Broadband, Content Provider Firms Fight Over Net Neutrality

By Jeremy Pelofsky

High-speed Internet providers and Internet content companies clashed before lawmakers on Tuesday, in dispute over whether a law enshrining the right to surf anywhere on the Web would help or harm consumers.

Representatives of local telephone and cable companies that offer fast Internet access, known as broadband, said passing a new law could stymie innovation while companies like Google Inc. said that could happen without legislation.

Broadband providers have largely pledged that consumers will be able to access any Internet site. But some also said they may charge more for services that use faster private Internet networks, like downloading movies.

"Regulatory or legislative solutions wholly without justification in marketplace activities would stifle, not enhance the Internet," Walter McCormick, head of the U.S. Telecom Association, told the Senate Commerce Committee.

Yet companies like Web search engine Google and Internet telephone provider Vonage Holdings Corp. argued that a private fast Internet lane could not only block users from accessing their content and services, but also squash innovation.

"We must preserve neutrality in this system in order to allow new Googles of the world, new Yahoos, the new Amazons, to form," said Vinton Cerf, a Google vice president who in previous jobs helped develop the Internet.

"We risk losing the Internet as a catalyst for consumer choice, for economic growth, for technological innovation and for global competitiveness," Cerf said.

In the middle were lawmakers who were divided and uncertain about whether they should act. Republicans and Democrats both expressed support for unfettered Internet surfing, but a few Republicans cautioned about legislating too quickly.

"This hearing on Internet neutrality is one of the most difficult but most important issues before this committee as we consider revisions to the nation's communications laws," said Senate Commerce Committee Chairman Ted Stevens, an Alaska Republican.

Sen. John Ensign, who has offered legislation to revise U.S. communi- cations laws, questioned whether such provisions would cut incentives for companies to build out their networks and compete.

"You do deserve a return on your investment is the bottom line if you're going to build out these networks," the Nevada Republican said. "Otherwise, if you can't give them the return on their investment, Wall Street is not going to loan them the money to do this."

But Democrats on the panel countered that consumers are already paying for content and broadband access.

"It is not a free lunch for any one of these content providers," said Sen. Byron Dorgan, a North Dakota Democrat. "I've already paid the monthly toll" to go to any Internet site.

Analysts have been skeptical that Congress will act this year on the issue.

"Details are devilish, suggesting differences would have to be bridged with broad and possibly ambiguous mandates that invite regulatory and court battles," said an analyst report by Stifel Nicolaus released on Tuesday. "And even then, legislation could easily stall."

Copyright 2006 Reuters Limited.

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Jeremy Pelofsky
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