Posted on 17/Dec/2014
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Rigid net neutrality rules risk becoming an ineffective remedy to a badly defined problem. That’s why politicians should leave such a complex issue to technical, independent regulators. A restrictive approach would not foster innovation as many argue.

U.S. President Barack Obama’s recent statement in favor of net neutrality is a good example of why politicians should stay away from bold statements when dealing with complex issues. And indeed, net neutrality is so complex, technically, economically and politically, that no one has found the way to square the circle: the aggravating and confusing factor is that the word “neutrality” sounds appealing, whereas “diversity” and “discrimination” inevitably sound negative to politicians.

This is why it is better to leave the hot potato to technical, independent regulators. President Obama certainly had good intentions: but there is reason to doubt that what he is advocating (putting unprecedented and ill-advised pressure on the FCC) would make users better off. Here’s why.

[Tweet “The Internet is not neutral, and will never be. “]

As often invoked by neutrality advocates, it was designed to guarantee end users against discrimination and usage limitations, and to allow no intrusion or inspection of files by any central “intelligence”.

However, this is not what the Internet is today, and not only because of the recent scandals generated by massive surveillance by government authorities in many countries. Since the 2010 FCC Open Internet Order entered into force, the “information superhighway” has become populated by cars with different engines and many toll lanes, which allow different speeds.

Companies such as Apple, Microsoft, Google, Netflix and may others make regular use of traffic acceleration services, either developed in-house or purchased from third parties such as Akamai, Limelight, Huawei, Level 3. This is why some services work better than others on the Internet: in a fully neutral network, this would not be possible.

Mandating net neutrality for telcos and cablecos would not make the Internet neutral: the players that are able to either invest in their “content delivery networks” or purchase expensive services from third parties will still have a toll lane that others can’t afford.

Second, “over the top” products and services such as search engines, wireless and cloud platforms are not (and should not be made) neutral. Giant wireless platforms such as Android, iOS, Windows give priority to certain apps over others, and even block certain (very few) applications. They carry their own default browsers and apps.

As search engines Google, Yahoo! And Bing have to show some results first, and must do it in a way that match their users’ preferences; giant cloud providers such as Amazon and Microsoft sell their suites that include some favorite products, leaving others out or in second row.

A neutral Internet would entail that all these companies refrain from customizing services for their end users: indeed, the European Commission seems to be lured by the sirens of “search neutrality” and “platform neutrality” in its antitrust investigation against Google. Would this be good or bad? Most likely, bad.

Third, mandatory net neutrality would not foster innovation as many argue. A “mantra” of neutrality advocates is that net neutrality is the only guarantee that a “new Google” or a “new Facebook” will emerge in the future, just as these successful young companies have done in the past.

But reality is different: try to name recent examples of successful start-ups, and see how many of them have emerged as new “apps” for existing platforms.

This shows how the non-neutral world of Internet platforms is lowering, rather than raising, barriers to entry in the marketplace. The same is happening in the cloud: as companies compete to become the leading cloud provider, they have an incentive to host as many promising start-ups as possible on their platforms: this is why Internet hyper-giants do not initially charge start-ups for services such as sub-domains, enterprise tools, search engine optimization capacity, and access to content delivery networks.

Based on the above, mandatory net neutrality risks becoming an ineffective remedy to a badly defined problem. If it is imposed only on telcos and cablecos, then the Internet will remain non-neutral as it is today, and competition for traffic acceleration services might even be reduced. But if neutrality is extended to search engines, operating systems, wireless platforms, then the Internet will die.

This is why FCC Chairman Wheeler is rightly careful: the solution to the problem can only be cautious and, if anything, deferential to the extraordinary value that the non-neutral Internet is creating for our society every day. This does not mean that specialized services should be left entirely unregulated.

To the contrary, they might well deserve careful monitoring, a good dose of technology to monitor quality of service, and sharpened competition rules.

Most importantly, there is a need to avoid that the end-to-end Internet is cannibalized by one-way networks: otherwise, video will kill (also) the Internet star. A nuanced solution, based on the healthy co-existence of specialized services and best effort Internet, is the best suited to the ever-changing nature of the Internet: to the contrary, imposing neutrality would be tantamount to throwing out the (cyber-)baby with the bath water.

[Tweet “The temptation to be resisted is praising neutrality as synonymous of freedom, democracy, openness.”]

It is not. Full-fledged, rigid net neutrality rules are equivalent to what the Trabant was in Eastern Germany: the only car that people could have, very neutral, very bad, identical for everybody.

It became famous in the Western world when the Berlin wall fell 25 years ago, and thousands of East Germans drove their Trabants over the border: once in the “free” world, they immediately abandoned their “neutral” cars, and started a new, non-neutral life.

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