ISPs warn of price rises as panel approves 'Net Neutrality' bill

Out-Law News | 26 May 2006 | 1:56 pm | 3 min. read

The US House Judiciary Committee approved a bill yesterday to prevent broadband providers from charging extra fees to websites for delivering their content to users. But the law would be "a direct financial hit to consumers," say internet providers.

The Internet Freedom and Nondiscrimination Act of 2006 was approved by a vote of 20–13. It articulates concerns that have been expressed by numerous consumer groups as well as content providers including Google, Yahoo! , and Microsoft.

Such companies spend fortunes on hosting web content; they don't want to pay new fees for users to access it. But that is a revenue source that cash-strapped broadband providers are contemplating in the US, forming plans that have been characterised as leading to a 'two-tier internet'.


AT&T CEO Edward Whitacre sparked the controversy last November. In an interview with Business Week he was asked whether he was concerned about "internet upstarts" like Google, MSN, Vonage and others.

According to edited excerpts from that interview, he replied: "How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?"

He continued: "The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!"

He subsequently clarified his position, saying that AT&T had no intention of making any content unavailable to consumers. That clarification failed to silence the critics and the so-called Net Neutrality debate continued in earnest.

What the bill says

The new bill pre-empts and blocks the introduction of internet tolls for content providers.

It states that broadband companies must provide their services "on reasonable and non-discriminatory terms and conditions" such that a company like eBay can provide its services over the network, "free of any surcharge on the basis of the content, application, or service". Providers cannot block or degrade access to content under the bill and there are limited exceptions, such as allowing priority for emergency communications.

And if a provider like AT&T prioritises or offers enhanced quality of service to data of a particular type – the high-speed delivery of video content, for example – the bill mandates that all data of that type be treated equally, regardless of source, without any surcharge.


House Judiciary Committee Chairman James Sensenbrenner, who introduced the bill, told The Wall Street Journal: "While the technological dynamics of the marketplace have changed over time, the threat of dominant firms abusing their market power to restrain competition has not."

Unsurprisingly, major providers have voiced their displeasure.

Christopher Wolf, co-chairman of the Hands Off The Internet coalition, which counts AT&T and Alcatel among its members, said the vote was "more about politics than substance."

"Even Members who voted for this bill said they had reservations about doing so, and only voted for it because of committee jurisdictional concerns," he said. "But what Congress needs to keep in mind is that the typical Net user doesn't care about jurisdictional disputes among Congressional committees. They DO care about paying more for Internet access and that's what this bill would do."

He added: "The fact is that internet neutrality regulations would be a direct financial hit to consumers and stop cold the country's progress in providing affordable high-speed options."

Verizon executive Tom Tauke also attacked the vote.

"Simply put, net neutrality legislation endangers both the future of video choice and the accelerated broadband investment that is just beginning to gain traction," he said.

He warned that radical net neutrality proposals "would chill the investment climate for broadband networks, deter and delay broadband rollout, and lock in today's internet architecture and levels of performance."

"Now is not the time to adopt new regulations that throw sand in the gears of the fast-growing and changing broadband marketplace," said Tauke.

The Institute for Liberty, a public policy group that exists to promote "principles and policies of honour" said the bill "threatens to smother the internet in a sea of unneeded regulations all in the name of the contrived 'network neutrality.'"

"Today's vote will be remembered as one of the saddest days for the internet as we know it," it said in a statement.

Meanwhile, the Free Press, Consumers Union, Consumer Federation of America, Media Access Project and US PIRG, will welcome the result.

In a joint statement issued shortly before the vote, the coalition of consumer groups said: "A growing alliance in Congress recognises that Network Neutrality is not a partisan issue, but one of grave importance to anyone who wishes to see the internet remain an unrivalled environment for innovation, civic participation and free speech."

Professor Sir Tim Berners-Lee, inventor of the World Wide Web, discussed net neutrality in a press conference at the 15th International World Wide Web Conference in Edinburgh on Tuesday.

"What is very important from my point of view is that there is one web," he said. "Anyone that tries to chop it into two will find that their piece looks very boring." Expressing his hope that the US would "come to the right decision," he pointed out that, in Europe, net neutrality "is the norm."