Be Afraid: Congress Takes Up Net Neutrality

U.S. Congress involvement in anything these days should give everyone at least a slight tremor. “Unintended” consequences seem to have a way of rearing their ugly heads in the aftermath of congressional action.

Remember campaign finance reform and how well that worked? What about the Telecommunications Act of 1996? Instead of the competition that was supposed to benefit the consumer, we have seen industry consolidation and higher rates.

So forgive my skepticism regarding potential congressional action on what has come to be known as “net neutrality.”

The Senate held hearings this month on whether to allow telecommunications giants BellSouth, SBC Communications (which includes AT&T) and Verizon Communications the ability to give Internet content providers preferential treatment for paying “higher rent” for the use of their network pipes.

Pages would load faster and overall performance would be better on the sites of the telcos themselves and the high-rent payers.

These telcos own the networks, and they are green with envy of the success of such content providers as Amazon, eBay and Google—particularly the latter, whose stock price is trading at close to $370 per share.

After all, the phone giants reason, they are the ones that made the investment to create the networks we all use to access the Web.

Content providers, they argue, essentially are getting a free ride.

On the surface, their position is not unreasonable—that is, until you remember that they already charge for the use of those pipes.

The telcos have raised the hackles of the content providers and an amalgamation of other business interests, including Microsoft, who are pushing for net neutrality, a principle that favors openness and equal access to content.

Civil rights advocates, not surprisingly, have jumped into the fray on the side of the content providers, even though the issue primarily involves competing business interests and who gets to pay for what.

Curiously, channel companies haven’t taken a position on this. While asking around over the past week, I found that few of my channel contacts have thought about it, and some are only dimly aware of the issue.

At this point, the potential effect of granting the telcos’ wish still seems too far removed from channel interests. Even if the big telcos have their way, it isn’t entirely clear how much of an effect, if any, this would have on the channel.

But the potential exists. Just follow the thread. Let’s say Congress allows the network owners to give preferential treatment to their own content and that of providers from which they extract higher fees. The inevitable outcome is increased costs.

If the telcos start charging content providers such as Google and eBay for the use of the pipes, what’s to stop them from also charging premiums for voice over IP and other Web-based services in which channel companies play a critical role?

Increased costs would get passed down from the content originators to those servicing the content, and ultimately, the end users.

So that IP-based telephony solution your customer was considering would become less affordable. And the same goes for Web conferencing solutions and remote network management services.

Innovation also would take a hit. If preferential treatment is given to large content providers because they can pay premiums, what happens to small, intrepid companies with a great product but few resources? Obscurity.

Judging from some lawmakers’ remarks during the hearings, the telcos face an uphill battle. But as often happens with competing interests pushing Congress for action, the result will likely be a compromise.

I shudder to think what that compromise would be. It would likely have loopholes big enough to allow plenty of “unintended” consequences, not least of which would be higher costs.

Pedro Pereira is a contributing editor for The Channel Insider. He covered the channel from 1996 to 2001, took a break, and now he’s back. He can be reached at ppereira@ziffdavis.com.