In a newsletter last May, we predicted that the issue of regulating 'Net Neutrality would likely be given an "up or down vote" by Congress and the Senate. We're unhappy to report that both 'Net neutrality legislation and progress on legislation to allow universal video franchise licensing seem to have stalled. (Proposed universal video franchising level allows a nationwide franchise license at the federal level vs. the local community level.)

The House of Representatives has approved legislation that allows ISPs to explicitly offer differentiated IP traffic across the Internet and to charge for the "privilege" of guaranteed service delivery. However, the Senate can't seem to muster the votes one way or the other. The bottom line is that without legislation, ISPs are not prohibited from charging companies like Google or Microsoft for providing Web surfers differentiated access to the companies' sites.

Although we have taken a position that recommends 'Net neutrality be maintained, service providers such as AT&T and Verizon insist that someone needs to pay for the substantial broadband access builds that are underway for consumers.

In a recent financial analyst conference, Verizon disclosed that it is looking at the opportunity to upgrade some 33 million households and 3.6 million businesses with improved broadband access "triple-play services" that include voice, video and data. Verizon expects to have 50% of the consumer homes served by fiber to the home by 2010 and reported that its investments to upgrade its FiOS platform would cost $850 per "premise passed." We should note that Verizon's FiOS service today offers consumer broadband speeds ranging from 5Mbps (beginning at about $35 per month) to 20Mbps (starting at about $45 per month); the FiOS broadband access loop also can provide voice service and video entertainment (where video is allowed under franchise agreement).

As for the progress of the universal video franchising legislation, local communities and entire states are encouraging competition for video services by allowing multiple companies to offer video to the home. So even if Congress can't seem to get its act together and decide whether to allow video competition, state governments (including California, Texas, Virginia, and others) and local governments (too many to list here) are slowly opening the doors for triple play competition.

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