The Historical Arguments over the FCC's Broadband Plan

By Niraj Chokshi

The innkeepers and infrastructure plans of yore offer valuable lessons on how to regulate the web.

The debate over net neutrality -- the idea that the government should require that Internet service providers offer unrestricted and equal access to the web -- has intensified lately. Proponents fear that without government intervention, ISPs will act as ruthless gatekeepers to the web.

The ISPs claim regulation will stifle innovation, and say the FCC is trying to use an outmoded set of regulatory powers. The Economist disagrees, citing the age-old idea of "common carriage":

English common law came to see innkeepers, boatmen, warehouse owners and granary operators as "common carriers": transport trades compelled to serve all comers, and to charge reasonable rates.

Similar rules have been applied to American rail, telegraphs and telephones. The great expense of building rail and other infrastructure meant many regions were served by monopolies, so Congress regulated rates to prevent abuse. Much of America is served by cable monopolies, The Economist argues, and so the FCC's reclassification makes sense.

But consultant and author Larry Downes sees a different history lesson: if we keep our hands off of private business, they will build a better network. The infrastructure for railroads, the banking system, electrification, civil aviation, commercial radio, and telephone and telegraph networks all relied on "complicated and delicate private-public partnerships," Downes writes. Companies hoping to profit provided most of the investment, while governments contributed land grants, rights of way and basic research.

The FCC's National Broadband Plan is an ambitious one, on par with major American infrastructure projects, Downes says. But the FCC will trip itself up by seeking net neutrality regulations:

[T]he dogged and increasingly desperate pursuit of regulatory authority over broadband practices will diminish if not poison the investment climate for precisely the kinds of high-risk expenditures necessary to achieve the NBP's goals. Already, Wall Street has responded to the FCC's proposed land-grab by downgrading the stocks of publically-traded ISPs. That comes as a surprise only to consumer advocates who, presumably, have never managed a public company of any size.

Public-private partnerships can create monopolies, Downes concedes. But, as was the case with American rail, the regulations brought problems of their own. The few "isolated incidents" of ISP's offering restricted access "hardly rises to the level of discrimination that justified" the railroad regulations, he argues.

After reading Downes' piece, TechDirt's Mike Masnick concludes that there is no clear answer. The debate is too focused on net neutrality on not enough on competition and the FCC misses the point. It seeks to increase broadband adoption, but it's already widely available, he writes. "It's just that there are lots of people who don't want it yet."

This article available online at:

http://www.theatlantic.com/technology/archive/2010/05/the-historical-arguments-over-the-fccs-broadband-plan/56700/