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Investigative reporter David Cay Johnston explains the growing power of monopolies and how a for-profit model Internet does a disservice to consumers

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JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore. U.S. cable company Charter Communications struck a deal with Time Warner Cable to buy the cable giant for $55 billion. Back in April, Comcast tried to acquire Time Warner but the FCC blocked the deal. But this Charter-Time Warner deal could end up seeing the light of day. Many don’t know much about Charter Communications, but here’s a map of the coverage area. And their largest shareholder is John Malone. This billionaire ranks 56th on the Forbes 400 list of richest Americans, and he’s the largest private landowner in America. Our guest today wrote a column on his influence, and this deal’s potential impact on the U.S. economy. It’s titled Monopoly Power Tightens Grip on U.S. Economy. Now joining us from Rochester, New York, is David Cay Johnston. David is a Pulitzer Prize winning investigative reporter and bestselling author who writes columns for Al Jazeera America. Thanks for joining us, David. DAVID CAY JOHNSTON, INVESTIGATIVE REPORTER: Glad to be here. DESVARIEUX: So David, for those who don’t know much about John Malone, just describe for us what you found out about him. JOHNSTON: Well, John Malone has been in the cable TV business for decades. He rolled up a lot of little mom and pop operations years ago into one of his companies, and he’s bought, sold, remade, refashioned, reworked around a whole variety of cable companies until he’s become a multibillionaire and a very major force in the cable television, and therefore the internet business, in America. DESVARIEUX: What would be the significance of this merger for everyday people? Let’s talk specifically about the internet, for example. JOHNSTON: Well, so long as we depend on private companies that are de facto monopolies, or perhaps duopolies, they might have one competitor on their market, there’s not much incentive for America to get the kind of internet other countries have. We invented the internet. It started out as a military-funded project to help scientific researchers move information back and forth. And yet today our internet is so bad, so slow, so unreliable that Bulgaria, Bulgaria has a faster, cheaper internet than we do. DESVARIEUX: Wow. JOHNSTON: Internet in South Korea, which is universal, is the equivalent of Niagara Falls, while America has a fire hose. And by the way, we pay more for what’s coming out of our fire hose than they do for what goes over Niagara Falls. DESVARIEUX: And what’s at the root of this, David? Like you said, the for-profit model. Speak to that a little bit more. JOHNSTON: Well, instead of adopting a policy that we want to have a universal internet, a high-speed, 1GB, fiber optic internet and then going about building it however we chose to do it, we instead said well, we’ll trust the market. The market will provide. And the market will provide. If you live in a prosperous neighborhood or a downtown urban core, you’ll probably get pretty good internet. Although Chattanooga, Tennessee decided their internet wasn’t good enough and they built a municipal system. Some other cities have tried to do that and have done so very successfully. But in a number of states an organization called ALEC, the American Legislative Exchange Council, which works hand in glove with all sorts of industries, from oil and fast food to cable companies, has gotten laws passed blocking cities from building an internet. In most big cities if you built a municipal internet and you offered universal Wi-Fi, probably you could serve everybody in town for a buck a month, not the $50 or more that most people pay now for internet access. DESVARIEUX: You mentioned ALEC, but I also want to talk about other influence, specifically the families–I mean, John Malone’s just one example. Do you see this sort of deal being part of a larger trend in America? That we’re moving away from a democracy and sort of heading into a plutocracy? JOHNSTON: And I’ve been writing exactly that for many years, in my trilogy of books and elsewhere. You know, it’s important to understand, corporations are not the problem. We want to have corporations. Corporations are very important for limiting risk, encouraging investment, and building wealth. What we need, though, are rules so that we get the benefit of corporations, and that’s what we’ve abandoned. You know, we’re not regulating big banks anymore. We’ve had banking regulation for 4,000 years. I teach the law of the ancient world to law and graduate business students at Syracuse University, and I show them how the ancients figured out everything you need to do in the laws. Social insurance, building inspection, white-collar crimes, testing witnesses, and controlling businesses so that they behave in ways that benefit the public. And we’ve moved into an era, the era of Ronald Reagan, which we are still in, in which we assume that if you’re a corporation, you must be motivated by the market to do good. Well, no. you’re motivated by the market to maximize profits. And in the case of cable TV that often means don’t put in the fastest equipment, it costs more. Don’t wire any neighborhoods you don’t have to. In New Jersey for example, they’ve gotten a setup now where Verizon only has to wire up, or actually only has to run a wire past 35 houses in each census tract, where there’s about 1,500 houses in each tract. And as soon as they’ve run a wire past 35 houses they can say, sorry, we’re not going to serve anybody else. In a neighborhood where the demand might be very third or fourth house, they don’t. DESVARIEUX: All right. David Cay Johnston joining us from Rochester, New York. Thank you so much for being with us. JOHNSTON: Thank you, Jessica. DESVARIEUX: And thank you for joining us on The Real News Network.


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David Cay Johnston was called by The Washington Monthly, "one of this country's most important journalists" and the Oregonian newspaper compared his work to the great muckrakers Lincoln Steffens, Ida Tarbell and Upton Sinclair. Johnston won a Pulitzer Prize in 2001 for his exposes of tax loopholes and inequities.