New Pacific Research Institute Report Makes the Case for Rejecting Regulation of the Internet

August 31, 2007; 12:55 AM
San Francisco -- Imposing a regulatory regime of "net neutrality" would harm consumers, quash innovation and investment, and prove difficult or impossible to change in the future, according to Net Gains or Net Losses? The Net Neutrality Debate and the Future of the Internet, a new report released today by the Pacific Research Institute (PRI).

"At its heart, the net neutrality debate is about price controls, and net-neutrality advocates want government regulation -- rather than the open market -- to determine what we pay for using the Internet," said K. Lloyd Billingsley, editorial director at PRI and author of Net Gains or Net Losses?

Net neutrality advocates believe it should be illegal for broadband service providers to charge their customers more for higher levels of service. Those who oppose net neutrality maintain that service providers should be allowed to set pricing policies that are flexible enough to meet a variety of consumer needs.

A key charge in the net-neutrality arsenal is that without regulation, the various broadband providers will block content that is not to their political liking or commercial benefit, thus depriving consumers of their right to know or their ability to access certain programs or features.

"You're not going to make more money if you're a broadband provider by blocking web sites or impeding disfavored services," said Mr. Billingsley. "This would quickly send customers packing to another provider. Instead, you're going to want to offer customers more services, more things to access and therefore, you're going to want to cut deals that are pro-consumer and offer choices."

The Federal Trade Commission (FTC) recently reported that there is evidence that the broadband Internet access industry is moving in the direction of more, not less, competition. There's been a decline in prices for higher-quality services, and the current market-leading technology (i.e., cable modem) is losing share to the more recently deregulated major alternative (i.e., DSL).

"In the dial-up era, there was not much to choose from among the different Internet providers, but that has changed dramatically over the past five years," said Mr. Billingsley. "With an explosion of service and fierce competition that benefits consumers, it makes no sense to abandon diversity and turn back to the monolithic conditions of a monopoly era."

"Regulation has consequences at odds with consumer welfare in the short term and the long term," said Mr. Billingsley. "Kept free from a new and onerous regulatory regime, high-tech companies large and small will continue to attract investment and roll out services that will promote Internet intelligence, Internet diversity, and Internet ubiquity, the true digital democracy of the next-generation Net."

Visit www.pacificresearch.org to download a copy of Net Gains or Net Losses? To schedule an interview with author K. Lloyd Billingsley, please contact PRI's press office at 415/955.6120 or smartin@pacificresearch.org

About PRI

For 28 years, the Pacific Research Institute (PRI) has championed freedom, opportunity, and individual responsibility through free-market policy solutions. PRI is a non-profit, non-partisan organization. www.pacificresearch.org