Americans are finding a growing number of policy decisions in Washington are rooted in the European-style regulatory state, but there is at least one place where the U.S. is “out-Europeing” Europe: Net Neutrality Internet regulations.
While some European governments (France, Norway, Sweden, and the EU) have created working groups, voluntary guidelines, or begun regulatory proceedings, yesterday the United Kingdom’s Office of Communications (Ofcom) released a preliminary report on Net Neutrality. Their conclusion: “there is currently insufficient evidence to justify regulation.”
The report takes a fairly reasoned look at how Internet service providers manage how data flows across networks – the very thing the Federal Communications Commission wants to regulate. Ofcom determined that such practices can actually bring a net benefit to consumers since their ultimate utility is preventing congestion and ensuring maximum Internet broadband speed. (Tell that to the socialist “consumer protection” advocates at Free Press.) In contrast, Net Neutrality is akin to letting all cars and trucks on the road enter a one-lane tunnel at the exact same time.
Proponents like Free Press have tried to argue that ISPs will prioritize or charge websites for consumers to access certain content, at times completely contradicting themselves to try to make the “doomsday scenario” point (see page 3 of our FCC comments). While the report looks at the potential for ISPs to engage in such business practices, they conclude that preventing it through regulation “is unlikely to lead to efficient market outcomes” and can actually be bad for consumers.
Ofcom argues the Internet is a “two-sided market” between content providers and consumers, with ISPs acting as a conduit between the two (though in reality most provide significant content themselves). If ISPs charge consumers too much, consumers won’t value the Internet. If they charge content providers too much, investment in content and applications will decrease, and – again – consumers won’t value the Internet. The goal is a balance between these sides to maximize efficiency and keep the cost low, something everyone desires.
ATR has long argued that consumers – not government – are the best regulators of business. Consumer demand in a free-market will balance the interests of ISPs and content providers alike to best ensure growth and innovation in all aspects of the Internet ecosystem. We’re glad Britain’s regulators appear to agree.