Net Neutrality – Government Regulating the Internet

So, who thinks government regulating pricing and traffic management on the Internet is a good idea? Anyone?

Well, there are some out there apparently, including some members of Congress. For example, U.S. Reps Edward Markey (D-MA) and Chip Pickering (R-MS) have proposed the “Internet Freedom Preservation Act.” Wow, with a name like that, how could anyone be against it? Well, a more apt name would be the Internet Regulation Act.

According to a February 13 Wall Street Journal story:

[T]he "Internet Freedom Preservation Act” … says it is the policy of the U.S. to "maintain the freedom to use for lawful purposes broadband telecommunications networks, including the Internet, without unreasonable interference from or discrimination by network operators." Essentially, the bill would give the Federal Communications Commission more authority to police Internet providers to make sure they're delivering traffic fairly.

Seems a little vague, don’t you think? Leaves lots of room for government meddling.

The Journal story also noted: “The FCC's ability to referee net-neutrality issues isn't clear, although it plans to hold a public hearing in Boston later this month to examine the issue.”

In essence, various broadband providers are pondering different pricing and management models as broadband traffic – particularly with video content – is exploding. The best scenario is to let those companies experiment in the marketplace, with consumers making the final decisions on what works and what does not. In contrast, it makes no sense whatsoever to have politicians and government bureaucrats dictating how pricing and broadband traffic should be managed. That will only limit innovation and investment.

The Wall Street Journal article noted: “Regulators now face a challenge to set rules in a rapidly shifting market where changes in technology and consumer tastes are running faster than Washington's ability to react.” That’s a very diplomatic way to say that government cannot possibly keep up with the dynamism of this market. Nor is there any reason why it should try.

It is worth taking a look at a July 5, 2007, SBE Council Cybercolumn I wrote titled “FTC Humility and Clarity on Net Neutrality.” It offers some highlights from an exceptional Federal Trade Commission (FTC) staff report released in late June titled “Broadband Connectivity Competition Policy.” I concluded: “The FTC staff deserves enormous credit for emphasizing caution regarding the unknowns and potential negative consequences of more regulation. While many of us who have spent years noting the costs and unintended consequences of government regulation, and observing the importance of incentives in the marketplace, are far more confident in predicting that net neutrality regulation will produce economic negatives, this was a rare and welcome case of regulatory humility.”