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NEWS ANALYSIS

Internet toll lanes appear less likely

AT&T pledges to treat all content the same. Many see an opening for new telecom legislation.

January 05, 2007|Jim Puzzanghera | Times Staff Writer

WASHINGTON — Edward E. Whitacre Jr., then chief executive of SBC Communications Inc., ignited an impassioned online debate about creating toll lanes on the Internet in late 2005, when he called Google Inc. and Yahoo Inc. "nuts" for expecting free use of his company's network to deliver their content.

A little more than a year later, Whitacre may have taken a big step toward dousing that debate.

As head of the muscular new AT&T Inc. -- SBC took the name when it acquired the venerable long-distance giant -- Whitacre surprisingly agreed last week that his company would not sell premium delivery of Web content for the next two years. His decision could spur Congress to extend the prohibition to all Internet providers.

AT&T and other telecommunications companies fought furiously last year to block congressional proposals mandating such nondiscriminatory treatment of content, known as network neutrality. They warned that those rules would inhibit new spending on high-speed data lines and deprive network builders of a way to recoup their investments.

But AT&T was forced to agree to treat all online content the same to gain Federal Communications Commission approval of its purchase of BellSouth Corp. The $86-billion deal, which the FCC unanimously approved Dec. 29, makes AT&T the dominant phone company in 22 states, including California, and the nation's largest provider of high-speed Internet service.

Advocates of network neutrality requirements now contend that if a behemoth such as AT&T can build its data highways without charging websites for faster delivery of video and other bandwidth-devouring services, so can other providers.

"It sets a key precedent going forward about what we should expect from the big telecommunications companies," said FCC Commissioner Jonathan S. Adelstein, one of two Democrats who used their temporary leverage on the Republican-controlled panel to extract the concession.

Key congressional supporters of network neutrality plan to reintroduce their legislation soon, hoping AT&T's decision elevates the policy into law. And AT&T's pledge not to discriminate among Internet content, contained largely in a two-sentence paragraph, may rob neutrality opponents of one of their most effective arguments: that the issue is too vague to be precisely defined.

"You have a single paragraph that has a rule that a fifth-grader can understand: Treat people the same," said Timothy Wu, a Columbia University law professor who has faced that argument when testifying to Congress in favor of network neutrality. "This will set a baseline and a standard."

AT&T's concession improves the outlook for a new law, but it will still be difficult for supporters to pass legislation this year, said Blair Levin, a telecommunications analyst at brokerage Stifel, Nicolaus & Co.

The phone and cable companies that sell high-speed Internet service still have clout on Capitol Hill and aren't giving up. AT&T emphasized that its concession was made purely out of necessity and for a limited time.

"We continue to believe that net neutrality regulations are unwarranted and unwise," said Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs.

Verizon Communications Inc. and other network owners also strongly oppose any neutrality mandate, portraying AT&T's concession in the same way: an isolated strategic decision that should not apply industrywide.

FCC Chairman Kevin J. Martin agreed. He joined with fellow Republican Commissioner Deborah Taylor Tate in a strongly worded assertion that the FCC was not embracing a policy prohibiting tiered pricing.

"We continue to believe such a requirement is not necessary and may impede infrastructure deployment," they said.

The FCC's two Democrats, Adelstein and Michael J. Copps, had the power to extract the AT&T concession and several others because Republican Robert M. McDowell sat out the proceedings. He had worked for an association of smaller phone companies that opposed the BellSouth acquisition.

That isolated instance of Democratic clout on the panel foreshadowed the party's new muscle as the majority in Congress. Democrats have been much more supportive of prohibiting tiered Internet pricing.

Rep. Edward J. Markey (D-Mass.) who sponsored a network neutrality bill last year, will become head of the House telecommunications and Internet subcommittee and plans to introduce his bill again and hold hearings. He called AT&T's concession "an important keystone" for legislation.

Paul Misener, vice president for global public policy at Amazon.com, one of several Internet giants that have lobbied for network neutrality, said it was important to have AT&T's promise codified for the industry.

"Right now, it's a great rule for AT&T customers," he said. "Somehow this has to be taken nationwide to all broadband consumers."

But the road ahead in Congress is difficult. Markey's proposal was defeated 269 to 152 in the spring. The issue fared better in a Senate committee three weeks later but lost on an 11-11 tie as an amendment to a broader telecommunications bill.

The broader bill, which stalled last year, may not be reintroduced, making it harder for the relatively obscure net neutrality issue to come to a vote in the full House and Senate.

But Art Brodsky of Public Knowledge, a Washington-based advocacy group that supports net neutrality, is "cautiously hopeful" about the chances that AT&T's concession will become law for all Internet providers.

"You have a major section of the industry that's signed on," he said, "and it will be very hard for them to go back and say, 'We didn't mean it.' "

jim.puzzanghera@latimes.com

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