Wednesday, August 28, 2013

Network Neutrality: Less Regulation is Better!



The main reason the internet has grown as much as it has over the last quarter century is the “end-to-end” principle that networks should confine themselves to transmitting generic packets without worrying about their contents. (Lee 2008) Self proclaimed "Network Neutrality" activists are pushing for legislation to prevent network owners from violating the end-to-end principle, a problem which doesn't exist currently. Unfortunately new regulations come with unintended consequences and having the FCC regulate the internet won't mean an internet more secure from limitations. So enacting new legislation appointing the FCC to regulate the internet for a problem which may or may not happen eventually is foolish, this is an example of government regulations creating new problems due to unfounded fears by making it harder for new companies to compete. There is also no reason to believe without added regulation network owners will destroy what has made the internet the big success its been, as it would go against their interests to destroy the very service consumers pay them for.

The network neutrality debate of today is very similar to the debate that produced the first modern regulatory agency, the Interstate Commerce Commission. Instead of protecting consumers from the railroads, the ICC ended up protecting the railroads from competition by creating new barriers for entry in the surface transportation marketplace. Other 20th-century regulatory agencies also limited competition in the industries they regulated and created more entry barriers for new competitors. (Lee 2008)

We need more competition in the internet service industry, so policy makers should be very wary of enacting any legislation which could make it more difficult for new companies to compete.

"Only one institution in American society has the size and power to bring about a return to the bad old days of monopolistic communications markets: the federal government. Government regulation of private industry frequently leads to unintended consequences,and industry incumbents often find ways to turn the regulatory system to their own benefit." (Lee 2008)

We should be deregulating to allow new companies to compete in more ways, allowing more companies to provide internet access to consumers. Promoting and helping to develop technologies which makes us less reliant on the infrastructure of the major broadband companies is a better solution than trying to add more regulation to an industry which already has a high entry barrier.

If the major broadband companies tried to cripple the internet from its current form, this would only further push people away from being reliant on their infrastructure and cause more people to invest into alternative technologies to circumvent them. Mesh Networking is one area in where technology is developing internet access in a more decentralized manner, just in case we start seeing restrictions coming from any sources. This alone is a big reason major network owners are unlikely to try limiting people's access to the interest.



Those pushing for the government to regulate the internet are laying the groundwork for the regulatory labyrinth of rules the major network providers will end up influencing to keep competition out. It is also laying the groundwork for the government to control and regulate what online content they find acceptable and broadband companies can display, much like how they regulate what content is acceptable to be shown on television. I doubt many want to see the internet end up how television did with the FCC regulating it, so it makes no sense to get the FCC involved in regulating the internet to solve a non-existent problem.

"A recent paper by University of Pennsylvania economist Gerald Faulhaber published in the journal Communications Convergence Review suggests this threat is almost entirely hypothetical. Faulhaber notes that the Federal Communications Commission (FCC),which drew up the rules, admits they are "prophylactic." In fact, the FCC says the regulations are based on "longstanding openness principles that are generally in line with current practices and with norms endorsed by many broadband providers."

Faulhaber writes that "one has to read the [report and order explaining the new rules] very closely to find any empirical support whatsoever that any of the suspect behaviors the FCC seeks to prevent have actually occurred." The commission cites just four cases, one of which was resolved before the FCC intervened and another of which did not result in a formal complaint.

That doesn't mean the rules won't have an impact. Faulhaber's review of the economic literature concludes that "prophylactic net neutrality regulation is unnecessary and may well be welfare-reducing" because the costs it imposes by discouraging network development and infrastructure investment are greater than any benefits it might provide. The FCC's rules did not include an estimate of their economic impact." (Suderman 2012)

References

Lee, Timothy B. (2008, November 12). The Durable Internet: Preserving Network Neutrality without Regulation. Policy Analysis 626. Retrieved from http://www.cato.org/publications/policy-analysis/durable-internet-preserving-network-neutrality-without-regulation

A.F. Branco (Artist). (2010). Net Neutrality: A solution looking for a problem [Political Cartoon], Retrieved August 30, 2013, from http://www.teapartytribune.com/2010/12/27/net-neutrality/

Suderman, P. (2012, January). Internet economics: needless net neutrality. Reason, 43(8), 14. Retrieved from http://go.galegroup.com.db24.linccweb.org/ps/i.do?id=GALE%7CA275037995&v=2.1&u=lincclin_spjc&it=r&p=AONE&sw=w

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