Non-Commercial Information Services

[Michael Ward <mike@essential.org>]

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TAXPAYER ASSETS PROJECT - INFORMATION POLICY NOTE
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The attached draft memo by James Love covers some of the issues
involved with providing non-commercial information services.


                                Memorandum
                                  (Draft)


Re:       MODELS FOR ALLOCATING RESOURCES FOR NON-COMMERCIAL
          INFORMATION SERVICES

From:     James Love, TAP (202/387-8030; love@essential.org)
Date:     April 11, 1994


Introduction

     In the current debate over regulatory models for the new
telecommunications infrastructure, there is great interest in
models that would support a new generation of non-commercial
information services.  A number of educational, library and
public interest groups are seeking mechanisms to guarantee a
large "public space" in cyberspace.

     At present there is broad based support for some type of
"set-aside" or preferential rates for non-commercial information
services.  Examples of this are the proposals before the FCC for
non-profit rates on Video Dialtone services, provisions in S.
1822 and HR 3636 for preferential rates for telecommunications
services provided to educational, health, and library facilities,
Representative Swift's amendment for preferential non-profit
rates, the APT proposal for a "public right of way," and
proposals (by TAP and others) for a fund to support non-
commercial information services, financed out of spectrum license
fees or a fund which all carriers (and some content providers)
contribute to.

     As appealing as these proposals are, there remains
considerable problems in addressing the issue of who will control
or benefit from these new non-commercial preferences.

     The older models from the post office, broadcast radio and
television, and cable are all possibilities, but none is entirely
satisfactory.  The 4th class postage rate allows certain non-
profits a preferred rate on bulk mailings that are used for
specific purposes, such as direct mail for membership
solicitations.  In broadcast radio and television there is a
reservation of spectrum for non-commercial stations, plus annual
appropriations from the federal government to support programming
services, channelled through the CPB or other similar
institutions.  In the cable model, carriers have reserved
capacity for public access, education and government uses, and in
some communities, revenues from franchise fees have been used to
support programming efforts.

     The following is a somewhat arbitrary taxonomy of the types
of mechansims which can be employed, along with comments on the
relative strengths or weaknesses of the different approaches.

1.   No-gatekeeper, no-rationing.

     The non-profit postal rate is a no-gatekeeper, no rationing
model.  For this to work in the new broadband networks, the
carriers would have to provide unlimited carriage to anyone who
qualified for the rate.  The problems with this approach will be
whether or not the unlimited carriage approach is workable
(depending upon the nature of switching technologies), and if
policy makers can agree upon an "acceptable use policy" (AUP),
for those seeking the preference.

     While this model may be feasible for allocating preferred
pricing for non-commercial entities (particularly if it is based
upon incremental costs), it is not useful as a model to allocate
funding for non-commercial information services, since this will
clearly involve rationing of some type.


2.   No-gatekeeper, with rationing.

     A non-discriminatory model of access at preferential rates
(including free access) that does not involve a gatekeeper, but
assumes a finite amount of capacity, and hence rationing, is
based upon the cable model for public access, where everyone is
treated the same, with rationing based upon first come first
service, lottery or sharing of time (pro-rationing similar to oil
pipeline common carriage rules).  The advantage of this model is
that it is fair and non-discriminatory.  The disadvantage is that
it lacks quality control, and makes it very difficult to manage
and promote the services offered (due to uncertainty over
carriage).

     Again, this approach would not be appropriate for allocating
funding for non-commercial information services.

3.   Government appointed gatekeepers, with rationing.

     APT wants the federal government to adopt the public
broadcasting model for allocating both carriage and money for
non-commercial information services.  The advantages of this
approach are the opportunities for quality control and better
management of carriage (the ability to advertize and promote
programming, for example).  The disadvantages relate to the
criticism (from the right and the left) that the appointed
gatekeepers will not allow full diversity of views and will use
public resources to promote political and cultural views which do
not enjoy public support.


4.   Single locally controlled democratically selected
     gatekeepers, with rationing.

     This model would substitute the government appointed
gatekeeper with one that was selected democratically.  Examples
of this approach would be Ralph Nader's audience network
proposal, and the methods used to control the licenses of some
public radio and television stations.  In the case of the
audience nework, Nader would have the non-profit organization
sell "airtime" (or bandwidith) to commerical users in order to
finance programming services, giving the group and independent
source of funding.  Public radio and televison stations receive
government appropriated funds, making them subject to some
political pressures.

     One potential weak area for both of these approaches is
criticisms that the "winner" of the elections for the membership
organizations will limit diversity or lack broad popular support,
and exist primarily as a self-perpetuating bureaucracy.  Whether
or not these criticisms are accurate, they represent an important
polemical attack which is increasingly being used by the right to
undermine public broadcasting funding.


5.   The TAP model for pluralistic democratically selected
     gatekeepers, with rationing. 

     TAP has recommended that Congress adopt a system of
allocating money and carriage to democratically controlled non-
profit organizations which act as clearinghouses for funding. 
TAP recommends the mechanisms for selecting groups and allocating
resources be lossely based upon a system used in the Netherlands,
with several important modifications.

     The basic approach would be as follows:

     a)   States or local governments would establish a criteria
          for non-profit organizations to "compete" for non-
          commercial carriage and/or money, to be used to support
          a wide range of non-commercial information services.

     b)   The funding would either come from a gross receipts fee
          on carriers, or from reselling bandwidth to commercial
          entities.

     c)   The qualifying organizations would be controlled by a
          membership, which would be open, and subject to audit.

     d)   Resources (carriage and/or money) would be allocated to
          groups on the basis of some indication of their public
          support.  This could be their membership size, subject
          to an arbitrary minimum "cut-off," as it is in the
          Netherlands, or it could be the result of public voting
          mechanisms  (perhaps modeled after the competition for
          contributions from payroll deductions or based upon a
          "ballot" sent out in the telephone bill once a year,
          with the right be to placed on the "ballot" subject to
          a cut-off on membership size).  Recources would be
          allocated in direct proportion to the indication of
          public support.

     e)   Reallocations of resources, based upon changes in the
          relative size of memberships, would occur regularly.


     This system offers the following benefits:

     a)   The mandate for the resource allocation would be
          decided at the local level, by the public, in a
          competitive environment.

     b)   Everyone's "vote" would count, since there would be
          several "winners."  There would be a greater feeling of
          "empowerment" for persons who do feel represented by
          "establishment" organizations.

     c)   The system would hopefully be considered "fair," and
          less subject to attacks from the right on an alleged
          liberal "elite."

     d)   There would be a mechanism to challenge incumbent
          organizations and approaches.

     e)   There would be mechanisms for quality control (as
          compared to the cable public access model).
     
     
     Some of the shortcomings of this approach would include:

     a)   A certain amount of what you get will not be what you
          want.  For example, in the Netherlands, relegious
          groups aggressively participate in this process.

     b)   Some important information services will suffer from
          poor "marketing."


     While we mention the Netherlands as a partial model, it is
important to also discuss some of the features of the Netherlands
system, as is currently practiced, including some of its
shortcomings.  The current system is based upon the 1967
Broadcasting Act.  The pluralistic feature of the system was
designed to accommodate deep divisions in the Dutch culture.  The
"non-commercial" entities were allowed to base membership on
subscriptions to programming guides, which was not the best
criteria for membership support.  Until recently there was no
commercial broadcasting in the Netherlands, and these
"movements," as they are called, were often criticized for the
pedestrian nature of the commercial programming which they
offered (See, for example, Eli Noam's Telivsion in Europe).

     We think that there are significant differences in
circumstances and goals between the United States and the
Netherlands, and it would be best to design a system which is
appropriate for the United States.


     Conclusion

     We think it may be appropriate to use more than one approach
to support non-commerical information services.  We are very
supportive to a pluralistic model as outlined in (5), which we


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