In a 3-2 vote today, the Federal Communications Commission announced it would begin to regulate the Internet, effectively prohibiting Internet Service Providers (ISPs) from discriminating against any website or online service traffic. Seeing the futility of politicizing a topic that is so new to legislators, Democrat and Republican lawmakers simply punted for now on the debate.
If the concept of ‘Net Neutrality’ is new to the small business owner, then let me try to explain. Imagine it is 8 a.m., and you are in a car approaching the Lincoln Tunnel for an 8:30 a.m. meeting. Once squarely inside the Lincoln Tunnel, all the lanes, but one, are occupied by massive semi-trucks and trailers. The only way to get past those vehicles is to get into the “car” lane with every other commuter. The time in which it should take you to get through the Lincoln Tunnel to make that 8:30 a.m. meeting is predicated upon a number of factors – many of which you have ZERO control over. The driving lanes and Lincoln Tunnel represent ISPs, like Comcast and AT&T; the semi-trucks and trailers represent “small” tech firms like Netflix, Etsy, and YouTube; and the car represents your place on the information superhighway. Net Neutrality would, in effect, create rules for which all occupants of the Lincoln Tunnel would have to play by.
Is this such a bad thing?
Entrepreneur Mr. Mark Cuban opines that the FCC is incapable of keeping up with fast-paced technologies, and that the creation of such rules would allow massive ISPs to monopolize the flow of Internet traffic, effectively eliminating competition. He goes on further to state that the fastest growing access for the Internet is mobile, and who dominates that market, Apple and Google. Cuban’s rationale is if Apple, Google, Comcast, and other ISPs are left to duke it out with each other, then the consumer wins.
Or does the consumer?
Congress and President Ronald Reagan deregulated the airline industry back in the 1980’s as a response to end airline monopolies and oligopolies, but such deregulation seemed to produce the opposite effect. Pan Am Airlines is now merely vintage fashion, Delta merged with NorthWest Airlines, American merged with USAirways, Continental with United, Southwest with AirTran, to name a few. Thus, it could be argued that deregulation of the airline industry achieved absolutely nothing.
Similarly, Congress and President Bill Clinton enacted a regulatory scheme to overhaul the telecommunications industry. The collateral byproduct of the Telecommunications Act of 1996 may have put us in the place we are today in regards to “Net Neutrality.” The Act was intended to open telecommunication markets, which included the Internet, to promote competition. Since 1996, what have we seen, in regards to completion, in the telecommunication space we see fewer consumer options. Enron and MCI/WorldCom are corporate governance footnotes; Qwest merged with CenturyLink; TimeWarner was bought by Comcast; and as a result, the choices for getting consumers across that analogous river to their Midtown meeting are few.
Alas, we come to the debate of ‘Net Neutrality’. Looking historically at the results of deregulation of industries as a way to “open” up competition in a marketplace, is regulation to keep an industry “open” such a bad idea? I leave that answer to more intelligible minds.