Senator: Net neutrality may not happen

Senate Commerce Chairman Ted Stevens seems lukewarm to mandatory Net neutrality, and analysts say it's not a good idea.

Declan McCullagh Former Senior Writer
Declan McCullagh is the chief political correspondent for CNET. You can e-mail him or follow him on Twitter as declanm. Declan previously was a reporter for Time and the Washington bureau chief for Wired and wrote the Taking Liberties section and Other People's Money column for CBS News' Web site.
Declan McCullagh
3 min read
A key senator said Tuesday that a much-anticipated proposal to overhaul U.S. telecommunications laws may not require network providers to follow Net neutrality principles.

Ted Stevens, the Alaska Republican who chairs the Commerce Committee, told reporters that he supports the idea of Net neutrality--that is, legally requiring network providers to treat everyone equally--in principle.

"But I don't know yet what's going to be in the bill," Stevens added, according to a transcript. "It's going to take votes of the committee to put things in the bill. We're going to have an enormous number of items that people want to put in."

Because Stevens' committee is the Senate panel responsible for updating the 1996 Telecommunications Act, his lukewarm endorsement of Net neutrality could be a setback for companies that have been pressing for it to be mandated by law. Google, Microsoft, Yahoo, eBay, Amazon.com, Skype and liberal advocacy groups have been pressing Congress for strict laws in this area.

Net neutrality, also called network neutrality, is the idea that the companies that own the broadband pipes should not be able to configure their networks in a way that plays favorites--allowing them, for example, to transmit their own services at faster speeds, or to charge Net content and application companies a fee for similar fast delivery.

Executives at Verizon Communications, BellSouth and the newly merged AT&T and SBC Communications have recently talked about the desirability of a two-tiered Internet in which some services--especially video--would be favored over others. Those companies are spending billions to improve their networks and appear to be trying to find new sources of revenue.

During an afternoon hearing before Stevens' committee, some Wall Street analysts expressed skepticism that aggressive new laws on Net neutrality were necessary.

"The very idea that third parties who benefit from Internet infrastructure investments--say, Google and Yahoo--might economically contribute in some way to these costs has been roundly greeted as if it is a threat to basic liberties," said Craig Moffett, an equity research analyst at Sanford Bernstein who studies the cable and satellite sector.

If some of the current proposals for Net neutrality were enacted, it would, Moffett said, "likely trigger a host of unintended consequences. Mandated 'Net Neutrality' would further sour Wall Street's taste for broadband infrastructure investments, making it increasingly difficult to sustain the necessary capital investments."

Sen. Ron Wyden, an Oregon Democrat, introduced a bill this month that would bar network providers from blocking or degrading Internet connections and favoring those of companies that pay for peppier access.

Aryeh Bourkoff, managing director and senior analyst at UBS who follows the cable TV, satellite and entertainment sectors, also testified that a welter of regulations would be premature.

"I believe that it is too early to introduce regulation on key issues such as a la carte packaging and pricing and on Net neutrality as the market is still in its early stages," Bourkoff said. "Instead, I feel that at this point it is essential that market forces and consumer demand drive the economic model."

In a statement released this month, Cisco Systems said it supported the general principles of Net neutrality but also warned that "imposing specific network neutrality rules now to address hypothetical problems would only compound the problem." Rather, Cisco said, the Federal Communications Commission could take specific actions if warranted--even without new legal authority.