FRAMINGHAM, 14 MARCH 2011 -
For quite a while I've been baffled by the inability of too many members of Congress to understand the importance of the network neutrality discussion. I'm not satisfied that I know for sure, but I may be getting closer.
Let me start out by saying that I'm not all that much of a fan of regulations for the sake of regulations. There are cases where regulations are warranted, prescription drugs for example, but many other cases where regulations have proven to stop any meaningful progress. Most of the regulations empowering AT&T when it was a monopoly were of the latter type. But I feel that regulations requiring carriers to treat their customers fairly are likely to increase progress rather than limit it.
Some of the people who object to what the FCC is doing claim that the commission does not have the authority under the law to make any rules about Internet network neutrality. This is a legitimate objection.
Others claim that there is not a problem to fix since all the carriers, telephone and cable, have been exemplary Internet citizens and have not done anything anyone would call bad. This is demonstrably wrong.
But these are not the reactions I'm most concerned with. Too many in Congress, and elsewhere, see that any attempt at ensuring network neutrality will, in the words of Sen. John McCain, R-Ariz., "stifle innovation, in turn slowing our economic turnaround and further depressing an already anemic job market."
This type of reaction only makes sense if someone has absolutely no idea how the Internet works or what it is used for.
The only way such an objection makes sense is if you only look at the carriers and assume that they will be worse off if they cannot get a piece of the action for the business that is done over their networks.
So, the argument must go, let the carriers control everything and they will create jobs and expand the economy.
Let's look at some actual data from the U.S. Census Department. Total U.S. commerce in 2008 (the latest year reported on) was about $22 trillion. Of this about $3.7 trillion was in the form of e-commerce, mostly over the Internet. Most of this (92%) was business-to-business. Doing business over the Internet depends on the Internet working and working fairly.
What about the carriers? The National Cable & Telecommunications Association reports that the total cable company customer revenue for 2008 was about $85 billion and the FCC reports that total U.S. telecommunications industry revenues for 2008 was $297 billion. Thus, total carrier (cable plus telephone) revenue was about $382 billion or about 10% of the value of the business done over the Internet. Commentators that focus on the well-being of the carriers are ignoring the vast majority of the value of the Internet. They want to penalize the 90% to benefit the 10%.
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