Net Neutrality – 10/22/2009

The US government is proposing broad new regulations for telecommunications and cable internet service providers.

The new proposals appear to target specific providers for regulation and government oversight.  Specifically, Massachusetts Senator Ed Markey has proposed the Internet Freedom Preservation Act of 2009, or the “Net Neutrality” bill, outlining government policies to impose new governance and restrictions targeting telecommunications and cable providers AT&T, Verizon, Time Warner and Comcast.

The proposed is based on the unfounded fear that service providers will “control who can and cannot offer content, services and applications over the Internet utilizing such networks.”

The Markey bill indicates the vast majority of consumers receive services from only one or two dominant internet service providers.  And, the bill says the national economy could be harmed “if” these providers interfered with access to internet applications.

The bill proposes regulations imposing equal treatment (eg price/performance) of all internet traffic and content, regardless of content type and delivery costs.  Specifically, the legislation proposes internet service providers could not sell prioritized internet applications or services.

The first problem with the proposed legislation is the lack of recognition of costs to provide internet services.  Some applications, such as video are bandwidth hogs and require significantly greater network infrastructure and associated costs to deliver when compared to the network infrastructure costs to deliver email access.  Under the proposed legislation, services providers would have to charge the low bandwidth users (casual browsers and email readers) more to offset the higher costs of the video users.  One result of the proposed legislation would be less consumer choice and a hidden “bandwidth hog tax”.  Today, most service providers offer tiered products and pricing to consumers and businesses to account for the additional costs to deliver bandwidth intensive applications.  You pay more if you use more under the tiered pricing model.  These are not “discriminatory” practices.  Rather, tiered pricing and application prioritization are sound business models delivering reliable, profitable product choices and unburdened internet ecommerce.  Consumers and businesses currently have choices.  The proposed legislation takes away choice and increases costs to consumers and businesses.

The second problem is, certain applications such as voice and video over the internet require prioritization and special treatment to work properly.  The proposed legislation makes existing application prioritization products and networking practices illegal.  Internet service providers would have to dismantle these services to make all internet applications “equal” with no prioritization schema.  The new legislation would kill off reliable voice and video over the internet as we know it.

The third problem with the Net Neutrality legislation is anti-trust and federal trade regulations are already in place to protect consumers and business from monopolistic practices and unfair trade.  For example, when AT&T disconnected MCI customers in 1974, MCI filed and won a successful anti-trust lawsuit resulting in breakup of the AT&T monopoly.  Another example is, the Federal Trade Commission recently investigated possible antitrust violations caused by the Apple and Google sharing two board directors.  Arthur Levinson has since stepped down from both Apple and Google boards.

The US government would better use taxpayer dollars and valuable legislation time by asking two questions:

Which companies are hiring lobbyists and launching advertising campaigns promoting Net Neutrality legislation?

What is their agenda?

Net Neutrality legislation is not needed.  Consumers would have less choice and higher costs.  Internet service providers would incur additional costs and compliance overhead.  Taxpayers would pay higher taxes to create and support additional government oversight organizations.

What business and consumers need is effective interpretation, oversight and enforcement of existing laws and regulations.

Disclosure – Joe Tighe has no paid relationships, products or    endorsements from any company, political or government organization cited in this article.

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