Congress has failed to pass legislation regarding so-called "Net Neutrality," and now the issue is again top of mind as Internet providers seeking preferential treatment; network operators considering a tiered approach, and once-staunch defenders beginning to soften their stance on the matter. This time, it appears Google (NSDQ: GOOG), which has been traditional a huge advocate of network equality and openness, is working behind the scenes with major cable and phone companies to get its Internet traffic prioritized, according to documents reviewed by The Wall Street Journal.
In essence, network neutrality means that cable and phone companies must treat all content crossing its lines equally, much like how phone companies today do not prioritize one phone call over another. Many supporters claim that this the secret to the internet's successif it was divided, only rich companies could participate, and new entrants would never have a chance. For consumers, network operators, like Comcast (NSDQ: CMCSA) or Time Warner (NYSE: TWX), would be able to control content distribution, or even promote their services over another. But now, the counter-argument is starting to pick up steam. Network providers maintain that as internet traffic grows by more than 50 percent annuallyby some accountscontent companies should share in the costs.
Any potential tiered deal will be faced with a landslide of criticism, but the WSJ suggests that even some of the most hardcore neutrality fans are fading. For instance, Microsoft (NSDQ: MSFT) and Yahoo (NSDQ: YHOO), which formed a coalition two years ago to protect network neutrality, have quietly left, and are now dealing directly with operators. Microsoft provides software to AT&T's Internet TV service, U-verse, and Yahoo has a DSL partnership with AT&T (NYSE: T). In addition, the WSJ reports that prominent scholars, some of whom have advised President-elect Barack Obama on technology issues, are also softening their views.
The matter will likely become a political one quickly, and will test incoming president Barack Obama on the subject. The WSJ said the issue could regain momentum quickly. It recalled that in approving AT&T's 2006 acquisition of Bell South, the FCC made AT&T agree to shelve plans for a "fast lane," or tiered service, for 30 months; that expires in the middle of next year. Plus, a Democratic lawmaker has already promised new network-neutrality legislation early in 2009, and a new chairman of the FCC could take a stricter position on enforcement. It appears the only thing holding Google back from signing a deal is the government's threat. One major cable operator, who is in talks with Google, told the WSJ: "If we did this, Washington would be on fire."
By Tricia Duryee