By Jeremy Pelofsky and Robert MacMillan
Telecommunications providers like AT&T Inc. intensified their efforts this week to persuade US policymakers to avoid imposing regulations on the Internet for services like streaming movies and unfettered Web access.
The "network neutrality" battle in Washington pits high-speed Internet operators against content and application providers. Network owners want to sell tiers of service to reflect bandwidth usage, while the content companies fear they will be shunted to the slow lane of the Internet or shut out unless they pay more for dedicated network service.
The issue dominated the annual convention of big and small carriers held by the US Telecom Association (USTA), as they stepped up efforts to influence lawmakers and regulators who are mulling whether new rules or laws are necessary.
AT&T, BellSouth Corp. and Verizon Communications executives spent the week criticizing demands for network neutrality laws at almost every opportunity.
"This debate I think is all about movies," said Jim Cicconi, AT&T's senior executive vice president for legislative affairs. "What we're saying is that you can't provide dedicated line, virtual private network services for free."
AT&T, BellSouth and Verizon say they do not intend to block Internet content and prefer to make commercial bandwidth deals with content companies such as Internet retailer Amazon.com or Web search engine Google Inc.
USTA Chief Executive Walter McCormick pressed the matter with Federal Communications Commission officials who attended.
"We're hearing a lot today about Net neutrality, it's in the newspapers just about every day," McCormick told FCC Chairman Kevin Martin during a public event. "The chairman of Disney said this is not an area to legislate in."
Martin replied that the agency has previously acted against discrimination, but recognized the need for network operators to control service and ensure "they have opportunities to offer differentiated products."
But Internet phone service company Vonage Holdings Corp. and others like Amazon.com worry their Internet applications could be blocked unless they pay for dedicated service.
"We're not looking for a free ride, but that downstream injection of content be offered on reasonable and non-discriminatory terms," said Paul Misener, vice president for global public policy at Amazon.com.
In Hollywood, streaming of full-length movies and television shows via the Internet has been slow in coming. Content delivery from Web sites like Movielink and CinemaNow has for the most part been confined to downloads.
But increasingly television networks and movie studios want to use the Web to reach consumers directly.
"If America is to enjoy the ever-expanding Internet, providers have to be able to manage their networks according to the needs of customers," said BellSouth Chief Executive Duane Ackerman. "But let me be clear, managing the networks is not about controlling where people go on the Internet."
Some consumer groups questioned whether the carriers would give their own services priority over competitors.
"My concern is they would say 'well you know we only have enough bandwidth to provide that quality of service for our service'," said Gigi Sohn, president of Public Knowledge.
The FCC last year attached network neutrality conditions to Verizon's acquisition of MCI and the deal that formed AT&T. It required them to provide consumers unfettered Internet access and to run any Internet-based applications for two years.
Lawmakers are considering etching those principles into law and giving the FCC enforcement power. But, some in Congress and at the FCC question if there is a problem to be solved.
"There is a big difference between a very important issue that needs discussion and a problem," Republican FCC Commissioner Deborah Taylor Tate said.
One of the two Democrats on the FCC, Jonathan Adelstein, said network neutrality could be resolved with more bandwidth.
"You don't need to worry about priority access if you've got 100 megabits going to the home," he said. "Hopefully as we get more capacity those kinds of questions become much less significant."
(Additional reporting by Bob Tourtellotte in Los Angeles.)
Copyright 2006 Reuters Limited.
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