dr-mark-jamison_dr-janice-hauge_web.jpgDumb is better?

That is what net neutrality advocates would have us believe. Their basic belief is that broadband networks should be pipes that indifferently pass information packets from one location to another, allowing content providers and customers equal opportunity to do whatever they want. Who could be against that? People interested in innovation and customer welfare.
Remember Al Gore calling the Internet the Information Super Highway? The metaphor wasn’t and isn’t perfect, but it is instructive. Suppose we applied net neutrality to our transportation system: There would be no high-occupancy vehicle lanes during rush hour, no car-only lanes on interstates, and no toll road as an alternative to Interstate 95 in South Florida.  Transportation would be more costly and provide less value.

Forcing net neutrality would have similar results. Time-sensitive information, such as stock market transactions, would wait in line behind football game highlights. Financial dealings that could benefit from extra security would receive no better treatment than a tweet from Taylor Swift’s E! interview.

If you are thinking that net neutrality restricts innovation and hurts customers, you’re right. Our research has shown that net neutrality limits innovation, contrary to the claims of the net neutrality proponents.

How can this be?

Imagine a one-dimensional network, one that does nothing but carry information from point to point, which is how the old Internet has worked. What kinds of content providers flourish in that context? Those big enough to distribute their software across the net, and those whose software takes advantage of the great bandwidth for which they don’t have to pay.

Now suppose that the network can offer enhancements that improve customers’ experiences. Content providers whose sites would not benefit from such enhancements could ignore the offering. But there will be some content providers who could improve their services by buying the enhancements, such as priority packet delivery. These sites become better without net neutrality and offer customers more service. In other words, there is more innovation and greater customer welfare without net neutrality than with it.

Today’s successful Internet sites face greater competition if we move beyond net neutrality principles. That probably explains why they are net neutrality’s strongest advocates. But moving beyond a dumb network is better for customers, sites that find new opportunities and networks.

It should be no surprise that dumb isn’t better. In an innovation-driven economy, restrictions don’t make us better. They hold us back.

The authors are Mark A. Jamison, director of the Unviersity of Florida’s Public Utility Research Center and Janice Hauge, associate professor of the Department of Economics at the University of North Texas.

Photos from top to bottom:
Dr. Mark A. Jamison – PURC@warrington.ufl.edu
Dr. Janice Hauge – jhauge@unt.edu