Ted Versus Technology
Cruz visits Capital Factory and plays prop comic
By Richard Whittaker,
9:00AM, Wed. Nov. 19, 2014
Ted Cruz dumps a rotary phone on the lectern and grins. He thinks he's got the audience in the palm of his hands.
It's a little after 3.30 last Friday afternoon in Austin's Capital Factory. Normally, the start-up employees that co-office here would be thinking about tapping the inevitable end-of-week keg. Instead, a dozen or so are in the training room, waiting for the man likely to become the next Senate Science and Space Subcommittee chair to speak.
He shouldn't get too giddy. This wasn't some new base turning out to see him. Chatting with some of the Cap Factory folks there, it wasn't like they were ready to cut campaign checks. For some, it was a curiosity issue. For others, it was a chance to get away from the desk for a few minutes. Although that few minutes had dragged out. Cruz's plane was late, so his announced plan to wander around the 16th floor of the Omni Hotel, check out some product lines, hold a full presser, became some brief intros, a meandering Cruz speech, and two quickly-grabbed questions from the back row.
The Cap Factory guys (and they were all men – this is the infamously male-dominated tech industry, after all) didn't even get seats. Those went all to Cruz's invited guests, a mixture of staffers, familiar legislative figures like Sen. Craig Estes, and a back row reserved for the press. The demarcation lines were clear and obvious, and if you weren't in a dress suit, you were shoved along the side walls.
Going in, the real question was simple. Would Ted touch on net neutrality? The presser was supposed to be about the Internet sales tax, the conventional wisdom on the back row went, and Ted was too canny a politician to wade into that topic here. After all, the IT folks aren't that hot on the idea of letting big telecoms firms restrict their data flow, or have them charge tariffs to compete for access. But the tech folks knew better. The day before, Mark Cuban had railed on Twitter against net neutrality, comparing it to some Ayn Rand nightmare (and not, as is more the norm, the nightmare of reading Rand). The consensus in the sneakers-and-tees crowd along the side was that this was typical big mouth Mark, controversial just to grab headlines. But now the headlines were out there, it was unavoidable.
They had a long time to muse and debate, with Cruz's plane still circling, and everyone's legs getting stiffer. Around 3, Cruz was finally ushered down the corridor, and Capital Factory Founder Joshua Baer was able to make his opening comments/disclaimer. "Capital Factory is a non-partisan group," he said. "We don't endorse any particular candidates or initiatives, but we do see a great role for us being able to connect elected officials with startup technology."
That would all explain why Cruz was there, but in the training room, and nowhere near the presidential seal that was laid after President Barack Obama visited in 2013. That would be a step too far.
If Baer was the pitch-perfect non-partisan host (referring to Cruz's tech platform, he said, "There many things in there that I agree with strongly; there are one or two things I may have a differing perspective on"), the other warm-up acts were less middle-of-the-road. Ron Yokubaitis, founder of local data firm Data Foundry, turned his five minutes into a surveillance state tirade/pitch for his security firm Golden Frog. Zello CEO Bill Moore amped the net neutrality stakes by citing how Turkish and Venezuelan protesters had used his walkie-talkie app to oppose their governments, and how it had been government intervention, not pricing structures, that had shut down their web access.
So would Cruz touch on net neutrality? Would he poke the bear, or would he stay on the single sales tax topic? In fact, he went on a four-pronged assault. No Internet taxes; keep the Internet Corporation for Assigned Names and Number (the entity responsible for assigning and managing domain policy and top-level domain assignments) under US control; a philosophically vague coda about ensuring that civil liberties extend into the digital domain. And, of course, net neutrality. He's against it, in case you haven't heard.
Of course he was going to go there. This was his big talking point. After all, who in the crowd beyond the room and Gizmodo readers, cares about ICANN governance? But last week, he'd lambasted new neutrality as "Obamacare for the Internet". Because, you know, decreasing premiums and rising enrollment, that's evil. "When you think of regulated monopolies, regulated public utilities, what are the adjectives that come to mind? They're not bold, innovative "
"Fair," barked one of the invited suit wearers from the peanut gallery.
Watching Cruz in action is like watching the snake oil get poured out of the bottle. For the fundamentalist Republican right, he is charisma on legs. If you already think he's right, you'll swallow every last gulp. At the Republican election victory party at Austin City Limits two weeks, ago, he got the biggest reaction of the night, dwarfing Rick Perry, while it took a WWE-style entrance video to get the friendly crowd primed for Greg Abbott. By comparison to them all, Texas' senior senator John Cornyn was their Hans Moleman. But Cruz ruled the night, the audience exploding at his every gesture and rabble-rousing threat to take down the presidency. Just this morning, his notoriously busy press office sent out a statement filled with quotes from folks who back his positions on the Internet. Truly hardcore tech heads like the Club for Growth, the Competitive Enterprise Institute, and Americans for Limited Government.
That's why Capital Factory is a different deal. When he suddenly pulled that old rotary phone from the lectern, the smoke and mirrors took over. While the other speakers had delivered from the stand, Cruz grabbed the mic and worked the front of the room. This is politics as prop comedy, and the inevitable McCarthy comparisons are there. The showmanship, the bombast, the feeling he'll pull a list out of his pocket at any second.
"I've grown up in the tech world," he mugged to the crowd. He told them stories about handling punch cards on his daddy's knee (that daddy would be Rafael Cruz, the one that believes his son is anointed by God to rule as a king, and thinks "the average black" doesn't understand why the minimum wage needs to end. Which would make them like a lot of highly-qualified economists, who believe it should be raised).
That's the thing. Ted Cruz walks into a room filled with tech people and tries to tell them that the regulation and government intervention never managed anything – and then he uses the telecom industry as his case study. Apparently the break-up of AT&T bypassed him, and the fact that most of the players in cell phones and satellite communication wouldn't exist without that government intervention.
And this is Texas, where the electricity companies would never have gone out into West Texas if Lyndon Baines Johnson hadn't shoved their arms up behind their back. Hell, not even West Texas. The Hill Country would have looked like a third world nation in the 1950s without government intervention, women tied to the endless grind of water-carrying and coal-fired cleaning they called, with grim irony, the sad irons. That's why the locals said about LBJ, "He brought the lights."
But this is also the state that AT&T built. The single biggest contributor to the Texas political system. And, like the other telecom companies, pretty much the only people interested in fighting back against net neutrality. Of course they are. That's because they're the ones that will make the most money off the change. In fact, they're the only ones that will make any money off it.
Cruz's role is to portray this all as a struggle for rights and freedom and competition, and against the big bad government and regulation. But the bulk of the tech guys in the room knew that killing net neutrality could kill their businesses.
Earlier this year, the big telecom firms were accused of deliberately slowing down or throttling NetFlix's traffic to disrupt its service. The charge was they they were tried to leverage extra fees out of the streaming service and Level 3, the company that connected Netflix's systems to those of firms like AT&T. NetFlix folded, paying a premium to the seemingly unstoppable Comcast (swiftly becoming the most powerful communications entity on the planet) and Verizon (who, astoundingly, even after extracting their new pound of flesh, is still being accused of messing with the NetFlix stream).
If start-ups faced the same kind of throttling, they could be out of business.
And here's the real thing. A net neutrality policy doesn't create a new status quo; opposing net neutrality is the paradigm shift. When Internet traffic depended on ARPANET in the US, and systems like JANET (the Joint Academic Network) in Europe, and the big, government-owned, government-maintained backbone systems of the 1980s and early 1990s, that philosophy that everything moved at the same (admittedly, snail-like) pace was embedded. In 2010, the Federal Communications Commission adopted rules to formalize that old reality, that telecom companies like Verizon had to treat all content equally. Then, in January of this year, the US District Court of Appeals for the DC Circuit struck down those rules. Now Verizon et al, through political catspaws like Cruz, is trying to convince people that the limbo of the last 10 months was the reality for all time, and that net neutrality would be some new intervention.
Question from the crowd: When the only people defending the ability to throttle are the telecom companies, and just about everyone else in the industry, including trade body the Internet Association, opposes it, doesn't that say something?
Sure, said Cruz. It shows that the big boys are out to get you, and that they have paid so much money to politicians, and you know how easily impressed they are by a little cash and a few parties. Wait up, came a question from press row. Didn't Cruz take money from the telecom companies? Doesn't that make his policy stances just as questionable? No, no, said the last virgin on Capitol Hill.
It was a risky pitch for Cruz, so he tried to stay on to what should be safer territory: taxes – because no one likes taxes, right, and those mean feds are trying to push through a new internet tax that would force every online vendor to collect sales taxes in every jurisdiction. What about the "mom-and-pop" operations, he lamented (although odds are that most mom and pop operations aren't pulling in the $1 million minimum proposed as the starter point for tax collection)?
Cruz was right in one way. The current fight for the Internet is about fairness and opportunity. Just this week, the Alliance for Excellent Education and the LEAD Commission published a study showing that poor kids, minority kids, and rural kids are about half as likely as rich white kids to have high speed Internet. If Cruz was bothered about innovation and Internet equity, that could be a much more pressing issue.
Instead, this is the sad irons all over again, and no one seems to think that Ted Cruz will bring lights to this new electronic Hill Country.