Conspicuously absent from the telecommunications overhaul passed by the U.S. House of Representatives earlier this month was an amendment guaranteeing “net neutrality,” the idea that telephone, cable, and other broadband providers shouldn’t favor certain web sites or services simply because they are willing to pay higher fees or make special arrangements to transmit data (see story: Schools seek ‘net neutrality’). Now, as action on the legislation switches to the Senate, lawmakers there appear sharply divided over the issue.

At least eight of the 10 Democratic members of the Senate Commerce Committee have joined Republican Olympia Snowe from Maine in supporting an amendment backing net neutrality. Most other Republicans on the committee are strongly opposed to the issue, believing it should be left to market forces.

Sen. Ted Stevens, R-Alaska, committee chairman, supports what he calls a compromise on the issue. It would establish an “internet consumer bill of rights” and give the Federal Communications Commission (FCC) the ability to fine companies found in violation–but not make new rules on the topic. The language is similar to what ultimately appeared in the House version.

Committee members had taken up the Senate’s version of the telecommunications bill on June 22 but adjourned before any votes were cast. They are scheduled to meet again on the bill June 27.

Phone and cable companies contend net neutrality would drive up costs to consumers, because online businesses wouldn’t pay a fair share of the billions of dollars being spent to provide high-speed service around the country.

Although they say they wouldn’t block access to anyone, some internet providers have proposed “tiered services,” in which a company offering an internet phone or video service could pay for higher priority on the network. That’s important, because voice and video offerings consume a high volume of bandwidth and rely on real-time delivery of data, so delays would be much more noticeable than if the transmission involved eMail or a static web page.

But critics say that with tiered services, those unable or unwilling to pay would essentially be left out. Demanding assurances of net neutrality are content providers such as Google Inc., Microsoft Corp., and Yahoo! Inc., and internet users ranging from the Christian Coalition to rock musicians.

The House telecommunications bill that passed earlier this month would give the FCC authority to enforce net neutrality principles and set fines of up to $500,000 for violations. Critics say that provision wasn’t enough to maintain the internet’s freewheeling openness.

Rep. Edward Markey, D-Mass., had offered an amendment stating that broadband network providers must not discriminate against or interfere with users’ ability to access or offer lawful content.

Without that amendment, said House Democratic leader Nancy Pelosi of California, “telecommunications and cable companies will be able to create toll lanes on the information superhighway. This strikes at the heart of the free and equal nature of the internet.”

The amendment was defeated 269-152. “You can call an amendment net neutrality,” said Rep. Paul Gillmor, R-Ohio. “But it’s still government regulation.”

“Tilting the cost burden onto end users, which would be the inevitable result of neutrality regulations, will only delay much-needed broadband deployment,” said Mike McCurry, co-chair of Hands off the Internet, a coalition of telephone, business, and small government groups.

Education groups disagree.

Testifying before the Senate Judiciary Committee on June 14, Jeff C. Kuhns, senior director of IT services for Penn State University, urged senators to support a full net neutrality provision.

“Universities are extremely large producers and users of internet content,” Kuhns said in his statement. “All of these activities, however, depend upon the availability of an open internet. … Our distance learning, our telemedicine applications, and our research activities could be wiped out if the owners of the broadband networks are allowed to close down the internet, or give preferential treatment to their own services. We urge Congress to restore the net neutrality policy that governed the internet since its inception. The future of American education, innovation, and competitiveness is at stake.”

Net neutrality is only a small portion of the telecommunications bill. Like the House version, the Senate version also proposes a national franchising system to speed the delivery of video and broadband services and give consumers more choices–but it goes much further than that. It also would give local governments the ability to deploy their own networks; set aside up to $500 million per year from the Universal Service Fund (USF) especially for broadband services in “unserved” areas; and expand the pool of money available through the fund, which also pays for eRate discounts on eligible telecommunications services delivered to schools and libraries.

On June 21, the FCC took an additional step to bolster the USF, voting unanimously to require all Voice over Internet Protocol (VoIP) services that connect to the public-switched telephone network–as opposed to using peer-to-peer technology–to contribute to the fund.

“The FCC decision to have VoIP companies contribute to the Universal Service Fund is welcome news, as [agency officials] are trying to ensure the fund stays solvent as technology continues to change,” said Peter Kaplan, director of regulatory affairs for eRate consulting firm Funds For Learning LLC.

“This, however, does not mean that VoIP will become an eRate-eligible service,” Kaplan added. “The FCC first needs to determine whether VoIP is an information service, which is relatively unregulated, or a telecommunications service–and there is no indication when that might happen.”


Senate Commerce Committee

Federal Communications Commission

Funds For Learning LLC