Packets Are Not People

FCC Chairman Julius Genachowski outlined a number of the key tenets of the proposed net neutrality legislation in a recent speech at the Brookings Institution. One of them–the principle of non-discrimination–states that broadband providers cannot discriminate against particular Internet content or applications.

This principal of packet equality is flawed (and the term is a loaded one created by neutrality proponents to seemingly draw parallels to the civil rights movement and evoke emotion that has no place in this debate). Despite the billions that telecoms and cable providers have spent in building out high-bandwidth networks, and the billions more they will spend in upgrading them, networks have and always will have finite capacity. Forcing ISPs to adhere to packet equality would prohibit them from routing time-sensitive and time-insensitive data differently, or slowing the transmission of high-bandwidth files that use the BitTorrent protocol to alleviate network congestion.

Around 5% of Comcast’s Internet subscribers use 70% of the network’s capacity, but pay as much as everyone else. Google pipes over 300 million search results through ISP routers and switches each day, yet doesn’t pay a penny more than the average website. Enforcing net neutrality would forbid the Comcasts and AT&Ts to charge bandwidth hogs, both consumer and corporate, more for more usage.

Regardless of whether net neutrality becomes law, consumers, as always, will have to bear the burden of subsidizing network enhancements, whether it be by paying higher rates to Internet providers, or paying online firms the same way. But as long as consumers have enough alternatives when it comes to choosing an ISP, there is no need for government intervention, and certainly no need for legislation. And now that broadband growth in the U.S. has flattened, and broadband suppliers can only get meaningful customer growth by taking each other’s customers, suppliers have to keep their customers maximally happy. And if you’re not happy, switch.

One question that still remains is why entrepreneurs and venture capital firms are so invested in passing net neutrality into law. Every day, entrepreneurs are starting businesses that hope to one day compete with the likes of Google, Amazon, and Microsoft, and venture capitalists are investing in them. Why would they want to cement an uneven playing field that would help their larger, more established competitors?