- FCC’s #netneutrality rules are based on the false premise that US broadband is worse than other countries' @iPolicy
- ISPs have incentives to sign up more subscribers & provide richer services, not harm innovation @iPolicy
- US #broadband speeds have doubled in last 3 years & LTE is 4 times more widely deployed in US than in EU @iPolicy
The FCC’s net neutrality rules are based on the false premise that American broadband services are sub-standard compared to those in other countries. Advocates who buy this notion believe that network price and quality can only be improved by regulatory action that forces providers to make uneconomic investments. Net neutrality advocates such as Susan Crawford and Tim Wu would have our broadband Internet Service Providers immediately rewire their networks on a grand scale in order to provide us with much more network capacity than we will be able to use for ten years or more. Before we can have a rational discussion about network policy, we need to get the facts straight.
The best analysis of international broadband speed, quality, and affordability is the State of the Internet reports published by Akamai every quarter. These reports show that the United States ranks in the Top 10 worldwide in terms of wired Internet performance and utilization, trailing only a group dominated by tiny states in which most people live in high-rise apartment buildings that are very cheap to serve, such as Hong Kong, South Korea, Singapore, and Taiwan. For the moment, we also trail former Soviet satellites Latvia and Romania that have been forced to install advanced fiber optic networks because their central planners never provided them with competent telephone networks, let alone cable TV systems capable of providing the 100 megabit per second services that are routinely available in this country.
Average broadband speeds in five of the top 10 are actually declining, while those in the US are improving. In the last three years, the average speed of all wired broadband connections in the US has more than doubled; by volume, Americans use the Internet more intensely than people do in all other countries except Korea, and even that gap is narrowing. On the wireless side, the US was the first nation to deploy the most advanced technology, 4G/LTE for smartphones, a market totally dominated by American firms such as Apple and Google. LTE is four times more widely deployed and used in the United States than it is in Europe, and our networking firms invest twice as much per user as their European counterparts.
Chairman Wheeler’s Open Internet rules aim to preserve the goose that has laid these golden eggs while protecting America’s innovators and ordinary citizens from the hypothetical harms than can arise in markets with minimal competition. In short, the proposed regulations permit a degree of experimentation with the pricing of technical services on the Internet provided that the common, baseline service continues to be adequate for the common, baseline set of applications. On its face, this is not an unreasonable plan. Some question whether the FCC needs to take any action at all in a market that’s obviously meeting user needs and outperforming every comparable market in the world, but regulators are going to regulate; that’s their nature, after all.
The most common complaint emanating from the fainting couches occupied by (the mainly far left) net neutrality advocates is that the proposed regulations don’t go far enough to preserve the Internet as it has always been. This is an odd standard to apply to a technical system notable for its disruption of traditional industries such as music, journalism, travel, and retail. The Internet as we know it is still dominated by the Web, the one big application that brought most of us to the Internet. The Web is a content-oriented system that supports limited interpersonal interaction and mild use of video streaming. The Internet of the future will be different: it will enable broader forms of interaction, more intense use of audio/video conferencing and streaming, and an “Internet of Things” in which machines interact with other machines without direct human involvement. It stands to reason that this evolved Internet will create norms of conduct and business transactions that haven’t been typical in the past.
Net neutrality advocates also worry that Internet Service Providers have incentives to exploit customers and harm innovation, fears inspired by every profit-maximizing business. But these incentives are counter-balanced by conflicting incentives to sign up more subscribers and to provide richer services. It’s more important to ensure that the Internet will be allowed to advance to the next stage in its development than to fret too much over an unbalanced and factually deficient perspective on the Internet economy.
Chairman Wheeler is wise to propose a much more permissive vision of the Internet than the one offered by his critics. It’s unlikely that the FCC will have occasion to penalize ISPs for harming the open Internet, but in the event that it becomes necessary it’s better for the FCC to be armed with legally sound standards than the unlawful house of cards it concocted in the past.
Wheeler’s approach is also more appropriate than the Title II telephone network regulations glibly described as “common carriage” by net neutrality advocates. Title II does not prevent carriers from offering services of varying levels of quality for different prices, and it does not require the free interconnection sought by Netflix. These aspirations come from an Internet culture that has already carved a new path for itself through the regulatory morass. Facts really do matter.