Thanks to Jeff Hoel for the transcript of Episode 29 of Community Broadband Bits Podcast. Susan Crawford discusses her new book, Captive Audience, and the importance of telecommunication policy. Listen to this episode here.
Lisa Gonzalez: Hello, and welcome again to the Community Broadband Bits Podcast. This is a production of the Institute for Local Self-Reliance. This is Lisa Gonzalez.
This is our 29th episode. Christopher has a great talk with Susan Crawford. Susan recently published the book, "Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age." Many of y9ou know Susan. She's a champion of the campaign to bring ubiquitous access to America. She is a professor at the Benjamin N. Cardozo School of Law. She served as President Obama's Special Assistant for Science, Technology, and Innovation Policy, and she's also a columnist on the Bloomberg View. Susan's published many articles in many different publications, and she's a Fellow at the Roosevelt Institute. Susan's lectured all around the world, and her list of accomplishments is long and distinguished. Christopher and Susan talk a little bit about the history of how a few large telecommunications companies have come to possess access for Americans. They also discuss the future of telecommunications in our country, and what possible scenarios may arise. Is our destiny to repeat past mistakes? Susan and Christopher talk about how we can influence our own connectivity by starting locally. Here are Susan and Christopher.
Christopher Mitchell: Susan Crawford, thank you so much for coming on Community Broadband Bits. I'm excited to talk about your new book.
Susan Crawford: Hey, well, Christopher, it's awfully nice of you to have me on. And I treasure your site, and all the hard work you do. The new book is called, "Captive Audience." And it just came out this week, on Tuesday. And I am doing the best I can to keep it in the national eye.
Chris: Right. I actually read it over the Christmas break. And I was really excited to read it. I have to say that I picked it up, and I was kind of like, I don't want to read a long book with a bunch of stuff I already know. But there was a lot of stuff in there I didn't know. And I learned a lot. So, I'm really glad you wrote it. And I'd like to know, what was you main reason for taking the time to write this book?
Susan: It seemed to me really important that Americans understand what's going on with Internet access. And telecom policy really doesn't get covered by mainstream media. It is slightly arcane. There are a bunch of acronyms. And I felt that I was in a position to explain it in a really accessible way. Because Americans got excited about banking, and they've gotten excited about climate change, as enormous social policy issues. But telecommunications remains a little distant, and we're easily confused, frankly, by lots of bright, shiny objects and slightly misleading press releases from our giant incumbent telecommunications companies. So, I thought I was in a special position to write about what had happened in the last decade. And I was really interested in the Comcast/NBCU merger.
Chris: The focus on Comcast and the history I thought was really good. And I'm a Comcast customer, through lack of other options. And what I usually say is, the best thing about Comcast is that at least it's not Time Warner Cable. But it was -- it's a terrific look at how this company succeeded, in terms of turning itself into such a large company. The criticism that you've been facing, though, in writing this book, which details how the cable markets came to be the way they are today, is that you somehow hate markets, and you hate capitalism, and you just -- you know, you want to go back to the 1800s. And so, I want to put that question to you: do you want to go back to the 1800s?
Susan: What's weird about that criticism is that, in fact, I want the opposite. I want free markets to function. And right now, when it comes to the flow of information over wires in America, we have a few gatekeepers deciding what information's going to be successful, and what the speeds are going to be, and how much consumers are going to pay for all this. And that means that innovation is at the mercy of these companies. Where, in other countries, you can take communications just for granted. On a smart phone, in most Asian countries, you never have to think about waiting for a link to load, or waiting to, you know, go on with your business. You never have to think about the friction of a slow wired connection if you're building a new business at home. But here in America, if you're launching a startup in Brooklyn, home of all twenty-somethings, you really have to struggle to find the connectivity need to be a world-class online startup. And so, it seems to me that that's worth worrying about. That isn't a free market. It's constrained by the private desires of a few extraordinarily successful actors.
Chris: Right. I think we often forget that markets can be broken by government having poor policy. Which is what, I think, the big companies are always railing against. And they can also be broken by very large companies taking over and subverting the inputs that all the others need. And I'm just curious if you want to just -- if you briefly can recall -- you talked a little bit about the oil and the train -- the railroads -- and how they took over, because they had the ability to "tax," effectively, every -- the movement of everything else.
Susan: That's right. Well, both of these industries -- railroad and oil distribution -- depend on having access to an essential input that many businesses in America need, and building the ability to corner the market in that commodity. So, in railroads, a few actors figured out how to get access to important rights-of-way across the country, built systems, and then consolidated their activities, so that they could cooperate across state lines, and differentially charge for packages going from one place to the other. They could make or break markets. Farmers were totally beholden to the operations of the railroad barons, and had no recourse. And they were furious.
Same thing happened with oil, where, over time, Rockefeller / Standard Oil -- really cornered the market on the ability to generate oil, and then cooperated with the railroad companies, so that it was impossible for anybody else to have the cheap-cost delivery of oil that Standard Oil had. So, at one point, Standard Oil really controlled 85 percent plus of the market for oil in the United States. Extraordinarily successful.
So, what's happened in wired and wireless Internet access -- it's quite similar. It is, in a sense, even trickier on the telecommunications side, because there was so much government assistance at the beginning of the stories of these companies. Cable companies were granted exclusive franchises. While the wireless companies got access to spectrum, initially for free. And the condition of that was supposed to be that everybody would get telecommunications service that was cheap and reliable and universal. But the end part of that story hasn't worked out well for America.
Chris: It actually makes you wonder how many times we have to learn the same lessons over and over again, I feel like. The -- I was fascinated, in reading a book about the history of coal, that there was -- when they were building the Schuylkill Canal, I believe it was, in Pennsylvania, the legislature passed a law saying that the owner of the canal, which was a private company, could have no interest in the coal mines or the other extractive industries along the route, recognizing that if it did, it would take over those industries, because of the advantages of owning the ability to move the goods. It's network neutrality, from 200 years ago.
Susan: And the Nixon Administration. So, in the '70s, when cable was first emerging, there was a lot of concern about the cable industry also having control over content, for exactly the reasons you've mentioned. But, in fact, having to wrangle the difficult relationships between content and distribution -- getting government into that business -- is really difficult. And so, the Nixon White House said it would be much simpler just to separate conduit from content, and ensure that cable was only a transmitter and not also involved -- vertically integrated -- in the programming business.
Chris: I actually think that that's -- it's such a brilliant solution -- structural separation -- of -- Implementing just that would obviate the need for so many other regulations ...
Chris: ... that it's really, I think, a deregulatory move. It's a very smart regulation that gets rid of so many others.
Susan: That's right. But because "regulation" as a word has such a bad name in America, we have a lot of thoughtful work to do, to get Americans to understand that.
Chris: Right. So, let's pose a hypothetical situation, here, which is something that someone first posed to me -- I wish I could credit them, but I cannot remember who it was -- and it is, if, tomorrow, a new company sprung up and provide fiber-to-the-home Internet to everyone across the United States, would our problems be over, or would they just be starting?
Susan: Well, it depends what the end of that sentence is. If a single company provided fiber access to all Americans AND was subject to government oversight, that might be fine. That's what we had in the telephone marketplace. And, as much as people try to claim that it was a mistake to have a telephone monopoly, the benefits of a single company cross-subsidizing long-distance service and providing reliable local service to everyone were very great. As long as the federal regulators could keep up with it, and could ensure that long-distance service, eventually, was competitive. We just have to learn, over and over again, that these are very high initial cost industries. It might be fine to have a private company providing it all, as long as there's a cop on the beat, consumer protection, and reasonable pricing for everybody involved in the country.
Chris: I'm glad to hear the nuance there. Because I think too may people have this idea that if only Google would expand beyond Kansas City, that, you know, suddenly everything would be good. And, although I expect Google to expand beyond Kansas City, and I certainly think that Kansas City is better off with the Google investment there, I think that there's -- it's just -- we need so many other changes as well that it's important to keep that in mind.
Susan: That's absolutely right. And I don't want people to be convinced that -- I love the Google disruption of this marketplace. I'm so glad they're doing it. But we still need a public interest role in the provision of telecommunications. We keep learning that again and again.
Chris: So, let me ask you, then, what should someone do, after reading your book, and being really excited, and throwing open their window, and saying that they're mad as hell and not going to take it anymore?
Susan: Well, just throwing open your window isn't going to actually change the situation -- as much as I understand the initiative. What we need to do is get this on the radar screen of Americans. So, someone who's interested in this needs to find their kindred spirits in their local community. And they need to become avid readers of your site. And they need to understand what their -- what air cover their mayor needs in order to provide competitive fiber. And it -- you know, it could be that the mayor decides to build a municipal system that's actually owned and controlled by the municipality. It could be that the mayor decides to condition access to rights-of-way by a private provider on provision of competitive fiber. But in any case, that mayor needs your support. Because he or she is going to be part of a lattice -- a network -- of community networks across the country that are under attack by the existing cable and wireless companies. And they're going to need political air cover so they can take the steps that are needed in order to serve your community.
Chris: One of the things that I've seen -- and I've to avoid doing myself, although it's very hard sometimes -- is to just be excessively snarky. In dealing with the FCC commissioner, for instance. And just being very frustrated. You do -- you've done a very good job, I think, of explaining how the incentives are all wrong, for a commissioner, or for an elected representative at the state or national level. And so, you just said to give mayors cover.
Susan: Um hum.
Chris: But maybe you can explain a little bit about why our elected leaders aren't doing this on their own already.
Susan: Well, let's start with the FCC. It's very difficult for them, because the incumbents have so much power on Capital Hill, they could just march on the Appropriations Committee, covering the FCC, if the FCC attempted to do anything too disruptive, and gut the budget for the agency. So that's a big risk for the regulator. Because they're so single-purpose in the United States that that one very powerful industry could really decimate the staffing of the FCC. Which wouldn't be good for anybody. And also -- so, it's now moved to elected officials. Because there is so much campaign cash, and so many employees of these companies, in every Congressional district, there's no real up-side for an elected official to call hearings, you know, do anything about this slightly complicated set of questions in telecommunications. So, they need help in a few ways. They need clear explanation, clear public interest, the sense that they may lose their seats as elected officials if they don't take this industry on, and ensure that Americans are getting the cheap, universal, open, fast connectivity that they need in order for the nation, as a whole, to be competitive.
In the end, Christopher, this is really about national competitiveness. And if we can help people understand that, and then help them vote for and persuade their elected officials, in turn, we'll get a better regulatory scheme.
Chris: Thank you so much. You've really, I think, captured things well in your book. And your interviews, I've really enjoyed listening to Diane Rehm. I look forward to -- I hope I hear you on Fresh Air, and on Stephen Colbert. In fact, let me just pull a page out of Stephen Colbert's book, and strongly encourage everyone to tweet Stephen Colbert ...
Susan: Yeah. [laughs]
Chris: ... and tell him to interview you. Because that's what he does to everyone else.
Susan: That's really great. Well, thank you very much. I -- Christopher, I so admire and appreciate your work. And I'm delighted that we had this chance to talk.
Chris: Thank you.
Lisa: That was Christopher interviewing Susan Crawford. We encourage you to visit your local independent bookstore and pick up a copy of Susan's latest book, "Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age." Follow Susan on Twitter. Her handle is @scrawford . And look for her on muninetworks.org , where we regularly bring you news of her writings and appearances. if you have any questions or comments, please send us a note. E-mail us at firstname.lastname@example.org . Our handle on Twitter is @communitynets . This show was released on January 15th, 2013. Thanks to the mojo monkeys for the music, licensed using Creative Commons. The song is called, "Bodacious."