Politics & Policy

Net Neutrality Is Anti-Consumer

Turn on your TV these days and within minutes you are likely to see several commercials from your local cable, satellite, or telecommunications company trying to convince you that their cable, DSL, or mobile broadband services are superior to those of their competitors. That’s because the market for broadband service is robustly competitive: If service providers didn’t advertise, they would lose business.

They would also lose business if they did something that made their customers unhappy, such as slowing or blocking the delivery of popular content over the Internet. Or they might gain customers if they created a model that, for a fee, guaranteed uninterrupted high-speed access to certain services, such as telemedicine, video conferencing, or some other use of the Internet we have yet to imagine. This competition directs broadband toward its most efficient uses. It is pro-consumer in that it allows for the proliferation of choices and pressures companies to offer a variety of pricing options.

It would be a huge mistake to impose by fiat a single business model on the carrier side of the Internet. Yet that is precisely what the proponents of net neutrality want the government to do. Specifically, they want the government to prohibit broadband providers (such as Comcast) from discriminating against content providers (such as Google) by, for instance, charging them different rates for different levels of network service. They argue that, in the absence of such regulation, broadband providers can act as self-appointed censors, slowing down or blocking content they don’t like. Keep in mind that in no instance has this actually happened. So far, broadband providers have acted only to slow down noisome bandwidth hogs in order to manage traffic and ensure a high quality of service for the majority of their customers. Net-neutrality proponents counter that other customers — those unhappy about the slowdowns — lack meaningful options; that is, that the market for broadband service is not sufficiently competitive.

Net-neutrality backers scored a victory on this front in 2008, when the FCC rebuked Comcast for slowing down movies and TV shows (and some other kinds of content) that were being shared, often in violation of copyright laws, via an application called BitTorrent. But this victory was short-lived: Comcast voluntarily ended the practice but sued the FCC over the principle, and a federal appeals court this week sided with Comcast, finding that the FCC lacked the statutory authority to force broadband companies to allow all content providers nondiscriminatory access to their networks.

The FCC argued that its authority to regulate Comcast’s broadband network stemmed from its congressional mandate to “promote the continued development of the Internet” and to “encourage the development of technologies which maximize user control.” The court disagreed, noting that the Commission had strayed far afield of its delegated powers. Judge David Tatel wrote that, were the court to accept the Commission’s reasoning, “it would virtually free the Commission from its congressional tether.”

This fight isn’t over. A statement from the FCC noted that the court did not “close the door to other methods” for imposing its preferred regulations. Net-neutrality backers, of whom FCC chairman Julius Genachowski is one, have suggested that the FCC should reclassify the Internet as a “telecommunications service” rather than an “information service” in order to gain the regulatory authority it currently lacks. This would effectively mean applying to broadband providers the rules designed for landline telephone companies in the 1930s. We know Obama wants to emulate FDR, but this is getting ridiculous.

But the FCC’s authority to reclassify broadband to suit its desires is also open to legal challenge. As a result, we are sure to hear louder calls for Congress to regulate the Internet or to grant the FCC the explicit authority to do so. These calls should be ignored. The Internet has thrived in the absence of homogenizing federal regulations, and this organic development should be allowed to continue so long as competition can act as a check on anti-consumer practices. If the broadband market becomes insufficiently competitive, then — as Apple CEO Steve Jobs might say — there’s an app for that: The United States has antitrust laws for regulating competition and monopolistic access. There is no need to develop a special set of rules just for broadband companies.

Besides, as it stands these companies compete vigorously against one another in a way that is beneficial to consumers. If one of them makes an unpopular business decision, its customers can go elsewhere. If, however, an unelected FCC chairman dictates uniformity in the services these companies provide, then there is nowhere Americans can turn for innovations the government may have strangled in the cradle.

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