Stuck in Neutral

[SOURCE: Wall Street Journal, AUTHOR: Editorial Staff]
[Commentary] Here come the telecom mergers, and right behind them come the bad ideas. With even many fervent regulators (even Reed Hundt!) now conceding that the current mergers aren't bad for consumers, the new Maginot Line for the politically ambitious is something called "Net neutrality." These days, this concept usually means that phone and cable companies should not be able to charge the Googles and Amazons of the world for the bandwidth they need to reach Internet users' homes. The issue came to the fore recently after the phone companies started making noises about offering preferential treatment -- basically, faster downloads and better service -- to Web sites willing to pay for the privilege. The "Net neutrality" debate has many similarities with that unbundling cul-de-sac. Both raise the question: Is innovation better served by undermining the property rights of network owners, or by reinforcing them? In the present debate, the property right at issue is that of cable and phone companies to charge Web site operators for faster access or better service. Telling a firm what it may charge for a service -- or that it may not charge anything -- is a good way to ensure that the service won't be offered at all. Placing limits on the ability of network owners to charge for better access will mean less investment, as we learned after 1996. Incidentally, whether the network owners could ever succeed in charging some of the millions of Web sites for preferential access is unclear. But it seems unlikely that they would do so if it so degraded users' experiences that it turned them off Web surfing or drove them to a competitor. If the phone and cable companies are the rapacious rent-seekers they're made out to be, "breaking" the Internet would turn out to be a bad way to turn a profit.
http://online.wsj.com/article/SB114179017259792277.html?mod=todays_us_opinion
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