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Net Neutrality

April 6, 2010 4 comments

Econtalk this week features Yochai Benkler of Harvard Law, on net neutrality, among other things. As usual I highly recommend everyone listen to it, we can always learn at least something.

As Internet users, we all should pay attention to the subject of net neutrality. At heart is the idea that Government, via the FCC, should have a role in access to the Internet. With States like China and Iran, imposing various regulations and censorship of the internet, it’s not something that should be taken for granted.

I’m a very big fan of the Internet, but I’m actually opposed to Net Neutrality. I see it as an economics problem. You have excess demand (Gamers, P2Pers, Facebook users uploading ungodly amount of pictures to their walls)  for too little supply (bandwidth). While the pricing structure the way it is, your going to have times when demand far exceeds supply. Who’s gonna give first; bandwidth or users? Naturally since the service providers don’t want to piss of their customers, they filter bandwidth, taking some of big bandwidth usage to those with lower bandwidth usage, call it a progressive bandwidth redistribution scheme.

Like everything, people want it all and they want it NOW. So naturally they want Government to step in a regulate the providers, so that the high end users don’t have to close Pandora, while uploading 100 new pics to Facebook, while Twitting about their new Ipad (which is busy downloading 20 new apps), etc… You get the picture. It’s bandwidth gluttony, where big bandwidth users are being subsidized by those that don’t get on Facebook, don’t Tweet and are not downloading the latest episode of Lost on their iPad. (Remember they both usually pay the same “one-size fits all” pricing structure.) Of course proponents of Net Neutrality argue that regulation is needed because internet providers are controlling what their users are able to view. Actually, that’s what China does, but who lets little things like fact get in the way.

What will happen if Government gets involved and should they get involved? That’s those are good questions. Do you think new regulations will magically solve the bandwidth problem with a sweeping decree? Probably not, more likely they’d impose some sort of regulation (needing funding from a new tax) “to prevent phone and cable companies from using their control over Internet access to favor some online content and services over others.”

The above quote comes from a recent ruling from the U.S. Curt of Appeals for the District of Columbia in the case of FCC v Comcast. The FCC had tried to do exactly that, use their powers to prevent Comcast from filtering bandwidth during peak load times. The Court said they didn’t have the authority.

The U.S. Court of Appeals for the District of Columbia ruled that the FCC lacks the authority to require broadband providers to give equal treatment to all Internet traffic flowing over their networks. That was a big victory for Comcast Corp., the nation’s largest cable company, which had challenged the FCC’s authority to impose such “Net neutrality” obligations on broadband providers

The decision also has serious implications for the massive national broadband plan released by the FCC last month. The FCC needs clear authority to regulate broadband in order to push ahead with some its key recommendations, including a proposal to expand broadband by tapping the federal fund that subsidizes telephone service in poor and rural communities.

So what does the Government want to do? Well, create new laws that will give it the power to regulate service providers. Judging from the FCC reaction, expect Obama to start pushing the Markey bill. Which give remarkable powers to the FCC to determine what is “reasonable network management.”

The ruling marks a serious setback for the FCC, which is trying to adopt official Net neutrality regulations. FCC Chairman Julius Genachowski, a Democrat, argues that such rules are needed to prevent phone and cable companies from using their control over Internet access to favor some online content and services over others.

Who knows what will eventually come out the Legislative Sausage Factory. I’m quite sure that Markey’s 13 page bill, will turn into a 100+ page bill rather easily. How many of those pages will give the FCC even more powers to regulate the Internet and Internet commerce (with another bastardization of the Commerce Clause as justification) than its intended purpose? I don’t know the answer to that. I do know that whatever comes out will stifle innovation and have other broad unintended consequences that will restrict freedom on the Internet. That’s what Governments do.

Update:

Verizon CEO slamming Net Neutrality in 2009: Via Hotair.com

“Proponents (of Net neutrality) have a worldview that network providers and application providers, like Google, occupy different parts of the Internet: dumb pipes versus smart apps,” he said. “This is a mistake pure and simple. It’s an analog idea for a digital world. It completely understates the need for sound practices and ignores the benefits of smart networks.”

Seidenberg pointed to telemedicine as an example of how strict rules could hamper innovation. He said that companies like Verizon need to be able to prioritize packets that are transmitting medical monitoring data–over such items like e-mail or spam–to make sure they get through the network quickly. But if rules are in place that prohibit carriers from prioritizing traffic, he said, then such medical services cannot be offered.

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