Net neutrality comes to the US

December 22, 2010 11:49 AM

The Federal Communications Commission (FCC) announced yesterday that it will enforce the principles of net neutrality in the US. In a statement they said that they will enforce net neutrality based on the three rules of transparency, no blocking, and reasonable traffic management.

Net neutrality is a confused term that means all Internet traffic should be treated equally. In reality, this sounds like a good idea, but in practice Internet Service Providers (ISPs) use traffic management every day to ensure timely delivery of email to one customer and video streaming to another. Without traffic management, the Internet as we know it today would suffer from greater congestion and issues with content delivery. Net neutrality is Internet regulation by imposing limits to the way ISPs do business.

There will be many discussions over the next few days, weeks, and months about the legality of this ruling.  In April, a US appeals court ruled that the FCC could not enforce net neutrality rules without a legal mandate, such as a law passed by Congress.  Essentially, the FCC cannot create and enforce laws on their own and so we will be seeing a number of law suits against these new rules next year.

These new rules have many complex aspects to them, but the one that I would like to focus on is the fact that implementation of these rules will cause unintended consequences.  Republican Commissioner Robert McDowell dissented to the rules of net neutrality yesterday because he doesn’t think that the government needs to fix something that isn’t broken and he is right.  How completely ridiculous it is that now under these rules ISPs can strike content deals because it is illegal?  It is like saying to HBO that they have to broadcast television shows from major US networks like NBC, CBS, and ABC.

But the unintended consequences have far reach economic consequences.  We in the UK benefit from greater competition in broadband access than in the US.  This is a good thing and I hope more and more new ISPs will enter the market in the years to come.  In the US, however, new entrants will be deterred as not only will they take on the cost of starting up, but will have to implement fundamentally different ways to doing business which will cause less investment in innovation and technical develop and, of course less jobs and less people paying tax and buying things in the market.  And potential investors of ISPs won’t want to take the investment risk as they money will be used for dealing with Internet regulation and legal court cases, no doubt.

This is just the tip of the iceberg so to speak.  All of this is to say, be weary of government regulation which may just impede the much needed economic growth.  all governments are seeking now. Fortunately, in the UK there is no sign of such Internet regulation being implemented. And the good news for the US is that these new net neutrality rules won’t apply as strictly to wireless broadband.  So expect to see growth and innovation in that US sector.The Federal Communications Commission (FCC) announced yesterday that it will enforce the principles of net neutrality in the US. In a statement they said that they will enforce net neutrality based on the three rules of transparency, no blocking, and reasonable traffic management.

Net neutrality is a confused term that means all Internet traffic should be treated equally. In reality, this sounds like a good idea, but in practice Internet Service Providers (ISPs) use traffic management every day to ensure timely delivery of email to one customer and video streaming to another. Without traffic management, the Internet as we know it today would suffer from greater congestion and issues with content delivery. Net neutrality is Internet regulation by imposing limits to the way ISPs do business.

There will be many discussions over the next few days, weeks, and months about the legality of this ruling.  In April, a US appeals court ruled that the FCC could not enforce net neutrality rules without a legal mandate, such as a law passed by Congress.  Essentially, the FCC cannot create and enforce laws on their own and so we will be seeing a number of law suits against these new rules next year.

These new rules have many complex aspects to them, but the one that I would like to focus on is the fact that implementation of these rules will cause unintended consequences.  Republican Commissioner Robert McDowell dissented to the rules of net neutrality yesterday because he doesn’t think that the government needs to fix something that isn’t broken and he is right.  How completely ridiculous it is that now under these rules ISPs can strike content deals because it is illegal?  It is like saying to HBO that they have to broadcast television shows from major US networks like NBC, CBS, and ABC.

But the unintended consequences have far reach economic consequences.  We in the UK benefit from greater competition in broadband access than in the US.  This is a good thing and I hope more and more new ISPs will enter the market in the years to come.  In the US, however, new entrants will be deterred as not only will they take on the cost of starting up, but will have to implement fundamentally different ways to doing business which will cause less investment in innovation and technical develop and, of course less jobs and less people paying tax and buying things in the market.  And potential investors of ISPs won’t want to take the investment risk as they money will be used for dealing with Internet regulation and legal court cases, no doubt.

This is just the tip of the iceberg so to speak.  All of this is to say, be weary of government regulation which may just impede the much needed economic growth.  all governments are seeking now. Fortunately, in the UK there is no sign of such Internet regulation being implemented. And the good news for the US is that these new net neutrality rules won’t apply as strictly to wireless broadband.  So expect to see growth and innovation in that US sector.

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