TELECOM Digest OnLine - Sorted: Hold Off on Net Neutrality

Hold Off on Net Neutrality

David Farber & Michael Katz (
Sat, 27 Jan 2007 23:32:15 -0600

By David Farber and Michael Katz
Friday, January 19, 2007; A19

The Internet needs a makeover. Unfortunately, congressional
initiatives aimed at preserving the best of the old Internet threaten
to stifle the emergence of the new one.

The current Internet supports many popular and valuable services. But
experts agree that an updated Internet could offer a wide range of new
and improved services, including better security against viruses,
worms, denial-of-service attacks and zombie computers; services that
require high levels of reliability, such as medical monitoring; and
those that cannot tolerate network delays, such as voice and streaming
video. To provide these services, both the architecture of the
Internet and the business models through which services are delivered
will probably have to change.

Congress failed to pass legislation amid rancorous debate last summer,
but last week a group of senators reintroduced several initiatives
under the banner of "network neutrality."

Network neutrality is supposed to promote continuing Internet
innovation by restricting the ability of network owners to give
certain traffic priority based on the content or application being
carried or on the sender's willingness to pay. The problem is that
these restrictions would prohibit practices that could increase the
value of the Internet for customers.

Traffic management is a prime example. When traffic surges beyond the
ability of the network to carry it, something is going to be delayed.
When choosing what gets delayed, it makes sense to allow a network to
favor traffic from, say, a patient's heart monitor over traffic
delivering a music download. It also makes sense to allow network
operators to restrict traffic that is downright harmful, such as
viruses, worms and spam.

Pricing raises similar issues. To date, Internet pricing has been
relatively simple. Based on experience in similar markets, we expect
that, if left alone, pricing and service models will probably evolve.
For example, new services with guaranteed delivery quality might
emerge to support applications such as medical monitoring that require
higher levels of reliability than the current Internet can
guarantee. Suppliers could be expected to charge higher prices for
these premium services.

Blocking premium pricing in the name of neutrality might have the
unintended effect of blocking the premium services from which
customers would benefit. No one would propose that the U.S. Postal
Service be prohibited from offering Express Mail because a "fast lane"
mail service is "undemocratic." Yet some current proposals would do
exactly this for Internet services.

We're not saying that all discrimination is good or that the market
always gets it right. Some forms of discrimination can be harmful,
especially when service providers have market power. For example, if a
local telephone company that is a monopoly provider of both broadband
access and plain old telephone service for a community blocks its
broadband subscribers from using an Internet phone service offered by
a rival company, this discrimination can harm both competition and

Public policy should intervene where anti-competitive actions can be
identified and the cure will not be worse than the disease. Policy-
makers must tread carefully, however, because it can be difficult, if
not impossible, to determine in advance whether a particular practice
promotes or harms competition. Antitrust law generally takes a
case-by-case approach under which private parties or public agencies
can challenge business practices and the courts require proof of harm
to competition before declaring a practice illegal. This is a sound
approach that has served our economy well.

The legislative proposals debated in the 109th Congress take a very
different approach. They would impose far-reaching prohibitions
affecting all broadband providers, regardless of whether they wielded
monopoly power and without any analysis of whether the challenged
practice actually harmed competition. If enacted, these proposals
would threaten to restrict a wide range of innovative services without
providing any compensating customer benefits.

Does this mean we believe that we should place all our trust in the
market and the current providers? No. But it does mean we should wait
until there is a problem before rushing to enact solutions.

David Farber is distinguished career professor of computer science and
public policy at Carnegie Mellon University. Michael L. Katz is a
professor of economics at the University of California at Berkeley.
Gerald Faulhaber, a professor at the Wharton School and the University
of Pennsylvania's law school, and Christopher S. Yoo, a law professor
at Vanderbilt University, also contributed to this article.

Copyright 2007 Washington Post

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