Nader: Al Takes Too Much Credit

Kicking off the second round of Wired News’ exclusive debate between Green Party presidential candidate Ralph Nader and Al Gore advisor Reed Hundt, Nader claims the administration’s competition policies have more style than substance.

Kicking off the second round of Wired News’ exclusive debate between Green Party presidential candidate Ralph Nader and Al Gore advisor Reed Hundt, Nader claims the administration’s competition policies have more style than substance.

First, I will comment on Mr. Hundt’s defense of the Clinton/Gore record on telecommunications policy.

Mr. Hundt doesn’t claim that Mr. Gore invented the Internet, but he does lay claim to credit for its success as a technology. And while Mr. Gore surely deserves some credit, particularly for his early congressional backing of government investments in the research and development which created the Internet, Mr. Hundt should be more expansive in terms of the reasons for the Internet’s success. Central to the success of the Internet is the fact that it is based upon open, non-proprietary and non-monopolistic standards. Also, no single firm or cartel yet controls key Internet bottlenecks, such as last-mile delivery of Internet content. But all of these factors are constantly at risk by forces that want to control and monopolize various aspects of the Internet.

Mr. Hundt dismisses my “assertion” that “cable companies will use their ‘gatekeeper’ role to limit access to the Internet.” He claims there is “no marketplace evidence” that this is a problem, but in any event, “real Clinton appointees” are showing attention to this issue in “real time.” In fact, the Clinton appointees to the FCC, particularly the current chair, Mr. Kennard, have been belittling the importance of this issue for years. The Consumer Project on Technology asked the FCC to address this issue in 1996, when Mr. Hundt was the FCC chair. After years of complaints by consumer groups and Internet content providers, the FCC is still unable to make even basic policy statements in favor of non-discrimination for content delivered to residential cable Internet users.

If Mr. Hundt is really interested in “marketplace evidence” regarding content discrimination by cable operators, he might begin by looking at several decades of content discrimination in the video field. Time Warner’s May 1 blacking out of ABC television was only the latest of countless cases of content discrimination. Now, as Internet providers, the cable companies want to decide what Internet content their customers will receive via “priority” delivery, and which content will move on the “slow” service.

Mr. Hundt is apparently not impressed with the views of consumer groups on this topic. Perhaps he can respond to the comments of Disney, hardly a smallfry in the content business, at the recent FCC hearing on the AOL/Time Warner merger. In discussing this merger, which Mr. Hundt has publicly supported, Disney said:

“This massive aggregation of market power cannot be left to voluntary good behavior. Both AOL and Time Warner have demonstrated their propensity to abuse their bottlenecks and market strength to limit and skew consumer choice and to inhibit competition. AOL has perfected a collection of predatory tactics and business practices that result in consumers spending 85 percent of their time online trapped inside AOL’s proprietary ‘walled garden.’ AOL requires its content providers to disable or limit consumer navigation links to sites outside the ‘walled garden.’ It prohibits advertising for competitive services. AOL takes affirmative steps to render its instant-messaging services incompatible with competitive services, resulting in a market share in excess of 90 percent. And, AOL actually developed client software that disables the client software of any other ISP on the customer’s desktop.

“Time Warner’s history is replete with similar anti-competitive practices. The common thread to Time Warner’s actions has been use of its cable distribution bottleneck to reduce consumer choice and to exclude service offerings deemed competitive with Time Warner offerings. For example, in Florida, Texas, Ohio, New England and the Northwest, Time Warner has refused to carry non-owned news channels, thereby reducing consumer choice in news and preserving the market for its own existing or planned news channels.

“Time Warner stood almost alone among major cable companies in refusing to carry the Disney Channel on basic on most of its systems. Time Warner would prefer that children watch Cartoon Network, which it owns.

“On its Manhattan cable system — arguably the most important and influential cable platform in the world — Time Warner moved its own channels to the higher-traffic and most desirable lower-channel positions.”

And, while evidence of past behavior is important, it is even more troubling when one considers proposals from Cisco and other firms for new Internet architectures that will fundamentally change the way consumers receive Internet content.

Consider, for example, excerpts from a recent Cisco paper describing its “New World” architecture for the Internet. According to Cisco:

“Tools … allow you to isolate network traffic by the type of application, even down to specific brands, by the interface used, by the user type and individual user identification, or by the site address.

“Admission control and policing is the way you develop and enforce traffic policies…. Preferential queuing gives you the ability to specify packet types — Web, e-mail, voice, video — and create policies for the way they are prioritized and handled.

“For example, if a ‘push’ information service that delivers frequent broadcasts to its subscribers is seen as causing a high amount of undesirable network traffic, you can … discourage its use. At the same time, you could promote and offer your own or a partner’s services with full-speed features to encourage adoption of your services.”

Cisco and other firms are creating technologies that will change the very character of the Internet. If Mr. Gore is in favor of government actions to address non-discrimination in content delivery, he can speak out at any time. I have been pushing for action on this issue since 1996.

Mr. Hundt dismisses the complaint regarding the approval of several local exchange company mergers (SBC/Pacific Bell/Ameritech, Bell Atlantic/Nynex/GTE) without responding to the specific complaints that larger companies will wield too much political power, or be too hard to police once they enter long-distance markets. Of course, ignoring these problems is pretty much how the FCC has operated for the past eight years. If Mr. Hundt believes it is not true that competitive ISPs and DSL operators need more protection from the predatory practices of the incumbent telephone monopolies, can he explain the extreme difficulties of ordering DSL lines from competitive providers? Mr. Hundt’s approval of the tying of the prices for Internet cable access to the purchase of cable television services undermines the future of the DBS industry, which has provided the only real market-based restraint on cable monopolies.

Turning back to the Internet, Mr. Hundt wants everyone to thank the vice president for the creation of this new big Internet economy. I don’t think the commercial aspects of the Internet are as important as the non-commercial aspects, particularly in terms of the empowerment of citizen movements and democracy. However, clearly in the commercial area, governments should play a role, particularly in areas such as consumer protection and privacy. I will address the issue of privacy first.

As e-commerce has grown in importance, there have been endless stories about the collection and use of detailed information about what people read, buy and do on the Internet. Privacy advocates have asked the Clinton/Gore administration to undertake any number of measures to protect people from invasions of privacy. What the Clinton/Gore administration has done is to provide an endless stream of rhetoric about the need to avoid over-regulation of the Internet in the privacy area, and to endorse various self-regulatory schemes.

With very minor exceptions, the administration has belittled the need for more government privacy protection. In the international area, our trade officials have been particularly bad. We have mounted enormous opposition to the European Data Protection (privacy) directive, and put Canada on our trade “watch list” for considering privacy legislation. In various global forums, administration officials tell parliaments and journalists that U.S. citizens don’t want the government to regulate the collection and sale of personal information. This is, of course, bunk. The American people want the government to act. The opposition to privacy regulation comes from the e-commerce millionaires who fund U.S. elections.

The United States is the only major industrialized country in the world without a government agency devoted to the protection of privacy. More than 40 countries have such agencies, which are essential in the modern age to provide a balance against the efforts of governments and markets to invade privacy. We also need specific U.S. legislative authority to regulate the collection and use of personal information by Internet service providers and website operators. And we need to support the call by privacy experts for the establishment of an international convention on privacy.

One of the more troubling proposals now under consideration by the Clinton/Gore administration is being discussed in the negotiations on the Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters, that relate to e-commerce. The International Chamber of Commerce is pushing for an agreement that will exempt e-commerce firms from national privacy and consumer protection laws if they agree to industry-led codes of conduct. Indeed, there is a whole movement by the Clinton/Gore administration to turn governance functions over to privatized institutions that are run by big business. None of this squares with the campaign rhetoric of Al Gore as champion of the consumer’s rights.

The same issues come up in the broader areas of consumer protection. The Clinton/Gore administration has never supported the creation of a national consumer protection agency, and they have rejected requests that the U.S. support an international meeting to create a global intergovernmental consumer protection institution, like we already have for labor, environment, trade, development, agriculture or intellectual property.

There are, of course, enormous consumer protection problems on the Internet. Groups such as the Trans-Atlantic Consumer Dialogue have begun work on a framework for policy. But the Clinton/Gore administration mostly talks about deregulation, self-regulation or no-regulation of consumer protection. In the WTO discussions on e-commerce, the Clinton/Gore administration has been pushing for a ban on “unnecessary” consumer-protection rules, raising the question of who will decide if regulations are necessary or unnecessary.

Contrast this with the Clinton/Gore policies on intellectual property and the Internet. Here, the government is pushing for more and more regulation of the Internet as it relates to intellectual property.

Then there is the Clinton/Gore policy on the scope of patents. The administration is embracing the policy of patenting “anything under the sun.” This includes, for example, political campaigning on the Internet, picking stocks, accounting methods, uses of tax shelters and even golf swings. The administration is rushing through thousands of poorly conceived and unnecessary patents on business methods, including many which deal with e-commerce.

In the area of copyright protection, the administration has been extremely aggressive supporting legislation to reduce privacy and ban new technologies that could lead to unauthorized use of copyrighted materials. The theft of company trade secrets is now a federal crime.

In all of these intellectual property disputes, the administration is pushing for global norms and global enforcement mechanisms, and working hand in hand with big business. So the “hands off the Internet” talk ends when investors need the government’s help.

The vice president’s efforts to promote the uses of computers and the Internet in schools is yet another example of making policy business-friendly. At the top of the agenda is pushing the sales of computers, software and telecommunications services. But when it comes to investments in teacher training or the objective evaluations of the benefits of computers in schools, the administration has not been so visible.

Educators say that the biggest problem with putting computers and Internet connections in schools concerns the lack of training, evaluation and technical assistance, and that often the schools underestimate the costs of upgrades and other maintenance fees. These budget issues are important, because while it is tempting for politicians to divert resources away from staff salaries to the purchase of technology, there is no evidence that this is a good choice.

Author: Ralph Nader

News Service: Wired News


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