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Congress Addresses Net Neutrality in Telecommunications Bill

June 22, 2006 at 6:30 PM EDT
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AD ANNOUNCER: They call their idea net neutrality. Clever name, bad idea.

JEFFREY BROWN: As an ongoing ad campaign shows, there are few neutral parties in the battle over so-called “network neutrality.” The central question: whether all content on the Internet is created equal.

The issue has led to a raging debate on Capitol Hill over proposed new regulation that would prevent a two-tiered Internet in which companies might pay more for faster delivery of their content.

The proposal has created divisions within the two political parties and pit some of the largest global communications and Internet companies against one another.

On one side are the companies that provide businesses and consumers with Internet access: telecommunications giants such as AT&T, Verizon and Bellsouth, and cable companies like Comcast. This group argues that the costs of an expanding Internet should be borne in part by the Internet companies using ever more of the space, for example, to send video.

AD ANNOUNCER: They want to stick consumers with the bill.

JEFFREY BROWN: An industry-funded advocacy group, HandsOff.org, is waging a TV ad campaign and has taken out full-page print spots, including one in today’s Washington Post singling out Google by name.

Google is, in fact, a leading member of the opposing, equally powerful coalition in this battle that is calling for new regulation, and includes Microsoft, Yahoo, Amazon and eBay.

Some of these companies have joined grassroots efforts, such as SavetheInternet.com, which represents a disparate array of interest groups across the political spectrum, from the ACLU on the left to Gun Owners of America on the right.

Such efforts have also garnered popular support. An online petition amassed more than a million signatures favoring new regulation that its proponents say prevents any division of the Internet that could convert the information superhighway into a toll road.

REP. EDWARD MARKEY (D), Massachusetts: Right now, we are facing the greatest threat to the Internet in its history.

JEFFREY BROWN: Two weeks ago, this side, backed by some members of Congress, failed to get so-called net neutrality regulations written into a new telecommunications law. They’re trying again now in the Senate, where the Commerce Committee began debating similar legislation today.

Keeping the Internet open

Paul Misener
Amazon.com
Net neutrality is about maintaining the fundamental openness of the Internet, which has been the hallmark of the Internet since its inception... The phone and cable companies have the technical means and regulatory permissions to limit that openness.

JEFFREY BROWN: And we have our own debate now, with Paul Misener, vice president for global public policy at Amazon.com. He's a former legal adviser at the Federal Communications Commission.

And Scott Cleland, founder and president of Precursor, a telecom industry research and consulting firm, he's chairman of NetCompetition.org, an online forum on net neutrality funded by telecom, cable and wireless companies.

And welcome to both of you.

PAUL MISENER, Vice President for Global Public Policy, Amazon.com: Thank you.

JEFFREY BROWN: Mr. Misener, start by defining exactly what you mean by net neutrality.

PAUL MISENER: I'd be happy to, Jeff. Net neutrality is about maintaining the fundamental openness of the Internet, which has been the hallmark of the Internet since its inception. In ways never before possible, the phone and cable companies have the technical means and regulatory permissions to limit that openness in ways that will reduce consumer choice of Internet content.

JEFFREY BROWN: Why is it necessary to have that principle put into regulation?

PAUL MISENER: Because the consumers in their homes don't have a meaningful choice of network operators, a way to get to the broadband Internet. For the foreseeable future, consumers in America will have only two choices: the phone company or the cable company.

Although we wish it were otherwise, this lack of competition in the network gives us great concern that they may leverage that lack of competition to start constraining the choice the consumers have of Internet content.

JEFFREY BROWN: Now, Mr. Cleland, can we at least -- can we agree on a definition?

SCOTT CLELAND, Founder, Precursor LLC: Well, I think we can agree on the goal. I think everyone wants a free and open Internet. And, really, the disagreement, and it's a big one, is: How do we get there?

And the net neutrality folks say, "Let's bring the government back in, after commercializing and having the Internet not be regulated for 13 years, and bringing it back and saying that we need the government to be the policeman of this." And what we believe is, is that competition and the way the Internet has been running for the last 13 years is what's best for the Internet.

Protecting or gouging the consumer?

Scott Cleland
Netcompetition.org
The Internet has been tiered, and it allows you to have different services. It's consumer-driven, and it's market-driven. And what we're concerned about is if you have the government come in with its heavy hand.

JEFFREY BROWN: But why would it be beneficial for telecom and cable companies to be able to charge differently for different service?

SCOTT CLELAND: Well, that's the way the Internet runs right now. I mean, everybody out there knows there's dial-up, which is the slow lane, or there is broadband. And if you pay one price, you get certain speed, and if you pay more for another speed.

So the Internet has been tiered, and it allows you to have different services. It's consumer-driven, and it's market-driven. And what we're concerned about is, if you have the government come in with its heavy hand and says, "No, I want prices to be one way, with one price and one terms and conditions."

PAUL MISENER: Well, what you'll see here, I think, today is that the disagreement is not on the philosophy, the regulatory approach to the Internet, but rather on the facts. We're all for the free market, as Mr. Cleland is, but the emphasis on his side of the debate is all on free, and that is free of regulation, free of legislation.

They forget about the second word in that phrase: the market. There is not a competitive market that can discipline the inappropriate behaviors of those who have this market power, the cable companies and the phone companies.

JEFFREY BROWN: You mean companies or consumers that want to use the Internet don't have enough choice?

PAUL MISENER: The consumers -- exactly right. The consumers do not have sufficient choice among providers of broadband Internet access.

When there are other competitive alternatives, say four or five out there, when it's a vibrant competitive market, such regulation would not be necessary. But we're trying to return to the state of last summer when the vast majority of American consumers actually had a regulation that proscribed discrimination. We are against discrimination on the Internet.

JEFFREY BROWN: You see a different world?

SCOTT CLELAND: We see a totally different world. The facts and the process are on our side. The FCC, the Federal Communications Commission, and the Department of Justice, they're the experts that determine the facts on the ground.

They both have ruled that there is sufficient broadband competition, that it doesn't require regulation. That went to the Supreme Court last summer. And the Supreme Court affirmed it.

Now, other people who should know, the House of Representatives took this issue up last -- a couple weeks ago, and voted resoundingly, 269 to 152 against net neutrality regulation, against regulating the 'net. And we expect the Senate, when it has a vote in committee and on the full floor, will have a similar vote to the House.

So the people that know and the people who have studied the facts on the ground have come up with a completely different conclusion than Mr. Misener is telling you.

Free tolls and free speech

Paul Misener
Amazon.com
The Internet is all about consumer choice, them being able to pull whatever information out unimpeded or un-discriminated against by their phone company or cable company network operator.

JEFFREY BROWN: The analogy that we keep hearing about is the sort of toll road on the highway, where trucks might pay a higher toll than cars. Now, is it possible that, in a new scenario, that, for example, a competitor, a bookseller online, might pay a higher premium to have faster service? Is that what you're worried about?

PAUL MISENER: Well, there are lots of things to be worried about. What we're concerned about is consumers, our customers, ultimately, will not have the panoply of choices that they have today.

Unlike the newspaper business, the television business, cable TV, satellite, which all involve pushing content out to consumers and ultimately allowing them to choose what to read in the newspaper, what channel to watch on their cable TV, the Internet is all about consumer choice, them being able to pull whatever information out unimpeded or un-discriminated against by their phone company or cable company network operator.

That model is about to change, unless Congress acts to reinstate the nondiscrimination rules that were removed last summer.

SCOTT CLELAND: And I know often the other side tries to hide behind the consumer and say, "This is about the consumer."

This isn't about the consumer. This is about big companies. There are about 20 companies and about five or six on their side, and they want a special deal, special interest regulation. I call it corporate welfare for dotcom billionaires, where everyone else, businesses, consumers and government, all pay the competitive retail rate for broadband. We know, dial-up or broadband.

They're asking the government to come in, and regulate, and give them a special deal and a special break on the wholesale side. These are companies that have 80 to 90 percent gross margins. They use the Internet more than anybody else, and they want to pay the least for it.

JEFFREY BROWN: Well, now, granted there are big companies on his side, but there are also, as we said in the set-up, is a coalition of all kinds of groups...

SCOTT CLELAND: Yes.

JEFFREY BROWN: ... that are worried about First Amendment issues, as well. Should they not be worried?

SCOTT CLELAND: Oh, the First Amendment question is completely misplaced here. If you go back to the Founding Fathers and read the Constitution, it was to defend citizens about the tyranny of government restricting their speech.

The irony here is, is that the net neutrality folks want the government to come in and protect free speech. They have the U.S. Constitution upside down.

JEFFREY BROWN: So what's the First Amendment argument, that it's not the government in this case, but it's the companies that would be potentially harming free speech, I suppose?

PAUL MISENER: Right. Well, I certainly don't want to speak for consumer groups, but they have spoken very clearly. The consumer groups and groups as divergent as MoveOn.org and the Gun Owners of America, on the far left of the spectrum to the far right of the spectrum, they are concerned about this, because there is a monopoly or duopoly bottleneck through which consumers get their information online.

It is true that Amazon.com is concerned about this as a company. We are also much more concerned about it from the basis of our customers who have grown to expect flexibility and consumer choice on the Internet, not having that choice dictated or restricted in any fashion by the cable or phone companies.

That's about to change unless, again, Congress reinstates the nondiscrimination rules that existed until last year.

Avoiding congestion

Scott Cleland
Netcompetition.org
When you see a big truck on the highway that's carrying heavy equipment, you better believe they get weighed and they pay more because they're going to do more damage and use more of the facility.

JEFFREY BROWN: But to the extent that this is largely about big and big, is one way of thinking about this, as the Internet expands and the costs go up, who pays for that expansion?

SCOTT CLELAND: Yes, a good way to look at this is, is that today the Internet handles e-mails and it handles Web surfing. Now, if you put a two-hour high-definition video over the Internet, it represents 35,000 e-mails. So it's like sending a tank or sending a piano rather than a letter over the Internet.

JEFFREY BROWN: And your companies are saying...

SCOTT CLELAND: Somebody has to pay for it.

JEFFREY BROWN: ... somebody should pay for that...

SCOTT CLELAND: Exactly.

JEFFREY BROWN: ... and you think the people providing that service ought to pay for it.

SCOTT CLELAND: When you see a big truck on the highway that's carrying heavy equipment, you better believe they get weighed and they pay more because they're going to do more damage and use more of the facility.

JEFFREY BROWN: So what's the response? If Amazon wants to put that truck on the Internet, shouldn't they pay more?

PAUL MISENER: We do pay more. We pay handsomely to get our servers connected to the Internet. We may more than small retail sites because we have more capacity. We have more users than the small retail sites do. It's fair that way.

Consumers, on the other end of the pipe, they pay more if they use more bandwidth, more capacity to pull information. That's the fair way to do it. But it's a misrepresentation of how the Internet works to suggest we put that semi-rig into the Internet. It's available to be pulled from our services -- from our servers, rather, from our warehouses, if you will, to extend the analogy.

Consumers are the ones who actually pull the information through. We don't push it out. It never gets into his clients networks unless their customers, the consumer, asks for it.

SCOTT CLELAND: And that's a specious argument, because they're the ones -- it's like saying, you know, "I didn't mean for all of these trucks to go over the Internet. I just had them all parked in my garage over there, and somebody else called up and dispatched them to me." I mean, it's not a -- it's a spurious argument.

PAUL MISENER: It's not spurious, since we pay so handsomely to get on, as do his customers. They're looking for the triple dip. We're happy to pay for special services, as we already do today. But on the Internet, it needs to be nondiscriminatory.

JEFFREY BROWN: All right. We are not going to resolve this one. I know we're not going to resolve it. Scott Cleland, Paul Misener, thanks very much.

SCOTT CLELAND: Thanks, Jeff.

PAUL MISENER: Thanks very much.