Testifying before Congress: Net Neutrality

I testified this week to the House Subcommittee on Communications and the Internet.

Here is my written testimony and here is my oral testimony and here the video version.
In general, the Republicans who wished to repeal the FCC order tried to:

• Confuse regulating access to the Internet (telecommunications providers: i.e. Verizon and ATT for the vast bulk of Americans) which is the subject of the FCC order, and regulating services (Google, Amazon, Facebook) which aren’t under the FCC’s jurisdiction.

• Confuse controlling Internet Openness (which everyone agrees is a good thing) with controlling Access to -- and Who Defines -- that Internet: 1) an industry that tends toward monopoly power or 2) the government who should serve the American public’s interests.

• Confuse innovation, jobs, and investment in the economy created by entrepreneurs and small businesses (75% of all jobs over the last 10 years and what percent of the economy?) with the “innovation,” jobs, and investment of two telecommunications giants (ATT invested $19b last year in infrastructure).

Congressmen who had done some work in preparation for my testimony raised the following points against my personal testimony:

• Asked by two members (a talking point?): When the search term “carsharing” is entered into Google, Zipcar has an ad that runs above the first search result. How does Zipcar’s ability to buy a paid ad sync with my testimony that startups can’t afford to pay for premium services?

The first time this was asked, I said that it wasn’t relevant. What was a better comparison was to think of newspapers, where big companies could take out full pages ads, and little companies only tiny classifieds, and that the internet had changed that access into one of a meritocracy. The second time I was asked, I said “This isn’t the question at hand” to which the Congressman replied that indeed, it was his question (true). A thoughtful short response should have been: The fact that an eleven-year old company can afford to buy a Google ad has no bearing on whether a startup could afford to pay a premium for access to the Internet, nor whether other structural hurdles could be established by the duopoly gatekeepers to the Internet.

Several times, Republicans raised the idea that if the unregulated Internet worked for me to start up Zipcar before, why did I think it wouldn’t work in the future? One Congressman even repeated to me two times how easy it must have been for me to start Zipcar (I didn’t let her get away with that). The response I tried to make, and I don’t know if I did, was that the Internet was a baby industry back then, the telcos power was much less, and in fact, the industry was regulated and under the jurisdiction of the FCC (which was later taken away in 2005).

• My favorite question: It appears that Zipcar gets free parking that taxpayers have paid for, depriving these taxpayers of on-street parking dedicated to a for-profit company, as well as received other government grants to succeed….not clear to me how this has any bearing at all.

To which I replied that during my three-year tenure as CEO I had paid for municipal parking won through RFPs and had received no federal grant money at all. Gigi Sohn of Public Knowledge later reminded me that the carriers have received rights of way, spectrum rights, and millions (billions?) of dollars of subsidies from government.

• Two ill-formed, grand-standing, and not quite completed questions were trying to relate to my sensibilities as a business woman. They seemed to be aiming at this point: Wasn’t the only way to respond to market demand to build out more infrastructure? And shouldn’t a company be able to set prices any way it wanted to without government interference?

One of the questioners cut me off after a sentence reply saying that his allotted time was up. And I think I didn’t answer well or clearly to the first time this question was asked. The answer which I managed to squeeze in later in answer to another Congressman’s question was a better one, although admittedly not as nicely said as written below:

Capitalism works when markets respond to demand and competition. The Internet gatekeepers are at best an oligopoly and for most consumers a monopoly. These companies don’t need to respond to demand (they can create scarcity to raise prices) and they also don’t have to respond efficiently or cleverly because they have no competition.