An article in today’s Journal paints a bleak outlook for net neutrality.

Separately, Microsoft Corp. and Yahoo Inc. have withdrawn quietly from a coalition formed two years ago to protect network neutrality. Each company has forged partnerships with the phone and cable companies. In addition, prominent Internet scholars, some of whom have advised President-elect Barack Obama on technology issues, have softened their views on the subject.

The contentious issue has wide ramifications for the Internet as a platform for new businesses. If companies like Google succeed in negotiating preferential treatment, the Internet could become a place where wealthy companies get faster and easier access to the Web than less affluent ones, according to advocates of network neutrality. That could choke off competition, they say. Read the rest of the article>>

Over at The Times, Saul Hansell responds in the Bits section:

The phone and cable companies don’t like the existing protocols of the Internet. They argue that since they paid to build the networks, they should be allowed to come up with any pricing scheme they choose. In other communications areas, they have found that the best way to profit is by charging a lower price for base service, and then selling high margin add-ons, like text messages in cell phones, or telephone service on cable systems.

The communications companies don’t want Google to waltz in and offer free voice chat, free messaging or a free version of whatever other add on service they come up with and undercutting their plans without cutting an appropriate deal. They find Google’s argument especially galling since it is making so much money on advertising using their networks.

There are lots of arguments on all sides here and lots of interests to be balanced between different sorts of companies as well as consumers. The incoming Obama administration says it wants to work this out. Read the entire article>>

All of this is tough to sort through, but it seems clear that the target is film and video, as both articles note that it is the major increase in web traffic that is fueling the price wars. Obama’s thoughts on the subject on the campaign trail:

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