Senate deals blow to Net neutrality

WASHINGTON--A U.S. Senate panel narrowly rejected strict Net neutrality rules on Wednesday, dealing a grave setback to companies like eBay, Google and Amazon.com that had made enacting them a top political priority this year.

By an 11-11 tie, the Senate Commerce Committee failed to approve a Democrat-backed amendment that would have ensured all Internet traffic is treated the same no matter what its "source" or "destination" might be. A majority was needed for the amendment to succeed.

This vote complicates Internet companies' efforts to convince Congress of the desirability of extensive new regulations, especially after the House of Representatives definitively rejected the concept in a 269-152 vote on June 8.

Republican committee members attacked the idea of inserting Net neutrality regulations in a massive telecommunications bill, echoing comments from broadband providers like AT&T and Verizon, which warned the rules were premature and unnecessary. Alaska's Ted Stevens, the committee chairman, accused his colleagues of "imposing a heavy-handed regulation before there's a demonstrated need."

What's more, Republicans warned, adding the regulations would imperil the final passage of the broader telecommunications bill, which is the most extensive set of changes since 1996. "This is absolutely a poison pill," said Nevada Republican John Ensign.

Democrats had rallied behind an amendment, adapted from a standalone bill they offered in May, which would have barred network operators from discriminating "in the carriage and treatment of Internet traffic based on the source, destination or ownership of such traffic." That could have prevented Verizon from inking deals to offer high-definition video and prioritizing that on its network, for instance.

Without new rules prohibiting such practices, "we're giving two entities, the Bells and cable, the power to be able to cut deals, and that will change the relationship of entrepreneurs to the Internet and to the financial marketplace," said John Kerry, the Massachusetts Democrat.

The concept of network neutrality, which generally means that all Internet sites must be treated equally, has drawn a list of high-profile backers, from actress Alyssa Milano to Vint Cerf, one of the technical pioneers of the Internet. It's also led to a political rift between big Internet companies such as Google and Yahoo that back it--and telecom companies that oppose what they view as onerous new federal regulations.

By a 12-10 vote, senators also rejected a second amendment that was broader. The amendment, proposed by Hawaii Democrat Daniel Inouye, included not just Net neutrality anti-discrimination language but also addressed topics such as video franchising and universal service.

Then, by a 15-7 vote, senators voted to send the broader telecommunications bill--called the Communications, Consumer's Choice, and Broadband Deployment Act--to the full Senate for a vote. Its fate there is hardly assured, though a Net neutrality amendment is likely to be offered in any floor vote.

In a statement after the votes, Verizon urged the Senate to act swiftly on the bill, claiming that delays in boosting video competition will cost consumers billions of dollars a year in higher cable bills.

But Sen. Ron Wyden, an Oregon Democrat, said Wednesday that he would seek to prevent a floor vote on the telecommunications bill because it did not include extensive Net neutrality regulations. "I will object to any further action on this telecommunications bill until it includes a strong net neutrality provisions that will truly benefit consumers and small business," Wyden said, a promise that has teeth because the Senate often works through unanimous consent.

The Republican-backed bill does include some Net neutrality regulations. It would, for instance, create an "Internet consumer bill of rights" to be policed by the Federal Communications Commission. That would permit punishment of network operators who interfere with their subscribers' ability to access and post any lawful content they please, to use any Web page, search engine or application (including voice and video programs), and to connect legal devices to the network.

Stevens defended those rules against Democrats who charged they were not extensive enough. If companies like Google, Microsoft and Amazon got their way, Stevens warned, "our costs for individual access to the (Internet) will double."

All the Republican committee members except Olympia Snowe of Maine voted against the more regulatory Net neutrality amendment. All the Democrats voted for it. The amendment was sponsored by Snowe and Byron Dorgan, a Democrat from North Dakota.