[Infowarrior] - Congress to Take Up Net ¹ s Future

[Richard Forno]

January 10, 2007
Congress to Take Up Net¹s Future
By STEPHEN LABATON
http://www.nytimes.com/2007/01/10/washington/10net.html?pagewanted=print

WASHINGTON, Jan. 9 ‹ Senior lawmakers, emboldened by the recent restrictions
on AT&T and the change in control of Congress, have begun drafting
legislation that would prevent high-speed Internet companies from charging
content providers for priority access.

The first significant so-called net neutrality legislation of the new
Congressional session was introduced Tuesday by Senator Byron L. Dorgan,
Democrat of South Dakota, and Senator Olympia J. Snowe of Maine, one of the
few Republicans in Congress to support such a measure.

³The success of the Internet has been its openness and the ability of anyone
anywhere in this country to go on the Internet and reach the world,² Mr.
Dorgan said. ³If the big interests who control the pipes become gatekeepers
who erect tolls, it will have a significant impact on the Internet as we
know it.²

In the House, Representative Edward J. Markey, the Massachusetts Democrat
who heads the Energy and Commerce Subcommittee on Telecommunications and the
Internet, said recently that he would introduce legislation soon and planned
to hold hearings.

Despite the flurry of activity, the proposals face significant political
impediments and no one expects that they will be adopted quickly. But the
fight promises to be a bonanza for lobbyists and a fund-raising tool for
lawmakers. It pits Internet giants like Google, Yahoo, eBay and Amazon,
which support the legislation, against telecommunication titans like
Verizon, AT&T and large cable companies like Comcast.

The debate may also affect the plans of the companies to develop new
services and to consider certain mergers or acquisitions.

Consumer groups have allied themselves with content providers. The groups
maintain that without the legislation, some content providers would be
discouraged from offering services while others would impose costs on
providers that would either discourage them from offering new services or
pass them on to consumers. They also feel that small companies would be
unable to compete.

But the telephone and cable companies say that efforts to limit their
ability to charge for faster service would discourage the pipeline companies
from making billions of dollars in investments to upgrade their networks,
and would, as a practical matter, be even more harmful to consumers.

Beyond the debate, the fight over net neutrality is, like most regulatory
political battles, a fight over money and competing business models.
Companies like Google, Yahoo and many content providers do not want to pay
for the kinds of faster Internet service that will enable consumers to more
quickly download videos and play games.

In their thirst to continue to grow rapidly, content providers are looking
to expand, but they consider any attempt by the telephone and cable
companies to charge them for priority services as restricting their ability
to move into new areas.

On the other hand, the telephone and cable companies ‹ the so-called
Internet pipes ‹ want to be able to charge for access, particularly as they
begin competing with content providers by offering their video services and
programming.

The phone companies have also been studying a business model not unlike that
of the cable TV industry: charging premiums to certain content providers for
greater access to their pipes.

They say that existing rules, as well as sound business judgment, would
preclude them from trying to degrade or slow their broadband service and
that what they oppose is regulation that would prevent them from charging
for offering a faster service. They also point out that many content
providers are already charging customers for priority services, so that what
they are proposing is not unduly restrictive.

While the debate has broken largely along partisan lines ‹ with Democrats
among the staunchest supporters and Republicans the biggest foes ‹ there
remains considerable Democratic opposition. Last June, a vote on an
amendment by Mr. Markey similar to what he plans to introduce failed by 269
to 152, with 58 Democrats voting against the measure.

Many of those Democrats have been allied with unions, which have sided with
the phone companies because they believe that the lack of restrictions will
encourage the companies to invest and expand their networks.

In the Senate, where the party in the minority has considerably more power
than in the House, the measure suffers from similar political problems. Last
year the Republicans blocked the measure from reaching the Senate floor.

But several developments have given some momentum to the supporters of the
measures. The House is now under the control of the Democrats, and the new
speaker, Nancy Pelosi of California, has been a vigorous supporter of the
legislation. Ms. Pelosi¹s district in San Francisco is near Silicon Valley,
the home of many companies that have sought the legislation.

Moreover, the conditions that the Federal Communications Commission imposed
on AT&T as a condition of its acquisition of SBC Communications represented
an important political victory for proponents of the legislation. After one
of the five members of the commission removed himself from the proceeding,
the commission¹s two Democrats forced the companies to agree to a two-year
moratorium on offering any service that ³privileges, degrades or prioritizes
any packet² transmitted over its broadband service.

The conditions imposed no significant immediate costs on AT&T. The company
does not yet have the equipment in place on its network to offer a priority
service on a large scale. But the conditions imposed by the F.C.C. showed
that, contrary to assertions of the phone companies, it was possible to
draft language that would preclude the companies from discriminating against
providers.

The conditions also set a political benchmark of sorts, and gave the
supporters of the legislation two years to try to gain more momentum just as
all of the companies are trying to figure out their next major sources of
revenue.