Net Neutrality Debate to Pick Up Steam in 2006

Randy May at the Progress & Freedom Foundation’s blog reacts to today’s Page One Wall Street Journal story (subscription required) on network neutrality by proffering a tale of Rip Van Fedex and Rip Van Bellwinkle.

Now consider if Rip Van FedEx awoke from a quarter century slumber and read the lead today’s WSJ story. He likely would think it pretty odd that the phone companies’ putative desire to charge more for faster service is setting the stage for a “big battle.” Wiping the sleep from his eyes, he might think to himself: “How in the {!!!!} did we ever get away with charging more for next day delivery!” The telephone companies, after having been subject to common carrier regulation during most of Rip Van Bellwinkle’s slumber, with the legacy of such regulation still in their eyes if not their DNA, may harbor doubts about whether they should really be free of common carrier regulation or what such freedom means. After all, they were not entirely uncomfortable with the FCC’s adoption of Net Neutrality principles (as long as the principles were not adopted as rules). It looks like there will indeed be a big battle over Net Neutrality during the coming year (and, yes, at least for some, the Net Neutrality mantra includes a prohibition on differential pricing for differential speeds of service). If we’re still arguing about whether common carrier-like regulations should apply today, it will be enough to make one wonder what all the fuss was about in the cable and telco broadband proceedings that eliminated common carrier obligations.

What are the obligations of a common carrier in the broadband age? Clearly, the network must continue to be available to all who wish to use it. But can there be prioritization beyond that? And can such arrangements come at higher rate and be exclusive? Network neutrality proponents say no. Put simply, they believe that the phone and cable companies, which in fact built and own the facilities over which much of the world’s Internet traffic gets to homes and offices, not only should be required to give this capacity away, but give every single applications provider the same treatment. Any innovation in quality, management or traffic control that is offered to one, must be offered to all, preferably at no additional cost. It is framed as an issue of fairness and equality. Regulators and legislators must consider the question carefully. Much of network neutrality argument ignores property rights, which proponents dismiss by claiming (incorrectly) that no one owns the Internet and that enforcing a property rights scheme on the Internet is detrimental to its growth. The opposite may be more true. We are not talking about essential services here. Most web applications, even VoIP, can work within the confines of the current best effort Internet. The nut is that converged services have created a legitimate market for data prioritization and partitioning that did not exist pre-broadband. Google’s ability to download content to users faster than its competitors has value to Google, measureable in dollars. Therefore, it is perfectly acceptable for a common carrier to reflect that value in the form of a higher rate for a higher level of carriage, just like Fedex charges more for guaranteed 10:30 a.m. delivery. Otherwise, Google is simply demanding something for nothing, which is neither fair nor equitable. Moreover, as common carriers are key to broadband buildoutââ?¬â??and need to see some way to make a business case for the capital expenditures necessary to wire the country, lawmakers should think twice before preventing carrier from developing and profiting from tiered levels of network performance. All network neutrality will do is take away another business incentive for carriers to invest in broadband. This isn’t about squeeezing the little guy; it’s about getting fair return from sizable applications and content providers like Google, Yahoo, eBay, not to mention Hollywood movie studios getting into Web video content, for the utility they derive from an optimized Internet.