The Internet's Future:
Congress should stay out of cyberspace.
THE SENATE will hold hearings tomorrow on "net neutrality," the idea
that the pipes and wires that form the Internet should treat all
content equally. An alliance whose membership ranges from the
Christian Coalition to MoveOn.org is demanding that Congress write
this neutrality into law; the groups fear that the pipe owners --
cable companies, phone companies and so on -- might otherwise deliver
corporate content at high speed for high fees, while consigning
political Web sites and hobbyists to a slow information byway. These
arguments are amplified by the big Internet firms -- Google,
Microsoft, eBay -- that want their services delivered fast but don't
want the pipe owners to extract fees from them. Although this
coalition lost a House vote last week, its prospects are stronger in
the Senate. (The Washington Post Co. owns broadband networks that
might charge Web sites for fast delivery. It also produces Web content
that might be subject to such fees, so it has interests on both sides
of this issue.)
The advocates of neutrality suggest, absurdly, that a non-neutral
Internet would resemble cable TV: a medium through which only
corporate content is delivered. This analogy misses the fact that the
market for Internet connections, unlike that for cable television, is
competitive: More than 60 percent of Zip codes in the United States
are served by four or more broadband providers that compete to give
consumers what they want -- fast access to the full range of Web
sites, including those of their kids' soccer league, their cousins'
photos, MoveOn.org and the Christian Coalition. If one broadband
provider slowed access to fringe bloggers, the blogosphere would rise
up in protest -- and the provider would lose customers.
The cable TV analogy is doubly wrong because media culture reflects
technology. Cable TV has been the province of Hollywood studios
because making a sitcom is expensive and hard -- though, with cheap
digital camcorders, this is changing. Equally, the Internet is the
province of experimenters and hobbyists because creating your own Web
site is cheap and easy. Thanks to technology, the Internet will always
be a relatively democratic medium with low barriers to entry.
The serious argument for net neutrality has nothing to do with the
cable TV boogeyman. It's that a non-neutral net will raise barriers to
entry just slightly -- but enough to be alarming. To use a far better
analogy: Competitive supermarkets aim to please customers by offering
all kinds of goods, but the inventor of a new snack has to go through
the hassle of negotiating for display space and may wind up on the
bottom shelf, which dampens his incentives. Equally, if the owners of
Internet pipes delivered the services of cyber-upstarts more slowly
than those of cyber-incumbents, the incentive to innovate might
suffer. Would instant messaging or Internet telephony have taken off
if their inventors had had to plead with broadband firms to carry
them?
This concern should not be exaggerated. Cyber-upstarts already face
barriers: The incumbents have brand recognition and invest in tricks
to make their sites load faster. The extra barrier created by a lack
of net neutrality would probably be small because the pipe owners know
that consumers want access to innovators.
Meanwhile, there are powerful arguments on the other side. If you want
innovation on the Internet, you need better pipes: ones that are
faster, less susceptible to hackers and spammers, or smarter in ways
that nobody has yet thought of. The lack of incentives for pipe
innovation is more pressing than the lack of incentives to create new
Web services.
You can see this imbalance in Wall Street's low valuation of Internet
infrastructure firms such as Verizon (price-to-earnings ratio: 12) and
its infatuation with Internet service firms such as Google
(price-to-earnings ratio: 69). You can see it, too, in the fact that
U.S. broadband infrastructure lags behind that of East Asia and
Europe. Allowing builders of Internet infrastructure to recoup their
investment by charging the Googles and Amazons for use of their
network would balance the incentives for innovation more
closely. Ironically, a non-neutral net would accelerate the spread of
zippy broadband that can deliver movies, allowing hobbyists with
camcorders to take on Hollywood studios. The neutrality advocates who
criticize corporatized cable TV should welcome that.
The weakest aspect of the neutrality case is that the dangers it
alleges are speculative. It seems unlikely that broadband providers
will degrade Web services that people want and far more likely that
they will use non-neutrality to charge for upgrading services that
depend on fast and reliable delivery, such as streaming
high-definition video or relaying data from heart monitors. If this
proves wrong, the government should step in. But it should not burden
the Internet with preemptive regulation.
Copyright 2006 The Washington Post Company
Washington Post Editorial Staff (washpost@telecom-digest.org)