The Other Tim B. Lee: Off the Rails
August 7th, 2006 by Tim Karr |
Timothy B. Lee — a little-known libertarian think tanker not to be confused with Tim Berners-Lee, developer of the World Wide Web — published an article last week on the New York Times op-ed page warning of the “unintended consequences” of reinstating Net Neutrality protections. He points to the “cautionary tale” of the 1887 creation of the Interstate Commerce Commission to regulate railroads.
In the following post, Mark Cooper, research director of the Consumer Federation of America, responds:
Timothy Lee’s “history lesson” on regulation and Network Neutrality neglects several key points. While he argues that “regulatory capture” turned the railroad industry into a cartel, he never addresses the pervasive problem of “unjust discrimination between persons, places, commodities, or particular descriptions of traffic,” which the Collum Commission found in the unregulated railroad industry prior to passage of the Interstate Commerce Act. This is the more relevant historical parallel.
Likewise, in his history of the Internet, Lee fails to note that it was Network Neutrality — or “nondiscrimination” — adopted by the Federal Communications Commission in the 1968 Computer Inquiries that prevented the telephone companies from interfering with the free flow of information that sparked the growth of the Internet. He also forgets that the open Internet protocol was the result of government action — first by DARPA and then by the National Academy of Sciences.
His economic analysis also leaves a great deal to be desired. There is an expression in economics, “four is few and six is many.” Two or three firms are not enough to ensure a vigorously competitive market. If both members of a duopoly discriminate, as the cable and telephone companies have declared they intend to do, there is nowhere else for the consumer to turn.
The prospects for competitive entry in the broadband market from wireless providers is slim to none, especially since the telephone companies own the top two wireless providers — and number three has entered a joint venture with the cable companies. Industry analysts are reporting that the once-heralded broadband “price war” is already dying down. The cozy cable-telco duopoly has no interest in cutthroat competition.
Allowing the network operators discriminate, as the railroads did before the passage of the Interstate Commerce Act, will be disastrous for the open environment for innovation on the Internet. Preserving Network Neutrality is the continuation of a policy that has worked magnificently.
