Recode reported today that Verizon is testing a "sponsored data" scheme, just like its rival AT&T. Sponsored data is a craven attempt to distort the market for internet access by creating arbitrary, discriminatory distinctions between types of speech. It is in blatant conflict with net neutrality, whose core principle is non-discrimination: simply put, it's the idea that ISP gatekeepers shouldn't decide what's important on the internet. Sponsored data is the opposite of fair competition; It's a pay-to-play scheme that gives big, rich companies an edge on the internet. And it's especially a problem when a company like Verizon does it.
Verizon doesn't just want to squeeze more money out of access to the internet, it wants to claw its way into Comcast's league as a media conglomerate that controls both the network and the content that travels over it. Earlier this year when Verizon bought AOL for $4.4 billion, CEO and chairman Tim Armstrong said AOL was "building toward becoming the largest media technology company in the world." (Comcast already did that when it bought NBC Universal and invested hundreds of millions of dollars in companies like BuzzFeed and Vox Media.) Verizon also launched "Go90" this year: an attempt to rebrand turning your phone sideways to reap unrealized cable television profits from millennials. (Comcast is also doing that.) In light of these ambitions, the idea of Verizon erecting tolls for its competitors takes on a sinister meaning, especially when you consider it's Verizon that led the original push to destroy net neutrality.
"What's starting to change is really looking at ways to monetize above the access network," Verizon executive VP Marni Walden told Recode on Wednesday. "Our media company, under the AOL brand, is completely different from what Verizon has done in the past — very sophisticated ad tech capabilities, owned and operated content." Walden says "people are surprised about Verizon getting into the content space," which is funny because nobody should be surprised: it's the cable television playbook for total media domination.
Just six companies basically own all the media in America
Here’s a staggering truth: just six companies basically own all the media in America. A supermajority of the media, from radio to television, is owned by News Corporation, Disney, Viacom, CBS, Time Warner, and Comcast. (Comcast is even a minority investor in Vox Media, the parent company of this website.) It’s not just a trend anymore, it’s a reality: the media is owned and operated by what looks more and more like a cartel. Verizon wants to join that club.
For an example of the kinds of shenanigans that Verizon is pursuing, look no further than Comcast, whose timeline of growth is a case study in conflict of interest. In 2009, Comcast decided it wanted to buy NBCUniversal — a deal that was universally panned by critics of consolidation, and even NBC itself through the lens of 30 Rock, which portrayed Comcast as "Kabletown." The deal was considered dangerous because it would give Comcast huge leverage against other content creators who don't own access to Comcast's customers. In 2011, after the FCC approved the transaction, FCC commissioner Meredith Baker, who helped approved the deal, became a Comcast lobbyist just four months later. Baker is now the president of the CTIA: the wireless industry trade association that's suing to kill net neutrality. In 2013, Comcast then took full ownership of NBCUniversal, but was required under the terms of a deal with the government to honor net neutrality provisions through 2018. Comcast routinely advertises its commitment to net neutrality under this mandatory compliance, while at the same time supporting the industry’s effort to kill it. Somewhere in all that noise, Comcast almost gained a stranglehold on US internet by attempting (but failing) to buy Time Warner Cable — a major telecom that just last decade was part of another vertically integrated media company, Time Warner Inc.
Strange things start to happen when you own both the content and the network
Strange things start to happen when you are a massive conglomerate that owns both the content people want and the channels of distribution that help them get it. If you’re a company like Comcast and you want to sell everyone on the idea that the X1 cable box is the future (nevermind the fact it’s more than a decade late), Dish’s Sling TV looks like a competitor — and a problem. NBC makes shows that can be seen using the X1 or Sling TV, so it probably doesn’t care, but oops — it’s owned by Comcast. So NBC won’t run ads for the Sling TV on its own TV stations. The conflict of interest is so stupidly obvious that arguments in favor of this type of vertical integration and consolidation are basically huge lies from people who stand to accumulate more money or power, and Verizon stands to establish many of the same conflicts of interest.
It’s no coincidence that many of these powerful telecommunications companies own both the old networks (television and telephones) and the new network (the internet). Despite the cries of near-monopolists like Verizon, AT&T, and Comcast that there’s plenty of competition out there, there just isn’t. The insane mess of laws and handshakes that enabled the creation of these networks, down to the local laws that decide who can dig up streets to lay cables, simply prevents meaningful competition. That’s why Comcast could never answer the only meaningful question it was asked about the Time Warner deal: why buy Time Warner instead of competing? Comcast has no answer, because like many other companies in its position, it doesn’t actually want to compete! It’s not a diabolical secret, it’s just a truth about rational economic actors: no rational gatekeeper or profit-minded investor would choose competition over collecting rent, which is much easier.
Verizon is trying to claw its way into Comcast's league
Schemes like sponsored data are dangerous because they exist in this context of overall media consolidation, where there are too many conflicts of interest to count and enough money and power in few enough hands to fight ideas like net neutrality forever. If it's not sponsored data, it will be "free" unlimited data programs, or equivocal interpretations of network management that let cable providers exempt their content from the arbitrary data caps they create. And Verizon has a leg up over Comcast when it comes to fighting net neutrality, since it's not bound by the rules the government imposed on Comcast when it bought NBC, but stands to be as powerful as Comcast anyway. The sad part is that Verizon and AT&T might get away with sponsored data, since the FCC appears to be taking a nap. It's at least understandable: I'd be tired too after fighting in the courts for years to correct my mistakes.
The net neutrality discussion is much bigger than a few rules — it's about the future of free speech and human interaction. And as long as massive, vertically integrated companies continue to operate a global public utility with the profit motivations of media conglomerates, the internet will be at risk.