Net Neutrality Faces Uncertain Future

As lawmakers gear up to debate the notion of passing legislation to ensure so-called net neutrality, an alternative approach to create a two-tiered Internet -- something many Web companies say will put them at a disadvantage -- appears to be gaining momentum.

The House of Representatives was expected to begin debate Thursday afternoon on a bill that would enable a two-tiered system, with guaranteed free access for certain types of Web services but with network owners retaining the ability to set prices for high-bandwidth services such as Web video.

Supporters of net neutrality are hoping that amendments will be added to that bill that will guarantee them access to the networks.

With the battle about to be joined in earnest, lobbying on Capitol Hill and elsewhere took on added urgency. Google (Nasdaq: GOOG) published an open letter, imploring its users to contact lawmakers to express support for net neutrality, which Google and others say is needed to ensure that consumers have access to Web services.

Without the legislation, those companies fear that the owners of the high-speed networks through which most American gain Internet access -- namely cable and telephone companies -- would begin to charge exorbitant fees to let Web companies deliver video or other high-value services.

The debate is likely to take some time to unfold, not just in the House, but also in the Senate, which has spent less time focusing on the issue so far and where individual lawmakers -- including New York Senator Hillary Clinton -- may propose their own versions of legislation that would then have to be reconciled with any action taken in the House before a bill could be sent to President Bush.

Taking Sides

Still, no one with a stake in the battle was wasting any time trying to garner support from lawmakers or the general public.

Google's open letter posted on its Web site warned users that "the Internet as we know it is facing a serious threat." The company also offered links to contact lawmakers or sign digital petitions.

"Today the Internet is an information highway where anybody -- no matter how large or small, how traditional or unconventional -- has equal access," Google CEO Eric Schmidt wrote in the letter. "But the phone and cable monopolies, who control almost all Internet access, want the power to choose who gets access to high-speed lanes and whose content gets seen first and fastest. They want to build a two-tiered system and block the on-ramps for those who can't pay."

Google and its Web brethren have been joined by liberal activist group MoveOn.org and others, while conservative and free market groups have lined up in opposition to legislation guaranteeing neutrality.

A group calling itself the Internet Freedom Coalition called such moves "innovation-stifling regulation" that "flies in the face of Internet providers' property rights."

"Net neutrality is dangerous industrial policy," said Jason Wright, an IFC co-founder and president of the Institute for Liberty.

No Problem

The telecommunications industry has called net neutrality legislation a solution seeking a problem and says that there have been no instances of network owners attempting to charge exorbitant fees to Web companies. It also says that it needs to have flexibility and the right to recoup the billions of dollars companies have spent to wire the country with high-speed fiber optic networks.

The Federal Communications Commission (FCC) has confirmed that it knows of no such complaints and has said it could take action against companies that were found to be acting unfairly.

Other concerns include what would amount to censorship in a two-tiered Internet. For instance, some say non-profit groups may be unable to deliver their messages if forced to pay high rates for the right to use fiber networks.

So far, the legislation that enjoys some of the strongest support is a bill that would make it an antitrust violation to unfairly charge for network access, a move some lawmakers say is necessary because 98 percent of U.S. Internet users get broadband access from either telephone or cable companies, creating a "virtual duopoly."

Pro-neutrality advocates are overstating things by claiming the death of the Internet is imminent, JupiterResearch analyst Joseph Laszlo said. Still, he said, the need for broadband companies to stay profitable even in the face of more direct competition from Internet services companies may prompt them to seek to charge Web companies for guaranteeing them high-speed access to customers.

A more likely scenario, he added, is for broadband companies to recognize that consumers will be willing to pay for the bandwidth they use, setting up the possibility that broadband providers offer more measured service, with those who mainly send e-mail and view Web pages able to pay less than those using bandwidth-hogging services such as video or interactive gaming.