The lightning-rod of government regulation always draws a spark. The question of net-neutrality has predictably drawn fierce response and invoked the typical bromides of the sin of government interference in the garden of the free market. Orrin Hatch and James Demint contributed their views this morning in the WSJ, and though their age and demeanor may make them appear to be among the less likely users of the internet, they have a clear sense of what any government role in the internet might do – destroy the very vitality and swagger that has characterized its growth to date.
Hatch and Demint’s argument goes something like this. Because the internet has thrived over the past ten years “without a Washington politician or bureaucrat moving a muscle,” they should stand aside and allow communications networks to prioritize traffic as they are able and as is profitable. What’s more, the government doesn’t know the first thing about the internet, so if we let them interfere now, we would find ourselves “dog-paddling” in an internet backwater rather than “surfing” the broadband revolution. Rules on net neutrality would mean just that – a dramatic change that would endanger the innovation and growth we have seen to date; therefore, stand aside and let the market decide.
There are several problems with their argument. First, the origin story of the web. Hatch and Demint would have us believe that the web came to be through the agile footing of corporations organized to profit by way of a new market opportunity – the web. The web as we know it emerged not only outside of government action, but in spite of it.
But is that really the case? Let’s not forget that the internet began as a government project, and it was through investments dating back to the ARPAnet in the ’60s that created the ancestors to the world wide web. Tim Berners-Lee, the acknowledged inventor of the World Wide Web, invented it at CERN, a government sponsored research facility. The current broadband revolution may have emerged through private investment, but it was on the back of a government sponsored foundation.
Hatch and Demint are correct to consider the significance of the broadband revolution. We’ve seen a remarkable efflorescence of businesses and services over the past ten years, and the internet has become a vital source of commerce and innovation. Hatch and Demint want to do everything they can to avoid upsetting the apple cart, and they fear that government regulation to introduce net neutrality would do just that.
Net neutrality, however, is not a new idea. It’s not even a new condition. The broadband revolution came into being with each packet having equal access to the network. ISPs made noises about prioritizing traffic and discriminating against third parties, but no one did. The FCC, therefore, isn’t considering new regulation that would change the competitive environment. They’re considering regulation that would keep in place the same competitive environment that cultivated the broadband revolution. Far from running against the tide, as Hatch and Demint have argued, the FCC is considering how to maintain the status quo.
But bandwidth is finite, argue Hatch and Demint, and network neutrality will eliminate the ability to yield a return on their investments. They claim, if a network provider is going to “invest billions of private dollars in new and improved networks, they should rightly expect to set prices and manage those networks as they see fit.” First, wouldn’t one expect the market to set the price, not the provider. When a provider sets the price, those are usually monopoly conditions. Second, these investments are not new. Network providers have made record investments since the 1996 Telecommunications Act, and net neutrality doesn’t seem to have stopped them from making money. Indeed, I pay far more for my cable bill today than I could ever have dreamed in 2000.
Hatch and Demint have argued for a radical reshaping of the underlying conditions that brought us this broadband-bounty. They want to abandon net neutrality, so we can avoid the specter of “hearings and mark up meetings and regulatory comment periods,” but it also means abandoning the competitive environment that has brought about the broadband revolution. Would that not make Hatch and Demint’s argument one for a dramatic change that would endanger the innovation and growth we have seen to date? We know that the network providers are profitable, so it’s not an issue of lacking returns on investment. Is that a risk we are willing to take?