A number of big issues have been brewing over the past few weeks, but few are as contentious as net neutrality. The term refers to the idea that network providers shouldn’t be allowed to discriminate (by offering better network performance in exchange for additional fees) between any user or company that uses the network to offer products or services. Instead, the idea goes, the pricing for transport of all traffic, regardless of type, source, or destination, should be the same.

Those lobbying against net neutrality–largely phone and cable companies–typically support additional charges for bandwidth-intensive products, like VOIP and internet video. They generally believe that extra fees are justified (even necessary) to provide high quality service. Further, they often say, additional charges are needed to build out next-generation network equipment, so that future services can be supported in an effective manner.

Those supporting net neutrality–including Microsoft, Google, Yahoo, Amazon, and eBay–oppose such charges. They claim that in a world without net neutrality, phone and cable companies could steer users toward products and services that they own, and that internet use would generally become more expensive.

My take: the real issue here is a lack of competition. Individual and business customers in many, if not most, markets have extremely limited choice over broadband providers; all too often, there simply aren’t many alternatives. This is due in large part to (legal) monopoly powers cable and telecom companies have enjoyed over the years (in particular, telcom companies have had near complete control over the copper cable linking businesses and homes to the carrier’s local exchange). Thanks to deregulation and new technology, the situation is improving and new choices are emerging–but it’s happening slowly.

Because consumers frequently don’t have much choice over their broadband provider in the current environment, I support net neutrality. Once the market for broadband service becomes truly competitive, network providers should be allowed to offer differential pricing as they see fit.

All this said, I’ve been offline for a few weeks and missed much of the debate–does anyone have a different perspective?

Posted by Dan Grossman on Tuesday, June 20th, 2006 at 10:19 am.