Google and the Problem With
‘Net Neutrality’
By BRET SWANSON
October 5, 2009; Page A19
On Sept. 25, AT&T accused Google of violating the
very "net neutrality" principles the world's
dominant search company has righteously sought
for others.
Net neutrality conjures the benign notion
of an open and fair Web, where all applications and
data packets are treated equally. Net reality is
much more complicated. Google says it doesn't
have to abide by rules meant for telecom
companies. But with the Internet obliterating such
distinctions, this defense exposes net neutrality's
inherent flaws.
The controversy involves Google Voice, a
new service that rings all of a user's phone lines
simultaneously and provides other conference-
calling and voice-mail features. Like myriad digital
applications, the service is possible because the
Web and phone lines have in many ways
converged. Google can thus offer "free" services
over the world's vast, expensive broadband
networks.
Google thinks net neutrality should
regulate only traditional phone and cable
companies. Phone carriers have long been ordered
to connect all calls. And open Internet principles
agreed to by all sides in 2005 offer similar
guidance for the Web: no blocking of Web sites or
applications.
But Google Voice does not connect all calls.
It blocks access, for example, to some rural areas
and conferencing services that would impose
heavier interconnection fees on Google. AT&T thus
charged Google with cherry-picking. Why, AT&T
asks, can Google exploit expensive communications
networks when it's profitable but refuse neutral
service to all customers when it's not?
This row unmasks something far more
important than Google's hypocrisy: the deep
structural flaws of net neutrality itself. Last week,
Federal Communications Commission (FCC)
Chairman Julius Genachowski outlined a more
expansive and legally binding regime. He would
not only codify existing nonblocking principles but
would also add a highly controversial
"nondiscrimination" rule. This regulation could
expand bureaucratic oversight to every bit, switch
and business plan on the Internet.
Basic technologies, like packet
prioritization (voice calls first, spam second), could
be banned. So could many business plans based on
robust and differentiated services. This regime
could send all routing algorithms and network
services into courtrooms for the next decade.
Despite the brutal economic downturn,
Internet-sector growth has been solid. From the
Amazon Kindle and 85,000 iPhone "apps" to Hulu
video and broadband health care, Web innovation
flourishes. Mr. Genachowski heartily acknowledges
these happy industry facts but then pivots to assert
the Web is at a "crossroads" and only the FCC can
choose the right path.
The events of the last half-decade prove
otherwise. Since 2004, bandwidth per capita in the
U.S. grew to three megabits per second from just
262 kilobits per second, and monthly Internet
traffic increased to two billion gigabytes from 170
million gigabytes—both tenfold leaps.
Broadband has been a rare
bright spot in the economy.
Why discourage new
investment?
No sector has boomed more than wireless.
Yet Mr. Genachowski wants to extend his new
regulations to the most technically complicated and
bandwidth-constrained realm—mobile networks
and devices.
In 2004, Wi-Fi was embryonic, the
Motorola Razr was the hot phone, the BlackBerry
was a CEO's email device, and Apple's most
recognizable product was an orange-sicle laptop.
But then the industry turned upside-down in a
flurry of dynamism. Both Motorola and Palm
plummeted in popularity and only now are
attempting real comebacks. BlackBerry and Apple
vaulted to smart-phone supremacy from out of
nowhere, Nokia became the world's largest camera
company, and a new wireless reading device
rekindled Amazon's fortunes.
Wireless carriers invested $100 billion in
just the past three years, and the U.S. vaulted past
Europe in fast 3G mobile networks. Americans
enjoy mobile voice prices 60% cheaper than foreign
peers. And the once closed mobile ecosystem is
more open, modular and dynamic than ever.
All this occurred without net neutrality
regulation.
My research suggests that U.S. Internet
traffic will continue to rise 50% annually through
2015. Cisco estimates wireless data traffic will rise
131% per year through 2013. Hundreds of billions
of dollars in fiber optics, data centers, and fourth-
generation mobile networks will be needed. But if
network service providers can't design their own
networks, offer creative services, or make fair
business transactions with vendors, will they invest
these massive sums to meet (and drive) demand?
Some question the network companies'
expensive and risky plans, asking if the customers
will come. But one thing's for sure: If you don't
build it, they can't come.
If net neutrality applies neutrally to all
players in the Web ecosystem, then it would
regulate every component and entrepreneur in a
vast and unknowable future. If neutrality applies
selectively (oxymoron alert) to only one sliver of
the network, then it is merely a political tool of one
set of companies to cripple its competitors.
At a time of continued national economic
peril, the last thing we need is a new heavy hand
weighing down our most promising high-growth
sector. Better to maintain the existing open-Web
principles and let the Internet evolve.
Mr. Swanson is president of the technology
research and strategy firm Entropy
Economics LLC.