FCC's repeal of Open Internet regulation sets stage for mega versions of 1990s era AOL, CompuServe walled gardens

The U.S. Federal Communications Commission has restored the regulatory framework that treats Internet protocol-based communications as an information service. The move reverses the commission’s 2015 Open Internet rulemaking classifying IP as a common carrier telecommunications utility under Title II of the Communications Act. So instead of an open Internet, the United States is turning back the clock to the closed, proprietary walled gardens that existed prior to the advent of the World Wide Web in the mid-1990s.

It’s even a greater back to the future policy move than appears at first glance. It sets the stage for media producers to consolidate with the companies that own the “pipes” – cable and telephone companies that serve more than three quarters of American homes, businesses and schools. After all, if those pipes are to be regulated as information services rather than telecommunications, companies that create information take on an integral role in this vertically integrated business model.

Consequently, the future could bring more combinations like Comcast’s acquisition of NBC or Verizon’s takeover of AOL and its pending deal for Yahoo! Under the new regulatory policy, it’s not inconceivable a big cable company or a telco could similarly make a play for Netflix.

Even Amazon, clearly in the information service business with its original offer of books and now its own production video content, could be a potential merger partner for one of the big pipe players. An Amazon-Verizon walled garden, for example, would provide this information content along with socks, towels and any other imaginable consumer commodity with both companies taking a nick of the revenues. Prime members might be eligible for a discounted monthly rate for Verizon connectivity.

The result would be a supersized version of the original big online information services: CompuServe and AOL. Both provided electronic mail along with content prior to the debut of the Netscape World Wide Web browser in the mid-1990s that swung open the garden gates to a vast digital universe. CompuServe even charged its subscribers by the minute to read “premium” content -- not unlike telephone long distance service. Such a billing scheme might well make a return under the FCC’s latest regulatory framework.

Last year Google abandoned its vision of building proprietary fiber to the home infrastructure to make its content more widely available. It could follow the adage, “If you can’t beat ‘em, join ‘em," and concede its effort to outshine legacy incumbent telcos and cablecos and their outdated metallic telephone and cable TV networks by merging with one of them to create a colossal proprietary information service.