The financial-services industry is considering coordinated opposition to the “net neutrality” language in the House’s video franchising bill, fearing a financial hit if lawmakers allow phone and cable companies to charge banks more for secure Web service.
Until now, the fight over network neutrality has pitted telecom sector against telecom sector, with broadband giants such as AT&T and SBC pushing for freedom to charge online content providers such as Microsoft and Google more money for speedier service. Bankers and stock exchanges, which have benefited from popular online operations, would be a new voice calling for mandated nondiscrimination but could be a loud enough voice to force lawmakers to strengthen the bill’s net neutrality provision.
“The whole nature of the Internet from a business perspective is changing,” said Philip Corwin, a financial-services lobbyist at Butera & Andrews who began circulating a 22-page paper called “Net Neutrality: Big Stakes for Financial Services Providers” last month. “Though people don’t think of financial companies as Web companies, they were very early adopters of the Internet. They would have the same concerns about this as Yahoo or Amazon.”
Corwin urges financial-services companies to recognize the potential harm that the bill sponsored by House Energy and Commerce Committee Chairman Joe Barton (R-Texas) could pose to their thriving Internet services. Barton’s bill would cement an optional net-neutrality standard at the Federal Communications Commission (FCC) while giving businesses in control of broadband fiber the right to establish tiers of pricing for priority Internet services.
Secure processing, which banks are legally required to furnish for Web customers, is one of the most likely candidates for new access fees under the House net-neutrality language. Brent Thompson lobbies for IAC/InterActiveCorp, which owns loan facilitator LendingTree, and he has joined the financial-services push on net neutrality.
“Neither the Financial Services nor the Banking Committee have looked at this, but the Internet is so critical to financial transactions of all sorts,” Thompson said. “So the prospect that there could be a third party that would have an impact either on making those communications more expensive or determining whether they occur is really a frightening prospect.
One financial-services lobbyist who circulated Corwin’s paper at his company said he hopes his bosses and others leap into the fray alongside Public Knowledge, Rep. Ed Markey (D-Mass.) and other net-neutrality proponents.
“Internally, our people did think Phil made some really good points,” the lobbyist said. “They said, ‘Well, this guy makes sense to us. Let’s convene some meetings and take a look at it.’”
Another lobbyist for a financial-services trade association said Corwin is right in predicting that bankers’ profits are bound to fall without stronger net-neutrality rules but pointed out that Corwin himself would likely profit from any organized financial-services effort on the issue.
“He’s clearly trying to start a coalition for himself and make some money,” the lobbyist said. “That’s written all over it. … It’s nothing terrible; it’s understandable.”
Although the Senate counterpart to Barton’s bill has only this week been released in draft form, the House version has been in the works for months and secured a Democratic co-sponsor in Rep. Bobby Rush (Ill.). Ali Amirhooshmand, a vice president at Cassidy & Associates who represents AT&T, BellSouth and Verizon in support of the House net-neutrality language, said banks would make less of a splash if they raised any objections at this late date.
“None of these guys have been at the table. They had the opportunity to offer their input, but they haven’t been there,” Amirhooshmand said. Still, he added, “It never helps to have more people on the other side of the table arguing [against you]. You always want to have people on your side of the table.”
Bankers routinely lobby hard against postal-rate increases because regulations require them to communicate with customers via first-class mail. But financial experts accustomed to taking the Internet for granted have begun to realize that the House net-neutrality standard could be a postal rate increase in disguise.
“We are waking up to this, and part of that involves realizing how much we have invested in it,” said Andy Barbour, a vice president at the Financial Services Roundtable.
The Roundtable already has begun discussing the video-franchising bill with Hill allies, Barbour added, “and based on what we’ve discovered we’re not comfortable with legislation that doesn’t include strong net-neutrality provisions.”
From the phone and cable companies’ perspective, Amirhooshmand also likened net neutrality to shipping costs, noting that tiered pricing in mail service is a fact of life for any business.
“If you want to send a letter to the West Coast and get a stamp on it, it will get there when it gets there. You can guarantee service and guarantee reliability, you can pay a little extra and it gets there overnight,” Amirhooshmand said. “Cable and the Bells want to spend billions of dollars to put broadband into your house, and if [a particular company] wants to come and sign an agreement with us … we want to guarantee that the site provides reliability.
The American Bankers Association (ABA) has received a copy of Corwin’s paper, as have top lobbyists at HSBC, ETrade Financial, AmSouth Bank, UBS Americas and Citigroup. Several recipients of the paper maintain close ties to House and Senate leadership.
ABA spokeswoman Laura Fisher said her group has not yet decided whether to seek changes to the House net-neutrality language.
“We think net neutrality is a good idea, and we’re following the issue,” Fisher said. “Because so many people use online banking, the future of the Internet is important to bankers.”
Markey, who introduced a stand-alone net-neutrality protection bill Monday, agreed with Corwin’s conclusions.
“The financial-services industry is right to be afraid of this new paradigm that would base Internet access on the size of the user’s wallet,” Markey said through a spokeswoman.