Markets, no Mandates, for Net

The battle over Internet freedom is heating up again. The spark this time is the proposed Internet Freedom Preservation Act of 2007, recently introduced in the Senate. Numerous Internet companies, website operators, and advocacy groups fear that without legislation big telecom companies will soon gain the power to restrict the quality or availability of certain types of Internet traffic—web sites, VoIP telephony, video broadcasting, and other new technologies—unless each content provider agrees to pay a toll. <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />

The newly introduced bill would impose a concept called “network neutrality,” by which Internet service providers (ISPs) may not block or hamper any third-party content or service provided over their networks.

A similar bill was defeated in the Senate last year, but this time around “network neutrality” enjoys a greater chance of passage due to the new Democratic majority's more favorable attitude. The bill explicitly prohibits broadband Internet providers from blocking, interfering with, or in any other way discriminating against lawful content available on the Internet. It enforces equal treatment of Internet services without regard to whether they are affiliated with the ISP. While at first this legislation seems to protect customers from potential abuse by ISPs, its effects may prove otherwise.

On the present Internet, ISPs do have control over what information can pass through their infrastructure, but cases of actual unfair discrimination against certain services are extremely rare. Currently, both the Federal Trade Commission and the Federal Communications Commission have authority to enforce competition rules and punish Internet providers for discriminating against unaffiliated services.

An even stronger disincentive to engage in such discriminatory behavior comes from customers. In fact, as in any other open market, the consumer ultimately enforces the conditions of service. This, coupled with people's dislike of being coerced and manipulated, would spark widespread public outcry and force the ISP to back down from any heavy-handed practices. In the end, providers have few incentives to employ discriminatory practices. This proposed legislation is pre-emptive, cumbersome, and unnecessary, and will lead to unforeseen impacts.

Worse, the inaptly named Internet Freedom Preservation Act would effectively block emerging technical innovations within the broadband Internet industry. Unfortunately, the companies lobbying for Net neutrality are shooting themselves in the foot by restricting their growth options and potential over future networks.

The bill now before the Senate leaves essentially no exceptions to the requirement of treating all traffic equally. This could prevent broadband operators from introducing new high-quality content even for customers willing to pay a premium. Not only would this limit consumer choice, it would hinder adoption of a new generation of services that require higher bandwidth. It would likely render useless the mission-critical services that rely on guaranteed priority of traffic, such as, for example, remote heartbeat analysis devices for patients or rapid emergency alert systems in hurricane-threatened areas. One can even imagine a situation in which a robotic arm controlled by a surgeon on another continent performing a brain surgery would have to compete for bandwidth with teenagers downloading mp3s.

Sadly, the eclectic pro-Net neutrality coalition includes both self-styled consumer advocates and major Internet content providers, such as Google and Microsoft. While the former endorse an awkward notion of “freedom by regulation,” the latter see a chance to free-ride by passing the costs of developing a better and faster Internet infrastructure solely to the ISPs. Some Internet companies that once embraced the virtues of the free market and entrepreneurship now resort to government regulation to increase their profits.

Replacing free market forces with government regulation rarely does much good, and in this case would clearly hinder freedom, innovation, and progress—the very core values of the Internet. Proposals like the Internet Freedom Preservation Act should be promptly dismissed before they can do real harm.