Net Neutrality Comment to the FCC: Net Neutrality vs “BandWealth”

Full Document Available in PDF


On Thursday, October 22, 2009, the Federal Communications Commission (FCC) issued a Notice of Proposed Rulemaking1 (NPRM) that asserts national government authority over the Internet’s future with respect to broadband access and pricing. Unelected FCC Commissioners contemplate this action with questionable authority from Congress.2 Meanwhile the U.S. Court of Appeals for the District of Columbia Circuit is hearing (with skepticism) a pivotal case concerning FCC’s authority to enforce neutrality principles in the absence of specific statutory authority.3 Net neutrality contends that the government should decree that Internet service providers treat all online traffic the same, rather than adapt in response to consumer demand, market and technological realities, and competitive pressures that already greatly mitigate against unreasonable blockage. No credible case exists for universal neutrality in contrast to an occasional rifle shot to deal with legacy—and clearly diminishing—market power owing to past exclusive franchises and other belligerent behavior. (Even in such cases, unfavorable press generally does the trick.) Worse, banning entire proprietary business models is hardly “openness.” Legitimizing proprietary approaches to network access, strategies and pricing (and enjoying the infrastructure wealth creation that such property rights foster) is vital.

America’s challenge is not for FCC to “do something” in the communications and Internet realm, but rather to dismantle and move beyond earlier regulatory impediments that have limited our creative freedoms in expanding infrastructure and content access. Current lapses are less representative of the market—which has labored under decades of sweeping communications regulation—than of the preemptive role of government, its derailment of institutional evolutionary market processes, and its blocking of freedom by inhibiting growth in what should be far more vibrant areas like infrastructure expansion.

At stake is less today’s ground-level dispute, but rather the principle of proprietary control versus the principle of collective control in the creation and management of infrastructure and communications wealth decades hence. Competition in the creation (and creative destruction) of networks is as important as competition in the content and “stuff” deployed across those conduits. The “infrastructure socialism”4 inherent in coercive neutrality’s obsession with only the latter undermines consumer well-being, Internet robustness and (not paradoxically) means a less open, less neutral Internet for future generations.