There are plenty of ideologues and no lack of commercial interests engaged in the debate over "net neutrality," which at its core seeks to prevent de-facto monopoly providers from exploiting their privileged position. Requiring internet service providers to deliver content and bit-streams to competitors and entrepreneurs alike at regulated rates (or at a wholesale cost derived from their infrastructure costs without any supplemental costs added in) seems like a reasonable idea. There are many who argue that forcing internet service providers to open their networks in this manner will stifle innovation – that the ISPs won't make investments in upgrading the infrastructure, and the entire system will therefore lack innovation and quality will be degraded. This is a canard. A regulated rate of return is a guaranteed rate of return. CEOs and executives at ISPs will still take home very comfortable pay and benefits. Stockholders will get a safe and secure return, although the prospect for astronomical returns will disappear. But in a world of low interest rates and volatile financial markets steady performance and returns tied to the overall growth of the internet are still substantial goods.
Underlying this issue is the desire of the utility providers – the ISPs – to "monetize" their investment, becoming content providers rather than just service providers. Much of the debate in public forums focuses on peer-to-peer protocols such as BitTorrent, because beginning with Napster these protocols have been used to share music and video files that are bandwidth-intensive and often have been or are used to circumvent the legitimate intellectual property interests of the content owners. But there is another side to this that speaks more to the use of the internet for business and innovation, which is why the blunt public statement by Federal Communications Commission Chairman Kevin J. Martin, a Republican appointee of President George W. Bush, that Comcast is blocking internet traffic on a widespread basis is striking.
If you think that it's just kids sharing illegal copies of music and stolen Hollywood movies, what Comcast is doing might seem OK. But look at Amazon's data services for software developers – Amazon S3 and Amazon EC2. Taking advantage of Amazon's huge infrastructure and scalability, Amazon is selling its data center capacity to software developers at extremely low rates, enabling countless entrepreneurs, start-ups, and established companies to create virtual computing centers and storage clusters and to use the internet "cloud" as their network infrastructure – sharing data, applications, and solutions worldwide. This is innovation – and when developers using Amazon S3 and the BitTorrent protocol for transferring their data find that Comcast is throttling their bandwidth, Comcast, casting a wide net, is stifling innovation and business development. No matter whether the company is working on medical software to improve brain imaging, a new Facebook social network, or an online content-distribution system for Netflix or Blockbuster, Comcast is impeding progress when they slow down internet traffic simply because it is using a particular protocol.
As with the recent meltdown in the financial services industry, the question is less whether regulation is appropriate or necessary than what form that regulation should take. The question is whether a "Net Neutrality" law establishing broad government regulatory policies or more narrowly framed enabling legislation that makes clear the FCC's right and obligation to enforce some version of "common carrier" provisions on internet service providers will best serve both commerce and the public interest.