WASHINGTON (AFX) -- The Internet as we know it did not die a sudden death this week.
In a closely watched vote Wednesday, a U.S. House panel did not say it was okay for phone and cable companies to discriminate against certain Web sites. Instead, lawmakers largely voted to keep the status quo: limited regulation of the Internet.
What that means is network operators are still barred from blocking access to legitimate Web sites. Yet they remain free to create different tiers of high-speed service and charge accordingly.
That was too much for critics such as Edward Markey, D-Mass., a supporter of 'Net neutrality' rules that would seek to guarantee equal access to the Internet for all. He declared that the House vote in favor of inaction represented a dire threat.
'Imagine the end of the Internet as we know it -- that is the reality that we are about to face,' he said after a key vote Wednesday evening in the House subcommittee on Telecommunications and the Internet. Colleague Jay Inslee, D-Wash., chimed in: 'You can call it the Interred-Net. It's a radical change.'
Well, not exactly. The Federal Communications Commission would still retain authority to punish network owners if they try to block access to certain Web sites. The House bill would even give the FCC the power to assess fines of up to $500,000 in case of any violations.
Congress would also retain the right to pass laws protecting the open nature of the Internet if problems emerge. Indeed, strong Democratic support for neutrality suggests lawmakers would almost certainly revisit the issue if Republicans were to lose their majority.
'People make the mistake of thinking there will be one big decision and it will be thus forever more,' said Stifel Nicolaus analyst Blair Levin, a former high-ranking official at the Federal Communications Commission. 'There is never any final victory or final defeat.'
You would never know it from all the rhetoric.
Now vs. later
For now, the Internet remains an open and 'neutral' place to surf for business or pleasure. Cases of network operators blocking users from certain sites are virtually nonexistent. And the only ones charged for Internet access are customers themselves, millions of households and business users.
That could change if phone companies get their way. AT&T Inc. , for one, has floated the idea of charging Internet firms a fee to ensure speedy and reliable connections for customers trying to reach their sites.
If Google wanted to start a video-rental service, for example, it would pay a fee so customers could download movies over faster and more secure connections than what they normally receive from their Internet provider.
Phone companies argue consumers should not have to bear the total cost of network improvements in the form of higher fees. They want Internet companies that generate most Web traffic to chip in.
Opponents call the argument bogus. Without neutrality rules, they say, the Internet could turn into a two-lane highway. The wealthier few and biggest Web firms would hug to the speedier side of the road and the rest would be relegated to the slow lane.
The net effect: harm to U.S. consumers, small businesses and the overall U.S. economy, they say.
'Without critical changes, the legislation puts at risk consumer choice, American innovation and global competitiveness,' the CEOs of Amazon , eBay , Google and Yahoo wrote to House members.
Lawmakers disagreed. They GOP-dominated House panel rejected an amendment to define Net neutrality in a 23-8 vote, with six Democrats joining the majority and one Republican on the losing side.
'It's not the end of mankind as we know it,' said Rep. John Shimkus, R-Ill.
Ill-defined effort
In the view of the congressional majority, there's no need to define Net neutrality now because a problem does not exist. Yet even if they did want to pass a law, there's little agreement over what exactly constitutes neutrality. The same difficulty has slowed a related debate in the Senate.
'Let's wait and see how this all turns out,' said Joe Barton, R-Texas, chairman of the House Commerce Committee. 'I don't think we are quite ready to say what Net neutrality is.'
What the House panel did say -- to the ire of some Democrats -- is that the FCC won't be allowed to broadly define Net neutrality, either. The agency was granted explicit power to investigate access-blocking disputes on a case-by-case basis and to levy larger fines, but its authority was otherwise curtailed.
Opponents view that portion of the bill as the most controversial, but FCC Chairman Kevin Martin, a Republican, has said he does not think the agency needs more authority. He's also expressed concern that further regulation might stifle investment in network upgrades.
Last year, the FCC adopted loose principles in favor of Net neutrality and warned network owners not to block access to Web sites. Phone companies, for their part, have repeatedly promised they would not block access to any site and lobbied lawmakers very hard to forestall legislation.
The next step is unclear. The House Internet panel's proposal still has to be approved by the House Commerce Committee and then the full House. A similar bill is circulating in the Senate, which is also divided.
In any case, one thing is certain. Congress won't intervene in a big way -- just yet anyway. 'I do think this is a good first step,' said Chip Pickering, R-Miss. 'It may not be the last.'
What occurs next depends on what network owners like AT&T do -- and whether they can find common ground with Internet companies.
'Both sides are using lots of rhetoric, and there's a little bit of truth to what each has to say,' said Levin of Stifel Nicolaus. 'But nobody really knows what's going to happen.' This story was supplied by MarketWatch. For further information see www.marketwatch.com.