Hands Off the Net
Congress wisely resists the urge to regulate cyberspace
June 28, 2006
The following article quotes Discovery Institute Senior Fellow George Gilder.
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.
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