April 28, 2006, 12:00 AM

Tug of War

(Page 3 of 3)

But the large retailers realize that network neutrality is more than a matter of keeping their own costs down, Thompson says. “IAC/InterActiveCorp is operating in a publicly spirited way about this,” he says. “We could throw our hands up and say, ‘We can pay extra for broadband and will pay to get a competitive advantage,’ and let that be the end of it.”

But if the telcos and cable companies control the Internet and somehow restrict the amount of content that consumers can readily access, that would bring down the overall value of the Internet for everyone, Thompson says.

David Fry, president and founder of web site design and e-commerce development firm Fry Inc., says that most retailers that do less than $100 million a year should not have to buy higher levels of bandwidth to maintain good content delivery speeds. But that could change as retailers offer more high-density items like videos, he says.

Power in numbers

For now, the extra competition between the telcos and cable companies in the way they serve the Internet suits Krim just fine. “I like the competition in broadband,” he says. “The quicker we can drive down prices and expand the availability of broadband, the sooner every retailer will benefit as more shoppers go online. We want to see the online marketplace continue to grow and expand.”

The greater the number of consumers and small, growing retailers that use broadband, the better chance Krim and other retailers will have to hold off any restrictive policies the telcos and cable companies may try to impose, Corbett says. “Keeping network neutrality is going to be a long battle and an uphill one,” she says. “But what we have that the other side does not is the power of consumers and small businesses.” l

paul@verticalwebmedia.com

Buttonholing the politicians

In Washington, lobbyists for the telecommunications industry outnumber retail industry lobbyists 10 to 1, says Brent Thompson, vice president of government affairs for IAC/InterActiveCorp.

But the voice of retailers is getting louder in the nation’s capital. More than 20 Internet retailers participating in the Online Retailing Alliance are pushing for clarification of “network neutrality” in a bill being considered by the House Committee on Energy and Commerce.

The bill, the Communications Opportunity, Promotion and Enhancement Act, sponsored by Rep. Joe Barton, a Texas Republican who chairs the House Energy and Commerce Committee, would open the door for telecommunications companies to provide Internet video services, effectively letting them compete with cable TV companies.

But retailers are concerned that the bill also includes a provision that ineffectively addresses network neutrality, the existing system of keeping the Internet free of rules by telecommunications providers on how Internet content can be transmitted, Thompson says.

The problem with Barton’s bill, he adds, is that its current provision on network neutrality removes the ability of the Federal Communications Commission to make rules regarding the openness of the Internet. “All we can say is that it’s an effort to diminish the ability of the government to enforce network neutrality,” he says.

Retail industry lobbyists will continue to press for inclusion of an effective network neutrality provision, even after a subcommittee of Barton’s committee voted down an amendment to his bill that would strengthen the FCC’s hand in enforcing network neutrality, says Bill McClellan, vice president of government affairs for the Electronic Retailing Association.

Retailers support another bill recently submitted in the U.S. Senate by Ron Wyden (D., Oregon), titled the Internet Non-Discrimination Act. Wyden’s bill, currently in committee, would give the FCC authority to bar telcos and cable providers from implementing unfair practices that could favor one company over another in use of the Internet.

“The growth of the Internet and its success are due in large part to the freedom that has always existed on the content and applications layer of the Internet,” Wyden’s bill says. “Innovation has thrived on this layer, as anyone with a good idea has the ability to access consumers. The continuation of this freedom is essential for future innovation.”

Members of the Online Retailing Alliance

(A lobbying group of the Electronic Retailing Association)

Adaptive Marketing LLC

Aegon Direct Marketing Services

American Telecast Corp.

Bloglines

Dave Petitto Direct

Downstream

Dresses.com

eBay Inc.

eBrands Commerce Group

Electronic Retailing Association

Hawthorne Direct

Iceland Health Inc.

iNest

InPulse Response

IAC/InterActiveCorp

• Ask.com

• CitySearch

• Cornerstone Brands (9 retail web sites)

• Entertainment Publications

• Evite

• Gifts.com

• Home Shopping Network/HSN.com

• LendingTree

• ServiceMagic and others

iWon

Jewelry Television

Livemercial

Match.com

Media Partners Worldwide

Mercury Media

Savvier

Shop At Home

ShopNBC

The Merrick Group

• AngelBeds.com

• Dreamsleep.com

• NationBlinds.com

• TonysTickets.com

• TranquilityMattress.com

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