In April 2006, a new legislation called the Communications Opportunity, Promotion, and Enhancement Act of 2006 (COPE) was introduced in the House of Representatives. It pretty much toed the line of the FCC policy resolution of August 2005 to grant pricing power to network operators. This was a blow to the proponents of neutrality. They tried to rally support for the principle, and soon, an amendment was proposed to the as-yet-un-enacted COPE to incorporate net neutrality principles into the proposed law. On June 8th 2006, the House of Representatives passed COPE, but the amendment was defeated by a wide margin.
But what does all this have to do with you and me? Should we worry about receiving bills from Google and Yahoo any time soon? The answer, for several reasons, is “not necessarily”.
First, the average consumer is quality conscious. He will not stop using his favorite web site or service simply because another site is faster. Similarly, a website is not likely to alienate customers by burdening them with fees if the website ends up paying small additional charges to the network operators.
Second, if the added cost is passed on to the consumers to an extent that online shopping becomes more expensive than a trip to the mall, both AT&T and Amazon.com stand to lose business.
Third, there already is discrimination on the Internet in one form or another. For example, bandwidth pricing on the Internet is already tiered. Do you, by any stretch of imagination, think that Google and I pay proportionate amounts for the bandwidth and connectivity of our respective web sites? Certainly not. My web server is in my basement, connects to the Internet over a DSL connection, and costs me $14.95 a month, including bandwidth charges, to run. Google’s servers are probably at a data center that has multiple backbone connectivity and is certified to be safe from a nuclear attack. And I am reasonably certain that Google pays more than $14.95 per server per month for bandwidth and connectivity. Even content is incrementally priced. You can pay Google more, for your ad to be placed more prominently on its pages, and you must subscribe to Wall Street Journal if you want to read it online but reading USA Today online is free.
Fourth, if Google has to pay AT&T, they may come up with workarounds such as ad-supported “fast lanes”.
Fifth, although enacted recently, the policy has been in effect since August 2005 and we haven’t seen any bills – yet.
Regarding freedom of speech, the network operators are quick to point out that although the policy has been in place since August 2005, they have not blocked anyone out for nefarious reasons, and that the FCC has punitive powers in cases of discrimination. Besides, if a provider does block content you want access to, you are likely to sign up with a competitor, who imposes no such restrictions.
The new law gives the network operators the ability to control access to their pipes. If the operators abuse their power, the FCC has the authority to slap them on the wrist. Whether the FCC will actually do so remains to be seen. The new law gives the network operators pricing power. Whether that translates into a monthly bill for you and me remains to be seen. And how many corporations actually go out of business under the burden of the anticipated expenditure also remains to be seen.
Ultimately, free market forces are likely to decide the cost of Internet access and who bears it. But if everyone except the network operators finds it difficult to cope with COPE, you can expect to see a proposal for a new amendment that seeks to reinstate the proposal for the original amendment!
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