Dec 15, 2017

The Future Internet: Open or Closed?

Published Jun 7, 2006, 12:00pm

By Jonathan Rintels

Center for Creative Voices in Media

An earlier version of this article appeared in the Journal of the Caucus for Television Producers, Writers, & Directors, Summer 2005.

"There are a handful of executives out there who are the gatekeepers of what gets made and seen -- or not. So we just decided to do it ourselves. You've already got the largest distribution network in the world already on your desktop, and the end-user experience is getting better every day."

- Daniel Myrick, director and co-creator of "The Blair Witch Project" and "The Strand," a dramatic series available only on the Internet

"This Internet may be dying."

- FCC Commissioner Michael J. Copps

Many in America's creative community have assumed that the rapidly approaching Internet of tomorrow - high-speed, low-cost, and utterly pervasive - will empower media creators to directly reach their audience, eliminating the corporate middleman distributor. Or, as some might less diplomatically put it, "the worm has turned! With high speed Internet, there will be no more clueless, tasteless, penny-pinching suits mucking up my vision! No more exorbitant distribution costs, gatekeepers, and bottlenecks! No more warping my creative work to reach a narrow, finicky TV demo or sell popcorn in theaters that won't exist!" No doubt you've heard it, if you haven't said it once or twice yourself.

That hoped-for panacea of seemingly unlimited creative power and freedom on the future Internet may never come to pass as a result of the Supreme Court's June 2005 decision in the Brand X case. Despite its underwhelming name, according to Andrew Jay Schwartzman of the Media Access Project, a public interest law firm specializing in media issues, Brand X "will, quite literally, determine the future of the Internet as we know it." It is nothing less than the opening shot in what promises to be an ongoing war between media goliaths and independent entrepreneurs, including creative media artists, over whether the future Internet will be "open" or "closed." What's at stake is whether a consumer will retain the freedom to access any website, as is the case today, or whether he/she will be restricted to visiting sites approved by - or in business with - the "gatekeeper" providing his/her high speed Internet access.

The outcome of this battle is especially important to the creative community. Television and films, along with music, are rapidly converging with and becoming "Internet," because the Net will soon be an infinitely cheaper method of distributing content. While it may now take hours to download a feature film, even over a broadband Net connection, researchers using the Internet2, a super-fast private "next Internet" that today links hundreds of colleges and is frequently used for illegal swapping of films, television, and music, recently demonstrated the ability to download a DVD-quality copy of "The Matrix" in 30 seconds. That is the future of content distribution, legal and illegal, and it will be here sooner than many think.

Daniel Myrick, co-director and co-writer of 1999's micro-budget horror hit "The Blair Witch Project," exemplifies the convergence of television and Internet with his latest project, "The Strand," an episodic ensemble drama set in Venice, California. Available exclusively online, each 50 minute "webisode" of "The Strand" is either presented in streaming video or downloaded for later viewing. For Episode 1, I chose the download option using my DSL broadband connection. Three hours later, I watched the 600 MB file on my large computer monitor, enjoying at least as good a viewing experience as watching a feature film on television. The writing, directing, acting, music, production values - the entire production was professional quality work digitally filmed on location in Venice. The budget was $75,000, which vividly illustrates digital media's potential to shrink both production and distribution costs. Myrick plans to earn a profit by selling a license to view each webisode for 99 cents, doing advertising and other promotional deals on his site, and selling Strand-related paraphernalia.

Says Myrick, "For me as a creative, the webisodic format allows me to do so much exploration of characters and story without constraints on language or topic. Unlike a Fox show that needs 3 million viewers a week or it's canceled, I only need a fraction of that and I can be filming forever. At Sundance, we were the only ones out there not looking for distribution." With so much money at risk using more traditional methods of production and distribution, Myrick believes innovation and creativity suffer. Using the Internet lowers the financial risk, thereby increasing the filmmaker's creative freedom.

Is Myrick blazing a trail for future creative artists seeking to distribute their works directly to the consumer via the Internet? And is he illuminating a pathway that producers of existing programming can use to bypass costly distribution gatekeepers and deal directly with the consumer?

Not so fast. Enter the cable and telephone companies that provide the high speed broadband access to the Internet necessary for Myrick's venture to succeed. For example, Comcast, the nation's largest cable company, is also the nation's largest broadband service provider. It serves over 21.5 million homes, approximately 30 percent of the nation's homes that subscribe to cable service, and will soon grow to 23.5 million subscribers if regulators approve its joint purchase with Time Warner Cable of the assets of bankrupt cable operator Adelphia. In terms of cable television content, Comcast's high percentage of cable homes served gives it life or death gatekeeper power over which cable networks receive carriage not just on Comcast, but on any cable television system. Says cable tycoon John Malone, "There's no way on earth that you can be successful in the U.S. distributing a channel that Brian Roberts (CEO of Comcast) doesn't carry, particularly if he has one that competes with it." And the likelihood that Comcast will own a competitive channel is growing. Increasingly, Comcast seeks to own the content that it distributes, as illustrated by its partnership with Sony in the takeover of MGM, as well as its unsuccessful takeover attempt of Disney in 2004.

Comcast's determination to own a piece of the content it distributes isn't limited to just cable television networks. It also extends to the Internet. And that's where the Brand X case comes in. When consumers use 56K "dial up" to access the Internet via modem over slow telephone lines, those telephone companies are defined as "common carriers." Under "common carrier" regulations, these companies must open their lines to competing Internet service providers (ISPs) such as Earthlink, AOL, and Brand X, a small ISP in the San Francisco area. They must also allow consumers to surf to any website they want, just as they must let consumers call any telephone number.

But in a highly controversial ruling, the Federal Communications Commission (FCC) decided cable companies such as Comcast were exempt from "common carrier" regulation. Brand X successfully sued the FCC in the Ninth Circuit Court of Appeals. But in June 2005, the Supreme Court reversed the lower court and upheld the FCC's original determination. In early August, the Commission then extended the Brand X decision to give telephone companies' broadband service the same exemption from "common carrier" status.

The Brand X case is an excellent example of the way arcane and mind-numbingly technical distinctions debated in Washington, such as whether broadband is subject to "common carrier" regulation, can have tremendous potential implications for media artists, which they seemingly discover only after it's too late. As a result of these FCC decisions, a cable or telephone company broadband provider no longer must allow access to the entire Internet. Instead, it now has the power to control where its customers surf and on what terms. In other words, it is free to offer its broadband customers a "proprietary" Internet of websites that pay it for carriage. Or, if a customer types in a website, and the company operates a competing website, the company has the power to divert the customer to its own website and deny access to its competitor.

Now, imagine a company with that power to discriminate and its reaction to Daniel Myrick sending "The Strand" directly to its customers over broadband. Will a cable company stand by idly while content owners such as Myrick use its very own cable to do an end run around its cable television, pay-per-view, and video-on-demand distribution system? Will telephone companies such as SBC and Verizon, now launching their own television distribution systems over their broadband connections, be any more hospitable to Myrick's competing programming?

In a competitive marketplace, this wouldn't matter so much. Consumers who don't want the cable or telephone company's proprietary version of the Internet could easily get their broadband access elsewhere. But according to the FCC's July 2005 report on High Speed Internet Access, in December 2004 approximately 94 percent of Americans subscribing to high speed Internet access received it from either their local cable or a telephone company. Of those Americans, many have just two choices for high speed Internet access - cable or telco. Others, including me, have only one realistic broadband option. Today's reality is that for many consumers who want broadband, the marketplace is not competitive.

As oligopoly gatekeepers, cable and telephone broadband providers will have the power to demand payment from content creators such as Myrick for access to their broadband customers. They will have the power to divert customers who try to download "The Strand" to a different download site that they own and operate where they can try to sell them a different program. They can require "The Strand" to reach their customers not by the Internet, but by their cable television Video on Demand (VOD) service. Or they can simply block any and all access to "The Strand," period.

Indeed, these cable and telephone companies will have the power to become extremely powerful "gatekeepers" for all kinds of Internet content and services. For consumers unfortunate enough to have no choice for broadband access other than these oligopoly gatekeepers, their Internet may bear more resemblance to a "souped-up" cable television system than the wide open Internet we enjoy today. Some analysts believe this "closed" Internet model will resemble the early "walled garden" days of America Online, where its customers were limited to AOL content and could not access the Internet. For many consumers, their only broadband choice may be the walled garden of the cable company or the walled garden of the phone company.

The implications of Brand X and the ongoing battle over whether the Internet will be "open" or "closed" can hardly be overstated. FCC Commissioner Michael J. Copps observes, "This Internet may be dying. It may be dying because entrenched interests are positioning themselves to control the Internet's choke-points and they are lobbying the FCC to aid and abet them... We seem to be buying into a warped vision that open networks should be replaced by closed networks and that traditional user accessibility can be superseded by a new power to discriminate. Let this vision prevail and the winners will be entrenched interests with far greater power than they have today to design and control the Internet of the future."

Recently, the FCC issued a "Policy Statement" expressing a preference for open networks that give consumers the freedom to surf the entire Internet over broadband. But many criticize the statement as unenforceable and full of loopholes that would not prevent cable or phone companies from exercising gatekeeper power over the Internet. Many advocates, including the Center for Creative Voices in Media, are calling on the Commission and Congress to guarantee the right of Americans to access the entire Internet over broadband.

If the cable and telephone companies succeed in establishing themselves as toll collectors on the information superhighway, the result will be an Internet that dashes the high hopes of many creative artists and media producers, including Daniel Myrick. The worm will not have turned after all. Instead of the Internet eliminating the distributor "suit," as so many hoped and assumed, it may simply mean a new suit enters the picture - your friendly cable or telephone company.

Rintels is the executive director of the Washington-based Center for Creative Voices in Media ( www.creativevoices.us ).

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