Don’t subject the Internet to politicians, bureaucrats

March 4, 2010

 By Carl Gipson
Washington Policy Center
Also on Tech Liberation

I recently wrote an op-ed for the American Legislative Exchange Council’s Inside ALEC publication. It’s decidedly non-technical, as most correspondence with a majority in the legislative branch must be. In my dealings with those in state government positions, it seems that only in the last few months have many of them become aware of the FCC’s Net Neutrality proposals — or even the issue itself. I don’t blame them. State legislators are often more concerned with local issues such as solving their budget deficits or finding funding for critical government operations.

But it’s important that they also keep an eye on what’s happening in “the other Washington,” (as we Washington state-ers like to call it) as the policies from Congress, the Administration and federal agencies trickle down to affect each and every one of us.

The text of the op-ed is after the break.

“Four years ago, the Federal Communications Commission (FCC) issued an advisory statement that laid out four principles of government regulation of the Internet. The principles, which have no statutory authority, include the right of consumers to access lawful Internet content of their choice, the right to run applications and services of their choice, the right to connect legal devices that do not harm networks, and competition among network, application, service and content providers.

New FCC Chairman Julius Genachowski, with strong backing from the Obama Administration, is pushing for this “statement of principles” to become enforceable regulations, along with two other rules that would regulate how Internet Service Providers (ISPs) manage their own networks, whether wired or wireless, and require ISPs to be “transparent” about their network management practices.

Supporters of the concept of Net Neutrality tout their desire for openness and competition while guaranteeing consumer access to data and content.

However, as innocuous as the proposed FCC rules might sound – who could be against network management transparency and access to legal content? – subjecting the Internet and ISPs to an entire new regulatory structure threatens to curtail the explosive growth of the Internet. This is ironic, given that one of the Obama Administration’s goals is to accelerate broadband deployment to Americans – a goal which will cost ISPs tens of billion of dollars.

Since the beginning of the commercial Internet in the early 1990s, most consumers accessed it via an all-you-can-eat data subscription plan; e.g., everyone pays the same subscription price per month for as much data as you want. As technology advanced consumers began using more data. This culminated in such services as Napster and BitTorrent – peer-2-peer services (P2P) that allowed direct sharing of large files between two consumers. Often, the P2P connections resulted in sharing pirated copyright material such as movies and music (but that is a whole other conversation).

Internet Service Providers, in order to lessen the disproportionate impact that the P2Pers were having on the network, began looking into ways of protecting other consumers whose connections were being slowed down by the P2P bandwidth hogs. Some of the ideas floated or adopted include usage caps, and tiered pricing – the ability to pay more for faster, better service. Some of the scare tactics Net Neutrality supporters use have never, in actuality, occurred. There have been no instances in the United States where consumers cannot access legal content, control of the Internet has not been wrested away from the people into the hands of greedy corporations. No one controls the Internet, and no one, including the government, should.

Need proof that the Internet has not suffered from a lack of strong regulatory oversight? Look at the immense growth rate of both users and data since the turn of the century. In the year 2000, only 5.1 million Americans subscribed to broadband connections. At that time broadband often meant a 1Mbps download connection for cable subscribers, or a paltry 500Kbps connection for DSL users.

In 2000 there was no YouTube, no Facebook or Twitter, no Netflix or Amazon.com streaming video services, no Blackberry or iPhone. These types of innovations simply would not have worked. The capacity to carry that kind of data did not exist, nor did the demand.

Contrast that with 2008 after broadband usage, both wired and wireless (wireless data connections were barely a thought in 2000) had experienced a 500-fold increase in just eight years. Today there are over 80 million households subscribing to broadband.

Looking forward there will be a leveling off in the rate in increase of broadband users, but data demands will continue to skyrocket, particularly in the mobile broadband arena. Cisco Systems estimates that the Internet in 2012 will be seventy-five times larger than it was in 2002 — and that Internet traffic will generate the equivalent of seven billion DVDs each month. Cisco also estimates that Internet video in 2012 will be nearly 400 times the size of the entire U.S. Internet backbone in 2000.

Given this spectacular growth, a new regulatory structure like that pushed by Net Neutrality proponents makes no economic sense.  When a powerful third party, such as a federal agency, regulates a limited resource, such as broadband capacity, the market itself becomes subject to political whims and special-interest carve-outs, which will only harm consumers.

Unfortunately, several state and city officials around the nation have also tried to get in on the act of regulating the Internet in their small jurisdiction. It seems regulatory proliferation in this area knows no bounds. Fortunately, courts have time and again rebuffed efforts at anything less than federal regulatory authority. As a result, some states and cities are petitioning the FCC to move forward with Net Neutrality.

No one would disagree that the growth of the Internet has been anything less than transformative on our society and economy, which has happened with minimal government interference. It will continue to grow if we leave it alone. Regulating an industry to achieve peace of mind comes at a price – most often that price is paid in missed opportunities and lost innovations and therefore cannot be measured.

With new restrictions in place, innovators will have to overcome artificial barriers and find success despite regulatory obstacles, not because of them.

The federal government should protect intellectual property rights and continue to encourage long-term investment in our online network by keeping the regulatory barrier low.”

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