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Will Cooler Head Prevail on Telecom?

Steven Titch
November 12, 2006, 2:05pm

I suppose one should be grateful that network neutrality did not make the "first 100 hours" list of action items set by House Speaker-presumptive Nancy Pelosi. I will let my colleagues on this site comment on the dubious economic benefits of a minimum wage hike, prohibitions on directed investment of Social Security contributions, the picking and choosing of winners in energy technology, and allowing the federal government to negotiate prescription drug prices. For now, the loudest and most misunderstood of current Internet policy controversies–network neutrality–seems to be on the back burner. For some reason, maybe because of the way lobbying dollars have fallen, the network neutrality debate, at least in Congress, has broken along partisan lines – Democrats favor it, Republicans oppose. But let's not reduce it completely to an issue of money. Network neutrality means an unprecedented level of government regulation of the Internet, and this carries consequences. To be sure, many proponents of network neutrality say that what they seek is a "return" to the neutrality rules that existed in the narrowband telecom era. This is somewhat disingenuous. In that era, network technology was, by definition, neutral. All traffic was, by necessity, treated the same. It's the technology and intelligence within newer broadband networks that gives carriers the capability to create definable service tiers. For the first time, they can derive revenue from furnishing different levels of network quality and reliability. The network neutrality question is whether there should be a law preventing them from doing so. The pros and cons have been debated here and all over the tech blogosphere, but no one denies the fact that it is, at the core, a layer of Internet regulation that has not existed before. And that worries some Democrats who have seen first hand how regulation in general can distort markets and raise prices. No less an eminence-gris than Alfred E. Kahn, the former Carter administration heavyweight who played a leadership role in deregulating airlines and interstate trucking, cautions against a rush to regulate. Describing himself as a "good liberal Democrat," he strikes a note of skepticism in a short policy paper published by the Progress & Freedom Foundation site.
"Why all the hysteria? There is nothing "liberal" about the government rushing in to regulate these wonderfully promising turbulent developments. Liberals of both 18th and 20th--and I hope 21st--century varieties should and will put their trust in competition, reinforced by the antitrust laws--and direct regulation only when those institutions prove inadequate to protect the public."
Kahn's thoughts follow those of another leading Democrat–William Kennard, chairman of the FCC under Bill Clinton–who in a New York Times op-ed urged Congress to move beyond network neutrality to issues that he sees as more relevant to consumer experience–reform of cable TV franchising and reform of universal service. While the Democrats have set plans for the first 100 hours of the next Congress, we don't know what to expect in the 101st. Chances are network neutrality will be on the agenda again. But perhaps with the reality check of Democratic policymakers who have a sound respect for market forces and competition, cooler heads will prevail.


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