Why the FCC’s Net Neutrality solution fails us

January 7, 2011 § Leave a comment

During Christmas week, the FCC passed what some would call a mild Net Neutrality policy, that essentially prevents ISPs from blocking lawful content, but that generally protects their right to implement usage-based tiers.  Web publishers continue to get access to the market, and broadband providers get to charge for it, so mission accomplished, right?  If so, why does the debate rage on, and why, in its first few days of existence, is the 112th Congress already presenting a bill that would reverse the FCC’s effects?  There are three reasons, in my view:

  1. The nature of multi-sided, partisan issues: common ground is hard to come by because both sides believe that if they give an inch, the other side will attempt to take a mile.
  2. Avoids the real issue: the recently passed policy doesn’t speak to what’s really at stake here, which is that much of our country’s innovation (and new jobs) comes from the digital sector, whose business models have become dependent on cheap distribution to consumers.  Charge publishers for their share of traffic, and their profits vaporize, making investment harder to come by.  The FCC policy maintains that ISPs can charge customers use-based tiers, but these days, customers have broadband choices, and who wants to drive customers away with new fees?
  3. Isn’t necessary: a key tenant of the new policy is that ISPs shall not block lawful content.  Surely, the righteous defenders of content liberalization have noticed that while the negotiations have continued for years, no content has been blocked or “managed” in any material way.  The existence of a vibrant competitive ISP market (including options for cable, DSL, satellite, and now wireless, in most MSAs) is an already effective deterrent, and there is no place for regulation when the free market functions effectively and efficiently.

So, Net Neutrality is far from resolved.  And until it is, we all suffer because as consumers, we don’t know how our household budgets may or may not be effected; as Web publishers, we don’t have confidence in our economic models; and as ISPs, we don’t know that we’ll get a predictable return on our capital investments (especially given the explosive growth of online video).  And don’t forget the lobbyists – actually, their profits are assured for quite some time.

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