Playing favorites on the Net?

A proposal in Congress could tip the scales toward some services and create a two-tiered Internet.

Broadband providers and e-commerce companies, historic allies on many political fronts, are finding themselves butting heads over federal legislation that could change the way either side does business.

A bill expected early next year in the U.S. House of Representatives, coupled with recent comments made by executives from BellSouth and the newly merged AT&T and SBC Communications, has raised the prospect of a two-tiered Internet in which some services--especially video--would be favored over others.

No broadband provider has proposed to block certain Web sites. But they have said Yahoo, for instance, could pay a fee to have its search site load faster than Google. Other possibilities include restricting bandwidth-hogging file-swapping applications, or delivering their own video content faster than a similar service provided by rivals.


That prospect has dismayed e-commerce and Internet companies including, eBay, Google and Microsoft, which are lobbying to maintain what they call the principle of "network neutrality"--namely, that network owners must not pick favorites among the myriad technologies, applications and users that travel across their pipes.

"We're trying to ensure that our customers are able to get to us without impairments along the way," said Paul Misener, vice president for global public policy at Amazon.

Broadband providers, on the other hand, say that intrusive federal legislation would prevent new business models from being invented and reduce the incentive to invest in speedier networks. It also, they say, could prove disruptive.

"Network neutrality is a nearly indefinable concept," said Brian Dietz, a spokesman for the National Cable & Telecommunications Association. "For instance, does network neutrality mean that network operators can't block spam? Should network operators be allowed to stop viruses from spreading? Should large users of peer-to-peer software be allowed unlimited bandwidth so service for other users is slower?"

On one level, the dispute invokes the philosophical question of what legal rules broadband providers will be required to follow. Will they enjoy the freedom to manage their bandwidth as they please, and will Internet users continue to expect that their provider will act as a simple pipe or conduit--one that does not prefer one destination over another?

At another level, though, the political wrangling is a routine business dispute that happens to be playing out before Congress. Not only are Yahoo, Google and Microsoft deeply interested in online video, but AT&T and BellSouth are planning to offer Internet-based television. For them, it's also a way to strike back at cable companies, which sell phone service.

Billions of dollars are at stake. AT&T is spending $5 billion to install an additional 40,000 miles of fiber to its networks and plans to pipe Internet Protocol-based television and other high-speed services into 18 million households by the middle of 2008. Its backbone network already shuttles 4.6 petabytes of data on an average business day. Similarly, Verizon Communications switched on its Fios television service in Texas and has plans to expand to Florida, Virginia and California.

Hypothetical "neutrality" concerns
Amazon and its allies have been touting the importance of network neutrality since at least 2002, and even went so far as to ask the Federal Communications Commission to endorse the principle.

Until recently, their worries were mostly hypothetical and gained little political traction. Michael Powell, FCC chairman at the time, dismissed their concerns a year later, saying there was no need for pre-emptive regulations that could imperil still-to-be discovered business models on the Internet.

Then along came the case of Madison River, a North Carolina telecommunications company that intentionally blocked Internet phone traffic. Madison River had a strong financial incentive: It offered both DSL (digital subscriber line) and voice telephone service.

The FCC responded swiftly to a complaint from Vonage, and Madison River soon agreed to stop blocking voice over Internet Protocol (VoIP) calls.

Paul Misener
Paul Misener

A few months later, in August, the FCC adopted a "policy statement" (click here for PDF) on network neutrality. While not a binding regulation, the statement says that Americans are "entitled to access the lawful Internet content of their choice." (At the time, Commissioner Michael Copps, a Democrat, said (PDF) he "would have preferred a rule that we could use to bring enforcement action.")

Now Congress is becoming interested. A draft bill (PDF) prepared by Texas Rep. Joe Barton, a Republican who chairs the committee overseeing telecommunications law, says providers "may not block, or unreasonably impair or interfere with, the offering of, access to or the use of any lawful content, application or service provided over the Internet."

But the e-commerce and Internet companies say that language is too vague for comfort. They're also troubled about a section permitting providers to offer their own "broadband video service." That, they say, may create a loophole permitting mischief by the increasing number of broadband providers that offer IP-based television services.

In a statement provided to CNET, BellSouth said it and other broadband providers should be able to offer "different plans that feature enhanced levels of service or that promote their own brand names and products or the services of selected vendors." That includes, BellSouth said, entering "into arrangements with content providers by which the content provider pays for special treatment, such as preferential listing or faster downloads from that provider's Web site or receiving higher quality of service."

The latest broadband bill to enter the fray, introduced last week by Republican Sen. Jim DeMint of South Carolina, proposes a broad deregulatory framework for the communications industry but does not explicitly refer to network neutrality. The closest it comes is to direct the FCC to look for "unfair methods of competition."

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