Here is one way of simplifying the issue of “net neutrality”: Should broadband internet service be treated by regulators as a public utility?
That boils down the subject that was decided Tuesday by the U.S. Court of Appeals for the District of Columbia Circuit, which ruled 2-1 in favor of guidelines established by the Federal Communications Commission. The guidelines support net neutrality, which essentially is the notion that internet providers must treat all web traffic equally. The ruling prevents providers from offering preferential treatment to sites willing to pay for faster service.
Proponents of the ruling say it is a victory for consumers, and President Obama had expressed support for the FCC rules. And yet an examination of the issue reveals that “net neutrality” is not the panacea its name suggests. As The Columbian wrote editorially in 2014: “The notion of net neutrality is an enticing concept, a utopian vision of an unfettered information superhighway. But, like most utopian visions, it also is unrealistic and unsustainable.”
The problem with treating broadband internet service like a public utility such as water service or an electric company is that the entities have little in common. An electric company is, almost by definition, a monopoly — a utility that has no competitors in its service region. Such a status requires strict regulatory oversight for the protection of consumers who otherwise are beholden to the whims of the provider. If an electricity provider suddenly decided to quadruple its rates, the public would have no recourse; it is essential that there be regulatory controls on those impulses.
But internet providers are not limited to a service area defined by physical or geographical boundaries. They are essentially universal, available in any location they choose to reach, and therefore demand less oversight. As plaintiffs stated in court documents, the FCC rules can inhibit internet providers with “heavy-handed, public-utility-style regulation designed for 19th-century railroads and 1930s telephone monopolies.”
The drawback to that heavy-handed regulation is that it places a yoke around innovation by high-tech companies. The premise of capitalism is that an entrepreneur or a company comes up with an innovation, markets that idea, seeks investors, and — if the idea is sound enough — attracts the capital necessary to grow the company and develop new innovations. Allowing higher charges for faster internet speeds would be consistent with a policy that attracts increased investment. As Judge Stephen Williams wrote in his dissent, the FCC rules provide “little economic space for new firms seeking market entry or relatively small firms seeking expansion through innovation.”
Not that the issue can be effectively summarized in one brief newspaper editorial. It is a complex one with strong arguments to be made on both sides, and it is one of those that garners little attention from the public but will have vast implications for consumers. As the Los Angeles Times wrote in an opinion piece: “The case is sure to be appealed, so the FCC’s net neutrality rules will have more tests to pass. And Congress may yet intervene, amending the Communications Act to clarify what the commission’s authority over the internet should be.”
Ideally, that authority eventually will be to promote innovation that proves to be beneficial to consumers and clears the way for the next incarnation of the internet.
