Carrier CEOs: We won't block 'Net

Telecom executives and regulators this week attempted to clarify their positions on 'Net neutrality, an increasingly contentious issue given the growth and importance of the Internet and consolidation producing more powerful players.

At the inaugural TelecomNext conference in Las Vegas, CEOs from the major carriers pledged not to block access to Internet content but sought non-regulated solutions to capture a return on their infrastructure investments to carry it. Regulators promised that any required policies would ensure unfettered, equitable access to and distribution of that content and would not discourage further investment.

Hanging in the balance are potentially higher costs for enterprise telecom services if carriers are precluded from recouping their network capacity and content delivery investments from consumers or content providers.

Further muddying the waters is ambiguity around the actual definition of 'Net neutrality.

"Whenever somebody walks into my office and asks, 'Are you for 'Net neutrality,' I say, 'What is it?'" said FCC Commissioner Deborah Taylor Tate during a keynote address.

Generally, 'Net neutrality refers to the unbiased delivery of Internet content even if it competes with content from the carrier or if the content provider pays less - or nothing - for that carriage. The fear in the industry is that carriers will charge content providers for varying levels of service quality and capacity for content carriage, and block or degrade service of content from providers that do not pony up.

This is the concern CEOs of the major carriers sought to appease at this week's conference.

"AT&T will not block access to the public Internet or degrade service [of content providers], period," said AT&T Chairman Ed Whitacre, who prefaced the keynote address remark by saying he was not familiar with the definition of 'Net neutrality.

"I don't even know what that means," he said, perhaps suggesting that different constituencies have different definitions.

Nonetheless, Whitacre sought to turn the tables on supporters of 'Net neutrality, some of whom have assailed AT&T's US$67 billion acquisition of BellSouth as a move to limit competition and customer choice in telecom services.

"There are really no competitive issues at stake," Whitacre said. "But that has not stopped some from making the merger a referendum on 'Net neutrality. They want to scare people into thinking that access to the Internet is at risk."

Advocates of 'Net neutrality limit choice, he said, by attempting to not bear any of the expense of the network capacity required to carry their content.

"They say, 'Go ahead and build more lanes but let the construction crew pay for it,'" he said.

Whitacre said AT&T is exploring creative ways to deal with those capacity and upgrade costs through commercial agreements with content providers looking to distribute their services over the AT&T network.

"The interests of the network and content providers are intertwined," he said.

BellSouth CEO Duane Ackerman also sought to quell fears that the combined company would exercise control over Internet content access. It is the largest carrier in the United States, with $120 billion in revenue, 71 million residential phone customers in 22 states, and the leading share of business voice and data customers.

"Let me be clear," Ackerman said during another keynote, "managing our networks is not about controlling where people go on the Internet. Why would we want to violate our customers' trust? It wouldn't take long for the market to punish us."

AT&T rival Verizon supports Whitacre's call for commercial agreements between carriers and content providers for mutually beneficial carriage, distribution and delivery of Internet content.

"We need to find the right business models and partnerships," said Verizon CEO Ivan Seidenberg during the conference's kickoff keynote address. "The marketplace is telling us there's great opportunity out there."

Seidenberg also suggested a partnership should be forged between carriers and government regulators to ensure equitable delivery of all Internet content and continued investment in content delivery networks. He used Korea, which built a 100Mbps-to-the-home broadband network with government assistance after a two-year economic slump, as an example. "It shows what happens when business and government come together, share a vision [and] have a winning mind-set about taking control of your own future," he said.

Content producer Walt Disney Co. was more emphatic on the role it believes regulators should play in 'Net neutrality.

"We do not support litigation at this time," said Disney CEO Robert Iger. "The free market should reign."

FCC Chairman Kevin Martin said the commission has the authority to act on 'Net neutrality and is "committed to taking action when necessary." But he promised that whatever action the commission takes to protect consumers and content providers will be business friendly.

"We have to have a regulatory environment that allows companies to invest and recoup those investments," Martin said.

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