Net Neutrality or Net Neutering?

Net neutrality has received surprisingly strong support from many Silicon Valley innovators, including Google. Given that the lack of regulation has enabled mind-blowing levels of innovation since the World Wide Web emerged in the early 1990s, why will imposing regulation to “protect innovation” help?  If it ain’t broke, don’t fix it.”

Many industry veterans agree. Bob Metcalfe is co-inventor of Ethernet technology underlying the development of networks. Unlike Al Gore, his original work was instrumental in enabling use and growth of the internet. Opposed to net neutrality, he has often warned that government regulation could kill the open internet, a “golden goose” of  economic development.

Are supporters of net neutrality Pie Chart thinkers or Venn diagram thinkers? A recent 20/20 Outlook post contrasted these two worldviews in an admittedly oversimple way. “Pie Chart thinking constrains your vision to that which already exists… Pie Charts constrain us to a finite perspective; Venn Diagrams encourage us to include more factors… Venn Diagram thinking enables you to break out of the box by forcing you to consider which of several circles you will include.”

Two possible reasons come to mind for why many in the technology sector support more government regulation: (1) lack of knowledge of history, and (2) Pie Chart thinking.

Supporters raise the specter that, if the largest providers are able to charge higher rates for faster service, small businesses and consumers would be harmed by being unable to access the faster service. These supporters must not be aware of how regulatory actions that have hurt innovation over the past century and a half in the U.S. Decades of government regulation in the telecom industry, for example, have on balance stifled rather than helped innovation. Instead of protecting consumers, the government became the protector of the status quo for the largest companies.

While limited historical vision is one cause, Pie Chart thinking seems like a bigger problem. Is it surprising that some politicians and large companies want to gain economic control over the fast-growing technology sector by imposing regulations? No. But is it surprising is that so many of the current and future innovators are supporting it? Yes! They apparently view one of the most explosive technological drivers of economic growth in our nation’s history as a bounded system with finite capabilities.

Rather than imposing regulations, protecting our freedom to act would benefit consumers. Instead of regulating a finite number of players to constrain pricing (Pie Chart), allowing significant ongoing demand from consumers for higher speed traffic to drive the formation of a whole new set of competitors would grow the economic pie and add to the U.S. economy (Venn Diagram).

My 2 cents. If you disagree, I’d like to hear about it.