Government control of the internet

The WSJ headline runs: "U.S. as Traffic Cop in Web Fight: FCC Proposal on Bandwidth a Boon for Consumers and Silicon Valley, Blow to Telecoms." This will help Google, but it will hurt consumers and make the internet much less efficient. The government will make it so that heavy users won't be charged more for using the internet. Fortunately, there is some opposition.

Federal Communications Commission Chairman Julius Genachowski, in a speech Monday, proposed putting teeth into current guidelines on so-called net neutrality by making them full-fledged rules, and extending them to wireless carriers.

"The bar needs to be set very high when it comes to additional government intervention," said USTelecom, the phone industry's lobbying group. Cable giant Comcast Corp. said it will "be incredibly important for the agency to review the data to determine whether there are actual and substantial problems that may require rules."

Large phone and video providers, including Comcast, Verizon Communications Inc. and AT&T Inc., have argued the government shouldn't tell them how to manage their Internet networks. Wireless providers are worried that a surge in bandwidth-consuming applications such as video downloads could hobble their networks unless they are allowed to control the flow. . . .

UPDATE: From the Washington Post.

Republicans to Push Against Net Neutrality; FCC Says Start of Process
Senate Republicans moved Monday afternoon to prevent the FCC's proposed rules on net neutrality with an amendment to the Interior Appropriations bill that would tie up funding at the agency for new regulatory mandates. Observers said, however, that the move was unlikely to be approved in the Democrat-majority Congress.

Senator Kay Bailey Hutchison (R-Texas), ranking member of Senate Commerce, Science, and Transportation Committee, said in a release:

"We must tread lightly when it comes to new regulations. Where there have been a handful of questionable actions in the past on the part of a few companies, the Commission and the marketplace have responded swiftly," Hutchison said in the release.

"The case has simply not been made for what amounts to a significant regulatory intervention into a vibrant marketplace. These new regulatory mandates and restrictions could stifle investment incentives," she said. Senators John Ensign (R-Nev.), Sam Brownback (R-Kansas), David Vitter (R-La.), Jim DeMint (R-S.C.) and John Thune (R-S.D. co-sponsored the amendment.

Rebecca Arbogast, head of technology policy research at Stifel Nicholas, said the move was a standard vehicle for Congress to block what regulatory agencies were trying to achieve in the executive branch or in a regulatory agency. "But the likelihood of it getting passed it pretty low. This is standard procedure and a time-honored tradition but the Republicans are in the minority." . . .

UPDATE: These regulations were clearly done to benefit Google. AT&T has tried to point out that if Google is going to offer telephone services it should also be treated like a telephone company. Google of course disagrees.

When your long-distance company connects your call to a telephone served by a different company, it pays a fee to terminate the call. This fee can range from almost nothing to as much as 7 cents a minute. The difference is set by a number of factors, including state regulatory regimes. In most cases, those access charges far exceed the actual cost of completing a long-distance call, and every telephone user pays higher bills because of these charges.

So why do these charges exist? Originally, they were to subsidize service in sparsely populated areas, and they are still defended by the largely rural phone companies that benefit from them, many of which have allies in Congress. (Those phone companies get a number of other subsidies, too.)

Meanwhile, some enterprising phone companies, aided by local regulators, have taken to encouraging entrepreneurs to set up businesses that attract lots of inbound calls. Those include the free conference calling services, free fax lines and telephone pornography. The phone companies rebate some of the high call termination fees they receive to the companies running these services.

Maybe the commission will decide that Google, since it is turning into a telephone company, will need to connect to those lines and pay the fees. Maybe it will agree with Google’s argument that its services are different enough to be exempt from the rules AT&T follows. But consumers would benefit most if the commission used this as another prod to do the difficult work of bringing some rationality to the way that long-distance calling is priced.

The WSJ has some specifics about how the telephone regulations seem to apply differently to Google.

In a letter to the Federal Communications Commission, the phone giant accused Google of violating rules designed to ensure phone companies connect all calls. AT&T also accused Google of violating "net neutrality" principles, which are designed to ensure consumers can use any legal Internet services they want.

Google Voice is an Internet call-forwarding system that allows consumers to sign up for a free phone number that, when called, simultaneously rings all of a consumer's other phones.

Google acknowledged it restricts outgoing calls to some phone numbers, including adult chat lines and conference-call centers, which charge higher access fees to carriers. Blocking such calls reduces Google's expenses for the service.

An FCC spokeswoman said the agency had received the letter and was reviewing it, but didn't have any comment about whether it might investigate

The FCC "cannot, through inaction or otherwise, give Google a special privilege to play by its own rules," AT&T said in the letter. . . .