Bill McClellan

Go Blogwild Series 005 – Net Neutrality: Crucial to Small Business (v0.9)

Go Blogwild Series 005

Net Neutrality: Crucial to Small Business

Intro

Andy Wibbels: Hey everybody this is Andy, author of Blogwild! A Guide for Small Business Blogging and today we are doing a quick call on the whole Internet neutrality thing. So today we are talking to Bill McClellan from the Electronic Retailers Association. Bill has joined the ERA in January 2003 as Director of Government Affairs before that he worked as a lobbyist for the Georgia Automobile Dealers Associations and before that he had managed political campaign for both the Congressional and State constitutional levels. Bill, thank you so much for joining us on this call.

Bill McClellan: Andy, thank you for having me. I just want to add that I have taken a look at your blog and I am really excited about some of things that you have talked about so it is a pleasure to be with you guys today.

Andy: Fantastic. So real quick. I got 80 questions from people all about neutrality but how do you explain it to people in plain language.

Net Neutrality in Plain English

Bill: You know, Net Neutrality is basically the idea that businesses have the ability to talk to their customers. What’s happened is AT&T and Verizon as they have decided to try to put a barrier between our businesses and our customers through having non-neutral net and basically what that means is they will be able to slow down people’s access. Pick winners and losers in the market place and it is just not something that we as small businesses and the medium-sized business that do business on Internet are comfortable with it, is that primary way to communicate with our customers.

Andy: Yeah, what I was thinking about earlier today is that most people don’t realize that all data that goes in the Internet is treated equally no matter where it’s coming from. And this is going to divide what data gets priority. Is that correct?

Bill: That is exactly right. Basically now everybody has the same access and when the broadband providers go in and create a premium service... They basically, if you think about what broadband what really is in the context of businesses, the mall, the virtual malls so to speak, it’s where people do businesses. When you create that third tier and aren’t neutral on how you treat that tier and have the ability for large businesses to go in and soak up all that bandwidth. I mean, basically, small businesses are in serious disadvantage in that relationship because you know the future is that part of the bandwidth.

It’s Nothing to Do with Your ISP’s Speed

Andy: And some of the questions I have where people talking about well don’t we already have tiered access with dial-up, and DSL, and T-1. But that’s really the speed on the consumers’ side, this is going to the side of the businesses, right?

Bill: Exactly. I mean basically it is a pipe and you can offer everything and anything and not discriminate what the consumer sees on one end of the pipe but if all you’re putting in is junk he put on the other. That limits people’s choice to junk and you don’t get basically pick them and does his best job. Basically making Verizon and AT&T in a position of playing God on how the Internet develops for the future.

Business Pay More to Get Access to Their Customers

Andy: So really because most of my audience is small business folks. Really, this is not about the consumer paying more. It’s about the businesses having to pay more to get this priority data access.

Bill: Right, in terms of where AT&T and Verizon wants to loan their pocket. It is the businesses that would be footing up that bill that is correct. But in addition to footing that bill, they are picking winners and losers and what customers and consumers get into to pick and in the context of your readership there are small businesses that are going to be at an extremely discompetitive disadvantage to larger players.

Cable TV-izing the Internet

Bill: As a comparison it is basically cable-izing the Internet. You go and look what happened in the cable [television] industry. One of the segment that we represents are the Home Shopping Networks, Home Shopping Networks in DC. And basically they have to go and pay for access to all the different cable operators in the country, to get on to cable to be able to reach the customers. And if you look how that breaks down, QVC and HSN center, the largest, they reach about 90 million customers where the other 2 are in the 40 – 60 million dollars range. Well the top 2 are rolling in the dough and the others lowest one is Shop at Home with 60 million viewers and they have lost so much money that last week they said we have to go out of business even though they revenues with 600 million dollars or whatever per year.

So that is the same thing, when you look at the Internet right now, everybody is treated the same. There is not an issue with the application that people use to connect to the Internet or the speeds because we are really looking at the beginning of that where people will need more bandwidth, streaming videos, etc. But once those pipes start filling up, you know we still think that the consumer should decide when they buy broadband capacity where and how they use that and what AT&T and Verizon and others want to do is be able to monetized that bandwidth and decide for the consumer what they are going to be seeing.

From looking at your blog Andy, I think you are pretty up on speed on that is just what the old business mode that is the wall garden approach. Basically everything is moving toward time shifting and towards people being able to get the content, what content they want, when they want it, and this is completely on other side of basically the future. When you look at what happened in other countries, we are sort of far behind in the games of this that I don’t know what AT&T & Verizon have been doing but that bandwidth that they are sitting on, part of the problem.

How This is Being Sold to Consumers

Andy: Yeah, I think a lot of the people in the US don’t understand or know how much bandwidth is deployed globally where it is much faster in many other countries than here in the US. How was this being sold to consumers. I know there is the telecom industry has this site called donotregulate.org and they say that Google and Amazon don’t pay for the bandwidth which I think is probably insane I would assume those companies pay a lot for the bandwidth that they use for their business.

Bill: A couple of thoughts about that, everyone that gets on Internet, be it a business or a consumer pays for that connection. Basically what AT&T & those guys are saying, okay we are going to charge you, we already charged you for your access but because you’re profitable we want to go ahead and charge a premium for you to run on these fast lines. You know Andy, one of the things that you’ve got to remember here is those fast lines are fast lines today, two years from now they are going to be what you have to do to be in business. You know if you are on that lower of the Internet spectrum there, the ‘ghetto’ so to speak, the third tier where you don’t pay for premium access, it’s going to be the same thing as dial-up connection. You know as well as anyone when a consumer goes to a website… visits 6 websites on a regular basis or whatever it is but then when they try something new and it is running at a modem speed in the future of the similar speed they are going to immediately pick the faster guy, and as a result every business that’s actually want to do business on line is going to have to get over it, pay the premium and go up to that business.

Is This a Global Trend? Yes.

Andy: Right and is this going to mostly affect just businesses in the United States or is this tier going to be elsewhere across the world. Is this a trend that we are starting to see?

Bill: It is a trend that we are starting to see because the broadband providers internationally have starting to take cues from their American counterparts and started to discuss charging for broadband access internationally I think Germany, Italy and the thing about it is and I am not going to be an apologist for Yahoo! or Google here but those guys are going to get creamed by this because they are American companies and they are the ones the telecoms in other countries are going after. But the reality is that the big players are going to be fine, they are going to cut their deals or find some ways [similar as] in cable. They are going to be ones that actually get paid to bring viewers on to closed system. And it is the smaller companies that I represent and your readership are going to be the ones that will be holding the bag and having to pay the freight. The broadband is available, you know we don’t know how quickly those pipes are going to fill up, it’s a relative thing. As long as there is plenty of space right for AT&T & Verizon to sell that space, you know everything is going to be fine. But the discrimination portion is going to happen when they don’t have anymore to sell.

Does Calling Congress Help? YES.

Andy: Yeah and one question I got a lot of was Will calling my congress members have any effect? And what is exacting today it looks like it has because that the Net Neutrality bill did make it out of the House Judiciary Committee.

Bill: Andy, I tell you this, I’m glad you asked that question. This week my association did a government affairs flying for its membership. We had about 55 businesses that came to meet with their representative on Capitol Hill and I was in for 5 of those meetings and what a lot of the message that came back to me was “We’ve never thought about this in the context of a small business. We’ve always thought about this as two giant industries fighting each other with tons of money and it is just whoever wins and whatever side you are on.” And I think the efforts of the number of people like free press and the - I forgotten the name of their coalition right now. We changed some people’s mind about yesterday and that is all about. The involvement of you and your readership and it is critical in this debate. The simple fact of the matter is that AT&T and Verizon have been around since the days of the horse and buggy and they’ve been a big part of their business model has been, has revolved around their relationship with legislators and the regulatory community and as a result it is kind of insider’s ball game for them. The only way that the Net Neutrality proponents is going to win is through the mobilization of the net mobilization and other grassroots groups. I tell you, we seen a lot of push back from the telecoms and this is the astroturfing. I don’t know if you are familiar with that term. Astro turf is basically is where it is a fake grass roots efforts and we’ve seen the telecoms put in a couple of those to try to counter act the great job a lot of the grass roots people on our side have been doing. So you know if any of your readers has been involved or sign on to any letters or come to the Hill. We want to thank you for making this more difficult for the telecoms had they had a couple of months ago.

Summary

Andy: Well you know when they start using the methods you guys are using, that they know they are in trouble. So just want to encapsulate this stuff it is important that folks call their congress folks, write out the numbers of your house and send a representative, post one on your LCD panel, laptop, you know call them once a week and just keep visible and let folks know that is important, if you are outside the US get your folks inside the US on how to speed on this. Also keep Googling for net neutrality in your own country because this is like a new trend. That no longer the telecoms are no longer just gatekeepers but they also want to decide how the content is delivered. I think the one last point of this is that the reasons small businesses are successful online is because it is an equalizing force. And if this legislation goes through and we don’t have Internet neutrality anymore that is going to be dead in the water. So Bill thank you so much for joining us today.

Special thanks to Bill McClellan from the Electronic Retailers Association and Catherine Castro from Qorvis Communications.

Stay Informed

To keep informed about net neutrality and other issues affecting free speech and commerce online check out the Electronic Frontier Foundation (http://www.eff.org/) and Save the Internet (http://savetheinternet.com/).

Call Your Congress Critters

Extra: Follow the Money

In the House the bill is called HR 5252 Communications Opportunity, Promotion and Enhancement Act of 2006 and is sponsored by