Freedom Line Blog

Is this what our Internet sector and economy need?  More uncertainty from the Federal Communications Commission (FCC) and Obama Administration?  The tech sector remains a positive outlier in terms of job creation, innovation, new networks and private investment, but regulatory misdirection threatens all of that.

The latest affront involves usage-based pricing for Internet service.  In order to facilitate Internet growth and accommodate ever-increasing consumer demand, service providers must be granted flexibility to at least explore alternative pricing models.  The outdated, flat-rate, all-you-can-eat model increasingly threatens service quality, as a small number of Internet users sap capacity through data-heavy applications like videogames and online video.  To illustrate, viewing a single streamed high-definition film consumes approximately four gigabytes of data.  Utilities aren’t forced to charge a flat rate regardless of electricity use, so why should Internet service providers be straightjacketed in that way?  It’s not fair, and it’s not effective.

Enter FCC Chairman Julius Genachowski, who just four months ago explicitly praised pricing flexibility and experimentation in the name of fairness and efficiency:

Business model innovation is very important particularly in new areas like broadband.  There was a point of view that said a couple of years ago that really there was only one permissible pricing model for broadband, and I didn’t agree with that and the Commission didn’t agree with that.  And we said that business model experimentation and usage-based pricing could be a healthy and beneficial part of the ecosystem that could help drive efficiency in networks, increase consumer choice and competition and increase fairness, because it can we said result in lower prices for people who consume less broadband.  So experimentation in this area with those goals in mind is something that’s completely appropriate.”

Other voices on the political left actually concurred, including Tim Wu, the man who coined the deceptive term “Net Neutrality.”

Speaking to a different audience last week, however, Genachowski appeared to reverse himself.  “Anything that depresses broadband usage,” Genachowski claimed, “is something that we need to be really concerned about.”  He added, “We should all be concerned with anything that is incompatible with the psychology of abundance.”

A “psychology of abundance?”  Easy to say when you’re not the once providing that so-called “abundance.”  Perhaps Genachowski is unfamiliar with the timeless economic adage, “There’s no such thing as a free lunch.”  Or perhaps he simply says whatever he thinks his present audience wants to hear.

Regardless, Genachowski’s latest comments only add regulatory uncertainty to an atmosphere that already faces too much of it.