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September 6, 2007 11:26 pm
The US Department of Justice threw its weight behind telecommunications operators on Thursday, warning telecom regulators against imposing so-called ‘net neutrality’ rules that would block carriers from charging content providers premium prices to prioritise some web traffic.
While the ultimate decision over whether to impose new regulations on how broadband internet providers transmit and deliver internet traffic over their networks rests with the Federal Communications Commission, the Department of Justice’s comments represent a significant blow to content companies such as Google, Microsoft, Amazon and eBay.
The companies have been pushing for net neutrality regulations in an effort to restrict the ability of the big telecoms carriers such as AT&T and Verizon Communications and cable operators like Comcast that would like the option to charge some users extra fees for carrying certain web content such as video.
In comments submitted to the Federal Communications Commission, which is considering the highly contentious issue, the DoJ said that precluding broadband providers from charging content and application providers directly for faster or more reliable service, “could shift the entire burden of implementing costly network expansions and improvements on to consumers”.
Thomas Barnett, the department’s antitrust chief, added: “Consumers and the economy are benefitting from the innovative and dynamic nature of the Internet. Regulators should be careful not to impose regulations that could limit consumer choice and investment in broadband facilities.”
The DoJ’s comments follow a report in June by antitrust experts at the Federal Trade Commission that expressed similar views and recommended that regulators “proceed with caution” on any such proposals.
The issue came to a head last year in Congress when some lawmakers tried unsuccessfully to pass legislation that would have enshrined the so-called net neutrality principle. Since then the FCC has been studying the issue but the five commissioners are believed to be deeply divided on the issue..
Last year, the FCC approved AT&T’s $86bn purchase of BellSouth after AT&T promised to maintain net neutrality for two years. It was one of several key concessions that AT&T made to ease concerns about competition.
On Thursday, the DoJ said proponents of new regulations had failed to show that many consumers had been harmed in a way that would justify government intervention. It noted that differentiating service levels and pricing is a common and often efficient way of allocating scarce resources and satisfying consumer demand.
“The US Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery. These differentiated services respond to market demand and expand consumer choice,” the department said.
“Whether or not the same type of differentiated products and services will develop on the Internet should be determined by market forces, not regulatory intervention.”
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