Net Neutrality

By Doug Hornig

Today, the Federal Communications Commission acts on so-called “Net Neutrality,” and given the commissioners’ predicted 3-2 party line vote, it would be a shocker if they rejected it. What happens next is anyone’s guess, because the exact text of the ruling will not be known until those contesting the order have had a chance to file their dissent (including those who argue that it’s beyond the FCC’s authority to regulate the Internet at all).

But what is known is that today’s developments will have far-reaching effects. Good or bad? Hard to say. It’s very difficult to separate the wheat from the chaff on this issue, since all sides seem to have compelling arguments to make.

Our readers know that we subscribe to the general principle that “that government is best which governs least” (or, as Doug Casey would contend, “governs not at all”). And this would seem to be especially true with regard to the Internet, which has grown to be an integral part of most Americans’ lives, largely because it has been unfettered by regulation and open to all manner of innovative ideas. Entrepreneurs like Facebook’s Mark Zuckerberg are able to become overnight billionaires armed only with a great idea and the ability to turn it into a solid business plan.

No one wants that to change. Keeping the Net open and free is everyone’s stated goal. But the devil is in the details of how most effectively to accomplish that. Which side you take will probably depend on whether you see the market as capable of self-correction when abuses arise, or whether you think it’s necessary for government to protect consumers from deep-pocketed corporate interests that would exploit them.

Background: Today represents the end point to five years of debates, lawsuits, regulatory actions, grassroots campaigns, and countless millions spent lobbying the federal government, all kicked off by a directive from Michael Powell.

In 2005, then-FCC Chair Powell defined the Internet’s so-called Four Freedoms, which attempted to secure for users the right to use the lawful software and services they want, access their choice of content, use whatever devices they like, and get meaningful information about how their online service plan works. The principles applied only to cable and DSL connections, and neglected to address wireless providers, such as the fast 4G Networks currently being built out.

Life has changed a lot in a mere half-decade, as the Information Highway has morphed into an 8-lane Interstate delivering not just information, but video, music, research, live business meetings, massive multiplayer games, social interactions, and much more. Thus under the new rules crafted by Chairman Julius Genachowski, both wireless and fixed broadband service providers will have to explain how they manage congestion on their networks. Cable and DSL companies will have to let you use the applications, online services, and devices that you want. Wireless companies will be prohibited from blocking websites and Internet telephone services like Skype, while cable and DSL providers would be barred from “unreasonably” discriminating against various online services.

All of this is designed to prevent Internet provider/entertainment conglomerates from stifling competition by charging you more to see competitors’ offerings than their own, or by limiting competitors’ access to bandwidth. Those are results many fear if final approval is granted to the Comcast/NBC merger that’s a flash point for the entire debate.

Also at stake, some say, is how we are charged for Internet usage. You may not notice if your ISP is damping down the speed of your peer-to-peer apps, opening up the pipes for its own products, or closing them to competitors. But you will notice when you pay more. Many Net Neutrality proponents fiercely oppose the possibility that monopolistic providers will institute a “metered” Net, where you’re billed, essentially, by the bit. As Steve Wozniak recently wrote: “Imagine that when we started Apple we set things up so that we could charge purchasers of our computers by the number of bits they use. The personal computer revolution would have been delayed a decade or more.”

Conservatives, including FCC Commissioner Robert McDowell, have predictably lambasted the new rules as an interventionist overreach by an activist federal regulator intent on asserting tight control over the Internet. Yet, interestingly, it’s not only committed free marketers who are fighting the FCC. There is also heavy criticism of Chairman Genachowski’s “compromise” regulations from supporters of neutrality, like public-interest and free-speech groups, who claim the guidelines don’t go far enough.

Specifically, one “concession” Genachowski made is that for the first time federal policy would allow for so-called “reasonable” paid prioritization, which critics argue is the first step toward installation of high-speed fast-lanes, sort of a cyber-version of cable TV, with tiers and premium packages available only to those who can afford them. This, critics say, not only discriminates against less-wealthy users, but jeopardizes innovation by creating disincentives to entrepreneurial activity on the free, regular Internet.

But it sits well with those who advocated for it. Despite the popular conception of steadfast corporate opposition to Net Neutrality, the nation’s cable and telecommunications companies, including AT&T, Comcast, and Verizon, have been hard on the lobbying circuit in recent weeks, registering their support for the revised rules.

So… The situation is that everyone’s purportedly on the side of the entrepreneur; criticism of the new regs is coming fast and furious from both the left and right; and outside of 3/5 of the FCC, the only ones professing satisfaction are the national media giants.

Confused yet? You’re not alone. Of course we want the Internet to remain the open, powerful force for positive change that it’s been. We don’t want bureaucrats – or corporate interests, for that matter – telling us how we can and cannot use this resource. And we’re obviously suspicious of the Washington camel poking its nose under this particular tent.

Ultimately, though, these things may be irreconcilable and, like everyone else, we’ll just have to wait and see how it all shakes out. But one way or another, change is coming to our Net. That much is certain.