July 23rd, 2008

Skewered Cableco Anyone?

Posted in  Technology 
Author: Solveig Singleton || Location: Washington, DC, USA

The FCC's determination to fine Comcast for it's treatment of BitTorrent net traffic has put the cableco in a difficult position. If Comcast objects that the FCC nondiscrimination principles are not really rules the violation of which can result in a fine, the firm is setting the stage for more stringent net neutrality regulation. But if Comcast does not object, it in essence allows the FCC to make rules without a specific mandate from Congress concerning their substance, let alone the consequences of a violation, and to do so retroactively. Ex Post Facto laws, indeed.
 
My position is that net neutrality rules are premature, especially given that no one as described an institutional device to systematically keep the rules for developing over time into a system in which regulators micro-manage prices and terms of carriage, as did the FCC and the ICC.
 
As regulators have lined up on the side of regulation, though, some second-best suggestions are in order. Assume that the FCC's four principles make an acceptable starting point. To keep the rules from being manipulated by those dependant on the Internet as a platform into a means of piggybacking on other's investment, OR by those who build the plaform as a means of wresting all the value from the enterprises it supports, the best thing to do is to throw any disputes over the rules into fast-track arbitration. (The economist Pablo Spiller has done some good work on this). Existing mechanisms of commercial arbitration could be used, or special forums could be created as part of a system of network self-regulation.
 
Bear in mind--if such a system did not work, something more aggressive could be done. But if a more interventionist approach is adopted from the start, it is likely to become a prime vehicle for deliberate manipulation, a game the little guy is unlikely to win. And it will be very hard to get rid of.