Support for Net Neutrality Wanes in Tech Community

Rich Tehrani : Communications and Technology Blog - Tehrani.com
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Support for Net Neutrality Wanes in Tech Community

I just came across an article worthy of passing along from the Technology Liberation Front, a group which is focused on helping to reduce the amount of regulation imposed on the Internet and technology. Aside from a typo or two (I make them as swell  ;) ) the excellent article titled Amazon.com Switches Sides on Net Neutrality focuses on how tech companies who once supported net neutrality are scared to death of being caught in the crosshairs of an administration gone wild with overregulation.

The article begins by discussing how Amazon's Pail Misener has for all practical purposes switched sides on the net neutrality issue as discussed in an editorial for CNET. Some of the points in the post have to do with net neutrality being a solution in need of a problem. And the most accurate point in the column is the uncertainty surrounding the administration's net neutrality talk is reducing investment. In fact in speaking with many business owners and leaders they tell me the fear of new regulations, general uncertainty and increased taxation is keeping them from buying homes, hiring and investing.

To put it succinctly, if you are out of work, blame those in power and be sure to consider your future job prospects whenever you vote.

Here are salient excerpts:

Along with Amazon, Microsoft, Expedia, Yahoo and Sony also have backed off from onetime hardline support. Just last October, it's CEO Jeff Bezos, co-signed an Open Internet Coalition letter supporting regulation. Back in 2006, Misener himself was warning about the potential of ISP abuse of their network to throttle Internet discourse.

Even Google, which has been funding the Open Internet Coalition, has been sending mixed messages on the regulation for more than a year.

What changed? Well, the FCC Chairman Julius Genachowski's plan to reclassify broadband Internet service as a regulated "telecommunications service," all for the sake of pushing a network neutrality agenda, is shaking the entire U.S. Internet industry to its senses. For companies like Amazon, when the FCC's power was circumscribed around carriers, network neutrality was "regulation for thee, but not for me." It's significant that Misener raises the issue of investor uncertainty, an ISP talking point that network neutrality proponents have in the past pooh-poohed. Reclassification would give the FCC broad discretionary powers over the entire supply chain for broadband services. And if the FCC can regulate ISP business models, which is essentially what net neutrality is all about--who says it won't, under its new self-styled mandate to regulate all things broadband, it won't start regulating other Internet business models as well? Given the Obama administration's immense appetite for regulatory adventurism and its willingness to use (and arguably abuse) discretionary executive branch powers to get around Congress, it could be that many companies that once thought themselves outside Washington's regulatory purview are now rethinking their desire to ride the president's industrial policy tiger.

Using the same reasoning applied to ISPs and their network technology, regulatory zealots have started talking about "search neutrality" in the context of the Google and its search algorithms. Apple's exclusive iPhone arrangement with AT&T draws regular fire. Amazon's Kindle is proprietary to Amazon--you can't use the e-book reader for books purchased from other on-line retailers (although I understand Kindle will read PDF documents). Who's to say the FCC won't demand e-book neutrality?

I don't like to make predictions, but I think that Genachowski's push for reclassification is going to blow up in his face. Congress, which sees it as an executive branch overstep, is already unhappy about it. In business circles, regulatory jockeying and rent-seeking might be part of the Washington culture, but it's notable that companies like Amazon are signaling that, given the choice between paying ISPs for tiered quality of service or the threat of wholesale imposition of a "Mother, may I" regime on their present and future business relationships, they will stand up for their the freedom to conduct business without government intrusiveness.

I am just as concerned as anyone else in the industry about the government taking control of the Internet in a way which could kill innovation. I voiced my concerns last April when I wrote about how an FCC ruling could inject politics into news delivery. Some people believe that it is safer to have the government in charge than corporations. I hear this over and over.

If you fall in this camp, please take a deep breath, and slowly say the following words... Katrina, BP, banking crisis, Bernie Madoff, Afghanistan. If my point isn't made, feel free to stop reading.

In reality the government is for all practical purposes a large corporation who instead of serving customers is headed up by leadership who must say and do whatever it takes to get reelected. In the end by focusing too much power in the federal government you are ensuring the special interests with the closest government ties have a single place to focus on when they want to control a market.

If you listen to some commentators on TV they discuss how evil corporations are but they somehow forget to mention Amazon, a company dedicated to providing the world with lower cost books and other products. Then there is Wal-Mart who for all the complaints from employees about low wages provides products below prices charged virtually anywhere else. Let's also not forget about Costco. Then there is Google who provides new free services seemingly weekly.

Then I think about the government and how many thousands of regulators they have already monitoring the insurance and banking industries. How many of them spotted the housing crisis? Zero. In fact the government enabled the problem to take place by backstopping the GSEs (Fannie Mae, Freddie Mac) and assuring the markets that all was well.

Call me a born-again-skeptic; I've discovered religion and that religion is that multi-thousand page bills which politicians pass before they read are potentially harmful. Let's hope the Internet isn't the next successful conquest of the new nanny state.



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