Cable, Telco Pledge Not To Block 'Net Content

By John Eggerton -- Broadcasting & Cable, 2/7/2006 11:32:00 AM

Representatives of the major telco and cable trade associations pledged to the Senate Commerce Committee Tuesday that they would not "block, degrade, or impair" Internet services or applications or limit access by their Internet customers to legal content on the Internet.

But they also argued that if the Congress mandates network neutrality--nondiscrimination in access to their networks by independent Internet service providers--it will sour Wall Street on investing in continued network build-outs and innovation in services.

On the eve of the tenth anniversary of the Telecommunication Act of 1996, the committee is considering how to update that act to reflect the advent of broadband and speed its rollout.

Everyone, senators and witnesses alike, seemed to agree that the ability to access Internet content should not be dictated by a consumer's choice of ISP, but whether Congress should mandate that through network neutrality was the $100 billion issue.

Bringing the issue to a head, in addition to the planned rewrite of the Act, were court and FCC decisions last summer and fall that cable and telcos do not have to open their networks to independent ISP's, though the commission also stated that network neutrality was an important tenet.

One of the witnesses for net neutrality was Google executive Vinton Cerf, one of the architects of the Internet, who argued that there is not currently sufficient competition for Internet service, saying 53% of Americans have no choice in broadband access. If there were competition, we wouldn't be here, he said.

Saying nothing less than the future of the Internet was at stake, Cerf said that without mandatory network neutrality: "We risk losing the Internet as a catalyst for consumer choice, economic growth, technological innovation, and global competitiveness."

NCTA President Kyle McSlarrow, who joined U.S. Telecom Association President Walter McCormick in pledging an open Internet, said that the marketplace has been working, that there is not problem that needs addressing through legislation, and that mandating network neutrality would stunt economic growth and put innovation in "neutral."

McSlarrow pointed out that the cable industry has invested $100 billion on its networks in the last 10 years. This model works, he said, why change it to pursue "hypothetical theories."

Pointing to another $100 billion--the market capitalization of Google--McSlarrow said that in the four years since another call for net neutrality legislation was buttressed with the argument that the Internet would be stifled without it, the 'net, and Google, have instead flourished. Obviously, they were wrong, he said.

The committee members appeared to have been upset by reports that Verizon wants companies like Google to pay for access to its networks, with Chairman Ted Stevens (R-Alaska) and Byron Dorgan (D-N.D.) pointing out that consumers, including themselves, were already paying via their monthly fees for access.

http://www.broadcastingcable.com/art...=Breaking+News

David A. Utter
Staff Writer
Published: 2006-02-07

Telecoms like Verizon and AT&T have been pushing harder to get their dreams of a two-tiered Internet supported by Congress and content providers.

The people do not appear to have been heard by the telcos. Instead of recognizing the benefits and needs for an Internet that doesn't have artificial barriers placed within it, Verizon and AT&T have turned up the volume.

A Washington Post article cited Verizon senior VP and deputy general counsel John Thorne, who spoke ahead of Congressional discussions on net neutrality:

"The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers," Thorne told a conference marking the 10th anniversary of the Telecommunications Act of 1996. "It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers."

The article further noted Verizon's work at constructing a fiber optic network that would deliver high-speed services. One source claims this work has been paid for already, in the form of $200 billion in tax breaks and other largess bestowed upon the telcos prior to the passage of the Telecommunications Act of 1996.

Telecom analyst Bruce Kushnick has made a number of claims regarding that $200 billion, and summarized the claims that appear in his book about the issue of telcos getting incentives to bring fiber to the home and then not doing so:

Starting in the early 1990's, the Clinton-Gore Administration had aggressive plans to create the "National Infrastructure Initiative" to rewire ALL of America with fiber optic wiring, replacing the 100 year old copper wire. The Bell companies - SBC, Verizon, BellSouth and Qwest, claimed that they would step up to the plate and rewire homes, schools, libraries, government agencies, businesses and hospitals, etc. if they received financial incentives.

By 2006, 86 million households should have already been wired with a fiber (and coax), wire, capable of at least 45 Mbps in both directions, and could handle 500+ channels.
Universal Broadband: This wiring was to be done in rich and poor neighborhoods, in rural, urban and suburban areas equally.
Open to ALL Competition: These networks were to be open to ALL competitors, not a closed-in network or deployed only where the phone company desired.
This is not Verizon's FIOS or SBC's Lightspeed fiber optics, which are slower, can't handle 500 channels, are not open to competition, and are not being deployed equitably.
This was NOT fiber somewhere in the network ether, but directly to homes.

Away from Washington, DC, in San Francisco, AT&T (formerly SBC) has pulled all of its ads from the San Francisco Chronicle. That action was reportedly worth $5 million per year to the newspaper, according to a post by search expert John Battelle, who thinks this move foreshadows what Google will face as it moves ahead with its plans to unwire San Francisco, and perhaps beyond:

this is your new competitor, Google. Get to know them. As you offer free WiFi to all of San Francisco (and, one might argue, the rest of the country/world), and undermine AT&T/SBC's broadband business (and wheel Vint Cerf out to argue the net neutrality meme), hard ball players like SBC are going to go after you, and rest assured, their motto ain't "don't be evil."

These same providers, AT&T/SBC, Verizon, BellSouth, and others collect fees from end-user subscribers in the home as well as from Google, Yahoo, and other big Internet players. Implying the Google is enjoying a "free lunch" doesn't conform to reality; the only free lunch associated with Google is in their employee cafeterias.

http://www.webpronews.com/topnews/to...alityGame.html

By Arshad Mohammed
Washington Post Staff Writer
Tuesday, February 7, 2006; D01

A Verizon Communications Inc. executive yesterday accused Google Inc. of freeloading for gaining access to people's homes using a network of lines and cables the phone company spent billions of dollars to build.

The comments by John Thorne, a Verizon senior vice president and deputy general counsel, came as lawmakers prepared to debate legislation that could let phone and cable companies charge Internet firms additional fees for using their high-speed lines.

"The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers," Thorne told a conference marking the 10th anniversary of the Telecommunications Act of 1996. "It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers."

Verizon is spending billions of dollars to construct a fiber-optic network around the country for delivering high-speed Internet and cable TV services. Executives at other telecom companies, such as AT&T Inc. chief executive Edward E. Whitacre Jr., have suggested that Google, Yahoo Inc. and other such Internet services should have to pay fees for preferred access to consumers over such lines.

While Thorne did not specify that practice, he emphasized the need for companies such as his to find ways to make money to justify their investments. "The only way we are going to attract the truly huge amounts of capital needed to build out these networks is to strike down governmental entry barriers and allow providers to realize profits," Thorne said yesterday.

Thorne described two obstacles to building such networks: the task of getting thousands of local franchise agreements to offer cable television; and what he called "Google utopianism," a concept he likened to "spiked Kool-Aid."

He spoke as Congress is considering whether to write provisions that advocates say would ensure consumers unfettered access to the Internet. The Senate Commerce Committee will hold a hearing today on the issue, which is known as net neutrality.

Opponents have argued that there is no need for such laws because there have been few instances of network providers blocking Web sites; because their customers would not stand for such limitations; and because, as a general rule, regulation of the Internet should be avoided.

Thorne did not mention net neutrality by name in his talk, which largely involved an assessment of the 1996 telecom law and what he suggested were its lessons for the future.

"Will another set of restrictions -- the continental minefield of franchise agreements and the free-ridership of Google and its brethren -- choke off investment in broadband deployment?" he said.

Vinton G. Cerf, a vice president and "chief Internet evangelist" at Google, said in an interview that his company is worried that if net neutrality protections are not enacted, the Internet's freedom could be compromised, limiting consumer choice, economic growth, technological innovation and U.S. global competitiveness.

"In the Internet world, both ends essentially pay for access to the Internet system, and so the providers of access get compensated by the users at each end," said Cerf, who helped develop the Internet's basic communications protocol. "My big concern is that suddenly access providers want to step in the middle and create a toll road to limit customers' ability to get access to services of their choice even though they have paid for access to the network in the first place."

http://www.washingtonpost.com/wp-dyn...601624_pf.html

By Anne Broache
http://news.com.com/Broadband+law+re...3-6036677.html

Story last modified Wed Feb 08 10:14:21 PST 2006

WASHINGTON--A senior Republican congressman on Wednesday said his committee hopes to propose a "comprehensive" overhaul of the nation's telecommunications laws--with an intensive focus on the explosion of the Internet--later this month.

"We really want to get a comprehensive telecom reform bill to the president's desk this year," Rep. Joe Barton, the Texas Republican who chairs the U.S. House of Representatives Energy and Commerce Committee, said in a speech at an annual "state of the Net" conference here.

Politicians in both the House and the Senate have been exploring ways to update the Telecommunications Act of 1996, which has been criticized for its failure to account for the rapid expansion of the Internet. On the Senate side, John Ensign of Nevada and Jim DeMint of South Carolina have each introduced measures that take a relatively laissez-faire approach to broadband.

Meanwhile, the Senate Commerce Committee has kicked off a series of hearings this year that are expected to lead to another reform bill, though Chairman Ted Stevens of Alaska said Tuesday that "we're going to finish our hearings first."

Barton said he didn't want to wait for the Senate to act before moving forward on legislation. "We don't have that many legislative days this year, so it is time to stop talking, and it is time to start working," he said. Because 2006 is a congressional election year, the legislative body's schedule will likely be somewhat fractured.

Last fall, the House Energy and Commerce Committee released a 70-page draft proposal (click here for PDF) and held a lengthy hearing. It outlines rules for a broad set of technology services divided into three major categories: broadband Internet service providers, voice over Internet Protocol providers and broadband video providers.

Technology companies like Google and Amazon.com criticized that version, which they accused of failing to spell out a network neutrality mandate--that is, a requirement that companies that own broadband pipes don't favor certain content over others when transmitting it.

Barton gave no indication as to how that draft would change before its formal introduction on the House floor but said he was aiming to put a bill out for public review "very quickly." With respect to network neutrality in particular, he said, "it's pretty tough to determine what is right in my mind."

February 16, 2006
AT&T Pays Off Congressmen To Kill Municipal Networks

AT&T has been using its considerable checkbook to pay off Congressman to ban cities and towns from setting up their own broadband and wireless networks. The top two recipients of AT&T campaign donations in 2006 have proposed laws to ban or dramatically curtail municipal networks.

That's according to Russel Shaw's blog. Shaw dug into AT&T campaign donations, and found that the top recipient this year is Representative Pete Sessions (R-Texas), and number two is Senator John Ensign (R-Nevada).

Sessions has proposed a law that would outright ban municipal networks. At the heart of his so-called "Preserving Innovation in Telecom Act" is section two, titled, "Prohibition On Municipal Services." As the name implies, it would outlaw municipal networks.

Ensign's proposal isn't much better. It would put such serious roadblocks in front of municipal networks, that in essence, they would be banned.

AT&T is proving once again that it's trying to provide us with the best Congress its money can buy -- and hurt us all in the process.

http://www.networkingpipeline.com/bl...ys_off_co.html

OPINION By Sonia Arrison
TechNewsWorld
02/17/06 5:00 AM PT

New technologies that allow for high-speed data transfer over the Internet have revolutionized the way consumers and businesses communicate, shaking up the nation's communications sector from telecommunications to cable. Laws that used to make sense have now become obstacles to positive change and consumer benefit.

For those who think their cable bills are soaring to all-time highs, it might be reassuring to know that a bipartisan group of U.S. senators agree. At a recent Senate Commerce Committee hearing, members pondered the reasons for the rate hikes.

"There is only head-to-head competition in less than two percent of America," said Senator Gordon Smith (R-OR). He's right, and one of the biggest barriers to competition in the cable market is franchising rules -- the regulatory system that allows local governments to set the terms and conditions for businesses to enter the video market.
Calling for Reform

As it works now, video providers are required to pay "franchise fees" to their local franchise authority, which is typically a municipality, but can also be a state or a region. Through these fees, the authorities grant the right to "rent" the public right-of-way to video service providers, which must access streets and public spaces to install and maintain programming equipment.

There was a time when cities were regulating what was effectively a monopoly service for local residents, but now that competition is available from a variety of technologies, such as satellite and the Internet Get Linux or Windows Managed Hosting Services with Industry Leading Fanatical Support., it's time to revise the regulatory system. The problem is that many cities are unfortunately working to protect franchisees from competitors in exchange for the significant financial and service concessions they get from cable companies.

If Congress acts to remedy this problem, consumers will benefit and the economy will grow as new investment gets injected into video technologies such as Internet Protocol Television (IPTV). It's encouraging to see that Senators John Ensign, John Kerry, Jim DeMint, John Rockefeller, and John McCain joined with Senator Gordon Smith in calling for reform.
Consumer Protection

In their letter, the Senators say that "in the interests of protecting consumers and promoting investment, the Congress should reform existing policies to ensure that they reflect the extraordinary changes in the communications marketplace, including new technologies and the desires of new entrants to compete with the incumbent provider."

What the senators are saying makes a good deal of sense. Consider the astounding results in the real world when competition is allowed to flourish.

Just weeks following passage of a bill last summer that authorized Texas to grant statewide video franchises, Verizon introduced its FiOS TV service in Keller, Texas, offering 180 video and music channels for US$43.95 a month, or a 35-channel plan for $12.95 a month. In response, the local cable company, Charter Communications (Nasdaq: CHTR) Latest News about Charter Communications, dropped its prices, offering a package of 240 channels and fast Internet service for $50 a month.

That's a big savings for the people of Keller, compared to the $68.99 Charter once charged for a TV package alone. Unfortunately, Americans in other parts of the country don't yet have the benefits of policy reform and are still paying too much.
Stemming 'Deadweight' Losses

A recent study by the Mercatus Center at George Mason University calculated that consumers are paying an extra $8.4 billion in costs in the form of higher rates for service, fees, and equipment as a result of video franchise regulations. The study also found $1.7 billion in "deadweight loss" or value that consumers forego because higher prices induce some consumers to go without cable television. That's a lot of money that could be saved and put to better use, making it imperative that Congress act now to fix the system.

New technologies that allow for high-speed data transfer over the Internet have revolutionized the way consumers and businesses communicate, shaking up the nation's communications sector from telecommunications to cable. Laws that used to make sense have now become obstacles to positive change and consumer benefit.

Congress is starting to act on many of these problems, and it is important that they finish the job. Rumors that reform won't take place this year should fuel enough consumer anger to shift attention away from American idol and towards the nation's political masters.

http://www.technewsworld.com/story/6...sing-Now.xhtml

http://se7enpc.com/

Thank you for your note about the Post story quoting Mr. Thorne. I was
not an addressee, but am glad to respond on behalf of Verizon.
First, because you might find it an interesting, small world-type of story,
I know and work with both the reporter who wrote the story, Arshad
Mohammed, and John Thorne, who was quoted. Each man is extremely bright
and principled and does his job well.

But, in this case, John was quoted on an issue where someone else --
Verizon's Tom Tauke -- is really the spokesman. Tom is Verizon's executive
vice president for public affairs, policy and communication; John is a
senior attorney who works in our legal department and, literally, wrote the
book on the 1996 Telecommunications Act.

Verizon supports Internet Neutrality, does not block anyone's access, and
has no plans to assess 'access fees' on Google. It's not as if a company
could do that, anyway -- the marketplace is a "voluntary" place. In fact,
we are doing more than any other company to provide high-speed fiber
connections to homes and businesses. It is our business plan to keep
people connected at higher and higher speeds-- that's how we keep customers
and investors happy in the new world of communications. If our customers
don't have access to virtually everything on the Internet at high speeds
and a comparatively low price , they'll go somewhere else -- it's that
simple.

You've, no doubt, read how much Verizon is spending on its new, fiber-optic
network to deliver high-speed Internet and video -- billions. And we
already offer video in parts of six states, having begun video deployment
only last fall. In the areas our new fiber network is already deployed, we
offer speeds of 5, 15, and 30 Mbps -- and the capacity to go even higher
when the market catches up. The power of fiber-optics is amazing, and
Verizon is doing more than anyone to make greater choices available to
consumers.

To be fair to John, his comments were made in the context of a discussion
on telecom regulation at an academic conference. He did not call upon
Google to do anything, or call upon government to regulate Google. He was
making the point that network companies are highly regulated and highly
capital-intensive, and contrasted them with other companies in the
communications sector that face relatively no regulations and relatively no
investment hurdles and have huge valuations in the stock market. He was
arguing that regulations from the old world of telecommunications should
not be expanded to the new world of the Internet. But, to make a long
story short, these remarks were applied by the Post, without complete
context, to a hot story of the moment -- Internet Neutrality -- something
John did not intend.

I'm attaching for you the transcript of a media briefing by Tom Tauke where
he talks about Internet Neutrality, among other policy topics. He
articulates Verizon's view and answers questions from the DC communications
policy media. I think you will find what he says illuminating and more
comforting than what you read in the paper. The transcript follows:

Transcript by: Federal News Service, Washington, D.C.

OPERATOR: Good morning, ladies and gentlemen, and welcome to the Verizon Media Relations Conference Call. At this time, all participants have been placed on a listen-only mode for the duration of today's call.

It is now my pleasure to introduce your host, Mr. David Fish. Sir, you may begin.

DAVID FISH: The real host is Tom Tauke, and most of you have been to these briefings before. Questions are welcomed and answered, and today the only difference is we have several new people. Thanks to the people who are new - there are about four of you who haven't been to one of these before. And we have 45 minutes; usually we have an hour, so we'll get right to business.

As you know, Tom Tauke is our executive vice president, and he's the man with all the answers. (Cross talk, laughter.)

TOM TAUKE: Good morning, everybody. It's great to see you. I'm in D.C. today so I thought I'd take a little time to chat with you and try to address any questions that you might have.

Actually I was stuck in an intercarrier compensation meeting down at the United States Telecom Association, and I had the choice of staying there or coming here. And I just thought that this was the better deal. (Laughter.)

Well, a couple of opening thoughts. First, as you know, we are very focused right now on the deployment of our FiOS network, the expansion of our EVDO network in the wireless world, and all other things broadband. And this effort to respond to the demands of customers for increasing bandwidth is something that we see as a challenge, but also a great opportunity and we see it in large part as the future of the business. And so as a result we are focused on that.

One key element obviously in this broadband effort is the deployment of the fiber network to homes. We passed, as you know, three million homes last - as of the end of last year. We expect to do 3 million more this year.

A key component of the business plan for fiber deployment is video services, and we are in the business now of offering video services. We started in Keller, Texas. We are in a number of other communities now, and it's - the early returns are terrific.

We do, however, face some challenges in getting the local franchises. I will say that, to date, we have been able to secure the local franchises we've needed from a business perspective. I assume that will - I expect that that will continue throughout 2006, but the hill, in a sense, keeps getting higher to climb as we move forward because the numbers are just overwhelming.

Bottom line is that we therefore have, in essence, a four-part strategy to break down the barriers to video entry. First, of course, we do it the old-fashioned way: going community to community. We, as of the first of the year, had about 50 local franchises that had been approved. We are in about 400 communities now where we are actively engaged in negotiations for local franchises, and that effort will continue to expand as the year moves on.

Second, we have been working hard at the state level to pass legislation for state-wide video franchise relief. As you know, we were successful last year in Texas. This year we are very encouraged by the progress in Virginia. Just over the last couple of days we were able to reach agreement with the key legislators on a statewide video entry package in Virginia, and much to my surprise, frankly, the Virginia Cable Television Association also has endorsed the package. And so I think this is real news where we have both the telecom sector and the cable sector supporting legislation for video entry in the state of Virginia.

So we are active in Virginia, we are continuing to pursue New Jersey. We believe that we have a lot of support in New Jersey for moving legislation there that would facilitate our entry into the video market across that state.

We will also be putting a lot of attention on California. California is obviously a state with a lot of local franchise areas. We have some unique challenges in California because in California if you enter a community, you must do the whole community - build out the whole community, even if you don't have a network for the whole community. And because of the history of our company, the history of telecom generally, of course, we don't build networks according to community lines. The old GTE served a lot of rural areas that have now become urban areas in California, and there are lots of areas where our network serves part of a community but not the whole.

So as we rehabilitate our network and turn it into fiber-to-the-home, we would like to be able to offer video services to our customers, but the California law as it currently stands would require us to build out to areas where we do not now have a network, which of course makes the financial hurdle very, very high.

So we see that as a barrier to entry. We think we can get that issue addressed in California. We will be focusing on that this year.

In addition, we will be active in Florida, possibly Maryland, possibly New York, possibly Massachusetts, as we look at the early part of this year and try to move things at the state level. We also have been active in Indiana, which I should have mentioned in the first group because legislation passed the state senate in Indiana, 40 to 6 - that was last week or this week? I guess it was this week. It seems longer ago than that, though it was this week. So the legislation passed in Indiana, and in the Senate, and seems to be moving forward in the House as well. So I think we may have some breakthroughs on the state side on the video front.

Obviously this issue has a substantial amount of political support because of what it means for consumers. Not only does it give consumers choice of video services, some of which consumers have been clamoring for for some time, but it also has impact on price, even for those who don't exercise the choice. I think you're probably all familiar with the FCC's study, which came out - I guess it was - the FCC's report, which as I recall said that where there is competitive video, the average price is 15 percent lower.

The GAO looked at it and they said it was a 15 percent reduction in markets with competition versus markets without competition. The Bank of America looked at what's happening where we had been introducing FiOS, and the Bank of America on the 23 rd of this month said cable companies are matching or undercutting FiOS pricing where video is available. Cable companies are not advertising these prices at all, but the discounts to cable-advertised prices run to 20 percent in the areas where we're offering FiOS. In Keller, where we - which was of course our first area of entry - Keller, Texas - the (incumbent) cable ran a promotion with a 50 percent bundled discount when we entered the market.

So I guess the bottom line is that cable prices, of course, have been going up at four times the rate of CPI since 2001 - CPI is the Consumer Price Index - and when we enter the market, the cable prices come down, and of course we also are providing competitive prices. So it's a great deal for consumers; they get alternative choices. We believe, in our case, we're offering a lot more attractive programming packages. But in addition, the price of their existing service tumbles. So there's a lot of support for this, and I see this happening at the state level.

Then on the federal side, we are continuing to push for federal legislation. Frankly, I was a little surprised that we didn't see more movement on federal legislation last year. I think however we see both sides of Congress - the House and the Senate - interested in moving this year. The Senate committee, as many of you know, has scheduled a dozen or so hearings on the issue. Our CEO, Ivan Seidenberg, will be testifying Tuesday in the Senate, before the Senate Commerce Committee, on the video issue - Senator Stevens' hearing. And so I think there is some head of steam building up on the Senate side.

On the House side, the House continues to work on a comprehensive legislative package. Frankly, I think the House may want to consider looking at some of the experience of the states where the approach to video entry has been to look at the new entrants and how you ease entry rather than looking at the BITS approach that has been the focus of attention in the House. They, of course, have to decide what they want to do. But if they want to get off the dime here, it may be they may want to take a look at a little slightly different approach.

So finally at the federal level we also are - expect some action at the FCC on the proceeding that Chairman Martin has teed up. We believe that the FCC has some ability to define what is unreasonable action by local franchising authorities in terms of the amount of time that they can take to act on these franchise applications, on the kinds of build-out requirements that they can apply as a condition for these franchises. Third, they can take a look at all of the other things that we are being asked to do when we apply. You know, you've all seen stories about some of these things that come up. Some of my favorites are the - you know, providing seed money for wildflowers, putting baskets on all the light poles in the town. I was personally approached about funding a sculpture in front of the city hall in one community.

There are lots of these things; some less expensive, some more expensive, but generally, the things that are unrelated to the offering of video services, just shouldn't be part of this process. We know local communities are scrapped for - strapped, I should say, for money, but we don't think that it's appropriate that we fill that hole that may exist in some communities through the franchise process.

So overall I think that the - with the FCC looking at it, with the Congress looking at it, the states looking at it and our efforts in the communities, we're going to be able to get the ability to move forward with video entry throughout 2006 and beyond.

The other thing that I'd just comment on briefly is the whole net neutrality issue. I think it is fair to say that over the last decade we have been on the side of the open Internet. We believe that consumers should be able to go where they want to on the Internet. They should get the appropriate services they purchase. And they should not be restricted in the way in which they access sites and access content on the Internet.

We've been there before. We have worked with hundreds of ISPs throughout the years in order to have them use our network to offer services to consumers. We argued when we were trying to encourage cable to allow more than one ISP to be available to the cable customers, we argued at that time that the marketplace would eventually work. And we think the marketplace has been working and that the consumers have been very well served by the forces of the marketplace, the forces of consumers.

Nevertheless, we are aware of discussions by some about potential restrictions on customers' access to the public Internet. And so we want to again confirm that we support the notion of a full and open access to the Internet. We think consumers should be able to go where they want to go. We think that they should be able to have full disclosure of any meaningful terms that relate to their service when they buy their service. We think they should be able to attach any device. We think they should be able to run any application of their choice. Bottom line is, when they purchase from us, whether it's 760 kilobits or 5 megabits or 15 megabits of capacity for access to the Internet, we think they should be able to use that as they see fit. We also would like others in the industry to support that kind of effort. In many ways, we have had near consensus in the industry in support of the various sets of principles.

The High Tech Broadband Coalition, I think, was the first one out with their connectivity principles. The High Tech Broadband Coalition's principles got widespread support. The FCC then, last year issued its policy statement on Internet neutrality - again with widespread support from the industry. And we encouraged and promoted this effort at the FCC. Various organizations - yesterday, I became aware of a new coalition, Free Press - that has a variety of consumer interests, but essentially is talking about the same four things - access to any website, attach any device, run any application, full disclosure of the terms and conditions to consumers when they purchase an Internet access capability. And we think that it's important to keep hammering on the value of these principles for the orderly development of the market.

Now, having said that, however, we are not sure it's a great idea to start adopting a lot of regulation pursuant to this. You look at what's happening with government involvement in the Internet across the world, and the efforts by our government and others to get the European Community from trying to take over the management of the Internet. You see what's happening in China where companies are cooperating with the government in order to restrict the content that consumers can receive over the Internet in that country, which is happening in other countries as well. And all of these things, I think, highlight the potential danger of having governments get involved in the regulation of the Internet space. The old notion of government keeps its hands off the Internet we still think has merit.

So how do you reconcile this notion of We want the principles to be followed while at the same time want government to stay out? I'm not sure. But I think one thing that we're looking at, and we look at, you know, get other companies to publicly embrace these sets of principles, and perhaps have some mechanism whereby consumers would know which companies are with the program and which ones aren't when it comes to the Internet neutrality principles. So we continue to explore ways to address the issue without getting bogged down in a substantial amount of government regulation.

I've talked more than I intended so let's just open it up for any questions that any of you might have.

Q: Could you expand a little bit on your suggestion that the House drafters of the bill might want to look at the states and what they're doing with their legislation for some education in how they might

MR. TAUKE: You're determined to get me in trouble, aren't you? (Chuckles.) Listen - we of course commend the leadership of the House committee for really the terrific effort that has been made to try to pull together telecom legislation. But we've worked at it for a year now, and this package does not yet have wings. Therefore, rather than have another year go by without actually having something come to fruition, we would like to see the House consider some alternative approaches. One might be to simply break the pieces apart and start passing what has a lot of support. We would suggest, for example, that it may be possible to move the Video Choice piece through fairly quickly, while it may take a little more time to deal with some of the issues relating to things like universal service and inter-carrier compensation, although my guess is that those kinds of things will also have to move through the Congress in the not-too-distant future. So I think that might be one option.

Another option would be to say We've tried to do this on the basis of technology. We're having problems with that approach, so maybe we need to look at another approach. And in the video entry area, I suggest that looking at it from the standpoint of new entrants who already have the authority to deploy a network may be being treated differently from those who have been in the traditional cable space may make some sense. So bottom line is, we're anxious for movement. We think that the current laws don't very well fit the conditions on the ground in communities, nor do they help meet the needs of consumers, and therefore we'd like to see Congress act. And if you can't get the whole loaf, let's take a portion of it.

Q: Just sticking with that, what type of video franchising - or the video competition section, you called it - what do you want to see in the House bill to help you get into video markets easier?

MR. TAUKE: You know there lots of ways to approach this, but the bottom line is we are looking for a way to move through the video franchising process with some ease. So it could be, as Texas did, we would have something like a statewide video franchise. Or, as Virginia is doing, you have a mechanism where the local communities start the process, but if you don't meet agreement within a certain time, then there is a default to a statewide franchise, and that could be an alternative. So there are many ways, if you will, in which to skin this cat. But I think the bottom line is that the Congress should look at the current statute at the federal level and determine whether or not it's facilitating entry into the marketplace, and competition for consumers and the lower prices and other benefits that come from that. Or is the current law hindering entry? And we'd argue right now the current law is a barrier to entry.

Q: Have you heard anything about Representative Pickering has been talking about maybe taking an approach where it would just be in markets where there is competition rather than focusing on the actual technology? I mean I've heard a bit of talk about that.

MR. TAUKE: I don't know if I'm referring or know about the exact thing you're talking about with Rep. Pickering, but the notion that, if you will, the rules change when there is competition in the market, we certainly agree with that concept.

We've never been of the view that we're trying to keep the burdens on cable that cable has. We think that there a lot of regulations that cable is subject to which don't make a lot of sense for them either. Times have changed, you know? But our focus, frankly, is on entry, our entry into the market, which brings about competition.

Q: Are you at all concerned that the limited way in which you're actually taking advantage of the statewide franchises in Texas will undercut the argument that it is community franchise that makes things so slow rather than the investment and business operational thing that you have to do to actually enter a market?

MR. TAUKE: Well, I think we've responded pretty aggressively to the action taken in Texas. We're now in 29 (sic) communities in Texas as I recall the right number, Eric? And we've stepped up our investment in the state this year from what was planned. I don't think we've given (budget) numbers on this, and I'm not going to disclose these things so we don't file 8Ks, but there has been a substantial step up in investment in the state of Texas as a result of the passage of the Texas video legislation on our part. I believe I'm correct in saying - and you'd want to check this with AT&T - but I believe AT&T has indicated that they are spending an additional $800 million in Texas for more rapid deployment of their network facilities in order to be able to take advantage of the opportunity to offer video services in the state. So my sense is that Texas is an example of where the investment is increasing substantially as a result of the quicker entry into video made possible by the Texas legislation. And our own ability to offer video services to consumers moved ahead rapidly in 29 communities in just a month or two - a couple months - since the legislation has passed. And more is going to happen in 2006. Bottom line is that we would have been in - I think I'll give myself a little wiggle room here - five to ten communities as of today, rather than 29, if we had not had the legislation passed in Texas.

You know, I don't want to ignore the fact which you may have pointed out that deploying the network is a big task. It's a very expensive and a very significant undertaking. But we are, by the end of this year, we will have 6 million homes passed. And that's about 20 percent of our network. And we'll do another 3 million next year. So, I mean, we're moving pretty rapidly.

Q: How do you anticipate approaching Congress to break something off to address this, given they're - the Democrats were very unhappy with the BITS 2 bill and concerned about public interest obligations, redlining, and things like that in a legislative period that I think Congressman Dingle said the other day is 60 days?

MR. TAUKE: It's tough. I don't disagree that this is a challenge. I also acknowledge that the leadership, the key players in the House and Senate seem to be committed to doing something. So these are the facts on the ground, and we try to deal with those. Again, given the short time available, and also the commitment, my sense is that we need to suggest to Congress that they focus on what's doable now. And if, going back to what I earlier suggested, if you can't get the whole loaf, then at least let's do part of it this year. We had indicated in response to another comment you made - we have indicated we're willing to pay the franchise fees. We agreed to that in Texas. We agreed to it in Virginia. We're willing to carry the PEG channels. We're willing to live by the redlining provisions in the federal statute that apply to cable. We are not unwilling, if you will, to address the concerns that people have about our entry into the video marketplace, and we recognize the legitimate needs of communities. So I don't think those things ought to be a barrier to getting this legislation through.

Q: With all due respect, on the last point about carriage, or franchise fees and carriage, I don't think your fellows across the street necessarily see eye-to-eye on that one. Does that complicate the efforts? And I'm talking about lower-case AT&T.

MR. TAUKE: (Chuckles.) Now, you're really trying to get me in trouble. Listen, I think that there are always some differences of viewpoint on details of issues among various players in the industry. But we talk to our friends and colleagues, and I think that things move along in time, and I think that what I have outlined here is something that the industry as a whole could live with. Or put another way, if the Congress moved in that direction, I think that we'd have a lot of support in the industry.

Q: Could you just elaborate on the anti-redlining provisions you just said you could live with? What exactly does that mean? Does it mean when you go into a county, you're going to serve all the county; or wire center, you'll go into all the wire center. Or just that you don't specifically discriminate by some characteristic, race, income, whatever.

MR. TAUKE: The federal statute - I don't have the wording in front of me - but the federal statute as it applies to cable essentially says that you can't redline on the basis of any factor, including income. And we traditionally as a business, we don't redline. You know, if you look at our wireline services. We've rolled out wireline services as we've rolled out wireless services, our objective is to serve our customers, and to offer the services as rapidly as we can. So we don't have any nervousness about complying with any anti-redlining provision because we don't do that. So the federal statute, I think speaks to that issue, and we're happy to comply with it.

Q: What about build-out? I mean no build-out whatsoever? If you want to get this, and you want to get it quickly, what are you going to give?

MR. TAUKE: Our preferred position is no build-out requirement. If you look at the Virginia statute, which we are - or the Virginia legislation that we are supporting, it has a build-out requirement. This is a build-out requirement that reaches 65 percent of a local franchise authority within seven years, and 80 percent within ten years. Now, each state, if you look at it on a state-by-state basis, what works in one state may not work quite in another state. But I guess what I'd say to you is that if you look up what the situation is in Virginia, you might reach the conclusion that this is not a religious matter for us, you know? This is a matter of what's practical.

And here is the - what you have to look at when you look at build-out requirements - the higher the build-out requirement, the tougher or the higher the barrier to entry. Because if, in order to serve home 1, you have to commit to the investment that is allowing you to serve the last home or, you know, 80 percent, or whatever it is - that becomes a barrier to entry because this is a new business for us; it's a new business to other entrants.

You know, Cavalier, for example, has been working with us in Virginia and in New Jersey on this video-entry legislation. Cavalier is in a much different situation than we are. So while we may be able to live with certain build-out requirements and so, okay, from a practical perspective, this is something we can go with, and from a public-policy perspective, it might not be great for others who are entering the video market place.

So I'd go back and say for us it's a practical issue. What is practical and reasonable that we can live with and still execute the business plan? From a public policy standpoint I think that legislators should be concerned that any build-out requirement is a barrier to entry and the higher the build-out requirement, the more difficult it is for other players to come into the market.

Q: Just on that point, how are build-out requirements different from redlining prohibitions?

MR. TAUKE: Well, build-out requirements say you have to serve everybody or you have to serve a certain percent. Redlining provisions say you can't just focus your build on, or your services, on a certain segment of the market. So that is the difference.

Q: Well, are you exposed to redlining charges if - you know, cable has this sort of posture where you can't serve anybody until your service is available to everybody. And so are you vulnerable to redlining criticism if your build-out starts in sort of the wealthy suburbs or something like that and it's 20, 30 percent after three or four years. I just - some people separate this issue and I don't quite get how they are different.

MR. TAUKE: Well, here is how they are different if I may - I think it's fair to say that there are a lot of companies that don't serve the universe of the population - full universe of the population. We have generally tried to provide service to everybody with all services that we offer.

Obviously on day one you don't provide the service to everybody. So, for example, with our EVDO capability in Wireless, we have started in urban areas and we are gradually filling in the capability across the country and with more broader and broader coverage for our EVDO high-speed data service on wireless.

When we rolled out digital services, we rolled them out in some areas first and gradually you expanded to until now our whole network is digital. So you have a - you can't serve everybody immediately; you have to do it as you build the facilities that allow you to serve.

I think redlining suggests that as you build the facilities you can't focus on - I guess to be blunt -- all of the high-income areas without also serving - you can't have a pattern that discriminates against certain groups. And we are happy to comply with that so that as you - as you look at our buildout, you'll be able to say, yeah, they are trying to serve people across the board; they aren't just focusing on one segment of the market.

Q: Ed Whitaker made a speech that everybody is talking about where he said he wants to potentially charge for tolling and what - does Verizon have the same point of view on that issue?

MR. TAUKE: I'm not going to comment on what Mr. Whitaker said, and I think AT&T should address - answer those questions. Our position is I think - well, let's put it in a different term and if you don't like this term you can try it a different way. Do we want to impose access charges on Internet access? No.

Q: Could you address, though, your willingness to deal with those who want some kind of net neutrality as a price for a video competition bill?

MR. TAUKE: We want - we want Internet neutrality, too. I have outlined the principles that we support. The question is what does it mean to put it in statute and what is in the statute? So I think it's a topic that is open for discussion.

We would prefer, frankly, to deal with the Internet neutrality issue without having government engaged in the regulation of the Internet as opposed, to a certain extent, this is a matter of religion. The - I think that if we had had government regulation of the Internet 20 years ago or 10 years ago or five years ago, it would not be serving consumers as well today as it is.

To the best of my knowledge, there is no problem today with Internet neutrality. I'm not aware -- outside of the Madison River case, I am not aware of any instance in which we have a problem. So it seems as if there is an attempt to legislate or regulate to solve a problem that doesn't exist.

I think what we're looking at as a company is how do we ensure that the problem doesn't develop so that there is no compelling need to regulate. If we could help that process along we would like to do that.

So I think that we'll look at these issues as we go along as the legislative process evolves, as the FCC looks at these issues. The FCC has acted - it's laid out principles. We supported what the FCC did. At the current time frankly we don't see a need for a lot more. We think the FCC already has the authority to enforce these principles. And so we don't see a need for a lot more at this juncture, and we are trying to do what we can within the industry to create the right climate so that there isn't a need anymore.

Q: Forgive me if you already announced that, but what are you doing to get a kind of private-sector momentum behind it.

MR. TAUKE: We're talking to other players, but I don't want to - I can't go beyond that now because obviously you have to have a lot of players in order to play - (inaudible, cross talk) - that's meaningful.

Q: (Off mike) - not have any players.

MR. TAUKE: No, I wouldn't say that; that would be a wrong conclusion.

Q: You have other -

MR. TAUKE: I am not getting ahead of myself. I think I have said as much as I am going to say right now, that we're trying to work with other players in the industry to see how we can create the right climate to ensure that there is if you will market pressure on everybody to abide by the open Internet principles. And if you have an outlier who doesn't want to abide by those principles, the consumers would be fully aware of that.

Q: Didn't a Verizon official at CES map out kind of an Internet platform that Ed Whitaker was talking about that wouldn't necessarily run afoul of net neutrality - something along the lines that the market develops premium content - sort of an HBO services for the Internet - that is the way the market works, and that is not a violation - net neutrality. I don't know who it was, but didn't Verizon -

MR. TAUKE: There were several of us out there, but there were two of us talking to the media, Ivan Seidenberg and me. So I'm sure - (inaudible, cross talk, laughter).

Q: Hasn't Verizon discussed that a bit?

MR. TAUKE: Yeah, we have talked about it. I mean, we have talked about this for a decade.

Q: More - (inaudible, cross talk) - that there can be a super-highway perhaps that doesn't necessarily run afoul of net neutrality.

MR. TAUKE: Correct.

Q: Would you elaborate on that?

MR. TAUKE: Let me try to address that issue. If, let's say, we offer somebody 5 megabits of Internet access and they purchase that 5 megabits of capacity, over the same type that comes into the home, we will be offering them video services. The video services are not part of the Internet access 5 megabits. And so we think that as you - as you offer this capacity to consumers that gives them full access to the Internet, you also ought to be able to do other things.

Now, in the future - we don't have anything like this now, but in the future if we have these 5 megabits or 15 megabits for Internet access and we have the video services on the pipe coming into the home, it may also be that someone will want to offer another service that we don't necessarily envision.

One example I've used - I'm not sure it's a great one - but suppose we had health monitoring where the local - let's say, Johns Hopkins University Hospitals are going to have health monitoring for their patients. This is something that has been talked about a lot. So you have the heart patient who leaves the hospital after surgery; they want monitoring of that patient.

Obviously if they do that they are going to want a network to give - a network provider to give the security, because it's a medical issue; they are going to want to have certain assurances about quality of service, and so they are going to necessarily want to have a single network provider offer end-to-end network services.

That means you aren't on the public Internet but you are using the network for end-to-end service. If we enter into a contract with Johns Hopkins to do that, we don't in anyway think that that interferes with the open access to the Internet, but it is something else that rides on the pipe.

So that is the kind of thing that we do all of the time. For 20 years we have had what we call virtual private networks for businesses, where a business will come to us and say, Look, yes, we could use the public Internet, but on the public Internet you are dealing with a network of networks where no one is solely responsible for insurance of quality of service from end-to-end or providing a certain level of security end-to-end or maybe some other feature that you want. So therefore, we are entering into an agreement with you for a contract for a visual private network.

As we deploy more broad-banned capabilities to consumers, businesses are not only going to want to have these kinds of arrangements for business-to-business relationships, but we could see that they would want them for business-to-consumer relationships to do things like healthcare monitoring or certain other on-line activities. And we think that given the capacity of the networks that will be available, you'll be able to have video services, you'll be able to have Internet access services, you'll be able to have the virtual private network services all coming together, and all of that is benefit of consumers.

And by the way, let me ask myself one other question that people ask that you haven't ask, and that is suppose somebody puts up a website with video services, and they want to use your 15 megabit capacity in order to download the video services in competition with you, Verizon? We said that's okay. That is part of it. If they buy the capacity then we think they ought to be able to do that.

Now, if somebody - it's also feasible that a company that would say to us, okay, we want to have a video service available through your network but we need certain security for copyright protection; we need other things and that way it will be a virtual private network deal.

So I think that, you know, as we look at these new networks with more capacity, you have got to understand that there are various ways in which services could reach consumers and in fact one thing that we think is a constant is that when consumers purchase access to the Internet, they ought to be able to have that that full access without any of the limitations that we have previously discussed.

Q: So when you have the virtual private network, would that be running over the same pipe that your video service is on or does that run over the pipe that the public Internet travels on?

MR. TAUKE: It runs over the same pipe, if you will. When we have got fiber to the home, you have got a lot of capacity on that pipe.

Q: But you have different wavelengths, right, in terms of the -

MR. TAUKE: Well, yeah. I mean, there are different ways in which you separate it out, sure. But in that -

Q: (Inaudible, cross talk.)

MR. TAUKE: Pardon?

Q: Which one would the VPN run on; the wavelength that carries upon the Internet?

MR. TAUKE: No, it would be something different. I mean, today, just like video is some place - I'm not the technology guy here, but the bottom line is, is that you have the ability on this kind of network with this kind of capacity to be able to offer an array of services to consumers, and that's what we hope to do. As I said, we don't have anything - we don't have these kinds of things in place yet; I don't have anything - I'm not announcing anything, but it's just that - as you think to the future, what is this going to mean? We would hope that there would be educational services, healthcare services, a variety of other things, that would be offered to consumers by various providers out there, and those providers are going to need some way to get their services to the consumer, and one way could be the public Internet. In some cases they want a quality of service or a security feature or something else in order to be able to offer that service to consumers. So we think we can facilitate that while also ensuring global access to the Internet.

Q: So when you're talking about having a private network that runs along the same pipe as the public Internet, then clearly if you're going to pass traffic around the country you have to have deals with other Internet providers, right? So are you guys talking about those kinds of deals, to have a seamless private network that runs from - so that everyone can use that same - (inaudible)?

MR. TAUKE: (Inaudible) - in a sense talking about those kinds of deals here for the consumer market. Clearly we have that kind of thing for the business market and have had that for 10, 20 years. I mean, pick a major customer - Bank of America - that has facilities all over the country. Somewhere along the line they want a network that connects all those facilities and they want somebody to manage that network, offer service guarantees, security guarantees and so on. And so, yes, network companies then will cooperate with one another in order to provide that kind of capability.

Q: Just thinking about this, your strong insistence that the consumer should be able to get the full capacity that they're purchasing. What in law stops someone from port blocking right now, which you seem to imply you would be against, and would you support, as a kind of dumbed-down or compromise net neutrality, some federal law that says No port blocking; the consumer gets the full amount of the bandwidth they've purchased?

MR. TAUKE: Yeah, maybe it's my little wariness of government in the space, but I think there's reason to be worried of government in the space. If we had a problem I think I would say to you, Yeah, we probably need to have some action. But right now we don't have a problem. If we did have a problem with port blocking, I think the FCC, with what it's already done in terms of the principles I've stated, and with the authority it has, could act promptly to address that issue.

So I think we already have sufficient, if you will, safeguards in place to ensure that if there is a problem there is an action the government can take. Do we need more? Right now I don't think we need more.

Q: How long do you think it will take for Congress to cave in and put things off?

MR. TAUKE: I have no idea. (Laughter.) That is a decision the lawmakers have to make. We can say what we would like them to do, but they have to make their own judgment.

Thanks very much.

http://se7enpc.com/transcript.htm

Chicago latest, biggest city to jump on Wi-Fi bandwagon
By Dave Carpenter, The Associated Press
CHICAGO The nationwide rush to go wireless appears poised to extend to its biggest city yet. Chicago is launching an effort to offer wireless broadband, city officials said Friday, jumping on the Wi-Fi bandwagon as similar initiatives proceed in Philadelphia, San Francisco and smaller cities.

Chicago has hundreds of Wi-Fi hotspots in places like coffee shops, bookstores and libraries, where anyone can walk in, sit down and connect to the Web. Hoping to extend that wireless blanket to all 228 square miles, the city plans to ask technology companies this spring to submit proposals for the project.

While it's too soon to say how the system would operate, the goal is to make Internet access "broad and affordable" for residents and heighten Chicago's appeal for businesses and tourists alike, according to Chris O'Brien, the city's chief information officer.

The city did not specify goals for how much the system would charge for access. In Philadelphia, EarthLink Inc. is building a citywide network that will charge a wholesale rate of $9 a month to Internet service providers that would then resell access to the public at an undetermined price.

"We think it's important for residents of the city and tourists and businesses to have lots of different ways to connect," O'Brien said. "For a city as big as Chicago, with the vibrant business community and diverse citizen base that we have, you want to make sure all kinds of technology are available to them as they work and enjoy entertainment options."

If all goes smoothly, the system could be running as soon as 2007, O'Brien said. That would all but certainly leave the city behind Philadelphia, which hopes to have its entire system in place late this year or early next year. But the size of a Chicago network would dwarf Philadelphia's planned 135-square-mile network or anything now in place.

Currently, the biggest municipal Wi-Fi network is the all-free MetroFi in the south San Francisco Bay area at 35 square miles, according to Wi-Fi expert Glenn Fleishman. By spring, that title will be passed to one covering nearly 110 square miles in the neighboring Phoenix suburbs of Tempe and Chandler, Ariz., he said.

Cities' race to get into municipal broadband is being increasingly embraced by Internet service providers, since most cities are enlisting private companies to help build the wireless systems rather than doing it on their own. EarthLink created a division last year to solicit deals similar to Philadelphia's with the 50 largest cities.

Cities besides Philadelphia that have put Wi-Fi projects out for proposals in the last four months alone, according to EarthLink, include Portland, Ore.; San Francisco, Anaheim, Pasadena and Long Beach, Calif.; Denver and Aurora, Colo.; Minneapolis; Milwaukee; Grand Rapids, Mich.; Pittsburgh; Arlington, Va.; and Brookline, Mass.

Rather than viewing the cities' efforts as competition, said Don Berryman, president of EarthLink's municipal networks division: "This allows us to build our own network and provide broadband service anywhere we want and not have to work through the Bell company or the cable company, so it gives us a lot of freedom."

Chicago's main phone company, AT&T, says it similarly would not be opposed to a city-initiated effort.

"AT&T always has believed that the best approach is to stimulate investment in broadband," spokesman Rick Fox said. "As long as you're working with the private sector, that's a good thing."

The idea of a citywide Wi-Fi network got a big thumbs-up from several Chicagoans who were sitting in cafes with their laptops Friday.

"I'm always searching for Internet hotspots," said Beibei Que, a law student getting in some work at a coffee shop. "I like to have the Net at my fingertips wherever I go."

Katy Harper, who works mostly out of her home, said she would welcome the chance to get online elsewhere. "It's nice to be able to go out and sit somewhere and get connected," she said.

Chicago officials haven't yet committed to specific goals for the project, but they don't want to spend city funds. They have been closely watching Philadelphia's project, including its priority on low user costs and its intent to ensure that more computers and training programs are available for low-income residents.

"Our main mission is to increase access and help overcome the digital divide," said Robert Bright, board chairman of the Wireless Philadelphia non-profit group overseeing that initiative.

Fleishman said building a municipal Wi-Fi network as big as the ones envisioned in Philadelphia and Chicago could be troublesome. He cited issues surrounding the need for high-powered antennas and interference from existing Wi-Fi networks.

"Once you get into dense urban environments, it's not that it won't work but it's more problematic," he said. "Nobody's built a network of this size."

Find this article at:
http://www.usatoday.com/tech/wireles...wireless_x.htm

Future of the Internet Highway Debated
Saturday February 25, 1:54 pm ET
By Peter Svensson, AP Technology Writer

NEW YORK (AP) -- On the Internet, the traffic cops are blind -- they don't look at the data they're directing, and they don't give preferential treatment.

That's something operators of the Internet highway, the major U.S. phone companies, want to change by effectively adding a toll lane: They want to be able to give priority treatment to those who pay to get through faster.

Naturally, consumer advocates and the Web companies that would be paying the toll are calling it highway robbery.

"Allowing broadband carriers to control what people see and do online would fundamentally undermine the principles that have made the Internet such a success," Vinton Cerf told a Senate committee recently. Cerf, who played a key role in building the Internet, is now the "Chief Internet Evangelist" at Google Inc.

On the Internet, information is carried in "packets," small chunks of data. An e-mail might be divided into several packets and travel different routes to the destination, much like cars have multiple ways of getting somewhere. The packets may arrive out of order, a few even late, but data can be reassembled to reconstitute the e-mail.

This design grew out of the military's desire for a network that was both simple and reliable. And as the Internet became more widely available, this equal treatment of traffic was part of what made it attractive; individuals, startups and big corporations were on the same footing.

Now, however, the Internet is being used for things the engineers of the 1960s and 70s couldn't have envisioned, like video, telephone calls and Internet games.

It doesn't matter if an e-mail gets where it's going half a second late, but a half-second's delay in a phone call is annoying, and a half-second's delay in a fast-moving game can mean a missed shot.

Thus, the telecommunications companies want to be able to provide "tiered service," guaranteeing that, for a price, some packets will get to their destination on time.

The carriers are under "tremendous pressure" from customers to provide more reliable service, said Shawn White, director of external operations at Keynote Systems Inc., which tracks the performance of Web sites and the Internet.

Brief delays, for instance, could result in stuttering video, unacceptable to advertisers, White notes.

Whether they tier their service or not, telecommunications companies need to expand capacity. To do so costs money, and the telecoms argue that Internet users will have to pay, one way or another. They say it's preferable that the money come from those who need and are willing to pay for better service, rather than spreading the cost out over all users.

"We do have to recover the cost for building the new capacity out there that the content providers are expecting us to provide," said Jim Cicconi, AT&T Inc.'s senior executive vice president of external and legislative affairs.

AT&T already provides connections between offices of the same company, or between government offices, using AT&T's own lines rather than the public Internet. This allows AT&T to guarantee a certain quality level.

By prioritizing packets, AT&T could extend that service to the connection between a Web site and a surfer at home.

To the opponents, abandoning the "network neutrality" principle opens up the prospect of the carriers blocking sites that don't pay up or that compete with the carriers' own services -- for instance, by providing phone calls.

The carriers have stoked those fears with some hard-line rhetoric. John Thorne, Verizon Communications Inc.'s senior vice president and deputy general counsel, was quoted by The Washington Post as telling a conference that Google "is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers."

Ed Whitacre, AT&T's chief executive, has raised eyebrows with similar statements to the effect that Google and Yahoo Inc. are freeloading on the Internet, a remarkable assertion considering both companies pay millions of dollars in Internet access fees, and their visitors pay for Internet access as well.

Brasil Telecom SA, Brazil's third-largest phone company, said in mid-February it had installed the first system that can identify information by type -- say, a voice call -- and bill the company providing it, addressing what the company calls "revenue leakage." The company would not give further details on its plans.

U.S. carriers are careful to point out that they don't intend to block anyone's Internet access or degrade service.

"None of the worst scenarios people have painted here can take place nor are they taking place," Cicconi said, adding that the government would stop any such abuse, as the Federal Communications Commission did in one case where a phone company that provides Internet services blocked a competing voice-over-Internet company.

Also, competition among carriers means they won't want to block sites for fear of losing customers, Cicconi said.

Opponents say that even if toll roads leave the rest of the Internet unimpeded, it will stifle innovation.

"The next great idea, the next Google or eBay or Napster or whatever, won't have the capital to get themselves in the fast lanes right away," said Ben Scott at Free Press, a nonprofit that promotes freedom of speech. "The reason the big e-companies were so successful were that they started on the same level playing field as everyone else."

Another objection to packet prioritization is technical.

The Internet2 association assumed that prioritization was the way to go when it started building a super-fast next-generation network connecting universities.

However, engineers abandoned that notion after a few years, concluding that it's more effective simply to expand the network's capacity for all traffic -- adding lanes to the highway instead of a parallel toll road.

The FCC has supported net neutrality in somewhat hedged terms, leading to calls in Congress for a stronger defense of the principle to be included in a future telecommunications bill.

The telephone and cable companies are arguing against any such law, pointing to the traditionally very light regulation of the Internet.

"The hands-off policy has given us the flexibility to innovate and respond to consumer demand," said Kyle McSlarrow, chief executive of the National Cable & Telecommunications Association.

For the carriers, part of the attraction of a tiered Internet is probably that they would get away from being a "dumb pipe." They're the messengers, with the unglamorous job of passing along the data that others produce and consume. With tiered service, the carrier would become more important, and perhaps have more pricing power.

"It's very rational behavior in the industry. I would do the same thing if I was paid by my shareholders," Free Press' Scott said. "But rational market behavior doesn't necessarily mean good public service."

http://biz.yahoo.com/ap/060225/net_neutrality.html?.v=1

March 2, 2006
Yahoo Says It Is Backing Away From TV-Style Web Shows
By SAUL HANSELL

After proclaiming grand plans to bring elaborately produced sitcoms, talk shows and other television-style programs to the Internet, the head of Yahoo's Media Group said yesterday that he was sharply scaling back those efforts. He said the group would shift its focus to content acquired from other media companies or submitted by users.

The executive, Lloyd Braun, the former chairman of ABC Entertainment, was the subject of speculation in recent weeks that he was leaving Yahoo over differences with its chief executive, Terry S. Semel.

Mr. Braun said yesterday that he had called a meeting of his group tomorrow in Santa Monica, Calif., where he would outline the new strategy. He said Mr. Semel would attend to endorse it.

"I thought it would be a good time, given all the rumor and innuendo, for me to reiterate once and for all that I am not going anywhere," Mr. Braun said.

Yahoo said Mr. Semel was not available for comment yesterday, but Daniel L. Rosensweig, the company's chief operating officer, said, "We are very happy with Lloyd, and Lloyd is very happy with Yahoo." Mr. Braun acknowledged some differences with Yahoo's management his initial budget requests for this year were rejected, he said but he dismissed that as normal corporate back-and-forth. And he said he had been engaged in a discussion with Mr. Semel and others at Yahoo's corporate headquarters in Sunnyvale, Calif., about his revised strategy for the media group, which includes Yahoo's news, sports, finance and entertainment sites.

"I didn't fully appreciate what success in this medium is really going to look like," he said. "This is not about creating one-off hits like in my old business. That is not going to create a sustainable competitive advantage over the long term."

With advertisers moving large parts of their budgets online, the market for content, created by professionals, bloggers and individual users, is expanding rapidly as is the competition. Major media companies are developing video-based programming for the Internet. Myspace.com, purchased last year by the News Corporation, has become a major site based on user-contributed content. Many start-ups, like youtube.com, seek to follow suit.

Indeed, Mr. Braun said yesterday that the way to keep users on Yahoo's site longer and thus be able to show them more advertising was to offer ways they can create their own content and look at content created by others. He pointed to the site Yahoo built for the 2006 Winter Olympics, which prominently featured photographs from Flickr, Yahoo's photo-sharing site, along with articles both by news agencies and by a few columnists exclusive to Yahoo.

"I now get excited about user-generated content the way I used to get excited about thinking about what television shows would work," he said.

Mr. Braun insisted that Yahoo would not abandon its efforts to have original material, but he said it would embark on only a handful of new ventures this year, not the dozens he had been promising last year.

The company is not canceling its initial forays into programming "Kevin Sites in the Hot Zone," a series of war reports, and "Richard Bangs Adventures," travelogues about unusual locales. But other initiatives, like a revival of "The Runner," an elaborate reality concept Mr. Braun originally developed for ABC, have been shelved.

"Original content is the salt and pepper on the meal," he said. "It is certainly not the engine driving this."

He acknowledged that coming off developing ABC programs like "Lost" and "Desperate Housewives," he had overly grand expectations for what he should do at Yahoo.

"I realized I have to check my ego at the door for a moment, and forget whatever expectations people had about me because of my former life, and really take a hard look at who should this business be built for the long term a business that is not dependent on a series of expensive one-off's to survive," he said. Jordan Rohan, an analyst with RBC Capital Markets, said Yahoo's shift in strategy was sound. "Embracing things like blogs and sharing of content between individuals" is at least as important as "coming up with the next mega-online event," he said. "The Internet is such a niche content environment that the broadcast model does not really work."

Mr. Rosensweig, the chief operating officer, said Yahoo's intention had always been to combine content from users, media companies and to a lesser extent its own creation.

"Where the confusion has come in, and maybe the emphasis has evolved, is we always felt that kind of programming was a component of what we were going to do, not only what we do," he said. "It happened to be the part people associated with Lloyd, because that is what he had been doing."

Mr. Braun's track record so far is mixed. The sites he took over, which generally have been among the most popular in their respective fields, have been neither leaders nor laggards in audience growth. Yahoo News, for example, was the most popular news site in January, with 27.5 million users. But that is only a 2 percent growth in users from a year earlier, compared to 19 percent growth for the No. 2 site, MSNBC.com.

Yahoo's original-content efforts have yet to create the sort of hit Mr. Braun had talked about. "Kevin Sites in the Hot Zone" had 791,000 users in January, according to figures from comScore Networks provided by Yahoo. That was more than popular blogs like Gawker and DailyKos, but marginal for Yahoo, with more than 400 million monthly users.

Joanna Stevens, a Yahoo spokeswoman, said the company was pleased with the site because it attracted an affluent audience that was attractive to advertisers and because of "the positioning it gives Yahoo News as a serious news brand."

One possible consideration for Yahoo in its original-content efforts was concern among movie studios and television networks that it might be a competitor rather than a potential distribution arm perhaps encouraging them to offer content first to Google, which says it has no interest in creating its own content.

"Hollywood is always paranoid about that sort of thing," said John Rose, a media consultant for the Boston Consulting Group. But he said their fears were overblown.

Mr. Rosensweig said concerns among studios were misguided. "We still think today, we have the best relationships with and are the best partner for the big media companies," he said.

http://www.nytimes.com/2006/03/02/te...gewanted=print

March 2, 2006
Senate Bill to Address Fears of Blocked Access to Net
By KEN BELSON

Senator Ron Wyden, Democrat of Oregon, will introduce new legislation today that would prohibit Internet network operators from charging companies for faster delivery of their content to consumers or favoring some content providers over others.

The bill is meant to ease growing fears that open Internet access may be blocked or compromised by the Bell phone carriers and cable operators, which may create tiers of service for delivering content to consumers, much the way the post office charges more for overnight mail delivery than for regular delivery.

Consumer groups and Internet companies like Google and Amazon contend that any move by the network operators to levy fees for premium delivery service would harm Web sites that are unwilling to pay for faster delivery.

The Wyden legislation, called the Internet Non-Discrimination Act of 2006, aims to prohibit network operators from assessing charges that give some content providers better access than others or blocking its subscribers from accessing content.

"You best compete by letting every company play on a level field, but these proposals would tilt the field," Senator Wyden said of the plans discussed by some network operators. "The Net has been about access and equal treatment and giving everyone a fair shake, and people who own these fat pipes, these cable and telecommunications people who say that they can't keep doing this, want to undermine that."

He added that his bill would prevent network operators from giving preferential treatment to affiliated companies. Time Warner Cable, he said, should not be able to give other Time Warner companies better access to the network than their rivals.

The bill more squarely confronts the concerns of consumer groups than a broader bill proposed last summer by Senator John Ensign, Republican of Nevada, which would prevent Internet service providers from blocking access, but would largely leave network operators to manage their own networks, including potentially charging content providers for a premium service.

That bill has won support from 16 Republican senators.

The Federal Communications Commission has largely stood on the sidelines as this debate as evolved. Though the commission has said it supports the principle of open, undifferentiated access to the networks, it has not taken any regulatory action.

"One reason I'm hesitant to have the commission jump in is because we don't want to impede companies' ability to invest," said Kevin Martin, the commission chairman.

Phone and cable companies largely agree that they should have the right to offer Internet companies the option of paying for faster delivery of their content. They argue that since traffic over their networks is rising, companies may want to pay to ensure that their Web sites can be accessed quickly by consumers.

Executives at Verizon, for instance, want to give companies a chance to buy a dedicated link to Verizon's customers so that their data would be set apart from general traffic on the network.

But consumer groups say that creating a "fast lane" for those who can pay would ultimately result in a series of "walled" networks run by the phone and cable companies, which is very different from the open Internet model that exists now.

"We're concerned that even if you have a robust basic Internet and higher-speed lane, they will only make it available to their favorite partners, and that's discrimination," said Gigi Sohn, the president of Public Knowledge, an advocacy group that focuses on telecommunications and intellectual property issues.

http://www.nytimes.com/2006/03/02/te...gewanted=print

Broadband TV Market Shows Consolidation Signs

By John P. Mello Jr., TechNewsWorld, 03/02/06 8:04 AM PT

ABI Principle Analyst for Broadband and Multimedia Research Michael Arden contended that this new breed of TV content deliverer wants to depart from legacy models. "They want to get ways from the cable company model, but still have that efficiency of going through one vendor for all their equipment needs," he maintained.

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As an industry, delivery of television programming into the home over broadband connections is barely off the ground, but it's already showing signs of consolidation.

A continuing series of acquisitions in the IP video market will ultimately result in a smaller number of vendors, according to a report released by ABI Research Latest News about ABI Research on Wednesday.

Worldwide, there are only about three million subscribers to broadband TV services, compared to hundreds of millions watching TV through cable, satellite and broadcast connections, thus, so far, startups have dominated the market, said ABI Principle Analyst for Broadband and Multimedia Research Michael Arden.

"As bigger players start getting into this, they want scalability from vendors that supply their equipment, so some of these startups are going to be acquired and merged into other operators," he told TechNewsWorld.

E2E Solutions

Big operators, like AT&T (NYSE: T) Latest News about AT&T and Verizon, are looking for a single company because they want to deal with one vendor for everything, someone who can provide an end-to-end solution for them, he maintained.

Consolidation is a natural evolution of the market, according to Ozgur Aytar, an analyst with Pyramid Research in Cambridge, Mass.

"Vendors are looking to have end-to-end solutions for their customers," she noted, "so they're looking to fill the gaps in their equipment portfolios through acquisition, just like Cisco (Nasdaq: CSCO) Latest News about Cisco Systems did with Scientific-Atlanta."

Offering a carrier an end-to-end solution not only ripens a vendor's profits, but also ensures interoperability among the pieces in the value chain, Aytar said.
Potential Danger

"You're also talking about scale," Arden added. "Some of the smaller guys simply can't provide the scale that the larger system vendors can provide as far as core network and access network architecture goes."

Signs that consolidation has begun, he said, are Cisco System's acquisition of Scientific-Atlanta (NYSE: SFA) Latest News about Scientific-Atlanta, Motorola's (NYSE: MOT) Latest News about Motorola announced plans to buy Kreatel, Tandberg's proposed purchase of SkyStream and Thomson's disclosed intent to acquire Thales.

A danger consolidation poses in any industry is the potential for vendor "lock in." The IPTV industry appears to be aware of that danger and is doing something to address it, Arden maintained.

Deserting Cable Model

"Operators want to make sure that these networks are going to have some sort of standardized technologies so they can go to another vendor and have all their equipment interoperate," he said.

"There's been a fairly good effort up front to ensure that they're not truly closed and proprietary systems," he asserted, "but that is certainly a concern that arises with this kind of consolidation in the market."

Arden contended that this new breed of TV content deliverer wants to depart from legacy models. "They want to get away from the cable company model, but still have that efficiency of going through one vendor for all their equipment needs," he maintained.

Consolidation will be ramping up because explosive growth is expected in the industry, he reasoned. "It's a very quickly growing market, and it will probably grow tenfold over the next five years or so," he predicted.

Current IPTV deployments are small. According to Ed Graczyk, director of marketing and communications for Microsoft's (Nasdaq: MSFT) Latest News about Microsoft TV division, which has developed software for controlling set-top boxes for IPTV, the largest deployment serves only half a million people.

"But we're only in the top of the first inning on this," he told TechNewsWorld. He said that Microsoft's customers, which include AT&T, Verizon and Swisscom, have told the software maker that their deployments will start accelerating in the second half of this year.

DVR Analogy

Asked what the barriers were to consumer acceptance of IPTV, Graczyk responded, "It's going to boil down to the value proposition and awareness."

He compared acceptance of IPTV to adoption of digital video recording (DVR).

"When we did the research on that back in the '90s, the research was dismal," he said. "There wasn't a huge demand for it. It was hard for consumers to grasp it.

"But as soon as they had they had that DVR in their homes, you couldn't pry it from their dying hands," he continued.

Michael Grasso, assistant vice president for marketing in the San Antonio offices of AT&T acknowledged that there would be challenges to breaking the duopoly cable and satellite enjoy in the current market.

"But our product, we feel, is a superior service offering," he told TechNewsWorld. "It's a robust product offering and we're going to bring it in at a competitive price with services that are unique and will differentiate our product from others in the marketplace."

http://www.technewsworld.com/story/49145.html

Senator wants to ban 'fast lane' for Web
By Declan McCullagh
URL: http://news.zdnet.com/2100-9588_22-6045330.html

Network operators would be barred from blocking or degrading Internet connections and favoring those of companies that pay for peppier access, according to a Senate bill introduced Thursday.

Sen. Ron Wyden, an Oregon Democrat, said his measure will foster "equal treatment" for all Internet content and dispel worries that telecommunications providers will play favorites in the future.

Because Wyden's proposal represents the most aggressive legislative attempt to dictate what kind of Internet services are permissible or not, it's likely to provoke a political spat between proponents of so-called "network neutrality" and the traditionally influential telecommunications industry. Executives at Verizon Communications, BellSouth and the newly merged AT&T and SBC Communications have recently talked about the desirability of a two-tiered Internet in which some services--especially video--would be favored over others.
News.context

What's new:
A new bill bars Internet providers from charging companies like Google or retailers for the privilege of speedier service.

Bottom line:
The proposal represents the most aggressive legislative attempt yet to dictate what kind of Internet services are permissible or not--and it's likely to provoke a political spat between proponents of so-called "network neutrality" and the traditionally influential telecommunications industry.

"The big network operators are saying, 'We built the network; we own the network; everybody's basically got to go along with what we're saying.' What I'm saying is, 'No, the consumers built the network; the subscribers built the network. They paid for the network. That is what this is all about,'" Wyden told reporters in a conference call.

The Federal Communications Commission would be given power to police violations and hand out "cease and desist" orders, according to the bill, titled the Internet Non-Discrimination Act. Wyden said that he didn't oppose companies offering different speeds of service at different prices, a practice already undertaken by several major Internet providers, provided that content is treated equally within each level of service.

No broadband provider has proposed to block certain Web sites. But they have said Yahoo, for instance, could pay a fee to have its search site load faster than Google. Other possibilities include restricting file-swapping applications that hog bandwidth, or delivering their own video content faster than a similar service provided by rivals.

BellSouth pledged in a statement on Thursday not to block or degrade "legitimate" Net traffic, but said it would not support Wyden's bill. "Without a managed network, the only way customers will be able to be sure they can enjoy high-bandwidth services is by upgrading to higher-speed connections whether they need them for everyday applications on not," said Herschel Abbott, the company's vice president of governmental affairs. "That choice should be the customer's choice, not the government's choice."

AT&T also said it will not block or degrade content. It said in a statement: "At this stage, we're exploring different product models, but feel strongly that this is an issue that has to be solved in the marketplace."

With a few exceptions that were quickly remedied by the Federal Communications Commission, no telecommunications provider appears to be blocking Internet traffic and demanding payment to lift the block. The FCC also has adopted a nonbinding policy statement saying that Americans are "entitled to access the lawful Internet content of their choice."

The U.S. Telecom Association, which counts both large and small telecommunications providers as members, said Thursday that the bill was unnecessary because "the FCC clearly has the authority and has already demonstrated the will to protect consumer choice and address cases of blocking, impairment or degradation."

Telecommunications providers generally argue that they have the right to be compensated for money spent in building the networks and to create a "fast lane" for those willing to pay up. Intrusive federal legislation, they say, would reduce the incentive to invest in speedier networks in the future.

On the other side are Internet content and application providers, which say Net neutrality requirements are essential to preserve the Net's traditional openness.

Dozens of technology companies and advocacy groups sent a letter Thursday to the House of Representatives' Commerce Committee, urging that "Congress take steps now to preserve this fundamental underpinning of the Internet and to assure the Internet remains a platform open to innovation and progress."

The list of groups includes Adobe Systems, Amazon.com, the American Association of Libraries, EarthLink, eBay, Google, Match.com, Microsoft, Skype, TiVo and Yahoo.

Other proposals in Congress address network neutrality--including a draft bill before the House Commerce Committee--but technology companies say those don't go far enough. One proposal, from Texas Rep. Joe Barton, a Republican who chairs the panel overseeing telecommunications law, says providers "may not block, or unreasonably impair or interfere with, the offering of, access to or the use of any lawful content, application or service provided over the Internet."

AT&T plan heightens debate over Net's future
Advocates want broadband carriers to promise 'neutrality'
By Martin Wolk
Chief economics correspondent
MSNBC
Updated: 6:22 p.m. ET March 7, 2006

AT&T's $67 billion plan to buy rival BellSouth has intensified debate over whether the Internet will remain a wide-open information freeway or a multitiered tollway where preferred content whizzes along in high-speed lanes while other traffic languishes in jams.

The debate over so-called "Net neutrality" pits giant broadband carriers including AT&T, rival Verizon Communications and cable giants like Time Warner against content providers Google, Yahoo and Microsoft's MSN as well as upstarts like Vonage and Skype, which offer voice-over-Internet service. (MSNBC.com is a joint venture of Microsoft and NBC.)

"We're already starting to hear from consumer advocacy groups that they absolutely are going to make Net neutrality a big part of the regulatory review of this merger," said Joseph Laszlo, an analyst at Jupiter Research.

AT&T chief executive officer Ed Whitacre has made himself a major target in the debate with his outspoken comment that he would like to charge Google and other content providers for using the company's high-speed Internet connections into homes and businesses.

"Why should they be allowed to use my pipes? The Internet can't be free in that sense, because we and the cable companies have made an investment, and for a Google or Yahoo or Vonage or anybody to expect to use these pipes (for) free is nuts," he said in a BusinessWeek interview last year.

AT&T and others say they should be allowed to provide preferential treatment to their partners including content providers who pay for the right to use their high-speed lines. But this notion violates the historically democratic promise of the Internet and could doom providers like Vonage, whose customers expect service to be as reliable as traditional telephones.

In a white paper outlining their case, Vonage executives warn that "broadband services are at risk of being controlled by gatekeepers who have the ability to skew the marketplace against the interests of consumers."

In at least one case that was literally true. A small telephone company called Madison River agreed to pay a small fine last year to settle a federal inquiry into charges that it was blocking voice-over-Internet providers.


"Basically this merger will mean even less competition for broadband Internet, and frankly that makes a Net neutrality requirement even more imperative," said Gigi Sohn, president of Public Knowledge, a non-profit that focuses on intellectual property issues. "If there was real competition in the provision of high-speed Internet access we might not be having this conversation, but now the world has gotten even smaller than it was before."

Telephone and cable companies contend there is more competition than ever before, with developments like voice over Internet, video over Internet and the proliferation of high-speed wireless "hot spots."

But the reality is that the vast majority of new services depend on high-speed Internet access, and nearly half the nation's homes have only a single choice for such service or none at all, according to Public Knowledge.

"I think the most passionate Net neutrality advocates probably overstate the extent of the problem today, but at the same time technologies do exist that would enable a broadband (service provider) to take an increasing amount of control over what applications work and what don't," said Laszlo.

"The power of that last mile connection is a very strong one," he said. "There is the capability and increasingly the temptation to to play a more active role in steering your customers toward your partners or content providers who have cut you in for a share of the revenue."

The issue of Net neutrality has attracted the attention of Congress.

The Senate held a hearing on the topic last month, where Internet pioneer Vinton Cerf warned of potentially dire consequences.

"We must preserve neutrality in this system in order to allow new Googles of the world, new Yahoos, the new Amazons, to form," Cerf testified. "We risk losing the Internet as a catalyst for consumer choice, for economic growth, for technological innovation and for global competitiveness," Cerf said.

A top cable industry official responded that government regulation would reduce investment and limit innovation.

"What is really going on here is that companies that started as entrepreneurs and innovators are now so invested in the status quo that they fear not cable or telephone broadband providers, but that next idea, that next search engine that takes off," said Kyle McSlarrow, president of the National Cable & Telecommunications Association. "What they're asking you to do is freeze the Internet in place with their position in the marketplace locked in."

Nevertheless Sen. Ted Stevens, the Republican chairman of the Commerce Committee, said he was generally in favor of Net neutrality, and Democratic Sen. Ron Wyden last week introduced a bill that would enshrine the concept in federal law, prompting a Verizon official to say he was trying to "fix a hypothetical problem that doesn't exist."

In the past, the Federal Communications Commission has ordered AT&T and Verizon to adhere to net-neutral principles for at least two years as a condition for allowing them to complete big mergers like the one now being contemplated.

Advocates of Internet openness are hoping for a more permanent solution, and while Wyden's bill is given little chance of passage as a stand-alone measure, they say the concept of neutrality could be written into other telecommunications law. One possibility is that phone companies would agree to keep their lines wide open as a condition for something they highly covet: the right to offer a national television service over their fiber-optic lines rather than negotiate franchise agreements with hundreds of communities individually as the traditional cable operators have had to do.

URL: http://www.msnbc.msn.com/id/11715558/

Who owns the Internet pipes?
Posted by Dan Farber @ 11:05 am
Digg This!

Ben Worthen of CIO has an interesting post about who in the context of the Net Neutrality debate. He worked with Lumeta's chief scientist Bill Cheswick to create a map of the North American Internet backbone, including 134,855 routers, colored by telecom company (Verizon, AT&T, Qwest, Level 3, Sprint Nextel, cable companies, smaller players).

Worthen concludes that while AT&T and Verizon have the biggest piece, they don't dominate enough to be considered monopolist candidates. On the other hand, if the telecom consolidation continues unabated that may not be the case.

(follow link for map)

http://blogs.zdnet.com/BTL/index.php?p=2747

AT&T Dismisses BellSouth Merger Critics

By PETER SVENSSON, AP Technology Writer Tue Mar 21, 8:15 PM ET

LAS VEGAS - Ed Whitacre Jr., the chief executive of AT&T Inc., dismissed critics who say its planned merger with BellSouth Corp. will form a near-monopoly for Internet access and give it the clout to dictate terms to Web sites if they want to remain reachable.

At issue is the current principle of "network neutrality," under which all traffic is treated equally on the Internet. The major Internet carriers, with AT&T in the fore, want to be able to provide different tiers of service, giving higher priority to, for instance, Internet phone calls, which could improve their quality.

At the TelecomNEXT telecommunications conference in Las Vegas on Tuesday, Whitacre rejected the notion that this would harm the sites and companies that don't pay for premium service.

"There's been a lot of talk about this in order to scare people into thinking that access to the Internet is somehow at risk, or that the Internet as we know it is a thing of the past," Whitacre told attendees. "AT&T will not block anyone's access to the public Internet, nor will we degrade anyone's quality of service."

Content providers and Internet phone companies have equated tiered service with extortion, as Web sites that don't pay extra could become relatively harder to access. Instead, they urge the carriers to improve traffic quality for everyone equally.

Whitacre said some have turned AT&T's acquisition of BellSouth, valued at $67 billion when announced two weeks ago, into a "referendum" on net neutrality.

SBC Communications Inc. pledged last year to uphold the principles of net neutrality until 2007 as a condition of its acquisition of AT&T Corp. The merged company took the name AT&T Inc.

Analysts have noted that AT&T will likely have to extend that pledge for two more years to gain approval for the acquisition of BellSouth, which is expected to close next year. That would delay resolution of the issue until 2009.

The chairman of the
Federal Communications Commission, Kevin Martin, addressed the conference in terms that were generally favorable to the carriers.

"We need to have a regulatory environment that allows companies to invest in their networks," Martin said.

Analyst Shiv Bakhshi of IDC said the issue facing the FCC is creating a balance that gives carriers incentives to improve Internet capacity, without creating "an environment that is so pro-network operator that it stifles innovation."

Separately, AT&T executives said they would seek the same easing of regulation on data services to large enterprise and wholesale customers that Verizon Communications Inc. gained from the FCC on Monday, exempting it from rules regarding tariff filings and pricing requirements.

"We will be filing something seeking similar regulatory treatment," AT&T spokeswoman Claudia Jones said.

The applications normally have a 15-month waiting period. Speaking to reporters, FCC's Martin said Tuesday that the commission "will act as quickly as it can" on applications from other carriers.

Given that the commission's Democratic members disagreed with the decision, saying it did not further competition, it is unclear how quickly other carriers could gain Verizon's terms from the FCC. The commission now has two Democratic and two Republican members; the Senate is expected to soon confirm a Republican as the fifth commissioner.

The Verizon decision occurred by default, as the commission declined to rule on the company's application, filed in 2004.

http://news.yahoo.com/s/ap/20060322/...at_t_bellsouth

Disney's Iger: No Net Neutrality Laws Needed

By Paul Kapustka
Networking Pipeline Mon Mar 20, 9:57 PM ET

LAS VEGAS, Nevada -- Walt Disney CEO Robert Iger weighed in on the network neutrality debate Monday with an opinion guaranteed to please his hosts here at the TelecomNext show -- in that he doesn't think any new legislation is needed.

"We appreciate the pledges made" by the telecom and cable companies not to block or degrade services, applications or content, Iger said at the end of his keynote presentation. "We do not support any [Network Neutrality] legislation at this time."

Iger's was the only clear statement made on the issue during Monday afternoon's rapid-fire session of keynote presentations here, a slate of presenters that included Verizon CEO Ivan Seidenberg, Time-Warner cable CEO Glenn Britt and Norio Wada, President & CEO of Japanese provider NTT. The executive viewpoints were the headline event on the first day of the TelecomNext event, the new yearly gathering for the conglomerate of telecom providers that belong to the U.S. Telecom Association.

While Verizon and Seidenberg have contributed mightily to the Network Neutrality debate, weighing in strongly against any new legislation both in public appearances and in written statements, on Monday Seidenberg only made passing references to the issue in a speech that mainly focused on Verizon's strategy for building faster networks for the future.

Calling the light regulation of the wireless and cable markets "a good framework," Seidenberg said that "business and government need a shared vision to vault into the markets of the 21st century."

Iger, whose company is already participating in partnerships with access providers like Verizon and distributors like Apple's iTunes store for its branded content, said he's generally against heavy government regulation in areas where he sees "market forces" doing a good job of policing competition. He also said that Disney supports a national franchising plan to make it easier for telcos to get into the video-delivery business, while "also supporting a level playing field for cable companies."

Iger also said Disney opposes regulatory or legislative requirements to offer a la carte cable programming, an idea that seems to be a favorite of FCC chairman Kevin Martin.

"It [a la carte regulation] is bad for our business, bad for your business and bad for the consumer," said Iger to the assembled crowd of mainly telco company employees, their customers and equipment suppliers. "I don't belive there's any market-based need [for such regulations]."

Offering somewhat of a counterpoint was NTT's Wada, who talked about his company's plans to build a fiber-based network in Japan that he said would be open to competitive providers and Internet service providers. Perhaps the most-curious inclusion in Monday's lineup was cable chief Britt, who noted that previously he might not have been invited to a USTA event.

But since Time-Warner cable is among the leaders in providing Voice over IP services -- the company claims 1.1 million users -- Britt deserves a spot at TelecomNext as much as the next CEO, and said to his new friends that they can expect competition from Time-Warner Cable on both the market and regulatory fronts, as they seek a "level playing field" on which to offer products and services.

Britt, who said he is opposed to the wholesale imposition of "old telecom rules" on cable companies entering the phone markets, derided companies (who he didn't name) who "run to the government, asking for favors to hobble competitors."

Britt said Time-Warner Cable is "for a level playing field -- and you can expect us to oppose any efforts to tilt it."

http://news.yahoo.com/s/cmp/20060321/tc_cmp/183701239

AT&T: 15 Mbps Internet connections "irrelevant"

3/31/2006 10:07:50 AM, by Nate Anderson

At this week's Media, Entertainment and Telecommunications conference, AT&T COO Randall Stephenson told his listeners that increased bandwidth was no longer of great importance to consumers.

"In the foreseeable future, having a 15 Mbps Internet capability is irrelevant because the backbone doesn't transport at those speeds," he told the conference attendees. Stephenson said that AT&T's field tests have shown "no discernable difference" between AT&T's 1.5 Mbps service and Comcast's 6 Mbps because the problem is not in the last mile but in the backbone.

Certainly this is true for general web browsing, which rarely taxes the speed of even a slow DSL connection, but it seems like bandwidth would be crucial for next-generation applications such as IPTV that the telcos soon hope to provide. Right? Not according to Stephenson, who points out that bandwidth is of less importance to IPTV setups because of the switched nature of the system. Generally, only a couple of channels are transmitted at one time, and this does not change no matter how many total channels are offered to the consumer (see our overview of IPTV for more information on how this works).

In terms of Lightspeed's ability to push through hundreds of video channels, including high-def video, "we're not constrained by bandwidth. You're not constrained by the size of the pipe anymore," Stephenson said, referring to the switched-video capacity of the network which delivers only one service to a single customer at a time.

This is a direct response to the criticism that AT&T has suffered for deploying a fiber optic network that reaches only to the local node, not directly into a customer's homewhich means that the "last mile" connection is still copper wire. Verizon, by contrast, is deploying fiber directly into the home, making for much higher speeds. AT&T argues that its model is cheaper, faster to deploy, and just as capable as Verizon's, which currently uses much of its massive bandwidth to distribute RF TV channels.
Pressures on satellite

In related television news, it looks like the squeeze play is underway against the satellite industry. The telcos, such as AT&T, have generally partnered with a satellite company in order to offer television service. Now that they're getting into the game themselves, these partnerships are dying. Pressure is also coming from the cable companies, which are getting onboard with Cablevision's plan to move the DVR into the headend. This will cut costs for the cable companies, who no longer have to send out trucks to install, troubleshoot, and repair DVRs in homes, but it's a move that satellite operators can't match.

He [Comcast COO Stephen Burke] said a network recording service would help cable companies compete against satellite TV operators such as DirecTV and EchoStar, which cannot cut the cost of the DVR box out of their pricing structure.

This kind of pressure from the cable companies, combined with the price war which could ensue between cable operators and the telcos, will certainly make it harder for satellite to compete over the next few years. Whether they can carve out a niche and remain a viable proposition remains to be seen, though it should be noted that satellite is not sitting still waiting for the axe to fall. DirecTV, for instance, has been pondering plans to roll out broadband services of its own, and satellite can still claim to offer a higher-quality picture than cable (in most cases). IPTV, though it could spark a price war with both services, won't be coming to most cities for some time, so satellite should have a few years of breathing room before the squeeze is on in earnest.

http://arstechnica.com/news.ars/post/20060331-6498.html

2006-04-06

League Board of Directors Adopts Telecommunications Policy

In a special conference call meeting on February 17, the League board of directors voted to adopt a telecommunications policy to guide the League's positions and lobbying activities in the upcoming debate at both the state and national level over a new regulatory framework for telecommunications services.

This debate is being fueled by the revolutionary changes in telecommunications technology. Cable companies want to become telephone providers and telephone companies want to deliver video services and it is all possible because of the new technology.

The board action followed by one week a February 10-11 board meeting, during which the board of directors heard presentations and engaged in an extensive Q&A with representatives from the "new" AT&T, Verizon and the California Cable Television Association. The industry representatives described the services they envision providing to local communities and were more than willing to point out why the services of their particular company were superior to the competition.

The cable industry argued for maintaining the status quo of the current local franchising process. Verizon and AT&T are concerned that the traditional franchising process will be a barrier in getting their product/service to market in a timely manner.

On the following day, the board considered and debated parameters for a telecommunications policy that would guide the League's positions and reactions to telecom reform discussions in Congress and the Legislature. The debate was complex and involved, with the board ultimately deciding to use the follow-up conference call the following week to finalize their telecommunications policy.

Reform Moving in Congress and Legislature

The adoption of the policy is timely, as regulatory reform discussions appear to be heating up in both Congress and the California Legislature. In California, Assembly Speaker Fabian Nunez and Assembly Utilities and Commerce Chairman Lloyd Levine (Van Nuys) have introduced a spot bill (AB 2987) that could be the vehicle for regulatory reform discussions here in California.

Reports from Washington D.C. this week were that Congressman Joe Barton, chairman of the Energy and Commerce Committee, plans to move to mark up this month of legislation that would focus on letting the former regional Bell operating companies rapidly enter the video marketplace to compete head-on with the cable industry. The mark up would occur in the Energy and Commerce Telecommunications and the Internet Subcommittee.

"My position is that there should be a national [video] franchise," Barton said after addressing a National Association of Broadcasters' gathering.

While the phone companies now offering video services seek such a national franchise, cable operators - who had had to obtain franchises at the local level - argue the Bells should be subject to similar rules in order to offer video services.

Last year the League joined with the National League of Cities (NLC) in opposing the Barton proposal. Click here to view a copy of the League's letter to Congressman Barton.

League Urges Cities to Write Legislators and Members of Congress

While passage of legislation this year establishing a new regulatory framework for telecom is far from certain, it does appear that there are serious discussions moving in both Congress and the Legislature. Earlier this week, the League issued an action alert to cities, asking them to sign onto a League letter to the California congressional delegation that urges the delegation to consider the League's newly-adopted telecommunications policy as they move forward with the reform of federal telecommunications law. The letter along with a list of cities who have signed on will be delivered to the California delegation during the National League of Cities Congressional City Conference in March.

The League is also urging cities to contact their California legislators to ask them to consider the League principles in their discussions about changes to telecommunications regulations.

Bookmark www.cacities.org/telecom

To stay up to date on telecommunications reform issues that affect cities, please bookmark the League's special website telecom page. You'll find background materials, action alerts and updates on this very important issue for cities.

last updated : 3/3/2006

http://www.cacities.org/index.jsp?zo...ewStory=24734#

April 12, 2006
Google, eBay And Amazon To AT&T: We'll Build Our Own Network

AT&T and the telcos are threatening to charge Google and other Web sites extortion-type fees unless Google and others pay for adequate bandwidth. But Google and others may soon have this answer for them: No, thanks. We'll build our own fat pipe into customers' homes.

That's the speculation, anyway. Investor's Business Daily points out that big swaths of the wireless spectrum are about to go out to bid -- and whoever buys them could build a high-bandwidth wireless pipe into people's homes and businesses across the country.

I won't go into all the gory details, but there are two big blocks of spectrum up for sale, and Internet companies like Google are expected to bid on both.

Google, eBay, and Amazon could form their own consortium to spend the many billions of dollars needed to buy parts of the spectrum, and build a high-speed, nationwide wireless network.

Investor's Business Daily quotes George Dellinger, an analyst at research firm Washington Analysis, as saying "A consortium of new media companies could wind up leading the pack to buy that spectrum and provide a third (broadband) pipe into homes."

Sound far-fetched? Google is already building wireless networks in San Francisco and its home of Mountain View. The company is sitting on top of the biggest pile of cash south of Bill Gates -- probably close to $10 billion after a planned $2 billion new stock offering. It can afford to do it. And when it comes to cash, eBay and Amazon aren't slouches, either.

So the network neutrality debate may blow up in AT&T's face. When it comes to buying bandwith, I'll choose Google over the telco dinosaurs any day of the week.

http://www.networkingpipeline.com/bl..._ebay_and.html

RBOCs Want Inside Your House
APRIL 14, 2006

As if selling you voice, video, and data services weren't enough, three of the nation's largest phone companies have designs to help build and manage your home network, too.

In recent interviews with three RBOC technology executives, AT&T Inc. (NYSE: T - message board), Verizon Communications Inc. (NYSE: VZ - message board), and Qwest Communications International Inc. (NYSE: Q - message board) each told Light Reading that being a service provider will soon mean managing all aspects and equipment related to any voice, video, and data service inside the home. (See IP Video: In the House.)

Each provider has a slightly different take on what type of residential gateway to use, and the video distribution schemes are still coming into focus. But it is clear that residential gateways are increasing in importance, as are the ability of
carriers to hold on to customers for life by managing all the services that touch their homes.

The Evolution of the Residential Gateway
Source: Heavy Reading

More importantly, though, this push into home networking now -- and, later, device management -- could be a key to the RBOC's survival. As Heavy Reading's Graham Finnie wrote in his February report, carriers allowed themselves to be thought of as "dumb pipe" providers by not taking more control of telephone management and, later, broadband devices. (See The DSL Gateway Dilemma.)

"This encouraged a sense among consumers that telcos were just pipe providers; so by becoming again the major supplier of more sophisticated (and subsidized) home equipment, service providers could reclaim the initiative on new broadband services." Finnie writes. He points out in the report that, according to one service provider, "The raw-pipe threat has never been as big as it is today, so we must be more present in devices."

Indeed, the major CTOs of the large U.S. RBOCs apparently agree with this statement, and they are looking at broadband as a launching point into more managed home services.

"The service provider can offer the managed solution to them to handle the firewall, manage the anti-spam and the anti-spyware programs, and ensure that there is the adequate priority of services inside the home," says Chris Rice, AT&T's executive VP of network planning and engineering.

Rice says AT&T is using TR-069, a management protocol drafted by the DSL Forum, along with 2Wire Inc. 's residential gateway, to manage consumer home networks for Lightspeed customers. "Much like businesses prefer to use managed services, we think consumers will look for managed services, too," he says.

Verizon is also making its way inside consumer homes. "We have this center piece of our home networking architecture called the broadband home router (BHR) and we're providing IP connectivity from the network to the BHR and then...adding NAT functions, network address translators, to all the devices that sit behind them, whether they be for data or they be for video or even conceivably for voice," says Verizon CTO Mark Wegleitner .

He adds that the broadband home router "really exists today" and it has "all the things you would expect to find in a home router, plus MoCA."

Multimedia over Coax Alliance (MoCA) is a group formed to promote standards for home networking equipment using coaxial cable.)

Table 1: Residential Gateways In The Digital Home

EQUIPMENT RELATIONSHIP TO GATEWAY
Modem Usually integrated
Router Usually integrated
Wireless Network 802.11, usually integrated
Wired Network Ethernet usually integrated, other wired home networks becoming integrated
Analog POTS or ISDN Phone Analog terminal adapters increasingly integrated
VOIP Phone Usually via phone port only; small number of vendors include phone cradle
DECT Phone Some vendors support DECT via gateway
Mobile (Dual-Mode) Phone Rapidly increasing interest in support
Desktop/Laptop PC Directly connected
Media Center/Server/Storage Not integrated, but increasingly connected; seen as playing a key role in content distribution

IP STB Not usually integrated, but increasingly connected and quality-controlled via gateway; some see more integration in the future
TV Usually connected via separate STB, not gateway
Personal Video Recorder Usually connected to TV; seen by some on consumer electronics side as playing an important role in content distribution
Game Console Increasingly connected directly; some vendors have games-oriented gateways

Dedicated Home Control & Automation Equipment Not connected, rarely based on IP; some vendors and service providers looking at bridging devices to connect
Video Monitoring and Related Security Equipment Beginning to be connected; some interest, especially in certain countries
HVAC and Domestic Appliances Not usually connected; some interest, especially in certain countries
Source: Heavy Reading

In fact, according to Verizon's Executive Director of Access Terchnologies, Brian Whitton, the BHR will have two chipsets based on the MoCA technology standard inside. This allows Verizon to (1) get broadband data and video from outside the home to the BHR and (2) move broadband data and video between the BHR and other devices via existing coaxial cable. Essentially, it creates a WAN and LAN in the home using just one physical set of cables to connect the optical network terminal (ONT) outside the home to the BHR to the MoCA-enabled set-top box on the TV.

Whitton says it will announce its vendor pick soon. But its worth noting that Westell Technologies Inc. is one of the only vendors that has made noise about being able to make a home gateway with two integrated MoCA chipsets. The company is already a Verizon supplier; it makes Verizon One handset -- a phone that integrates a DSL modem, a 802.11g wireless router, a 5.8 GHz cordless phone, and a color-touch screen.

According to Wegleitner, Verizon will be able to manage and configure the BHR via TR-069, and, when more standards work is done, the carrier can "extend management to other devices...so that we can really have a picture of what's going on in the household help the consumer configure and manage what they've got," Wegleitner says.

"What we're trying to do is make sure the user has a pleasant experience...and we're trying to cut down our costs because every time we dispatch a truck, it costs $125 just to get a truck to the customer's front door," Wegleitner says.

Other services could come conceivably come into play later on, such as having the carrier monitor home security systems -- and allowing customers to check on their homes via Internet-connected computers and other devices. But analysts say those services are unlikely in the near term. Right away, carriers really just want to evolve to manage the customer's experience, according to Heavy Reading analyst Rick Thompson.

"Once a provider starts sending voice, video, and data into the home, it will need to prioritize that home's network traffic so that simple user requests such as IPTV channel changes aren't stuck in a queue behind less time-sensitive items, such as email," Thompson says.

Qwest wasn't as forthcoming as its peers, but definitely lit up at the chance to talk home networking. "We are planning to do something in the DSL space, I don't want to give specifics on that," says Qwest CTO Pieter Poll. "What I will say is we already, by default offer, wireless networking capabilities in all our DSL modems, right out of the box."

Likewise, Poll cautions that any move into home networking by a service provider, also assumes the mantle of providing security, network configuration instructions, and some smart way of handling video distribution within the home. "We're on the page of using existing telephony wiring but using things like HPNA and other technologies that would allow video distribution."

That wisdom comes from experience, Poll says. In the 90s, when Qwest first deployed video services via VDSL, it installed CAT5 wiring inside consumer homes to allow for video distribution. Poll says what followed were horror stories of summers in Texas and Phoenix where it was 100+ degrees outside and installations were taking one and a half days. "We were learning and I think everyone's going to learn that as we go into the video environment," he says. (See Qwest Building FTTP Network and RBOC IPTV: The Quiet Ones.)

Phil Harvey, News Editor, Light Reading
http://www.lightreading.com/document...592&print=true

Free Net TV threatens telecoms and cable

By Marguerite Reardon
http://news.com.com/Free+Net+TV+thre...3-6060306.html

Story last modified Thu Apr 13 06:25:34 PDT 2006

Walt Disney's bold move to let people download TV shows for free could spell trouble for cable and satellite providers, but it also throws into question the strategy of telephone companies spending billions to get into the paid TV business.

On Monday, Disney-owned ABC announced plans to put "Lost," "Desperate Housewives," "Alias" and "Commander-in-Chief" on the Internet for free as part of a two-month trial beginning in May. The Net-accessible episodes, which will be available the day after the shows air, will be archived so viewers can watch any shows they miss.

Viewers will access the shows on the ABC Web site where they'll be able fast-forward, pause and rewind entire episodes. Short commercials will be aired with the programs; viewers will not be able to fast-forward through them.

Disney's ABC has been at the forefront of experimenting with new ways to distribute content over the Internet. Last year, it struck a deal with Apple Computer to sell individual episodes of some of its popular shows via the iTunes Music Store for $1.99 per episode. The two other major networks, NBC and CBS, soon followed suit by offering programs of their own on iTunes.

While the iTunes deal may have been a harbinger of bigger things to come in the realm of fee-based content downloads, Disney's move to offer shows for free on the Internet could be viewed as a direct threat to the business model of cable companies, which have been the gatekeepers of television programming in America for the last few decades. The news is equally grim for phone companies, especially Verizon Communications, which is aggressively moving into the TV business.

Over the past two years, Verizon has spent billions of dollars to build a fiber network directly into people's homes that can deliver a triple-play package of services including ultra-fast broadband, phone service and TV. It has bet the farm, so to speak, that the best way to compete against the cable companies, which are now offering phone service, is to try and beat them at their own game. But building and upgrading telecom networks for video is a capital-intensive strategy fraught with risks.

The ABCs of video upheaval

Disney's plans "raise big questions for the phone companies' long-term strategy," said Joe Laszlo, an analyst with JupiterResearch. "To some extent, building a faster network is smart no matter how content delivery evolves. But if we reach a point in five to 10 years when video over the Internet becomes a bigger part of how we consume video, then the phone companies will have to find other ways to make their video services relevant."

No one is expecting Internet television to cannibalize traditional TV models overnight. Despite advancements in streaming technology, video delivered on the Web can still be choppy, with frequent interruptions as data packets buffer and reload on the screen. In fact many viewers who watched the NCAA tournament aired by CBS on the Internet last month complained about the network being overloaded.

No panic among telecoms
A Verizon spokeswoman said the company does not feel threatened by Disney's move to offer some of its shows on the Web. And executives at the National Cable and Telecommunications Association convention in Atlanta this week also said they aren't especially worried about Disney's plans.

"It's speculative to assume people will abandon one model in favor of another," said Sharon Cohen-Hagar, a spokeswoman for Verizon. "That's quite a leap into the future. Given the kind of network we are building, we believe we're well positioned to go wherever the market takes this."

Indeed, Verizon, as well as the entrenched cable operators, are already offering on-demand programming that lets viewers select movies or TV shows and watch them whenever they want. They are also offering consumers digital recording services that let them record programs and watch them at a later time.
But advancements in technology could eventually eliminate the need for consumers to subscribe to a third party such as a cable operator or a telephone company to schedule programming. Companies such as Kontiki and EdgeStream are improving the quality of streaming video on the Net. And others such as Cisco Systems and Microsoft are working on products that will let people watch video downloads from the Net on their TVs.

These advancements, coupled with the fact that broadband penetration continues to grow, makes it possible for millions of people to watch TV directly from the Internet. In 2005, roughly 55 percent of all online users had broadband, according to JupiterResearch. That figure is expected to reach 69 percent by 2010.

A step toward a la carte
If content providers are willing to distribute their shows over the Internet themselves, viewers could simply use a search engine to find what they want to view, and then watch it directly from the Internet anytime they want.

Clearly Disney's move signals that content owners are feeling more comfortable about Internet distribution. Others have also started distributing video over the Net.
Even though Disney is delivering content independently of the cable operator or the telephone company, it would be interesting to see if network providers respond by blocking content. --Joe Laszlo, JupiterResearch analyst

Warner Bros., for example, has teamed with AOL to distribute classic sitcoms such as "Growing Pains" and "Welcome Back Kotter." In March, CBS offered free online streaming of the NCAA basketball tournament. In November, NBC started offering its Nightly News broadcast on the Web for free after the newscast airs on TV. MTV's Comedy Central also launched a site called MotherLoad in November that offers clips of existing shows and airs new shows only available on the Web site.

And just last week, a group of Hollywood studios said they will sell digital versions of films such as "Brokeback Mountain" and "King Kong" through Movielink.com and CinemaNow with certain restrictions.

While experts agree that most people will continue to subscribe to a paid TV service for a long time coming, some research indicates there is consumer appetite to watch downloaded content from the Internet.

Parks Associates predicts that roughly 60 percent of broadband users will be downloading some video a la carte from the Web in 2010. These estimates were calculated when it was assumed that people would pay $1.99 an episode to download shows from iTunes, according to Kurt Scherf, vice president and principal analyst with Parks Associates. The figure could be even higher if content is offered for free, as Disney plans to do. Today, only about 3 percent of broadband subscribers download video from the web.

Increased competition in the video market from Internet-based video services could cause network operators to look for other ways to make money, added JupiterResearch's Laszlo.

"Even though Disney is delivering content independently of the cable operator or the telephone company, it would be interesting to see if network providers respond by blocking content," he said.

The issue referred to as Net neutrality centers on whether carriers should be able to charge different fees to content providers who access their network. For weeks, the topic has been hotly debated in the industry as lawmakers draft legislation that addresses the issue.

"I think Disney's move could open up this debate even more," Laszlo said. "I wouldn't be surprised if we saw large media companies getting into the debate soon."

http://news.com.com/2102-1034_3-6060...=st.util.print

AT&T to offer video on demand to DSL customers
By Marguerite Reardon
URL: http://news.zdnet.com/2100-1035_22-6062310.html

AT&T said on Tuesday that it's teaming up with Akimbo Systems to provide Internet video-on-demand to customers of Homezone, its new subscription TV service for DSL users.

AT&T has been testing Homezone in several states and expects to launch the new service throughout its 13-state region later this summer.

San Mateo, Calif.-based Akimbo sells a set-top box and video-on-demand service that's similar to Apple Computer's iPod-iTunes combination. Instead of selling music, Akimbo sells video that can be downloaded from the Internet onto the set-top box.

Homezone is an interim video offering from AT&T that'll be in place until the company is able to offer IPTV service over its new fiber-optic network, called Lightspeed. Homezone, a cross between a satellite TV service and IPTV, offers consumers a set-top box that gets satellite TV programming from Dish Network and also connects to a DSL line to offer Internet-based services from providers like Akimbo.

AT&T plans to offer its Homezone subscribers the Akimbo Service, which hosts more than 10,000 on-demand programs from 125 different providers, and the Akimbo Player set-top box, which stores 150 hours of video. Exact pricing hasn't been disclosed, but Akimbo sells the service for $9.99 per month, and the set-top box costs about $199.99.

Adding TV to its lineup of services is crucial for AT&T, as it competes with cable operators that have already begun offering telephone service, along with TV and high-speed broadband services. AT&T is spending billions of dollars upgrading its existing network with fiber that reaches deeper into communities to boost broadband speeds. This new network, called Project Lightspeed, will let AT&T offer consumers Internet-based TV, phone service and ultra high-speed broadband that is comparable to, or even more robust than, services from its cable rivals.

AT&T plans to have Lightspeed available to about 80 percent of its customers in the next three years. It's already testing its IPTV service in San Antonio, Texas.

http://news.zdnet.com/2102-1035_22-6...?tag=printthis

Networking and Telecom Blog

Preston Gralla Keeps You Up To Date

Wonder why AT&& and other telcos are winning the net neutrality debate, and just about every other issue that comes before government? It's simple: Money talk. Telcos spent a whopping $60 million in lobbying money just at the federal level, second only to the health care industry, Business Week reports.

That's bad enough, but there's worse as well. The Center for Public Integrity compiled a list of the top 100 money-givers to Congress between 1998 and 2005, and telcos dominate the list.

Here are a few of its findings:

* Verizon Communications Inc. $81,870,000
* SBC Communications Inc. $58,035,037
* AT&T Corp. $53,349,499
* Sprint Corp. $47,276,585
* BellSouth Corp. $33,732,827
* Qwest Communications International Inc. $24,523,480

So next time you wonder why telcos always seem to get their way with the feds, just look at those numbers. They're buying the best Congress money can buy.

Posted by Preston Gralla on Apr 17, 06 11:53 AM in Networking and Telecom

http://techsearch.cmp.com/blog/archi...verizon_1.html

A get-rich cyberscheme
Reformer.com
Tuesday, April 25

Congress is about to hand over operation of the Internet to phone giants such as AT&T and Verizon and cable behemoths like Comcast, Time Warner and Adelphia.

You're forgiven if you haven't heard about this. Press coverage of this issue has been sparse and it does seem a bit unbelievable that a handful of telecommunications companies could control the vast online universe.

But barring a last-minute change of heart by the House Commerce Committee, the telecom corporations -- which own 98 percent of the nation's high-speed broadband networks -- will have the keys to the Internet turned over to them. The free, open and nondiscriminatory information superhighway of today will be transformed into a privately run toll road that will eventually charge a fee for every thing we do online.

The diversity of the Internet has grown from its lack of central control. The telephone and cable companies that carry all the traffic treat every bit and byte of information exactly the same. This is called "network neutrality," and it is a big reason why the Internet evolved in the way it did. Would eBay or Google or Amazon have been able to grow if they all had to pay for access to the Web?

Instead of network neutrality, the new corporately owned Internet will strictly be a pay-to-play system. It's not enough for them to charge users for access. The telecom companies would be the content gatekeepers and would charge Web sites for access to their networks. Those who have the most money will get preferred treatment. Everything else will be shunted aside to lower-quality, lower-priority services.

It's easy to see what could happen. The corporate-controlled Internet becomes a medium designed primarily for marketing and entertainment, with an inferior, low-grade Internet for civic and noncommercial communications. Service would be tiered, with limits on the number of downloads or e-mail that could be sent or received. And a rural state like Vermont would become a digital backwater because the big telecom companies see us as an unprofitable market.

But it gets worse. The phone and cable companies are rolling out tools that allow them to look at the data that's been sent and received by users and track the usage of subscribers. This way, they can not only measure usage and bill accordingly, they can also turn over the data to the government.

Want more bad news? They also want to prevent municipalities and nonprofit groups from setting up local Internet wireless or wi-fi networks and prevent municipalities from requiring telecommunications companies to serve the public interest. For example, Adelphia would no longer be required to fund BCTV or give it two channels on its cable system.

The telecommunications lobby is powerful and has successfully bullied and bribed members of both parties in Congress into supporting this special interest giveaway. AT&T has spent $11 million and Verizon more than $7.5 million in 2005 to lobby for an end to network neutrality.

But this giveaway is not inevitable. Three years ago, a public outcry derailed the Federal Communications Commission's attempt to loosen limits on the number of radio and TV stations that could be owned by individual corporations. A similar outcry can stop this giveaway of the Internet.

http://www.reformer.com/editorials/ci_3748632

'Net Neutrality' in High Gear

By John Eggerton -- Broadcasting & Cable, 4/25/2006 4:11:00 PM

The "Net neutrality" debate raged in Washington Tuesday, the subject of a hearing in the House Judiciary Committee and of countless letters to and from legislators on the issue as lobbyists geared up for a markup on a video franchising bill Wednesday.

A House Commerce Committee bill allowing national video franchises also promotes telco provision of Internet access. And there's the rub.

Because telcos want to be able to offer enhanced services over their networks, and charge content providers for those services, those who see one company's enhancement as another's degradation are concerned that those network providers will discriminate in Internet access provision., discouraging innovation and requiring Internet content providers to pay "protection" money not to have their service degraded.

On the telco side, Walter McCormick, promised legislators that the companies he represents would not "block, impair, or degrade" access. He also told the committee that antitrust laws, as they already exist, guard against restraint of trade and should be able to insure that so-called "network neutrality."

McCormick said that since the bill already charges the FCC with adjudicating violations of what it decided impedes network neutrality, combining that with antitrust law is a "belt-and-suspenders" approach that covers the net neutrality issue without tougher rules or giving the FCC the ability to set rules on the issue rather than simply punish violators of general anti-network neutrality principles.

McCormick says that companies like Disney have approached them about setting up virtual private networks--where they could securely distribute video content, for example--and that those companies should bear the cost of that enhanced services.

Proponents of stronger network neutrality rules counter that that scenario means that others service will be, de facto, degraded, since the bigger pipe will go to the company willing or able to pay for it.

The most doomsday scenario among the net neutrality crowd came from Paul Misener, Paul Misener, Global Public Policy VP, Amazon.com. He predicted that while network operators will promise not to degrade access to some in order to give fast-lane access to others, eventually they would provide this ultimatum: "Pay us for prioritization or we will degrade." Smaller companies will have no chance in that bidding war and innovation will be stifled.

There may be a flurry of antitrust actions, and the Congress and the FCC will realize their mistake in not mandating network neutrality, he said, but it will be too late.

The result, he said, of this "clear and present danger," will have been to "reduce content choice, stall innovation, and wound global Internet competitiveness."

The danger of the bill passing may not be as clear and present as it once was. Judiciary committee members were talking about starting a process--of looking at the issue--on a bill that other legislators were hoping to approve by Wednesday night.

As one lobbyist pointed out, the net neutrality lobby has succeeded in pushing that issue to the front burner, overshadowing the the bill's core, which is national video franchise reform.

While Commerce Committee Chairman Joe Barton (R-Tex.) has vowed the telecom reform bill would pass this session, the more contentious it becomes, and the net neutrality lobbying letters and e-mails are multiplying like virtual rabbits, the less likely a bill can be agreed-on, voted out, reconciled with a much more comprehensive Senate version not yet marked-up, passed, and signed in the dwindling days of the legislative calendar.

http://www.broadcastingcable.com/art...=Breaking+News

AT&T, Yahoo Jointly Offer VoIP

April 26, 2006 (11:01 AM EDT)

By Laurie Sullivan, TechWeb News

AT&T Inc. and Yahoo Inc. Wednesday officially rolled out integrated Internet-based voice services.
The offering brings Yahoo Messenger with Voice to AT&T Yahoo high-speed Internet subscribers and Yahoo users in AT&T's 13-state local service area. Free voicemail and missed-call message retrieval are included. The Phone Out feature gives consumers in the U.S. voice over Internet protocol (VoIP) calls. Users may use their PCs to place calls to traditional or mobile phones in more than 180 countries. Consumers may call within the U.S. and to more than 30 other countries for two cents per minute or less.

Subscribers select a phone number to make and receive calls on their PCs from traditional and mobile phones for $2.99 per month or $29.90 per year through Phone In and Phone Out services.

As part of the agreement, AT&T becomes Yahoo's global preferred network termination provider for PC-based calling services in Yahoo Messenger with Voice service. The service gives consumers PC-based calling capabilities for making and receiving phone calls with VoIP.

AT&T Inc. and Yahoo announced their alliance in November 2001 and launched co-branded high-speed Internet and dial services less than one year later. The companies announced in late 2004 a multi-year extension of their alliance to take AT&T Yahoo beyond the PC and into home television and audio systems, Cingular Wireless handsets, AT&T Wi-Fi, and AT&T Home Networking equipment.

The two companies also plan to extend the partnership into Internet protocol television (IPTV) with AT&T's Project Lightspeed and U-verse package of services.

http://www.techweb.com/wire/networking/186701148