2007 brought the Democrats back in to power in the House and Senate and it’s changing the tone of the debate for policy issues in the intellectual property and high tech arena. It’s about ‘who controls the pipes’ and ‘who controls the content.’ Although many policymakers will say that these issues like patent reform or Net Neutrality aren’t issues that cut across clear partisan lines there still appear to be some differences in the tone being set as the 110th Congress gets started. Sometimes it’s indirect. There’s still a feeling among some Democratic leaders that pharma set the agenda for patent reform in the 109th Congress and whatever pharma is for, they’re against. Similarly with the debate about Net Neutrality there appears to be a sense that large telcos drove the agenda last term and now it’s time to move in a different direction. The Net Neutrality debate is thus far being waged along partisan lines in the presidential contest – Democratic challengers, Clinton, Obama and Edwards are supporting it and Republican challengers McCain and Brownback are against it. “Net Neutrality” is a term coined by Professor Tim Wu when he delivered a paper at the 2003 Silicon Flatirons Conference in Boulder Colorado, where Michael Powell (then Chair FCC) listened and returned the following year (2004) with an address outlining the four “Internet freedoms” (PDF). It was a warning to the broadband industry to preserve openness and consumer choice. He also hinted that adopting these policies would be the best way to avoid further government regulation. Fast forward to November 2005 where then SBC CEO (now ATT CEO) Ed Whiteacre responded during an interview by Business Week with words (that perhaps haunt him):

“Now what they [responding to competition from Google, Yahoo, eBay and others] would like us to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using.”

The reaction to Whiteacre’s statement was swift and strong. His ‘fighting words’ were fuel to the network neutrality advocates such as the grassroots effort led by SavetheInternet.com, and were piggybacked on by Internet giants Google, Yahoo, Amazon and eBay. Even the ‘father’ of the Internet, Vince Cerf, spoke at House hearings on the need for non-discrimination legislation. Legislation followed in the 109th Congress generally along lines of either an anti-competitive standard where telecom behavior is okay unless demonstrated to be illegal, or ananti-discrimination standard where if certain stated rules of neutrality are broken, the violators have to prove their behavior was on the right side of the line. Similar to the patent reform debate, the 109th Congress seemed weighted down by the powerful telco lobby and nothing was passed. There was a divide with other ‘technology’ companies like Cisco, Qualcomm, Nortel and Motorola who came out publicly against the proposed Net Neutrality legislation with soft statements like, “It is premature to attempt to enact some sort of network neutrality principles into law now.” Even with the momentum and apparent groundswell the Republican-controlled Congress stalled any legislation from being passed. With the 110th Congress the broadband providers are starting to sound like they’re on the defensive. Last month (February 2007) at the Tech Policy Summit in San Jose, broadband access/service and Net Neutrality were hot topics for discussion. TPS brought an impressive line-up of technology companies, media leaders and government policy makers. Congressman Berman was flown in as well as Jon Dudas (head of US Patent Office). All the large broadband providers (ATT, Comcast and Verizon) were represented, as were large technology companies from the Valley (Cisco, Intel, Sun and HP), and companies with large Valley presence (IBM, Microsoft). Of the significant Internet companies, Google was represented but eBay and Yahoo were noticeably absent. The broadband providers were put on the defensive not by the technology companies directly but, by their media interviewer/moderators. Walt Mossberg of the Wall Street Journal put James Cicconi (SVP, External and Legislative Affairs, ATT) constantly on the defensive with questions like:

  • Why is broadband value so poor in the US?
  • Why can someone in France (and many other European and Asian countries) get better broadband (ie faster service) for less money?

Cicconi tried to talk about population density and regulation but was really stumped when Walt told him he lived in Manhattan and could get better service from a small cable company. They’re also on the defensive for not providing useful information (read: transparency) about what broadband service they’re providing. This was discussed at the State of the Net conference as well. I remember living in Palo Alto in 2003 and still not being able to access broadband (cable or DSL). Friends on the East Coast were stunned. Broadband providers were saying that because some people in my zip code were receiving broadband, they were serving the area. The broadband providers sound like they are on the defensive. They constantly cite statistics about how much money they’ve invested in broadband, how many feet of fiber, they’ve laid across the country, and so on. The crucial question is whether the Internet should be treated like a public utility and if so what is the appropriate regime to serve the public interest. The Big Three (ATT, Verizon and Comcast) have vested interests in ensuring that their billions of dollars invested (some well, some not so well) gets recouped, at least so their management can answer to their boards and shareholders. Cicconi said his company has publicly agreed to not block content or degrade service based on source of content. To those following the debate closely it may or not have appeared disingenuous that he failed to mention that their public position followed their agreement to certain Net Neutrality provisions with the FCC to permit the ATT/BellSouth merger in 2006. Note the partisan divide; one Republican commissioner had excused himself from the vote and the remaining two Democratic commissioners held up the merger until ATT agreed to abide by Net Neutrality provisions. Mossberg’s point (effectively made) was: Why can’t the consumer choose the phone they want and the carrier they want? His reference analogy of the circa 1968 black ATT phone was an unspoken reference to the FCC’s Carterphone ruling, which for the first time made attaching a non ATT phone to the ATT network legal. Cicconi talked about how the phones are subsidized, but he sidestepped the real question about consumer choice. Now Skype has petitioned the FCC, arguing that consumers should be able to attach their chosen device to the Internet via wireless networks. It is trying to take the Net Neutrality debate beyond the terrestrial Internet space and include wireless access as well. Here the large broadband providers believe the investment they made in purchasing spectrum from the government means they need control over those airwaves to ensure a return on their investment. It sounds similar to Whiteacre’s argument for exercising price discrimination on its access to the terrestrial Internet. What’s happening in Congress? In the House, Ed Markey (D MA) has started hearings on Net Neutrality legislation. He hasn’t introduced any bill yet, but when he does it will likely to be similar to his 2006 bill (PDF). It included the principles of probation on blocking, degrading or interfering with user’s accessing content similar to what ATT has agreed to (for limited period) with the FCC. On the issue of prioritization of content, broadband providers have to make all similar content available on the ‘dedicated pipe’ without surcharge. In the Senate, Senators Snowe (R-ME) and Dorgan (D-ND) have re-introduced legislation (from the 109th session) called the Internet Freedom Preservation Act (PDF). It’s similar to the Markey provisions on blocking, degrading, and prioritization of content. It also has a provision about mandating that broadband providers make stand-alone broadband service available to users. Reaction by Presidental contenders to this bill has so far lined up on partisan lines. Notably, Snowe is the only Republican supporting it. Tech LawForum will be following the public policy debate as it unfolds in the 110th Congress. Besides Net Neutrality, Tech LawForum’s Internet law and policy section will be following many other issues and topics including the Google v Perfect 10 case and Congressional efforts to legislate in the areas of music licensing and fair use. Also, articles and blog posts under Net Law will cover updates on cyberspace law topics such as defamation, jurisdiction and privacy.