Net Neutrality: The Real Issue


The recent AT&T merger and Senate net neutrality bill (see our takes here and here) have understandably given rise to a flood of commentary. Although Internet types seem to come out nearly unanimously in favor of net neutrality, the battle has been and is likely to continue to be controversial.

With everything being said on the subject, the controversy really comes down to one primary issue: is there enough competition in the market for broadband service to prevent harmful monopolistic practices by telecommunications companies?

Quite a mouthful, which might be why we read so much that misses the point. I bring this up because I see so many news articles and blogs that gloss over the details and turn the matter into one of dogma. It’s not that people want our ISP’s to prevent us from accessing the content we want. And remember, there are some good things about network discrimination (like increased security and performance and fighting spam) that could possibly be prohibited with a too-broad law. The question is whether we need Congress to pass a law in order to preserve our ability to surf the Internet the way we want.

There’s something to be said in favor of not needing to fix something that isn’t broken. To my knowledge there have been no violations of net neutrality that have not been taken care of by the existing scheme of FCC regulations and oversight. Besides, it seems as though government intervention always has a way of stringing along extra baggage in the way of unintended consequences–often in the form of stifling innovation.

Two articles by respected Internet commentators–who are both in favor of net neutrality legislation–still support the position that if there were enough competition to let the free market encourage the kind of environment we need, legislation would be inappropriate.

In an article last week in Wired, Lawrence Lessig, observes that in hindsight the technological environment created an open-source operating system and managed to do a better job checking Microsoft’s influence than government lawsuits. But even while acknowledging this, Lessig argues that net neutrality is different and in need of regulation: “there isn’t yet a Linus Torvalds of broadband, nor is a single
competitive platform being built by volunteers to displace AT&T.”

Susan Crawford contrasts net neutrality with the issue of FCC broadcast flags. Senator John Sununu, to prevent the government from doing something the market can do more effectively, is working on legislation to prevent the FCC from mandating industry technology standards. Crawford, while applauding Sen. Sununu, argues that broadband just doesn’t have the kind of market that will foster enough competition to keep things running smoothly.

Personally, I’m very libertarian on nearly every issue. I’ve got a strong aversion to supporting government intervention in the market, so I’m very sympathetic to opponents of net neutrality legislation. Still, the economist in me believes that the behavior of companies will adjust itself to the incentives inherent in the system. If we can get a careful well-drafted bill, we can shape the incentives to prevent monopolistic abuse and still allow innovation. (The current Snowe-Dorgan bill looks pretty good.)

That said, it still comes down to whether or not there is enough competition in the market for broadband. Even if I’m preaching to the choir, consider this a plea for everyone to keep the issue in perspective.

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