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Net Neutrality (and why we should care) part 2 of 3
added Mon May 22 2006 at 8:03 PM
In part 1, I explained what the concept of net neutrality is and why many people are turning to the government to enforce the concept as a law. I will later be discussing my own opinions on the matter. Right now, I will explain the negative potential of government enforcement of net neutrality.

The most vocal opponents to the Net Neutralists do not disagree that creating an internet with multiple tiers of content, based on the willingness of content providers to pay, would be a bad thing. Generally (although not always), they speak out against the idea because they are afraid of government regulation of what has been a very unregulated market. Many take an "If it ain't broke, don't fix it" attitude, pointing out that the huge growth of broadband has continued in spite of the dot-com bubble bursting at the beginning of the decade. Some even argue that the network neutrality would actually cause monopolies due to a "commoditizing" effect, where companies cannot differentiate themselves so only the largest survive.

Most anti-regulatory proponents feel that the internet isn't nearly as fragile as the Net Neutralists fear, and that corporate greed couldn't stem the flow of people toward broadband internet. Because they have gotten used to being able to visit whatever they want, any attempt to disable their activities would be met with resistance and eventually be overturned. They point to China as an example. China is actively trying to block people from reaching certain non-approved sites, such as any information about Tiananmen Square. Many non-profit organizations have sprung up world-wide to sneak information in to China in such a way that the government can't see or stop the traffic. Information, they say, wants to be free (as in speech, not as in beer).

There are two common fears associated with government regulation of the internet. First, there is the fear that once the government tastes the power of regulation, they will be hungry for more, like a wild animal tasting man-flesh for the first time. There has already been concerns of the government trying to tax email and/or the internet. So far, all attempts have either been politicians dreaming or hoaxes, but it's hard to deny that the government would like a piece of that pie to spend on important projects. Various internet taxes could provide significant revenue for the national government.

The other fear is that any government regulation would probably backfire and end up harming the "good guy" and rewarding the "bad guy". The best internet companies filter traffic a lot by blocking known spammers or attempts to hack the network. While the distinction between legitimate traffic that is being threatened and illegitimate traffic that is currently being blocked may be clear to us now, how long would it be before a bold cracker took an ISP to court for blocking his access attempts? Any such laws would require so many loopholes to be able to effectively allow positive differentiation that the law would be ineffective at protecting the consumers for any company with a large enough team of lawyers.

One study I looked at insists that Network Neutrality actually encourages monopolies instead of discouraging them. The idea is that because network neutrality essentially tries to guarantee that the internet is the same regardless of what company you use to access it, there will be no room for product differentiation. If companies cannot differentiate their product based on the content they provide, price becomes the only factor in making a decision between two companies. Because there is such a high barrier to entry due to high costs of laying fiber and such, new companies will not be able to enter the ISP market and we will be left with one or two companies dominating the market. They refer to this concept as commoditization.

Another problem with trying to regulate the internet is that it is changing so rapidly that regulation would most likely fall behind very quickly. Probably nobody on the initial ARPA-NET could see the huge growth and commercialization of the world wide web. Even as the internet became more common, the concept of streaming television programs or even live events seemed far-fetched. In fact, one reason why it took so long to start distributing the shows online was because of licensing issues. If contract law is having such a hard time keeping up, would internet regulations fare any better?

Finally, there are some valid concerns about whether a company could or even should build a solid network only to have it used exclusively by other companies. If a telecommunications company gives high-speed internet to its customers and wants to also launch a music site or video site, is it fair for them to not be allowed to offer a speed incentive for their customers? If they can't, then is there any incentive for them to continue to develop faster networks or better products?
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