Article 43
Saturday, January 23, 2010
The Mother of All Privacy Battles Part 18 - Economics
The conservative case for Net neutrality
By Bill Snyder
Info World
January 21, 1010
Hey there, conservatives: NET NEUTRALITY is your ISSUE, too.
Innovation, economic growth, and the health of content providers are what’s at stake as the FCC MOVES TOWARDS A NEW SET OF RULES governing the Internet. Until now, much of the discussion about the future of the Internet has focused on issues like freedom of expression, fairness, and metered pricing—real concerns, to be sure. But a pair of academic research papers circulated by the Open Internet Coalition puts the issue in economic perspective.
Here’s the core of the argument, in a PAPER by Inimai M. Chettiar and J. Scott Holladay of New York University’s Institute for Policy Integrity:
Without Net neutrality rules, new technologies could lead to pricing practices that transfer wealth from content providers to ISPs, a form of price discrimination that would reduce the return on investment for Internet content—meaning Web site owners, bloggers, newspapers, and businesses would have less incentive to expand their sites and applications.
What’s more, developers and IT as a whole will be hurt if providers are allowed to discriminate against particular applications that might make money for someone else.
The Net neutrality issue is sometimes framed by the usual left/right split in American public life. But I’d argue that conservatives who believe in a free market should join libertarians—and, yes, liberals—in the fight for an open Net.
What a neutral Internet really means
Here’s how the Internet works today: “Last-mile facilities-based broadband Internet access service providers provide users with access to the Internet, but they are expected to route all traffic in a nondiscriminatory manner. They do not charge Internet content or application providers to reach users, and they are expected to route traffic without regard to what that traffic contains, who it is from, or where it is going,” writes Christiaan Hogendorn, a Wesleyan University economist.
To date, those principles have worked really well. The Internet has for years arguably been the most efficient engine of economic growth and job creation in the American economy. But it won’t function nearly as well if the market is rigged by ISPs.
The argument about Net neutrality has been clouded by understandable confusion about what it really means—and what it doesn’t mean.
Many people think the issue has to do with METERED broadband access—that is, paying for data access by the gigabyte instead of a flat monthly rate. That’s something that many of us might object to, but for better or worse, it’s a choice the carriers may well make. The truth is, the issue of METERING HAS NOTHING TO DO WITH NEUTRALITY. And frankly, the market will decide if metered pricing is a viable idea.
The real issues are more subtle. Without Net neutrality, say the researchers, “ISPs could charge content providers again when users access content. Adding these fees would increase the costs of creating Web sites and applications.”
Providers don’t talk about that directly. Instead they talk about “fast lanes” to the Internet. After all, why shouldn’t a company that wants its customers to have faster access pay more? Well, this argument sounds reasonable at first, but think about the implications: If there’s a fast lane, there has to be a slow lane. And companies stuck in that slow lane—likely to include competitors to the providers and to the providers’ business partners—are going to lose business.
Should ISPs decide which technologies will prosper?
The second key issue is about the right of users to access applications of their choosing, and the right of developers to compete on an open playing field. Or as FCC chairman Julius Genachowski said as the commission discussed the issue this week: “Specifically, this proceeding is about preserving consumers’ freedom to access lawful content and applications of their choosing over the Internet; produce and distribute content; and innovate without permission to create new businesses, services, and opportunities that no one has dreamed of yet.”
The providers deliberately obfuscate the issue, by talking about “bandwidth hogs” who download too much video and play too many online games. Why shouldn’t they charge video or game providers extra, since their users are clogging up the pipes?
Again, that issue can be solved by metered pricing. But once the principle has been established that an ISP can discriminate (in the economic sense) against a particular application or technology, the market isn’t free to pick winning technologies.
There’s no telling where the next best idea will come from. It could well be a small company we’ve never heard of, but if those innovators face a discriminatory pricing wall, their ideas will never get off the ground.
The ISPs argue that additional revenue raised by new pricing schemes would allow them to spend more on badly needed infrastructure. Don’t believe it. “Most additional revenue generated for ISPs is likely to be transferred to their shareholders rather than invested in expanding broadband lines,” say the NYU researchers.
I want to close this by appealing to conservatives: If you believe in the free market and the ability of the Internet to drive innovation and create jobs and real economic growth, tell the FCC that you support Net neutrality.
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