Toll Charges Ahead on the Internet Freeway?

Normally Americans offer ideas critical of government, emphasizing free-market policies as an alternative to Europe’s state-centred, socialistic tendencies.

But in years to come the phrase “beware geeks bearing gifts” may come to describe the American Trojan Horse US which threatens to ruin the Internet.

For the current US debate between high-tech content providers and broadband access providers about the deceptive term “net neutrality” has nothing to do with keeping the Internet free and open.

At stake is whether or not broadband providers can charge content providers different rates for different quality of service levels in transmitting their data packets.

Gigantic corporations such as Google and Yahoo are pushing for “net neutrality“ legislation that would require ISPs to treat every single information packet the same way, precluding them from giving priority treatment to video or voice content for an added fee ; the phone and cable companies building broadband pipes are against.

The Google side argue that government interference is needed to keep the broadband companies from blocking and censoring websites, and that otherwise the Internet is doomed to become the exclusive privilege of the wealthy.

There is in fact scant evidence that broadband providers are guilty of any such crimes; but it is a matter of record that Google consented to censor content in order to gain access to the lucrative Chinese market.

The Internet is a place where people freely exchange ideas, and commerce moves at the speed of light. It is precisely the ever-present market forces – not legislation – that have lowered prices, promoted broadband access, and boosted innovation.

In Europe, new market entrants already provide close to half of all broadband access lines. Restricting the type of service and content broadband service providers can provide closes off a dimension of competition: pricing flexibility.

Without that, the Internet is only useful for the bulk shipment of data packets. Very little separates one provider from another, leading to a natural advantage for larger companies.

Smaller companies would lose their comparative advantage in the market, precipitating a concentration of ownership of the broadband providers.

New mandates and regulations are not required to protect Internet access; should any problems emerge, they can be readily handled with existing laws.

What we should really be promoting is net diversity, allowing providers to experiment with services that meet a wide array of demands, from telemedicine and online video gaming to video programming and email.

This would encourage investment in broadband infrastructure, invite more competition, and keep down prices. The best way to alleviate concerns about anti-competitive behaviour is to have more competitors and new choices in the market.

Net neutrality mandates do nothing to promote competition in the broadband market or provide consumers with more options to access the Internet. Instead, they would ensure that the Internet operates the same way for the rest of its existence, regardless of whether engineers and scientists find another approach that works better for consumers.

Today’s Internet is already feeling its age, and new bandwidth intensive applications and content will only make current shortcomings more apparent.

Quality of service will become a much more important issue and require important investments in broadband infrastructure. Mandates would require regulated rates that would stifle the natural evolution of the physical architecture of the Internet.

Matt Kibbe is president and CEO of FreedomWorks, a US American grassroots organisation of 800,000 members fighting for lower taxes and less government. Last week (NDLR June 29th – July 2nd) in Vienna he spoke on “How to get sound economic policies into the political process” at the Third European Resource Bank meeting, held in cooperation with the Annual Meeting of the World Taxpayer Associations.