Telecoms want their products to travel on a faster Internet - The Boston Globe

AT&T Inc. and BellSouth Corp. are lobbying Capitol Hill for the right to create a two-tiered Internet, where the telecom carriers' own Internet services would be transmitted faster and more efficiently than those of their competitors.

The proposal supported by AT&T and BellSouth would allow telecommunications carriers to offer their own advanced Internet video services to their customers, while rival firms' online video offerings would be transmitted at lower speed and with poorer image quality.

AT&T and other telecoms want to charge consumers a premium fee to connect to the higher-speed Internet. The companies could also charge websites a premium to offer their video to consumers on the higher-speed Internet. That could mean that a company like Yahoo might have to pay AT&T to send high-quality video to AT&T subscribers.

The telecom companies said that since they are spending billions of dollars to build new fiber-optic networks that can carry more data, they are entitled to give their own offerings the bulk of Internet bandwidth, and to charge others for higher-speed access.

''When costs are being driven into an equation, they have to be recovered somewhere," said Bill Smith, chief technology officer of BellSouth. ''Why do fundamental business economics not apply to the Internet?"

"Fundamental business economics?" OK, try this fundamental economic proposition on for size, Bill: without the free content from sites like Google or The New York Times, or the free infrastructure like HTTP or SMTP, or free technology like HTML or XML, BellSouth's network wouldn't be worth much at all.

In case you were wondering, BellSouth saw profits of $4.8 billion for fiscal 2004, an increase of a little under $1 billion from FY2003. You can see why Congress needs to help them with their "cost recovery" program.