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Giant Telco Mugged by Regulators

It's not even safe for the largest telephone company on the planet to walk halls of Washington alone anymore. Scott Cleland of the Precursor Group has revealed that AT&T "was mugged" when the FCC imposed network neutrality as a condition of the telco's merger with BellSouth.

He called the condition a "mugging and extortion" after Gigi Sohn said it defined the meaning of network neutrality. Sohn, head of Public Knowledge, has become a standard bearer for net neutrality. She and Cleland squared off at a recent Media Institute event, where they both warmed up for the inevitable battle in Congress.

The concept of network neutrality says broadband providers like Comcast and Verizon shouldn't mess with the load speeds of Web sites. Proponents like Sohn say there ought to be a law. The opposition holds that a law is unnecessary, and that broadband providers should be able to charge whatever they want for the use of their networks.

So pitched is the battle over net neutrality that it stalled telecom legislation during the previous Congress. A bill from Sens. Olympia Snowe (R-Maine) and Byron Dorgan (D-N.D.) to impose net neutrality was re-introduced in this Congress even before new members got their curtains hung.

One persistent saw against net neutrality is that no one really knows what it is, but Sohn said the definition was right there in the AT&T/BellSouth merger conditions.

Where, Cleland parried. The condition in question provides that AT&T/BellSouth abide by the FCC's policy statement on net neutrality for 30 months after the deal closes. The statement consists of five paragraphs, none of which specifically prevent broadband providers from parsing out bit-rates.

Among other things, it says the commission can make sure that IP services "are operated in a neutral manner," and that "consumers are entitled to:
• access the lawful Internet content of their choice.
• run applications and use services of their choice, subject to the needs of law enforcement.
• connect their choice of legal devices that do not harm the network.
• competition among network providers, application and service providers and content providers."

Net neutrality supporters fear that if broadband providers are allowed to fiddle with download speeds, they will favor their own sites over that of the competition. E.g., if Verizon wanted to start its own online bookstore, it could squeeze Amazon's bit-rate to a trickle and steal its customers.

Wouldn't happen, Cleland said, because consumers wouldn't have it.

"Should a telco be allowed to block or degrade Vonage? It won't happen because of the marketplace," he said. "There's no problem. The Internet's not broken. Don't fix it."

Sohn said there was, indeed, a problem because 98 percent of the broadband market is controlled by cable and phone companies, and 40 percent of Americans have access to only one provider.

"The problem is competition," she said.