After last year's Republican-controlled Congress killed amendments to preserve so-called Network Neutrality, the advocacy groups of Internet companies had hoped for better luck with the current Democratic-led Congress but have thus far seen no meaningful legislation introduced.

Network Neutrality — the concept that major telecoms should provide equal access to all content providers as opposed to creating fast lanes for their own services and others willing to pay top dollar while charging other competitors exorbitantly high prices — has been left on the back burner by Congress for a number of reasons, blogs CNet's Declan McCullagh. Unfortunately for advocates of Net Neutrality, agencies under the Executive Branch have not been quiet. The Federal Trade Commission and the Department of Justice have both came out against new rules to ensure broadband competition.

In a comparison sure to be sending chills to Internet companies, the DOJ's filing with the FCC on Sept. 7 compared a tiered pricing model by cable and telecom services to the postal service's charging premium prices for faster service. The DOJ's statement says, "It may make economic sense for content providers who want a higher quality of service to pay for the Internet upgrades necessary to provide such service." The DOJ also says that “any regulation that prohibits this type of pricing may leave broadband providers unable to raise the capital necessary to fund these investments.”

Net Neutrality's setbacks began in June, when the FTC also warned against new regulations or legislation, saying, "In the absence of significant market failure or demonstrated consumer harm, policy makers should be particularly hesitant to enact new regulation in this area.”

While both the FTC and DOJ cited their willingness to step in should service providers go too far and hurt consumers, promoters of Net Neutrality, such as the Open Internet Coalition, insist that pre-emptive safeguards are needed.

GETTING TO KNOW NETWORK NEUTRALITY

THE ARGUMENTS ...

• Net Neutrality advocates worry that without proper protection from the Federal Communications Commission, phone and cable companies would create a high-speed toll road for the Internet, discriminating against smaller Web companies and other online content.
  • Similarly, Internet content companies argue it's a must to preserve the wide-ranging content available on the Web today and would hurt those unwilling or unable to pay, creating a "lesser breed" of Internet competitors.
• Some activist groups think the outcome of the media ownership debate and the Net Neutrality battle are inherently connected, while FCC Chairman Kevin Martin likely wants to keep those two bloody battles separate.
• Network companies argue Net Neutrality would discourage innovation and investment.

... AND THE IMPACT

Net Neutrality was central to the approval of the SBC Communications Inc.-AT&T Corp. and Verizon Communications Inc.-MCI Inc. deals last year — they had to agree to it.

Net Neutrality's effect on technology development and adoption of Web services by businesses and consumers will likely be far greater in the future, but with the expected tight battle for the White House, a political and regulatory debate on an issue that many don't quite understand and that isn't of pressing importance may be put on hold.

The regulatory issues of Net Neutrality and their effect on M&A will be the focus of an afternoon panel at Tech Confidential's Convergence 2.0 Conference on Sept. 17 in New York City. —Carolyn Murphy and George White

UP IN ARMS

The players
	FCC chairman Kevin Martin, in charge of the great debate over net neutrality, media ownership and so much more, fighting those who want to bring the issues together.
	Rep. John Conyers of D-Mich., the ranking Democrat heading the House Judiciary Committee, and co-sponsor of a last year's net neutrality bill which approved in committee May 26, 2006, but was killed by the Republican-controlled congress.
	Veteran Sen. Ron Wyden, D-Ore., who argues big telecom and media companies are trying to "break the Net" if Congress and antitrust authorities don't stop them.
	The House Judiciary Committee's ranking minority member Lamar Smith (R-Texas).
	Chairman of the Senate Commerce Committee, Daniel K. Inouye (D-Hawaii), who advocated a compromise on net neutrality during last year's hearings.
	Ranking minority member of the Senate Commerce Committee, Ted Stevens, R-Alaska, said he was unwilling to fight for strong net neutrality protection — a hit to Democrats. He said price restrictions would discourage phone and cable network companies from investing in new services, networks and technology if there were limits on charging content companies for faster connections.
Source: The Deal