Microsoft exits net neutrality coalition for AT&T-BellSouth merger
Published:01-November-2006
By BR staff writer
Microsoft Corp has pulled out of a pro-net neutrality industry group, which is fighting for US legislation on how owners of Internet infrastructure charge for their services.
Microsoft dropped its support following the group's recent request that US federal regulators force telco AT&T Inc to agree to non-discriminatory treatment of all Internet-based applications and services as part of its pending $78bn buyout of BellSouth Corp.
The It's Our Net Coalition has been a major proponent of net neutrality laws in the US. So far, it has not been successful, but further proposed laws are not expected to ultimately be passed or rejected by the Senate until next year.
Supporters say net neutrality is necessary to prevent broadband network owners from charging for prioritized content and services over their own pipes. Operators argue they have the right to charge for prioritized content and in doing so would be able to build out their networks to ensure prompt delivery of certain online services and content.
Microsoft helped found the 172-member It's Our Net Coalition, along with Google, Amazon.com, eBay and Yahoo. But a Microsoft spokesperson confirmed the company is no longer affiliated with the group.
"Microsoft has withdrawn its name from the It's Our Net website for the pendency of the AT&T-Bellsouth merger proceeding based on a company decision not to engage the proceeding," said Microsoft, in an emailed statement.
"However, we continue to support and will pursue other opportunities to obtain meaningful network neutrality policies."
It's Our Net spokesperson Jim McGann declined to comment on Microsoft's withdrawal, except that he expects Microsoft would rejoin the coalition once the AT&T-BellSouth merger is resolved.
"It's still important that they're supporters of net neutrality ... and we look forward to having them back," McGann said.
Microsoft declined to comment further on why it dropped its membership to the coalition.
But a coalition insider, who asked not to be named because they were not an official spokesperson for the group, said Microsoft's decision was based on the company's general rule not to get involved in ongoing merger processes at the US Federal Communications Commission or Department of Justice.
Microsoft's policy, according to the source who is not a Microsoft employee, is that the software maker does not deem it appropriate for industry to step in and seek specific merger conditions.
"I really do believe Microsoft is serious about its interests in net neutrality," said the source. "And it is, in fact, also serious about once this merger process is over with, which could be as soon as this coming Friday, they would re-engage with the coalition."
But Microsoft doesn't seem to take so seriously that it is prepared to break this rule, as it has done in the past. When America Online Inc merged with Time Warner Inc in 2001, Microsoft weighed in and asked the government to enforce certain conditions pertaining to AOL's instant messaging service which competed directly with Microsoft's
It would seem Microsoft does not think enforcing conditions of net neutrality as part of the AT&T-BellSouth merger are worth breaking its principal.
But the coalition source also pointed out that whatever conditions AT&T agrees to, as part of its BellSouth deal, would apply only to AT&T. "We wouldn't have Comcast or Cox or Verizon also covered by these conditions," said the source. One could also argue that having isolated net neutrality requirements would be better than no net neutrality requirements at all.
Gaining the FCC's approval is the final regulatory hurdle for AT&T to complete its acquisition of BellSouth.
The coalition criticized the recent, swift approval of the merger by the Justice Department, which did not impose any conditions on the deal.
Last week, the coalition urged the FCC to require AT&T to adhere to net neutrality rules. AT&T senior executive VP of external and legislative affairs Jim Cicconi rejected the proposal.
"The issues raised ... by proponents of net neutrality smack of public relations-driven opportunism as opposed to a thoughtful approach to policymaking," Cicconi said.
He said the pros and cons of net neutrality should be debated in Congress or an industry-wide proceeding at the FCC. And that it was not appropriate or justified to set policy by applying merger conditions on only one company.
"Perhaps the efforts of the It's Our Net Coalition will be better served by encouraging all infrastructure providers to accept to the same FCC net neutrality principles that AT&T has already agreed to voluntarily."
The coalition contends that AT&T's merger with BellSouth would give too few companies too much control over the Internet, in a country where 99.6% of all consumers receive high-speed broadband connection from either an incumbent phone or cable company.
"If a few large corporations such as AT&T are allowed to dominate the market for broadband Internet access, their gatekeeper role must be subject to appropriate regulatory oversight and enforcement," said the coalition in its proposal to the FCC.
"Because the proposed merger cements the existing broadband duopoly, it is entirely reasonable for the commission to revise AT&T's proffered merger conditions to include tailored yet effective net neutrality requirements."
