The Association of U S West Retirees



Don't let phone giants 'Ctrl' what you get on the 'Net
Thursday, February 16, 2006

Our view:
Telecoms trying to build toll booths on information superhighway.

In the history of great ideas, the Internet will surely rank near the top.  In a relatively short time, it has made vast amounts of information searchable, sortable and readily available with a few key strokes.

Much of the Internet's appeal is that no one controls it in the way that, say, a grocery store decides which brands to stock. Within its virtual walls, a start-up such as MySpace or Craigslist can surge to prominence entirely on the power of an idea.

Now, some very old-school companies want to change all that.  Using market dominance achieved through the relative scarcity of lines into people's homes, phone companies such as BellSouth, Verizon and AT&T are eyeing a system that would demand that operators of search engines, e-commerce sites and other Web applications pay them fees or be relegated to the slow lane.

Here's how AT&T CEO Ed Whitacre put it while discussing Vonage, Google and Yahoo with BusinessWeek magazine:  "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."

Let us count the ways why this vision by the telecommunications companies is misguided:

  It shows a complete lack of comprehension of why the Internet is so attractive.  It is not, like television, a pipeline for delivering content and advertising to consumers.  It's an interactive medium that empowers individuals to communicate, join virtual communities, shop, search, prioritize information and engage in an evolving list of other activities.

  Google, Yahoo and other companies are not freeloading off of anyone.  Their data flow over the lines of companies such as AT&T only if AT&T's customers pay for it.

  Search engines, e-commerce sites and other major destinations have invested billions of their own dollars on servers, routers and software to make the Internet work.  The only difference is that these companies do not have a potential chokehold over the Internet's on-ramps.

  Phone companies achieved dominant positions through their origins as part of the Ma Bell monopoly.  It would have been unthinkable for them to demand royalties from catalogue sales over toll-free numbers when they were treated as "common carriers."  But now they feel empowered to shake down companies such as Amazon or Travelocity.

Competition might keep the phone companies from putting the squeeze on website operators.  That would be the best outcome.  But consumers in many parts of the country have little choice in broadband, so Congress is appropriately exploring legislation that would lay out a principle of "Net neutrality" that would require all websites to receive equal access.

Telecommunications companies say they are not altering the Internet, merely offering a new ultra-high-speed tier of service on top of it.  Don't be fooled.  Once they begin choosing search engines, auction sites and other applications for their premium service, they alter the entire competitive landscape.

In this new world, companies would have to spend more time kowtowing to the likes of AT&T and less time innovating.  That doesn't sound like such a great idea.
We'll give users choices

Opposing view:
Companies should be free to offer new services and pricing options.
By Walter McCormick

Local telecommunications companies have a 150-year tradition of connecting people with each other.  As we invest billions of dollars in new, advanced broadband networks, our commitment remains the same:  We will connect you to whomever you choose, and we will not block, impair, or degrade any content, applications or services.  The Internet freedom you have today, you will have tomorrow.

Government has kept its hands off the Internet, and it has flourished.  Telecom companies have not sought to hinder the Internet's growth -- indeed, just the opposite:  We have invested, grown and expanded the networks that make up this extraordinary resource.  Today's DSL, cable, wireless and satellite companies vigorously compete to offer a faster, more robust Internet experience.

Consumers are in control via new pricing and service packages being made available everyday -- witness AT&T's announcement of $12.99-per-month DSL access.  Consumers expect and demand Internet freedom.  If telecom companies don't provide it, they will do business with someone else.

To meet ever-increasing customer expectations, the nation's telecom companies are investing in next-generation networks that will offer consumers even more choices -- for video and for new services and applications such as health monitoring, telemedicine and home security.  This new marketplace should be allowed to develop, without government micromanaging it.

It is only through investment that new networks will be built and Americans will enjoy the full promise of the information age.  Experts predict that demand for new services will require a 400% increase in bandwidth over the next decade.  Therefore, all who use, enjoy, or profit from the Internet have a common interest policies that promote investment in network infrastructure.

No one in today's debate opposes Internet freedom.  We differ only in this:  We do not believe that now is the time to close the chapter on Internet innovation and progress by turning to government-managed competition and central planning, no matter how well-intentioned.

Those who invest in advanced fiber, wireline and wireless broadband networks should be free to offer new services, and new pricing and service options, in a marketplace characterized by robust competition and consumer choice.

Walter McCormick is president and CEO of the United States Telecom Association.