How do we create Net Neutrality in light of a general desire for less regulation of the private sector? Freedom-loving people want less government intervention in our lives. Silicon Valley, whether it recognizes it or not, is philosophically libertarian.
We take pride in our self-sufficiency, capital efficiency, lack of regulation, and fairness to employees — unlike numerous industries dependent on corporate welfare to stay afloat and labor unions to protect the rank-and-file. When the going gets tough, we fix it ourselves, and very rarely turn to the government for help… much to the chagrin of politicians who will always try to fill campaign coffers with Silicon Valley money.
So is it possible to be simultaneously a proponent of Net Neutrality and Free Market Capitalism? Most on the right would argue that Net Neutrality is a huge encroachment on the property rights of the ISP industry. Furthermore, they worry whether it invites further regulation of the Internet in the future. But given the obvious fact that the Internet has become so essential to people for their jobs, education, and entertainment, is it really possible to deny that a neutral, fair, and open network is in the consumer’s interest? ISPs have been pretty darn neutral over the last fifteen years, and it has been in their interest to be so, with data subscriptions generating tens of billions in new revenue streams. A neutral network is the reason the Internet we know and love exists — at least according to those who built the Net.
Putting Neutrality in practical terms: if a website you load, a video you stream, or a file you download was degraded in performance without warning, where would you take your customer service claim? Do you call the website provider? The ISP? The manufacturer of your PC or router? The publisher of your operating system, firewall software, or browser? The Internet as a packaged experience is truly miraculous when you consider how many layers of technology and services exist to simply load a website. Fundamentally, what people really want is disclosure. We want to know if the ISP — the most invisible layer in the “Internet stack” — is responsible for an improved or degraded experience for any of the services we use.
As consumers, how could we desire anything less than a fair and open Internet? Analogously, we are in favor of clean food in our restaurants, functional planes in our airlines, low emissions from our cars, clearly marked lanes on our toll roads, and stockbrokers who don’t lie about the value of our 401(k)s. The debate lies in how we achieve these outcomes from the private sector. And if we’re being sensible, how can we achieve these outcomes using the government as little as possible? After all, I don’t think anyone really loves the idea of using the legislature to settle disputes when there are more responsive and efficient mechanisms available.
Disclosure and clear Rules of the Game are good for everyone. Entrepreneurs whose ingenuity has driven the Internet thus far desperately need more clarity. Ambiguity is not a good thing for entrepreneurs because it scares off investment. The FCC could do startups a great favor by clarifying what our country’s broadband policy actually is. That will usher in new confidence and investment for entrepreneurs who are desperately looking for ways to finance their ideas in a tough economy. But before the government has a chance to do anyone any favors, why don’t ISPs proactively do it themselves? Everyone around them is asking for the same thing, so why don’t they respond?
When Comcast tried network management procedures that inhibited BitTorrent transfers in 2007, consumers had a very negative reaction to the practice. The public outcry compelled Comcast to change policies, but ultimately no government action was needed because Comcast responded to the market. The free market prevailed mostly because the people “injured” by Comcast’s network management policy are probably the most passionate, the most informed group of citizens in the world. They are extremely focused on this issue, and they have ample means to scream bloody murder if they are not happy — through blogs, YouTube, Twitter, and every other tool the open Internet has given them.
Outside of the BitTorrent/Comcast incident, it’s difficult to cite any major confrontations requiring new laws and regulation. Most proponents of Neutrality are fearful of bad behavior in the future. Imposing punitive measures to enforce Net Neutrality seems premature and even unnecessary in my opinion. Not being a policy maker, I will characterize my personal views in broad strokes, again striving for as little regulation as possible.
First, I think the activists, regulators, and lawmakers in this area would be wise to define what we want from the ISP industry and couple those things with rewards — such as tax breaks — rather than penalties. Second, ISPs should figure out a way to self-regulate through some non-governmental, self-regulatory organization (SRO) that collectively publishes guidelines for network management, discloses the practices of its membership, and praises and rewards its members for investments made to improve the Internet experience.
If ISPs proactively embraced Net Neutrality — since they are pretty much already neutral anyway — and then figured out a way to self-police, wouldn’t the need for new laws pretty much dissipate? Analogously, the securities industry self-polices through NASD/FINRA. Couldn’t an equivalent non-governmental SRO be formed to handle these matters before ever escalating to the FCC? The subscription TV services — MSOs, telcos, and DBS providers — have already banded together in the TV Everywhere initiative. The right stakeholders are already at the table. They should nip this in the bud.
A lot of folks worry whether Net Neutrality, if implemented, will open the door for further regulation. I am less concerned about that if Neutrality is implemented with positive reinforcement. Or better yet, if ISPs working through a new industry group can evaluate the “ask” we have as consumers and choose to take it or leave it. If ISPs reject the tax break, either we’re asking too much or not giving them enough. Surely an ISP’s shareholders would love the newfound cash flow in an economic climate like this, and if the “give” is what they’re giving us anyway, everyone’s happy.