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Is striking down net neutrality a bad thing?

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JANUARY 30, 2014

Why would anyone possibly doubt the value of net neutrality? The core idea is simple: The network should treat all packets of information that travel across it equally. If you are a network provider, such as Comcast, you can’t slow down packets that carry Netflix movies to their subscribers just because … well, perhaps because Netflix uses a substantial portion of your network’s bandwidth? Or, more insidiously, because you (as Comcast) might have a competing movie service you want to offer to Netflix’s customers?

Net neutrality says you can’t play that game. You can’t play that game because, according to net neutrality’s proponents, it would undermine fair competition. In some people’s minds, it might also “slow down innovation” by preventing new businesses from having the ability to reach customers on the same terms as today’s businesses can.

It does sound as if net neutrality would be necessary to ensure fair competition — we certainly don’t want a corporate “gatekeeper” who gets to decide winners and losers on the Internet. But let’s look more closely. What would actually happen if a network provider did slow down Netflix packets to benefit its own service instead? There would be a public outcry. There would be boycotts. There would be front-page articles in every major newspaper you can imagine. Congress would call for regulations against Comcast. Wikipedia would “go dark” again in protest. And the digerati would not stop yelling until Comcast backed off.

The real question is not whether net neutrality is a good or bad principle for the Internet. It is whether government regulation is needed to maintain that principle in practice. In my view, the answer is no. The market will maintain the principle in the short term through the threat (or reality, if need be) of the kind of public protest action I imagined above and, in the longer term, through the threat or actual creation of other broadband delivery methods that would ultimately undermine Comcast’s power. Today, there aren’t that many alternatives for most consumers — cable internet, DSL or perhaps satellite. But technology exists to develop others, including fixed wireless and broadband over power lines. If Comcast were to exploit its market power and stop consumers from getting to what content they want at the other end, it would rather quickly undermine Comcast’s business and possibly do so for the long term. Comcast knows this perfectly well and is in no mood to blow up its profitable business by taking undue advantage.

This isn’t just a theoretical argument. Violations of net neutrality have been few and far between. There’s certainly no prima facie evidence of an innovation slowdown on the Internet. What there is evidence of is underinvestment in network capacity, at least in the United States. Would allowing the network providers to offer premium levels of service to companies that felt their businesses needed it and could afford to pay for it enhance investment in the network? Would raising the costs of network access to services that hog bandwidth increase the incentive for those companies to figure out a way to use bandwidth more efficiently? Possibly. There’s no reason not to run the experiment.

Some proponents of net neutrality want to make this an issue of free speech. They fear that if network providers can offer differential service or even block access to particular websites, then free speech is at risk. But again, imagine the outcry and the way in which customers would vote with their feet. Or consider an analogy to the newspaper delivery truck. Does the government have to require that the company that delivers your newspaper charge the same to the New York Times as it does the Wall Street Journal? The reason it doesn’t have to do so is that customers acting through the market restrict the possibilities for exploitation just fine. You can get the New York Times in the most politically conservative towns in America, and you can get the Wall Street Journal in Berkeley. The Internet is not any different.

Today’s Silicon Valley — and the IT industry overall — maintains a kind of libertarian feel. People who obsess over innovation and create new businesses want the government out of their way for the most part. So why do they feel the government must step in to regulate someone else in the pathway to their customers? I think it’s partially because some have a dated, anachronistic view of the telecom companies as big, bad monopolists who would do anything they can to exert their market power against customers and competitors. Those days and those companies are gone — even if today’s network providers, such as Verizon and AT&T, have some of the same names.

Nobody would benefit for long from the exploitation of market power on the Internet. It’s too transparent, too essential and too well monitored to be at risk from any one company. The same argument applies, of course, to companies such as Google and its influence over search. It’s a fair question to ask, if we need net neutrality, don’t we also need search neutrality? Shouldn’t Google be required to tell us why it puts some search results on the front page and some on page 25, where almost no one ever looks?

Google says no, because if the company were to bias its search results to favor its own services or sell premium positioning in those results to rich existing companies, the customer can always click over to Bing or any other search service. In fact, Google has done both of those things transparently. As has Bing. And the Internet is still the greatest boost to free speech, innovation and wealth creation any of us have ever seen.

Net neutrality, like many relationship status updates on Facebook, is complicated. The Federal Communications Commission could still choose to enact regulations that require neutrality if it were to reclassify network providers to put them in the same conceptual category as the old telecom providers. I hope they don’t do that but instead deal with any violations — at least for now — on a case-by-case basis. I think we’ll see the market will sort this one out just fine.

Steven Weber is a UC Berkeley professor at the School of Information.

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FEBRUARY 11, 2014