As the speed of the internet has grown, as its "bandwidth" has allowed it to carry large amounts of content at high speed, the internet highway has become an enormously lucrative commercial highway. It has also become much like a utility, in that its services are delivered primarily by cable operators and telephone companies, each industry operating in most markets as a de facto monopoly.



Now, those cable and telephone companies that are the internet service providers, or ISPs, are looking for additional revenue services beyond the subscription fees that they charge consumers each month. They are considering charging major content providers on the web a fee for massive use of their networks. Large websites such as Amazon, Google and Yahoo would be charged a fee for the amount of traffic they put into the web

pipelines.

Keep in mind, these providers already pay for their bandwidth. They pay for their connections to the Internet through various datacenters and connections to various backbone networks. Some don't do much to dispel the confusion their claims may cause, allowing people to think Google somehow isn't paying for their bandwidth usage already. All major content providers do pay, the issue at the heart of this debate is whether they will have to pay more due to their size, or suffer less-than equal treatment when an ISP's customers attempt to reach their sites.

Net Neutrality Comes to Center Stage

What has brought this issue to a head is the pending ability of broadband cable networks to deliver movies and other first run video programming over the internet. But the success of Google and Yahoo with their advertising revenue model and Amazon with its enormous retail presence has convinced the cable system operators that they are entitled to some of the revenue these companies are deriving from services delivered and transactions concluded over their networks - at no cost.

Thus "net neutrality" has become a buzzword on Capitol Hill and the focus of more than one proposed piece of legislation in the past eighteen months. One of the problems facing the lawmakers is that no one is exactly sure what net neutrality means. For the big content providers, it means no additional fees for their presence and availability on the internet. For the ISPs, it is a veiled term for regulated rates - or more accurately, the inability to create a rate structure for major websites.

The National Cable and Telecommunications Association (NCTA) has fought cable regulation for years, and sees net neutrality as another governmental threat. Says a spokesman, "For instance, does network neutrality mean that network operators can't block spam? Should network operators be allowed to stop viruses from spreading? Should large users of peer-to-peer software be allowed unlimited bandwidth so service for other users is slower?"

The major internet search engines and retail sites are active in their support for net neutrality, and they are joined by some likely allies including internet freedom of speech advocates, liberal organizations such as MoveOn and some libertarian organizations.

The legislative concern is that the monopolistic service providers would be in a position to favor some websites over others - and that providing unlimited high speed delivery capability to major sites will push other websites into slower lanes on the internet highway. There is also the possibility of ISPs denying some websites access to their networks altogether. These scenarios are viewed as an inherently unfair model subject to antitrust consideration, at least by some Democrats.

Google recently threatened to use antitrust lawsuits should net neutrality initiatives fail and they detect any signs of discrimination against their traffic.

Freedom of Speech or Freedom of Profit?

The philosophical issues are interesting. But more important in this issue are the potential business opportunities for both content providers and network operators. The telephone companies that have large numbers of high speed internet subscribers intend to get into the television business via the internet.

Yahoo and Google see opportunities in online video, and alliances between such websites and movie companies are a real possibility. The cable companies that provide internet service are also interested in proprietary pay-per-view services delivered via the internet. The service providers would like to see a "tiered" structure wherein they can charge large websites (with large revenue streams) a fee. In addition, they would like to get into the

content business themselves.

The ISPs argue that additional revenues are necessary in order for them to continue to invest billions in high speed networks to better serve their customers. They are finding some allies among hardware manufacturers, who see the implementation of a fee structure online as requiring additional in-home equipment. Some conservative Republicans are opposed to net neutrality as well, agreeing that the ISPs would be denied the ability to expand their networks without the additional revenue.

A Regulatory Conundrum

The FCC has left the issue alone. At one point, they dismissed the issue when raised by Amazon and other major web content providers, saying that regulation was unnecessary for activities that had yet to occur. Then Madison River, a telecommunications company in North Carolina, blocked internet telephone service over their telephone network which they used to deliver both internet access and telephone service. The FCC is no longer in a position to ignore the matter, as they will be the enforcement body for whatever rules emerge from the current debate

A bill addressing net neutrality that was proposed by Democrats failed in the House in April. However attitudes are shifting. In May, a seemingly bipartisan bill came out of the House Judiciary Committee that would add specific language to existing antitrust law guaranteeing net neutrality. The Judiciary bill would make it illegal under antitrust law for network operators to impose fees or to fail to provide their services on "reasonable and nondiscriminatory terms."

Further, the bill would bar ISPs from blocking or impairing internet sites. The house has two other pending bills as well, both emanating from Democrats. One of the proposals is from Congressman Ed Markey, a longtime expert on cable and telecommunications issues. He proposes to amend a telecommunications bill slated for consideration by both houses later this year.

On the Senate side, there is a major rewrite of the Telecommunications Act of 1996 underway and debate over this issue has made its way into the process. At the moment, the proposed bill includes language that charges the FCC with watching for potential violations of net neutrality and reporting its findings to Congress. This "when in doubt, commission a study" approach suits the NCTA perfectly. It's a good-government approach to continued non-regulation, and as the NCTA president told a Senate committee "This is the kind of issue that is most appropriately studied a lot more."