Deal Raises Issue of Internet Control
Merger of Broadband Titans Could Jeopardize Openness,
Yuki Noguchi, Staff Writer
Thursday, March 9, 2006
Consumer groups and big online brands say mega-deals such as
the proposed AT&T purchase of BellSouth are creating a
growing threat to the openness of the Internet by
consolidating power in the hands of companies that provide
access to the Web.
To date, cable and telephone companies have had limited
ability to act as gatekeepers or toll collectors for the
content passing through their networks. But AT&T Inc.
Chairman Edward E. Whitacre Jr. and executives at BellSouth
Corp. -- companies that together serve nearly half the
country -- have been outspoken about their desire to exert
greater control over their lines.
The proposed $67 billion purchase of BellSouth gives the
issue new urgency among opponents.
"We don't begrudge the telcos their market power; what we're
strongly arguing is that they not be allowed to extend that
market power to content," said Paul Misener, vice president
of global public policy for Amazon.com Inc. Allowing
telecommunications and cable companies -- the two primary
providers of Internet access -- to charge fees for
preferential treatment over their networks destroys the
flat, democratic structure of the Internet and ultimately
limits what customers can do online, he said.
The Federal Communications Commission addressed the issue
last year when it approved Verizon Communications Inc.'s
acquisition of MCI Inc. and the SBC Communications Inc.
buyout of AT&T. (San Antonio-based SBC took the AT&T name
upon completion of that deal.) Commissioners ordered the
companies to abide by guidelines that bar them from imposing
any limits on Web access for two years.
But some major Internet players want permanent protection.
Amazon and eBay Inc. last month joined Google Inc., Yahoo
Inc. and Microsoft Corp. in sending a letter to members of
Congress calling for clearer measures to ensure that the
companies will not use their market size to create tiers of
access to the Internet.
EBay said restricted, or "pay for play," Internet systems
will increase costs for all Internet users, and some of the
90 million U.S. eBay users have started asking their
legislators for "network neutrality" protections, said Hani
Durzy, a spokesman for the San Jose-based company.
AT&T spokeswoman Claudia Jones denied that the company had
an interest in changing the open nature of the Internet.
"We have no intentions of blocking content or access," she
said. But she added that as usage and speeds on the
Internet increase, companies should share in the
responsibility to make sure the system remains "healthy."
"I think people have used the merger to talk about net
neutrality," but those people have yet to cite an example of
discrimination on the Internet, she said.
But Verizon chief executive Ivan G. Seidenberg and deputy
general counsel John Thorne, AT&T's Whitacre, and BellSouth
chief technology officer William L. Smith all have stated
their preference for a system that allows the carriers to
charge to carry some kinds of traffic.
America Online Inc. and Yahoo have also provoked outrage
among consumer advocates with a plan to charge e-mail
senders who want to bypass spam filters. Although the issue
there differed from neutrality, it sparked opposition from
several nonprofit groups, as well as free-Internet
advocates, who protested the proposed fees as a further step
toward restricting the Internet's wide-open culture.
Lobbying is still new for the relatively young Internet
companies, which face much more established
government-relations organizations in the telephone and
cable companies. Some of those Internet firms also have
business alliances that may make their interests diverge.
Yahoo, for example, has marketing partnerships with both
AT&T and Verizon to sell broadband Internet services;
Google made a $1 billion investment in AOL, which is owned
by cable company Time Warner Inc.
But, as was the case with eBay, some companies are hoping to
tap their online community of users to help make their case
Congress is just beginning to take up the issue of how to
referee the competing Internet interests. Hearings have
been held in House and Senate committees, and Sens. John
Ensign (R-Nev.) and Ron Wyden (D-Ore.) have introduced
legislation addressing aspects of network neutrality.
Rep. Edward J. Markey (D-Mass.) called the network
neutrality debate "the single most important debate we're
going to have in the communications sector for the next
Jeff Chester, executive director for consumer-advocacy group
Center for Digital Democracy, said questions over the
freedom of the Internet will figure heavily into the
"[Regulators] are sadly mistaken if they believe there won't
be intense opposition to this deal from all those who care
for the Internet's democratic and competitive future," he
said. "AT&T's ambition knows no bounds and places the
future of the broadband Internet at risk."
Other companies agreed that ensuring a neutral network will
be a central issue in this deal, more than in mergers past.
The FCC is likely to impose the same neutrality restrictions
on the AT&T-BellSouth deal as it did in the past two big
telecom mergers, and that in turn sets the stage for
possible congressional action, said Christopher Putala,
executive vice president of public policy for EarthLink
Inc. "Politically, it's important for increasing the
momentum for congressional action."