Chill out about the Netflix-Comcast deal

[Commentary] A five-year-old app gets bought for $19 billion (WhatsApp). A Web document sharing firm gets valued at $10 billion (Dropbox). And cable TV firms are losing customers in their main video business. The Internet is booming, challenging established industries all around. Yet many greeted the news that Netflix would connect its video servers directly to Comcast with apocalyptic shrieks of Internet doom.

The fears are misplaced. The Internet is changing, as it was always meant to. That’s the genius of its design. Netflix’s decision to send video directly to Comcast, instead of routing it through other network intermediaries first, sets no precedent. Other firms like Google, Amazon and Microsoft have been linking directly to broadband networks for years. So have content delivery networks such as Akamai, Limelight and EdgeCast, which store videos, banner ads and other content closer to end users. The pessimistic charge that the US is failing, however, could send policy in a very different direction. The Netflix-Comcast news led to calls for applying the regulatory regime known as “network neutrality” (twice struck down by the courts) to not just last-mile broadband networks but the whole Internet ecosystem. Others called on the Federal Communications Commission to “reclassify” the Internet as a “Title II” telephone service. Do we really want regulate the Internet like an old monopoly phone network?

[Swanson is president of the technology research firm Entropy Economics LLC and a visiting fellow at the American Enterprise Institute’s Center for Internet, Communications, and Technology Policy]