Why Net Neutrality Is Good For Telcos

One tactic of political debate is to influence public perception of terms by subtly changing or obscuring their meaning. What I describe here will be recognized by some as Net Neutrality, but will be seen by others as a distortion of that concept. In either case, this is a proposal that would resolve the Net Neutrality debate by framing it in terms of qualities of service versus uses of the service. I argue that telecommunications companies, companies that maintain the "pipes" of the Internet, are utility companies that provide a commodity service, and that their long term health, as well as the health of the industry that they serve, will be best maintained if they are regulated in a way that prevents them from having conflicts of interest with their various customers.

Communications bandwidth is a commodity resource much like electricity and water. Like these other resources the variety of uses for this bandwidth is nearly unlimited. The consistent, reliable availability of these commodities allows businesses to constantly deliver new and innovative products, and allows consumers to use them, thus driving American productivity and our economy.

If other utilities controlled the uses to which their resources were put the resulting drag on our economy would ruin our ability to be competitive in the global market place. Imagine what would have happened if we had to pay for light, air conditioning and access to radio and television all separately, instead of just paying for electricity. Imagine what would happen if farmers had separate price lists for corn irrigation and wheat irrigation. By separating the availability of a commodity from the uses to which it is put, we create an economy that is agile and productive.

Like other commodities, bandwidth has several properties that can be varied to make it more suitable for various purposes. For example, some kinds of data transmission can tolerate the loss of some percentage of information. This could be compared to the property of purity in water -- some applications of water (e.g. irrigation, cement mixing) can tolerate the presence of impurities and microorganisms, while others, like drinking and cooking, cannot. It makes sense for utility companies to offer their products in different packages that provide varying qualities of service each tuned to a different segment of the market. It does not, however, make sense for the utility companies to monitor or control the uses to which these quality-controlled commodities are put. For instance, it would be completely inappropriate for the electric company to revise my bill because I had used light bulb electricity in my coffee maker.

Telecommunications companies that provide data channels and connectivity to the Internet should be returned to common-carrier status. They should offer products based on industry standard qualities of service (the same way that electric companies offer 120 or 240 volt electricity but not 178.3 volt electricity, for example.) They should not base their pricing or availability on the use to which these services are put, and they should have no visibility into nor responsibility for the data that they carry. Separating the qualities of the product from the use to which it is put allows both users and providers to maximize their levels of innovation and productivity.

Telecommunications utilities resist this sort of plan on the basis that it represents excess regulation and restricts their ability to profit. In reality, separating quality of service from type of use approximates the minimal possible level of regulation and creates an market place where these utilities can achieve maximal productivity and profit. If the telcoms are allowed to influence the content that flows through their networks then market forces will compel them to limit the types and availability of the content in a cycle that will ultimately result in a small amount of content with high production value but limited accessibility and high prices. They will, in fact, be compelled regulate the content industry and to do so in a highly destructive manner. This sort of regulation, imposed by the private sector and driven by blind profit motive, is far more restrictive (to the point of being excessive,) than the plan presented here. If telecommunication utilities are allowed (and therefore effectively forced) to compete based on content rather than service, they will have significantly less incentive to invest in the infrastructure required to deliver the highest level of service. Ultimately they will have high ROI, but relatively lower levels of absolute profit. If they are restricted from competing based on content then they will be forced to compete based on service, resulting in higher quality infrastructure, greater opportunity and innovation in the content creation industry, spurring demand for higher volume and quality of telecommunications services, resulting in a virtuous cycle of real growth in productivity.

Businesses are often forced to make long-term sacrifices for short term profits. Here is an opportunity to do something that, although they won't like it, will be better for them and our country in the long run.