[DMCA-Activists] At Stake: The Net as We Know It

[Seth Johnson]

> http://www.businessweek.com/technology/content/dec2005/tc20051215_141991.htm


At Stake: The Net as We Know It


By Catherine Yang

DECEMBER 15, 2005


Google et al fear broadband carriers will tie up traffic with new
tolls and controls. Ultimately, it could mean a world of Internet
haves and have-nots


The Internet has always been a model of freedom. Today the Web is
flourishing because anyone can click to any site or download any
service they want on an open network. But now the phone and cable
companies that operate broadband networks have a different
vision. If they get their way, today's Information Highway could
be laden with tollgates, express lanes, and traffic tie-ups --
all designed to make money for the network companies.

That prospect is the worst nightmare of Internet stars such as
Google (GOOG) , Amazon (AMZN), and eBay (EBAY). They're gearing
up for a clash with the phone and cable giants early next year as
Congress begins to redraft the telecom laws for the broadband
era. The Internet gang fears that unless they get lawmakers to
intervene, the network operators will soon be able to put a
chokehold on the Web. "The issue is about the future of the
Internet," says Alan Davidson, Google's Washington policy
counsel.

BLOCKED OUT.  Doug Herring, 48, got a glimpse of that specter
last November. Traveling on business in Tennessee, the General
Electric (GE) sales manager phoned his wife at their Elberta
(Ala.) home. Herring had just signed up with Web-phone provider
Vonage Holdings and was pleased with the service. But this time,
he couldn't get through. He switched Web-phone providers, but
still couldn't make calls.

Frustrated, Herring contacted Madison River Communications, the
rural phone company that provides his digital subscriber line
(DSL) connection. The company said it was blocking calls from
Internet phone companies. Outraged, Herring and Vonage complained
to federal regulators.

"For me to get the Internet where I live, [Madison River] is the
only provider," Herring fumes. In March the Federal
Communications Commission fined the company $15,000, and the
carrier agreed it would no longer block Internet-calling
services.

INTERNET FIEFDOMS?  Most phone and cable companies are no longer
content just to sell Web access to consumers. After investing in
high-speed pipes, they also want to peddle more lucrative
products, such as Internet-delivered TV programs, movies, and
phone calls. "Building these networks is expensive," says Link
Hoewing, vice-president for Internet policy at Verizon
Communications (VZ). "If I can find new ways to pay for this
network, it's gravy for everyone."

But selling those extras puts the phone and cable companies in
competition with Web services big and small. The network
operators could block consumers from popular sites such as
Google, Amazon, or Yahoo! (YHOO) in favor of their own. Or they
could degrade delivery of Web pages whose providers don't pay
extra. Google's home page, for instance, might load at a creep,
while a search engine backed by the network company would zip
along.

"This new view of the world will break apart the Internet and
turn it into small fiefdoms" divided between the network
providers' friends and foes, says Vonage Chief Executive Jeffrey
Citron.

LOBBYING HEFT.  That's just crying wolf, retort the Bell and
cable operators. The Web companies' push for rules requiring
"network neutrality is a solution in search of a problem," says
Daniel Brenner, senior vice-president for regulatory policy at
the National Cable & Telecommunications Assn.

But recent court and regulatory rulings have given the carriers
more room to discriminate. In June, the U.S. Supreme Court ruled
that cable broadband services were almost free of regulation. Two
months later, the FCC granted the same liberty to the Bells'
broadband services. The FCC made two newly merged megaphone
companies -- created from AT&T (T) and SBC Communications and
Verizon and MCI (MCIP) -- vow to keep their Internet lines open
to all for the next two years. But FCC Chairman Kevin Martin
favors a light regulatory touch until he sees widespread abuse by
the networks.

Lawmakers updating the telecom laws are more likely to act. The
House Commerce Committee will probably vote early next year on
whether to require Net neutrality. And while Google and its
Internet brethren are the darlings of Wall Street and a Web-wild
public, these New Economy powerhouses could find themselves
outgunned in Washington. After decades as regulated carriers, the
Old Tech phone and cable companies employ legions of lobbyists
and funnel hefty checks into Congress's campaign coffers. Google,
by contrast, just hired Davidson, its first lobbyist, in June.

BANDWIDTH ROAD HOGS.  For their part, the phone and cable
companies protest that they have no plans to use their pipes
unfairly. Madison River is the only carrier known to have blocked
rivals or degraded their service. "We have no intention of
controlling where you can and can't go on the Internet," says
Bill Smith, chief technology officer at BellSouth (BLS). "If
[phone companies] restrict where people go on the Net, they'd
leave in droves" for cable competitors.

Yet in a Nov. 7 interview with BusinessWeek Online, AT&T CEO
Edward Whitacre Jr. declared: "What [Google, Vonage, and others]
would like to do is to use my pipes free. But I ain't going to
let them do that." Whitacre and AT&T argue that they need
flexibility to exact a toll from Web services that hog bandwidth.

As broadband use grows, the Bells and cable companies say that
intensive users aren't paying their fair share. File-sharers
swapping music and movies account for 60% of North American
residential broadband use, estimates Dave Caputo, CEO of Sandvine
in Waterloo, Ont., which sells technology to manage network
traffic. "Your overeaters get preferential treatment over weaker
ones," he says.

IT'S OUR NET.  Carriers could raise their prices for consumers
who clog the network. But when Korean phone giant KT noted that
5% of its users accounted for half of its traffic and floated the
idea of volume pricing earlier this year, the public outcry
quickly quashed any plan.

So the network operators figure they can charge at the source of
the traffic -- and they're turning to technology for help.
Sandvine and other companies, including Cisco Systems (CSCO), are
making tools that can identify whether users are sending video,
e-mail, or phone calls. This gear could give network operators
the ability to speed up or slow down certain uses.

That capability could be used to help Internet surfers.
BellSouth, for one, wants to guarantee that an Internet-TV viewer
doesn't experience annoying millisecond delays during the Super
Bowl because his teenage daughter is downloading music files in
another room.

WINNERS AND LOSERS?  But express lanes for certain bits could
give network providers a chance to shunt other services into the
slow lane, unless they pay up. A phone company could tell Google
or another independent Web service that it must pay extra to
ensure speedy, reliable service.

That could result in an Internet of haves, who can afford to pay
the network operators more to ensure smooth service, and
have-nots. Trouble is, those have-nots may include the Next Big
Thing -- whether it be mom-and-pop podcasting or video blogging.
The fewer innovative services on the Net, the less reason Web
users have to want broadband. Both the network operators and the
Internet could lose out in the end.