Skype CEO eye-to-eye with FCC on net neutrality rules

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The nation’s top communications regulator on Monday proposed new rules that would force Internet and wireless companies to treat all Web traffic equally, a principle known as net neutrality. The Federal Communications Commission (FCC) is also crafting a plan to expand broadband service to underserved regions.

Both issues are key to Skype’s survival as it prepares to become an independent company. Private investors have agreed to pay $1.9 billion for the service, which was acquired by eBay four years ago.

Now that regulators in Washington are paying attention to the role broadband will play in the nation’s economic recovery, Skype plans to be active in those discussions.

“The focus has been on how to make sure access providers can continue to provide access to more people,” Silverman said Monday while speaking at the Brookings Institution. “But it’s only with an open and free Internet that we can develop the applications like Skype that have caused people to want to pay for faster, better, more reliable Internet. It’s only through that virtuous cycle that we can proceed.”

Skype was one of the first companies to push for open-Internet regulations. In early 2007, Skype filed a petition with the FCC asking that the agency require wireless carriers to allow consumers to attach any device to wireless networks and use any application, as long as they did not harm the networks.

Skype said the rules would promote innovation, just as they did 40 years ago when the same principle was applied to the nation’s telephone network, letting consumers attach a range of types of devices to copper lines, eventually leading to cordless phones and modems for dial-up Internet access.

“The way we see the world is not that phones are getting more powerful but that computers are getting smaller,” Silverman said. “In a world where your personal computer fits in your pocket, people demand choice of any software they want to load on that and any website you want to visit. Right now it’s the carriers who dictate what people are allowed to do with their phone. And that stifles innovation.”

Not all phone companies have welcomed Skype, which allows consumers to make low-cost calls over the Internet, thus undercutting standard phone rates for long-distance calls.

Some consumers have complained that they can’t make Skype calls on Apple’s iPhone using AT&T’s network. In response to an inquiry from the FCC regarding applications it allows, AT&T said it plans to “take a fresh look” at allowing consumers to make Web-based calls on its network via services such as Skype.

Silverman said many other networks around the world still block Skype’s service, a point also raised by FCC Chairman Julius Genachowski as he introduced his proposal for new net neutrality regulations.

“We have witnessed certain broadband providers unilaterally block access to phone calls delivered over data networks and implement technical measures that degrade the performance of peer-to-peer software distributing lawful content,” he said. “And as many members of the Internet community and key congressional leaders have noted, there are compelling reasons to be concerned about the future of openness.”

Changes in Skype’s management will allow it to take a more active role in telecom policy discussions.

This month, eBay announced it is selling the majority of its stake in Skype to private investors for $1.9 billion in cash and a $125 million loan. eBay will continue to own 35 percent of Skype. The deal has largely been seen as good news for Skype, allowing it to explore new directions and grow as an independent company.

Skype has certainly not been absent from the open-network debate over the past few years. It joined companies like Google, Amazon and PayPal in the Open Internet Coalition, which has been advocating for net neutrality regulations, and the Voice on the Net (VON) Coalition, which pushes for policies that promote Web-enabled phone services.

Google’s telecom lobbyist, Rick Whitt, said Skype’s policy philosophy is similar to Google’s, including letting consumers choose the applications and devices they want to use and letting third-party software developers innovate without roadblocks set up by wireless operators and cell phone manufacturers.

Silverman, 40, is no stranger to Washington. After graduating from college, he spent two years as a legislative director for Sen. Bill Bradley, a Democrat from New Jersey. Silverman mostly handled healthcare policy.

His experience on Capitol Hill was great training for the business world, he said.

“What I found is if you can take a complex issue, like national healthcare policy, and summarize it down to one or two pages, you can find out what really matters,” he said. “In business, it’s very complex, but if you boil it down and show what we need to accomplish, that’s the key to leadership.”

After following a fellow staffer to Booz Allen Hamilton for a stint in health consulting, Silverman turned to entrepreneurship. He started an online invitation company called Evite, which he later sold to IAC, the media and e-commerce company where Genachowski was an executive.

But the men didn’t meet until Monday, despite sharing the same vision for an open Web.

Silverman, who lives in London, travels to Washington two or three times a year, and he said he expects that frequency to increase. During this visit, he plans to meet with the FCC’s broadband task force to discuss the agency’s broadband strategy, and he’ll also meet with House and Senate leaders about net neutrality.

Skype’s government affairs team is relatively tiny, with two lobbyists in Washington, two in Europe and one in Asia. The U.S. team is headed up by Christopher Libertelli, who previously served as a legal adviser to former FCC Chairman Michael Powell.

Skype plans to be involved in the broadband plan development, Libertelli said.

“The core message in that proceeding is that applications like Skype can grow the entire broadband pie,” he said. “We’re saying, let’s look at the investment incentives for everyone in this ecosystem, not just carriers.”