Net Neutrality: A Revolutionary Solution to a 21st Century Problem

 “Whatever facilitates a general intercourse of sentiments, as good roads…a free press, and particularly a circulation of newspapers through the entire body of the people…is favorable to liberty.”

--James Madison, Public Opinion, 19 Dec. 1791

This week, the Federal Communications Commission (FCC) announced a major shift in policy concerning “net neutrality”—the principle that has heretofore established that all legal internet traffic must have equal access to the networks of service providers. This shift will potentially allow larger companies (particularly providers of bandwidth-busting streaming video, like Netflix or ESPN) to pay for preferential access to the internet’s infrastructure—what the New York Times deemed “the digital equivalent of an uncongested car pool lane on a busy freeway.”

A host of consumer and civil liberties groups—from Common Cause to the American Civil Liberties Union (ACLU)—have spoken out against the proposed rule changes, with the ACLU predicting, “barriers to innovation will rise, the marketplace of ideas on the internet will be constrained, and consumers will ultimately pay the price.”

On the other side of the argument are telecommunications companies that for years have insisted that “tiered” bandwidth would benefit the majority of consumers. As David Cohen, an executive at Comcast declared at an FCC hearing at Harvard Law School in 2008, “Bandwidth-intensive activities not only degrade other less-intense uses, but also significantly interfere with thousands of Internet companies’ businesses.”

While I personally believe that net neutrality should remain the law of the land, I am not blind to the pressures facing ISPs or the writing on the wall from the FCC. Therefore, I want to focus today on the potential effect that a “bandwidth to the highest bidder” system could potentially have on a free press and whether an ancient Constitutional clause long forgotten—the Post Roads Clause—can be seized on by Congress to ensure a free and equal exchange of ideas online.

I propose that Congress enact legislation recognizing fiber-optic/broadband cable as the post roads of the 21^st century, and (assuming the FCC’s plans go through) require all ISPs that choose to implement differentiated services to permit news organizations to have free and uninhibited access to the fastest possible connection to end users. This designation would reduce the potentially devastating effects of “bandwidth to the highest bidder” and would comport with the history of Congressional awareness of the importance of a free and open press.

The Old Boston Post Road-- From Wall Street to the Hub

In 1791, Massachusetts Congressman Elbridge Gerry declared, “Wherever information is freely circulated there slavery cannot exist; or if it does, it will vanish, as soon as information has been generally diffused.” Shortly thereafter, the first Postal Act passed and ever since, the Post Roads power of Congress (Art. I, §8, Cl. 7) has been used to support the work of newspapers. Newspapers were permitted to use the mails at deeply discounted rates throughout the 18^th and 19^th centuries and were eventually joined in that privileged position by magazines, books, and other periodicals.

Over time, the Post Office has continued to be at the forefront of using transportation and communications technologies to improve both the reach of the press and the speed at which its product could be transmitted across the continent.

In 1823, waterways were declared post roads. In 1838, all railroads in the United States were declared post roads. And in 1922 and 1923, the Post Office was awarded the Collier Trophy for important contributions to the development of aeronautics for its contributions to airliner safety.

The Post Office not only asserted control over transportation technology, but also over new forms of communication technology. As the Supreme Court of the United States noted in Pensacola Telegraph Company v. Western Union Telegraph Company, a case upholding Congressional regulation of telegraph lines:

Post-offices and post-roads are established to facilitate the transmission of intelligence…The powers thus granted are not confined to the instrumentalities of commerce, or the postal service known or in use when the Constitution was adopted, but they keep pace with the progress of the country, and adapt themselves to the new developments of time and circumstances. They extend from the horse with its rider to the stage-coach, from the sailing-vessel to the steamboat, from the coach and the steamboat to the railroad, and from the railroad to the telegraph, as these new agencies are successively brought into use to meet the demands of increasing population and wealth.

Pensacola Tel. Co. v. W. Union Tel. Co., 96 U.S. 1, 9-10 (1878) (internal citations omitted) (emphasis added).

Like the canals, rails, and wires before it, the internet has become the great facilitator of knowledge—tying the nation and the globe together and transmitting ideas across oceans in ways the Founding generation never could have imagined. And yet, as the Court said 136 years ago, the Constitution stands ready to adapt to the “progress of the country.” In 2014, the time has come for Post Roads to meet Cyber Space.

Stamps, Low Prices, and Banking in Modern America

 “I cannot forbear intimating to you the expediency… of facilitating the intercourse between the distant parts of our Country by a due attention to the Post-Office and Post Roads.”

--President George Washington, 1^st Annual Address to Congress, 8 Jan. 1790

In February, Senator Elizabeth Warren (D-MA) unveiled a proposal, based on a white paper issued by the Office of the Inspector General for the United States Postal Service, to resuscitate the flailing Postal Service by partnering with banks and credit unions to offer basic banking services -- bill paying, check cashing, small loans -- for the nearly 70 million Americans who are part of the “unbanked” economy, lacking access to checking or savings accounts.

As Warren noted, the costs imposed on the working poor by lacking access to bank accounts is substantial.

Collectively, these households spent about $89 billion in 2012 on interest and fees for non-bank financial services like payday loans and check cashing, which works out to an average of $2,412 per household. That means the average underserved household spends roughly 10 percent of its annual income on interest and fees -- about the same amount they spend on food.

Many elected officials have taken significant steps to solve the problems facing the unbanked. For instance, as Manhattan Borough President, my boss, Scott Stringer, partnered with banks to promote low-cost checking accounts through the Bank On Manhattan program, saving thousands of New Yorkers hundreds of dollars in check-cashing fees every year.

However, there are few institutions in American life that have the scope and reach of the United States Postal Service. Indeed, from the flagship Farley Post Office on and 8^th Avenue in Manhattan (10001) to the remote outpost in Barrow, Alaska (99723), USPS has been designed, from the founding of the Republic, to “bind the nation together” as one.

The Founding Fathers wouldn’t have believed it, but in 21^st century America, there may be one entity that can compete with the reach of the USPS: Wal-Mart. The world’s largest retailer, with over 10000 stores in 71 countries (over 4000 stores in the U.S.) and over $476 billion in sales in FY 2014, Wal-Mart’s footprint is so large that over 90 percent of Americans live within 15 miles of a store.

So perhaps it comes as no surprise that as same-store sales stall (thanks in no small part to the stagnation in wages growth for the vast majority of Americans), Wal-Mart is dipping its toes into the financial services arena. Last week, the company announced that it would launch a new, low-cost money transfer system today, Thursday, April 24, which will allow customers to transfer up to $900 between stores at a fraction of the cost of competitors Western Union and MoneyGram (whose stocks plunged upon the news).

While many justifiably criticize Wal-Mart’s labor and environmental practices (though in my view in a manner disproportionate to the scrutiny other similar firms face), there is little doubt that Wal-Mart’s sheer size can have a potentially transformative effect on the unbanked. Indeed, just as we now shop for groceries, set our alarms, read our email, watch TV, and pay our bills with our phones, so the banking of the future is likely to take place outside the traditional bank—be it online or at a store like Wal-Mart (a similar, consumer-oriented trend has emerged in medicine with the proliferation of “minute clinics” in pharmacies nationwide).

It will be interesting to see how Wal-Mart’s new service fares. For now, government regulators should take a wait-and-see approach to the initiative, ensuring that consumers are properly informed of the services offered and the fees charged, while also allowing the market to innovate in order to drive down costs.

And if it doesn’t work out, there’s always that post office in Barrow.