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Commentary: Free market should rule the Net

The free market will prevail and regulators, despite good intentions, should avoid creating bumps along the way.

By Ron Cowles, Gartner Analyst

The free market will prevail and regulators, despite good intentions, should avoid creating bumps along the way.

See news story:
FCC role in flux amid broadband explosion

However, the Federal Communications Commission does have a useful role to play concerning the Internet, by nudging Internet service providers that happen to stray from broad quality standards that serve the public interest.

When America Online introduced its flat-rate pricing scheme, consumers stopped watching the clock while surfing the Web. The increased online use immediately taxed AOL's network capabilities. The FCC stepped in and urged AOL to quickly fix its capacity problem, which AOL promptly did.

Then the FCC--along with several state regulatory and consumer watchdog agencies--prodded AOL to provide refunds to inconvenienced customers, which it also did. Once calm was restored, the FCC backed out of the Internet regulatory picture.

Such is the model for the FCC to use in future Internet governance scenarios: It should set broad guidelines that address such critical public policy goals as "universal service," the growing digital divide of Internet have's and have-not's and the pending open access controversy.

The FCC should favor open access, to prevent one or two mighty enterprises from monopolizing the broadband link into consumers' homes. However, as it did with the AOL capacity problem, the FCC should set open-access guidelines--covering local and long-distance phone services, cable TV and the Internet--and then revert to the shadows while the key players sit down to negotiate the nitty-gritty of rates, terms and conditions.

In the dynamic world of the Internet, change occurs second by second, and the free market has done a perfectly fine job of rewarding, punishing and--yes, regulating--enterprises.

(For related commentary on the Digital Divide and American society, see Gartner.com.)

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.