Net Neutrality Really Means Internet Mediocrity

Congressional plans would slow technological innovation

Over the past year, legislators in Congress and, more recently, in states such as Maryland, Maine and California, have been calling for laws guaranteeing "network neutrality." Net neutrality laws would prevent service providers from using their own network resources to improve the quality or reliability of increasingly popular Internet applications such as movie downloads and multiplayer games.

As the neutrality bills in Congress and the states stand now, no service provider could offer a third party any sort of network-based prioritization or quality assurance, whether or not a fee is offered. All content must be treated the same way as it crosses the network. Any quality improvement offered to one, must be offered to all.

This legislated mandate for neutrality – which really means Internet mediocrity - is based on the supposition that neutrality was a founding doctrine of the Internet. That couldn't be more wrong. The Internet and its commercial component, the World Wide Web, are what they are today due to the simple principle of free exchange through voluntary agreement. Engineering concepts such as "network neutrality" or meaningless slogans like "information should be free," had nothing to do with it.

The idea of the Internet goes back to the moment when one university professor said to a colleague from a distant institution, "Gee, wouldn't it be great if we could access research stored on each other's computers with the same ease as we can from our own?"

And then some very bright engineers and programmers devised a transmission language called the Internet Protocol (IP) that allowed computers to exchange information over conventional phone networks. Over time, IP spread to phones, PDAs, iPods and set-top cable boxes, creating the amazing, versatile world wide Internet we know today.

The growth of the Internet is one of the best examples of libertarian principles in action. As it expanded into the commercial realm, mechanisms of trust and validation grew out the marketplace's desire to have an open, honest forum for enterprise. Without any government regulation or oversight, people grew comfortable enough to use the Internet to email loved ones, transfer money, purchase cars and airline tickets, even make wagers.

The Internet indeed is an open network. But this is different from asserting, as the network neutrality idea does, that all of the attributes of the physical network infrastructure should either be freely available to any connected party, or else not at all.

Network neutrality in effect would declare the infrastructure in the network—the cables, routers, switches and software—a public resource, even though it is, in reality, private property bought and paid for by investor dollars. Just as in the case with your own PC, these property rights are not waived at the moment of Internet connectivity. Any corporation or individual on the Internet (or anywhere for that matter) has a right to choose what components to make available to whom and on what terms. In commercial language, it translates to the freedom to place a market value on one's proprietary assets to create viable business plans. That has been the case since the first Internet service provider purchased a rack of servers and started seeking customers for hosted email.

Rather than preserving basic Internet principles, network neutrality subverts them. It replaces cooperation with coercion. It would make government bureaucrats the arbiters of the way two or more companies could agree to use their own network resources to deliver consumers the best experience when it comes to content and applications.

The intrusiveness of this level of supply chain regulation is unprecedented. Imagine if the government were able to tell farmers they could not price organic produce higher than crops grown using cheaper large-yield methods; or that TV makers could not charge more for high-definition sets, even though they are more expensive to manufacture. To be sure, such price-control measures might find support in some circles, but the net result is that would-be suppliers of organic produce and hi-def TVs, seeing no profit in the venture, would not put their resources into bringing the items to market, however desired they may be. The same will hold true for Internet quality if lawmakers adopt network neutrality.

But above all, the Internet has never been about regulation. It has been about free exchange. Exchange, however, implies ownership, because at heart, it is the choice to provide something you own for something in return, be it material or goodwill. The government's net neutrality is all about taking resources without compensation.

From both an economic and legal perspective, network neutrality is a non-starter. It doesn't fly legally or ethically. Theft is not a legitimate business model. No enterprise cannot simply claim another enterprise's resources to make money for itself. This has been true as much on the Internet as it has been in the brick-and-mortar world. It's disappointing that so many in Congress are blind to it.