Frank’s Case Book

The Internet began under the auspices of the military’s ARPANET and was later augmented as the National Science Foundation sponsored links to educational institutions. For the most of the 1980’s the Internet was a robust network largely closed to everyone not involved in governmental or research activities. Many enjoyed this exclusivity and limited access. There was resistance to opening up the Internet to commercial activity. To many this bow to the market would taint the nobler aspirations of a publicly-developed, open communications shared among particularly educational institutions.

Once the Internet allowed for commercial activity its public adoption exploded, first with the availability of modem connections via telephone lines, dedicated cable lines, and now wireless connections. For a while, there was talk of a social-class based “digital divide’’ that separated the computer/Internet haves and havenots. Almost before people conjure up government programs to address this crisis, the falling costs of computer and Internet connections have largely alleviated this perceived problem. There are still pockets of the world with limited connectivity, but wireless communications may cause these areas to leapfrog the desktop computer Internet connection to almost exclusive wireless cell phone Internet connectivity.

Now that the Internet and Internet applications have become ubiquitous, the newest worry is “net neutrality’’. The concern is that the relatively few very high speed Internet providers will use their positions for unfair competitive advantage. For example, some Internet service providers also provide Internet-based telephone services. It is conceivable that they might prevent or handicap rival companies from using the Internet connection offering an alternative telephone service. Now that one of the major Internet providers, Comcast, owns NBC, the fear is that Comcast might some how give speed or connection preference to NBC content.

The concern is real and possible abuse plausible, but there have been few instances of abuse to point to and it seems premature to begin regulation. Nonetheless, the Federal Communications Commission (FCC) proposed net neutrality regulations, which were recently rejected by Congress.

Republicans have been largely against compelling net neutrality via regulation in no small measure because they distrust the FCC. Liberal members of the FCC have suggested that they would like to re-institute the “Fairness Doctrine’’ as a means to balance political content radio broadcasting. Conservative view this as unnecessary given the many available communications channels, and as a means of silencing popular Conservative radio talk show host like Rush Limbaugh and Sean Hannity. The mistrust caused by these efforts explain part of the reluctance of granting the FCC authority to regulate Internet content.

Concern over Internet service providers exploiting monopoly or near monopoly positions to control content and access need not be the concern of the FCC, but rather the Federal Trade Commission (FTC). In general, Internet service providers have an economic interest in allowing broad access to online services. If they begin to use non-competitive practices, the FTC can intervene under its anti-trust authority. In the meantime, the best role for government would be to provide conditions necessary to mitigate monopolies. Such conditions might be the availability of more wireless spectrum to allow more competition with wired services, or making available public rights of way so that additional providers might be able to provide wired access.

Governments too often have embarked on regulation for the benefit of the consumers have succumbed to the temptation of protecting incumbent business. Even Edward Kennedy and Jimmy Carter saw that regulation of trucking and airline fees were largely hurting consumers and deregulated trucking and airlines. The result has been lower trucking fees and availability of air travel to a broader range of consumer income levels.

Prudence and history suggest that we wait and see how the Internet develops before leaping to regulate it even under the auspices of “network neutrality.’’