Friday, March 14, 2008 - The Progress & Freedom Foundation Blog

More Lohr on Internet Traffic

Yesterday, Steve Lohr or the New York Times wrote about the impact of video on Internet traffic.

In a supplemental blog post about the "policy dimension" of the video surge, he mentions our recent "Unleashing the 'Exaflood'" article:

The broadband policy debate will unfold over many months, but it seems to me there is at least one perspective-enhancing principle to keep in mind, which you won’t necessarily hear from the lobbyists for the warring sides. That is, this is in good part a business negotiation being conducted in a policy arena. Who pays for the needed investment in broadband infrastructure, and who stands to profit?

On one side stand the telecommunications carriers and cable companies, supported by free-market economists and some industry analysts. They say it is the telecom and cable companies that will have to make the crucial investments to deliver faster broadband into households, so they need the freedom to price their service as they see fit. They want to be able to charge the biggest users — from a file-sharing teenager to the big Web companies like Google, Microsoft, Yahoo and eBay — for how much bandwidth they consume. It is a position with articulate exponents.

I think Lohr is right. This is "a business negotiation being conducted in a policy arena." Which is really too bad. Business negotiations should be conducted among the private parties. A "negotiation" conducted with the heavy hand of government just waiting to tip the scales is no negotiation at all. In a large sense, once the side calling for regulation gets the issue into the regulatory arena, they've already won. It's an example of the constant struggle between capitalism and government. Any "compromise" that emerges, even if the regulatory advocates don't get all they want, is still certain to have more than the optimal amount of regulation.

That's why it's so important for the FCC to remain principled and just keep its hands off the Net.

posted by Bret Swanson @ 1:39 PM | Exaflood