Recent Chinese cyberattacks on American companies–as well as more widespread censorship, such as Iran’s blocking of Gmail–have thrust Internet regulation to the center stage of foreign policy. The State Department has correctly identified Internet access as an important tool for promoting freedom abroad, but at home the Federal Communications Commission (FCC) is busy undermining the longstanding freedom from regulation that has allowed the Internet to grow exponentially for two decades.
The debate over so-called “net neutrality” has been technical and heated, especially since the FCC began the process of actively regulating Internet traffic management.
This affects our foreign policy goals. Ambassador Philip L. Verveer, the State Department coordinator for international communications and information policy, expressed concern that some countries watching the FCC attempt to regulate the Internet “may be used” by repressive regimes “as a justification for blocking access for purposes of preventing unwelcome political, social or cultural information from being disseminated to their citizens.”
Net neutrality seems sensible at first. But upon further consideration, it’s clearly not.
The FCC seeks to require that all data packets be treated the same and that all individuals and entities receive the same service–regardless of their usage or bandwidth demands. Its proponents contend that such regulation is necessary to ensure the free and open nature of the Internet.
Yet the opposite seems closer to the truth. Net neutrality is counterproductive, even illogical. The openness of the Internet is not and never has been in contention. In today’s ultra-competitive marketplace service providers will lose customers and revenue if they ever discriminate against customers or fail to deliver legal online content quickly and efficiently. This is similar to the requirement that
To see the flaws in net neutrality just apply the “everyone must be treated the same regardless of usage or other considerations” to other areas. The government abandoned “mail neutrality” when FedEx began offering the same service as the government, delivering the mail, yet doing so more quickly and surely. The U.S. Postal Service didn’t issue FCC-like regulations to prevent FedEx from offering customers new and innovative services. Instead, it, too, offered different pricing plans based on customer needs, for overnight and certified delivery.
FCC-like regulations for net neutrality were considered over the past two years by the European Union and Japan, and both rejected the need for this type of unnecessary, even harmful, over-regulation. Such regulation, they concluded, would undermine their primary goals to promote universal access by discouraging investment in smart, next-generation networks and raising prices for ordinary consumers. One respected consulting outfit, Copenhagen Economics, estimated that adopting net neutrality would push up prices by one-third for European consumers. For example, the monthly price of a broadband subscription would rise from 33 to 44 euros in Sweden and from 29 to 39 euros in Germany.
Wealthy consumers might not care about this increase in price, but for many consumers net neutrality would mean they could no longer afford broadband access. Copenhagen Economics quantified this potential increase in the digital divide. For instance, broadband penetration in France would increase from 22% to 30% with no regulation. Under a net neutrality regime, broadband penetration would actually fall from 22% to 21%.
Furthermore, Internet use, while near-universal, isn’t evenly distributed. There are a few jumbo users (aka “bandwidth hogs”). YouTube alone consumed more bandwidth at the end of last decade than the whole Internet provided at the decade’s beginning. To pay for the pipes and switches for the few voracious users, service providers could charge them a bit more than ordinary users–that is the fairness principle. Or service providers could charge all consumers more–that is the net neutrality principle. The question at the core of the debate is who pays: ordinary consumers or heavy bandwidth users (whether companies or individual bandwidth hogs).
What we need instead of net neutrality is an FCC that facilitates massive private investments in high-speed broadband. What the federal government furnished in the 1950s with interstate roads, private firms now furnish with the Internet-pathways.
When it comes to broadband needs, we are at the very beginning of innovative and exciting new opportunities. Soon it will be common for medical teams to swap X-rays on the Web and monitor critical care patients at home. Soon we will be monitoring all of our home and office security and most appliances over the Web. And soon we will all have the technology and power to monitor and adjust our energy usage in our homes. Consumers having access to these smart technologies, and access to broadband at affordable rates, is what is at stake in this debate.
The FCC should take note of the direction set by our democratic allies in Japan and the E.U. and commit to policies that encourage access, investment and affordability, rather than policies that will at the end of the day undermine investment, stifle deployment and raise consumer prices. We need smart, robust and accessible networks at home and abroad.
Ken Adelman, a U.N. ambassador and arms control director under President Reagan, is cofounder and vice president of Movers and Shakespeares, which offers executive training and leadership development.
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