The Feb. 25 hearings may not lead to broad regulation, but they did shine a light on broadband providers' "network management techniques"

As Comcast Executive Vice-President David Cohen began his remarks at a hearing held by the Federal Communications Commission at Harvard Law School on Feb. 25, he knew he was in for a rough day. "It's a pleasure to be here as a participant and hopefully not as the main course for your meal."

Those hopes were quickly dashed as Comcast (CMCSA) drew the ire of many participants during the six-hour proceedings. FCC Chairman Kevin Martin convened the hearing to explore allegations that Comcast is acting improperly by blocking certain kinds of Internet traffic.

At issue is consumers' access to Web content and whether network owners can lawfully impose limits on how people access certain forms of traffic, service, or speech over the Internet. Proponents of Net Neutrality say Comcast and other cable TV companies, as well as phone carriers such as Verizon Communications (VZ), which provide much of the country's Web access, should not favor some kinds of content over others. "Consumers don't want the Internet to be another version of old media, dominated by a handful of media giants," said FCC Commissioner Jonathan Adelstein, who called for creation of an "Internet Bill of Rights" to ensure equal access to all lawful content on the Web.

Broad Legislation Unlikely

As heated as the rhetoric has become, it's not clear whether it will result in sweeping regulation. Representative Ed Markey (D-Mass.), who was on hand for the event in his home state, drafted a bill this month that would prohibit "unreasonable interference" by a network operator, but a lobbyist contacted by BusinessWeek who requested anonymity says it's not likely to be passed this year. And while FCC Chairman Martin said the commission was "ready, willing, and able" to take action against improper practices, some experts say the FCC may just demand changes from Comcast rather than issue industrywide regulations. "Given the public statement that I've heard, it's not clear to me the majority of commissioners were ready to move to the next step [and draft any changes]," says Carol Mattey, a managing director in the telecom regulatory consulting practice at Deloitte & Touche. Given the variety of circumstances that can affect the speed of the Internet, "implementation of such rules would be difficult. Life does not come in black and white. There are thousands of shades of gray."

Still, forums such as the hearing in Cambridge are bringing the subject of Internet freedoms and restrictions more squarely into the public arena, creating conditions for change, possibly under the next Administration, experts say. Big carriers have every incentive to use their networks to delay or block traffic for their own purposes—whether it's to favor a homegrown video service over a competing one or to stifle political speech—academics, including Columbia University law professor Timothy Wu, have argued. Until recently, with little clear evidence of such tampering, the FCC had decided in a 2005 policy statement only to lay down general principles against such tampering.

Then, late last year, the Associated Press published an article that claimed the cable giant was delaying traffic sent via Bit Torrent, a peer-to-peer technology that uses the power of vast networks of PCs to share big data files such as TV shows and movies. Comcast, which initially denied it was interfering in such data transfers, says the practice leads to imperceptibly short delays, and only at certain times, such as when the network in a particular neighborhood is overly congested. "We believe we have chosen the least intrusive method" to ensure that peer-to-peer file sharing by a few heavy users doesn't degrade download times for everyone else," Cohen says.

Competition for Cable Fare

But at the Feb. 25 hearing, critics argued it's unacceptable to single out a given type of traffic—particularly one that is used mostly to deliver movies and other video, in direct competition with Comcast's cable offerings. Experts pointed out that other carriers haven't taken this approach. Comcast critics say the company should be more focused on building additional bandwidth to satisfy customer demand than on finding ways to throttle some of their activities. "Comcast is trying to generalize and say this is a common practice," says Gilles BianRosa, CEO of Vuze, a video site that filed a petition with the FCC last November claiming the throttling practices were hurting its business. "The funny thing is that the other Internet service providers are saying they're not doing it."

Both sides of the debate say they agree on one thing: that everyone should have unfettered access to whatever legal content they seek. There's even some agreement that the biggest bandwidth hogs may need to pay more for the privilege.

Indeed, Comcast notes that all network operators use "network management techniques" to get through periods of peak loads, deploy spam and adware filters, and ensure that time-sensitive traffic gets proper treatment—so that phone calls made using Voice over Internet Protocol technologies, for example, don't get dropped. "There isn't a broadband network in the world that's unmanaged," Cohen tells BusinessWeek. And while both sides say they agree carriers need to do a better job of disclosing their network management policies to consumers, carriers are concerned that too much technical information would help hackers proliferate malware.

Putting the Issue Front and Center

Network owners say any regulation will impede U.S. competitiveness by stifling innovation and hurt consumers who benefit from network management practices they insist are "reasonable and nondiscriminatory."

Net Neutrality advocates argue just the opposite: that big U.S. carriers already have too much power. One recent Government Accountability Office report says the average American has only two broadband suppliers to choose from. With so much influence, says Harvard law professor Yochai Benkler, there's a disincentive for carriers to invest in capacity or innovation. Lack of competition "creates the opportunity and the incentive to extract rent by, among other things, discriminating against applications that compete with other high-value services," he says.

Even if the Feb. 25 hearing doesn't result in immediate changes, it helped give Net Neutrality advocates some of what they wanted: a bright light on their concerns that could make them less confounding and more relevant to the Net-using masses. "I was pleasantly surprised by the depth of the questioning," says Vuze's BianRosa. "It was a great opportunity to cut through a lot of the noise and get a clear picture of what's at stake."