3. Big Telco Companies, Industry Group USTelecom
Issue: Network Neutrality
Network neutrality principles are rules that prevent large Internet service providers (ISPs) like AT&T, Verizon, and Comcast from giving one Internet company's traffic priority over another's. Up until now, the Internet has been a fairly neutral place--we have equal access to any (legal) content we choose to access. But if the big ISPs begin giving preferential treatment to the highest-paying Internet sites, they could effectively make it harder for us consumers to access some of the vast content and services on the Web. The next Google and Yahoo of tomorrow, now gestating in garages and dorm rooms across the country, likely wouldn't have the funds to buy enough bandwidth to compete with the Google, Yahoo, and other giants of today. That's bad for us, because the companies of tomorrow might simply be better.
The phone companies had at one time reserved the right to parcel out bandwidth as they saw fit, as evidenced by the words of former AT&T CEO Ed Whitacre in late 2005:
"How do you think [Internet companies are] going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it." And so began the network neutrality fight we know and love today."
What Smoking Gun?
But so far there's been no smoking-gun evidence that the "Internet tollbooths" Whitacre alludes to are being set up on a large scale--that major net neutrality breaches are taking place at the big ISPs. We've seen only borderline offenses like traffic Comcast's recent throttling back of BitTorrent file sharing. But Comcast may have singled out BitTorrent traffic not because it's BitTorrent traffic or because it's file sharing traffic, but because peer-to-peer traffic eats up huge amounts of bandwidth--both upstream and downstream. Still, many people believe that some type of traffic discrimination is inevitable, and that network neutrality principles must be codified into law to prevent it.
Some say that the absence of network neutrality guarantees in existing law is already hurting tech companies, and, by extension, tech consumers. "It fosters an area of uncertainty," says Art Brodsky of Washington D.C.-based public interest group Public Knowledge. "The point is you have to wonder, if you're a technologist, and you'd love to get this [service] on the Web, and if I'm competing against another company that has a sweetheart deal with the phone company and they move my packets to the back of the line, am I going to get screwed?"
The companies that own the big broadband pipes remain willing to fight hard against a law restricting their right to discriminate on their networks. A major pro-network neutrality bill cosponsored by Senator Olympia Snowe, R-Maine, and Senator Byron Dorgan, D-North Dakota, failed to pass last year, in part because of a massive lobbying campaign by Big Telco and it allies. The two Senators reintroduced the bill again in January, but little action has been taken on it. The phone companies have already done a lot of talking on Capital Hill to prevent passage of a net neutrality law. And, it should be said, the tech and consumer groups pushing for a law have not always stated their case clearly enough to move lawmakers and their constituents. That situation, I believe, is getting better, but a smoking gun--an obvious net neutrality breach by a large ISP--will likely be needed for Congress to pass a law.
Legions of Lobbyists
The big telcos are very influential in Washington, and rarely loose a fight over something they really want. "They've got armies of lobbyists that work for them," Public Knowledge's Brodsky says. "They've got regiments of lobbyists that are hired guns. They've got zillions of dollars to spread around town in campaign contributions and other ancillary supports."
AT&T has a large contingent of in-house lobbyists in Washington, but also farms out much of the work. AT&T reported almost $19.1 million in lobbying expenses last year, hiring 25 outside firms to do its bidding in the capital. That makes AT&T the fifth-largest lobbying spender in the U.S. for 2006, followed closely by the telcos' industry group USTelecom, which spent $18.4 million during the year. Verizon and Verizon Wireless together reported $13 million in lobbying expenses, and hired some 45 outside lobbying firms in addition to internal lobbying staff.
One interesting thing about these lobbyists is their somewhat incestuous relationship with the offices in which they lobby. Brodsky says Verizon and AT&T routinely hire lobbyists from the staffs of senators and representatives. "If you look at the lobbying forms for the companies, you'll see a lot of people that worked for very influential members of Congress and senators and things." One example is Tom Tauke, a former congressman from Iowa who now heads up Verizon's lobbying efforts in Washington. Tauke has long been an outspoken critic of network neutrality legislation.
The big phone companies also give generously to the campaigns of federal election candidates. In fact, AT&T was the 2nd largest political donor from 1989 to 2006 at almost $38 million, again according to data from the Center for Responsive Politics. Verizon donated $15.5 million to candidates in federal elections between 1990 and 2005.