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Hand Off the Internet

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    Even when I disagree with City Journal, I dare not ignore it. — Bill Moyers SEARCH SITE Hands Off the Net Congress wisely resists the urge to regulate
    Message 1 of 1 , Jul 1, 2006
      "Even when I disagree with City Journal,
      I dare not ignore it." — Bill Moyers SEARCH SITE


      Hands Off the Net
      Congress wisely resists the urge to regulate cyberspace.
      Brian C. Anderson
      28 June 2006

      It's a good thing that Congress seems to recognize—for now—that
      regulating the Internet is an acute danger to free political speech
      in America. Thanks primarily to Republican efforts, both the House
      and (narrowly) the Senate have fought back a push to establish in
      law the principle of "network neutrality," a roster of whose
      supporters—from Hillary Clinton, MoveOn.org, and the New York Times
      editorial board on the left to the Christian Coalition on the right—
      includes some of the nation's leading advocates for government
      regulation of the media.

      What ignited the controversy is the possibility that the information
      bits that make up Internet traffic will no longer enjoy first-come,
      first-serve treatment, as has generally been the case until now.
      Freed up by recent Supreme Court and FCC rulings, broadband firms
      want to manage more actively the data pulsing through their conduits—
      their cables, fiber optics, phone lines, or wireless connections—
      offering, for instance, new ultra-fast delivery for sites willing to
      pay extra, just as FedEx accelerates delivery of packages for a fee.
      They might offer as well their own additional services, such as
      online video or telephony, as part of the package.

      These changes, critics claim, will wreck the Internet. From an open
      commons where surfers can access all sites on egalitarian terms, the
      Net will become a world of "walled gardens," where "broadband
      barons" favor certain content (their own) and impede sites unwilling
      to pay high fees or selling competitors' products or supporting
      controversial political views. To stop this, the reformers,
      organized in a "Save the Internet" campaign, wanted Congress to
      force Internet providers like Verizon not to "discriminate among
      different types of traffic based on the traffic's source,
      destination, or content," in the words of Net theorist David
      Isenberg.

      In truth, however, mandated net neutrality is completely
      unnecessary. For the telecoms to become site-obstructing bullies
      would be an odd business model, explains tech guru George Gilder of
      the Discovery Institute. "The providers have no incentive to kick
      anybody out," he says. "They want to get as much content as possible
      on their conduit. That's what attracts customers." This is why
      bloggers shouldn't fear that differentiated service will prove an
      enemy of openness.

      Competition will give providers a positive incentive to stay honest.
      Say Verizon wants to charge Amazon oodles to join the fast lane, and
      Amazon refuses. Verizon could boot Amazon off its network in
      retaliation. But zillions of Amazon fans would jump ship to another
      supplier. "The market works these things out, as it should," advises
      regulatory theorist Peter Huber. But meanwhile, many Internet giants
      like Amazon and Google are backing neutrality, because they don't
      want to pay any more for bandwidth, which—to match fast lane rivals—
      they'll have to in a non-neutral regime.

      Political censorship is equally improbable. Christian Coalition
      president Roberta Combs worries that, without enforced
      neutrality, "a cable company with a pro-choice board of directors
      could decide that it doesn't like a pro-life organization using its
      high-speed network to encourage pro-life activities"—and silence
      it. "Sure, it would be legal [to block access]," retorts Tim Lee, a
      contributor to the libertarian Technology Liberation Front
      blog. "But it would also be commercial suicide, as millions of irate
      pro-lifers would switch to their local Baby Bell and call their
      Congresscritters."

      Ah, but there's the rub, would-be regulators say. The Coalition of
      Broadband Users and Innovators, a group including Amazon, eBay, and
      other Net firms, claims that the broadband market is an entrenched
      cable/telephone "duopoly" that allows network owners "to infringe or
      encumber the relationships among their customers or between their
      customers and destinations on the Internet." "There's nowhere else
      for consumers to turn," frets the Save the Internet site. Without
      new regulations, the broadband barons will conspire to control the
      Web for their own selfish ends.

      Yet as Gilder observes, "the broadband market is one of the most
      competitive arenas in the world economy." FCC numbers show that
      around nine out of ten U.S. zip codes have two or more broadband
      providers (and duopolies can be very competitive); 60 percent have
      four or more—and the rivalry for the digital "last mile" into the
      home or office is getting fiercer. "In some suburbs, you now have a
      cable supplier, maybe two, you have the telephone company, you've
      got WiMax, you have various brands of satellite, WiFi, on and on,"
      enthuses Gilder. Competition is a key reason, a Pew study finds,
      that 42 percent of Americans enjoy broadband access, up from 30
      percent only a year ago. After a telecom price war drove down
      monthly broadband rates, middle-class and working households in
      particular signed up in droves.

      A neutrality law would dampen this healthy competition. "Without
      neutrality," Vanderbilt law prof Christopher Yoo, a leading thinker
      on Net regulations, informs me, "providers could compete on quality
      of service, giving, say, voice communications a higher priority to
      make Internet telephony work better, or they could boost the
      security features of the network, in each case targeting a smaller
      subset of the market, like specialty stores in a world dominated by
      larger, efficient stores offering one-stop shopping." A neutrality
      law, forcing all traffic to be treated the same, would transform
      broadband into a kind of commodity. "That would favor the largest
      firms, those with the largest economies of scale," elaborates
      Heritage Foundation telecom expert James Gattuso. Challengers—
      especially tiny ones—would have a hard time getting into the market.

      Given today's bandwidth scarcity—the U.S. still lags far behind
      South Korea and many other nations in bandwidth per capita, despite
      all the competition—it's more rational to use prices to allocate the
      resource efficiently. "While someone sending personal e-mail may be
      perfectly fine with an occasional delay of a few seconds," Gattuso
      says, "delay could be deadly if a hospital or health care provider
      was sending vital medical information." Creating Internet "lanes"—
      with the fast lanes costing more—helps solve this problem.

      Neutrality fans like to tout the innovation in Web services that the
      Internet's first-come, first-serve approach to data has encouraged.
      A neutral Net would function like the electricity grid, argue
      University of Virginia professor Tim Wu and Stanford Law's Lawrence
      Lessig in a joint letter to the FCC. "The electronics industry
      designs new and better electronics, safe in the assumption that
      American electricity will be provided without preference for certain
      brands or products." Similarly, Web innovators will be more likely
      to launch the next eBay—and find investors for it—knowing that all
      Internet conduits are equally open to them.

      But that argument mistakenly assumes that the Net's infrastructure
      doesn't need constant and ample investment to upgrade—so that it
      does not end up in as poor shape as the electricity grid. As
      Bernstein Research's Craig Moffett testified to the Senate in March,
      despite billions in capital spending, "our telecommunications
      infrastructure is woefully unprepared for widespread delivery of
      advanced services—especially video—over the Internet." Verizon
      anticipates that the typical Web surfer, who today uses two gigs of
      data monthly, will use 100 times that a decade from now, as he
      downloads high-definition movies and TV, music, and games. "Today's
      networks simply aren't scaled for that," Moffett reports.

      Yet if government busybodies keep networks from tapping new revenue,
      forget about new investment. "A net neutrality measure would just
      put a stop to it," Gilder predicts. As it is, Bernstein's Moffett
      notes, Wall Street is getting leery of network capital outlays.
      Verizon's stock limped throughout 2005, for instance, "due to the
      capital markets' distaste for the expensive capital investments in
      [the firm's] . . . fiber optic deployment," he says. Uncertainty
      about the regulatory future is a major reason for Wall Street's
      gloom. As the Progress and Freedom Foundation's Adam Theirer
      suggests, enforced neutrality "would essentially tell infrastructure
      operators and potential future operators of high-speed networks your
      networks are yours in name only and the larger community of Internet
      users—through the FCC or other regulatory bodies—will be free to set
      the parameters of how your infrastructure will be used in the
      future." Not a business to bet on. And so, with ever more
      information surging through the Internet's overburdened pipes, such
      infrastructure socialism would mean a big slowdown.

      Net neutrality would swiftly become a bureaucratic
      nightmare. "Neutrality regulation might as well have been labeled
      the `Telecom Lawyer & Lobbyist Full Employment Act of 2006' because
      it would generate mountains of regulation and litigation in coming
      years," says Theirer. "You simply can't put something as amorphous
      as `digital nondiscrimination' mandates on the books and then expect
      that regulators won't abuse it—and that means competing teams of
      lawyers, consultants, and economists will be hired to try to figure
      it all out. When they don't, the lawsuits will start flying."

      There's no guarantee that the quest for neutrality would stop with
      the providers, either. The educational site KinderStart has just
      slapped a lawsuit on Google for downgrading its page rank. Because
      of its prominence, the suit argues, Google has become an "essential
      facility," and thus should face government review for fairness.
      Welcome to the newest right, says tech writer James DeLong: "search
      engine neutrality." Of course, the arguments made against Google's
      freedom to run its business are analogous to those Google is now
      making against the telecoms.

      The biggest reason to be thankful Congress resisted net neutrality:
      the scary prospect of Ted Kennedy and Nancy Pelosi trying to stamp
      out broadband traffic "discrimination." Some of the most vocal
      neutrality advocates, including Save the Internet campaign organizer
      Free Press, relentlessly agitate for regulation of other media to
      fight "corporate interests" and guarantee "fairness." The deeper
      agenda at work in the net neutrality debate, insufficiently noticed
      by most commentators, is the Left's zeal to get a hold of the new
      media, which have given conservative voices powerful outlets,
      shattering the liberal monopoly over news and opinion outlets—and
      regulate those outlets out of existence, so we can all go back to
      the days when the New York Times and other elite liberal
      institutions set the agenda.

      It's thus not hard to imagine a network neutrality law as the first
      step toward a Web fairness doctrine, with government trying to
      micromanage traffic flows to secure "equal treatment" of opposing
      viewpoints (read: making sure all those noisy right-wingers get put
      back in their place). European Union advisory bodies have already
      called for such a rule, potentially forcing all opinion sites
      viewable in Europe—from tiny blogs to big news organizations—to post
      opposing opinions or face fines.

      It's not primarily the telecoms and cable companies we should worry
      about as threats to Internet freedom. It's the government
      regulators. Should Democrats regain control of Congress, expect
      another drive to police the Web.


      Copyright The Manhattan Institute
      http://www.City-Journal.org

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