Like most expressions of populist idealism, there is much to admire about the most recent exhortation by Professors Lawrence Lessig and Robert McChesney on the issue of "network neutrality." (This is true even though, for the moment, Congress has declined to take the bait, rejecting their calls for stringent rules when the House adopted a telecom reform bill last night.[1]) The professors' op-ed in the June 8th Washington Post implores Congress to "save the Internet" from "deep-pocketed corporations" who aim to be "content gatekeepers" that "sell access to the express lane" and "relegate everyone else to the digital equivalent of a winding dirt road."[2] If nothing else, this rhetoric is stirring. Viewed out of context, it masterfully corners even skeptical readers with all the inescapable "logic" endured by the first person forced to answer: "When did you stop beating your wife?"
So too can we admire some of the authors' sincere aspirations. Consumers do win if the Internet remains a "free and open technology fostering innovation, economic growth and democratic communication" in which "regular people" can access and distribute "independent news and community information." And certainly few of us former regulators could sit still if broadband providers found a way to thwart competition to the degree the authors' apocalyptic vision suggests is imminent. (Indeed, that is why many technologists,[3] academics[4] and other scholars of communications policy[5] agree that government can and should address network neutrality as part of its larger efforts to seek and destroy anticompetitive practices. Senator Jim DeMint has proposed a telecom reform bill that would rely on this competition policy approach.[6])
But if Congress is to develop balanced and pragmatic policy in this area, it really can't ignore the context that reveals flaws in the authors' arguments, just as Congress cannot sensibly rely on mere hope that the Internet remains "open." Although responsible policymakers may scrutinize pearls of wisdom dropped from the ivory tower, sooner or later they must tussle with the realities on the ground.
Reality 1: Not Even the Internet is Perfect
One of these realities is that, for all its flexibility, the Internet has some technical shortcomings. For example, the Internet suffers from a variety of security and safety vulnerabilities -- worms and viruses, authentication problems, inappropriate content and the like. The Internet also tends to transmit data in short bursts. This approach works well for things like e-mail, but it tends to disfavor applications like streaming audio or video that rely on a steady flow of information over the network.
To address problems this pressing, consumers need help from all aspects of the Internet -- including network owners. Suppose that a company like Google seeks to buy services from Verizon or Comcast to combat junk e-mail and identity theft using an e-mail service that gives preferred treatment to certain e-mails for an additional charge (an approach pursued by AOL and Yahoo!). A network neutrality mandate could prohibit Verizon or Comcast from doing that deal, based on the notion that the deal would "discriminate" in favor of Google. In this case, a network neutrality mandate harms consumers by denying them the opportunity to get more out of the Internet with less frustration. Essentially, a mandate could force broadband networks to disarm unilaterally, when the battle against security and other technical limitations has hardly begun. It also harms consumers by denying them the benefit of additional investment in broadband networks that revenues for the service might have supported.
Certainly, Congress could attempt to craft a more flexible standard for network neutrality that allows network owners to contract with content and applications companies in some cases. But such flexibility would generate more ambiguity and litigation, and push consumers and the industry down a slippery slope toward further regulation and consumer harm.
Reality 2: Internet Users Need Faster Broadband Connections
Congress also must face the reality that the Internet won't attain even Lessig and McChesney's most laudable aspirations for it without continued -- indeed expanding -- investment in faster and more sophisticated broadband networks. Cable modem, DSL and other network owners already have invested tens of billions of dollars to upgrade their networks for broadband. With any luck, already-skittish capital markets[7] won't turn their backs as these and other companies invest more tens of billions of dollars to roll-out new "fiber-to-the-neighborhood," wireless and other networks. As any engineer can attest, such advanced networks will be necessary for consumers to receive, produce and send increasingly bandwidth-hungry content and applications. Further, to the extent new broadband networks are deployed, it will lessen the risk that broadband networks will, as Lessig and McChesney fear, serve as Internet "gatekeepers."
Sadly, network neutrality mandates are more likely to hurt, than harm, this critical investment. Such mandates add costs and uncertainties to network owners' business plans when financial analysts and their own shareholders already are expressing doubt these companies will earn a meaningful return on the fortunes they hope to spend to continue improving their networks. Moreover, network neutrality mandates restrict networks' ability to distinguish themselves in the marketplace, thereby making it harder for new entrants to expand and, conversely, making it more likely that the authors' anticompetitive fears will someday be realized. (Of course, this need to nurture private investment in broadband networks becomes moot if what Lessig and McChesney are really after is for government to pay for broadband upgrades. There is no indication of that aim in this latest appeal, however. And presumably that argument would have fallen on deaf ears in a Congress that faces looming budget deficits and several contested races in November's election.)
Reality 3: Broadband Networks Are Acting More Scared Than Scary
But the most inconvenient reality Congress must face in deciding what to do with Lessig and McChesney's theories is that broadband network owners just aren't acting like he says they are. As he would have it, broadband networks use their control of "last mile" broadband connections to dictate how other broadband companies, and how consumers, use the Internet. Yet despite this purported might, broadband networks generally continue to give consumers access to the content, applications and devices of their choice. They continue to compete vigorously for customers on the basis of price, speed and other features. And to the extent network owners are trying to impose new charges, they are less "tolls" than value-added services designed to protect consumers' security, improve the performance of streaming media and online gaming and otherwise make up for the fact that the "best efforts" nature of Internet technology cannot be all things to all users.
Why would any broadband provider pass up this chance to play the villain? Ironically, it has much to do with the vein of anticipatory outrage that Lessig and McChesney so deftly tap. Consumers simply won't stand to pay a premium for an Internet experience that gives them fewer options than they enjoyed with cheaper but slower dial-up service. Attempts to manhandle these customers will prompt them either to leave or (just as painfully for companies trying recoup their network investments) refuse to pay fees for services that don't offer them greater value. And if consumers ever became dissatisfied with the economic punishment they can inflict on networks that do not satisfy their expectations, they always could prod the FCC into doing more to keep the Internet "open."
Unanswered Questions: Besting the FCC?
The FCC's activities thus far raise an interesting and as-yet unanswered question: what will action by Congress in the area of network neutrality add to what the FCC is already doing on this issue? The FCC has adopted a policy statement[8] expressing its strong preference for the kind of connectivity network neutrality proponents seek. It has taken action to express that preference through swift enforcement action in one of the few cases of questionable network behavior[9] and by adopting binding conditions on two recent mergers of Bell and long distance telephone companies.[10] Further, the FCC has stated repeatedly that it retains authority to impose additional network neutrality requirements.
What the FCC has declined to do is adopt the kind of sweeping, across-the-board network neutrality mandates that Lessig and McChesney (and, of course, the many content and applications companies who stand to gain) have championed. Rather, having faced some of the realities the authors ignore, the Commission concluded that playing a more intrusive role would impose unnecessary costs and uncertainties and thereby deny consumers the benefits of investment and innovation in increasingly competitive broadband networks.
Whether or not one wishes the FCC were more aggressive in its approach, it is undeniable that there haven’t been any significant or sustained restrictions on legal content, applications or devices by broadband networks under the agency’s policy. Further, even if future FCC efforts to promote net neutrality get challenged in court, the agency's views likely will determine networks’ behavior over the years the issue would be litigated on appeal.
As the network neutrality debate continues to rage in the Senate and elsewhere, policymakers can learn much from Senator DeMint's proposal and from last night's House bill that addresses the issue by building on the FCC's considerable leadership in this area. At the very least, Congress should press network neutrality proponents like Lessig and McChesney to explain why new legislation is necessary given there is no evidence the FCC’s policy isn’t already working to address their concerns. Assuming, of course, legislators can find a way to think clearly under another assault by their admittedly brilliant, yet blinding, rhetoric.
* Kyle D. Dixon is Senior Fellow and Director of the Federal Institute for Regulatory Law & Economics . The views expressed here are his own and are not necessarily the views of PFF, its board, fellows or staff.
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Lawrence Lessig & Robert W. McChesney, "No
Tolls on the Internet," Wash. Post, June 8, 2006,
A23.
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See Editorial Board, "Out of the Telechasm,"
Wall St. J., April 18, 2006.
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Madison River Communications LLC and
Affiliated Companies, Consent Decree, File
No. EB-05-IH-0110, March 3, 2005.
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