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"Why Should They Be Allowed to Use My Pipes?"

I came upon this quote while looking up citations from a MoveOn.org e-mail, and it manages to be both stupid beyond measure and immensely frightening all at the same time. This is from a November 2005 Business Week interview with Edward Whitacre, CEO of AT&T (still known as SBC Communications at the time of the interview).

How concerned are you about Internet upstarts like Google, MSN, Vonage, and others?

How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?

The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes [for] free is nuts!

The last time I checked, Mr. Whitacre, your customers pay you for your pipes.

Of course, there's no feasible way for any service provider to collect tariffs from all Website operators. So what Whitacre is leading us to is one of two things:

  1. Disallowing traffic from Websites that don't pay AT&T a tariff, or,
  2. Providing higher levels of service to Websites that do pay AT&T a tariff
It's hard to imagine a major service provider getting away with simply disallowing traffic (though apparently smaller service providers have tried). It would be a customer support and media relations disaster. So this leads us to tiered levels of service, which is what the network neutrality debate is all about. From a New York Times editorial on the subject:
In its current form, Internet service operates in the same nondiscriminatory way as phone service. When someone calls your home, the telephone company puts through the call without regard to who is calling. In the same way, Internet service providers let Web sites operated by eBay, CNN or any other company send information to you on an equal footing. But perhaps not for long. It has occurred to the service providers that the Web sites their users visit could be a rich new revenue source. Why not charge eBay a fee for using the Internet connection to conduct its commerce, or ask Google to pay when customers download a video? A Verizon Communications executive recently sent a scare through cyberspace when he said at a telecommunications conference, as The Washington Post reported, that Google "is enjoying a free lunch" that ought to be going to providers like Verizon.

The solution, as far as the I.S.P.'s are concerned, could be what some critics are calling "access tiering," different levels of access for different sites, based on ability and willingness to pay. Giants like Walmart.com could get very fast connections, while little-guy sites might have to settle for the information superhighway equivalent of a one-lane, pothole-strewn road. Since many companies that own I.S.P.'s, like Time Warner, are also in the business of selling online content, they could give themselves an unfair advantage over their competition.

If access tiering takes hold, the Internet providers, rather than consumers, could become the driving force in how the Internet evolves. Those corporations' profit-driven choices, rather than users' choices, would determine which sites and methodologies succeed and fail. They also might be able to stifle promising innovations, like Internet telephony, that compete with their own business interests.

It's hard to overstate just how bad access tiering could be for innovation. Startups with limited resources could find it difficult or impossible to pay the fees required to provide their customers with levels of service equivalent to those offered by established players. The Internet -- possibly the most level playing field ever created in the history of business -- would be tilted, to the detriment of us all. This includes shareholders in AT&T and other service providers, because if access tiering becomes reality, and the Internet is tilted to favor some over others, reducing innovation, then the Internet's amazing run as a driving force in the economy could be damaged.

Those politicians who don't see a problem with access tiering because they see how it could benefit certain large corporations in the short run need to reflect for a bit on the long-term consequences of impeding entrepreneurship on the Internet. Of the top 30 Websites listed in Alexa's Global Top 500 traffic rankings, 22 are based in the US or are foreign operations of US sites. Of the remaining eight, seven are from China. This is who is nipping at our heels. This is why we have to stay competitive. This is why we can't afford to damage Internet innovation.


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