A better idea for Net neutrality

Policy analyst Randolph J. May says the time is right for advocates to step back from the precipice.

The most controversial communications policy topic today is Net neutrality. This is the notion, peddled actively in Washington by Google, Amazon, Microsoft, and Yahoo, along with self-styled "consumer" groups, that broadband network operators such as AT&T and cable operators such as Comcast must not be allowed to discriminate among content providers or favor their own content. The Net neutrality proponents even argue that the nondiscrimination prohibition should apply to wireless and all other technology platforms that deliver Internet access to consumers. Unfortunately, the Net neutrality forces appear to be gathering strength just as the broadband marketplace is becoming vigorously competitive, rendering a new government Internet mandate unnecessary. Adoption of a broad Net neutrality prohibition will impose monopoly-era public-utility-style regulation on new broadband services in an era characterized by competition.

Witness the bill (S. 2360) introduced on March 2 by Sen. Ron Wyden, a Democrat from Oregon. His "Internet Non-Discrimination Act of 2006" provides that a network operator "shall not interfere with, block, degrade, alter, modify, impair, or change any bits, content, application or service transmitted over the network of such operator." Nor shall it "discriminate in favor of itself or any other person, including any affiliate or company with such operator has a business relationship in (A) allocating bandwidth; and (B) transmitting content or applications or services to or from a subscriber."

Thus far, there have been virtually no complaints that any network operator has actually engaged in any discriminatory conduct.

Finally, in the true style of all public utility regulation, Wyden's bill provides that "a network operator shall?offer just, reasonable, and non-discriminatory rates, terms, and conditions" for all its broadband services. Other legislative proposals containing broad Net neutrality prohibitions have been offered as well.

Thus far, there have been virtually no complaints that any network operator has actually engaged in any discriminatory conduct. No network operator has entered into a business arrangement, say, that somehow favors Amazon's content over that of Borders. There have been a few statements made by AT&T Chief Executive Ed Whitacre and other network operator executives to the effect that network owners ought to have the flexibility to consider charging content providers such as Google or Yahoo a higher fee for speedier service on their Internet backbone facilities if these content providers desire some form of premium service to better serve their customers.

In a competitive marketplace, the government usually does not require that vendors treat all customers and all suppliers alike for all purposes. Very often such differences in treatment in a competitive marketplace reflect economic efficiencies to be realized from that result in cost savings, and these cost savings enhance overall consumer welfare. Avoiding broad prohibitions on such differential treatment gives operators the freedom and flexibility to invest with confidence in new facilities and innovative services consumers may value.

About the author

    Randolph J. May is President of the Free State Foundation. His newest book is "A Call for a Radical New Communications Policy: Proposals for Free Market Reform."

     

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