The Stakes 2008

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By Nicholas Thompson

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John McCain is an AT&T guy; Barack Obama is a Google guy. And that’s one of the most important policy differences between the two.

Think of the Internet as working at different layers. There are all the pipes that go into your home, and then there’s all the stuff on your screen—from e-mail to eMule. The telecom companies like AT&T control the pipes; the software companies, like Google, create the stuff.

In an ideal world, both these layers would be sites of great innovation and creativity. But in the United States, that isn’t so. The software industry may seem like a team of Gandalfs, constantly producing magic. But the average telecom company resembles Jabba the Hut: it moves slowly and slobbers a lot.

The United States created the Internet, but it’s the rest of the world that can really use it. People in Japan are twice as likely as Americans to have broadband connections, and their pipes are ten times as fast. Compared to France, U.S. Internet access is twice as expensive and one-fourth as quick. Since 2000, the United States has gone from fifth in the world to twenty-second in broadband penetration. We have become a nation of buffering YouTube videos.

What went wrong? It’s not that telecommunications companies are inherently lazy. Such companies innovate, after all, in East Asia. And it’s not just that the United States is a big rural country. That explains some of our lag, but not all. Canada and Australia are thumping us too.

The real reason things went wrong is that we haven’t regulated our telecom markets properly. And that’s where John McCain comes in.

The problem is primarily the lack of competition among Internet providers. In most places, you have, at best, two choices—the local cable company or the local phone company. And these behemoths know that they don’t have to worry about new competitors. With the government’s help, they spent decades digging up roads and building lines into everyone’s home, creating an infrastructure that no start-up can replicate. Now they sit, fat and happy, neglecting customer service and innovating about as much each year as Google does each Tuesday.

John McCain’s culpability is both specific and philosophical. For much of the Clinton and Bush administrations, he chaired the Senate Commerce Committee, overseeing the Federal Communications Commission and the telecom industry. Just before taking the post, he voted against the 1996 Telecommunications Act, the one big effort to solve the problem of anemic competition in the telecom sector. When the act nevertheless passed, he
helped to make sure that its main provision for opening the market—mandating that phone companies lease their local lines to competitors—wasn’t enforced. Eventually, he, and the people he put on the FCC, helped to roll that law back. France, by contrast, implemented and enforced just the kind of law that McCain opposed. And now the country mocked here for its thirty-five-hour workweek is far more wired than the United States.

As committee chair, McCain also oversaw, and often encouraged, the incredible competition-stifling consolidation in the telecom industry. The country is now served almost entirely by three local phone, four cellular, and four cable companies. In his tenure as chairman, McCain supported nearly every merger. In 1999, he coauthored a bill that would strip the FCC of its ability to veto telecom mergers.

McCain’s mistakes derive partly from a lack of technological curiosity (he doesn’t use e-mail) and the presence of all sorts of Bell guys around him. His campaign manager, deputy campaign manager, Senate chief of staff, and chief political adviser have all worked as lobbyists for Verizon or AT&T.

But more blame lies with his philosophy. McCain espouses what he calls a deep belief in free markets and in keeping government off the backs of business. That’s all well and good, except for when a market—like telecommunications—requires intervention in order to create competition. Unrestricted freedom for the big guy often means death to the little guy.

Given McCain’s poor record on the issue, Obama could ignore the topic and still come out ahead. But the forty-seven-year-old, it turns out, is something of a geek. He presented a sweeping technology plan early in the campaign that is full of good ideas. He suggested that the government
create the post of national “chief technical officer.” He proposed taking the money that is now used to subsidize rural telephone use, and spending it on subsidizing rural broadband instead. Not only would people and businesses get Internet access; they’d be able to switch to vastly cheaper Internet phones. Not surprisingly, Obama has won over Silicon Valley. According to opensecrets.org, 555 employees of Google have donated to his campaign, compared to just twenty-six for McCain. When the author of McCain’s technology plan, Michael Powell, was pressed to name supporters from the tech world, he came up with the name of one person who’s actually written code—and then it turned out that guy didn’t even support McCain.

Obama also clearly gets that government has an ongoing role to play in making sure markets work—a fact reflected in the debate over net neutrality. The question here is whether the telecom companies can discriminate over the kind of information that flows over their pipes. AT&T, the other telecom companies, and McCain argue that of course they should. They own the pipes, and in a free market they should be free to do whatever they want. Obama’s position is: Hold on a minute. Do we really want the phone and cable companies deciding what kind of software people can use? Do we really want Comcast to, say, decide to start monkeying with your ability to access iTunes.com or Vonage?

Obama, in other words, understands that actual market freedom sometimes requires tough love from the feds. McCain still seems to believe in the chimera of naturally existing total freedom—the freedom for his country to fall further and further behind as AT&T and the other telecom leviathans sit back, ignoring your customer service calls and just watching the $90 monthly checks roll in.



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Nicholas Thompson a former Washington Monthly editor is a senior editor at Wired and a fellow at the New America Foundation.  
 
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