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Renewed Warning of Bandwidth Hoarding

By Jonathan Krim
Thursday, November 24, 2005

A couple of years ago, a group of big technology companies got together and issued a public alarm about the future of the Internet:

Those who own the wires that get us online, the companies said, should not be able to pick and choose what Web content and services we can see and use.

Just as electric companies can't cut deals with electronics makers to allow only some products to work, the Internet should have similar, guaranteed "network neutrality," argued tech firms such as Amazon.com Inc., Microsoft Corp. and Yahoo Inc.

The telephone and cable companies that provide most Internet access dismissed the warning as a pro-regulatory, paranoid rant. It was a solution in search of a problem, they said, and they vowed they would never, ever do such a thing. And the issue receded.

But now it's back in a big way, and the question is: How will the tech industry respond?

Consider:

On March 3, the Federal Communications Commission announced that it settled a case against a small North Carolina-based telephone company that was blocking the ability of its customers to use voice-over-Internet calling services instead of regular phone lines.

On Sept. 15, the first major draft of proposed changes in the nation's telecommunication's laws was circulated by the House Energy and Commerce Committee. The draft said Internet service providers must not "block, impair, interfere with the offering of, access to, or the use of such content, applications or services."

On Nov. 2, another draft of the bill came out, with language specifically addressing the Internet video services that are proliferating as connection speeds increase and the phone companies get into the digital television business. In this draft, the prohibition on blocking or impeding content was gone.

If the bill passes as is, tech companies say, the Internet could be forever compromised.

"Enshrining a rule that broadly permits network operators to discriminate in favor of certain kinds of services and to potentially interfere with others would place broadband operators in control of online activity," Vinton G. Cerf, a founding father of the Internet who now works for Google Inc., wrote in a letter to Congress.

The phone companies argue that with their new fiber-optic systems capable of handling huge amounts of bandwidth, they simply want the ability to set aside some of it for their own services, be it television, gaming or anything else.

Unfortunately for them, the head of phone giant SBC Communications Inc., Edward E. Whitacre Jr., was a little more plain-spoken in an interview in Business Week.

"Now what they [Google, Yahoo, MSN] would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it," Whitacre said. "So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using."

Like his predecessor, FCC Chairman Kevin J. Martin favors network neutrality "principles," but not codifying them as rules.

The FCC did add them as conditions of planned mergers between SBC and AT&T Corp., and Verizon Communications Inc. and MCI Inc. But those conditions apply only for two years, and only to those companies, so Congress will have to wrestle with this beast.

A coalition of tech companies that includes Microsoft, Yahoo, Amazon, Google, Ebay Inc. and IAC/InterActive Corp., argues that the issue is bigger than straight-up discrimination.

What if, they say, the Internet service providers decide to reserve 90 percent of their bandwidth for their own services, and leave 10 percent for the rest?

"Allowing broadband providers to segment their . . . offerings and reserve huge amounts of bandwidth for their own services will not give consumers the broadband Internet our country and economy need," Cerf wrote.

Another wrinkle: What if Internet service providers decide to provide lots of bandwidth to customers who buy their other services, such as cellular or voice-over-Internet telephony -- but less if the customer uses rival providers of those services?

That would be similar to the kind of bundling that occurs now, under which, for example, cable Internet service is cheaper if a consumer also buys a cable-television package. That, they say, is the free market at work.

With tech firms and the Internet providers engaged in many joint business relationships, it is unclear how much artillery the technology group is willing to roll out on this issue.

If they hope to succeed against the powerful cable and telephone lobbies, it will require more than some letters and public testimony to Congress.

Jonathan Krim can be reached atkrimj@washpost.com.

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