Who can best keep the Internet open: Government or the free market?

Guest Editorial by Patrick McGuinness

Some “Net Neutrality” advocates claim this debate is about whether we will have net neutrality and an open internet or not. However, both sides of the issue want what net neutrality delivers -- an open internet. The real debate is over FCC internet regulations, and it can be considered a question of trust: Do we trust markets or Government to ensure an open internet?

For proponents of Government regulation, the impending rollback by the FCC (Federal Communications Commission) of regulations they passed in 2015 to control ISPs (Internet Service Providers) is a threat to net neutrality. They believe Government intervention is needed to keep ISPs in line – after all – “if given the chance, large ISPs will use monopoly power to bully suppliers and squeeze consumers for their profit and the detriment of others, right?”

Wrong.

The boogeyman argument that treats ISPs as evil monopolists doesn't reflect the true history of the Internet and behavior of ISPs. ISPs are interested in making money, not controlling what content we access. As described by Adam Smith long ago, the “invisible hand” of competitive enterprise yields consumer choice and technological innovation, which has kept big business in line and consistently improved the internet over time, without need for government interference.

For over 30 years the Internet has grown and improved without the heavy hand of FCC regulations. Prior to 2015, the FCC had an approach that was known as 'light touch' regulation, forbidding anti-consumer practices while letting the internet develop through market-driven innovation. It suited the rapidly developing internet well.1

In the 1980s and most of the 1990s, a dial-up modem was needed to access the Internet. Today, that technology is obsolete and most customers have broadband internet access, either cable-modem service provided by cable companies, or DSL, offered by phone companies.2 High-bandwidth fiber-to-the-home technology is now available in many markets and reaches 25% of homes nationwide,3 and wireless technologies, notably 4G/5G broadband, is becoming capable of providing competitive broadband service.4

But now, we are told by proponents of the FCC Title II regulations, that the same 'light touch' rules that allowed the internet to develop into what it is will destroy the open internet we love in the future. They believe that ISPs are monopolies out to bully consumers.

Are ISPs monopolies? While choices for broadband were once limited, technology has been opening up choices. As of now, 85% of US homes have two or more internet service options of 3Mbps or better, and about 60% of homes have two or more service options of 25Mbps or better. The future will see even more competition, as 5G wireless competes directly with wire-line cable and DSL.

Are ISPs out to bully consumers? Examples of abuses cited by regulation proponents actually affirm that prior FCC regulations have been more than sufficient. The few cases cited are mostly concerned with bandwidth-throttling for legitimate business or technical reasons, and those cases were resolved through consumer reaction forcing companies to respond, technical fixes, or business resolution.5 Heavy-handed regulation impedes the flexible adjustments needed to fix such problems.

Arguments that ISPs will do terrible things if not strictly regulated rely on assumptions that markets don't work; consumers are mute, and competition non-existent. All are false. Because consumers want these services provided by the content creators, any ISP making the mistake of limiting access would face a consumer backlash. The marketplace itself disciplines providers who mistreat customers.

The history of the internet demonstrates the power of market-driven innovation as the path to a free and open internet. Technological innovation has outpaced government regulation every time when it comes to the Internet. The FCC Title II regulations imposed in 2015, treating ISPs as if they are Ma Bell type utilities, is an inappropriate regulation model that will hurt choice, slow innovation, and reduce investment. In this question of trust, a market-driven internet has earned our trust; the government controlled internet has not.

The FCC regulation rollback won't end “Net Neutrality”; it will restore a market-driven, open internet.

Patrick McGuinness of Round Rock is Executive Vice Chairman of the Travis County GOP and Chair of the North Austin Republicans (formerly the Austin Tech Republicans), and a former candidate for Texas House.