Despite the admonishment by the courts for overstepping its congressional mandate in its attempt to regulate the Internet, the Federal Communications Commission chairman Julius Genachowski announced a proposal to declare broadband services to be a Title II service under federal telecommunications laws. Net Neutrality is the discredited notion that forcing network providers to treat all traffic on their networks the same is good for innovation and investment in advanced networks and services.

In Friday’s Wall Street Journal, Nat Worden writes about the chairman’s defense of the proposal (sub. required). Cable company stocks off 5-9% since the announcement (telcos were unchanged but lots of stocks were down since the market blip 2 weeks ago) which may signal cableco investor uncertainty about what the new regulations might mean for future returns on network investments.

For many folks the battle over Net Neutrality seems to be the software/services players – Google, Amazon, Yahoo! – many of whom are big Dem supporters (Google CEO Eric Schmidt is a particularly strong one) verses the network companies, many of which are opposed to more regulation of the Internet. This is about those who believe the best outcomes for America are only achieved with government intervention versus those who believe that the best outcomes for America are only achieved with ZERO government intervention. Case in point is that the Internet’s rapid rise to an important role in the American life and economy over the past decade and a half was achieved WITHOUT regulation or taxation.

This brings up my personal discomfort with the notion that American taxpayers should subsidize Internet service and in particular, broadband Internet service for other Americans. No doubt, the transfer payments paid by telephone subscribers in easy-to-serve markets to telephone companies operating in hard-to-serve markets has made America a better place to live and work. But do we have to apply this same logic to the Internet? Surely those who choose to live in states, counties and areas where it is uneconomical to deploy wires to deliver Internet should be willing to pay nominally more to connect their computers with the rest of society using wireless or satellite means?

I see the Hughes Internet service commercials all the time on DirectTV. I’ve written about innovative network balloons that can serve large spaces, more economically and simply than stretching underutilized wires and towers across the landscape.

This FCC chairman likes to ignore history. The best way to avoid the market distortions of the past is to avoid the market distortions of the past. There is no need to regulate the Internet. Consumers are not being robbed, gouged or otherwise forced to accept an inferior service. When they are confronted with demands they don’t like – they switch networks. That’s how innovation is preserved.

Competition between cablecos and telcos on network service works pretty well. That market does needs to be joined by broadband wireless providers to assure consumers have a choice. That’s the best way for the next Google, the next Amazon to thrive and develop their audience. Not through some sort of unnecessary price and technology regulation regime.

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