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The following is a response to the FCC Common Carrier Bureau's solicitation of comments on RM 8775, the ACTA Internet Phone Petition.
On March 8, 1996, the America's Carriers Telecommunication Association (ACTA) requested a declaratory ruling, special relief, and institution of a rulemaking procedure with regard to so-called "Net-Phone" services; software and hardware which permit voice transmission between any two Internet hosts using Internet TCP/IP transmission as a medium. ACTA requests that the FCC immediately put a stop to this activity pending the installation of what it deems an appropriate regulatory regime.
More information is available at the FCC's Web Page on the ACTA Petition, including a copy of the ACTA petition and of the FCC's solicitation for comments. How to submit comments by email is also explained. (The period for comments has expired.)
The following is my letter of comment to the FCC Commissioners on this matter.
I write to you today as an Internet user of twenty years' standing and an Internet technologist, one of the technical people who help make the Internet culture work and have worked hardest to bring its benefits to ordinary people. To learn about my Internet-access projects and their fruits, I invite you to browse my Web page at http://www.tuxedo.org/~esr.
I write to state that I am appalled that the FCC is even considering action on the ACTA petition designated as RM8775, re Internet Net-Phone technology.
I have no stake in any Net-Phone service. I've never used a net-phone. I am, in economic terms, a wholly disinterested party. But I cannot stand idly by while ACTA argues for the suppression and regulatory strangulation of an entire class of technologies to protect the profit margins of its members, adding insult to injury by cloaking this self-serving manipulation in a hypocritical appeal to the "public" interest.
Where would we be today if, in 1896, the manufacturers of buggy whips had banded together to petition the government to keep the infant technology of the automobile off U.S. roads, lest it imperil the economic position of the carriage-making industry?
Considering the growth of U.S. population and travel since then, the proper answer is probably "knee deep in horseshit". Which phrase eloquently expresses the way I felt after having read the ACTA petition.
In the remainder of this letter, I shall demolish ACTA's special pleading point by point, then turn to some more general but very relevant considerations regarding Internet regulation.
First, ACTA submits "that it is not in the public interest to permit long distance service to be given away, depriving those who must maintain the telecommunications infrastructure of the revenue to do so"
No one is proposing that long-distance service be "given away"; users of net-phones will still pay the cost of their Internet connections to Internet service providers, who will have every incentive to "maintain the telecommunications infrastructure" because that's what ISPs use, too.
Transparently, what ACTA really objects to is the inevitable shift of customer choice and revenues away from time-metered service over voice circuits protected by regulatory barriers to entry, and towards a wide-open free market in flat-rate Internet connections carrying voice, data and multimedia communications at lower cost than ACTA's members can offer. No construction of the "public interest" can justify attempting to thwart this natural evolution.
ACTA continues "nor is it in the public interest for these select telecommunications carriers to operate outside the regulatory requirements applicable to all other carriers." In making this argument, ACTA blatantly ignores the goals of the regulations that it cites so piously.
47 U.S.C. Sections 203 and 214 set up as a public-policy objective the encouragement of cheap universal telecommunications service. The continuing development of a robust, market-driven Internet supporting lower-cost universal voice communications among its many other facilities is clearly in the public interest defined by cited statute.
ACTA's attempt to protect the profit margins of its members by coercive regulatory fiat amounts to a form of market-rigging, and is just as clearly against that public interest.
All other FCC regulations and statutes pursuant to 47 U.S.C 203/214 are mere mechanics pursuant to these public-policy objectives, and provide no independent grounds for satisfying ACTA's oligolopolistic desires.
ACTA continues: "The misuse of the Internet as a way to bypass the traditional means of obtaining long distance service could result in a significant reduction of the Internet's ability to handle the customary types of Internet traffic."
These crocodile tears for "customary" traffic are unconvincing even as a narrow technical objection. ACTA knows full well that Internet and voice traffic now use essentially the same inter-LATA infrastructure of 56K and higher-capacity digital connections. The complete replacement of voice inter-LATA calls by net-phone connections would therefore not imply contention for separate Internet capacity, but merely a customer-driven reallocation of fungible existing capacity. It would have marginal or zero effect on "customary" traffic.
ACTA's real concern is that said customer-driven reallocation would force them out of high-margin voice business into low-margin packet-transfer business. Absent a solid finding that packet-transfer profit margins could not sustain the telecommunications infrastructure, this concern is no business of the FCC's. And no such finding could possibly be justified as long as carriers are seeking Internet customers in order to make a profit on them!
ACTA attempts to buttress the preceding "crowding-out" argument by analogizing Internet capacity to the radio spectrum. The petition continues: "The Commission has historically protected the public interest by allocating finite communications resources/frequencies and organizing communications traffic."
Developing new radio spectrum (or tighter modulation techniques for old spectrum) is expensive and difficult. Internet capacity is cheap and easy to build, almost absurdly so -- indeed, the low cost of additional bandwidth is the economic root of the threat ACTA perceives. While both are technically finite, the difference in incremental cost of developing new bandwidth is so great that to analogize Internet capacity to scarce radio-spectrum space is transparently nonsense.
The FCC has no mission to allocate Internet bandwidth because the public need for growth in Internet bandwidth is being effectively served by the market. ACTA's argument on this specific amounts to a groundless plea that the FCC ignore economic facts.
ACTA completes its wretched exercise in special pleading with a flourish of humbug by appealing to the FCC's duty to suppress unlawful uses such as "gambling, obscenity, prostitution, drug traffic, and other illegal acts."
Suppose we agree to leave aside both the doubtful enforceability of such regulations even in existing media and the dubious constitionality of those relating at least to victimless crimes. ACTA's argument is nevertheless flawed. It amounts specifically to a call for enforcement of standards against net-phone users which (by assumption of the argument) would not be enforced against the same users engaging in non-voice communication of the same material, even over the same portions of telecommunications infrastructure!
Constitutional case law strenuously prohibits the Federal government from underbroad regulation of this kind. Either the FCC's responsibility requires it to attempt to control all Internet speech relating to "gambling, obscenity, prostitution, drug traffic, and other illegal acts", or the FCC is absolved from attempting to duplicate the functions of the FBI, DEA and BATF because the Internet as a whole is impractical to police.
An attempt at selective regulation against net-phone users would constitute a forbidden discrimination between classes of speakers. Nor is this merely a theoretical point -- does the FCC really want to invite suit against net-phone regulation under the equal-protection clause by advocates for the blind?
Morally, ACTA's posturing as a would-be defender of "family values" in pursuit of its narrow economic interests is perhaps the most contemptible single tactical maneuver in this petition. It is crass and cynical and ultimately rather pathetic.
(This completes the rebuttal of ACTA's arguments. Points following are general challenges not specifically related to the particulars of RM8775.)
Net-phone technology is primarily software. The hardware (microphones and speakers) necessary to capture and relay voice communications is already ubiquitous on personal computers for other reasons. The algorithms required to compress and packetize speech are well-known and implementations are widely available as free software. The hardware assistance provided by some commercial net-phone products is useful but by no means essential.
It follows that hypothetical FCC prohibitions or restrictions on net-phone technology would be unenforceable. Locking out commercial products would merely hand development of net-phones to a technology underground, and brokering of net-phone time to a black market. This could lead to all the bad consequences we are familiar with from other kinds of prohibition.
The FCC must be aware that, more than other media, the Internet plays host to many communities of interest; further, that the Internet itself is no tabula rasa passively awaiting guidance but a huge community of interests with its own traditions, shared values, and attitudes. As the present maintainer of the Jargon File (http://www.tuxedo.org/jargon), a widely-recognized and even venerated compendium of Internet folklore, I can speak with some authority on the substance of these values.
I am confident that most informed Internet users share my rejection of ACTA's arguments and my passion for a free and diverse Internet supporting an unfettered free market in net-phones and all the other kinds of services we can conceive and build. Among Internet technologists and other core members of the culture, I predict that virtually all will reject net-phone regulation.
Indeed, many Internetters would regard the undermining of such regulation (and all other regulation that in their view threatens free expression on the net) as a semi-obligatory form of civil disobedience, a positive duty in defense of liberty.
In support of this perhaps startling assertion, I suggest the FCC consider the nearly universal popular support on the Internet for campaigns of active civil disobedience against the regulations on export of cryptographic "munitions" and against the Communications Decency Act.
The implication that the net would also actively resist the FCC content regulation incidentally called for in the ACTA petition is intended. As one of our tribal elders once observed, "The Internet interprets censorship as damage and routes around it."
As the Internet become more ubiquitous, packet-traffic costs drop, and the margins between net-phone rates and voice tariffs rise, users of voice telecommunications will experience steadily increasing incentives to flout FCC's net-phone regulations and escape FCC tariff structures.
In the absence of either totalitarian force majeure or a widely-accepted ethical argument to justify FCC regulation, these pressures will certainly prove irresistible. No one wants the former and ACTA has not supplied and will not supply the latter.
Net-phone regulation would, therefore, eventually collapse politically as well as technologically.
Before the collapse, net-phone regulation would inflict much harm.
Neither ACTA nor the FCC (assuming it is so minded) can turn back the technological tide. Net-phone regulation cannot be ethically justified, would be popularly rejected, and eventually would not stand. While in force, it would inflict substantial harm on the American public and body politic.
I therefore urge the Commissioners to reject the ACTA petition. I further urge that the Commissioner's refusal express the sense that the FCC will not in future entertain petitions for declaratory rulings or rulemaking premised on an Internet threat to the profits of older media.
(The entire text of this letter has been made available on the World Wide Web at http://www.tuxedo.org/~esr/netfreedom/acta.html)
The preceding was submitted to the FCC Commissioners on March 26th 1996.
On October 16, 1996 I received the following update from Kevin Werbach, the FCC's Counsel for New Technology Policy:
There has been no formal action on the ACTA petition since we solicited public comment back in March. However, Reed Hundt, the Chairman of the FCC, has given several speeches opposing the application of traditional regulatory rules to Internet telephony. They are available in <http://www.fcc.gov/Speeches/Hundt/>; the primary ones are the 9/18 Wall St. Journal conference and the 6/28 INET conference.
Here's a representative quote, from Mr. Hundt's speech on September 18th to the Wall Street Journal Businesds and Technology Conference:
"It is natural that the companies with monopoly market power will try to keep that power unless governments through rules constrain their potential anticompetitive impulses. So that's why Congress, in the Telecommunications Act of 1996, asked the FCC to write new rules of competition. But let's be clear: our ultimate goal is to reach the sunny uplands of deregulated markets in which the prices and output of telecom services, like software and soap, are set by markets and not governments."
And another from his June 28th speech to the INET conference:
"I am also strongly inclined to believe that the right answer at this time is not to place restrictions on software providers, or to subject Internet telephony to the same rules that apply to conventional circuit-switched voice carriers. On the Internet, voice traffic is just a particular kind of data, and imposing traditional regulatory divisions on that data is both counterproductive and futile. Even if most of the FCC wasn't working around the clock on implementation of the Telecommunications Act, I can't imagine that we would have the time to keep track of all the bits passing over the Internet to separate the "acceptable" data packets from the "unacceptable" voice packets."
"More importantly, we shouldn't be looking for ways to subject new technologies to old rules. Instead, we should be trying to fix the old rules so that if those new technologies really are better, they will flourish in the marketplace. For years, some engineers have been telling us that voice over a packet switched network wasn't possible. The latency periods were too great, they said, and you'd never get acceptable quality. Well, it is going to be possible, and in the short period of time since the first commercial products became available, the quality has been rapidly improving. But the last thing we want to do is stop that improvement by thoughtless regulation."
As of late January the FCC has not acted on RM 8775. Looks like you lose, ACTA scum! :-)
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