A half-dozen clowns – John W. Mayo and Marius Schwartz of Georgetown, Bruce Owen at Stanford, Robert Shapiro at the Georgetown Center for Business and Public Policy, Lawrence J. White at New York University’s Stern School of Business, and Glenn Woroch University of California, Berkeley – recently took the the New York Times op-ed pages to argue against what they call possible "extreme regulations" by the FCC and the rest of us would call enforcing net neutrality.
Their argument centers around Europe’s Internet regulation, which they claim is less restrictive – and therefore better – than the FCC reclassifying broadband so it can make sure big telecom companies can’t charge online publishers for premium delivery. Specifically, they like transparency as a solution:
Under the new European rules, providers are required to inform customers of any limitations that they impose on access, or on the use of services and applications, including bandwidth caps.
It’s a silly argument.
Europe’s regulation is much stronger than America’s, with mandated line-sharing and explicit control over rates, fostering "open access" principles that the Bush administration explicitly abandoned. Open access to the lines means there are dozens of Internet providers a European broadband customer can choose from. Because the Bush administration liked big telecom monopolies, a typical American is lucky if they have more than two providers to choose from.
All that makes the "transparency" that these clowns feel is the right way to regulate the Internet meaningless. What does it matter if broadband companies have to tell me they are serving CNN.com pages faster than this post because CNN can cough up the money for the premium service and I can’t? I only have one provider to choose from.
And of course, European broadband is better for their tougher regulation – it’s faster and cheaper than it is here in the good old U.S.A.
But at the heart of their argument is a free-market zealotry that says businesses should be allowed to make money any way they choose:
Perhaps the most noteworthy thing about the European regulations is what they do not do. They do not prescribe business or pricing models for European telecommunications companies. This represents a vote of deserved confidence regarding the effectiveness of Europe’s current competition policy as well as the evolution of pricing, competition and investment in the industry. Europe already has all the tools needed to address lapses in competition if they occur.
This is wrong, and it’s dangerous. As other industries – for example, health insurance – show, government should in fact regulate how companies can make money, because some ways companies choose to make money are immoral and deeply harmful.
The health insurance industry currently employs one of those harmful and immoral business models. It’s called denying care. They make money by finding ways to avoid paying for the medical care their customers need – be it rescission, denying care for pre-existing conditions, "designing benefits" so that nothing is covered or any of the other bad practices we’ve focused on so much over the last two years. And because the industry was never told that making money this way is wrong and therefor not allowed, they ran with it and made a killing. Health reform is designed to end this harmful business practice, and it’s to our nation’s credit that health reform passed. Simply put, the insurance industry shouldn’t be allowed to make money by denying care, and it’s government’s job to tell them to cut it out.
The same principle applies with phone or cable companies and net neutrality.
There is a ton of money to be made by charging web publishers for premium delivery of their content. For example, I’m sure Comcast could charge Google a fortune to serve Google’s searches to their customers faster than any other page on the web. The telecoms could make a lot of money this way. But the business practice would be incredibly harmful. If startup online companies without money to pay the big telecoms were at a speed disadvantage they will be at a huge competitive disadvantage. New startups hoping to be the next YouTube, EBay or Amazon would never get off the ground because they couldn’t pay the price of entry. The Internet would be dominated by big media companies with the deep pockets to pay the big telecoms. The little guy wouldn’t stand a chance.
That’s not what the Internet is about, and that’s not what’s made it great.
Making money by breaking net neutrality is not a business model that helps society, and it’s not one that should be legal in America. The FCC’s job, as a regulator, is to enforce the public good in the realm of private industry. They should absolutely be telling telecoms that this business model is off-limits here in the U.S.
And so, the FCC should reclassify broadband so it can be regulated and kept net neutral. It’s the best way to make sure the Internet stays the creative and economic powerhouse that it is. Click here to tell them to do so.
Just so folks know where these authors are coming from [emphasis mine]…
- John W. Mayo of Georgetown has served as an advisor and consultant to both public and private agencies including the U.S. Department of Justice, the Federal Trade Commission, the U.S. Department of Energy, AT&T, MCI, Sprint, Verizon, the Tennessee Valley Authority and Oak Ridge National Laboratory.
- Bruce Owen, professor of public policy at Stanford, founded Economists Incorporated and served as CEO and Board Chair until 2002. EI is a consulting firm provides “cutting edge research, analysis and strategic advice to corporations, trade associations, government agencies, individuals and legal counsel worldwide.” Their client list includes: AOL TimeWarner, AT&T, Cablevision, Comcast, Qwest and even the NAB and NCTA
- Robert Shapiro, senior policy fellow at the Georgetown Center for Business and Public Policy has advised AT&T, MCI
- Glenn Woroch, executive director of the Center for Research on Telecommunications Policy at the UC, Berkeley advised Bellsouth, SBC and T-Mobile USA
Almost all of the writers have deep telecom connections. What a surprise!