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Is an 'open' Internet a doomed concept?

Former FCC adviser Kyle Dixon says there's a danger that the agency or Congress will decide the winners and losers of the broadband world.

Should Congress and regulators keep the Internet "open," or not?

The Supreme Court on Tuesday considered a 9th Circuit Appeals Court ruling that rejected the Federal Communications Commission's decision to spare cable modem service from telecom regulation. When this issue of mandating access for cable broadband competitors is discussed, the debate is usually framed by the question above.

But this is an oversimplified approach. The real question is how to encourage the further build-out of broadband networks. The FCC wants to stimulate broadband investment and once again make the United

The agency may be forced to impose regulations that would deter broadband investment.
States the top nation in broadband usage. We are far from that ranking now, and based on the arguments heard in court, the agency may be forced to impose regulations that would deter broadband investment.

No one involved seriously disputes the value of Internet "openness." The issue is whether the government must mandate openness on cable modem and other networks, or whether openness will occur without such mandates.

Despite dire predictions to the contrary, openness has persisted for the last several years--a point correctly noted by cable and other broadband providers. The more content, applications and devices consumers can use with their broadband connections, the more they will value those connections. In turn, increasing consumer value makes cable companies and others more confident about recouping the high cost of building networks or upgrading customers to higher speeds.

Balancing act
For now, uncertainty reigns, as Congress considers whether to revise the Communications Act.

While defending its policies in court, the FCC will need to address several issues related to broadband. For instance, should new services like voice over Internet Protocol, or VoIP, be regulated? And how should owners of networks recover their costs in areas that are expensive to serve?

During this period of uncertainty, even pro-deregulation policy-makers will be tempted (in part, by companies who supply content, applications and devices) to impose a few openness regulations on network owners. Network owners will then face an uphill rhetorical battle. They will need to explain to skeptics what harm there is in requiring them to safeguard the openness they support and have always provided by dint of basic financial incentives.

Yet it is this same need to maintain financial incentives for network builders that may cause them to rethink their regulatory strategy.

Most openness mandates, by themselves, don't ensure that consumers get the bulk of the benefit created as more devices, content and applications make broadband networks more valuable.

The last thing the broadband world needs is more regulation.
Rather, these mandates shift the benefit from the companies building networks to companies that develop the devices, content and applications.

To reduce the risk that Congress or the FCC will pick winners and losers in this manner, network owners would do well to offer their own voluntary commitments to preserve consumers' freedom to choose the devices, content and applications. In early 2004, former FCC Chairman Powell challenged them to do as much.

Because voluntary approaches can remain agnostic as to which companies benefit most as broadband networks grow in value, they offer the prospect of preserving openness while also preserving critical incentives to invest in broadband infrastructure.

The last thing the broadband world needs is more regulation. That could cast a pall over investment in all sorts of technologies, including wireless broadband and fiber to the home. But given the political context network owners are likely to face in the foreseeable future, they may discover that taking control of their openness destiny voluntarily is better than risking losing control if a mandate is imposed.

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