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By Todd Shields

Oct. 21 (Bloomberg) -- Google Inc. backs “extreme regulatory standards,” AT&T Inc.’s top Washington official says. His rival at Google calls the phone company’s campaign against new Internet rules “almost laughable.”

Google’s Richard Whitt and AT&T’s Jim Cicconi are jousting publicly and behind the scenes before the Federal Communications Commission takes its first vote tomorrow on plans to write so- called net neutrality rules governing Internet traffic.

The rules would bar Internet providers led by AT&T, Verizon Communications Inc. and Comcast Corp. from favoring or blocking Web content from companies such as Google, Amazon.com Inc. and Twitter Inc. The prospect of losing some control over their networks has phone, cable and wireless services on the defensive, said former FCC chairman Michael Powell.

“It looks like a fait accompli to many companies,” said Powell, a senior adviser in Washington with Providence Equity Partners Inc., in an interview. “They fear it is an effort to commoditize their businesses and that is terrifying.”

Julius Genachowski, a former Internet executive named by President Barack Obama to head the FCC, has led the push for new regulations. The commission will vote tomorrow on a road map for writing rules. That action will open “a multi-month” proceeding, said Jen Howard, an FCC spokeswoman.

Regulation is needed “to preserve Internet openness, helping ensure a future of opportunity, innovation and a vibrant marketplace of ideas,” Genachowski said in a Sept. 21 speech. The open-Internet rules would apply to wireless service as well as cable and phone providers, he said.

Obama’s Position

Net neutrality has been a long-running dispute in Washington. Rules would expand on “principles” adopted by the FCC in 2005. Obama supported net neutrality during his campaign for president.

Advocates of government restrictions say providers such as AT&T, the largest U.S. phone company, and Comcast, the biggest cable provider, otherwise could use their control of Internet access to play favorites. Video services owned by the providers or their business partners could be delivered to subscribers at top speed while competitors are slowed or blocked.

“The issue comes down to whether they want to use that limited bandwidth as the rationale for prioritizing and/or degrading certain traffic purely for commercial purposes,” said Whitt, 47, the Washington telecommunications and media counsel for Mountain View, California-based Google, in an interview.

Rules would help ensure that “consumers make the ultimate choices about which products succeed and which fail” on the Internet, Google and other companies said in an Oct. 19 letter to Genachowski.

Craigslist, IAC/Interactive

Executives signing the letter included leaders of Amazon.com, EBay Inc., Facebook Inc., Craigslist Inc., Twitter and IAC/Interactive Corp. Genachowski is a former executive at IAC, the Internet and media company run by billionaire Barry Diller.

Companies such as New York-based Verizon and Dallas-based AT&T say net neutrality rules could interfere with management of their networks, risking slowdowns when applications such as peer-to-peer file-sharing hog limited bandwidth. They also say they may pull back from investing billions of dollars in more network capacity.

Verizon’s Seidenberg

The FCC shouldn’t “impose rigid rules on a rapidly changing industry,” Verizon Chief Executive Officer Ivan Seidenberg said in a speech in Chicago today, according to excerpts distributed by e-mail.

“The commission is injecting a high degree of uncertainty” by “threatening restrictions on the ability and flexibility to manage traffic,” Cicconi, 57, AT&T’s senior executive vice president for external and legislative affairs, said in an interview. “It could have a very, very harmful effect, we fear, on investment.”

The debate over net neutrality began over content delivered through Web browsers on computers. Genachowski’s rules would have a broader reach, including mobile phones.

EBay’s Skype unit complained to the FCC in 2007 that some wireless carriers don’t let subscribers use its free calling service. The FCC’s stance will mean “customers get to use their data plan for what they see fit,” Skype Chief Executive Officer Josh Silverman said in an interview today in Jerusalem.

AT&T announced Oct 6. that it will let users of Apple Inc.’s iPhone make such Internet calls over the same AT&T airwaves as standard wireless traffic.

‘Competitive Market’

“What it ought to tell the FCC is the competitive market is operating pretty well,” Cicconi said. “People are very hard-put to define any problem that calls for a government regulatory solution when it comes to wireless.”

AT&T’s decision “doesn’t in any way reduce the need for fair and sensible rules of the road that preserve a free and open Internet on an ongoing basis,” Genachowski said in a Bloomberg TV interview on Oct. 7.

Wireless networks already face congestion.

AT&T has exclusive U.S. rights for the iPhone, introduced in 2007, with its thousands of online applications. The company’s wireless data usage has increased almost 5,000 percent since 2006, said Ralph de la Vega, chief executive officer for AT&T Mobility and Consumer Markets, in an Oct. 7 speech to a wireless convention in San Diego.

“Managed services” also should be considered in framing net neutrality rules, Genachowski said in the Sept. 21 speech. He said such services, which he didn’t define, “can supplement -- but must not supplant -- free and open Internet access.”

Virtual Private Networks

The category may include virtual private networks that are password-protected and used by corporations, said Andrew Jay Schwartzman, president of the Washington-based Media Access Project, a consumer advocacy law firm, in an interview.

If Internet providers are permitted to offer such services without limits to customers willing to pay extra, it could remove incentives to build “more networks for everybody,” Schwartzman said.

Rules on managed services also could affect TV programming offered by phone companies, including Verizon’s Fios and AT&T’s U-verse, said David Farber, a professor of computer science and public policy at Carnegie Mellon University in Pittsburgh, in an interview. Farber served as the FCC’s chief technologist in 2000 and 2001.

The five FCC members, with a Democratic majority led by Genachowski, will vote on a notice of proposed rulemaking to serve as a framework for crafting regulations.

AT&T dropped 5 cents to $25.94 in New York Stock Exchange trading at 4:02 p.m. Google, the world’s most popular Internet search engine, dropped 62 cents to $551.10 on the Nasdaq Stock Market.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net