The Downside of Net Neutrality

Larry Downes has written an interesting piece for CNET on why the White House is backing away from its regulatory effort to mandate network neutrality.

Genachowski had initially described his vision for the future role of the FCC as a “smart cop on the beat preserving a free and open Internet.” Communications companies understood that to mean aggressive and detailed enforcement of rules that would, among other things, prohibit ISPs from offering premium, or “fast lane,” services.

Now, however, the White House is signaling that it will pursue a more modest course, by, for example, accepting the resignation of Susan Crawford, a very forward-leaning net neutrality proponent. The reason, Downes argues, is that the Obama administration now believes that achieving universal high-speed access at low cost is the highest priority, even if that means allowing the telcos that build out the infrastructure to use it as they see fit.  

While the FCC was developing its plan and spending “too much time on Net neutrality,” he said, the communications industry had already invested $60 billion toward that effort. By contrast, the stimulus bill allocated only $7 billion for broadband projects. Clearly, Fried noted, satisfying the goals of the national broadband plan will require significant private investment.

The major carriers are making the investments, and have every business reason to make more. But the Net neutrality rules, depending on how the FCC defines key terms, could hamstring their efforts to make their money back. Net neutrality is making Wall Street uncomfortable about financing broadband deployment. That in turn is making the White House nervous.

Scholars and policy entrepreneurs who spent the Bush years writing trenchant critiques of the FCC now hold the reins, and in the collision of theory and reality, reality is winning out. I think this reflects very well on President Obama’s FCC.  

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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