How to Regulate the Internet Tap

[Commentary] "Transparency is non-negotiable," declared Europe's new commissioner for digital issues, Neelie Kroes, in a speech last week laying out her thoughts on net neutrality. "In a complex system like the Internet, it must be crystal-clear what the practices of operators controlling the network mean for all users." Kroes's comments reflect the decision made by the European Union in November to avoid any of the more extreme regulations that could stifle the innovation that has been the hallmark of the Internet. Instead, the union chose a more measured approach that emphasizes transparency. This at odds with the Federal Communications Commission, which is currently considering versions of net neutrality regulation that would severely restrict firms' business models and pricing flexibility. Before the commission embraces regulation, it should take another look at the European model and focus on a policy built on transparency. When it comes to the Internet and net neutrality, ensuring transparency promises to enhance the evolution of this dynamic market. Imposing heavy-handed rules about how providers can operate will only hinder it.

[John W. Mayo and Marius Schwartz are professors of economics at Georgetown. Bruce Owen is a professor of public policy at Stanford. Robert Shapiro is a senior policy fellow at the Georgetown Center for Business and Public Policy. Lawrence J. White is a professor of economics at New York University's Stern School of Business. Glenn Woroch is the executive director of the Center for Research on Telecommunications Policy at the University of California, Berkeley.]