Bader’s Bits

I have to admit I’m so frustrated by the Net Neutrality issue that I’ve tried to tune it out. The “bad guys” seem to be in the lead, the game seems rigged with money and inside influence, and I feel disempowered as a result. I know I should increase my participation, but the wind is a bit out of my sails.

Well, just when I might be overcoming my cynicism, out come Tim Doyle in the latest Forbes magazine issue with an insightful wrapup of why I should be frustrated. Here’s the article, in its entirety, to save you the effort of registering at their site. Post some comments on what you think.

OutFront
Milking the Internet
Tim Doyle, 08.14.06

Don’t expect a quick decision from Congress on network neutrality. Not deciding is too profitable.

After senator Ted Stevens, the Alaska Republican, explained recently that he opposed “network neutrality” because “Internet” (translation: e-mail) was delayed by the clogged “tubes” of the Internet, his awkward lingo was lampooned by comedian Jon Stewart. The parody became a YouTube hit. Laugh if you want. But the pols get to laugh all the way to the bank: The fight over the Internet and what fees should be assessed for access is a surefire moneymaker–for their campaign coffers.

On one side of the net neutrality fight are the telephone and cable companies who want the freedom to charge Internet companies extra for higher-speed access for their customers–fees they say will be used to build more capacity. On the other side companies such as Google (nasdaq: GOOG - news - people ), Microsoft (nasdaq: MSFT - news - people ), Yahoo (nasdaq: YHOO - news - people ) and Vonage want Congress to bar such charges by mandating what they call “net neutrality.”

The stakes are huge for both sides, so both are pouring millions of dollars into political contributions and lobbying to press their argument. Now you know why Congress would let this debate linger on. As long as the issue stays in play, the money keeps flowing. “Telecom reform has been a cash cow for members of Congress,” says Brookings Institution congressional scholar Thomas Mann. “The battles go on for years, and the fundraising requests never stop.”

Congress has been toying with a rewrite of the nation’s telecommunications law since 2003; net neutrality became a central issue last year. In June there were even signs of progress: The House passed a “reform” bill and Stevens’ Senate Commerce Committee, after 26 hearings, sent one to the full Senate. But this is an election year, so the legislators may not have the time to complete action on a bill.

So far, score one for the telephone and cable companies. They succeeded in keeping net neutrality (that is, a prohibition of volume-sensitive charges) out of both bills. No coincidence that telcos, even by Washington standards, are writing huge checks. Since the start of 2003 the telcos’ political action committees and employees have made a combined $27 million in political contributions and sunk another $146 million into lobbying, according to the Center for Responsive Politics. AT&T (nyse: T - news - people )’s PAC ranks as the biggest corporate PAC donor to Republicans so far this election cycle, at $1.1 million. Why so much? “Telecom is one of the most heavily regulated industries in the country,” says AT&T Chairman Edward Whitacre.

The biggest recipient of telco largesse during the 2005–06 election cycle, with $114,000 in contributions, was Senator Conrad Burns. He’s the Montana Republican whose reelection has been endangered by his connection to the scandal involving convicted lobbyist Jack Abramoff. In June Burns joined other Republicans in killing a net neutrality measure. Burns says he prefers less regulation.

The lightly regulated Internet companies and their execs have traditionally spent less time and money lobbying Washington. Microsoft, Yahoo, Google, Ebay and Amazon (nasdaq: AMZN - news - people ) have spent a total of $37 million on lobbying since the start of 2003, a fourth of the telco spending. Their PACs and employees have given $14 million in campaign contributions. But some Internet execs are substantial Democratic donors. Google Chief Eric Schmidt, for example, has donated $42,500 since the start of 2004, including $9,500 to the Oregon Democratic party and to Senator Ron Wyden (D–Ore.), who has vowed to block any anti-net neutrality telecom bill.

Yet PACs and individual donations don’t tell the whole story. There’s a newer source of money and influence here: the Internet itself. In years past, telecom legislation barely registered with voters. But net neutrality is different, whipping up grassroots passion throughout the Internet.

In April conservative groups such as the Gun Owners of America and the Parents Television Council teamed up with liberal stalwarts MoveOn.org and the Consumer Federation of America, among others, to form Savetheinternet.org. Already one million Internet users have signed the group’s online petition. The opposition hasn’t been entirely spontaneous: Ebay Chief Margaret Whitman sent millions of customers an e-mail warning of a “two-tiered” Internet. Ebay, Yahoo and Microsoft have formed their own site, Itsournet.org, to gin up opposition.

Democrats in particular see a potential way to profit from the net outrage. During the last presidential election more than half of Democratic donors, but just a fourth of Republican ones, made at least one donation online, according to the Institute for Politics, Democracy & the Internet. Possible presidential contenders Senators Harry Reid, Hillary Clinton and John Kerry have all vowed to oppose any bill that doesn’t include neutrality. “Moveon.org has seized on this and tried to make it a litmus test for Democrats,” says AT&T lobbyist James Cicconi.

Indeed, seven-term Congressman Albert Wynn (D–Md.), who voted for the House bill, faces a tough primary test from Donna Edwards, a foundation head campaigning on net neutrality. In just six weeks Edwards raised $190,000, 40% of Wynn’s war chest.

Stevens says he doesn’t yet have 60 votes to overcome a filibuster and move a telecom bill lacking network neutrality. Cicconi says the telcos won’t accept a bill with it. And so the spending goes on. In April AT&T and others hired Clinton-era White House press secretary Michael McCurry to run a coalition, Hands Off the Internet, and its Web site and blog. Grass roots, ostensibly