Home > posts > Net Neutrality, the Next “Systemic Risk” for the U.S. Economy
October 27th, 2009 12:57 pm
Net Neutrality, the Next “Systemic Risk” for the U.S. Economy

James Pethokoukis, Money and Politics columnist and blogger for Reuters, notes that the FCC’s decision to proceed with a process of imposing so-called Net Neutrality rules on Internet network providers is not only “curious as well as wrongheaded,” it could result in the next “systemic risk” for the U.S. economy.

Questioning the wisdom and necessity of strict Internet regulations to be imposed under the false promise of “neutrality,” Pethokoukis wrote:

The financial crisis that has convulsed the global economy for the past two years should be a potent reminder to communications regulators that the best of government intentions can create horrible, though unintended, consequences. …

“Like physicians and Fed governors, the first goal of regulators should be to do no harm. And that is especially true when they are trying to impose a solution in search of a problem. Broadband prices, for one thing, are on the decline. The average cost of consumer broadband has dropped to less than $20 a month from $50 a month in 2001. And more people have access. As late of 2004, 70 percent of households still used dial-up modems for web access. Today, just 10 percent do with broadband speeds doubling over that period. Tough to find a market failure here. …

“But the FCC — with the full encouragement of the Obama administration — nonetheless intends to push forward with seeming little concern about the unintended consequences of intervening into a well-functioning sector vital to the American economy. At the very least, the FCC will likely face years of court battles over the rule that could serve to paralyze the sector. Now there’s your systemic risk.”

Google Chief Executive Eric Schmidt, whose company has been lobbying hard in support of Net Neutrality, admitted recently, “It is possible for the government to screw the Internet up, big-time.”

Perhaps Google and other large corporate content providers who wish to use the heavy hand of government to continue to freeload on the backs of ordinary Internet consumers should heed Schmidt’s warning.

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