The Coming Tug of War Over the Internet

Do you prefer to search for information online with Google or Yahoo? What about bargain shopping -- do you go to Amazon or eBay? Many of us make these kinds of decisions several times a day, based on who knows what -- maybe you don't like bidding, or maybe Google's clean white search page suits you better than Yahoo's colorful clutter.

But the nation's largest telephone companies have a new business plan, and if it comes to pass you may one day discover that Yahoo suddenly responds much faster to your inquiries, overriding your affinity for Google. Or that Amazon's Web site seems sluggish compared with eBay's.

The changes may sound subtle, but make no mistake: The telecommunications companies' proposals have the potential, within just a few years, to alter the flow of commerce and information -- and your personal experience -- on the Internet. For the first time, the companies that own the equipment that delivers the Internet to your office, cubicle, den and dorm room could, for a price, give one company priority on their networks over another.
This represents a break with the commercial meritocracy that has ruled the Internet until now. We've come to expect that the people who own the phone and cable lines remain "neutral," doing nothing to influence the content on your computer screen. And may the best Web site win.
For more than a year, public interest groups, including the Consumer Federation and Consumers Union, have been lobbying Congress and the Federal Communications Commission to write the concept called "network neutrality" into law and regulation. Google and Yahoo have joined their lobbying efforts. And online retailers, Internet travel services, news media and hundreds of other companies that do business on the Web also have a lot at stake.
Meanwhile, on the other side, companies like AT&T, Verizon and BellSouth are lobbying just as hard, saying that they need to find new ways to pay for the expense of building faster, better communication networks. And, they add, because these new networks will compete with those belonging to Comcast, Time Warner and oth er cable companies -- which currently have about
55 percent of the residential broadband market -- this will eventually bring down the price of your high-speed Internet service and television access.
Would these new fees imposed by carriers alter the basic nature of the Internet by putting bumps and detours on the much ballyhooed information superhighway? No, say the telephone companies. Giving priority to a company that pays more, they say, is just offering another tier of service -- like an airline offering business as well as economy class. Network neutrality, they say, is a solution in search of a problem.
Maybe you've never heard of this issue -- and if so, you're far from alone. In my job as a media analyst, I've been talking in recent weeks to lobbyists for some of Hollywood's major entertainment conglomerates. These are people who know that consumers' ability to download their studios' movies and television shows as easily and cheaply as anyone else's will be key to the studios' future profits. Yet hardly any of them were more than vaguely concerned about the potential ramifications of network neutrality.
But lately the issue, a matter of heated debate on obscure blogs and among analysts like me, has begun to attract the attention of the mainstream press. There are a couple of reasons.
One is that Congress is taking first steps toward updating and rewriting the Telecommunications Act of 1996, a key legal underpinning for media, telecommunications and Internet activity. This process, required by technological advances, will probably take a year to complete.
More dramatically, executives at AT&T and BellSouth got into the headlines recently with a series of audacious statements. In a November Business Week story, AT&T Chairman Edward E. Whitacre Jr. complained that Internet content providers were getting a free ride: "They don't have any fiber out there. They don't have any wires. . . . They use my lines for free -- and that's bull," he said. "For a Google or a Yahoo or a Vonage or anybody to expect to use these pipes for free is nuts!''