Net Neutrality: Treating the Internet Like a Utility (Updated)

There is always the danger, as Charlie points out, that the FCC and its political appointee head could decide that Fox News -- or the Huffington Post, for that matter -- constitutes hate speech. They could use the rules as a club to limit access to those sites, thereby limiting the openness that Genachowski himself said in a recent speech is the great strength of the net.

In that same speech, and within some of the proposed rules which have from time to time been circulated, Genachowski has also suggested usage-based fee structures. Currently, most people pay a flat rate to their providers for access -- much like you do for your cable television -- and get all the data they care to download. Under a usage-based structure, this would end up being more like a cell phone plan where you get so many minutes each month and then must pay extra for any overages. The Internet becomes less and less a convenience, and more of a utility like your electricity or natural gas.

Many of us simply cannot do without Internet access. For instance, Charlie and I are collaborating on these stories on net neutrality. Charlie is based in Colorado, and I am in Kansas. PJM is based in California, but some of our editors are in New York and Washington, D.C. Without the Internet, Charlie and I would be unable to do our jobs. Under a usage-based fee structure, I might only be able to afford Internet access part of the month, and would be unable to do my job. My ISP might provide a flat-rate service, but if they can make more off usage-based, that flat-rate might be prohibitively expensive.

I'm not at all certain how openness or fairness are served here.

While it is apparent some sort of regulation is needed, what form it should take is less so. It is also less than apparent where the FCC derives authority to make this particular power grab, as Congress to date has not authorized them to regulate the Internet.

Moreover, the Internet is truly international in scope. Regulations which, whatever the stated intent, tend to limit growth and stifle competition within this particular sector will put the United States at an economic disadvantage globally at a time when we can ill afford any more disadvantages.


I was perhaps unclear about a couple of things in my post and wanted to clear them up.

ISPs should be free to use the pricing structure which best suits their business model. That, however, is not what the FCC is talking about doing here. What the FCC is discussing is protectionism. Sites like Netflix and Hulu are hurting the cable industry. The FCC is moving forward with regulations which would tend to hurt consumers and have the possibility of putting the burgeoning Internet video industry out of business. As the Washington Post points out:

The FCC will vote Dec. 21 on the proposal, which could could tilt fortunes toward cable and telecom companies battling to keep users from abandoning paid television services for new Internet options such as Apple TV and, analysts say. Those providers are struggling to manage overburdened networks that are seeing a surge in streaming video traffic from sites such as Netflix, which alone occupies 20 percent of all peak broadband traffic in the United States.

This is a power grab by the FCC, pure and simple -- despite the fact they have no statutory authority to regulate the Internet, Genachowski plans to simply lay down rules which Congress has not voted on and which may or may not have anything to do with reality. The law of unintended consequences applies.

Moreover, the rules the FCC is promulgating have the potential to kill a new industry as well as stifle free speech. There is nothing "neutral" in anything the FCC is proposing.