Seidenberg: It’s About Cost, Not Blocking
By Mike Farrell -- Multichannel News, 2/9/2006 12:33:00 PM
New York -- Verizon Communications Inc. chairman and CEO Ivan Seidenberg gave his take on the network-neutrality issue at an industry conference here Thursday, telling the audience that the controversy is more of a cost issue than of the potential blocking of certain Web sites on the Internet.
Internet-service providers and application-service providers have been at loggerheads over the issue of net neutrality, which basically means that broadband distributors may not discriminate against unaffiliated Web-based service providers.
Examples include blocking or degrading a voice-over-Internet-protocol provider or slowing consumer access to desired Web pages. The telcos have also raised the prospect of forcing portals like Google Inc. (www.google.com) and Yahoo Inc. (www.yahoo.com) to pay them for guaranteed access to their networks.
Seidenberg, speaking at the BusinessWeek Media Summit, said that in the broadband world, as users “camp out” on the Internet more, Verizon needs backbone facilities to carry the traffic across the country.
“If you buy your DSL [digital subscriber line] from FiOS, you’ll never have any problem with the bandwidth from your house to the first point in the network,” Seidenberg said. “But the issue is that the backbone needs to be built. Who is going to build it?”
Seidenberg added that the options are either that the Internet-applications companies like Google foot the bill, or that it falls on Verizon with no regard to how the company will recoup that cost.
“I think where we are now is one big ruse to shifting costs and hiding behind the notion that a company like Verizon will block traffic so therefore you better make sure that these guys can’t block traffic and give everybody in the world free access to broadband services,” Seidenberg said. “I think we have to be real careful. We won’t be quiet on this point.”
He continued, “What we have to be careful about is not to be trapped into this public-policy debate and forget the fact that there are commercial sets of agreements that need to be established where customers will pay for access and the market has to figure out how to pay for the growth and the building of the backbone.”
While Seidenberg said Verizon and other carriers are willing to live by the Federal Communications Commission’s rules and have no intention to block Web sites, he doesn’t believe there is a need for legislation yet.
“I don’t think we need to fix a problem that hasn’t been defined yet,” he added. “The market needs to set up how people create the backbone network [and] how it will be paid for.”
He said one group that will not foot the bill is Verizon DSL customers.
“I don’t think anybody wants us to put all of the cost of the backbone network from New York to San Francisco in the DSL rates,” Seidenberg added. “I think everybody that participates in the broadband world needs to participate. It doesn’t mean that there will be a direct charge. What we need to do is let reasonable people sit down and talk about it.”
Seidenberg also offered his opinion on the issue of statewide franchises for video-service providers.
“Two years from now, no one will remember this because we’ll get this solved and move on,” he said. “The issue really comes down to the law is the law. We could take the position, because we’re using new technology, that we don’t need a franchise. My view of that is that it’s highly risky. We could end up getting down a path and finding ourselves with a problem. So we chose to deal with it face up and we decided to do it two ways: No. 1 is go in and comply, and then complain like crazy.”
However, he added that the debate may be moot in a few years.
“Our view is that as people will come to their senses, we still will be regulated, we will still pay franchise fees we will still have to get permits, but we don’t need the extra added complication of municipalities trying to turn this into a big delay tactic,” Seidenberg said. “They’ll work hard at it, they’ll try and they’ll lose because the public won’t stand for this. To me, in two years or less than that, this is something that’s come and gone.”
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