Net Neutrality II (2014)

Two primal forces are colliding in Washington in reaction to the Federal Communications Commission’s attempts to enforce net neutrality. Net neutrality is the idea that internet service providers ought to treat all forms and sources of data equally. In other words, the companies that operate the pipes should not be allowed to block, censor, degrade, or otherwise discriminate against some kinds of data traffic.

The two forces are as old as government itself. Governments lean toward regulation as a way to protect consumers and to maintain stability. Businesses recoil from regulation, arguing that it stifles innovation, discourages investment, and ultimately reduces competition.

The FCC will vote tomorrow (May 15) on the latest net neutrality proposals. As expected, the broadband industry is in full battle mode.

This week the chief executives of America’s biggest ISPs — Comcast, Time Warner Cable, AT&T, Verizon, et. al. – wrote to the FCC that the current “light-touch approach” had allowed the broadband industry to thrive. Senator Mitch McConnell, the Senate Republican Leader, and five other Senate Republicans sent the FCC a letter arguing that “a light regulatory touch” has made possible the growth of the Internet. (See? Lobbyists are effective in keeping the message on target.)

The implication of their argument is this: If the government had applied a “heavier” regulatory touch to the burgeoning internet, terrestrial and wireless broadband internet would not be as widespread, as fast, and as affordable as it is today.

The argument would be laughable, were it not so dangerous. The United States, which helped create the internet with taxpayer dollars, now lags other countries in broadband penetration (24th  in the world) and in broadband speed (35th).

The only broadband metric in which America leads the world is in cost per megabyte, and it’s not even close. Here in Silicon Valley, Comcast charges $115 per month for 100-megabit-per-second broadband. In Seoul, consumers pay just $31 per month for service that is 10 times faster – 1,000 megabits, or 1 gigabit.

The great fear of the broadband industry is that Congress and the regulatory agencies will classify the internet as a necessary public utility, as vital to American lives as electricity, water, or telephone service. The FCC could do so by invoking Title II, a “heavy” regulation established to insure than all Americans had access to affordable telephone service.

“Reclassification of broadband Internet access offerings as Title II — telecommunications services — would impose great costs, allowing unprecedented government micromanagement of all aspects of the Internet economy,” the CEOs wrote.

Banks, railroads, landlords, pharmaceutical companies, oil drillers, tobacco growers, mining companies, utilities, carmakers… whenever great fortunes can be extracted from consumers, the government pushes for regulation, and businesses push back.