US: 'Net Neutrality' Amendment Rejected

A proposal to prevent Internet service providers from charging Web firms more for faster service to consumers failed yesterday to clear a Senate committee.

The vote was a setback for such companies as Google Inc., Yahoo Inc. and Skype Technologies SA, which had pushed for rules that would prohibit telecommunications companies from controlling the flow of online content. The Senate Commerce, Science and Transportation Committee took up the matter as part of a larger telecommunications bill, which passed 15 to 7. But some telecom experts said the party-line, 11 to 11 vote on "net neutrality" could signal a tougher fight to get the larger telecom bill passed on the Senate floor.

The bill would make it easier for telephone companies to expand into the cable television franchise business, a move which lawmakers hope will result in more competition and lower prices for consumers.

Sen. Ted Stevens (R-Alaska), chairman of the committee, said he was not sure he had the 60 votes necessary to move the legislation forward. He said he would be open to negotiating with Democrats in September, when Congress comes back from its recess.

The House passed its telecom bill earlier this month, and both versions include weaker net-neutrality language that would require the Federal Communications Commission to study and monitor the issue.

"If slimming [the bill] down helps advance the bill, we should look at that," said Aaron Saunders, a spokesman for Stevens.

Although there is little evidence so far, supporters of net neutrality fear that telecom companies such as Verizon Communications Inc. and Comcast Corp. will begin charging Web site operators high fees in exchange for faster connections to consumers.

Opponents argue that telecom companies invested the money to build the Internet infrastructure and should be free to charge what they see fit. Opponents also don't want the government to impose more regulation on companies competing in the Internet market.

Sens. Byron L. Dorgan (D-N.D.) and Olympia J. Snowe (R-Maine) offered the amendment to prevent cable and telephone companies from assigning priority to Internet traffic based on financial arrangements with Web sites.

Without the measure, Sen. John F. Kerry (D-Mass.) said, "we're creating a gatekeeper system, giving [telephone] and cable companies the power to cut deals," adding, "That will change the relationship of entrepreneurs with the Internet and the market."

Sen. John Ensign (R-Nev.) said such a law is unnecessary because there is little evidence of discriminatory pricing from Internet service providers. "We're attempting to legislate on a problem that doesn't exist and potentially make other problems in the process," Ensign said. If telecom companies begin to charge higher fees, "I'd be the first to stand up and do something about it," he said.

After yesterday's vote in the committee, both sides of the debate claimed victory. Net-neutrality supporters said that they were successful in recruiting enough Democrats to their side and that they would continue to push for stronger language if the bill moves forward. Telecom firms also claimed victory, saying they succeeded in striking down the Dorgan-Snowe amendment that Stevens made clear would have killed the entire bill.

The vote "suggests a hardening of Democrat opposition on this bill without stronger net neutrality safeguards," said David Kaut, telecom analyst at Stifel Nicolaus. "It's a bad sign for the prospects of this bill on the Senate floor without significant changes to network-neutrality provisions."

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