TMCnet News

Telecom plan to charge content providers called the 'Tony Soprano model of networking.'
[April 26, 2006]

Telecom plan to charge content providers called the 'Tony Soprano model of networking.'

( Via Thomson Dialog NewsEdge)
WASHINGTON - Looking at possible antitrust implications of having telecoms and cable companies controlling 99 percent of U.S. broadband connections, a special task force of the House Judiciary Committee took up network neutrality.

Like other committees that have heard testimony on network neutrality, the Judiciary panel heard conflicting interpretations on whether legislation is needed to ward off discrimination by broadband providers.

Verizon and AT&T have publicly stated they intend to charge content providers different fees based on bandwidth consumption to access consumers, but will not block, degrade or impair delivery of the content to consumers.

Tech companies and a growing coalition of consumer groups contend the plan amounts to discrimination since those who can pay the broadband providers' rates will have a competitive advantage over those who can't.

"All sides of the net neutrality debate agree that consumers should be control of their Internet experience," Walter McCormick of the U.S. Telecom Association said. "Where we differ is on whether consumers alone should foot the bill for the advanced networks that drive the Internet's growth and evolution."

McCormick said Internet content providers seeking to profit on new high-speed fiber networks should not expect a free pass on all costs associated with the increased bandwidth capacity to deliver services and applications.

"If you want more, then you pay more, is as American as it comes," he said. "It is a straightforward market proposition. As companies move into live video and gaming and advanced services, they will be seeking more bandwidth."

Columbia University Professor Tim Wu spun it another way.

"It's as if the electric company one day announced that refrigerators made by General Electric would henceforth not work quite as well as those made by Samsung," Wu said. "That would be a shock, because when it comes to the electric grid and the Internet, people are used to a network that they are free to use as they wish."

Wu said the issue of network neutrality is really an issue about market power concentration.

"Whatever AT&T and others may claim as motives, the potential for abuse of market power is obvious to everyone," he said. "Ninety-four percent of Americans have either zero, one or two choices for broadband access. Many of us wish things were otherwise, but they are not."

Given the concentration of market power between the telcos and the cable companies, Wu said it was clear AT&T, Verizon, Comcast and other power players coiuld make more money by distorting competition between Internet firms.

"It AT&T can, through implicit threats of degradation, extract a kind of protection money for those with the resources to pay up," Wu said. "It's basically the Tony Soprano model of networking, and while it makes sense for whoever is in a position to make threats, it isn't particularly good for the nation's economy, innovation or consumer welfare."

The House Judiciary debate came on the eve of a vote in the House Commerce Committee on the Communications Opportunity, Promotion and Efficiency Act of 2006 (COPE).

The centerpiece of COPE is national video franchising for IPTV providers such as Verizon and AT&T. With the goal of increasing competition in the pay television market, the proposal enjoys wide support on both sides of the aisle.

More controversial is network neutrality.

Republicans see little problem with the tiered access approach proposed by the telecoms and leave enforcement of network neutrality violations to the Federal Communications Commission (FCC).

Democrats and a growing coalition of tech companies and consumer groups, want the FCC's network neutrality principles, which have no force of law, turned into statutory law. Rep. Ed Markey (D-Mass.) is expected to propose an amendment to COPE to do just that.

A similar proposal three weeks ago was handily defeated by the Republicans, 23-8. Corp.

Copyright 2003 Jupitermedia Corp. All rights reserved.
Republication and redistribution of Jupitermeida Corp. content is
Expressly prohibited without the prior written consent of Jupitermedia
Corp.. Jupitermedia Corp., shall not be liable for any errors
or delays in the Content, or for any actions taken in reliance thereon.

[ Back To's Homepage ]