Wednesday, March 30, 2011

FCC net neutrality rules and efficiency

by Thomas W. Hazlett

Financial Times

March 29, 2011

The US Federal Communications Commission, seeing the internet as a fragile ecosystem under threat from opportunistic internet service providers, issued its “network neutrality” order on December 23. By January 10 it had received its first complaint – against an upstart wireless competitor providing innovative services, advanced technologies and new options for low-income consumers.

The targeting of socially valuable entrepreneurship is not an accident. The regulatory effort – “preserving the open internet” – as the FCC labels its regime, mistakes the benefits of market competition for designs of market planners.

The FCC sees danger lurking in the broadband ISP. It will steer you to websites it prefers, pocketing extra fees, either by flat-out blocking your path to others, or by “covertly blocking or degrading internet traffic” to rival sites. Special delivery deals – some sites working better than others – are seen as barriers for new, small-scale players in content and applications. “The harms that could result from threats to openness are significant and likely irreversible,” intones the FCC.

Regulation is to the rescue. ISPs will not be allowed to block access to (legal) websites, or unreasonably discriminate in the way traffic flows. Customers choose. ISPs are open. The network is neutral. What’s not to like?


Ungated version

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