Mainstream coverage of Net Neutrality.
Dana
DECEMBER 15, 2005
NEWS ANALYSIS
By Catherine Yang
At Stake: The Net as We Know It
<http://www.businessweek.com/technology/content/dec2005/
tc20051215_141991.htm>
Google et al fear broadband carriers will tie up traffic with new
tolls and controls. Ultimately, it could mean a world of Internet
haves and have-nots
The Internet has always been a model of freedom. Today the Web is
flourishing because anyone can click to any site or download any
service they want on an open network. But now the phone and cable
companies that operate broadband networks have a different vision.
If they get their way, today's Information Highway could be laden
with tollgates, express lanes, and traffic tie-ups -- all designed
to make money for the network companies.
That prospect is the worst nightmare of Internet stars such as
Google (GOOG ) , Amazon (AMZN ), and eBay (EBAY ). They're gearing
up for a clash with the phone and cable giants early next year as
Congress begins to redraft the telecom laws for the broadband era.
The Internet gang fears that unless they get lawmakers to
intervene, the network operators will soon be able to put a
chokehold on the Web. "The issue is about the future of the
Internet," says Alan Davidson, Google's Washington policy counsel.
BLOCKED OUT. Doug Herring, 48, got a glimpse of that specter last
November. Traveling on business in Tennessee, the General Electric
(GE ) sales manager phoned his wife at their Elberta (Ala.) home.
Herring had just signed up with Web-phone provider Vonage Holdings
and was pleased with the service. But this time, he couldn't get
through. He switched Web-phone providers, but still couldn't make
calls.
Frustrated, Herring contacted Madison River Communications, the
rural phone company that provides his digital subscriber line (DSL)
connection. The company said it was blocking calls from Internet
phone companies. Outraged, Herring and Vonage complained to federal
regulators.
"For me to get the Internet where I live, [Madison River] is the
only provider," Herring fumes. In March the Federal Communications
Commission fined the company $15,000, and the carrier agreed it
would no longer block Internet-calling services.
INTERNET FIEFDOMS? Most phone and cable companies are no longer
content just to sell Web access to consumers. After investing in
high-speed pipes, they also want to peddle more lucrative products,
such as Internet-delivered TV programs, movies, and phone calls.
"Building these networks is expensive," says Link Hoewing, vice-
president for Internet policy at Verizon Communications (VZ ). "If
I can find new ways to pay for this network, it's gravy for everyone."
But selling those extras puts the phone and cable companies in
competition with Web services big and small. The network operators
could block consumers from popular sites such as Google, Amazon, or
Yahoo! (YHOO ) in favor of their own. Or they could degrade
delivery of Web pages whose providers don't pay extra. Google's
home page, for instance, might load at a creep, while a search
engine backed by the network company would zip along.
"This new view of the world will break apart the Internet and turn
it into small fiefdoms" divided between the network providers'
friends and foes, says Vonage Chief Executive Jeffrey Citron.
LOBBYING HEFT. That's just crying wolf, retort the Bell and cable
operators. The Web companies' push for rules requiring "network
neutrality is a solution in search of a problem," says Daniel
Brenner, senior vice-president for regulatory policy at the
National Cable & Telecommunications Assn.
But recent court and regulatory rulings have given the carriers
more room to discriminate. In June, the U.S. Supreme Court ruled
that cable broadband services were almost free of regulation. Two
months later, the FCC granted the same liberty to the Bells'
broadband services. The FCC made two newly merged megaphone
companies -- created from AT&T (T ) and SBC Communications and
Verizon and MCI (MCIP ) -- vow to keep their Internet lines open to
all for the next two years. But FCC Chairman Kevin Martin favors a
light regulatory touch until he sees widespread abuse by the networks.
Lawmakers updating the telecom laws are more likely to act. The
House Commerce Committee will probably vote early next year on
whether to require Net neutrality. And while Google and its
Internet brethren are the darlings of Wall Street and a Web-wild
public, these New Economy powerhouses could find themselves
outgunned in Washington. After decades as regulated carriers, the
Old Tech phone and cable companies employ legions of lobbyists and
funnel hefty checks into Congress's campaign coffers. Google, by
contrast, just hired Davidson, its first lobbyist, in June.
BANDWIDTH ROAD HOGS. For their part, the phone and cable companies
protest that they have no plans to use their pipes unfairly.
Madison River is the only carrier known to have blocked rivals or
degraded their service. "We have no intention of controlling where
you can and can't go on the Internet," says Bill Smith, chief
technology officer at BellSouth (BLS ). "If [phone companies]
restrict where people go on the Net, they'd leave in droves" for
cable competitors.
Yet in a Nov. 7 interview with BusinessWeek Online, AT&T CEO Edward
Whitacre Jr. declared: "What [Google, Vonage, and others] would
like to do is to use my pipes free. But I ain't going to let them
do that." Whitacre and AT&T argue that they need flexibility to
exact a toll from Web services that hog bandwidth.
As broadband use grows, the Bells and cable companies say that
intensive users aren't paying their fair share. File-sharers
swapping music and movies account for 60% of North American
residential broadband use, estimates Dave Caputo, CEO of Sandvine
in Waterloo, Ont., which sells technology to manage network
traffic. "Your overeaters get preferential treatment over weaker
ones," he says.
IT'S OUR NET. Carriers could raise their prices for consumers who
clog the network. But when Korean phone giant KT noted that 5% of
its users accounted for half of its traffic and floated the idea of
volume pricing earlier this year, the public outcry quickly quashed
any plan.
[snip]
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