Telcos agitate for toll booths on the fatter internet pipes

Back in the ancient past - say, a decade or so ago - telecommunications companies were pretty sure of what they did, and how to do it: they carried telephone conversations over their wires and fibre-optic pipes, and got paid a hefty amount for doing so.

They were also protected by various government regulations. And as a result, they were required to carry whatever anyone wanted to send down the phone line and to give everyone access under what was known as the "common carrier" principle.

As the world has turned increasingly digital, however, the phone business has become a lot more complicated. Now, telecommunications lines and fibre-optic cables carry data of all different kinds, from phone calls to email, instant messaging, music and even movies.

In one house, an internet user might be making a voice-over-internet phone call, while next door, his neighbour is downloading gigabytes worth of illegal software. Should the two be treated the same, or should the phone company be allowed to discriminate between them?

That, in a nutshell, is the question of "network neutrality" - a question many internet theorists and consumer activists are pondering, not to mention lawmakers in the United States.

When the internet consisted mainly of email and some light web-surfing, it wasn't a big issue for the phone companies. But even as bandwidth has increased, the amount of data being poured into those pipes has increased as well, and some of the major carriers are starting to get a little peeved at the idea that they have to carry all that video and other information to its destination without getting a cut of the revenues from it.

Although the issue has been simmering for some time, it burst into public view in November, when AT&T chairman Ed Whitacre said he resented the fact that Google and other technology companies were using his "fat pipes" and not paying for them.

"They don't have any fibre out there. They don't have any wires," he told BusinessWeek magazine. "They use my lines for free."

There have been similar comments since from most of the major telcos. In early February, an executive with Verizon - one of the largest US wireless carriers - said Google was taking advantage of the fibre networks built by the phone companies, and was therefore "enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers."

He and other telco executives have suggested that Google, Yahoo, Microsoft, Apple and other tech companies might have to pay extra to send their video or digital downloads through the carriers' pipes.

This position has drawn a firestorm of criticism from many areas, including from Vinton Cerf, one of the original inventors of the technology that underpins the internet.

He told the US Congress that the impartiality of the internet when it came to data was one of its key strengths, and that filtering or interfering with that to make certain kinds of information more important would change the very thing that has made it so useful and ubiquitous.

Cable companies and others, meanwhile, are afraid the phone companies will arrange it so that their services work better and faster than those of their competitors.

Jeff Citron, chief executive of VoIP provider Vonage, has already accused some of the telcos of deliberately restricting their networks so that his company's software and services wouldn't be as attractive.

Others have described how telcos already use "bandwidth shaping" techniques to restrict the amount of bandwidth that goes towards peer-to-peer services or even to digital downloading services such as Apple's music and video store, iTunes.

Consumer advocates also argue that users of internet services from the telcos already pay dearly for their DSL connections, and users of large amounts of bandwidth such as Google already help pay for the pipes they connect to.

Some critics, such as telecom analyst Bruce Kushnick, argue that the telcos promised huge amounts of bandwidth for US consumers in the late 1990s - in order to convince the Government not to deregulate the industry as quickly as it originally wanted to - but never followed through. If they had, he says, there would be no bandwidth issues now.

The phone companies say that regardless of their earlier promises, they can't afford to make the types of investments in infrastructure that are required unless they have some control over pricing - and that means the ability to charge users of large amounts of bandwidth more, to ensure that their data gets to its intended destination.

But will this kind of ability turn the internet from an information highway into a toll road run by the telcos? That's what some fear will happen unless governments enshrine the concept of "net neutrality" in law, the way they did with the "common carrier" principle.