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UPDATED:Verizon Cracks Telcos' United Front on Net Neutrality

Posted by: Stephen Wildstrom on October 22, 2009

UPDATE As expected, the FCC today adopted the Notice of Proposed Rulemaking that begins the process of formalizing network neutrality rules for the Internet. Here’s a link to the full text of the notice (PDF). Comments are due Jan. 14, 2010.

On the eve of a Federal Communication Commission vote that will start the formal process of imposing network neutrality rules on Internet service providers, the seemingly united front of the big telecommunications companies is showing cracks. The big development was a joint statement by Verizon Wireless CEO Lowell McAdam and Google CEO Eric Schmidt expressing their commitment to the idea “that the Internet remains an unrestricted and open platform” and pledging to work together to find common ground on the issue.

The shift is more symbolic than substantive. Google and Verizon still differ sharply on the question of how neutrality rules should apply to wireless services. And shortly before the Schmidt-McAdam statement was released, Ivan Seidenberg, CEO of Verizon Communications, which owns 55% of Verizon Wireless, attacked “proponents of net neutrality [who suggest] that network providers like Verizon and applications providers like Google, Amazon and others occupy fundamentally different parts of the Internet ecosystem - a binary world of ‘dumb pipes’ on the one hand and ‘smart applications’ on the other.” (Courtesy of FierceWireless.)

But even with Seidenberg's remarks, made in a keynote at the SUPERCOM 2009 conference in Chicago, Verizon is taking a considerably more moderate tone than the take-no-prisoners approach of duopoly partner AT&T. In a letter to employers, top AT&T lobbyist James Cicconi urged them to use personal e-mail accounts to post their opposition to the FCC's net neutrality Web site: ""Those who seek to impose extreme regulations on the network are flooding the site to influence the FCC. It's now time for you to voice your opinion!"

Of course, the difference in attitude between AT&T and Verizon may reflect an important difference in their status. Both spent billions of dollars to buy 700 MHz spectrum in an FCC auction last year. The spectrum Verizon bought came with open-access restrictions while the block bought by AT&T was not so encumbered. So Verizon may have less to lose--and might actually gain a competitive advantage--if AT&T is forced to abide by wireless net neutrality requirements.

Today's planned vote is just the beginning of what is likely to be a protracted rulemaking process. The FCC's Democratic majority is expected to support Chairman Julius Genachowski's proposed net neutrality rules, which will then be put out for public comment before final adoption. But there is a very good chance the the regulations will end up in federal court the first time the commission attempts to enforce them. Comcast Communications is already challenging an enforcement action brought under the FCC's earlier informal net neutrality principles. The case is pending before the D.C. Circuit Court of Appeals and is likely headed for the U.S. Supreme Court.

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Reader Comments


October 22, 2009 01:20 PM

Reminds me of the break-up of the telcos. As their monopolies were threatened by new technologies (private long distance carriers), it made more economic sense for them to split up and concentrate on core competencies.

Chuck Gaffney

October 22, 2009 03:29 PM

Hope AT&T is shacking with fear. It's about time the 100 year+ system (and bills) get an overhaul.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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