Net Neutrality

Net Neutrality is an interesting topic. It has generated a great deal of furor recently as a grass-roots movement against lobbying by Internet companies trying to offer preferential treatment to certain content providers. Even Google supports net neutrality. The bundling of goods and services has been a standard business practice for as long as commerce has taken place. There is an argument for net neutrality for someone like me who realistically only has one choice for broadband service, i.e. DSL. However, broadband services are a competitive business. Cable, telephone DSL, power companies, fiber optic services, and wireless services are all part of the mix. If you as a customer cannot get the content you want fast enough from your provider, then you have the right to switch providers and use someone else who will give you the quality of service you demand. I have a feeling that ending net neutrality will actually drive competition, broadband penetration, and improve services overall. I have yet to hear a coherent economic argument which shows that net asymmetry necessarily reduces social welfare. Rather, I see net asymmetry as a potential driver behind the next generation of Internet services: HDTV over IP.

Net asymmetry is only a proposal at the moment. It could be a good thing. If a firm starts providing their customers unacceptable service, they will vote with their wallet. Customers will always have the ability to continue to pay for net neutral service where competitive ISP markets exist.