Tuesday, May 16, 2006

Neutrality Net-Net

A topic that’s been getting a lot of play in Internet circles lately is “Net Neutrality.” Basically, net neutrality means that Internet service providers have to treat everyone who uses their networks equally, and not give either preferential or punitive treatment to any customer(s). But, while net neutrality has been the law for years, the big telecom companies want to get rid of it. Both Ed Whitacre of AT&T and Ivan Seidenberg of Verizon have been quoted on several occasions asking why they can’t charge more to big users of their bandwidth like Yahoo and Google.

On the surface, the argument has some merit: Everyone pays more as they use more electricity, so why shouldn’t the same thing go for Internet access—the more you use, the more you pay. The interesting thing is that Internet access works exactly this way already. Content providers such as Yahoo and Google don’t get Internet access for free. They have to pay for bandwidth, which they buy from Internet Service Providers. The two largest ISPs are…you guessed it, AT&T and Verizon. On the other end of the Internet, we’re paying for high-speed bandwidth and connectivity, and the companies that control consumer DSL access are…wait, let me guess…AT&T and Verizon.

In other words, AT&T and Verizon are already making money on both ends of the connection, from the content providers and consumers. Apparently, that’s not good enough. Of course, the telcos argue that they’re not going to turn off access to content providers that don’t pay, they’re simply going to give more bandwidth to those providers that do pay. Here’s a potential scenario:

Company “S,” which offers free or low-cost VoIP service (which it’s already paying the ISPs to offer,) is told by the telcos that it either has to pay more or lose some of its available bandwidth. If it loses the bandwidth, its quality of service will deteriorate, and customers will switch to competitors. If it pays more, it has to recoup those costs somehow, so it has to convert some of its free services to paid, raise the prices of its existing paid services, or both. Any of these outcomes will make its services less competitive with the local and long distance services offered by the telcos.

If the telcos came out and said that their intention is to put their competitors out of business, there would be a huge outcry, but by simply “charging more for using more,” they can obtain the same outcome. Also, by making the content providers, not consumers, responsible for footing the bill, they can deflect criticism that their actions are “anti-consumer.”

As with most things related to the telecom industries, the interests with the most money to contribute to politicians are the ones with the greatest probability of success, and the phone companies take a backseat to no one. Of course, if enough people write their Congresspeople and email the FCC, they could change the outcome. After all, if three people and a form letter can get the FCC to rule that a television show is indecent, surely thousands of emails and letters from outraged consumers will get action, right?

Don’t count on it.
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