The Chairman of the FCC wants to develop a new rule for governing the Internet based on the principle of non-discrimination. The idea in a (rather bulky) nutshell: broadband providers should not be permitted to “block or degrade lawful traffic over their networks or pick winners by favoring some content or applications over others in the connection to subscriber’s homes; nor can they disfavor an internet service just because it competes with a similar service offered by that broadband provider.”
Sounds good, but we’re worried about the potential for mischief. The new rule could create a whole new sandbox for lawyers to play in, and, ironically, undermine the rollout of the next generation of high-speed Internet. How? By making it more difficult for providers to contract and charge extra for sophisticated applications requiring enormous bandwidth or bulletproof security – say, applications like tele-medicine.
Our conclusions are hardly new. Back in 2007, a bevy of prominent economists opined on net neutrality in a statement [Download Here] issued by the AEI-Brooking Joint Center (which Hahn directed). Their two key points:
- Where competition is insufficient to discipline providers, the government already has the authority to police an Internet service provider’s behavior.
- Firms should be allowed to experiment with different pricing schemes for providing Internet access.
If the FCC just can’t resist the lure of regulating Internet discrimination, one can at least hope that they will allow for exceptions needed to fast-track innovation. Lawyers and their sandboxes may be an unavoidable reality of regulation. But it still may be possible to protect consumers from the unintended consequences.
The Federal Energy Regulatory Commission accomplished gas pipeline “net neutrality” with Order No 636, back in the 1990′s. Gas pipelines are not allowed to favor their own marketing affiliates in providing transportation service. Under the Interstate Commerce Act, oil pipelines are not allowed to favor their affiliates in crude and product transportation. Yet some tell us this simply will not work for common carriage of packets over wire, fiber and airwaves. I fail to see how this industry is so much different. I also do not know of any regulatory regime that requires that a fixed rate be charged to each customer for all the service each wishes to take. Is this simply a straw man argument?