Search This Blog

Monday, September 28, 2009

Broadband Deployment and Internet Regulation

Nearly everyone seems to be in agreement that broadband deployment has been and will continue to be a huge plus for consumers, entrepreneurs, business and the economy.

Before and after taking office, President Obama has spoken of broadband deployment as a priority.

FCC Chairman Julius Genachowski has declared: "Broadband is our generation's infrastructure challenge. It is as important as electricity and highways were for past generations."

But is more regulation then the best way to accelerate broadband deployment?

On September 21, Genachowski proposed "net neutrality" rules on all Internet service providers, including wireless firms. While "net neutrality" sounds nice; it's really all about government regulating how providers operate their networks.

ISPs have every incentive to provide the best service to both content providers and consumers. And that includes managing and prioritizing traffic, especially given the vast expansion in bandwidth-gobbling applications, such as video downloads.

And complaints against network operators in terms of traffic flow issues have been practically nonexistent, as one would expect. Again, why would ISPs go out of their way to stir up consumer, media and political opposition? Meanwhile, competition and choice have expanded and continue to expand, especially given the wireless revolution.

So, it's bewildering as to why the FCC is going down this path at all - especially given the risks that come with unwarranted government dictates and interference in such a dynamic and innovative market.

A September 22 Wall Street Journal warned about potential lawsuits, given that Congress has never passed a law providing the FCC with "net neutrality enforcement powers." The article also pointed out that "telecom firms ... recently paid a premium at auction for what was advertised as unencumbered radio spectrum."

Strangely, this is being billed in the media as a loss for ISPs, but a win for content providers. However, both would wind up losing if the FCC regulates how networks are managed. Why? Incentives for innovation, differentiation and investment in broadband would suffer, which means both content providers and consumers would suffer as well. And most certainly among those listed in the negative column will be entrepreneurs who use the Internet to build and run their businesses, and the entrepreneurial firms involved in building broadband networks.

In fact, in the end, more government regulation of the Internet would only be a plus for the political class. Both politicians and regulators seeking more power would acquire it, with little regard for the restraints they are placing on competition, investment, innovation and technological change actually geared towards serving consumers and businesses in the marketplace.

Raymond Keating, Chief Economist
Small Business & Entrepreneurship Council

No comments: