fbpx

Does Net Neutrality Make The Internet A Utility?

I’ve written about the complex issue of net neutrality before.

Advocates of enforcing net neutrality claim that it preserves the democratic nature of the internet and prevents monopolistic businesses from stifling startups’ access to the digital market.

Critics claim that net neutrality is based on a complete misunderstanding of how the internet actually works and will only lower the quality of connectivity and access for most users, not raise it.

Many celebrities have made public statements about the issue, including President Obama. However, yesterday the president took one step further and urged the FCC to treat the internet like a public utility and enforce net neutrality by regulating the internet.

This unilateral action would bypass the very passionate public discussion of the issue. Rushing to impose a quick-fix solution, essentially redefining “utility” to include “any highly popular good or service” and adding “monitoring the internet” to the FCC’s job description, is a risky move. This point is well made in the Washington Post.

First of all, as the article indicates, startups have enjoyed access to the digital marketplace from day one:

At the dawn of the broadband era, the same advocates today predicting imminent doom and gloom for “the Internet as we know it” warned the Clinton FCC that without public utility treatment for broadband, start-ups would be unable to access potential customers, destroying the potential of the emerging commercial Internet.

In 1999, of course, one of those start-ups was a new company called Google, which today is worth over $370 billion.   And under the light touch regulatory approach mandated by Congress and sensibly followed by Republic and Democratic FCC Chairman until now, ISPs have invested over a trillion in new infrastructure, building the world’s leading cable, mobile, and now fiber networks.

Second of all, the government’s track record with utility takeovers is nothing to brag about:

Despite all evidence to the contrary, however, the advocates continue to call for government takeover of the network, subjecting it to the same slow, inefficient and often corrupt rules that have nearly destroyed existing power, water, transportation and other older utilities.  (In California last month, the president of the state’s public utility commission was forced to resign amid allegations of a too-comfortable relationship with a state power company whose poor maintenance and lax oversight by the regulator led to a gas explosion that killed eight people in 2010.)

Case in point: in my personal opinion, a significant portion of the insurance marketplace is oppressively regulated. On the one hand it is true that the unethical misconduct of financial representatives over time has invited government oversight. If we do not clean up our act, the government will force us to do so.

At the same time, all too often the government does not stop at simply enforcing proper business practices with consumers. Almost 20 years ago the insurance department in my home state of New Jersey took over the medical insurance marketplace. We now have very few carriers to choose from; no product innovation; ridiculously high premiums; and poor commissions.