Internet, Interrupted

By Craig Aaron
Financial Times

Telephone companies in the US that provide broadband internet connections are starting to tread on dangerous ground. They are mooting charging companies that provide internet services such as telephony and video-downloading fees to ensure a speedy and high-quality connection.

The phone companies such as BellSouth and Verizon Communications say it is expensive to build networks, such as Verizon's new fibre-optic connection to homes and offices, and they need to recoup their investment. They also say that some services — notably online gaming and video — take up a lot of bandwidth and capacity.

The effect of this discrimination would be to create a two-tier internet: users would find it easier and quicker to connect to services provided by the companies that paid such fees than others. Invisibly, customers would be steered towards these "approved" services, including those provided by the phone companies themselves.

There are a couple of obvious flaws in the phone companies' case. One is that they are already being paid by customers to provide the network connection: home users typically pay between $25 and $40 a month for a DSL or cable high-speed internet connection in the US. There is nothing to stop the companies charging more to customers who use the most bandwidth.

The second flaw is the idea that network capacity is hugely limited. The speed of internet connections, not only in the US but in other countries, has been rising and advances in technology will ensure that this continues. The suggestion that internet telephony companies such as Vonage are hogging broadband capacity unfairly owes more to phone companies' efforts to raise their profits than reality.

Phone companies have already been stopped by the Federal Communications Commission from crudely blocking services that do not suit them. After fining phone companies that tried to block Vonage, the FCC adopted a set of broadband deployment principles in August that protect consumers' rights to run internet applications and services of their choice.

The phone companies are now taking a second run, in a subtler manner, by proposing to provide a fast-lane for those who pay. This could add up to the same thing. Instead of providing a connection that can be used by all — not only large companies such as Google but small start-ups and individuals — the phone companies would be ranking different services.

That approach would be unfortunate even if there were free competition among broadband providers. At least consumers could then select a provider that offered open access. But, in practice, most people at best have a choice between a DSL and a cable internet connection. The FCC, and other communications regulators, should ensure that utilities do not distort internet services for their own ends.


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