4 min read

Test Of Net Neutrality

Telecom companies want to change long-standing practices that treat all network traffic equally. Businesses could face application degradation-- or higher prices.
Question Of Motive
Network operators have a selfish motive: They're expanding into new, media-rich services such as video programming for which they must reserve network bandwidth. Verizon plans to use as much as 80% of its network capacity to carry its own content, according to documents filed with the FCC. AT&T, BellSouth, and other carriers insist the rest of the Internet will continue to work as it does now, but Internet companies are concerned.

"We're OK with them providing [content], just so long as they don't use their underlying technical network to prioritize their content over others'," says Paul Misener, Amazon's VP of global public policy. "We're not trying to overtake their network or even compete with it. But if they're going to start injecting video, they should allow others to inject it on the same terms."

Businesses could be hurt by content discrimination in any number of ways. The quality of voice- and video-over-IP applications could suffer if they were pushed down on the priority lists of network operators, as would XML-based apps and hosted software such as SAP's new CRM offering, which eat up bandwidth.

Large, sophisticated IT departments may be able to absorb network-service changes better than others. "Anything that would go out over the Internet, we have a strategy to deal with that," says an airline IT exec, citing his company's use of multiple carriers and dedicated transmission lines.

Businesses, of course, already pay to plug into the Internet and to pipe voice and data over wide area connections. What we're talking about here are added costs, though no one's sure just how much. "They're already charging us for the access," says Newegg's Tong. "The beauty of the Internet is that it's free except for the access costs."

Phone companies pound the point that they're spending tens of billions of dollars to build out the fiber-optic networks that carry all the voice, data, and video that's flying in every direction. Even so, the likes of AT&T and BellSouth say their networks could become congested, and they're looking for ways to fund expansion. "There's a recognition that building the next-generation information network is expensive," BellSouth's Ross says.

Carriers have said they won't impede, alter, or block traffic, but they have been known to wield excessive control over what flows over their networks. Madison River Communications, a small phone company and DSL provider, was fined last year for blocking Vonage Holding's VoIP traffic, prompting Vonage to cite concern at the public hearings last week about the potential for further abuse. A discriminatory network model could cause consumers and small businesses to shy away from providers like Vonage that rely on network neutrality to compete.

Question Central
Last week's hearing led to an overflow crowd at the Dirksen Senate Building in Washington. "There's going to be more questions coming out of this hearing than there will be answers," Sen. Conrad Burns, R-Mont., told a panel of stakeholders that included Google's Cerf, Vonage co-founder Jeffrey Citron, and top execs of two carrier industry groups.

Lawmakers already are putting down the ink. A bill by Sen. John Ensign, R-Nev., sides with open Internet advocates, while the House Energy and Commerce Committee Subcommittee on Telecommunications late last year issued draft legislation that would give more control to carriers. The issue easily could drag on for another year, Sen. Ted Stevens, R-Alaska, predicted after the hearing.

Carriers have the upper hand today. Says U.S. Telecom Association CEO Walter McCormick, "'If you want more, then you pay more' is as American as it comes." Momentum could still shift the other way, but money may hold sway over Internet neutrality.