60 Second Briefing
(FORTUNE Magazine) - The Battle Over Broadband
As Congress begins revisiting the 1996 Telecommunications Act, a nasty feud over the future of the Internet is brewing between telcos such as Verizon (Research) and Internet companies like Yahoo. At issue is whether the companies that own the wires have the right to impose new fees to move big loads of data. Here are the basics.
1 - Aren't there laws governing web traffic? Not really. The outdated 1996 act offers little guidance. Right now, bytes move freely through broadband wires according to a sort of gentlemen's agreement known as "network neutrality." Whether it's a small file, such as an e-mail, or a data-rich videoclip, the broadband providers deliver it as quickly as possible. That may not last.
2 - So the telcos could put tolls on the Net? Yes. The telco companies are spending $15 billion this year alone on building next-generation broadband networks. And they predict that demand for new services like video and phone calls will require a 400% increase in bandwidth over the next decade. They're pushing a tiered fee system, in which content companies will pay to guarantee speedy delivery of their data.
3 - Wait, would that mean higher fees for me? Probably. The telcos want to force content providers to share their costs. And content providers would almost certainly pass part of the bill on to consumers. That means a lot of free or low-cost services we take for granted today--voice over Internet phone, streaming video--might someday come at a higher price.
4 - What is Congress going to do about it? Argue. Some of the draft bills being passed around include provisions to lock in Net neutrality, but the debate will drag on for a year or so. Expect the lobbying to be epic. The U.S. Telecom Association spent $11.4 million in the first six months of 2005 alone. Now cash-rich Google (Research) is building up its presence in Washington.