The telecommunications industry is still struggling to rebound from tough economic times, but it appears that the sector is finally showing signs of renewed vigor. The Nasdaq, having risen 44% from its October 2002 low, is at the leading edge of what some economists are cautiously calling an economic recovery. The danger is that the Federal Communications Commission is considering a proposal that threatens to snuff out what appears to be a light at the end of the tunnel. A group called the Coalition of Broadband Users and Innovators (CBUI), which is funded by Microsoft and which has adopted the rhetoric of Stanford law professor and former Microsoft nemesis Larry Lessig, has urged the FCC to impose new regulations on cable broadband providers. Under the deceptively salutary moniker of ”network neutrality,” CBUI supposedly wants to ensure that the Internet continues to resemble a public commons. Despite the superficial appeal of their arguments, however, more detailed scrutiny reveals that their proposals will result not in neutrality, but in network neutering that will choke new investments and further hamper an industry that is just getting back on its feet. Although CBUI never puts forth any specific proposals, the crux of network neutering is prohibiting broadband networks from distinguishing between different types of traffic on their systems. According to this so-called ”end-to-end” principle, all of the intelligence needed to support the applications and services provided through the Internet must reside in the computers connected to the ”ends” of the system and not in the system itself. The electronic ”pipes” that connect the computers must be kept as ”dumb” as possible and must focus solely on ferrying each bit of information from point to point as quickly and transparently as possible. It is this principle that CBUI claims preserves the neutrality of the Internet and protects against its monopolization. Close inspection reveals that CBUI’s ”one size fits all” approach is anything but neutral. Like any standardized architecture, it inherently favors some applications over others. While well tailored to basic applications such as e-mail and browsing the World Wide Web, these protocols can stifle the development of other applications, such as e-commerce and Internet telephony, that depend on distinguishing between different types of traffic. Moreover, imposing such standardization through regulation places the government in the position of picking technological winners and losers. Even the most conscientious regulator will find it difficult to know which way to jump, let alone keep up with the dizzying pace of technological change. In addition, government-imposed standardization of Internet protocols may actually promote monopolies, rather than hinder them. Simply put, standardization limits the number of ways that broadband networks can compete, and as a result, it can give rise to a vicious circle in which the largest network gets larger and larger. In contrast, allowing greater diversity in network architectures can enable small providers to survive by offering networks designed to cater to the particular needs of particular groups of customers. For example, a network optimized to provide Internet telephony might be able to compete effectively with much larger rivals. Given these conceptual problems, why are CBUI members like Microsoft, Amazon.com, Disney, eBay, and Yahoo! pushing so hard to neuter cable broadband networks? The truth is that content providers have a lot to gain by doing so. Network neutering makes sure they can capture the benefits of high speed Internet service without doing any of the heavy lifting required to build those networks. It’s an undeniable fact that deploying high-speed data networks is expensive. The early broadband leaders have already spent hundreds of billions of dollars to upgrade the existing infrastructure and still face investing billions more. Emerging technologies, such as third-generation wireless devices, will require still greater investments. Although content providers like Microsoft are among the prime candidates to help finance the deployment of broadband, they would, of course, much prefer for someone else to undertake those investments first and to obtain access to them after the fact. That way, they can sit on the sidelines until the market becomes established without losing the ability to take advantage of them should they prove profitable. But this chokes off the flow of investment capital to broadband networks, which in turn delays their deployment and results in fewer technology platforms. It’s hard to see any public benefit in this, even though I’m certain the result would be good for Microsoft, Amazon.com and Disney. Christoper Yoo click here Appeared in The Tennessean July 8, 2003 http://tennessean.com/opinion/nashville-eye/archives/03/07/35615244.shtml?Element_ID=35615244