Broadband providers shaky about regulation

For good reason, the Internet has a wild and wooly reputation; it has been a kinds of entrepreneurs, some wacky, some brilliant. This could change, however, if a band of large software companies called the Coalition of Broadband Users and Innovators convinces the Federal Communications Commission to regulate the Internet, according to Adam D. Thierer, director of Telecommunications Studies, Cato Institute, Washington, D.C., and author of "Net Neutrality: Digital Discrimination or Regulatory Gamesmanship in Cyberspace?"

Thierer explains that, in the name of "anti-discrimination" and "network neutrality," the Coalition--which is made up of billion-dollar software and entertainment giants--is pressing the FCC to enact rules ensuring that cable and telephone industry broadband operators "will not use their control of high-speed networks to disrupt consumer access to websites of competitors or other users."

However, the record does not show that broadband providers are guilty of these supposed crimes against the Internet, and the preemptive measures the Coalition wants regulators to take will retard innovation and competition. In any event, adds Thierer, it is unlikely that broadband customers would tolerate draconian restrictions on their "freedom to surf" on the Internet, and market forces would punish those companies that do implement unpopular policies.

The property rights of broadband service providers--who have legitimate interests in protecting the substantial investments they have made in their communications infrastructures--should be respected. The proposed mandates would create a regulatory system open to "gaming" and abuse by large firms who would attempt to "hobble competitors."

Thierer criticizes the failure of Net neutrality supporters to consider the effect that regulations could have on "the innovation and investment needed to bring about entirely new network infrastructures," and suggests that "instead of being so preoccupied with merely maximizing consumer welfare within the confines of existing systems, proponents of Net neutrality ... need to put more thought and energy into the question of how the networks of the future are going to be funded and built."

Ultimately, "by calling government in to solve a nonproblem, supporters of Net neutrality ... are essentially inviting regulators into the broadband marketplace and asking them to play a more in how the Internet is governed the future. This invitation will have serious ramifications and costs that may manifest themselves only years from now. [Coalition] members should be careful what they ask for; it might come back to haunt them in ways they can't possibly imagine today."

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