As the Bush administration considers whose side to take in the lobbying war over the leasing rates, top executives from both sides decided to participate in the discussions in order not to offend government officials and regulators.

The problems facing the heir of Ma Bell are obvious to everyone in the industry, yet hard to grasp, let alone fix. And when AT&T finds a solution to one of its many problems, another struggle develops.

AT&T's central problem is that its core long-distance business is eroding fast.

As buyers grumble about paying more for shrinking, distracted audiences, a big piece of American commercial culture seems endangered. In the age of the remote control, of HBO and endless cable choices, and of TiVo, the marriage of mass entertainment to "a word from our sponsor," appears to be in trouble.

Commercials aren't really interruptions to our entertainment but a major component of our common culture. As Madge the manicurist would say, we're soaking in it.

Even the dumbest commercials insinuated themselves deep into people's psyches.

City elders tried marketing Las Vegas as a family destination. The scheme was jettisoned for a new campaign that hypes Las Vegas as America's grown-up romper room, the center of sin and indulgence.

Now the hotel rooms are full, and people keep moving here. Las Vegas grows at a supersonic rate. But within this growth lie seeds of conflict. One in four Las Vegans is a minor.

The final and most serious argument is that whatever the short-term benefits, the tax cuts have left us with a long-term fiscal mess.

It was clear from the moment they took power that Bush and Cheney were determined to greatly accelerate oil and gas drilling on the public lands of the West. All anyone asked for was a balanced approach.

Lisa: "Can't you see the difference between earning something honestly and getting it by fraud?"

The traditional world of Internet peering is undergoing radical change with the commercialisation of the Internet. The result may be the emergence of a running battle between the Internet backbone providers and ISPs, before the two agree on the creation of a new interconnection regime.

The structure of interconnection agreements in the past has been based on a non-commercial model, bundled up with the notion that the Internet is 'free'. Yet these models are being reassessed with Internet backbone providers no longer prepared to remain bound by Internet interconnection arrangements which fail to take adequate account of associated infrastructure costs.

Peering arrangements have in many instances been adopted blindly; peering has come to be seen as an end in itself, driving the economic imperatives.

Fundamental economic problems have arisen as a result of blindly adopting SKA peering. The SKA peering model has allowed networks to develop rapidly. However, the model provides no real platform for organic growth. Ongoing investment in broadband capacity is therefore dependent on the development of new interconnection models that provide incentives for investment in infrastructure.

Internet backbone providers are now looking to financial settlement models which allow Internet backbone providers to enter into interconnection arrangements without losing the ability to be fairly compensated for their infrastructure costs. The arrangements have the potential to enhance Internet connectivity and to provide an optimal level of interconnection in the long term.

In effect, we are moving towards a tiered pricing structure.

In the future, in the trend toward settlements-based interconnection arrangements, we will see opportunities for Internet backbone providers to derive increased revenues where they are able to attract popular content to their networks. However, the impact of content on the value of the interconnection services provided is not without its problems, given that Internet content varies enormously in terms of its usefulness, popularity and ultimate value.

The continuing saga of Internet connectivity is chipping away at a well-intentioned vestige designed to keep accessibility to the Net squarely in the public domain.

It remains to be seen whether the industry can self-regulate and if public peering will survive.

The NSF helped to create NAPs. It lured service providers to connect to these access points by making participation mandatory for ISPs signing government contracts.

Congestion turned many ISPs away from public peering and toward private alternatives. With private peering, traffic typically is still exchanged for free, but rather than connecting at a public exchange, two ISPs instead connect their routers at other points in the network.

A widening gulf soon developed between public and private peering.

Some charge that the dominant backbone providers -- UUNet, Sprint and Cable & Wireless -- have used peering to retain what amounts to an oligopoly.

"Both the private peering and the public peering points have grown in parallel. Quite simply, that's the bandwidth explosion we continue to see."

The fray over peering - or for some, the lack of it - is spurring new ventures that fill the void in Internet connectivity.

"The money will flow into providers that can solve [the BGP] problem."

"We're trying to get away from the current peering and transit model," says Level 3.

"The only way for the Internet to survive is with public peering," says AboveNet.

Tom Nolle believes one of two things will happen. "One, we're going to build what I call a shadow Internet." The other possibility is that the industry will see some regulation in the Internet space, Nolle explains. "If one of those two things doesn't happen, the Internet will crash eventually."

Says PSI: "Our primary strategy for growing our backbone is through the acquisition of capacity. We do this to reduce costs."