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Battling Over Clouds

More than 40 years ago, the FCC was worried about telephone companies using their power over communications to control the then-nascent (and competitive) data processing marketplace. The Bell System at that point was already banned from providing services that weren’t common carriage communications services (or “incidental to” those communications services).

In Computer 1, the Commission tried to distinguish the use of computers for processing information from the use of computers as part of communications, with the goal of not allowing the Bell System into the data processing business.

In a 1999 article in the Texas Law Review, Steve Bickerstaff pointed out that Computer 1 meant that no one could provide a “computer utility” service. The Bell System couldn’t as a matter of regulation, and no one else could because they’d be completely dependent on the good graces of the Bell System for transmission. There weren’t enough highspeed lines to make a computer utility viable, and other companies probably didn’t want to test the regulatory boundaries anyway—they didn’t want to suddenly become telecommunications carriers by providing transport to remote computing services.

Today, we’d call the “computer utility” something different—we’d use the term “cloud computing.”

Fast-forward: Computer I was the right decision, arguably, in that it allowed the internet to come into being. Our government made a number of policy decisions (and delayed action in a number of ways) that supported internet access, as Bickerstaff describes.

Since then, Computer I and the divestiture conditions that continued the Computer I regime have been completely dismantled. More than that—they’ve been reversed. Now the telephone companies are *only* in the data processing business, which we now call “enhanced services” or “information services.” No more common carriage transmission. Nice note from Bickerstaff, writing, remember, in 1999: “Mostly escaping attention has been the successful effort of the BOCs to position themselves as a very potent future force in the Internet market.

You can reframe the net neutrality battle as an argument for re-imposing the restrictions of Computer I. Keep these companies from providing “information services”! Put them back in the “transmission” box!

That hasn’t happened—yet. Meanwhile, though, what about cloud computing? Bickerstaff suggests that the conditions for cloud computing emerging would have to be (1) an increase in highspeed internet access, (2) increasing frustration with PCs, and (3) the existence of ample competitors to provide carriage.

Let’s say the first two conditions have been met now. The third is still a major problem. Yet there are companies—including Google—who have a great interest in providing the cloud. What will happen?

The carriers have no particular reason to give up voluntarily on the regulatory gains they’ve made over the last 40 years. Google is doing its best to open up or limit the control of the carriers (plus finding alternative pathways), but surely wants to move forward with the cloud more than it wants to win on principle. Of course, I could be wrong.

So many questions—is cloud computing desirable? Are people willing to possibly lose access to their entire portfolio of stuff if their internet connection goes down? If cloud computing is desirable, will companies that are good at clouds be striking deals with the companies that have a lock on transmission? Or will the companies that have a lock on transmission be emerging with clouds of their own?

By Susan Crawford, Professor, Cardozo Law School in New York City

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