AT&T Agrees to Neutrality Regulations (Temporarily)

by on December 31, 2006 · 2 comments

It seems that AT&T has made a 2-year network neutrality promise in order to get its merger with Bell South approved. The Los Angeles Times approves:

In order to win approval from the Federal Communications Commission for its $84.5-billion buyout of BellSouth, the reconstituted Ma Bell agreed Thursday to not offer for two years “any service that privileges, degrades or prioritizes” any data transmitted over its broadband network. In other words, AT&T guaranteed what has come to be known as “Net neutrality”–giving websites and services equal access to Internet users. The only exceptions are for AT&T’s new TV service and the managed networks it sells to businesses.

Net neutrality became an issue last year after AT&T and BellSouth executives talked about making online companies cover more of the cost of broadband networks. In particular, they raised the prospect of charging high-traffic companies such as Google an extra fee to improve the picture quality of online movies and TV shows. Such charges could help established companies fend off upstarts by erecting a cost barrier to entry, suffocating the next YouTubes and Flickrs in their cribs.

I’m not thrilled about this, but it could have the silver lining. Frankly, AT&T is already so much a creature of the state that I’m not sure I care very much if they’re under the thumb of the FCC for a couple more years. I’m far more worried about regulations being applied to smaller firms and new entrants that might not have as much clout with the FCC. If this deal helps to take the wind out of the sails of the activists who want to regulate the entire Internet, that could be a blessing.

What I find most interesting about this, though, is that for the first time we’ll get a sense for what a network neutrality rule will actually look like in practice. The concept has always been somewhat vague, and it’s never been quite clear how it would be applied. Hopefully this will give some clarity to the debate.

My initial impression, having only read a couple of articles about the deal, is that the distinction drawn in the rule doesn’t make a whole lot of sense. They’re not allowed to discriminate except “for AT&T’s new TV service.” But AT&T’s new TV service involve streaming various companies’ video content using TCP/IP, right? So how is that different from the type of discrimination the regulation is designed to prevent? I thought video was always considered the biggest area of concern when it comes to ISP discrimination. I don’t see what’s to stop them from effectively selling companies the right to be part of “AT&T’s new video service” and having the same effect as selling higher-bandwidth pipes.

It also seems that the 2-year timeframe renders the regulations as little more than a symbolic exercise. If AT&T were planning to abandon network neutrality on its networks, it would probably take them a year or two to install the necessary infrastructure. So it’s probably not a big deal for them to put the equipment in place in late 2008, ready to flip the switch as soon as this deal expires.

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