Washington – Back in the old days – say, three years ago – most online Americans were satisfied to dial up an Internet service provider to check their e-mail or look up recipes.
But today, the great majority have high-speed Internet access and want to do much more – exchange video clips, play interactive games, make phone calls, teleconference and download movies.
Broadband providers say these new demands are taxing the Internet’s aging infrastructure. To keep pace, companies must spend billions to upgrade networks and run fiber-optic cable into homes.
But who will pay for this makeover? Broadband subscribers? Phone and cable company shareholders? The Internet-based companies that offer customers advanced websites and services? That question is the most contentious aspect of a major telecommunications bill before Congress.
The lawmakers are battling over an issue with the confusing label of “net neutrality,” but the real buzzword to remember is “money” – who has it, who needs it and how Congress can help steer it to help improve the Internet.
The phone and cable companies want to get some of those billions from wealthy Internet-based companies, such as Google Inc. and eBay Inc., in exchange for faster delivery of their content.
Opponents say such tariffs would forever change the open nature of the Internet, where network operators have always handled content in a neutral way. They want Congress to block phone and cable companies from setting up “toll roads” that would provide premium delivery service for some content.
In Denver, Qwest’s chief executive officer Richard Notebaert said recently that companies should have the option to pay for a “competitive edge” online.
He said if a company paid Qwest extra to get faster service, it would be like retailer Lands’ End paying UPS to offer free delivery service to customers.
Data network company Level 3 Communications in Broomfield has not taken a position on network neutrality, chief executive Jim Crowe said at a March investor conference.
But the effects of making some pay more than others could be “problematic,” Crowe said.
Back in Washington, the issue largely splits along partisan lines, with Republicans siding with phone and cable companies, but enough Republicans support net neutrality to make it hard for Congress to pass legislation this year.
Levine said that if Congress stalls, companies will come up with compromises.
“At the end of the day, you’ll end up with some kind of negotiated settlement, probably with the (Federal Communications Commission) getting involved in some way,” he said. “There needs to be a solution.”
As recently as 2003, most home computer users reached the Internet via old-fashioned phone lines, but today, 72 percent get broadband service either through TV cables or phone companies’ digital subscriber lines, according to Nielsen/NetRatings, a research firm.
While the roughly 103 million home broadband users may want more advanced Web services, they may be reluctant to spend more than they do now, typically about $40 a month. Raising subscription prices would discourage many of the other 200 million Americans from ever going online or upgrading from dial-up service.
At a Senate hearing last month, AT&T chairman Ed Whitacre was adamant about the need to spread costs.
“This Internet is growing, and it’s growing at an astounding rate,” he said. “Somebody has to pay for that.”
Congress “cannot expect any company, my company or anyone else, to pour in these billions of dollars that are required without some return,” he said.
To boost return, network operators must impose fees for premium service, he argues. Under that scenario, if Google were to pay up, then its videos would download more quickly than, say, those from YouTube Inc.
Opponents believe such arrangements would lead not to a better Internet but a divided one. Big companies that could afford to pay “protection money” to network operators would flourish, while startups and nonprofit groups would get stuck on the networks’ “dirt roads,” where the pace is slow.
Last Wednesday, the Senate Commerce Committee tackled the net neutrality issue as it crafted a broader telecom bill. Sen. Olympia Snowe, R-Maine, sided with Democrats in supporting an amendment guaranteeing net neutrality, but the amendment failed to pass when the vote tied 11-11.
The bill will go to the Senate floor this fall.
Senate Democrats plan to use parliamentary procedures to block the telecom bill unless a tough neutrality amendment is attached.
A BROADBAND BOOM
Consumers are rapidly adopting high-speed Internet service
May 2005 ———— May 2006
Broadband users 78.5 million (57% of total) —- 102.5 million (72% of total)
Dial-up users 58.8 million (43% of total) —- 40.3 million (28% of total)
Source: Nielsen/NetRatings
