Like most policy debates, the Washington argument over "network neutrality" is thoroughly uninformative. Both the cable and telephone companies on one side and big Internet companies like Google (GOOG) and Microsoft (MSFT) on the other claim to be protecting consumers. But there's a danger we users could get trampled in this fight among elephants.
The problem is that everyone wants to get into the business of on-demand video—phone companies, cable companies, and players such as Microsoft, Google, and Yahoo! (YHOO). Each group wants the playing field tilted to its advantage. Internet companies, backed by various public-interest groups, claim the phone and cable companies want to turn the information superhighway into a private toll road (see BusinessWeek.com, 7/5/06, "Senate Scorecard: AT&T 1, Google 0 "). Rules are needed, they say, to keep the networks "neutral"—to prevent the network operators from discriminating against content created by companies that don't own the data highways. They especially want to prohibit carriers from charging extra for premium services such as video.
Cable and phone companies, on the other hand, claim their opponents want to smother the Internet in regulations and get a free ride for their own advanced services.
PRESERVING CREATIVITY. Fortunately, there's a middle ground: We must acknowledge that public networks for everyone can exist alongside premium, private ones, and that these two types of networks can live by different rules. The Center for Democracy & Technology (CDT), a think tank on tech issues, argues for an approach that preserves the open nature of today's Internet while creating space for premium networks. This solution truly serves the interests of consumers and most businesses.
The glory of the Internet is its openness to innovation. As long as you conform to some basic technical requirements, you can send any sort of data and create any service you want. E-mail, streaming video, online commerce, and the World Wide Web itself were all started by groups, companies, or individuals who did not need permission from regulators or network owners. The action took place on the very same lines that carry telephone and cable-TV traffic. But unlike those services, Internet activities were never subject to stifling regulations, which is why innovation was able to flourish.
This unprecedented freedom could be threatened as network operators consolidate, putting ownership of the Internet backbone into the hands of just a few corporations. New laws are needed to keep the Internet from degenerating into a closed and uninspired copy of the phone networks. Specifically, network operators should be prohibited from blocking services such as Internet phone calls.
FAIR PREMIUM. But even as we preserve companies' freedom to innovate on the familiar public Internet, we must make sure innovation can thrive on new, high-speed private networks, too. That won't happen if Google, Microsoft, and others succeed in efforts to bar network operators from selling premium services. I would like to see AT&T (T) and Verizon Communications (VZ) deliver high-quality video, something today's Internet cannot do well.
Google, Microsoft, Yahoo, and even YouTube (NWS) would be free to do it, too—and it seems fair for them to pay a premium price for premium delivery. Regulation of these networks should be minimal. Interestingly, cable companies provide a model: Part of their network is dedicated to the public anything-goes Internet. The rest is used for controlled delivery of video content.
CDT's formula for network neutrality calls for "basic rules requiring network operators to preserve nondiscrimination and openness, but only on those portions of broadband networks dedicated to the [public] Internet." This isn't as simple as it sounds, and the devil will be in the details. But it is the best compromise I have seen. Congress' record of getting it right on tech issues is poor, but we can hope that this time they will find a middle ground that can serve everyone.
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