Democracy & Technology Blog Online advertising revenues a target of net neutrality regulation

Congress seems prepared to outlaw blocking or degrading Internet sites, services and applications, yet supporters of net neutrality regulation aren’t satisfied. Oregon Senator Ron Wyden, for example, promises to block legislation that would benefit consumers with higher bandwidth and lower prices for video services unless it provides for stronger net neutrality regulation.
My theory is the real objective of net neutrality regulation is to protect Google, Yahoo, MSN and the other Internet content providers from having to share online advertising revenue with companies like AT&T and Verizon who deliver their content. Online advertising generated $12.5 billion last year, and the content providers captured all of it. That’s not usually how it works when it comes to newspapers, broadcasters and other media. Advertising usually supports both content and delivery.
Last week a distinguished panel debated net neutrality regulation at George Gilder’s Telecosm conference. The panel featured Stanford Law Professor Larry Lessig, Peter Huber of the Manhattan Institute, eBay’s vice president and deputy general counsel for government relations and others. I asked the panel if anyone thought it would be wrong if AT&T or Verizon were to hold an auction where Google, Yahoo and MSN could bid for the right to feature their search bar on a portal or a browser that AT&T or Verizon provide as a default setting to their millions of customers? Assuming that it’s illegal for Verizon and AT&T to block or degrade acces to the others, is there anything wrong if Google wants to pay each of the carriers a billion dollars to feature its search bar as the default setting?

LESSIG: … Totally fine … it’s exactly what we should be encouraging.
HUBER: … If [net neutrality regulation favored by Wyden and other supporters] becomes law, it’s illegal. [AT&T and Verizon] are giving preferential access to one advertiser … it cannot be done.

Considering that Lessig supports net neutrality regulation and Huber opposes it, I thought the responses were quite interesting.
The marketplace should allocate advertising revenue, in my opinion, not lawmakers. A problem with most of the proposals for net neutrality regulation, perhaps unbeknownst to many supporters, is they would make it illegal for broadband providers to receive advertising revenues. In this sense, net neutrality regulation is anti-consumer because it would deprive providers of additional revenues which they could use to accelerate the build-out of their networks and to lower the subscription fees their customers have to pay.
View a podcast of the panel discussion.

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.