Will the Internet Survive Washington?

NEW YORK (TheStreet) -- Through the first nine months of the year, the company with the biggest individual lobbying budget has been Comcast (CMCSA), spending almost $14 million to influence politicians, according to OpenSecrets, which tracks political spending.

The trade group of which it's a member, the National Cable Television Association, has spent over $13 million. Between them, AT&T  (T) and Verizon  (VZ) spent another $23 million.

For the third quarter of 2013, the Cellular Telecom & Internet Association increased its lobbying budget 66%, quarter-to-quarter. The former head of that group, Tom Wheeler, was nominated to head the Federal Communications Commission in April and was recently confirmed.

Why are carriers spending all this money and gaining all this influence? Critics say it's to kill the Internet. They seem to be succeeding.

In the wireless Internet there's no single service charge. You pay for bits. They may be millions or billions of bits but they add up. Start watching TV, or videoconferencing, on your iPhone and you can blow through those bits in no time.

The reason is that wireless is new, and wireless infrastructure costs money. Wireless carriers say they need the extra money to pay for spectrum and regular technology upgrades.

Cable now wants to rush through the door wireless cracked open. The aim is to make the Internet into something more like cable television, where carriers decide what you can watch and get to either charge programmers for carriage -- or pay them for it.

Wheeler's predecessor, Julius Genachowski, approved regulations in 2010 creating a "non-discrimination" principle for Internet carriers commonly called net neutrality. In the next few months another set of politicians -- the judges of the U.S. Court of Appeals for the D.C. Circuit -- look set to strike that principle down.

The case was brought by Verizon, which claims that net neutrality violates its rights of free speech.

John Malone of Liberty Global (LBTYA) was quite forthright in this during a recent interview with Wired Magazine. The tool for this is tiered pricing.

Instead of paying a single monthly charge for Internet service, tiered pricing would charge different prices depending on how much Internet you use, and what types of services you access. It would turn Internet into cable, with the cable company charging both Internet "programmers" like Netflix and their customers for using the local network, while at the same time offering their own alternative services.

The Internet has always had a lot of ways to route around blocks. Competition is just one way. But wireless service already has data caps. Cable operators like Malone say they just want to sell bits. What's the harm?

The harm is that it shifts power from technologists to the owners of Internet pipes. Customers become "owned" by carriers who can limit choices for their own reasons. Most areas of the U.S. have only two broadband providers, and some have only one.

AT&T, meanwhile, has a petition before Wheeler's FCC to end common carrier rules and treat all the nation's wires as an Internet network. The rules of the Internet would become the only rules there are. Those rules, as noted, will be twisted to benefit carriers.

Ever since the Web was spun, Internet access has been a commodity. The only way carriers could raise profits was by delivering more service or lower prices. With data caps, those incentives reverse.

While you can change wireless carriers easily, putting some pressure on them to raise caps and keep prices down, most customers have only two choices for wired service. If both share the same policies, and the same incentives to limit service, to squeeze both sides, the Internet we've known will disappear.

There is some pressure on the other side of these questions. Google (GOOG) has spent $11.46 million in the first nine months of the year, according to OpenSecrets. But they are outgunned. And key choices are now in the hands of courts which don't respond to lobbyist pressure but seem to be on the carriers' side.

Maybe it's time you took some money out of the technology names and put them on the pipes.


At the time of publication the author had 20 shares of GOOG.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

The author owns 20 shares of GOOG.