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New harsher Net Neutrality rules endanger investments

By 22 October 2009 5 Comments

US-economyFree Press is arguing that because AT&T agreed in 2006 to an FCC non-discrimination principle for a period of two years during which time AT&T actually increased its investments in network infrastructure, this then proves that new Net Neutrality regulation.  But this logic is fundamentally flawed because it assumes that the 2006 rules are the same as the new harsher Net Neutrality rules being proposed by Rep. Ed Markey’s H.R. 3458 and the potentially similar rules being proposed by the current FCC.  [Update 2:19PM – After today’s FCC’s rule making meeting, hope remains that the FCC will permit reasonable discrimination.]

But the currently proposed Net Neutrality rules are nothing like the 2006 non-discrimination rules and they threaten existing business models operating on and off the Internet.  For one thing, the 2006 rules only applied to AT&T’s wireline networks and not wireless networks.  The other aspect of the 2006 rules is that it did not prohibit AT&T from operating managed services like IPTV nor did it prohibit AT&T from prioritizing its own IPTV service over its own infrastructure over all other Internet services.  The currently proposed Net Neutrality rules would apply to wireline and wireless networks and it will seek to regulate and rein in managed services operating on “private transmission capacity”.

This difference between the old set of light-touch non-discrimination rules and the new heavy handed rules is stark and it is clear that the new regulations will have a substantial negative impact on network investments, jobs, and the economy.  Two independent studies conducted by the Information Technology and Innovation Foundation and economist and former FCC Commissioner, Harold Furchtgott-Roth are warning that the economic downside of reduced Network Operator investments due to heavy handed Net Neutrality regulation will far exceed any potential investment growth in the businesses that operate on the Internet.