Net Neutrality: The Real Issue Behind the AT&T/BellSouth Showdown

It’s pretty clear that the AT&T (T) and Bellsouth (BLS) merger has turned into a proxy war over Net Neutrality, with Yahoo (YHOO) and Google (GOOG) spearheading the effort in a naked attempt to keep their distribution costs near zero. Correspondingly, Washington bloodsuckers lobbyists on both sides are gearing up.

The Wall St. Journal editorial yesterday captures the true issue at hand, and why the FCC is now deadlocked on approving the merger.

Meanwhile, Congressmen Ed Markey and John Dingell deserve their place in this story, having bared their teeth at Mr. McDowell in a threatening letter last week that questioned Mr. McDowell’s suitability to vet the merger. Their true interest was in strengthening the hand of Democratic Commissioners Copps and Adelstein, who seem bent on using this merger review to advance “Net neutrality” mandates that neither Congress nor the FCC have seen fit to impose through normal channels.

We’d like to see these two Congressmen demonstrate the same concern for public integrity by calling on the Commission to quickly approve a merger that everyone from shareholders to the relevant unions supports. But that probably makes us “uncurable optimists” too. The duo are eager to do favors for the campaign check-writers at Google and MoveOn.org, which want Net neutrality rules so AT&T and other telecom companies can’t charge market prices for use of their broadband pipes.

Check out the latest video from the “Save the Internet” coalition.

The only thing worse than having Washington involved in free markets is when they are trying to solve a problem that DOES NOT EXIST. My extended opinions can be found here.

Comments

[RichardAlvarado]

Figure i post something to even out this post.
First i will correct some errors.
-Google and Yahoo distribution cost are far from zero. They paid by the bandwidth they use (could you image paying ISPs by the download instead of a monthly fee).
- You can't really call it a free market when you can only pick one of two. (you can only get high speed via cable or dsl)

Now I'm really surprised that the telcos are pushing against Net Neutrality. If they are getting so many issues, they should just allow the itty bitty law pass(hey it could be worse). Lets also not forget who win wins in every case. Google. Google really is the only company that can afford to paid the telcos. If they don't feel like paying, they are the only ones that can afford to build their own fiber/wireless networks and by pass completely the telcos (giving consumers a possibly free choice). If Google builds, the telcos become obsolete, and cease to exist.

Just because you can't tell the difference between, my telco is blocking me from accessing seekingalpha.com vs. seekingalpha.com is down, doesn't mean the problem DOES NOT EXIST!

[David Lang]

Google building a broadband network is just the kind of thing that would derail it. They are not a Telecommunications company. Building out a network would be a huge, and expensive task that would take them away from what made them great.

[schmitt]

Google is not invincible.

[Neu Turd]

Are you kidding? Google has to spend MILLIONS on the bandwidth necessary to host their site/services. Heck, the YouTube founders were having to raise over $1 million dollars per month just to pay the bandwidth and hosting fees associated with their site, well before Google came to recognize its value. Adding fees on the other end of the line would likely prevent the next YouTube, MySpace, Digg, Ebay, Wikipedia,or Yahoo from ever happening.

The "regulation" argument against net neutrality is pure telecom spin. While the term 'net neutrality' may not have been coined until relatively recently, it has nonetheless has been the established practice that has allowed the rise of web titans like Google to come into existence in the first place. Having the congress or FCC impose a tiered web like the one major ISP's are so desperate to get <b>would be the real regulation</b> of the web that needs to be opposed.

Even *if* AT&amp;T's arguments are true that the rising popularity of web video and services like Skype are saturating the capacity of their lines, whose fault is that? It sure isn't the consumers fault if more people are actually <i>using the services they already pay for<i>. It isn't anybody else's fault if AT&amp;T has oversold more bandwidth to consumers than AT&amp;T can actually supply. Their is no reason web innovators should be forced to bail them out of a mess they made for themselves.

If you like at how many billions of dollars the Baby Bells have spent to put AT&amp;T back together again(mostly), it far exceeds what it would to have cost to deliver a fiber connection to every home in America.