A Neutral Network is Best for California

Northern California is a hotbed of modern, global technological innovation, particularly internet innovation. Yet, increasingly Washington, D.C. dictates the direction and velocity of innovation, often abetted by the very companies that gained from the permissionless innovation approach of government that so benefitted the industry in the past. For example, in the last several years some internet companies and activists have campaigned for heavy handed regulations of the internet. The goal seems merely to use government to gain market advantage over suppliers.

For two decades, the goal of more broadband, more places, more often, and for more people was met with a light touch regulatory model powered by a free market. But this notion of network neutrality came under attack a few years ago as a new vision emerged. That top-down, central control vision called for the internet to adhere to 70-year-old restrictions created to constrain a monopoly that provided the rotary dial telephone. Fruition of that vision would end the “open internet,” ending what the FCC defined as allowing “…consumers can go where they want, when they want.”

But in the integrated world of communications, software, data storage and audio/visual, when one part of the ecosystem is affected, all parts are affected.

Platforms such as social networks, search engines, operating systems, webmail, browsers, mobile apps, and e-commerce are proliferating. These platforms are simply layers that create a “stack” as new products or services are built upon them. The relationship between these various layers of the ecosystem, including service providers, is tightly woven in part because of the vertical integration but also because of contracts and interdependencies. Upsetting or isolating one part of the stack does not necessarily lead to linear and predictable results.

In fact, the opposite is observably true. Innovation in the internet and communications space moves rapidly but unevenly. Perhaps nowhere else is “supply creating its own demand” more observable than in this technology space. That is, some goods, such as broadband access and internet services, cannot be oversupplied as the very existence of the supply will lead to its use in the market, increasing its demand. That supply may appear in one part of the stack, only to be used by another part, but how is it taken advantage of it is innovation itself and virtually completely unpredictable.

So, humility is the correct approach for prognosticators. Most harmful is regulatory hubris which regularly leads to any number of unintended consequences. This is damaging pollution to the ecosystem. Desperate attempts to try to bring order to what is not orderly are doomed to failure or only succeed in suffocating innovation. The result is less broadband because of less supply, less online services, and less advantages for consumers.

The well-being of the internet, at least as it exists in the U.S., is dependent on all parts of the ecosystem being healthy, and free from interference. An economically thriving digital ecosystem requires cooperation with an eye towards what is best for the broader ecosystem. The distributed nature of the Internet is a fundamental part of its design, and so no one entity, no one cluster of entities, can be an island. Stakeholder cooperation is imperative for the success of all.

No one should mistake that there is anything but near unanimous belief amongst all political tribes that an open Internet should exist. No advocacy group, political party, industry or consumer group is advocating for consumer harm. Only a small, loud, activist, agenda-driven group argues for government restriction and control. Inarguably, the best way to preserve an open internet is precisely how an open internet has been preserved for this long, via the free market. No other model even comes close to providing the flourish of consumer freedom coupled with consumer choice. That is how consumers will continue to be protected, how consumers will continuously benefit from the innovation, investment and creation that follows, and how consumer experiences with content, technology, and information can be consumer driven instead of government determined.

The best answer for the continued success of northern California is an environment with fewer regulations, or an open internet. Politicians should be told to keep their hands off. Liberty frees those in the internet ecosystem just as it does elsewhere allowing them to pursue their lives, creating an online experience that they desire, not what is dreamt up for them in D.C.

Bartlett Cleland is senior fellow in tech and innovation at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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