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Are We About to Lose a FREE Internet?

The End of the Internet?

Make no mistake: The free-flowing Internet as we know it could very well become history.

What does that mean? It means we could be headed toward a pay-per-view Internet where Web sites have fees. It means we may have to pay a network tax to run voice-over-the-Internet phones, use an advanced search engine, or chat via Instant Messenger. The next generation of inventions will be shut out of the top-tier service level. Meanwhile, the network owners will rake in even greater profits.

Internet Neutrality?

When we log onto the Internet, we take lots of things for granted. We assume that we'll be able to access whatever Web site we want, whenever we want to go there. We assume that we can use any feature we like -- watching online video, listening to podcasts, searching, e-mailing and instant messaging -- anytime we choose. We assume that we can attach devices like wireless routers, game controllers or extra hard drives to make our online experience better.


What makes all these assumptions possible is "Network Neutrality," the guiding principle that preserves the free and open Internet. Net Neutrality means that Internet service providers may not discriminate between different kinds of content and applications online. It guarantees a level playing field for all Web sites and Internet technologies. But all that could change.

The biggest cable and telephone companies would like to charge money for smooth access to Web sites, speed to run applications, and permission to plug in devices. These network giants believe they should be able to charge Web site operators, application providers and device manufacturers for the right to use the network. Those who don't make a deal and pay up will experience discrimination: Their sites won't load as quickly, and their applications and devices won't work as well. Without legal protection, consumers could find that a network operator has blocked the Web site of a competitor, or slowed it down so much that it's unusable.

The network owners say they want a "tiered" Internet. If you pay to get in the top tier, your site and your service will run fast. If you don't, you'll be in the slow lane.

What's the Problem Here?

Discrimination: The Internet was designed as an open medium. The fundamental idea since the Internet's inception has been that every Web site, every feature and every service should be treated without discrimination. That's how bloggers can compete with CNN or USA Today for readers. That's how up-and-coming musicians can build underground audiences before they get their first top-40 single. That's why when you use a search engine, you see a list of the sites that are the closest match to your request -- not those that paid the most to reach you. Discrimination endangers our basic Internet freedoms.

Double-dipping: Traditionally, network owners have built a business model by charging consumers for Internet access. Now they want to charge you for access to the network, and then charge you again for the things you do while you're online. They may not charge you directly via pay-per-view Web sites. But they will charge all the service providers you use. These providers will then pass those costs along to you in the form of price hikes or new charges to view content.

Stifling innovation: Net Neutrality ensures that innovators can start small and dream big about being the next EBay or Google without facing insurmountable hurdles. Unless we preserve Net Neutrality, startups and entrepreneurs will be muscled out of the marketplace by big corporations that pay for a top spot on the Web. On a tiered Internet controlled by the phone and cable companies, only their own content and services -- or those offered by corporate partners that pony up enough "protection money" -- will enjoy life in the fast lane.

Monopolistic Practices

If you look back in our U.S. history, at some of the powerhouse big businesses and corporations, you will see that in some respects, yes, big business has helped build a great nation and brought a better life to most of the citizen of this county. But, big business has always had a dark side, a hidden agenda, Their main agenda has always been, how to exert or gain control over a market, how to influence government regulations in their favor and how to eliminate their competition. We know this as monopolistic practices!

Monopoly is the extreme case in capitalism. It is characterized by a lack of competition, which can mean higher prices and inferior products.

Responding to a large public outcry to check the price fixing abuses of these monopolies, the Sherman Anti-Trust Act was passed in 1890. This act banned trusts and monopolistic combinations that lessened or otherwise hampered interstate and international trade. The act acted like a hammer for the government, giving it the power to shatter big companies into smaller pieces to suit its own needs.

Definition of 'Price Fixing' - Establishing the price of a product or service, rather than allowing it to be determined naturally through free-market forces. Antitrust legislation makes it illegal for businesses to decide to fix their prices under specific circumstances. However, there is no legal protection against government price fixing. In an ill-fated attempt to end the Great Depression, for example, Franklin Roosevelt forced businesses to fix prices in the 1930s. However, this action may have actually prolonged the downturn.

Despite this act's passage in 1890, the next 50 years saw the formation of many domestic monopolies. During this same period, the antitrust legislation was used to attack several monopolies with varying levels of success. The general trend with the use of the act seemed to have been to make a distinction between good monopolies and bad monopolies as seen by the government.

Case Study 1: International Harvester and American Tobacco

For example, International Harvester produced cheap agricultural equipment for a largely agrarian nation, and was thus considered untouchable lest the voters rebel. American Tobacco, on the other hand, was suspected of charging more than a fair price for cigarettes - then touted as the cure for everything from asthma to menstrual cramps - and consequently called down the legislator's wrath in 1907 and American Tobacco was broken up in 1911.




The Benefits of a Monopoly

Case Study 2: Standard Oil

The oil industry was prone to a natural monopoly because of the rarity of the deposits. Rockefeller and his partners took advantage of both the rarity of oil and the revenue produced from it to set up a monopoly without the help of the banks. The business practices and questionable tactics that Rockefeller used to create Standard Oil would make the Enron crowd blush, but the finished product was not near as damaging to the economy or the environment as the industry was before Rockefeller monopolized it.

Back when there were a lot of oil companies competing to make the most of their find, companies would often pump waste products into rivers or straight out on the ground rather than going to the cost of researching proper disposal. They also cut costs by using shoddy pipelines that were prone to leakage. By the time Standard Oil had cornered 90% of oil production and distribution in the United States, it had learned how to make money off of even its industrial waste - Vaseline being but one of the new products launched.

The benefits of having a monopoly like Standard Oil in the country was only realized after it had built a nationwide infrastructure that no longer depended on trains and their notoriously fluctuating costs, a leap that would help reduce costs and the overall price of petroleum products after the company was dismantled. The size of Standard Oil allowed it to undertake projects that disparate companies could never agree on and, in that sense, it was as beneficial as state-regulated utilities for developing the U.S. into an industrial nation.

Following the break up of sugar, tobacco, oil and meat-packing monopolies, big business didn't know where to turn because there were no clear guidelines about what constituted monopolistic business practices. The founders and management of so-called "bad monopolies" were also enraged by the hands-off approach taken with International Harvester. They justly argued that the Sherman Act didn't make allowance for a specific business or product, and that its execution should be universal rather than operating like lightning bolts thrown down upon select businesses by the wrathful gods in government.

In response, the Clayton Act was introduced in 1914. It set some specific examples of practices that would attract Sherman's hammer. Among these were interlocking directorships, tie-in sales, and certain mergers and acquisitions if they substantially lessened the competition in a market. This was followed by a succession of other acts demanding that businesses consult the government before any large mergers or acquisitions took place.

Sound familiar? This sounds like the same game now but with different players. All you have to is replace the names of the player – Comcast, Times-Warner – ATT – Verizon!

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