- The Washington Times - Thursday, September 24, 2009

ANALYSIS/OPINION:

Hardly anyone predicted the Internet and its consequences, with the amazing new freedom to communicate with almost anybody across the globe and easily look up facts. Who would have thought that someone could pull out a cell phone at dinner and have the most comprehensive encyclopedias in hand to peruse for information? All this was created without the federal government protecting us from the companies that were providing the service.

The Obama administration doesn’t hold the new freedom in high regard. The administration labels new regulations as “net neutrality.” If enacted, new Federal Communications Commission regulations will change everything. The federal government not only will regulate prices (which is never a good idea), but also will eliminate any control by service providers over the programs they run on their systems.

Preventing Internet providers from charging higher prices to those who use more bandwidth will, the argument goes, benefit consumers. Unfortunately, although we all would like lower prices, things don’t work that way. Large downloads slow down the Internet. Not limiting those who want to make large downloads produces congestion, slowing down the rate at which others can access information on the Internet.

It’s perplexing that the Obama administration wants to prevent Internet service providers from pursuing what seems like an obvious policy, but companies such as Google want to stream big movie files over the Internet, and they tend to take up a lot of bandwidth. Coincidentally, administration policy helps its corporate supporters.

Our solution is to let the market decide. If customers don’t think the improved service quality that they receive justifies increased prices, they will go to some other service provider. If a customer doesn’t like iPhone from AT&T, she can get a Blackberry on Verizon, a Palm Pre with Sprint, or an Android on T-mobile. Apple wants people to use its telephones, so the company has added an amazing choice of 75,000 applications for iPhone users. Apple has no incentive to withhold applications that make the iPhone more attractive.

But technology isn’t free. Customers may like a program such as Skype, but if AT&T can’t recoup its investments in it, other fees are going to have to increase. Besides that, Apple voiced concerns that some applications interfered with the feel or performance of its phones. It is strange that the new regulations will mandate access and prevent Apple from determining what applications can run on its phones. Google is Apple’s competitor, and there is no reason to assume that Google will have Apple’s best interests at heart.

What administration bureaucrats don’t seem to understand is that if Apple had been prevented from making an exclusive agreement, it never would have been able to introduce the iPhone because it required that a cellular carrier make big upfront investments in capacity as well as developing special programming.

The administration should leave well enough alone. Red tape stifles innovation, and government regulators don’t have a clue what new inventions their regulations might destroy. The case in point is the iPhone, which might never have been developed had the proposed FCC regulations been in place four years ago.

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