Content and Connection in a Broadband World
By Jeanne Marie Follman
Broadband access to the Internet is finally becoming available in our neighborhood. When we sign up for it, we will have Internet access that is high speed and always on. That will be great. But what will happen when the younger members of the household go online using their favorite software? We subscribe to America Online (AOL), an Internet service provider (ISP) that supplies rich content as well as a dial-up connection to the Internet. The children love the contentespecially the enhanced instant messaging, chat rooms, user profiles, and easy home page creation. But with broadband access, when they launch AOL, will they be able to get AOL content via our new high-speed connection or will the software still look for a modem and attempt to dial into AOL the old way? This question highlights the problem of combining both content and connection into a single producta practice known as bundlingas we move into a world of broadband access to the Internet.
AOL started out as an online service well before the World Wide Web splashed onto the scene, so it has a tradition of combining content and connection. In the early days, there really was no other alternative. In late 1996, howeverabout the same time it figured out that unlimited access was a good ideaAOL realized that people who already had connections to the Internet through work, school, or another Internet service provider might still want to access AOL content. So it began the Bring Your Own Access program, a means to provide AOL contentfor about half the price but with all the advertisingfor those folks who already had their own connections. With this program, AOL unbundled content from connection. Because AOL unbundled content, we can set up our current AOL software to connect via TCP/IP rather than through the dial-up AOL network, thereby retaining access to AOL content when we move to our new broadband connection.
AOL has unbundled content; it does not, however, have an unbundled connection. You can get content alone for half the price, but if you want an AOL connection, content comes with it whether you want it or not. This may be an annoying situation, but with dial-up access to the Internet, its not a big deal. If you dont like the service or the bundling you get from an ISP like AOL, you can sign up with another, choosing just about any ISP reachable with a local phone call. However, the advent of broadband access could change this freedom of choice because of the bundling of content and connection with the broadband facilities themselves.
Bundling in a Broadband World
Today high-speed, broadband access to the Internet typically comes in two flavors: via cable from a cable television company or via a digital subscriber line (DSL) from a telephone company. And once a cable or telephone company goes through the trouble to get you connectedfor example, by installing or upgrading wire and installing special modemsthat company would really like to see your cable or line hooked directly to an ISP in which it has an interest. A number of large telephone and cable companies are forging agreements with large ISPs to provide Internet access services for their customersfor instance, AT&T and Excite@Home for cable, or SBC and Prodigy for DSL. Theres no problem with that. You need an ISP between you and the Internet; the ISP performs a number of critical services without which your connection would not work. But the ISP may also provide gigabytes of content you could probably happily do without or easily find elsewhere, including e-mail, Web hosting, chat, instant messaging, sports information, news groups, e-commerce, headlines, weather, stock quotes, search engines, advertising, and entertainment news and reviews. The question now is, If you buy broadband access from such a cable or telephone company, will you still be able to choose your own ISP?
Bundling Access and ISPs
When cable and telephone companies sign agreements with ISPs to provide Internet services, the obvious temptation is twofold: (1) to sell the ISPs services to every home in which they install broadband access and (2) to bundle all sorts of features and content with the broadband connectionand charge you one price. Why? Because thats where the money is. By bundling ISPs with access and by bundling content with connection, telephone and cable companies automatically sell ISP services and content that they would otherwise have to sell on the open market. And if they require the use of proprietary rather than standard software, they also gain an army of captive eyeballs to which they can deliver advertising.
Such a setup forces consumers to buy a product they may or may not want (a specific ISP and its content) in order to get something they do want (broadband access). It could expose consumers to unwanted advertising. It fails the truth-in-advertising convention because there is no technical reason to require bundling of ISPs or content with access, yet thats how the setup is often pitched. And most critically, it removes the driving force of competition as a motive to improve the quality of the product. A bundled product can be lousy but not suffer a loss of market share because people have no choice in the matter.
If youve ever been on a tour and had the tour bus take you to a restaurant that just happened to be owned by the tour bus company, youve been bundled. Maybe the restaurant was fine; maybe it wasnt. It certainly had no reason to improve. The point was, you had no choice. The bus could have dropped you off and let you pick your own restaurant. The driver could even have made recommendations or stopped in front of a favored restaurant. But the choice of restaurant would still have been yours. Instead, the bus company used its momentary control over your whereabouts to sell a product it might not otherwise have been able to sell.
Today there are over 6,500 independent ISPs in the U.S. and thousands more worldwide, all competing against one another and thinking up new products and services. Some differentiate themselves by delivering a bare-bones, speedy, reliable connection to the Internet at a reasonable price. Others differentiate themselves by their varied content. For example, some ISPs offer customized services to communities of people who have a common interest, for instance, language, ethnicity, or sports teams. Known as affinity ISPs, they offer an Internet connection as well as content tailored to the interest of the community. Some people are happy to sign up with content-rich ISPssuch as affinity ISPs or AOLwhile others prefer the simple joy of a fast, reliable connection to the Internet. In a dial-up world, if you dont happen to like an ISPs services or its bundled content, you just sign up with another ISP. In a broadband world, that freedom of choice is not yet guaranteed. Choice of ISP should not be dictated by the company that has the monopoly franchise (cable or telephone) to lay the wire to your house.
The rollout of broadband presents a perplexing situation because it does involve a heavy investment in facilities (like upgraded wires) as well as sophisticated coordination between telephone companies, cable companies, and ISPs. However, the situation should not be an excuse for cable and telephone companies to structure their offerings in a way that forces purchase of an ISP and content that rightly should be marketed separately. Public networks have historically been content neutral. The Internet is a public network, and the ISP is the means by which we all gain access to that public network. Public networks are about efficient and complete connection, not about content.
Public Networks Connect
Lets think about two public networks with which were all familiar: the voice telephone network and the road network. Telephones and roads are facilities open to the public that offer pure, complete network connections. They are content neutralas long as youre not doing something illegal. When you make a telephone call, your telephone company provides you with a connection; the content of the callyour conversationis totally up to you. You can call anyone anywhere on the planet, and you can say anything you want. Anyone can call you and say anything they want. The telephone company does not monitor the conversation; it does not make the connection clearer if it happens to like what you are saying. The same is true when you drive across country. You can get from anywhere to anywhere just by going from road to road to road. Nobody restricts access. Nobody closes roads because they might not like where they lead. The object of a public network is to offer a connection that is efficient, complete, and content neutral, and the Internet is a public network.
Content, Connection, and Convergence
The bundling of ISPs and content with broadband access is made more crucial by the phenomenon of convergence: the blurring of traditional boundaries between print, images, audio, video, telephone service, TV, and movies. The more that each of these is represented as bits in files, the more inclination there will be to make the delivery mechanism the same. Wiggle the bits one way, and you get a Web page. Wiggle them another way, and they become a radio broadcast. Wiggle them a third way, and they become a TV show. And they can all in some manner be delivered via the Internet, especially an Internet to which most people have high-speed broadband access.
The stakes are high; this business has a huge potential, and corporations are busy dividing up the turf of these new markets. Thats great as long as the public nature of the Internet is not compromised. In a traditional broadcast network, content and connection are happily joined because that is the nature of the business: it is a private, not a public, network. A television network owns the contentthat is, the TV shows and sends the broadcast of its content out through its private broadcast network to its network affiliates, which deliver the broadcast to us. But what happens when a number of centralized, private networks such as TV broadcast and cable networks crunch into the distributed, decentralized public network that is the Internet?
History Repeats Itself
In the United States in the early 1900s, when telephone service was first proliferating, a number of different telephone companies competed against one anothermuch like todayonly their networks were not interconnected; initially, you could talk on the telephone only to those who subscribed to the same telephone company as you did. It was the voice telephone networks version of bundling contentthat is, conversationwith connection. The telephone network at that time was in fact not a public network but a series of fragmented, private ones. That looniness eventually resolved itself into the completely interconnected national and international public voice telephone network we know today. This network has served us well for over a hundred years and continues to serve, represented for most of us by the thin strand of copper wire that comes in from the telephone pole.
The Internet requires a much fatter connection in order for us to send and receive all the bits we have to exchange with one another. Great as it is, the Internet is still very much in its infancy. At some point in the future, most of us will have broadband access at speeds probably 10 times faster than whats becoming available today. Well be able to have our packets switched to a different ISP with a phone call, just like we do today with our long-distance carriers. All contentfree or otherwisewill be available via any connection. We will consider quaint such practices as having to go through a certain connection in order to access specific content. And we will pay for at least some of that content.
The Pricing Issue
When you get right down to it, the bundling of content and connection is really a pricing issue. With its Bring Your Own Access program, AOL is effectively charging for content, albeit content that is laden with advertising, which makes the subscribers experience somewhat ironic. In an ideal world, we would pay one price for content, another for connection, or a third, if we choose, for both. Such a pricing strategy on the part of all content-driven ISPs would not only go a long way toward helping keep the Internet a truly public network; it would also sharpen the content through competition and make it truly accessible to anyone on the Internet, not just those with the right connection.
Such a pricing strategy would undoubtedly also improve the connection as well; if AOLs dial-up connection service had to stand alone as a product separate from AOL content, I doubt very much that the busy signals would be as plentiful as they are today. AOL is now offering enhanced multimedia content, called AOL Plus. It is also offering broadband connection via DSL, called AOL Plus DSL. And broadband cable connections and broadband wireless connections are in the works. AOLs broadband bundling appears to be much like its dial-up bundling: content is unbundled but connection is not. Enhanced multimediathat is, broadbandcontent is unbundled and accessiblefor a pricethrough any broadband access. But broadband connection is still tied to content; if you get DSL from AOL, you get AOL content whether you want it or not. That means that DSL and other broadband offerings from AOL will not be made to stand on their own and will not be open to market competition to control quality and price. If history is any indication and if AOLs broadband connections are like their dial-up connections, they will be widespread and probably inadequate. But that doesnt have to be the case.
The Infrastructure Challenge
The Internet is the telephone company for computers, a key part of our information infrastructure, and a national and global resource. Providing widespread broadband access to it will be a tremendous logistical undertaking, involving the laying or upgrading of millions of miles of wiring and the installation, where appropriate, of wireless technologies. The current broadband offerings such as DSL and cable will represent only round one. Like computer processor speed, the more we have, the more well use and the more well want. The challenge to cable and telephone companies is to get that infrastructure built and get it built fast. As consumers, citizens, and stockholders, we can encourage investment in the necessary facilities to create high-speed connections to the Internet and shape the business and pricing models used for this investment. And we can use what influence we have to speed the demise of the bundling of facilities, content, and connection.
The more we understand the issues and pitfalls of bundling in a broadband world, the better able we will be to ensure the continued health of the public network that is the Internet.
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