Interview: Amazon---Misener, Paul---VP of Global Public Policy
Interview: US Telecom Association---McCormick, Walter---President
>> as cable tv and phone companies go at each other, congress racing to catch up by rewriting the nation’s telecommunications laws. it’s the first overhaul in a decade. bloomberg’s lizzie o’leary has the story on what lawmakers are doing.
>> remember, dial-up? that’s how most americans got on line in 1996. now, more people are entering the broadband age and the house of representatives is refereeing a new battle―phone companies want to sell television over their broadband, while cable companies are eating into the traditional phone business.
>> what you have is this cross entry where in the battle over the big bundle of voice, video and data service, the cable industry can offer the complete bundle. the phone guys want to offer the complete bundle, as well.
>> yet, there’s a difference. comcat cast can offer phone service anywhere, any time it likes while at&t and verizon face a thicket of local politicians who have to sign off on tv services. they want to bypass local government. telecom industry consultant, scott cleland.
>> what they’re category for is to have one national franchise rather than having to go door to door to 30,000 different localities.
>> the draft bill in the house would do just that, and create national tv franchises. that’s touched off a nasty ad war between cable and telephone companies.
>> cable companies are fighting competition and choice.
>> meet the phonies, the bell monopolies.
>> still, the industries are united on a tough issue before congress, who has access to the fastest internet lines. they argue that they’re allowed to recoup the billions they spent on networks by charging content companies like google and yahoo more for using high-speed networks. backers of so-called net neutrality say that’s discriminatory, undermining the web’s history as a level playing field.
>> so that distorts innovation. it’s no longer survival of the fittest, it’s no longer who has the best technology, it’s a question of who goes golfing with the c.e.o. of at&t.
>> bloggers and activists are waging a p.r. campaign for strong net neutrality protection. the house bill, however, takes no stand on an answer to the debate, leaving it up to the f.c.c. to decide. lizzie o’leary, bloomberg news.
>> for more, now, on the net neutrality debate, i’m joined by paul misener, vice president for global public policy at amazon. amazon and other companies like yahoo and google backing the so-called net neutrality law. on the other side, walter mccormick, president and c.e.o. of the u.s. telecom association which represents companies like verizon and at&t. we thank you both for joining us. first, if i could have both of you take a second to define net neutrality as you understand it as it applies to your industry and tell us why you’re either for or against it, mr. misener?
>> we’re go preserving the open internet. the internet, from its inception, was an open platform available for all content and services available to all consumers all the time. now we have a circumstance where phone and cable companies control the market of access for american consumers and they now want to get into the content business and control to some extent or another the access to content online and we believe we need to preserve the open internet by reinstating a law that was essentially overturned last year by the f.c.c.
>> now, mr. mccormick?
>> well, technology’s brought us to the place where consumers have a world of choice to access the internet. they can access it through cable modem, through d.s.l., through satellite, through wi-fi, why-max, through wireless technologies and in some areas by broadband over power line. we believe consumers should be in control. consumers should be free to choose the products and services they want from the companies that they trust. and we believe that in this kind of marketplace, we don’t need to have big government managing competition. we need to allow the consumers to control and to pick the winners and losers.
>> as a consumer, i’m confused because right now don’t i have choice? don’t i, through my internet provider, get whatever i want?
>> you have more choice today than you’ve ever had before and you’ll have more choice tomorrow than you have today. our companies are deploying advanced networks that will increase the speeds by which you can access internet services and we’ve made a commitment that your internet experience will only improve. the sites that you access today, you’ll access tomorrow, and the services that you have today, you’ll be able to have those and more tomorrow.
>> but isn’t this, then, a debate about who pays for it and you’re worried that mr. mccormick’s groups are going to start charging your companies to access that high-speed broadband?
>> no, actually, it still is about consumer choice. well over 90% of americans have only two choices at best for broadband internet access―the phone company or cable company. and some of these companies have announced intentions to prioritize some services. some websites over others. and that priorization serves to degrade the quality of some websites that do not pay for that special treatment. so it’s serving to limit consumer choice in a way that’s never been possible by law until last august.
>> so this is not hypothetical? some of your companies are doing prioritization and some companies at the other end of the web pipeline might have to pay up to get better access?
>> well, amazon.com enjoys prioritization today. it’s the prioritized book service on most internet search websites. and the reason it’s prioritized is it pays for that priority. amazon’s not here to protect the new entrant or small corner bookstore. amazon.com wants to protect its market position with regard to internet searches. what we’re talking about is letting the consumer be in control. the consumer can choose access to the internet over d.s.l. or cable modem, they can get it over their wireless phone or over satellite so they have a variety of ways to access the internet. amazon.com would like the government to come in and now set rules that will help protect its market position and we just think that’s wrong.
>> we have to make a couple of things clear. one is that the search engine market is very competitive today. there are over two dozen available and perhaps more. they can start off almost freely. consumers can switch between them with ease, with simply the mouse click. switching between your phone and cable broadband internet access service requires a new annual contract, perhaps, a truck roll, new equipment. there simply is competition in the search market but not in the internet access market . we’re concerned that where there is no competition, there is no consumer choice, that will be extended over content.
>> if i could stop you both for a second. i think i get it, but in case our viewers don’t, what we’re talking about, here, is a situation where the companies that provide access to the internet would like to charge companies who have internet sites something for their placement or the ease of access. is that correct?
>> yeah, and to make clear, we already are paying. we pay millions of dollars to access our content or get it connected to the internet and of course consumers are already paying to get all the bits they want or pay for depending on their service plan. so it’s not a matter of them not being paid. what they’re trying to do is triple dip, get paid a third time for the same service.
>> mr. mccormick, your companies are spending a lot of money to upgrade internet access services and you feel you should get some return on that?
>> that’s correct. when companies like amazon.com come to us and say that they would like to have additional capabilities in the network, we say to them, we can build in those capabilities but we have to determine who’s going to pay for it. they say, well, let’s load those additional costs on the consumer. we say, we’re not going to raise our prices for internet access. one internet company, google, suggested that if we just charge all consumers $50 a month, then they can continue to offer advanced google services and new google services for free. we’re offering d.s.l. service for as low as $12.99 per month in some areas.
>> we’re out of time but it’s obviously an issue that will continue and we will continue to follow it. thank you both for joining us, walter mccormick, from the u.s. telecom association and paul misener from amazon. condoleezza rice and donald rumsfeld working together on iraq today, in iraq. a report on their surprise trip to baghdad when “money & politics” continues in a moment.
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NYSE --- Julie (slow)
>> hello, i’m michael mckee. welcome back to “money & politics.” strong economic news and earnings helping wall street today. orders for durable goods rose the most in 10 months in march, bookings up 6.1%, three times expectations. excluding transportation, orders rose 2.8%. bookings for non-defense capital goods, excluding aircraft, a proxy for future business investment, rose 3%. sales of new homes snapped back in march to an annual rate of 1.213 million, a jump of over 13% from february. the reports underscore the latest federal reserve survey of regional economic conditions. the so-called beige book concludes the economy is growing at a solid, steady pace. labor markets for skilled workers are tight or tightening. most districts report that manufacturing shipments and orders continuing to strengthen, significantly in some cases. auto sales are mixed while non-auto retail sales are up from a year ago. as for inflation, no district reports cost increases have intensified in the latest survey period. profits at pepsico and monster worldwide stronger than expected today, signaling growth may top investors’ expectations, the gain helping the dow jones industrial average return to a six-year high. the housing report helping d.r. horton and pumenty home lead a rally among homebuilders. for more on today’s trading action, here’s a report from julie hyman at the new york stock exchange.
>> we saw the ongoing struggle we’ve seen in the equity market reflected again today where you have earnings and strong economic data on the one hand and then interest rate concerns as reflected by higher bond yields on the other hand. today, we had the earnings optimism, the economic optimism winning out. we saw that send the dow to a new six-year high. the s&p 500 and the nasdaq didn’t quite make it, but the dow closed at that level, the five-year chart showing the 6% gain over the past five years for the dow. a stock that is not earnings-related today but the best performer in the dow, that was general motors. shares rose by about 8% after the stock was upgraded by an analyst at merrill lynch to neutral from sell. the analyst saying the company is taking needed steps for a turnaround and also pointing out that the company may get 50% of its union workers eligible for early retirement to take that early retirement and that, then, would save the company much-needed money. also, from earnings reports today, some of the best performers in the s&p 500 were earnings-linked. we had office depot, louisiana-pacific, anheuser-busch and baker hughes, across a number of different industries, all beating analysts’ estimates and all some of the best performers today. then you have the counter balance, utilities, which tend to be sensitive to changes in interest rates, falling today because of that. but also falling because of disappointing earnings from exelon. exelon, which is buying the first stock listed there, pseg, so those two stocks leading declines. disappointments in the energy group, as well. oil prices falling by the end of the day, contributing to sentiment. in addition, disappointing earnings from murphy oil sent that stock down. amerada hess beating analysts’ estimates but still lower by more than 4.5%. so a little bit of a counter balance, but the earnings optimism winning out. i’m julie hyman at the new york stock exchange.
>> next on “money & politics,” rewriting the nation’s telecommunications laws and what it means to you.
