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  • BILL MOYERS: Welcome. Youve heard me before quote one

  • of my mentors who told his students thatnews is what people want to keep hidden; everything

  • else is publicity.” That’s why two books are rattling the cages of powerful people

  • who would rather you not read them. Here’s the first one. "Captive Audience: The Telecom

  • Industry and Monopoly Power in the New Gilded Age," by Susan Crawford. Read it and youll

  • understand why we Americans are paying much more for internet access than people in many

  • other countries and getting much less in return. That, despite the fact that our very own academics

  • and engineers, working with our very own Defense Department, invented the internet in the first

  • place.

  • Back then, the U.S. was in the catbird seatpoised to lead the world down this astonishing

  • new superhighway of information and innovation. Now many other countries offer their citizens

  • faster and cheaper access than we do. The faster high-speed access comes through fiber

  • optic lines that transmit data in bursts of laser light, but many of us are still hooked

  • up to broadband connections that squeeze digital information through copper wire. Were stuck

  • with this old-fashioned technology because, as Susan Crawford explains, our government

  • has allowed a few giant conglomerates to rig the rules, raise prices, and stifle competition.

  • Just like standard oil in the first Gilded Age a century ago.

  • In those days, it was muckrakers like Ida Tarbell and Lincoln Steffens rattling the

  • cages and calling for fair play. Today it’s independent thinkers like Susan Crawford.

  • The big telecom industry wishes she would go away, but she’s got a lot of people on

  • her side. In fact, if you go to the White House citizen’s petition site, youll

  • see how fans of "Captive Audience" are calling on the President to name Susan Crawford as

  • the next chair of the Federal Communications Commission. “Prospectmagazine named

  • her one of thetop ten brains of the digital future,” and Susan Crawford served for a

  • time as a special assistant to President Obama for science, technology and innovation. Right

  • now she teaches communications law at the Benjamin Cardozo School of Law here in New

  • York City and is a fellow at the Roosevelt Institute. Susan Crawford, welcome.

  • SUSAN CRAWFORD:
Thank you so much.

  • BILL MOYERS:
“Captive Audience?” Who's the captive?

  • SUSAN CRAWFORD:
Us, all of us. What's happened is that these enormous telecommunications

  • companies, Comcast and Time Warner on the wired side, Verizon and AT&T on the wireless

  • side, have divided up markets, put themselves in the position where they're subject to no

  • competition and no oversight from any regulatory authority. And they're charging us a lot for

  • internet access and giving us second class access. This is a lot like the electrification

  • story from the beginning of the 20th century. Initially electricity was viewed as a luxury.

  • So when F.D.R. came in, 90 percent of farms didn't have electricity in America at the

  • same time that kids in New York City were playing with electric toys. And F.D.R. understood

  • how important it was for people all over America to have the dignity and self-respect and sort

  • of cultural and social and economic connection of an electrical outlet in their home. So

  • he made sure to take on the special interests that were controlling electricity then who

  • had divided up markets and consolidated just the way internet guys have today, he made

  • sure that we made this something that every American had.

  • BILL MOYERS:
But we are a long way from F.D.R., the New Deal and those early attitudes

  • toward industry. What makes you think that's relevant now when you come to the internet?

  • SUSAN CRAWFORD:
You know, this is an issue about which people have a lot of passion because

  • it touches them in their daily lives. “The Wall Street Journalon the front page had

  • an article about kids needing to go to McDonald's to do their homework because they don't have

  • an internet connection at home. Parents around the country know that their kids can't get

  • an adequate education without internet access. You can't apply for a job these days without

  • going online. You can't get access to government benefits adequately, you can't start a business.

  • This feels to 300 million Americans like a utility, like something that's just essential

  • for life. And the issue of how it's controlled and how expensive it is and how few Americans

  • actually sign up for it is not really on the radar screen.

  • BILL MOYERS:
You describe this frankly as a crisis in communication with similarity,

  • you say, to the banking crisis and global warming. What makes it a crisis?

  • SUSAN CRAWFORD:
It's a crisis for us because we're not quite aware of the rest of the world.

  • Americans tend to think of themselves as just exceptional. And we're

  • BILL MOYERS:
Well, we did invent the internet, didn't we?

  • SUSAN CRAWFORD:
We did, but that was generation one. Generation two, we're being left far

  • behind. And so all the new things that are going on in the world, America won't be part

  • of that unless we are able to communicate. So there's a darkness descending because of

  • this expensive and relatively slow internet access in America. We're also leaving behind

  • a third of Americans. A third of us.

  • BILL MOYERS:
In here you call it the digital divide. Describe that to me.

  • SUSAN CRAWFORD:
Well, here's the problem. For 19 million Americans, many in rural areas,

  • you can't get access to a high speed connection at any price, it's just not there. For a third

  • of Americans, they don't subscribe often because it's too expensive. So the rich are getting

  • gouged, the poor are very often left out. And this means that we're creating yet again

  • two Americas and deepening inequality through this communications inequality.

  • BILL MOYERS:
So is this why, according to numbers released by the Department of Commerce,

  • only four out of ten households with annual household incomes below $25,000 reported having

  • wired internet access at home compared with 93 percent of households with incomes exceeding

  • $100,000? These companies are not providing cheap enough access to the poor folks in this

  • country?

  • SUSAN CRAWFORD:
These are good American companies. Their profit motives though don't

  • line up with our social needs to make sure that everybody gets access. They're not in

  • the business of making sure that everybody has reasonably priced internet access. That's

  • how a utility functions. That's the way we need to treat this commodity. They're in the

  • business right now of finding rich neighborhoods and harvesting, just making more and more

  • money from the same number of people. They're doing really well at that. Comcast is now

  • a $100 billion company. They're bigger than McDonald's, they're bigger than Home Depot.

  • But they're not providing this deep social need of connection that every other country

  • is taking seriously.

  • BILL MOYERS:
And you make the point that the United States itself is beginning to experience

  • this digital divide in the world.

  • SUSAN CRAWFORD:
It's fair to say that the U.S. at the best is in the middle of the pack

  • when it comes to both the speed and cost of high speed internet access connections. So

  • in Hong Kong right now you can get a 500 megabit symmetric connection that's unimaginably fast

  • from our standpoint for about 25 bucks a month. In Seoul, for $30 you get three choices of

  • different providers of fiber in your apartment. And they come in and install in a day because

  • competition's so fierce. In New York City there's only one choice, and it's 200 bucks

  • a month for a similar service. And you can't get that kind of fiber connection outside

  • of New York City in many parts of the country. Verizon's only serving about 10 percent of

  • Americans. So let's talk about the wireless side for a moment, you know, the separate

  • marketplace that people use for mobility. In Europe you can get unlimited texting and

  • voice calls and data for about $30 a month, similar service from Verizon costs $90 a month.

  • That's a huge difference.

  • BILL MOYERS:
Why is there such a disparity there?

  • SUSAN CRAWFORD:
The difference in all of these areas is competition and government

  • policy. It's not magical. Without the intervention of the government there's no reason for these

  • guys to charge us anything reasonable or to make sure that everybody has services.

  • BILL MOYERS:
How do you explain that in the course of one generation, from the invention

  • of the internet in this country to falling way behind as you say the rest of the world

  • in our access to internet? How did that happen?

  • SUSAN CRAWFORD:
Beginning in the early 2000’s we believed that the magic of the market would

  • provide internet access to all Americans. That the cable guys would compete with the

  • phone guys who would compete with wireless and that somehow all of this ferment would

  • make sure that we kept up with the rest of the world. Those assumptions turned out not

  • to be true. It's much cheaper to upgrade a cable connection than it is to dig up a copper

  • phone line and replace it with fiber. So the cable guys who had these franchises in many,

  • most American cities, they are in place with a status quo network that 94 percent of new

  • subscriptions are going to. Everybody's signing up with their local cable incumbent. There

  • is not competition for 80 percent of Americans. They don't have a choice for a truly high

  • speed connection. It's just the local cable guy. Competition has just vanished.

  • BILL MOYERS:
Well, the 1996 Telecommunications Act was supposed to promote competition and

  • therefore protect the consumer by bringing prices down. That didn't happen?

  • SUSAN CRAWFORD:
That didn't happen because it's so much cheaper to upgrade the cable

  • line than it is to dig up the copper and replace it with fiber. The competition evaporated

  • because Wall Street said to the phone companies, "Don't do this, don't be in this business."

  • So you may think of Verizon and AT&T as wired phone companies, they're not. They've gone

  • into an entirely separate market which is wireless.

  • They're the monsters on the wireless side that control two thirds of that market. So

  • there's been a division. Cable takes wired, Verizon/AT&T take wireless. They're actually

  • cooperating. There's a federally blessed non-compete in the form of a joint marketing agreement

  • between Comcast and Verizon. And so the world is perfect for them, not so great for consumers

  • who are paying more than other people in the rest of the world for slower service.

  • BILL MOYERS:
Since the 1996 Telecommunications Act which I thought was going to lower the

  • price of our monthly cable bill, it's almost doubled.

  • SUSAN CRAWFORD:
Well, that's because Time Warner controls Manhattan. There's no competition.

  • The cable guys, long ago, something they callthe summer of love,” divided up

  • BILL MOYERS:
“The summer of love?”

  • SUSAN CRAWFORD:
Yeah. They clustered their operations. It makes sense from their standpoint.

  • You take San Francisco, I'll take Sacramento. You take Chicago, I'll take Boston.” And

  • so Comcast and Time Warner are these giants that never enter each other's territories.

  • BILL MOYERS:
You talk to certain people and they say, "Look, I don't know what this

  • is about. I have all the gizmos I want. I have a smart phone, I have a tablet,” And

  • they say, "What's the crisis? Because I have more access than I can use."

  • SUSAN CRAWFORD:
There are a lot of bright shiny objects that are confusing people about

  • the underlying market dynamics here. What people don't realize is that for this wireless

  • access you're paying too much and the coverage is too spotty. On the wired side, that's where

  • we're really being left behind. And here's the important tie to understand. A wireless

  • connection is just the last 50 feet of a wire. So fiber policy is really wireless policy.

  • These two things fit together. And if the whole country did an upgrade to cheap fiber

  • everywhere we'd get better connection for everybody. Right now though if a mayor wants

  • to do this for himself he'll be pummeled by the incumbents. In almost 20 states in America

  • it's either illegal or very difficult for municipalities to make this decision for themselves.

  • BILL MOYERS:
In North Carolina a couple of years ago lobbyists for Time Warner persuaded

  • the state legislature to make it almost impossible, virtually impossible for municipalities to

  • get their own utility, right?

  • SUSAN CRAWFORD:
That's exactly right. And so now North Carolina, after being beaten

  • up by the incumbents is at the near the bottom of broadband rankings for the United States.

  • BILL MOYERS:
And what's the practical consequence of that?

  • SUSAN CRAWFORD:
All those students in North Carolina, all those businesses that otherwise

  • would be forming, they don't have adequate connections in their towns to allow this to

  • happen. They've got-- they're subject to higher and higher pricing. They're being gouged.

  • BILL MOYERS:
Your book did underscore for me why this is so important to democracy,

  • to the functioning of our political system, to our role as a self-governing free people.

  • Talk about that a moment. Why do you see this so urgently in terms of our practically dysfunctional

  • democracy today?

  • SUSAN CRAWFORD:
We need to be able to speak to each other effectively and effectively

  • to government. We need to empower our citizens to feel dignified and ready to cope in the

  • 21st century. Having a communications system that knits the country together is not just

  • about economic growth. It's about the social fabric of the country. And a country that

  • feels as if it can move together and trust each other is one that is more democratic.

  • As a matter of national policy we have forced other countries to talk about the importance

  • of internet access, foreign policy we're great at saying, "Make sure internet is everywhere."

  • Domestically, for some reason, we haven't done so well. So I see internet access as

  • the heart of a democratic society.

  • BILL MOYERS:
You use that merger of Comcast and NBCUniversal as the window in your book

  • into what this power can do to the aspirations of a democratic internet.

  • BRIAN WILLIAMS on NBCNightlyNews:
Federal regulators today approved the purchase by

  • Comcast of a majority stake in NBCUniversal from General Electric […] This merger will

  • create a $30 billion media company with cable, broadcast, internet, motion picture and theme

  • park components. The deal is expected to close by the end of the month.

  • BILL MOYERS:
You say that the merger between Comcast and NBCUniversal represented a new

  • frightening moment in U.S. regulatory history. How so?

  • SUSAN CRAWFORD:
Comcast is not only the nation's largest broadband distributor with

  • tens of millions of customers, it also now owns and controls one of the four media conglomerates

  • in America, NBCUniversal. That means that it has a built-in interest in making sure

  • that it shapes discourse, controls programming all in the service of its own profit-making

  • machine. As both the distributor and a content provider, it's in its interest to make sure

  • that it can always charge more for discourse we would think isn't controlled by anybody.

  • So it's a tremendous risk to the country that we have this one actor who has no interest

  • in the free flow of information controlling so much of high speed internet access.

  • BILL MOYERS:
You say the merger created the largest vertically integrated distributor

  • of information in the country. So what's the practical consequence of Comcast having this

  • control over its content?

  • SUSAN CRAWFORD:
Here's the consequence. Comcast with the control over its programming,

  • and also because it works to closely with the very concentrated programming industry,

  • can raise the costs of any rival coming in to provide let's say competitive fiber access.

  • So Google in Kansas City is having real trouble getting access to sports content because Time

  • Warner Cable, the local monopoly player there, controls that sports content. So Google or

  • any other competitive fiber provider has to enter two markets at once. One market to provide

  • the transport, the fiber, and then also the programming market. And making programming

  • more expensive is yet another barrier to entry. And Comcast can carry that out now.

  • BILL MOYERS:
So what should the F.C.C. do about that?

  • SUSAN CRAWFORD:
This is a moment when we have to separate out content from conduit.

  • It should not be possible for a local cable actor or any distributor to withhold programming

  • based on volume. That's what's going on. The programmers say, "We'll sell to Comcast cheaply

  • 'cause they're big. But if you're an upstart we're going to charge you three to four times

  • what Comcast is paying for the same programming." That should not be legal. Everybody should

  • get access to the same stuff at the same price and they should be announced prices.

  • BILL MOYERS:
What about the argument that in this modern world there are certain industries,

  • certain markets, that require an economy of scale. Critics have said that you're ignoring

  • the sophisticated economics that govern these industries.

  • SUSAN CRAWFORD:
The economics of these networks did not change when we added a little bit

  • of digital pixie dust to them. It's still very expensive to build these networks. Private

  • actors still don't have an interest in covering everybody because that's too much of an economic

  • risk for them. The better route is sensible oversight. We can learn from our mistakes

  • in the past when it came to regulatory regimes that didn't work. But a regulatory regime

  • is needed without question to make this work for all Americans.

  • BILL MOYERS:
I have to say this is pretty strong stuff. Listen to yourself. "Instead

  • of ensuring that everyone in America can compete in a global economy, instead of narrowing

  • the divide between rich and poor, instead of supporting competitive free markets for

  • American inventions that use information, instead that is of ensuring that America will

  • lead the world in the U.S. in the information age, U.S. politicians have chosen to keep

  • Comcast and its fellow giants happy."

  • SUSAN CRAWFORD:
For the last 30 years the rhetoric of the market being the thing we

  • all aspire to has in a sense become the collective vision in America. Our politicians aren't

  • separate from that kind of understanding. I think they believe that it's better to have

  • government stay out of industry. In this particular place no government intervention is actually

  • disaster for the country because we leave so many people behind, we subject ourselves

  • to the informational control of just a few giants. The problem for the politicians is

  • that there's no upside right now to fighting back. If they do they'll lose their campaign

  • contributions. We need to get the public interested in this so that politicians will understand

  • that they're not acting alone.

  • BILL MOYERS:
In your last chapter you describe what happened in Lafayette, Louisiana when

  • the city decided it wanted the very kind of internet access you're talking about. And

  • a few years ago my colleagues and I did a documentary calledNet @ Riskin which

  • we looked at the threat to internet access. And we went to Lafayette and lo and behold

  • they're doing exactly what you're describing in your book.

  • JOEY DUREL in Net @ Risk: 
We have an out-migration problem with our young people from Louisiana,

  • and I felt it was time for politicians to quit talking and do something.

  • RICK KARR in Net @ Risk:
Something like building every home and business in town its

  • own fiber optic connection to the information superhighway.

  • DON BERTRAND in Net @ Risk:
We see telecommunications in the way of Internet, in the way of fiber

  • connectivity as something that should be available to everyone.

  • STEPHEN HANDWERK in Net @ Risk:
Just like water, sewer, electricity, telephone. I mean

  • it all falls into that same lump.

  • JOEY DUREL in Net @ Risk:
I think this is a tremendous opportunity for small business

  • and to attract business here.

  • RICK KARR in Net @ Risk:
So what the city decided to do was build its own fiber network

  • through its municipal power and water company, Lafayette Utility Systems or L.U.S.

  • BILL MOYERS:
How did they get away with it in Lafayette when as you say they didn't

  • in North Carolina?

  • SUSAN CRAWFORD:
Persistence of a mayor who very much focused on this and said, "We're

  • going to get this done." And there wasn't a statute at that point at the state level

  • making it illegal. Municipalities have a lot of assets at their disposal. They control

  • the rights of way, the access to their streets and their poles that people need in order

  • to build these networks. They can condition access to those rights of way on a particular

  • network being built. Stockholm did this. They say, "Look, you can come in and build a fiber

  • network as long as it's a wholesale, nondiscriminatory really fast fiber network connecting our hospitals

  • and schools and police departments. And then you have to let anybody else connect to it."

  • Not that hard, you just draft an R.F.P., request for proposals, and the city can do that using

  • its control over its rights of way.

  • Cities often also have access to this long term low rate financing. They can put their

  • good name behind a bond issue and make sure that it gets paid back by the subscriptions

  • to the network over time. It's a great investment for the city, and that's what Lafayette found

  • out.

  • BILL MOYERS:
So how is the consumer in Lafayette situated differently from me here in Manhattan

  • with one cable service?

  • SUSAN CRAWFORD:
In comparison to where you are in Manhattan where there's no government

  • intervention at all, in Lafayette the municipality is acting as a steward, standing up for you.

  • It is in fact government's role to stand up against the ethic that might makes right.

  • In most of America there is no government factor keeping these bullies from charging

  • us whatever they want.

  • BILL MOYERS:
You describe something in your book that we've talked about often at this

  • table. Quote, "The constant easy, friendly flow between government and industry in the

  • communications world centered around Washington D.C." Describe that world.

  • SUSAN CRAWFORD:
It's a warm pond of familiarity. Everybody knows everybody else. They're all

  • very nice people, you'd like to have a drink with them. They go from a job inside the regulator

  • to a job in industry to a job on the hill, one easy flow, nice people. Outsiders have

  • no impact on this particular world.

  • And it would be-- I talked to a cable representative not long ago about the need to change this

  • regulatory state of affairs. And she looked at me and said, "But that would be so disruptive."

  • And she's right, it would be disruptive.

  • BILL MOYERS:
Well, you know, the F.C.C. was supposed to be the cop on the beat of

  • the communications world. But for example Michael Powell, who served as F.C.C. chairman

  • for four years in the mid-2000s, is now the cable and telecom industry's top D.C. lobbyist.

  • Meredith Attwell Baker who was one of the F.C.C. commissioners who approved Comcast's

  • merger with NBCUniversal, left the agency four months later to join Comcast as a highly

  • paid lobbyist. That move infuriated media groups.

  • SUSAN CRAWFORD:
But that warm pond of familiarity in Washington sees this as absolutely normal

  • behavior. Just yesterday the former chief of staff of the F.C.C. left to be the general

  • counsel of a regulated company. It happens all the time. And so in order to change this

  • you'd have to make regulation of this area not be carried out by such a focused agency.

  • Right now, the F.C.C.'s asymmetry of information is striking. They only talk to the industry.

  • The community is all so close. In order to break that up you'd have to make sure you

  • had a broad based agency seeing lots of different industries.

  • BILL MOYERS:
About the time I was reading your book I also read a speech by the present

  • chair of the F.C.C., Julius Genachowski. He said, "The United States is in a global bandwidth

  • race. A nation's future economic security is tied to frictionless and speedy access

  • to information." If you were chair of the F.C.C. what would you do to move us forward?

  • SUSAN CRAWFORD:
I know that it's important to let these municipalities make decisions

  • for themselves. That's going to take a bill in Congress preempting the terrible state

  • laws like the one that happened in North Carolina. We need to make self-determination possible

  • for cities. And the second one is making sure that there's low cost, low rate financing

  • available to build these networks.

  • That's the stumbling block, making sure that you can actually build without needing to

  • put up all the money yourself. Because it pays out over time, it pays out as a social

  • investment for the country. And then finally, changing all those rules at the FCC that are

  • getting in the way of progress.

  • BILL MOYERS:
So briefly describe the need.

  • SUSAN CRAWFORD:
All Americans need a fast, cheap connection to the internet.

  • BILL MOYERS:
And the problem?

  • SUSAN CRAWFORD:
A few companies control access in America and it's not in their interest

  • to bring that fast, cheap access to us all.

  • BILL MOYERS:
And the solution?

  • SUSAN CRAWFORD:
The solution is for people to care about this issue, ask hard questions

  • at every debate, make sure you elect people who will act and give your mayor air cover

  • so that he or she can act to make sure that your city has this fast, competitive access.

  • BILL MOYERS:
The book isCaptive Audience: The Telecom Industry and Monopoly Power in

  • the Gilded Age.” Susan Crawford, I've enjoyed this conversation. Thank you for being with

  • me.

  • SUSAN CRAWFORD:
Thank you so much.

BILL MOYERS: Welcome. Youve heard me before quote one

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