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Freedom rings

AT&T's buyout of BellSouth protects equal access to the Internet for most services.

December 30, 2006

TELECOMMUNICATIONS giant AT&T made a welcome concession to federal regulators this week that could help preserve the Internet's role as an engine for innovation and competition.

In order to win approval from the Federal Communications Commission for its $84.5-billion buyout of BellSouth, the reconstituted Ma Bell agreed Thursday to not offer for two years "any service that privileges, degrades or prioritizes" any data transmitted over its broadband network. In other words, AT&T guaranteed what has come to be known as "Net neutrality" -- giving websites and services equal access to Internet users. The only exceptions are for AT&T's new TV service and the managed networks it sells to businesses.

Net neutrality became an issue last year after AT&T and BellSouth executives talked about making online companies cover more of the cost of broadband networks. In particular, they raised the prospect of charging high-traffic companies such as Google an extra fee to improve the picture quality of online movies and TV shows. Such charges could help established companies fend off upstarts by erecting a cost barrier to entry, suffocating the next YouTubes and Flickrs in their cribs.

The idea stirred so much opposition in the tech industry that two Democrats on the FCC refused to approve AT&T's purchase of BellSouth unless it agreed to Net neutrality. With only four of the five commissioners voting on the merger -- one of the three Republicans recused himself -- the Democrats essentially held veto power on the deal, and AT&T finally gave in.

Phone and cable companies operating broadband networks shouldn't be able to pick winners and losers among websites and services. Cordoning off toll roads on the information superhighway would undermine the Internet's nondiscriminatory nature, which has been critical to its entrepreneurial and inventive spirit.

At the same time, network operators should be free to introduce prioritized services elsewhere on their data pipelines, separate from their Internet offerings. AT&T's new TV service, which acts as a sort of private network within AT&T's Internet business, is a good example. The TV service relies on prioritization to ensure picture quality, particularly for high-definition TV channels. The only limitation there should be that network operators offer the same terms to competitors as they do to affiliated companies.

The merger makes AT&T the dominant phone provider in 22 states, with more than one-third of the country's phone lines. This kind of mass is far less troubling today than it would have been 10 years ago, before the advent of cheap wireless and Internet-based phone services. What is still troubling is the paucity of competition in the market for broadband service, which promises to be the next dominant platform for communications. In most parts of AT&T's turf, it competes only with the local cable operator, if anyone. That's not enough to protect consumers or Web sites, which is why a temporary Net neutrality requirement makes sense for the entire industry.

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