New Technology, Long Road

While most of Wall Street is now betting on “convergence”--the notion that computers, telephones and TV sets will soon merge into a single technology--most Americans are just beginning to warm to the idea. That’s because early products under the new technology are far from perfect--video images on a computer are choppy, for instance--and because the high-speed cable lines on which the convergent technology depends are still being laid.

Still, many thousands of Americans are already using services like @Home and Road Runner to surf cable television channels as well as the Web and to make videophone calls, all on their home computers. In so doing they are also surfing right over the early 20th century rules that the Federal Communications Commission uses to regulate media. Until it becomes clear how most people want to use their high-speed Internet connections, the FCC will have little choice but to regulate them using existing legal frameworks for either phone or cable companies.

The stakes for business are high. Should the agency deem the new medium a kind of “phone service,” then those operating it would have to abide by the “common carrier” rules that require phone companies to open up their networks to competitors. Should the agency deem the new medium a “cable service,” then those operating it would be much freer to dictate content and shut out competition. Not surprisingly, the cable industry is now lobbying ardently for the latter outcome.

The cable industry contends that Congress gave it control over the high-speed Internet market in the 1996 Telecommunications Act, in which the traditional definition of cable was extended. Earlier, the definition spoke of the transmission of signals to subscribers, plus enough “subscriber interaction” to allow movie selection. But the 1996 law vaguely extended it to include not only the selection but the “use of” programming.

There’s another passage in the Telecommunications Act, however, that’s far more central to its essential spirit. It says U.S. policy should be based on “preserving the vibrant and competitive free market that presently exists for the Internet and other interactive computer services.” And arguments from the cable industry notwithstanding, the pro-competitive rules that govern phone companies fit the free-spirited Internet better than the proprietary rules governing cable.

If the Wall Street analysts are correct, convergence will be far more than a novelty. It promises to eventually be as essential to business and culture as the vibrant marketplace known as the agora was to ancient Athens. Deciding how to govern the Internet is the key regulatory challenge of the Computer Age. The key to tackling it properly lies in ensuring that the Internet remains a community readily accessible to consumers and entrepreneurs alike. Regulation should neither hinder economic growth nor confer an unfair advantage on current monopolies.