Senate Panel Kills ‘Net Neutrality’ Proposal

Jun 28, 2006  •  Post A Comment

The Senate Commerce Committee rejected a proposal that would have barred Internet access providers from offering preferred treatment to content providers that pay more, ignoring warnings that the decision would endanger the free competition that has fueled the growth of the Web.

The vote for now kills a push for “net neutrality,” which supporters say will keep phone and cable companies from changing the egalitarian nature of the Internet.

“People outside this room better be ready,” Senator Barbara Boxer, D-Calif., said after the vote. “They are in serious trouble.”

Without the restrictions in the net neutrality provision, phone and cable companies that offer Web access will for the first time be able to give favored content providers – most likely video and audio sites willing to pay extra fees – better paths to consumers’ computers. It marks a setback for Web companies such as Google Inc., who were outmaneuvered on Capitol Hill and now face the risk of having to bid against each other get the best access to the Internet.

The committee’s decision came in a vote on an amendment to legislation that would ease the way for phone companies to get into the pay-TV business. The vote sets up a fight on the Senate floor, where proponents of net neutrality have promised to wage an all-out battle. The House of Representatives earlier rejected net neutrality proposals.

Commerce Committee Chairman Sen. Ted Stevens, R-Alaska, said today that unless he can assure the Senate leadership he has 60 votes to close debate on the bill helping phone companies offer TV services, the legislation may never get voted on. After the committee today sent the legislation to the Senate floor, Stevens said he’ll draw a narrower version of the bill in case he can’t get the 60 votes he needs to close off debate.

Today’s vote followed a spirited debate in which net neutrality proponents warned that changing what has worked is dangerous. Their opponents argued that new sources of revenue are vital to induce companies to invest in upgrades to the Internet.

“It will deter innovation, technology, economic growth,” Senator Olympia Snowe, R-Maine, said of the committee’s rejection of net neutrality. “Consumers will have all the selections of a former Soviet Union supermarket. We are going to create a two-tier Internet, for the haves who can pay the price, and the have nots who will be relegated to the Internet dirt road.”

Senator John Kerry, D-Mass., warned that without net neutrality, “We are creating gatekeepers. … We are giving Bells and the cables a lot of power.”

Opponents of net neutrality argued that there was no need for “new regulation” and that the phone and cable companies have a reasonable right to generate revenue to help pay for the investment they have to make in new, faster lines.

“The Internet isn’t a big truck,” Mr. Stevens said. “It’s a series of tubes and those tubes get filled.”

Some of the big Web companies supporting net neutrality (including Google, Microsoft Corp., Amazon and eBay) have annual combined revenue of $500 billion.)

“If they want [a bigger pipe], they should build it,” he said, adding that “consumers are fully protected” by the legislation’s consumer bill of rights.

The Web already favors companies who can pay for the best placement, said Senator Jim DeMint, R-S.C., giving the example of Google Web searches in which advertisers pay for prime placement.

The legislation in the Commerce Committee started as an effort to create a way for phone companies to easily offer pay-TV services without going city by city for franchises. The bill grew as a number of unrelated sections were added.

The legislation now contains provisions that would limit the number of commercials on children’s video broadcasts on the Web and restrict marketers’ ability to tie programming in kids shows to Web sites. It also would cap cell-phone taxes and would force the FCC to conclude its study of the effects violent TV shows have on kids.