The banking industry is weighing whether to oppose an attempt by telecommunications companies to change how businesses use the Internet.
The debate is over so-called Net neutrality legislation, which would ban telecom companies from charging businesses more for faster and better access to their Internet sites.
The Financial Services Roundtable and some independent lobbyists say the industry should support such bills, arguing such tiered-service will force banks to pay more money to offer online services and undermine the expansion of online banking.
"This is an issue of emerging prominence and one that the financial services community cannot afford to ignore," said Andy Barbour, a vice president of the roundtable.
Other industry trade groups said they are watching the issue closely but have not determined if it is worth engaging in the fight, which until now has largely been between telecom companies and large Internet content providers, such as Google Inc.
The Net-neutrality debate originated after a recent court ruling that said broadband Internet service providers are not obligated to act as "common carriers," allowing consumers equal access to any Web site.
The decision opened the door for broadband network operators, including telecommunication and cable companies, to seek a new pricing system for Internet access that could charge businesses more based on factors such as priority, quality, and speed of online services to their customers.
Some lobbyists argue that such a system is a risk for banks, which have invested millions in promoting online banking services. If the telecom giants get their way, banks would have to pay more to guarantee their customers' online transactions are given priority and executed with high quality, the lobbyists said.
"The financial services industry was an early adopter of online services [and] has realized substantial cost savings as its customers have switched from physical to virtual relationships," wrote Philip S. Corwin, a partner at the Washington law firm Butera & Andrews, in a memo to financial firms attempting to bring attention to debate.
"As the slow lanes of a tiered Internet become increasingly congested, consumers are likely to experience service slowdowns and disruptions … undermining their overall confidence in and use" of online financial services, Mr. Corwin wrote.
He recommends the financial services industry join a coalition of Internet companies, including Microsoft Corp., Google, and Yahoo Inc., that have pushed Congress to enact legislation that would ban telecom companies from offering tiered level of service.
So far, efforts to pass Net-neutrality bills have not been successful. The House Energy and Commerce Committee voted 34-22 last week to reject an amendment that would have added Net-neutrality language to a telecommunications bill that would allow such companies more flexibility to offer cable services.
Chairman Joe Barton strongly opposed the amendment, saying the bill already contained sufficient protections for Internet access. But Rep. Ed Markey, D-Mass., the amendment's author, said that without it, telecom companies will fundamentally change the character of the Internet.
Net-neutrality supporters are resting their hope in the Senate version of the bill. Full Senate Commerce committee hearings on the bill are scheduled for later this month.
Mr. Barbour said the Roundtable is pursuing meetings with House and Senate staff on several committees to attempt to persuade them to adopt Net-neutrality provisions. The issue has become a growing concern during the past month, he said.
Mr. Barbour said the industry is worried that Internet service providers could give priority to financial firms that pay for the top tier of service. Consumers who use banks that do not pay for such service could be hampered in carrying out online banking, he said.
"Telecom companies cannot use their networks to control or prejudice content," Mr. Barbour said.
Banking customers should be able to choose financial services on the Internet "just like they have access to financial services by walking in a door of a brick-and-mortar establishment."
Lobbyists for the telecom companies argue the issue is being misrepresented. One telecom lobbyist, who spoke on condition of anonymity, argued that financial firms will benefit if telecom companies can provide tiered levels of service. He said that all lanes of Internet traffic would move faster than they do now if those who use more bandwidth pay for a higher tier of service.
"We are going to build more lanes so we can deal with more traffic," the lobbyist said.
The lobbyist also argued that telecom companies were not interested in charging banks more for Internet services, but that their efforts are more targeted to companies that allow consumers access to video services.
Steve Verdier, the congressional relations director of the Independent Community Bankers of America, said banks would want to ensure that any tier of Internet service has the same data protection.
"Even the most basic services should meet the privacy and security requirements," he said.
Don Rhodes, the American Bankers Association's policy manager for payments and technology, said the group is also deciding whether to join the debate.
"Bankers would prefer to have everyone treated equally," he said.
