrast, most other nations treat broadband services as necessary infrastructure; their governments adopted explicit broadband stimulus plans at the turn of the century, and their countries are now reaping the benefits.

The same tendency is working in Canada, despite the differences in legislation and political culture. The ability of Internet Service Providers to obtain facilities from large carriers has been under attack. For several weeks this past autumn, the CRTC held hearings on the issue, with the government’s Bureau of Competition Policy leading the attack against all but the narrowest interpretation of what could be leased at regulated prices from telephone and cable companies. The telephone and cable companies want to restrict the ability of smaller competitors to lease facilities. This means that access to the Internet would, if they succeeded, be available almost exclusively from a duopoly of large cable and telephone companies serving your neighbourhood.

Who cares and why does it matter? Everybody who cares about the Internet should care. Why? Here we enter the realm of reasoned speculation. Right now, when you get onto the Internet, every IP address in the world is accessible to your IP address, without extra charge. The universe of IP addresses is yours for a monthly fee. Internet carriers can condition your traffic, install security measures, check for spam, and engage in many practices invisible to you that increase the usefulness of the Internet to you and to them. While these are violations of the principle of “network neutrality“, they do not affect the perceived neutrality of carriers towards endpoints, be they Google or the University Library or the world of porn, or any of the other billions of IP addresses.

The deregulatory approach to telecommunications basically asserts that it is the carriers’ network and they can do with it what they please. (This is the line constantly espoused by Terrance Corcoran of the Financial Post). If they wish to raise prices for certain classes of end-point, such as Google, or search engines, or for certain parties, or uses, this can only redound to the public benefit. Competitors will offer different pricing mechanisms, and people will be able to switch to those carriers. What if you only have two competitors? What if you cannot switch?

Throughout the CRTC’s hearings on “essential facilities” (stuff you can and cannot lease from the carriers), the refrain from the carriers was “let us compete”, which is a code word for “let us discriminate on price” among uses and users. This is not a bad idea in most capitalist situations. Price discriminations can have many beneficial effects in a competitive market. But when you have a largely captive market, and the costs of switching to a competitor are high, and the competitor does not want to upset the applecart, the power to set prices can work against the collective interest in communication networks.

The claims of the carriers during this CRTC proceeding were even more piquant than this. Their experts said they needed more money to build out “Next Generation Networks”, (NGNs) which is ironic indeed. The “Next Generation Network” is the carriers’ idea of an Internet, where you pay for every transaction like you pay for long distance phoning. The NGN is a rearguard action against the Internet.

Two points emerge from this discussion:

1) the basic tendencies of US and Canadian telecom policy in the last five years have been to expand the rights of owners of networks against those who would lease facilities, regardless of the legislative framework; and

2) the basic claims of the carriers is that they must be allowed greater rights to engage in price discriminations among uses and users so as to build out “next generation networks”. This is like asking for money so as to entrench a cash machine at the core of the Internet, where one does not now exist.

“Confederate” telecommunications policy consists of the assertion of unlimited rights by owners over carrier networks. It refuses to see the advantage for society as a whole in a ubiquitous broadband infrastructure, if that would mean fewer rights for carriers over who gets what. In the Confederate model, the rights of ownership are exaggerated. It is as if your water utility charged you diferent prices for water depending on the kind of tap it came out of. (I am sure the apologists for carriers would think that a sound economic doctrine). No appropriation of state money for collective improvements. If this is not Confederate telecom policy, what is?

Sometimes conservatives have to figure out what society needs to conserve. For me it is the neutrality of Internet, and not the unlimited rights of large property owners. If that makes me some kind of progressive, I will be pleased to be associated with Abraham Lincoln and his left-wing movement against some rights of private property. And if I find myself aligned with Democrats on this issue, I will survive the shock.