April 27, 2006 3:00 am

Telecoms groups win net pricing battle

Telecommunications and cable companies scored a victory in the US Congress yesterday when a key House committee defeated plans for strict price controls on the high-speed networks that will form the next generation of internet connectivity.

The House energy and commerce committee voted 34-22 yesterday to defeat a Democrat-sponsored amendment that would have prevented AT&T, Verizon and Comcast from charging more for priority access to the high-speed networks of the future. Despite the defeat, the debate on "net neutrality" - the principle that all content providers should be treated equally on the internet - is far from over, say lobbyists, which pits big telecoms companies against giants of the internet content world, such as Google, Yahoo and eBay.

Net neutrality has emerged as an issue as lawmakers rewrite US telecoms law. Both sides agree the future of the internet could be at stake: telecoms companies say that unless they are allowed to charge more to construct a "fast lane" on the internet, they will not be able to build the high-speed networks that can handle broadband-hungry services such as video.

But internet content companies, backed by internet civil libertarians and consumer groups, say that price differentiation of this kind would jeopardise the freedom that has fostered innovation in cyberspace. They want stricter regulation of broadband services, which have been very lightly regulated up to now.

Ahead of yesterday's vote several powerful US consumers' groups, including AARP, the retired people's lobby, Consumers Union and the Consumer Federation of America, sent a letter to the committee saying that network neutrality was "the first amendment of the internet" and that the absence of such a provision would "profoundly undermine innovation on the free and open internet". Most American consumers have at most two choices of broadband service and, in this atmosphere of slim competition, "it is imperative that consumers enjoy the fruits of a non-discriminatory marketplace," the consumer group letter said.

Congressmen Rick Boucher, one of the Democrats who sponsored the net neutrality amendment, said that without it start-up companies would face insuperable barriers to entry since they could not afford to compete with established companies offering their services in the fast lane. Google, Yahoo and others have been lobbying hard for months to see network neutrality written into the legislation.

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