Net Neutrality vs. "do no evil"

The various net neutrality proposals now in process in the U.S. Congress are intended to establish government oversight on all public networks in the United States in the stated interest of ensuring that carriers neither charge extra for, nor artificially retard or accelerate, packets based on origin or content.

On the surface the worst this is going to do is obsolete the priority packet forwarding terms found in many contracts - particularly for people with direct backbone connections, people forwarding broadcast signals, and people still using frame relay type technologies.

Look a bit deeper, however, and you find a lot of people expressing serious concerns - consider, for example, these bits from a Human Events article by Ross Kaminsky:

The idea of 'Net Neutrality' is to prevent Internet Service Providers ('ISP's) from being able to slow down particular internet traffic or charge more for it, even if that traffic is compromising internet service for the rest of their network's customers. One definition of Net Neutrality is 'the principle that data packets on the Internet should be moved impartially, without regard to content, destination or source.'

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So, for example, an ISP will not be allowed to slow down 'peer-to-peer' file transfers even if they are disproportionately degrading Internet service for others. Much like our income tax system, it is reported that 10% of internet users consume 80% of bandwidth. And much like our tax system, there are those who want others to foot the bill for their costs. If ISPs can't have policies which address the fact that bandwidth is limited and that bandwidth hogs need to be restrained so the rest of their customers can maintain adequate service, that puts them in an extremely difficult situation.

Imagine you are a private builder of toll roads who invests a billion dollars in a highway. Then the government tells you that it's unfair for you to charge 18-wheel tractor-trailers a higher toll than you charge passenger cars despite the fact that the big trucks are responsible for the large majority of your maintenance and repair budget. What would your choices then be? Probably some combination of stopping construction of further roads, raising the prices for everyone (because the government says everyone has to pay the same price), or trying to find legally uncertain ways to game the system. The same choices will apply to ISPs under Net Neutrality.

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As Dylan Tweney noted in an article at Wired magazine entitled FCC Position May Spell the End of Unlimited Internet, AT&T has repeatedly stumbled in its ability to provide 3G wireless capacity, thanks to the unexpected popularity of the iPhone. Those difficulties lend credence to AT&T's (and Apple's) reluctance to allow apps like Skype and Slingplayer unfettered access to the 3G network: If the network can barely keep up with ordinary demand, just imagine what would happen if we were all live-streaming the Emmy Awards over our iPhones at the same time."

While both the pro- and anti-Net Neutrality sides claim to be on the side of innovation, in the words of Heritage's Gattuso, "I'm stumped to think of any government regulation which has increased rather than decreased creativity and innovation. This scheme is not made necessary by a lack of competition. It's made to replace consumer choice with a government rule as to how traffic is to be managed. At the very least, we'll have a slower, less efficient Internet. The government rules will be a first-come, first-served basis, but I doubt that's the model the market would come to on its own; it's not the model that works in most sectors of the economy."

So why the push for 'Net Neutrality'? Most of the support from the private sector is from large internet content companies which used to be truly capitalist and essentially libertarian in behavior, companies like Amazon, eBay, and particularly Google. As they add more high-bandwidth content, such as movies and music, they want to prevent ISPs from being able to charge them for using such a high percentage of available bandwidth. Instead, under the guise of 'neutrality', they're trying to use government to prevent the owners of Internet infrastructure from being able to rationally set prices for the use of that infrastructure. In other words, they are trying to steal the ISPs property rights. Is it any wonder that almost all of Google's political contributions go to Democrats?

One thing I think most of the people commenting on this issue have missed is that the American network infrastructure is currently under built in reaction to the excesses of the 90s - and therefore that these regulations, by killing the incentives for new investment, will eventually raise short term carrier profitability while essentially capping efforts to deliver high bandwidth content via the internet at or below present levels.

In the long run , therefore, the bottom line on net neutrality is is that it's far from neutral in being good news for traditional media but bad news for internet users and worse news for long term American competitiveness in the world.