Free-market telecom

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A little free-market common sense emerged from Congress late Thursday night when the House rejected by 269-152 an amendment to a wide-ranging broadband bill that would have imposed "net neutrality." As nice as it sounds, the underlying idea is anything but.

Essentially, the amendment would have forced Internet service providers (AT&T, Verizon, Comcast, etc.) to offer the same speed to Internet companies regardless of content. So, for example, Comcast would have to charge Microsoft the same price to send broadband-consuming video content as the individual blogger who uses far less band space. The basis for this is the idea that the Internet should remain "free" to all.

But nothing in life is free. That inconvenient fact has not stopped the Googles, the Microsofts and the Amazons from spinning all sorts of doomsday scenarios in the name of protecting the little guy. If Internet service providers are allowed to set prices depending on broadband use, they say, then small Internet companies who could not afford the price would be "discriminated" against, either by being subjected to painfully slow broadband speeds or being blocked from certain networks altogether. That's the nice way of putting it. One such advocate, in an interview with this newspaper, said failure to enact net-neutrality regulations would mark "the end of the Internet."

But net neutrality is a solution to a nonexistent problem. Federal Communications Commission Chairman Kevin Martin said recently, "We're not seeing widespread examples of abuses in the marketplace that would justify us trying to adopt rules at this time."

Net-neutrality advocates are correct to attribute much of the Internet's unprecedented growth and innovation to the early decision by Internet service providers not to charge broadband usage based on content. They accepted taking reduced revenue in part because Internet technology was still in its infancy, and in part because they wanted to make the Internet an attractive market to consumers.

Those days are coming to a close. The future of the Internet is in video and voice content -- technologies with an enormous appetite for broadband space. The House bill is intended to encourage development of television over Internet Protocol technology. To build those networks and to transition from copper wires to fiber optics Internet service providers need Wall Street investors to see broadband as a worthy investment. Charging the heaviest users of those networks extra is the natural market solution. Google and Amazon just want to continue their free ride.

Less discussed, but equally troubling, is how net-neutrality regulations would actually impede Internet growth. To understand how, imagine the FCC trying to determine a "fair price" and enforcing "non-discrimination" laws. The Internet would become a swamp of contentious litigation.

The House vote doesn't end the debate. In the Senate, Commerce Committee Chairman Ted Stevens is considering language in his pending telecom bill to clarify the FCC's role in regulating net neutrality. The free-market impulse that prevailed must win in the Senate as well.