http://www.newyorker.com/printables/talk/060320ta_talk_surowiecki

THE FINANCIAL PAGE
NET LOSSES
by James Surowiecki
Issue of 2006-03-20
Posted 2006-03-13

In the first decades of the twentieth century, as a national
telephone network spread across the United States, A.T. & T.
adopted a policy of "tiered access" for businesses. Companies
that paid an extra fee got better service: their customers'
calls went through immediately, were rarely disconnected, and
sounded crystal-clear. Those who didn't pony up had a harder
time making calls out, and people calling them sometimes got
an 'all circuits busy' response. Over time, customers gravitated
toward the higher-tier companies and away from the ones that
were more difficult to reach. In effect, A.T. & T.'s policy
turned it into a corporate kingmaker.

If you've never heard about this bit of business history,
there's a good reason: it never happened.  Instead, A.T. & T.
had to abide by a 'common carriage' rule: it provided the same
quality of service to all, and could not favor one customer
over another. But, while 'tiered access' never influenced the
spread of the telephone network, it is becoming a major issue
in the evolution of the Internet.  Until recently, companies
that provided Internet access followed a de-facto commoncarriage
rule, usually called 'network neutrality,' which meant that
all Web sites got equal treatment. Network neutrality was
considered so fundamental to the success of the Net that
Michael Powell, when he was chairman of the F.C.C., described
it as one of the basic rules of 'Internet freedom.' In the
past few months, though, companies like A.T. & T. and BellSouth
have been trying to scuttle it. In the future, Web sites that
pay extra to providers could receive what BellSouth recently
called 'special treatment,' and those that don't could end up
in the slow lane. One day, BellSouth customers may find that,
say, NBC.com loads a lot faster than YouTube.com, and that
the sites BellSouth favors just seem to run more smoothly.
Tiered access will turn the providers into Internet gatekeepers.

The logic of the tiered-access approach is simple: broadband
companies do the work of providing Internet access, so they
should be able to charge what they can for it. Telecom executives
say that the revenue from tiered access would let them invest
more in adding bandwidth and improving download speeds, and
argue that Web sites are parasites taking, as A.T. & T.'s
chairman, Edward E. Whitacre, Jr., put it, a 'free ride' on
the pipes the broadband companies own. But these companies
have pipes into people's homes in the first place only because
of a long history of government regulation, and people want
to use those pipes only because of all the value the so-called
parasites have created.  And it's that value which tiered
access -- even if it does improve the Internet's infrastructure
-- will put in harm's way. The Internet has become a remarkable
fount of economic and social innovation largely because it's
been an archetypal level playing field, on which even sites
with little or no money behind them -- blogs, say, or Wikipedia
-- can become influential. If the Internet turns into a zone
of tiered access, it will be harder for noncommercial sites
or startup companies to compete with bigger firms.

Broadband providers insist that they have no plans to block
access or degrade service to those who don't pay a premium
rate. But if some companies are getting better service, then
all the others are getting worse service. Besides, there have
already been examples of active discrimination. Last year, a
rural telecom company in North Carolina blocked its users'
access to the Internet-based phone service Vonage, and in
Canada the telecom company Telus blocked access to a Web site
supporting the telecommunications workers' union. Market forces
will offer some check to this kind of interference -- if a
particular provider goes too far, customers will take their
business elsewhere -- but, in the world of broadband, market
forces are weak, because most cities have only two major
providers. More than ninety per cent of Americans get Internet
service from either their local phone company or their local
cable company, and A.T. & T.'s newly announced acquisition of
BellSouth means that there will soon be only three major phone
companies in the entire U.S.

Ultimately, Internet providers hope to manage the Internet
the way a supermarket owner manages his store, charging
companies 'slotting fees' in exchange for better shelf space,
or the way bookstores charge publishers extra in order to have
books placed on tables at the front of the store. Up to this
point, the Internet has been operated more or less like a
public utility. All bits of data have been treated similarly,
just as the highway system doesn't allow trucks from some
companies to go faster than others, and the electrical grid
does not deliver reliable power to some customers and erratic
service to others. We could write this principle into law, as
a new bill sponsored by Ron Wyden, a Democratic senator from
Oregon, proposes. But the bill's chances of success are slim
at best. Increasingly, it seems likely that the Net will end
up looking less like the highway system and more like a
collection of Safeways.

Companies already pay for bandwidth. It should not matter what type of
data the paid for bandwidth is carrying, it should cost the same. AT&T
wants to be able to charge extra if a movie is being streamed, while
allowing that download of Linux to be charged the normal rate.

For example, AT&T hates voip. They want to be allowed to look for voip
packets that are not theirs and hold them up a bit, thus making a
competitor's voip call break up and have pauses.

This has been discussed at Groklaw and Slashdot.
http://it.slashdot.org/article.pl?sid=06/04/06/0212225&from=rss

Dear Dan,

Congress is about to sell out the Internet by letting big
phone and cable companies set up toll booths along the
information superhighway.

Companies like AT&T, Verizon and Comcast are spending tens
of millions in Washington to kill "network neutrality" -- a
principle that keeps the Internet open to all.

A bill moving quickly through Congress would let these
companies become Internet gatekeepers, deciding which Web
sites go fast or slow -- and which won't load at all --
based on who pays them more. The rest of us will be detoured
to the "slow lane," clicking furiously and waiting for our
favorite sites to download.

Tell Congress to Save Net Neutrality Now:

http://action.freepress.net/ct/QdMoTqF19PRt/

Our elected representatives are trading favors for campaign
donations from phone and cable companies. They're being
wooed by people like AT&T's CEO, who says "the Internet
can't be free" and wants to decide what you do, where you go
and what you watch online.

The best ideas rarely come from those with the deepest
pockets. If the phone and cable companies get their way, the
open and free Internet could soon be fenced in by large
corporations. If Congress turns the Internet over to AT&T,
everyone who uses the Internet will suffer:

* Google users -- Another search engine could pay AT&T to
guarantee that it opens faster than Google on your computer.

* iPod listeners -- Comcast could slow access to iTunes,
steering you to a higher-priced music service that paid for
the privilege.

* Work-at-home parents -- Connecting to your office could
take longer if you don't purchase your carrier's preferred
applications. Sending family photos and videos could slow to
a crawl.

* Retirees -- Web pages you always use for online banking,
access to health care information, planning a trip or
communicating with friends and family could fall victim to
Verizon's pay-for-speed schemes.

* Bloggers -- Costs will skyrocket to post and share video
and audio clips -- silencing citizen journalists and
amplifying the mainstream media.

* Online activists -- Political organizing could be slowed
by the handful of dominant Internet providers who ask
advocacy groups to pay a fee to join the "fast lane."

* Small businesses -- When AT&T favors their own services,
you won't be able to choose more affordable providers for
online video, teleconferencing, and Internet phone calls.

* Innovators with the "next big idea" -- Startups and
entrepreneurs will be muscled out of the marketplace by big
corporations that pay for a top spot on the Web.

We can't let Congress ruin the free and open Internet that
has revolutionized democratic participation, economic
innovation, and free speech online.

Let Congress Know that You Want Net Neutrality Now:

http://action.freepress.net/ct/QdMoTqF19PRt/

We must act now or lose the Internet as we know it.

Onward,

Robert W. McChesney
Free Press

P.S. Visit http://action.freepress.net/ct/Q7MoTqF19PRg/ to
contact your representative, learn more about this issue,
and discuss this campaign with other activists.

You can take action on this alert via the web at:
http://action.freepress.net/campaign/savethenet/i7xi7wu4rjnx8jd?

Visit the web address below to tell your friends about this.
http://action.freepress.net/campaign/savethenet/forward/i7xi7wu4rjnx8jd?

We encourage you to take action by April 10, 2007

Don't Let Congress Ruin the Internet

INSTRUCTIONS TO RESPOND VIA THE WEB:
If you have access to a web browser, you can take action on
this alert by going to the following URL:

http://action.freepress.net/campaign/savethenet/i7xi7wu4rjnx8jd?

Your letter will be addressed and sent to:
Your Congressperson
Your Senators

----THIS LETTER WILL BE SENT IN YOUR NAME----
Dear [decision maker name automatically inserted here],

Congress must preserve a free and open Internet. Please vote
for enforceable network neutrality and keep tollbooths,
gatekeepers, and discrimination off my Internet.

Please act immediately to save the Internet.

--
Dan Clore

My collected fiction, _The Unspeakable and Others_:
http://amazon.com/o/ASIN/1587154838/ref=nosim/thedanclorenecro
Lord Weÿrdgliffe & Necronomicon Page:
http://www.geocities.com/SoHo/9879/
News & Views for Anarchists & Activists:
http://groups.yahoo.com/group/smygo

Aren't many of the networks that run the internet privately owned?  If
corporations built the infrastructure, why can't they charge for the use
of that infrastructure?

The issue isn't that they shouldn't be able to charge more for more
bandwidth. They want to charge more depending on what is being sent.