Good Cop or Bad Cop?

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There's a new sheriff in town. And he may have already decided who the “bad guys” are.

Last week, Federal Communications Commission chairman Julius Genachowski hauled the network-neutrality debate out of cold storage, proposing to establish rules “preserving a free and open Internet.” As my colleague John Eggerton documents, reaction to Genachowski's proposal came swiftly from the industry, interest groups, legislators — and President Obama (see Rules, page 36).

On the face of it, the chairman's suggestion that the FCC have formal rules to enforce network-neutrality concepts sounds like a politician pledging to be “tough on crime.” In fact, he likened the agency's role in regulating Internet access to “a smart cop on the beat.”

After all, how could you be against the idea of protecting a vital conduit for communications (and commerce) from abuse by private interests? Genachowski believes consumers and Web businesses need the FCC to ensure that Internet service providers do not discriminate against specific applications or content, and that the Internet will benefit from a “transparency” rule that requires disclosure of network-management practices.

It's not the general principle of network neutrality that's problematic. Market forces (i.e., consumers) demand nothing less than unimpeded Internet on-ramps, as has been repeatedly demonstrated.

Rather, broadband providers are concerned about the nitty-gritty details of how net neutrality will be enforced in practice. Even if you agree that Genachowki's fears about the threats to the Internet's continued openness are well-founded — and not everyone does — good intentions can have negative consequences.

If you need proof of fair-minded policies leading to millions of dollars flushed away, look no further than CableCards.

The FCC several years ago required cable to open its video services to third-party devices. Operators did that with CableCard in 2003. Then the agency, responding to pressure from the consumer-electronics industry, decided that wasn't enough—that cable operators would also have to use CableCards in their own set-top boxes, with the theory that the technology would work better as a result (that's the so-called “integrated set-top ban”).

The result: Cable operators have spent hundreds of millions of dollars complying with the rule, deploying more than 14 million CableCard-enabled boxes to date. But it didn't make a difference. CableCard still failed to achieve CE manufacturers' wishes, and this month the Consumer Electronics Association asked the FCC to consider whether additional regulations are needed.

Meanwhile, apart from the possibility that a net-neutrality “cure” will be worse than the disease, there's a question of whether there's any disease in the first place. Undeniably, the Internet has sustained awesome growth over the last two decades. Is Genachowski trying to fix what ain't broke?

The chairman, in his network-neutrality speech, recalled Comcast's throttling of peer-to-peer traffic, which led the agency to order the MSO to change its network management practices (improperly, in Comcast's view). But it's not clear how new FCC rules would have resulted in a different outcome in this case, given that Comcast responded to public pressure to modify the way it deals with congestion on its broadband network.

Other critics say Genachowski — with his warning that “broadband providers' rational bottom-line interests may diverge” from consumer interest in accessing competing Internet video and phone services — has already concluded that ISPs are the enemy.

“Mr. Genachowski has picked up where his predecessor, Kevin Martin, left off: pre-emptively tagging the nation's cable and telco broadband ISPs as untrustworthy conspirators plotting to wall off the Internet to all but their own favored services,” VideoNuze editor and consultant Will Richmond wrote in a blog post.

The danger, of course, is that Genachowski's new rules of the Internet road could throw up stoplights that make it tougher for broadband providers to deliver faster, better, cheaper services — and that's just bad for everyone.

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