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The net neutrality war rages on. Last week Ajit Pai, chairman of the Federal Communications Commission, dismantled rules the Barack Obama administration put in place in 2015 requiring internet service providers to treat all internet traffic the same. Supporters are elated, and opponents are rending their garments: Presumably, then, the decision is of vast significance.
Actually, it’s hard to say what difference the change will make, if any. The one thing that can be said with confidence is that this is a dumb way to make policy.
On the face of it, a change that widens the scope for competition among ISPs is a good thing. Under the Pai regime, for instance, they’ll be allowed to charge content suppliers a premium for access to “fast lanes.” They’ll also be allowed to create “slow lanes” that cost less. Because consumers differ in their preferences and willingness to pay, that kind of variety is capable of spurring innovation and adding value.
The problem is that the market for ISPs is not notably competitive — and the new freedoms could make it less so, if bigger firms use it to put rivals at a disadvantage.
Rescinding the Obama administration’s net neutrality guidelines doesn’t scrap all relevant regulation: The Federal Trade Commission will still be charged with policing anti-competitive behavior. And consumers may well push back against the kind of internet segmentation that net neutrality advocates fear, inducing ISPs to carry on much as before. Whether the change proves to be good or bad for consumers overall is an open question.
What matters more is that the rules are being changed two years after they were put in place. Effective regulatory regimes need to be stable. Remember, this is an infrastructure industry. Outlays are heavy, and business decisions have to look forward over a span of years and even decades. There were lawsuits when the Obama administration acted; there are lawsuits again. A regulatory system in a perpetual state of
upheaval is a heavy tax on investment and innovation.
It would be far better to pass a law capable of commanding bipartisan support and settle the issue for the foreseeable future. A sensible compromise would bar ISPs from throttling particular apps or services, and permit fast lanes that could be shown to benefit consumers.
Right now, to suggest this simple, common-sense approach to Congress seems like asking for the moon. Count the pointless net neutrality war as one more cost of Washington’s dysfunctional politics.
—Bloomberg