shouting loudly

Props to my fellow Public Knowledge intern Tim Schneider, who smartly incorporates Blair Levin’s Senate testimony into his latest blog post about network neutrality. Levin served as Chief of Staff at the FCC, and he is now a Wall Street analyst.

Levin makes four key points about the likely economic impact of neutrality regulations (or a lack thereof):

1. Regulation doesn’t necessarily reduce investment in network resources. Historically, networking companies (cable, phone, etc.) are as likely to invest more in their networks due to increases in regulation.

2. The goal of regulation should be to maximize investment throughout the internet value chain, not just in last-mile broadband provision. Such value-spreading regulation is historically normal:

The point is, targeted government action may or may not be warranted in this case but a generalized view that such intervention into a business relationship is always wrong or highly unusual is not historically accurate.

Levin also warns that, if companies cannot count on steady or improving quality of general internet service at steady or declining prices, they will reduce their investment in innovative new applications that run on the best-efforts internet. (Of course, I happen to agree with this fear.)

The important thing is that from the perspective of investing in Internet applications and content, knowing that such access will continue to be available would be a critical variable in the investment decision. Without some basic guarantee of an improving, not degrading, open lane, investors in Internet applications would be less willing to invest in new applications.

3. “The primary threat to the market being able to optimize investment is a non-transitory bottleneck in any critical part of the value chain that restricts economic growth.”

Levin does not explicitly take a position on network neutrality, but this sure helps our side a great deal. He continues:

The goal of public policy should be to assure that bottlenecks do not prevent that rising standard of living I noted earlier. Antitrust experts have identified some potential harms that might be relevant here, such as preventing new entrants from entering through adjacent markets, allowing those with a bottleneck to leverage that bottleneck into a related market, or impeding technology development by concentrating technology leadership into a small cadre of firms so that the entrepreneurial function of technology leadership is stymied.

And finally:

4. “The greatest guarantor of the kinds of benefits that network neutrality principles have delivered in the past, and the greatest driver of investment are the same: an opportunity for new, ubiquitous broadband networks.”

I couldn’t agree more: ultimately, we need more broadband networks, e.g. a third and fourth “pipe” via wireless, or satellite that isn’t insanely slow and ridiculously overpriced. If almost all US consumers could choose from five or six competitors who could all deliver broadband access, this would make any calls for net neutrality just silly—we neutrality advocates are only concerned about anticompetitive behavior from firms in a broadband market where nearly everyone has 2 or fewer real choices. But competitive broadband markets would do more than obviate this debate—it would deliver higher quality at lower prices.

Unless you work for an incumbent broadband provider, I know you can dig that.