January 29, 2009 By News Report
"These companies have responded to the challenges of managing the Internet in a patchwork, ad hoc fashion. In so doing they've failed to notice the profound social policy issues they've unwittingly engaged." -- Farnum Brown of Trillium Asset Management
Members of a coalition of investors have filed shareholder resolutions with 10 publicly-held U.S. providers of Internet access, urging corporate boards to report on the impact of the companies' Internet network management practices on public expectations of freedom of expression and privacy.
The resolutions highlight the vital role played by ISPs in providing Internet access to more than 211 million Americans -- or 70 percent of the U.S. population -- who use the Internet daily. They point out that ISPs are managing traffic, insuring communication, and forging rules that shape, enable and limit the public's Internet use.
Noting that ISP network management practices have come under public scrutiny by consumer and civil liberties groups, regulatory authorities and shareholders, the resolutions assert that "Internet network management is a significant public policy issue; failure to fully and publicly address this issue poses potential competitive, legal and reputational harm" to each of the companies.
"With greater numbers of people using the Internet for everything from shopping to healthcare, Internet network management and its effect on the user have become significant public policy concerns," said New York City Comptroller William C. Thompson Jr., in announcing resolutions filed on behalf of the New York City Pension Funds. "These ISPs are among the biggest in the world and if the network management practices are having an effect on how the public perceives the companies, we as shareholders have a right to know what that effect may be."
Farnum Brown of Trillium Asset Management, which has filed resolutions with several of the ISPs, said: "These companies have responded to the challenges of managing the Internet in a patchwork, ad hoc fashion. In so doing they've failed to notice the profound social policy issues they've unwittingly engaged. Americans are concerned about how their use of the Internet is monitored. They're concerned about whether their privacy and freedom of expression are respected by the companies that manage the Internet. We as shareholders believe it is in these companies' best business interests to respond to those concerns."
Michael Connor, Executive Director of Open MIC, noted recent Congressional scrutiny of ISPs' use of so-called "deep packet inspection" technology, which can provide individual personal data based on a user's Internet traffic. In another case, the Federal Communications Commission voted in August to punish Comcast Corp. for its surreptitious interference with subscribers' use of peer-to-peer software applications.
At the time, FCC Chairman Kevin Martin said Comcast's network management amounted to "looking inside its subscribers' communications, blocking that communication when it uses a particular application regardless of whether there is congestion on the network, hiding what it is doing by making consumers think the problem is their own, and lying about it to the public..."
"There are multiple examples that raise concerns regarding Internet management practices," said Connor. "As the growth of digital media accelerates -- with new electronic devices, new forms of delivery, and increased demand for Internet bandwidth -- privacy and freedom of expression will increasingly be front-page issues, commanding shareholder attention."