With increasing signs that the telecommunications policy reform effort in Congress is stalled, there is an opportunity for policymakers to go back to the drawing board on net neutrality. From my vantage point, that's a good thing.
The debate in Congress marked one of the most amusing telecom policy debates in a long time. Just Ask A Ninja or Jon Stewart. The debate was, however, short on careful policy analysis.
Take the Wyden bill, for starters. The bill prevented network owners from making available tiered levels of service for a fee because it feared a “chilling effect on small mom and pop businesses that can't afford the priority lane, leaving these smaller businesses no hope of competing against the Wal-Marts of the world.” To someone schooled in antitrust principles (like me), this fear smacks of the 1960s “big is bad” mantra that cost consumers big time–i.e., prevented efficiencies of the kind that Walmart and Costco use to save consumers money.
Looking even deeper at the economics behind a system of “pay-to-play” is even more revealing. There are costs of upgrading broadband networks and the question that cable and telephone companies are asking themselves is how they will pay for it. Under the Wyden bill, the answer is–charge consumers. But is it necessarily more efficient only to charge consumers and not producers? In short, there may be a series of reasons behind why different pricing strategies will be more effective at identifying those willing-to-pay more–and thereby making services available cheaper to those willing-to-pay less. (This is a little like popcorn at the movies–those who do buy it are, in effect showing their willingness to pay more for the movie experience, and subsidizing those not willing to pay more.)
The real concern of net neutrality advocates should not be insisting on a single tiered Internet that–at least for those who have heard of Akamai already know–is a fantasy. (For those who are unfamiliar with Akamai, its caching services provide enhanced performance to the big companies who can afford to pay for them.) The real concern is that with only two broadband providers offering service, there remains a risk of anticompetitive conduct that understandably makes policymakers nervous. The question is thus, in an environment where there are real benefits from improving network performance and possible efficiencies from alternative pricing strategies, what should policymakers do. For Rob Atkinson and I, the answer is embrace a third way–i.e., a course different from the “do little” approach of the Stevens bill and the “no tiering” approach of the Wyden bill. In particular, we advocate transparency requirements (to enable consumers to be their own protectors); a competition policy based regime that would provide after-the-fact oversight of non-discriminatory conduct (evaluating whether a legitimate business reason existed for it); and a requirement that the best efforts Internet continue to evolve (in bandwidth) so those unable to pay for prioritization are still able to develop and deploy new services. For the details on our proposal, see here.