‘Net Wars

It’s a politician’s dream:

Congress is about to embark on new policymaking that will make some of America’s largest and wealthiest corporations into big financial winners and others into big losers. Given the money at stake, firms are dispatching lobbyists, armed with perks and campaign contributions, to D.C. to ensure that their clients end up on the good side of the legislation.

Making the dream even more wonderful is that the issue is obscure and complex. Most Americans will be affected, but few Americans will understand the issue and thus be able to hold politicians accountable for bad policymaking.

Welcome to the Net Neutrality fight.

To understand the fight, think of how the Web is increasingly making use of video and audio content, e.g., YouTube’s video streams, Internet radio’s audio streams, even Cato’s webcasts and podcasts. And now, on the technological horizon, is the ability to receive whole movies over the Internet. The flow of all of that data places considerable strain on high-speed Internet service providers (ISPs), who have to maintain and upgrade their portions of the Internet in order to keep the streams moving quickly.

Notice the economic asymmetry that results: content providers benefit from the upgrades, but high-speed ISPs like Comcast and AT&T pay the cost. Such asymmetries open the way for consumer-harming inefficiency and mischief.

The ISPs have responded to this situation by threatening to charge content providers for priority access. That is, a modest, text-driven website like Cato@Liberty, which doesn’t use much bandwidth, would likely go uncharged because it wouldn’t need priority service, but YouTube, with its bandwidth-consuming media streams, would need priority service and thus have to pay fees to the high-speed ISPs.

The content providers would prefer to avoid those fees, of course. They’re asking Congress to prohibit the ISPs’ proposal, and instead mandate “net neutrality” — ISPs giving equal priority to all Internet content, regardless of uneven bandwidth demand.

The New York Times nicely summarizes this fight:

Beyond the debate, the fight over net neutrality is, like most regulatory political battles, a fight over money and competing business models. Companies like Google, Yahoo and many content providers do not want to pay for the kinds of faster Internet service that will enable consumers to more quickly download videos and play games.

There are interesting arguments for both neutrality and non-neutrality. For a good argument for neutrality, read this article [pdf] by Stanford Law School’s Larry Lessig that appeared in the Fall 2005 issue of Regulation. Lessig’s Stanford colleague Bruce Owen makes a good argument for non-neutrality in this article [pdf] from the Summer 2005 issue.