The FCC’s Net Neutrality Rules Will Shut Down Innovation on the Internet

Editorial Cartoon by AF Branco

By a 3-2 vote, the Federal Communications Commission has approved “Net Neutrality” rules. According to FCC chairman Tom Wheeler, the new rules “ban blocking, ban throttling, and ban paid-prioritization fast lanes” on the Internet. According to Brent Skorup, however, the rules will prevent ISPs from experimenting with different ways of managing traffic to improve the quality of their services:Prioritization has been built into Internet protocols for years. MIT computer scientist and early Internet developer David Clark colorfully dismissed this first myth as “happy little bunny rabbit dreams,” and pointed out that “[t]he network is not neutral and never has been.” Experts such as tech entrepreneur and investor Mark Cuban and President Obama’s former chief technology officer Aneesh Chopra have observed that the need for prioritization of some traffic increases as Internet services grow more diverse. People speaking face-to-face online with doctors through new telemedicine video applications, for instance, should not be disrupted by once-a-day data backups. ISPs and tech companies should be free to experiment with new broadband services without time-consuming regulatory approval from the FCC.

Intelligent management of Internet traffic and prioritization provide useful services to consumers. Net neutrality proponents call zero-rating — which is when carriers allow Internet services that don’t subtract from a monthly data allotment — and similar practices “dangerous,” “malignant,” and rights violations. This hyperbole arises from dogma, not facts. The real-world use of prioritization and zero-rating is encouraging and pro-consumer. Studies show that zero-rated applications are used by millions of people around the globe, including in the United States, and they are popular. In one instance, poor South African high school students petitioned their carriers for free — zero-rated?—?Wikipedia access because accessing Wikipedia frequently for homework was expensive. Upon hearing the students’ plight, Wikipedia and South African carriers happily obliged. Net neutrality rules like Title II would prohibit popular services like zero-rating and intelligent network management that makes more services available. […]

[T]he FCC’s rules will make broadband more expensive, not cheaper. The rules regulate Internet companies much like telephone companies and therefore federal and state telephone fees will eventually apply to Internet bills. According to preliminary estimates, millions of Americans will drop or never subscribe to an Internet connection because of these price hikes. Second, the FCC’s rules will not make Netflix and webpages faster. The FCC rules do not require ISPs to increase the capacity or speed of customers’ connections. Capacity upgrades require competition and ISP investment, which may be harmed by the FCC’s onerous new rules. [Mercatus Center, February 23]And Julian Sanchez explains how the rules foreclose the discovery of better business models:[U]sers who want any of their traffic delivered at the highest speed will have to continue paying for all their traffic to be delivered at that speed, whether they need it or not. The extreme version of this is the controversy over “zero-rating“ in the developing world, where the Orthodox Neutralite position is that it’s better for those who can’t afford mobile Internet access to go without rather than let companies like Facebook and Wikipedia provide poor people with subsidized free access to their sites.The deep irony here is that “permissionless innovation” has been one of the clarion calls of proponents of neutrality regulation. The idea is that companies at the “edge” of the network introducing new services should be able to launch them without having to negotiate with every ISP in order to get their traffic carried at an acceptable speed. Users like that principle too; it’s why services like CompuServe and AOL ultimately had to abandon a “walled garden” model that gave customers access only to a select set of curated services.But there’s another kind of permissionless innovation that the FCC’s decision is designed to preclude: innovation in business models and routing policies. […] Are there different ways of routing traffic, or of dividing up the cost of moving packets from content providers, that might lower costs or improve quality of service? Again, I’m not certain—but I am certain we’re unlikely to find out if providers don’t get to run the experiment. It seems to me that the only reason not to want to find out is the fear that some consumers will like the results of at least some of these experiments, making it politically more difficult to entrench the sacred principle of neutrality in law. [Cato Institute, February 6]

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