Net Neutrality Exposed (2006 Jul)

by Barry A. Liebling

While the importance of the internet is indisputable, the role that government should play is hotly contested. In June 2006 The Wall Street Journal published several articles on “the complicated debate before Congress” regarding Net Neutrality. The subject is apparently so abstruse that “everyone on both sides is struggling to explain the issue.”

On one side of the conflict are telephone and cable companies – including Verizon, Comcast, and AT&T – that would like to add higher-speed, premium-priced, broadband service to their offerings (see On the other side are Net Neutrality advocates – which include Google,, Ebay, Yahoo,, and the Christian Coalition – who are calling for legal prohibitions against multi-tiered services (see Net Neutrality exponents assert that all web content should be treated the same, that selling express service to those who are willing to pay for it is inherently unfair to those who might chose not to buy it or cannot afford it. Each side is vigorously lobbying government officials and is attempting to convince businesses and consumers of its point of view.

The rational way to evaluate the Net Neutrality controversy is to focus on principles. In a free society a business may develop and sell any product or service of value, then potential customers decide to purchase it or not. Of course, whatever is sold can change the status quo – which may be advantageous to some people and deleterious to others. The proper role of the government is to prohibit the use of force or fraud – not to decide that the current business environment should be frozen in place by law.

By this reasoning internet service providers should not be proscribed from creating and marketing premium services – even if some customers regard these services as unnecessary or inconvenient.

That people should be free to enter new businesses is not persuasive to most Net Neutrality advocates. They insist that permitting multi-tiered internet services will inevitably lead to horrendous consequences. Consider the plausibility of three widely publicized predictions.

First, Net Neutrality advocates believe that without legislation network providers will deliberately slow down or block access to websites that compete with their businesses or that advocate unpopular political positions. But if a provider were to do this, consumers would quickly notice and would not be pleased. Network providers know that if they interfere with a customer’s connections a competitor will be eager to accommodate that customer with better service.

Second, fans of Net Neutrality worry that multi-tiered services will stifle innovation because small, start-up companies will not be able to afford the higher fees. But a cable or phone company offering enhanced services is doing the same thing Federal Express and UPS does with premium overnight delivery. Providing small companies with more options is more likely to stimulate business than to thwart it.

It is interesting that some of the largest internet players – Google,, Ebay, Yahoo – are calling for Net Neutrality legislation. In a world with multi-tiered internet service there is no guarantee that they will maintain their dominant positions. It is one thing to wish that the business environment where you are doing well does not change, but it is unconscionable to use government muscle to assure that your competition is limited.

Third, Net Neutrality buffs are alarmed that the effect of multi-tiered services may be higher internet bills for consumers. They assert that content companies will be pressured to buy the more expensive services and will pass the added costs on to their customers. But return to the Federal Express and UPS example. Premium package delivery services give consumers the choice to spend more for speed. Those who do not need to have next day delivery do not have to buy it. Similarly, in a multi-tiered internet system there will always be a less expensive alternative to super-premium service. The real issue is whether consumers should decide for themselves what they will buy or whether the government should mandate what they are allowed to buy.

Take note that the case against the legislation of Net Neutrality is based on the endorsement of free market capitalism and is not a partisan sanction of all actions a telephone or cable company might take. These firms have the same ethical obligations as all businesses – no calling for government special privileges, no lobbying for legal monopolies, no objections to competition in their markets. The principles are transparent and should not require a complicated debate or a struggle to explain.

*** See other entries at in “Monthly Columns.” ***

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