In mid-2005, a U.S. Supreme Court decision and a Federal Communications Commission ruling basically deregulated how phone and cable companies handle broadband Internet traffic.
Video, music, e-mail, Web browsing and voice transmissions all continue to move freely and equally across the pipes the telecom and cable companies own. But soon after the rulings, phone company executives began talking about creating a tiered program of paid access to the Internet. The CEOs or top executives of AT&T, Verizon Communications and BellSouth (now part of AT&T) have spoken in general terms about dividing the Internet pipelines into fast lanes and slow lanes, with fees to be charged for those who wanted fast-lane priority. (Cable network owners haven't said as much.) Applications such as video sharing and voice over Internet protocol use more bandwidth than other traffic, they argue. This situation, they have said, will force them to invest much more in their networks.
These words rang alarm bells for consumer groups and Internet companies. They say any fast lane/slow lane plan will undermine innovation, investment and competition. A tiered Internet system would hurt small Web operators who can't afford extra fees, they say. They also fear that telecom and cable companies might block or slow the services of their rivals.
The phrase for the status quo is network neutrality. For now, the Internet remains neutral. In January, U.S. Sen. Byron Dorgan, D-N.D., and Sen. Olympia Snowe, R-Maine, introduced the Internet Freedom Preservation Act. It would prevent a fee-based or tiered Internet.
On Thursday, the FCC voted to launch an inquiry focusing on whether there is a need for the agency to adopt regulations to ensure network neutrality.
IBD invited two leaders in this battle to a pro-con debate, with questions submitted and answers received via e-mail. Josh Silver is the executive director of FreePress.net, a nonprofit group behind the pro network neutrality Web site SavetheInternet.com.
Michael McCurry is a partner in Public Strategies Washington and co-chairman of Hands off the Internet (handsoff.org/blog), which supports the position of telecom and cable firms. He's former press secretary to President Bill Clinton.
IBD: Why should I care whether the Internet remains neutral?
Silver: Until a 2005 FCC decision, net neutrality has always been the law, preventing cable and telephone companies that deliver the Internet from discriminating content based on its source, ownership or destination. A neutral network allows consumers to continue to decide the winners and losers in the content marketplace based on the merits of a Web site or service. Eliminating net neutrality will undermine innovation, investment and competition. It would take the decisions away from millions of users and puts it in the hands of a small cartel of telecom executives with a strong financial incentive to undermine the free market. For all their talk about "deregulation," the cable and telephone giants don't want real competition. They want special rules written in their favor.
McCurry: If you want more affordable Internet access, then you have to be concerned about higher prices from neutrality regulation. A net neutrality law would let Google, Amazon and other large online companies avoid paying for their share of online bandwidth. Typical Internet users would end up paying those costs, as well as the huge ongoing costs for deploying high-speed networks capable of carrying TV, video and other entertainment. Let's be clear: It's wonderful that so many imaginative new services are migrating to the Net. But basic economics, not to mention common sense, suggests government should not try to micromanage how the future Internet gets built, particularly at the expense of ordinary consumers who won't get to choose if the government decides.
IBD: Who supports your point of view?
McCurry: Many of the Internet's founders are speaking out against new regulation. This includes David Farber, who Wired once called the "Paul Revere of the Digital Revolution" and Robert Kahn, co-designer of the TCP/IP system (that enables the Internet). The 700,000-member Communications Workers of America also opposes new regulations. Its members are on the front lines of our broadband rollout, so they're acutely aware of the need for job-creating network deployment. These are the true independent experts that lawmakers, particularly Democratic lawmakers, should listen to.
Silver: Everyone except for phone and cable companies who stand to make billions by eliminating it. Anti-net neutrality spin doctors have spent countless millions on slick PR to convince us that it's a battle between corporate titans like Google and AT&T. In reality, the debate pits nearly every industry that uses the Web: banking, real estate, small-business associations, travel, search engines, retailers and gamers — to name a few — against the largest phone and cable companies.
The issue spawned the most successful online grass roots campaign ever. In 2006, the SavetheInternet.com Coalition, (launched by my organization Free Press which receives no money from corporations) engaged more than 850 organizations, educators, librarians, consumer advocates and groups as diverse as MoveOn.org on the left and the Christian Coalition on the right. More than 6,000 bloggers and tens of thousands of YouTubers joined the fight.
IBD: What might happen if laws are written that keep the Internet network neutral?
Silver: The Internet will continue as the leading engine for global economic growth, market innovation and free speech. It will allow Americans to break the current bottleneck on access and distribution of TV, radio and phone service, which is currently controlled by a few major corporations. It will ensure competition, allow all businesses to maximize their use of the Internet, and as broadband connection speeds increase, allow every Web site to become a digital TV or radio network, fostering more innovation, accountability, critical journalism and news coverage of local issues. Last December, AT&T agreed to net neutrality for two years as a condition of their merger with BellSouth, discrediting another of their unfounded claims: that Net neutrality cannot be defined or enacted as policy.
McCurry: Look at the plain text of the Senate bill. Since the language is so vague, the sponsors admit that the guiding regulations will have to come from government attorneys, who will be charged with enforcing the law. FCC attorneys and judges will substitute their judgments about emerging technologies in place of the Internet's natural evolution. That invites not only micromanagement and litigation, but long-term unintended consequences that hurt the Internet's growth. In short, it will be a legal and bureaucratic mess that rolls back the recent progress in making Internet access costs more affordable.
IBD: And what if phone and cable companies are allowed to develop a tiered network?
McCurry: Consumers will benefit as the Internet maintains its traditional openness and the Digital Divide continues to close. Look, let's remember that existing laws on unfair competition, antitrust and communications can be enforced to ensure that consumers enjoy an open Internet. But the key difference is that these laws don't overstep into micromanaging technology or emerging business models. This restraint is what has helped produce an investment climate in which companies are committing tens of billions to bring new, faster access choices to consumers — with large online companies sharing that cost. By turning aside neutrality regulation, Congress will send a signal that Google, Amazon and the other companies backing the net neutrality movement can't exempt them from this cost.
Silver: Phone and cable companies will become the gatekeepers of the Internet, just as cable companies are with TV. They alone will have the power to decide what content you can find online, what content you can't find, and which content loads fast and slow. Their profits will go from high to astronomical, and they will do what several of their CEO's have admitted in the pages of the Washington Post, Wall Street Journal and BusinessWeek: they will discriminate in favor of the companies and Web sites that pay their added tolls for fast access. They will create a cartel of Internet content providers against which no startup will ever have a chance. They will marginalize the thriving democratic culture of Internet communication and establish their business model as the No. 1 priority for the future of the technology.
IBD: Would laws that maintain network neutrality foster or hinder Web competition and innovation?
Silver: Competition and innovation have thrived on the Web because the Internet has always been a neutral network. This is a competitive market in its truest form, where barriers to entry are low and everyone in the marketplace is equal. Remove neutrality, and the market tips in favor of the network owners. College kids created Google. A hobbyist conceived the idea for eBay. A teenager wrote the code for Instant Messaging. Innovation continues because the Internet is an unrestricted free marketplace of ideas where entrepreneurs rise and fall on their merits.
McCurry: The fatal problem with neutrality regulation is that it forces new advanced communications networks to become essentially "dumb pipes." Online services would become tied down in government regulations that hinder creativity and innovation. That would be bad news for all businesses, large or small, that are based on the need to give consumers access to higher-quality material than is possible with the standard public Internet. Services as diverse as public broadcasting and sporting events require a much higher level of bandwidth service than ordinary e-mail does. But "neutrality" rules would put, for example, a PBS feed from Lincoln Center that a consumer orders on par with spam.