More bandwidth solves concerns

Net neutrality is simply a policy that forbids privately owned broadband networks from discriminating in how they provide transmission for producers of any legal content. We’ve had a successful de facto net neutrality policy in place for the better part of 20 years.

So what’s all the fuss?

Some believe the policy should be expanded, with the Federal Communications Commission — and possibly 50 different state utility commissions — given new powers to enforce not only the no-blocking and reasonable discrimination guidelines, but also the Internet ecosystem as a whole (and as a utility).

Others argue that the current regulatory policy works fine. They caution that the prospect of utility-style regulation could stifle private investment and innovation in broadband platforms, which in turn could have spill-over effects for the entire Internet.

Broadband providers have been investing approximately $65 billion annually in recent years. The European Union, which lags the U.S. in the deployment of fiber-optic and fourth-generation wireless technologies, has recently streamlined regulation to incentivize private investment in broadband.

One question the FCC is asking is whether broadband providers should be allowed to experiment with paid prioritization. In the transportation space, express, or fast, lanes permit motorists to avoid traffic congestion if they’re willing to pay a toll. By providing an escape for commuters who have urgent business, express lanes reduce the need for building more highways. In the absence of congestion, fast lanes would be unnecessary since no one would pay to use them. The same principle applies to the Internet.

If there’s ample bandwidth, all packets travel at the speed of light. There’s no need for paid prioritization. This is why public policy needs to promote bandwidth abundance, not manage for bandwidth scarcity. There are two ways to do this. First, the FCC needs to allocate more frequencies for mobile broadband. Second, it needs to insist that proper incentives are in place for continued private investment in broadband platforms. That means that a dollar invested in broadband can earn a comparable return to a dollar invested somewhere else.

Congress never explicitly authorized the FCC or the state public utility commissions to regulate broadband. In 1996, the last time Congress amended the relevant portions of the Communications Act of 1934, broadband didn’t even exist.

Congress did, however, make clear that utility regulation would only apply to telephones in the absence of competition and not to advanced services that combine communications and computing features. The FCC has previously ruled that broadband falls in the latter category.

Even if the FCC can establish jurisdiction, there is ample precedent for paid prioritization in utility law. Common carriers routinely provide different levels of service at rates and terms that are available to anyone. Nothing in utility law would prevent broadband providers from offering prioritized delivery at premium prices, as long as that offer is open to everyone.

The wider use of congestion pricing may be unavoidable in the case of highways. Congestion on major urban highways in America cost the economy an estimated $101 billion in wasted time and fuel annually. Aside from the environmental considerations, spending on highway construction would almost have to double in order to significantly improve highway conditions and performance.

Fortunately, broadband isn’t like a highway. Broadband doesn’t require an environmental impact statement. And private investors are willing to underwrite the cost of additional network capacity, as long as it continues to be profitable.

The good news is that we can choose between a virtuous circle of investment and abundance when it comes to broadband, versus a vicious circle in which regulatory uncertainty leads to diminished investment that requires more regulation to manage the harmful effects of spiraling network congestion.

Growing what we have now in federal regulation of the Internet would not be as harmless or as prudent as it may sound. It could trigger a vicious circle — a risk we don’t have to take as long as broadband providers continue to expand network capacity.

Hance Haney is a senior fellow at Seattle’s Discovery Institute.

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