A federal appeals court in Washington has at least temporarily opened the Internet to market forces again, which should give anyone who logs in a reason to cheer.
By striking down the FCC’s Internet rules known as net neutrality, the court this week gave a boost not only to innovation and creative business modeling, it also gave Internet broadband service providers greater latitude in responding to the desires of customers.
For instance, a broadband provider now could offer greater protections from objectionable content such as pornography, even if that content is otherwise legal. Until now, the government forced them to allow access to all legal content, regardless of consumer preferences.
But don’t expect this newfound freedom from regulation to last long. In its decision, a three-judge panel of the U.S. Court of Appeals for the District of Columbia struck down net neutrality only because the FCC had classified broadband providers as information service providers. The court made it clear that, had the FCC instead classified them as common carriers, similar to telephone companies, its neutrality rules likely would have been acceptable.
The FCC, then, could make this change and try to reinstate the policy, or it could appeal the ruling, which resulted from a challenge by Verizon, to the full circuit court or to the U.S. Supreme Court. Either way, this week’s ruling likely is not the last word, although it should be.
Net neutrality rules required broadband service providers to treat all content the same. The FCC imposed these rules in 2010 under the worry that a large and wealthy provider, such as Comcast, might begin either to manage bandwidth in a way that would slow its competitors’ content and speed up its own, or that it would begin charging premium prices for popular content.
One grim, alarmist scenario popular among supporters of the rule involves customers being told they must pay extra for access to Youtube or Netflix.
Market forces tend to take care of such worries nicely. If a provider wanted to charge extra for Youtube, chances are a rival provider wouldn’t. If a provider slowed popular websites to a crawl, customers would flee.
And if a provider could assure customers stronger controls against objectionable content, that could be a strong selling point to a large market segment.
In addition, without neutrality rules in place, providers are free to innovate with services that, for example, could provide certain premium content to mobile devices in faster, more reliable ways.
We like the words of Judge Laurence Silberman, who dissented from the court’s ruling only in as much as he thought it went too far in suggesting the FCC had the power to regulate broadband companies at all. The worries behind net neutrality are “sheer speculation,” he said, adding:
“An unwarranted government interference in a functioning market is likely to persist indefinitely, whereas a failure to intervene, even when regulation would be helpful, is likely to be only temporarily harmful because new innovations are constantly undermining entrenched industrial powers.”
Of all arenas in which business is conducted, the Internet has clearly demonstrated the power and value of competitive forces, and of how fresh innovations constantly challenge the status quo. Net neutrality, like most government-imposed business regulations, offers little more than a way for established providers to protect themselves from those forces. That is not in consumers’ best interest.
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