Hurray - Net Neutrality is Dead, For Now

Yesterday's ruling by the D.C. Court of Appeals that the FCC didn't have the authority to cite Comcast for blocking BitTorrent traffic effectively kills "net neutrality," at least for now. That's a good thing and everyone who's interested in seeing continued innovation by broadband ISPs and new video competitors should be cheering the decision. I've been writing about the FCC's unnecessary net neutrality intrusion into the well-functioning ISP market for several years (here, here, here), and it's very encouraging to see this unanimous court decision.

For those not familiar with net neutrality, it would give the FCC the ability to regulate how broadband ISPs manage their networks in order to ensure that all content is delivered without any bias. Since net neutrality advocates have lacked any sustained pattern of broadband ISP misbehavior to point to as evidence for net neutrality's need, they have instead relied heavily on the argument that pre-emptive regulation is required because ISPs can't be trusted to keep their networks open, and that potential conflicts of interest (many ISPs like Comcast are also big video providers) will inevitably lead ISPs to favor their own services over others.

Concerns about impending, yet hypothetical ISP "fast lanes and slow lanes" have made great soundbites for net neutrality proponents and politicians. And yes, Comcast bungled how it blocked the BitTorrent traffic, and then how it explained itself. There have also been a handful of other ISP infractions. However, if the 70 million plus broadband households were asked to name a single instance where they felt their ISP degraded their access to a certain web site or video service, I am convinced that very few would be able to think of any.

This reflects the fact that broadband ISPs maintain open networks, rightfully policing against illegal behavior or disproportionate use. The ISP business works quite well, and in most parts of America, substantial competition exists between 2 or more providers (with more wireless ones on the way). Further, new video services and devices, which depend on ever-faster, and open broadband networks continue to proliferate, suggesting ample confidence by their backers that robust network access will be available. Consider: did Steve Jobs hesitate to introduce the iPad, which is heavily video-centric, out of fear for network availability? And how about Netflix, ABC, Discovery, MTV and other video providers who quickly introduced apps for the iPad - did they balk due to network concerns? Of course not.

Earlier this week, I calculated that at least $277.4 million was raised by early stage video companies in Q1 '10, bringing the total to at least $570.2 million over the last 4 quarters, despite the worst market circumstances in ages. As I've said many times, investors and entrepreneurs are undeterred though there are no formal net neutrality rules.

It's also important to remember that broadband networks have been built with private capital, in the process creating tens of thousands of well-paying technical and customer service jobs, plus countless other by the content and applications providers who freely ride these broadband pipes each day. And innovation continues, with numerous announcements of 50 and 100 megabit/second services now available. Tinkering with this vibrant sector of the economy with new regulations introduces the risk of unintended consequences.

Rather than presuming that broadband ISP will disrupt their own success formula by arbitrarily blocking supposed competitors, the FCC would be better off staying relentlessly vigilant of ISP behavior. If ISPs do misbehave - thereby offering clear evidence of the need for regulation - the Congress and the FCC should be prepared to act quickly. Until then net neutrality remains a solution in search of a problem, and Washington has plenty of real problems to work on without tackling imaginary ones.

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Categories: Broadband ISPs, Regulation

Topics: Comcast, FCC