Enterprise executives quietly fret about net neutrality's future and its impact on their budgets.Collier County, which is tucked in the southwest tip of hurricane-prone Florida, reaches deep into the Internet for its taxpaying customers: culling weather data to prepare for the frequent storms, Googling for tech support, even comparison-shopping for the best deal as county officials buy fleets of cars.
But those efforts could become cost-prohibitive if network operators—namely, the Bell telephone companies and cable companies that serve as ISPs—begin charging fees for sending traffic in addition to the traditional fees charged to access the Internet. Such a pricing scheme would effectively create a toll lane for content and application providers willing to pay a premium, allowing ISPs to prioritize traffic as they choose.
Network operators got a step closer April 26, when a committee of the U.S. House of Representatives approved legislation that would support such a pricing plan. However, there still are several hurdles to clear before the full House, which entered the debate earlier this year, votes on the measure in early May.
At issue is the concept of net neutrality, which holds that operators cannot give preferential treatment to content or applications in which they have an interest and that users have a right to use the Internet in a nondiscriminatory, unrestricted fashion.
For organizations that rely on the Internet to reach customers or constituents, an end to net neutrality would mean the prospect of paying a content-based fee to every ISP serving those customers. Enterprises that send the highest volumes of data, such as financial institutions, would face the highest prospective fees. High-ranking IT executives of large corporations contacted for this story said such a move would not only impact their budgets but also restrict the Web-enabled applications they could develop. Despite those concerns, they declined to be named in the story.
The debate has mobilized a massive lobbying campaign by the network operators and a countercampaign by nonprofit organizations, content providers, free-speech advocates and others. Enterprise customers, however, haven't joined the lobbying fray.
"Gradations of content are very important," said Mike Berrios, network operations manager for Collier County, adding that the Internet's open architecture encouraged the creation of myriad weather-related sites that emergency planners depend on. If the number of such sites were to fall because of rising costs, planners would lose vital information, Berrios said.
In addition, open architecture gives his team the freedom and flexibility to create ever-improving services for the county.
"When you start having to think about what [content and applications] might be restricted from a cost perspective, it makes it much more difficult to pursue them," said Berrios in Naples. "I pay for my Internet services. I pay my ISP every month for a certain amount of bandwidth. How I use that bandwidth shouldn't make any difference."
ISPs say they need to establish a new revenue stream to support continued improvements in the broadband infrastructure—an argument that has won support from many lawmakers who fear the United States is lagging behind the rest of the world. But critics say the scheme would give ISP-affiliated services an unfair advantage, ultimately restricting content and discouraging the development of competing applications.
Until 2005, Americans did not have to worry about network operators having a say in how customers used bandwidth. The United States had a long tradition, backed by law, that prevented operators from interfering with or discriminating against the content they carry. The tradition was codified in the telephone companies' common carriage obligations, which evolved into the principles of neutrality on the Internet.
Next Page: AT&T chairman's famous quip.
The first hints that all that could change came last fall from top executives of the country's largest telephone companies. In a now-famous quip, Ed Whitacre, chairman of AT&T, said in November that content providers were using his lines for free. "For a Google or a Yahoo or a Vonage or anybody to expect to use these pipes for free is nuts," Whitacre said.
A few weeks later, BellSouth Chief Technology Officer William Smith said the Internet should become a "pay-for-performance marketplace."
The controversial comments closely followed the government's approval of SBC Communications' acquisition of AT&T Corp. and Verizon Communications' acquisition of MCI in late October. SBC, which renamed itself AT&T Inc., is now awaiting approval of its latest acquisition target, BellSouth.
That the Bells revealed their tiered pricing plans as they were consolidating is no coincidence, critics say.
"There's nothing wrong with the concept of offering classes of service that might involve [quality of service] or different delivery times," said Lee Selwyn, president of Economics and Technology, in Boston. "What you want to do is make sure that the basis for that differentiation is not an exploitation of market power but a reflection of cost differentials that can be vetted through a competitive market. The concern that we have is that, as you eliminate competition, you can use prioritization as a means for discriminating on the basis of value to the customer."
The most vocal opposition to the tiered pricing plan has come from large content providers, which would be the first targets for premium fees. The CEOs of Amazon.com, eBay, Google, Yahoo, Microsoft and IAC/ Interactive are urging Congress to pass a bill limiting network operators' ability to manipulate what content and applications users have access to.
However, tiered pricing plans eventually would likely extend to all enterprises that rely on applications requiring high bandwidth and low latency, such as VOIP (voice over IP), collaboration and streaming video.
"It's a reasonable guess that if the network is divided into a fast lane and slow lane, increasingly the slow lane will be inadequate for the kinds of things people want to do on the Internet," said David Isenberg, a fellow at The Berkman Center for Internet & Society at Harvard Law School, in Cambridge, Mass. "Anybody who's serious about using the Internet for work purposes is probably going to want the fast lane."
In a pay-for-performance Internet, enterprises would have to worry not only about paying a premium to have their content delivered but also about paying a premium to several different ISPs at once.
"Any time the enterprise goes onto the Net or they do a little bit of e-commerce, they want to be able to reach all of their customers," Isenberg said. "They don't want to have to pay three different terminating ISPs in order to reach three sets."
The potential for the Bells to extend their market dominance from transport to content raises not only economic alarms but also First Amendment concerns. A diverse group of free-speech advocates and nonprofit organizations have joined large content providers to fight for enforceable rules on nondiscriminatory delivery.
Next Page: SavetheInternet.com Coalition doubles in size.
As Congress prepared to address the net neutrality controversy last week, the SavetheInternet.com Coalition doubled in size.
"Everybody with a Web site on the Internet is a content provider," said Gigi Sohn, president of coalition member Public Knowledge, based in Washington. "There is, at best, a duopoly in broadband service. We would like a pro-competitive safeguard against the inevitability of a problem occurring."
The telephone companies insist they do not intend to block any legal content. In sworn testimony before the House Committee on the Judiciary April 25, Walter McCormick, head of the telcos' main lobbying group, repeatedly said that premium service proposed under a tiered pricing plan is akin to special enterprise offerings such as VPNs, and it is not an effort to restrict content.
"We will not block, impair or degrade content, applications or services. If you can go there today on the Internet, you can go there tomorrow," said McCormick, president and CEO of the U.S. Telecom Association, also in Washington. "I don't think this is any different from what has historically been done in our networks."
However, the underlying concern is not about blocking, which would almost certainly raise the ire of policy-makers, but about the potential for subtler discrimination and for interfering with categories of traffic in ways that would be difficult to discern.
Calling the telcos' plan for a two-tiered Internet "a Tony Soprano model of networking," Timothy Wu, a professor at Columbia Law School, in New York, said it resembles a protectionist scheme.
"Degradation is the central issue here," Wu told the Judiciary Committee. "Their plans are to give favorable treatment to the companies they make deals with. The obvious point is that it distorts competition."
The net neutrality legislation, which the House Committee on Energy and Commerce approved April 26, is a small part of a telecom reform bill, the Communications Opportunity, Promotion and Enhancement Act of 2006. The bill focuses mostly on requirements that telcos will face as they attempt to compete with cable companies in the residential video market.
The neutrality provision gives the Federal Communications Commission the authority to enforce a set of principles that the agency adopted last fall in a Statement of Policy on Internet Openness. The FCC could adjudicate complaints brought to it on a case-by-case basis, but it would be prohibited from issuing regulations to prevent discrimination.
The bill's main sponsor, Rep. Joe Barton, R-Texas, said the measure "seeks to strike the right balance between ensuring that the public Internet remains an open, vibrant marketplace and ensuring that Congress does not hand the FCC a blank check to regulate Internet services."
Opponents say the bill will not preserve an open Internet because the FCC principles do not adequately address discrimination, and they do not prevent ISPs from charging fees that would be prohibitive for startups. Rep. Ed Markey, D-Mass., who failed in an attempt to amend the bill to prohibit two-tiered pricing, said the measure "will stifle openness, endanger our global competitiveness, and warp the Web into a tiered Internet of bandwidth haves and have-nots."
Online Media 
