Government vs. Private Control and “Balkanization” of the Internet

September 3, 2010

By Kelly William Cobb
Americans for Tax Reform Blog

The Economist had a piece yesterday called “The Future of the Internet: A virtual counter-revolution.”  It twists and turns through the ways that government and businesses are attempting to “balkanize” the Internet; to take it over and turn it into a “collection of proprietary islands accessed by devices controlled remotely by their vendors.”  The piece is certainly worth a read, but even if the picture it portrays is accurate, that doesn’t mean it’s not a good thing for consumers and the future of the Internet.

First, it points out how “governments are increasingly reasserting their sovereignty.”  China is blocking content; India and Saudi Arabia threatened to block BlackBerry and other services; the U.S. is pushing regulations for Net Neutrality that could lead to government enforcement of price control, access, and more, eventually turning the Internet into a virtual public utility.

Most disconcerting was where it highlighted United States government’s influence online.  According to The Economist piece, the U.S. ranked 4th amongst countries requesting that Google remove content from their website (roughly 125 times in the second half of last year).  Ironic that it came from the same government that wants to enact Net Neutrality regulations to supposedly preserve the current open nature and free flow of information online.  Worse, the U.S. government ranked second in requests for information from Google, 3,580 in the second half of 2009.  Again, from the same government that wants to establish a “Do Not Track” list for “helping” consumers control online privacy.

The government’s actions raise enormous red flags for privacy and 4th Amendment violations.  That’s why ATR is a member of the Digital Due Process coalition to require federal agencies to have a warrant and a target before asking, for example, Google for all Gmail emails sent between 2:00 and 3:00 pm EST yesterday.  Today, the Electronic Communications Privacy Act (enacted way back in 1986) is woefully out of date, and permits the FBI and others to do exactly that.  How are we supposed to trust a government that installs “strip-search” machines at airports, or President Obama who has been pushing for his own form of “online warrantless wiretapping” of late?  (Coincidentally, you can visit another section of The Economist’s website to discuss and vote “no” on government regulation of online privacy alongside Cato’s Jim Harper).

Where the Economist piece goes awry is when it looks at how businesses are using the Internet.  It says that if large players on the Internet move away from an open platform (where services, applications, and devices don’t construct walls against others), “this would be bad news.”  But this is an oversimplification and allowing the free market to offer both open and closed systems means greater consumer choice, innovation, and competition.  Mozilla Firefox vs. Apple’s Safari.  Android vs. iPhone’s iOS.

The Internet is an innovative and dynamic space.  Right now consumers are testing out both “open” and “closed” systems.  This is a decidedly good thing.  Facebook reached 500 million users this month, and its “closed” nature is probably why consumers put it in high demand.  iPhone’s closed operating system has qualities consumers demand just as much as the open Andriod operating system.  The Economist wrongly eulogizes Harvard professor Jonathan Zittrain for his concept of “generativity,” which values a system where anyone can create content anywhere.  Zittrain and The Economist lament that the entire Internet is not “generative”.  But this is an absurd extreme of openness that ignores consumer preferences, like the way Apple restricts a small number of applications in its App Store for safety and reliability reasons.

The Economist also says Net Neutrality is a means to preserve openness, though the piece fairly outlines its many cons.  Without Net Neutrality, proponents of government regulation argue Internet service providers will create a closed Internet by blocking content or permitting some websites to ride on a “fast-lane” above others.  However, this, too, should be decided by consumer choice in the free market, not by prescriptive rules from the FCC that mandate extremely “open” business models.  Consumer preferences in the free-market alone have long ensured that ISPs do not block websites.  Additionally, prioritizing traffic helps prevent congestion, and the model of offering paid fast lanes is utlized by mostly “open” companies like Google to ensure their service is fast enough for consumers in places far from their servers.  Finally, paid prioritization would provide a new revenue source for ISPs to lower prices and invest in broadband expansion, speed, and other services – something that can be very good for consumers.  Net Neutrality and the FCC’s lingering attempt at broadband reclassification could take all these potential benefits away.

Only government can seal off portions of the Internet outright.  Businesses cannot.  When companies choose to build islands in the online world, they do so knowing consumers will value their service, for or in spite of this reason.  The same applies to companies that choose to have their products or services interconnect to all others.  At the end of the day, some balkanization of the Internet gives consumers and businesses the most choice and opportunity compared to an only open or only closed Internet.  And this competition is a good thing.

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