Net neutrality: Don't subject the Internet to politicians and bureaucracies

FOUR years ago, the Federal Communications Commission (FCC) issued an advisory statement that laid out four principles of Internet network management.

The principles, which have no statutory authority, include the right of consumers to access lawful Internet content of their choice, the right to run applications and services of their choice, the right to connect legal devices that do not harm networks, and competition among network, application, service and content providers.

New FCC Chairman Julius Genachowski, with strong backing from the Obama administration, is pushing for this "statement of principles" to become enforceable regulations, along with two more rules that would regulate how Internet Service Providers (ISPs) manage their own networks, whether wired or wireless, and require ISPs to be "transparent" about their network management practices.

Supporters of the concept behind "net neutrality" tout their desire for openness and competition while guaranteeing consumer access to data and content. However, as innocuous as the proposed FCC rules might sound — who would be against network transparency and access to legal content? — subjecting the Internet and ISPs to an entire new regulatory structure threatens to curtail the explosive growth of the Internet. This is ironic given that one of the Obama administration's goals is to accelerate broadband deployment to Americans.

Need proof that the Internet has not suffered from a lack of strong regulatory oversight? Look at the immense growth rate of both users and data from the turn of the century. In the year 2000, only 5.1 million Americans subscribed to broadband connections. At that time, a broadband connection often meant a speed that is about one-tenth of a common Internet connection today. In 2000, there was no YouTube, no Facebook or Twitter, no Hulu or Amazon.com streaming video service, no Blackberry or iPhone. These types of innovations simply would not have worked. The capacity to carry that kind of data did not exist, nor did the demand.

Contrast that with 2008, after broadband usage, both wired and wireless (wireless data connections were barely a thought in 2000), had experienced a 500-fold increase in just eight years. Today there are more than 80 million households subscribing to broadband.

Looking forward there will be a leveling off of the rate in increase of broadband users, but data demands will continue to skyrocket, particularly in the mobile broadband arena. Cisco Systems estimates that the Internet in 2012 will be 75 times larger than it was in 2002 — and that Internet traffic will generate the equivalent of 7 billion DVDs each month. Cisco also estimates that Internet video in 2012 will be nearly 400 times the size of the entire U.S. Internet backbone in 2000.

Given this spectacular growth, a new regulatory structure such as net neutrality makes no economic sense. When a powerful third party, such as a federal agency, regulates a scarce resource, such as broadband capacity, the market itself becomes subject to political whims and special-interest carve-outs, which will only harm consumers.

No one would disagree that the growth of the Internet has been anything less than transformative on our society and economy, which has happened with minimal government interference. It will continue to grow if we leave it alone. Regulating an industry to achieve peace of mind comes at a price — most often that price is paid in lost opportunities and innovations and therefore cannot be measured.

The federal government should protect intellectual property rights and continue to encourage long-term investment in our online network by keeping the regulatory barriers low.

With new restrictions in place, innovators will have to overcome artificial barriers and find success despite regulatory obstacles, not because of them.