The Internet has always been about democracy—what the geeks who designed it call "network neutrality." Data, whether e-mail, a Web page, or video, get sent as packets that are reassembled at the end of their journeys. All packets are created equal, and Internet service providers deliver them without prejudice, based on their network's speed and capacity.
Telecommunications and cable companies—let's call them telco-cable—want to change that. Verizon, Comcast, and their ilk have been lobbying Congress to transform the Internet into a two-tiered system. By tagging content, broadband providers would ensure that their own packets (or those from companies paying them protection money) get preferential treatment and reach subscribers faster than second-tier content. This would give companies like Verizon a tremendous advantage as they roll out their own television and VoIP telephone services.
Telco-cable companies have spent billions to lay down broadband pipe and want a return on their investment. They are tired of bandwidth hogs like Google, Amazon, and Microsoft getting a free ride. This was fine when the Internet consisted mostly of e-mail and static Web pages. With the advent of online video, Internet telephony, and IPTV, Verizon, AT&T, and BellSouth want content providers to share the cost. Their reasoning: If Google is going to introduce a video service, shouldn't it have to pay for some of the bandwidth it scarfs down?
But it isn't just the Googles of the Web that are soaking up bandwidth. According to the U.K.-based technology firm Cachelogic, peer-to-peer traffic accounts for 80 percent of the traffic of so-called last-mile providers, companies like Verizon and Time Warner Cable that take broadband that final mile into your home. All of this demand for video, music, and file-sharing could create bottlenecks for Verizon and Time Warner—the ones who hook up your home to the data grid.
As a result, telco-cable has been lobbying Congress to rewrite the Telecommunications Act of 1996. A draft of the new bill would codify "network neutrality" (which to this point has been voluntary) and forbid network service providers from blocking or otherwise sabotaging content. Usually fierce competitors, these gatekeepers can agree on one thing: They want to strike the network neutrality clause. Google, Yahoo!, Microsoft, and eBay want to keep it. If telco-cable wins, it will be able to set up separate tiers, forcing Google to pay up or ride in the slow lane.
At this month's Consumer Electronics Show, Verizon CEO Ivan Seidenberg explained, "We have to make sure that they [application providers] don't sit on our network and chew up bandwidth. We need to pay for the pipe." Perhaps, but what Verizon proposes is to charge twice for broadband: first to subscribers, then to content providers. In essence, telcos and cable companies want to privatize the Internet—a model we've pretty much left behind since the days of CompuServe, Prodigy, and AOL.
If the telcos and cable companies get their way, we'll have a Balkanized Web. Content providers who can afford to pay for premium service will market superior products to consumers with fast connections. Everyone else will make do with second-class companies at second-class speeds.
The business model that this most resembles is cable television. There's one key difference, though. In the cable world, the service providers pay channels for the rights to broadcast their shows. In the system that telco-cable is proposing for the Internet, the content providers—who provide the services that make customers clamor for broadband in the first place—would have to pay for the privilege of being included.
Not all content providers are taking this lying down. Business 2.0's Om Malik reports that Google has been buying up miles of "dark" fiber—unused fiber-optic cable—at severely depressed prices. Malik believes that Google plans to "blanket major cities with Wi-Fi," including San Francisco, Washington, D.C., and New York. Given Google's ethos, its Wi-Fi would probably be free, with revenue derived from targeted advertising. Obviously, the telcos and cable companies would have trouble competing with that. Even if telco-cable is successful in implementing a two-tiered Internet plan, another workaround could be municipal wireless networks, like those being built in Philadelphia. (No wonder Verizon has been fighting them tooth and nail.)
There's a far better solution than Verizon charging Google to use its bandwidth or Google becoming a service provider itself. What about having subscribers pay for the bandwidth they consume? Just like you buy variable rate cell-phone plans and pay for electricity based on how much you use, your broadband bills should be calculated the same way. That way, heavy Net users could subsidize the Internet for those who don't use it as often, and access would be available for anybody who wants it. Then content would remain free, and everyone would benefit.