On FCC Regulations and Net Neutrality

net_neutrality1_600x400Net neutrality is one of the more hot button issues in the tech industry these days, and now the new FCC regulations coming out, there are a number of the rants criticizing the regulations. The essence of these rants suggest that FCC is making a power grab and layering on bureaucracy and this is the first part of a slippery slope that will result in a government takeover of the Internet. Furthermore, these rants suggest that government control of the Internet will stifle innovation, increase costs, and squash competition.

For the record, I don’t implicitly trust the government or believe that the government always has the interest of the people at heart. But nor do I believe that corporations do either. Liberals typically rail against the evils of big corporations while conservatives rail against the evils of big government. If you look hard enough you can probably find examples of both. Likewise, I think competition is a good thing: it has historically helped drive down prices and drive innovation so that companies remain competitive too.

But what I find to be absurd about these rants is that they fail to recognize the fact that the Internet is a product of the government and has been managed by the government since its inception. The Internet started as a project for sharing research among universities and to facilitate communications in the military in the 50’s and 60’s. It was originally called Arpanet. The concept was to have what is called a “packet switched” network that allowed for packets (bundles of data) to be “routed” through an series of interconnected computers rather than have direct links between all computers on the network. This allowed the network to be more robust and fault tolerant in the event that any single computer would fail. After the debut of Arpanet, many other networks emerged based on the concept of a packet switched network. During the 70’s, there was a significant effort to standardize these networks through a project funded by the National Science Foundation (NSF). Through this effort, the TCP/IP protocol was born, which is still the primary protocol used for Internet today. By the early 80’s Arpanet had adopted TCP/IP as its protocol and in the early 1980, most all other networks including those from the Department of Energy, National Aeronautics and Space Administration, and National Science Foundation followed suit creating the formation of the modern Internet. During early 1990’s private connections were being being offered through ISP’s, and these expanded the Internet to what it is now. While many of the actual physical networks were being consolidated to create the modern Internet, there simultaneously emerged governing bodies to manage IP addressing and domain names. The first of such was a group called IANA that managed domain and IP’s IANA was a non-profit private corporation set up to manage IP addresses and names for Arpanet. IANA was subsumed in 1998 when the Department of Commerce contracted with ICANN to perform much of the same functionality, and it has been this way ever since.

With this as a backdrop for the FCC regulations that were put in to place, it doesn’t seem to make a whole lot of sense to criticize the government regulating something that it created, nor does it make sense to think that the government is utterly incapable of managing things such that they will destroy it. If anything, the Internet is at least one example of where the government was able to create and maintain something that people want to use.

Likewise, the opposition to the FCC regulations are based on a fear of something that hasn’t happened or that has even been proposed. In fact, the regulations promote an environment makes United States broadband market into a more competitive and to ensure that the openness and reliability built into the Internet by its designers remains there through a number measures.

First, the regulations prevents ISP’s from preferring or penalizing Internet traffic based on the content being consumed and from blocking content so long as it is legal content. This is the essence of what net neutrality is trying to defend. This is important for number of reasons, but perhaps the main one is it prevents startups and entrepreneurs from being squashed because consumers cannot reach them. The openness of the Internet is what has allowed companies like Amazon, eBay, Facebook, Google, Microsoft, Netflix, Twitter, and Yahoo grow from fledging ideas to global, multi-billion dollar companies, and it is no surprise that these companies also support net neutrality. These are the big ones, but there are hundreds of success stories on a smaller scale where businesses had been able to start and grow because they were able to use the Internet has means to advertise and attract business.

Second, the regulations allow municipalities to set up broadband networks to increase competition in local areas. This has been one of the more controversial decisions made by the FCC because it overrides some state laws that prohibit municipalities from setting up publicly run broadband service and only allows private companies to do so. But many municipalities are not going at this alone, rather they are partnering with companies like Google who are installing high speed fiber optic networks in cities such as Chattanooga and Kansas City. For this reason, residence of these cities enjoy some of the fastest Internet connectivity in the world has prices on par or even less than broadband offered solely by private businesses. The difficulty with many agreements in local areas is that private companies end up with a monopoly or near monopoly in an area, so the prices are not always competitive and service can even suffer. The United States on average pays more for the same Internet service that other comparable services in other parts of the world, and some of America’s broad band companies are some of its most hated companies too because they lack good service.

Third, the FCC categorized the Internet as a utility in the same manner telephones, power, and electricity. There a couple of reasons that the FCC did this. One, it gives authority to regulate ISP’s in the manner that utilities are regulated to prevent the ISP’s from weilding monopolistic power over consumers. Two, it helps all ISP’s have fair access to utility infrastructure such as utility poles and infrastructure. Third, it helps the regulation stand up in court. In previous rulings, the FCC has attempted to block attacks on Net Neutrality, but these were struck down because the courts ruled the FCC lacked the authority to do so. These regulations, however do not set prices on ISP, nor do they control how ISP’s bill their customers for service. Four, it provides the authority to deal with specific complaints against ISP’s and provides more transparency into the process.

My support for the FCC regulations is grounded in the fact that they are aimed at protecting the content and connections on the Internet so that the consumers and providers of content don’t receive interference from the connecting agent, namely the ISP and sets the stage so that ISP’s will have more competition in areas such that it increase innovation and drive down cost. These values are inline with values I stated earlier, and why I think the FCC regulations are a good thing.

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