We didn't see the context at the time, because Business Week chopped up the interview. But when Whitacre later repeated his remarks it was clear that he was really talking about voice and video. Both matter very much indeed to AT&T.
While VoIP is the same old product as a POTS, with a few extra gimmicks - TV is represents the best hope for dinosaurs to escape distinction - and Verizon and AT&T have made huge investments in high capacity bandwidth in an effort to grab the TV market from the entrenched cable operators. It's an expensive gamble, but the long term rewards are huge: consumers rarely change their utility provider, and are even less likely to change when they get three utilities (phone, TV and internet) from the one supplier.
But both voice and video, which Verizon and AT&T plan to deliver over a packet-based internet network (IPTV) require minimum Quality of Service (QoS) guarantees. Internet protocols are still so inefficient at guaranteeing QoS, that one modest Bittorrent user can clog up a network. Worse, there's no way to guarantee QoS across hops - although the ITU's long-term NGN (Next Generation Network) initiatives seek to address these. Without QoS, IPTV providers have to build far more infrastructure than the need to, and this over-provisioning is expensive - and they still can't guarantee a decent picture.
The key word is "portion". The one occasion Whitacre repeated the statement again, it was specifically in the context of IPTV - and he ruled out charging the consumer, or even surcharging websites like The Register.
I think the content providers should be paying for the use of the network - obviously not the piece from the customer to the network, which has already been paid for by the customer in Internet access fees - but for accessing the so-called Internet cloud.
If someone wants to transmit a high quality service with no interruptions and guaranteed this, guaranteed that, they should be willing to pay for that.
And if that wasn't clear enough, he stressed:
Now they might pass it on to their customers who are looking at a movie, for example. But that ought to be a cost of doing business for them. They shouldn't get on [the network] and expect a free ride.
However, that was enough for an online culture that thrives on conspiracy theories and paranoia. MoveOn, the civic action group, saw an opportunity for a bipartisan "Apple Pie" theme. (No one can object to Motherhood and Apple Pie). If you could imagine 9/11 as a government conspiracy, it wasn't so much of a leap to imagine your humble blog being persecuted by AT&T.
And so "Net Neutrality" was born.
Step Two: Feign Persecution
Did Whitacre know exactly what he was doing? We can't say. As an engineer, he was well aware of what he could and couldn't do from a technical standpoint - and what he might risk.
Unsubstantiated rumors of Big Telco interference in VoIP were rife. We heard them throughout 2004 and 2005 from a number of infrastructure providers across the industry. But Whitacre also knew this kind of discrimination was illegal - and that the FCC had acted swiftly in the case of Madison River, a North Carolina telco which blocked the VoIP indie, Vonage.
He also knew that discriminating against high bandwidth websites wasn't practical. The Amazons and Yahoo!s expect their traffic acquisition costs to be fixed and predictable - and are locked into long agreements.
Either way, AT&T appeared to be startled by the speed and growth of the "Net Neutrality" campaign, which became the free speech cause of the year.
"This is horrendous," wrote former San Jose Mercury columnist Dan Gillmor, as he described the imaginary threat. "It's a threat not just to Citizens Media (sic) but to democracy itself."
This hysteria seems absurd now, given that the primary backers included Google and Yahoo!, two companies who had just proved themselves delighted to bend over and take it from the government of the People's Republic of China.
In March Whitacre made emphatic public pledges not to discriminate against websites, but by then the campaign had a momentum of its own. AT&T and Verizon hastily assembled their own response to the "netroots", led by former Clinton press spokesman Mike McCurry.
But this didn't seem to matter. The net roots had succeeded in casting the struggle as one between the Old and Bad, and the New and Good.
Despite their ample lobbying funds, the telcos didn't have a strong suit to play. Public antipathy to Big Telco was historic, mergers were viewed with some distrust, and worst of all, fighting something as nebulous and noble as "neutrality" made technical rebuttals hard to argue. The telcos had to propose the technical argument that the net had never been "neutral", without risking sounding Hobbesian. They couldn't explain that piling on bandwidth would be no help to services afflicted by latency and jitter - for who could explain jitter in a soundbite?
Internet experts such as Dave Farber - often called the 'Father of the Internet' ,staunch Democrat, and no friend of Big Telco - warned against passing rash legislation.
And what if the corollary of a "two speed internet" was true - and everyone got condemned to the slow lane? Antis found it hard to make this argument, too. Hypotheticals such as the one put forward by the internet entrepreneur Mark Cuban, found little traction:
I would rather have little Johnny's grandma getting priority for her video checkup with the doctor at the hospital over little Johnny getting his bandwidth to upload the video of the prank he pulled on his buddy.. I would rather make sure that information from life support or other important monitoring equipment, medical or otherwise is finding its way without interruption, and without the end user having to pay for an off the net solution. These are the applications that make the net great. These are the applications [sic[ that offer equal opportunity to those who are disadvantaged.
So the AT&T lobby came out swinging with a crude, fundamentalist libertarian argument - Government is bad, and don't mess with big business.
It didn't really matter, as an apparently arcane debate about the semantics of "net neutrality" was about to detonate.
This had become problematic for the Neuts, for no one in the activist coalition was able to define "net neutrality", or able to point to an offense that transgressed it. And trying to define "neutrality" - a precursor to being able to mandate it - was a philosophical dead end. As Martin Geddes, telecoms consultant and author of the Telepocalypse blog, puts it:
The moment you try to define Network Neutrality, you have to choose a layer, a time, a market, the participants. You have to make non-neutral choices in order to define the boundary of your Neutrasphere. There is no "neutral" space devoid of favouring the interests of particular market players. The contradiction is inherent. There is no way to finesse it away... Neutrality is a sign of healthy supply competition and sophisticated ways of demand expression. It's an output, not an input.
Like Goodness, "Neutrality" was a symptom, not a blueprint.
This began to emerge as a problem as the Democrats made haste to draft some legislation to fight the phantom menace.
Obligingly, Democrats created two amendments, one by Markey in the House, another by Olympia Snowe (R-Maine) and Byron Dorgan (D-ND) in the Senate which would have the accidental consequence of killing large sections of the telcommunications sector stone dead - or at least ensuring that everyone who transfers bits for a living has to spend their capital at a lawyer. The Dems' law would have outlawed QoS, even when the participants entered such a contract by mutual agreement, and institutionalised one slow lane for everyone. Both proposals went down to defeat, which only increased the frenetic level of activity amongst the grassroots.
Few of the Net Neutrality activists realized it at the time, but they'd handed Whitacre a gift: he was now being "persecuted".
As a consequence, AT&Ts BellSouth merger was progressing through the Administration smoother than anyone can have expected. In October the Department of Justice shrugged and handed the final word to the FCC commissioners.
Victory was almost at hand.