Friday, August 04, 2006

Protecting the Web from 'regulatory capture'

When broadband companies try to charge consumers of internet content (such as you and me) as well as content hosts (such as Google, Blogger, Flickr), there's a clear danger of the internet being carved up into two (or more) kinds of 'internets': a faster net for companies that pay, and a slower one for those who don't. Since this tips the scale in favour of the 'haves' and against the 'have-nots', it endangers the democratic nature of the internet which (currently) carries your voice irrespective of how small you are. If you thought -- like I did -- that a regulation that mandates 'net neutrality' is a good way of combating greedy broadband companies, you will be forced into a re-think after reading the sobering message in this NYTimes column by Timothy B. Lee:

It’s tempting to believe that government regulation of the Internet would be more consumer-friendly; history and economics suggest otherwise. The reason is simple: a regulated industry has a far larger stake in regulatory decisions than any other group in society. As a result, regulated companies spend lavishly on lobbyists and lawyers and, over time, turn the regulatory process to their advantage.

Economists have dubbed this process “regulatory capture,” and they can point to plenty of examples. The airline industry was a cozy cartel before being deregulated in the 1970’s. Today, government regulation of cable television is the primary obstacle to competition.